ACER Acer Therapeutics Inc

PROSPECTUS SUMMARY

This summary contains basic information about us and this offering. Because it is a summary, it does not contain all of the information that you should consider before investing. Before you decide to invest in our common stock, you should read this entire prospectus carefully, including the section entitled “Risk Factors,” and any documents incorporated by reference.

Our Business

We are a pharmaceutical company focused on the acquisition, development, and commercialization of therapies for serious rare and life-threatening diseases with significant unmet medical needs. Our pipeline includes four clinical-stage candidates: emetine hydrochloride (“emetine”) for the treatment of patients with COVID-19; EDSIVO^™ (celiprolol) for the treatment of vascular Ehlers-Danlos syndrome (“vEDS”) in patients with a confirmed type III collagen (COL3A1) mutation; ACER-001 (a taste-masked, immediate release formulation of sodium phenylbutyrate) for the treatment of various inborn errors of metabolism, including urea cycle disorders (“UCDs”) and Maple Syrup Urine Disease (“MSUD”); and osanetant for the treatment of induced vasomotor symptoms where hormone replacement therapy is likely contraindicated. Our product candidates are believed to present a comparatively de-risked profile, having one or more of a favorable safety profile, clinical proof-of-concept data, mechanistic differentiation, and/or accelerated paths for development through specific programs and procedures established by the United States (“U.S.”) Food and Drug Administration (“FDA”).

Our current product candidate pipeline is summarized in the chart below:

Product Candidates

Emetine for COVID-19

On May 11, 2020, we announced that we have entered into a research collaboration agreement with the National Center for Advancing Translational Sciences (“NCATS”), one of the National Institutes of Health (“NIH”), to develop emetine hydrochloride as a potential treatment for patients with COVID-19, the disease caused by infection with the SARS-CoV-2 virus. Emetine is an active pharmaceutical ingredient of syrup of ipecac, given orally to induce emesis, and has also been formulated as an injectable to treat thousands of individuals with amebiasis. Several independent in vitro studies have demonstrated nanomolar potency against both DNA and RNA-replicating viruses, including Zika virus, Ebola virus¹, Rabies Lyssavirus, human cytomegalovirus, human immunodeficiency virus 1, influenza A virus, Rift Valley fever virus, echovirus 1, human metapneumovirus, and herpes simplex virus type 2². Clinically, emetine has been used to treat approximately 700 patients (including pediatrics) with viral hepatitis³ and varicella-zoster virus⁴. Additionally, emetine is a potent inhibitor of multiple genetically-distinct Coronaviruses and demonstrated in vitro the strongest anti-coronavirus activity in one study that screened and identified approved compounds with broad-spectrum efficacy against the replication of four Coronaviruses⁵ and specifically against SARS-CoV-2.⁶

Pursuant to the NCATS research collaboration agreement, Acer and NCATS are working together to speed the clinical development of emetine for the treatment of SARS-CoV-2 infection (the “Research Project”). Acer has defined a target product profile for the clinical development program and will share details with NCATS on aspects of its clinical development program to facilitate the urgent development of this therapy. NCATS has completed a literature review of clinical experience with emetine use, as well as artifacts including previous drug product labels and a drug master file, that it will share with Acer. NCATS also has access to a quantity of emetine physical material to support further nonclinical studies by Acer. Inventions made in the course of the Research Project will be owned by the party employing the inventor or inventors; inventions that are invented jointly by employees of both parties will be owned jointly. The research collaboration agreement has a one-year term, may be extended or terminated upon mutual agreement of the parties and may be terminated by either party with 30 days written notice.

