On November 7, 2019 Aclaris Therapeutics, Inc. (NASDAQ: ACRS), a physician-led biopharmaceutical company focused on immuno-inflammatory diseases, reported its financial results for the third quarter of 2019 and provided business highlights and an update on its research and development programs (Press release, Aclaris Therapeutics, NOV 7, 2019, View Source [SID1234550613]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Business Highlights:
Announced the completion of the strategic review of its business in September 2019, as a result of which Aclaris is refocusing its resources on its immuno-inflammatory development programs and is actively seeking partners for its commercial products and certain clinical development assets.
Divested RHOFADE (oxymetazoline hydrochloride) cream, 1% (RHOFADE) to EPI Health, LLC in October 2019 for up to $55.0 million, consisting of:
Upfront payment of $35.0 million; and
Potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the agreement; as well as
A high single-digit royalty on net sales, on a product-by-product and country-by-country basis; and
25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health from a licensee or sublicensee in any territory outside of the United States, subject to specified exceptions.
Seeking partners to:
Commercialize A-101 45% Topical Solution, an investigational compound being developed as a potential treatment for common warts (verruca vulgaris);
Further develop and commercialize ATI-501 (oral) and ATI-502 (topical), which are investigational Janus Kinase (JAK) 1/3 inhibitor compounds, as potential treatments for alopecia; and
Commercialize ESKATA (hydrogen peroxide) topical solution, 40% (w/w).
R&D Program Updates:
Recently announced positive results from THWART-1 (WART-301) and THWART-2 (WART-302), Aclaris’ two pivotal Phase 3 clinical trials of A-101 45% Topical Solution as a potential treatment for common warts.
Announced in August that the first subject in its Phase 1 clinical trial of ATI-450, an investigational oral MK2 inhibitor compound, has been dosed. ATI-450 is Aclaris’ first internally developed novel compound to enter the clinical phase of development.
"We are excited with the progress we have made toward executing on our new business strategy, with our first step being the divestiture of RHOFADE," said Dr. Neal Walker, President and Chief Executive Officer of Aclaris. "With the success of our two pivotal Phase 3 trials for A-101 45% Topical Solution, which has the potential to be the first FDA-approved prescription treatment for common warts, we believe this program will be of interest to potential commercial partners. In September, we presented our new focus on immuno-inflammatory diseases at our R&D day. We look forward to reporting the results of our Phase 1 trial for ATI-450 by the end of the first quarter of 2020 and providing further updates on the execution of our new strategy," said Dr. Walker.
Clinical Pipeline Update:
A-101 45% Topical Solution:
A-101 45% Topical Solution met the primary and all secondary efficacy endpoints in both THWART-1 and THWART-2, Aclaris’ pivotal Phase 3 clinical trials for the treatment of common warts.
The majority of adverse events (AEs) in THWART-1 and THWART-2 were application site reactions, which were predominantly mild or moderate. No treatment-related serious adverse events were observed in the trials. Only one subject in the Phase 3 program had an AE that led to treatment discontinuation. The most common AEs occurring in more than 5% of subjects in the A-101 45% Topical Solution group were AEs at the application site such as pain, scabbing, erythema, pruritus, pallor and erosion.
An open-label safety extension Phase 3 clinical trial (WART-303) evaluating the long-term safety of A-101 45% Topical Solution as a potential treatment for common warts, has completed enrollment of 425 patients. Aclaris expects WART-303 to be completed in the first half of 2020.
ATI-450:
ATI-450-PKPD-101 – This is an ongoing Single Ascending Dose / Multiple Ascending Dose (SAD/MAD) safety, pharmacokinetic and pharmacodynamic Phase 1 clinical trial of approximately 60-80 subjects. If successfully completed, Aclaris expects to initiate a Phase 2 clinical trial for ATI-450 in subjects with rheumatoid arthritis in the first half of 2020. Aclaris is also considering developing ATI-450 for an additional inflammatory indication.
ATI-1777:
ATI-1777 is an investigational topical soft-JAK inhibitor compound that Aclaris is developing as a potential treatment for moderate-to-severe atopic dermatitis.
Aclaris expects to submit an IND/regulatory filing for ATI-1777 in mid-2020.
If the IND/regulatory filing is allowed, Aclaris expects to initiate a Phase 1/2 clinical trial in the second half of 2020.
Financial Highlights:
Liquidity and Capital Resources
As of September 30, 2019, Aclaris had aggregate cash, cash equivalents and marketable securities of $91.4 million compared to $168.0 million as of December 31, 2018. For the quarter and nine months ended September 30, 2019, net cash used in operating activities was $23.4 million and $76.1 million, respectively. As of September 30, 2019, Aclaris had approximately 41.4 million shares of common stock outstanding.