We intend to initially seek FDA approval to market emetine in the U.S. using a regulatory pathway established under section 505(b)(2) of the Federal Food, Drug and Cosmetic Act that allows applicants to rely at least in part on third party data for approval. We are working toward an IND submission in mid-2020 and targeting a clinical trial initiation in the third quarter of 2020, subject to additional capital. We intend to rely in part on the existing preclinical and clinical safety data for emetine, while supplementing with the COVID-19 safety and efficacy data to be generated in a proposed adaptive design Phase 2/3 randomized, blinded, placebo-controlled multi-center trial to evaluate the safety and antiviral activity of emetine in high-risk symptomatic adult patients with confirmed COVID-19 infection not requiring hospitalization, as well as chemistry, manufacturing and controls information. Based on the substantial amount of safety data that is already available with respect to emetine and our ongoing pre-IND discussions with the FDA, we do not believe that a Phase 1 trial in healthy volunteers will be required, and we believe that we may be able to proceed directly to a Phase 2/3 clinical trial in COVID-19 patients. Although emetine’s potential cardiotoxicity, in cumulative doses above 650 mg, has been cited as a reason for its restricted clinical use in most recent years, patients treated with a subcutaneous injection of emetine at a cumulative dose of 650 mg did not experience any notable toxicity⁷. As an antiviral and for COVID-19 patients, we expect to administer emetine as a subcutaneous injection at a cumulative dose of approximately 150 mg. If the Phase 2/3 trial is completed successfully, following IND submission and clearance, we anticipate submitting to the FDA the 505(b)(2) NDA for emetine for the treatment of COVID-19.

The potential initiation of the Phase 2/3 trial, its conduct and completion and NDA submission are subject to our ability to generate sufficient capital resources to fund this program. Emetine is an investigational drug for COVID-19 and is not currently FDA approved for any indication.

References

EDSIVO^™ for Vascular Ehlers-Danlos Syndrome (vEDS)

Ehlers-Danlos Syndrome (“EDS”) is a group of hereditary disorders of connective tissue. vEDS is the most severe subtype where patients suffer from life threatening arterial dissections and ruptures, as well as intestinal and uterine ruptures. There is currently no approved treatment option for vEDS. The median age of death is 51 years.¹ An Acer-commissioned patient-finder study phenotypically identified 4,169 vEDS patients in the U.S. from an analysis of a commercially available patient claims database with data of approximately 190 million unique patient lives. Based on that information, Acer estimates the prevalence of phenotypically-defined vEDS in the U.S. could be greater than 1 in 45,000. Currently, there are no FDA-approved therapies for vEDS.

We are advancing EDSIVO^™, a new chemical entity (“NCE”), for the treatment of vEDS based on published results from a randomized controlled clinical trial of celiprolol.¹ The FDA granted a priority review of the EDSIVO^™ NDA and subsequently issued a Complete Response Letter (“CRL”) in June 2019. The CRL stated that it will be necessary to conduct an adequate and well-controlled trial to determine whether celiprolol reduces the risk of clinical events in patients with vEDS. In December 2019, we submitted a Formal Dispute Resolution Request (“FDRR”) to the FDA’s Office of New Drugs appealing the FDA’s decision as outlined in the CRL. In March 2020, we received a response to our FDRR from the Office of New Drugs (“OND”) of the FDA stating that it had denied our appeal of the CRL. In its Appeal Denied letter, the OND described possible paths forward for Acer to explore that could provide the substantial evidence of effectiveness needed to support a potential resubmission of the EDSIVO^™ NDA for the treatment of patients with vEDS with a confirmed COL3A1 mutation. The OND referred to the FDA Guidance document issued in December 2019², where substantial evidence of effectiveness can be provided by two or more adequate and well-controlled studies demonstrating efficacy, or a single positive adequate and well-controlled study plus confirmatory evidence. While neither resubmission nor the prospect of approval of the EDSIVO^™ NDA is assured, we are evaluating our possible next steps with the goal of resubmission of the EDSIVO^™ NDA. EDSIVO^™ received FDA Orphan Drug Designation for the treatment of vEDS in 2015.

References

ACER-001 for Urea Cycle Disorders (UCDs)

UCDs are a group of disorders caused by genetic mutations that result in a deficiency in one of the six enzymes that catalyze the urea cycle, which can lead to an excess accumulation of ammonia in the bloodstream, a condition known as hyperammonemia. Acute hyperammonemia can cause lethargy, somnolence, coma, and multi-organ failure, while chronic hyperammonemia can lead to headaches, confusion, lethargy, failure to thrive, behavioral changes, and learning and cognitive deficits. Common symptoms of both acute and chronic hyperammonemia also include seizures and psychiatric symptoms. Current treatments consist of dietary management, as well as treatment with phenylbutyrate available as sodium phenylbutyrate (NaPB), which is marketed as BUPHENYL^®, and glycerol phenylbutyrate, which is marketed as RAVICTI^®.

ACER-001 is a taste-masked, immediate-release formulation of NaPB developed using a microencapsulation process. We believe that if ACER-001 is approved, its taste-masked properties will make it a compelling alternative to existing NaPB-based treatments, as the unpleasant taste associated with NaPB is cited as a major impediment to patient compliance with those treatments.¹ In February 2020, we reported the successful completion and final data from Part B of our pivotal trial evaluating the bioavailability and bioequivalence of ACER-001 to BUPHENYL^® (sodium phenylbutyrate). Consistent with observations from Part A of the trial, data from Part B showed ACER-001 to be bioequivalent to BUPHENYL^®. We anticipate submitting to the FDA the 505(b)(2) NDA for ACER-001 for the treatment of UCDs in early 2021, assuming successful completion of nonclinical work and 12-month stability data. NDA submission is subject to our ability to generate sufficient capital resources to fund this program.

References

Osanetant for Induced Vasomotor Symptoms (iVMS)

Hot flashes, flushing, and night sweats are known as Vasomotor Symptoms (“VMS”), and most often occur in women who are entering/in menopause. While VMS associated with menopause can be often be treated with hormone replacement therapy (“HRT”), there are patients who experience VMS who are not in menopause and for whom HRT is contraindicated.¹ VMS that are induced by either chemical or surgical intervention are referred to as induced Vasomotor Symptoms (“iVMS”). For example, patients receiving tamoxifen treatment for breast cancer, men receiving leuprolide treatment for prostate cancer, and women who are BRCA-positive who elect to have bilateral salpingo-oophorectomy (“BSO”)^2,3, all exhibit severe iVMS and should not receive HRT to alleviate these symptoms because their cancer is sensitive to hormones which could cause disease recurrence.^1,4

Osanetant is a clinical-stage, selective, non-peptide tachykinin NK3 receptor antagonist. NK3R is the main receptor for neurokinin B (“NKB”), a tachykinin peptide primarily found in the arcuate nucleus (ARC) of the hypothalamus. In December 2018, we entered into an exclusive license agreement with Sanofi to acquire worldwide rights to osanetant. We believe that several disorders involving the hypothalamus-pituitary-gonadal axis could benefit from treatment with an NK3R antagonist. We plan to evaluate osanetant in various patient populations with iVMS, including for BRCA-positive breast cancer following BSO and following treatment for Hormone Receptor (+) breast cancer and prostate cancer where HRT is likely contraindicated. We intend to submit an IND in the fourth quarter of 2020 and initiate a Phase 1/2 trial in the first quarter of 2021, subject to additional capital, evaluating pharmacokinetics, pharmacodynamics and safety, and to identify an optimal dosing strategy.

References

Our Corporate Information

We are a Delaware corporation. Our principal executive offices are located at One Gateway Center, 300 Washington Street, Suite 351, Newton, Massachusetts 02458, and our telephone number is (844) 902-6100. Our website address is www.acertx.com. The information found on our website, or that may be accessed by links on our website, is not part of this prospectus. We have included our website address solely as an inactive textual reference. Investors should not rely on any such information in deciding whether to purchase our common stock.

with the SEC the registration statement that includes this prospectus to register for resale under the Securities Act of 1933, as amended, or the Securities Act, the shares of common stock that may be issued to Lincoln Park under the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, at the time we signed the Purchase Agreement and the Registration Rights Agreement, we issued 148,148 Commitment Shares to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the Purchase Agreement. The 148,148 Commitment Shares are also covered by this prospectus.

We do not have the right to commence any sales of our common stock to Lincoln Park under the Purchase Agreement until certain conditions set forth in the Purchase Agreement have been satisfied, including that the SEC has declared effective the registration statement that includes this prospectus. Thereafter, from time to time, at our sole discretion, we may direct Lincoln Park to purchase shares of our common stock in amounts up to 50,000 shares on any single business day, which amounts may be increased to up to 100,000 shares, depending on the market price of our common stock at the time of sale and subject to a maximum commitment by Lincoln Park of $1,000,000 per single purchase, which we refer to in this prospectus as “Regular Purchases.” In addition, at our discretion, Lincoln Park has committed to purchase other “accelerated amounts” and/or “additional accelerated amounts” under certain circumstances. We will control the timing and amount of any sales of our common stock to Lincoln Park. The purchase price of the shares that may be sold to Lincoln Park in Regular Purchases under the Purchase Agreement will be based on the market price of our common stock preceding the time of sale as computed under the Purchase Agreement. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute such price. We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one business day notice. There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement, other than a prohibition on our entering into certain types of transactions that are defined in the Purchase Agreement as “Variable Rate Transactions.” Lincoln Park may not assign or transfer its rights and obligations under the Purchase Agreement.