Aclaris anticipates that its cash, cash equivalents and marketable securities as of September 30, 2019, after giving effect to both the upfront payment from the sale of RHOFADE and the full repayment of the loan facility with Oxford Finance LLC, will be sufficient to fund its operations into the third quarter of 2021, without giving effect to any potential new business development transactions or financing activities.
Third Quarter 2019 and Year-to-Date Financial Results
As described above, on September 5, 2019, Aclaris announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The accompanying condensed consolidated statements of operations and selected condensed consolidated balance sheet data have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to Aclaris’ commercial products as discontinued operations. The accompanying financial statement data are generally presented in conformity with Aclaris’ historical format. Aclaris believes this format provides comparability with its previously filed financial statements.
Contract research revenues decreased to $1.0 million and $3.1 million for the quarter and nine months ended September 30, 2019, compared to $1.1 million and $3.4 million for the quarter and nine months ended September 30, 2018. Cost of revenue was $0.8 million and $3.0 million for the quarter and nine months ended September 30, 2019, compared to $1.1 million and $3.1 million for the quarter and nine months ended September 30, 2018. These amounts included non-cash stock-based compensation, and amortization and depreciation expenses, of $0.2 million and $0.8 million for the quarter and nine months ended September 30, 2019, respectively, and $0.3 million and $0.8 million for the quarter and nine months ended September 30, 2018, respectively.
Research and development expenses were $16.2 million and $53.3 million for the quarter and nine months ended September 30, 2019, respectively, compared to $15.2 million and $41.5 million for the quarter and nine months ended September 30, 2018, respectively. The increases were mainly the result of a $4.0 million milestone payment made by Aclaris to Rigel Pharmaceuticals, Inc. for the achievement of a specified development milestone, and activities associated with preclinical development and the recently initiated Phase 1 clinical trial for ATI-450. These increases were offset in part by decreases in expenses for several Phase 2 clinical trials of ATI-501 and ATI-502 and two Phase 3 clinical trials of A-101 45% Topical Solution, which reached or neared completion in the third quarter of 2019.
General and administrative expenses were $6.7 million and $21.1 million for the quarter and nine months ended September 30, 2019, respectively, compared to $6.1 million and $20.5 million for the quarter and nine months ended September 30, 2018, respectively.
Total costs and expenses from continuing operations for the third quarter of 2019 were $23.8 million, compared to $22.5 million for the third quarter of 2018. For the nine months ended September 30, 2019, total costs and expenses were $96.6 million, compared to $65.1 million for the same period in 2018. These amounts included non-cash stock-based compensation expenses of $4.0 million and $12.9 million for the quarter and nine months ended September 30, 2019, respectively, compared to $4.0 million and $12.4 million for the prior year periods, respectively. For the nine months ended September 30, 2019, there was also an $18.5 million non-cash charge for the impairment of goodwill. There was no such charge in the prior year.
Loss from continuing operations was $23.1 million for the third quarter of 2019, compared to $20.6 million for the third quarter of 2018. Loss from continuing operations was $94.1 million for the nine months ended September 30, 2019, compared to $58.5 million for the nine months ended September 30, 2018.
Loss from discontinued operations was $32.2 million for the third quarter of 2019, compared to $12.1 million for the third quarter of 2018, and was $48.7 million for the nine months ended September 30, 2019, compared to $35.6 million for the nine months ended September 30, 2018.
Net loss, which combines loss from continuing and discontinued operations, was $55.3 million for the third quarter of 2019, compared to net loss of $32.7 million for the third quarter of 2018, and was $142.8 million for the nine months ended September 30, 2019, compared to $94.2 million for the nine months ended September 30, 2018.
2019 Financial Outlook and Cash Runway
As a result of Aclaris’ new strategic direction announced on September 5, 2019, which resulted in the reclassification of expenses related to its commercial products, Aclaris’ prior full-year 2019 estimated operating expense guidance no longer represents an accurate estimate of its anticipated operating expenses, and Aclaris does not believe that updated full-year guidance for 2019 would be meaningful.
Aclaris now anticipates that its cash, cash equivalents and marketable securities as of September 30, 2019, after giving effect to both the upfront payment from the sale of RHOFADE and the full repayment of the loan facility with Oxford Finance LLC, will be sufficient to fund its operations into the third quarter of 2021, without giving effect to any potential new business development transactions or financing activities.
Company to Host Conference Call
Management will conduct a conference call at 5:00 PM ET today to discuss Aclaris’ financial results and provide a general business update. The conference call will be webcast live over the Internet and can be accessed by logging on to the "Investors" page of the Aclaris Therapeutics website, www.aclaristx.com, prior to the event. A replay of the webcast will be archived on the Aclaris Therapeutics website for 30 days following the call.
To participate on the live call, please dial (844) 776-7782 (domestic) or (661) 378-9535 (international), and reference conference ID 2698128 prior to the start of the call.