As of April 29, 2020, there were 10,101,034 shares of our common stock outstanding, of which 5,523,010 shares were held by non-affiliates. Although the Purchase Agreement provides that we may sell up to $15,000,000 of our common stock to Lincoln Park, only 1,840,148 shares of our common stock are being offered under this prospectus, which represents shares which have been or may be issued to Lincoln Park in the future under the Purchase Agreement, if and when we sell shares to Lincoln Park under the Purchase Agreement. Depending on the market prices of our common stock at the time we elect to issue and sell shares to Lincoln Park under the Purchase Agreement, we may need to register for resale under the Securities Act additional shares of our common stock in order to receive aggregate gross proceeds equal to the $15,000,000 total commitment available to us under the Purchase Agreement. If all of the 1,840,148 shares offered by Lincoln Park under this prospectus were issued and outstanding as of the date hereof (without taking into account the 19.99% shareholder approval limitation), such shares would represent approximately 15.4% of the total number of shares of our common stock outstanding and approximately 25.0% of the total number of outstanding shares held by non-affiliates, in each case as of the date hereof. If we elect to issue and sell more than the 1,840,148 shares offered under this prospectus to Lincoln Park, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately offered for resale by Lincoln Park is dependent upon the number of shares we sell to Lincoln Park under the Purchase Agreement.

Under applicable rules of the Nasdaq Capital Market, in no event may we issue or sell to Lincoln Park under the Purchase Agreement more than 19.99% of the shares of our common stock outstanding immediately prior to the execution of the Purchase Agreement (which is 2,020,205 shares based on 10,101,034) shares outstanding immediately prior to the execution of the Purchase Agreement), which limitation we refer to as the Exchange Cap, unless (i) we obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or

(ii) the average price of all applicable sales of our common stock to Lincoln Park under the Purchase Agreement equals or exceeds $2.135 per share (which represents the average closing price of our common stock for the five trading days ending on April 29, 2020, the trading day immediately preceding the date the Purchase Agreement was executed) plus an incremental amount, such that issuances and sales of our common stock to Lincoln Park under the Purchase Agreement would be exempt from the Exchange Cap limitation under applicable Nasdaq rules. In any event, the Purchase Agreement specifically provides that we may not issue or sell any shares of our common stock under the Purchase Agreement if such issuance or sale would breach any applicable Nasdaq rules.

The Purchase Agreement also prohibits us from directing Lincoln Park to purchase any shares of common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park and its affiliates having beneficial ownership, at any single point in time, of more than 9.99% of the then total outstanding shares of our common stock, as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Rule 13d-3 thereunder, which limitation we refer to as the Beneficial Ownership Cap.

Issuances of our common stock in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to Lincoln Park.

There are substantial risks to our shareholders as a result of the sale and issuance of common stock to Lincoln Park under the Purchase Agreement. These risks include substantial dilution, significant declines in our stock price and our inability to draw sufficient funds when needed. See “Risk Factors.” Issuance of our common stock to Lincoln Park under the Purchase Agreement will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to Lincoln Park.

Unless otherwise noted, the number of shares of our common stock outstanding prior to and after this offering is based on 10,095,176 shares outstanding as of December 31, 2019, and excludes:

The above also excludes 403,807 additional shares of common stock which became available for future issuance pursuant to the evergreen provision under our 2018 Stock Incentive Plan as of January 1, 2020.

To the extent that additional shares are issued pursuant to the foregoing, investors purchasing our common stock in this offering will experience further dilution. In addition, we may offer other securities in other offerings due to market conditions or strategic considerations. To the extent we issue such securities, investors may experience further dilution.