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Supernus Announces Third Quarter 2018 Financial Results and Record Quarterly Revenue

On November 6, 2018 Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN), a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, reported record financial results for the third quarter of 2018 and related Company developments (Press release, Supernus, NOV 6, 2018, View Source [SID1234530847]).

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"Supernus generated another strong quarter of growth, setting a new record for quarterly net product sales of $100 million," said Jack Khattar, President and CEO of Supernus Pharmaceuticals. "Despite the market introduction of new competitive preventive treatments for migraine, Trokendi XR continued to capture a greater portion of the topiramate market. For Oxtellar XR, we continue to prepare for the potential launch of the monotherapy indication for partial seizures."

Progress of Product Pipeline
Given the recently accelerated development timeline for SPN-812 that positions its potential regulatory approval and commercial launch ahead of SPN-810, the Company has directed its resources to prioritize filing of the New Drug Application (NDA) and potential commercial launch of SPN-812 in the United States.

As a result, the following are the updated plans and timelines for both product candidates:

SPN-812 – Novel non-stimulant for the treatment of ADHD

The Phase III program consists of four three-arm, placebo-controlled trials: P301 and P303 trials in patients 6-11 years old and P302 and P304 trials in patients 12-17 years old.
The Company expects to announce top-line data from P301 and P303 pediatric trials concurrently in early December 2018, and from P302, the first adolescent Phase III trial, by the end of December 2018. Top-line data from the second adolescent Phase III trial, P304, are expected by the end of the first quarter of 2019.
The Company expects to submit an NDA for SPN-812 in the second half of 2019, and to launch it, pending U.S. Food and Drug Administration (FDA) approval, in the second half of 2020.
SPN-810 – Treatment of Impulsive Aggression in patients with ADHD

As expected, the first Phase III trial (P301) has reached its original enrollment target. However, given the aforementioned prioritization of SPN-812 and that top-line data from the second Phase III trial (P302) is expected around mid-2019, the Company has decided to keep P301 enrollment active until data from both trials can be released concurrently instead of sequentially. This change does not impact the timing of submission of the NDA for SPN-810, given that the NDA submission is rate-limited by completion of the P302 trial and generation of data in the adolescent patient population.
The Company continues to observe enrollment in the open label extension (OLE) study at 90% or higher. On average, a patient in the OLE study remains on SPN-810 treatment for 9.5 months, which we believe is an encouraging sign of the tolerability and efficacy of SPN-810.
Patient dosing has been initiated in the Phase III trial in adolescent patients.
The Company expects to submit an NDA for SPN-810 in the second half of 2020, and to launch it, pending FDA approval, in the second half of 2021.
SPN-604 (formerly known as Oxtellar XR for Bipolar)

The Company continues to expect initiating pivotal Phase III studies for the treatment of bipolar disorder in the second half of 2019.
"We are pleased to announce the completion of enrollment in the first three Phase III trials for SPN-812," said Jack Khattar. "We look forward to reporting top-line data from these trials during December 2018. If successful, SPN-812 has the potential to be a novel non-stimulant for the treatment of ADHD that compares favorably to existing medications."

Operating Expenses
Research and development expenses in the third quarter of 2018 were $20.4 million, as compared to $13.0 million in the same quarter last year. The increase was due primarily to the initiation of the four Phase III clinical trials for SPN-812 in the second half of 2017 and, to a lesser extent, the OLE trials for SPN-812 and SPN-810.

Selling, general and administrative expenses in the third quarter of 2018 were $40.9 million, essentially unchanged compared to $40.8 million in the same quarter last year.

Operating Earnings and Earnings Per Share
Operating earnings in the third quarter of 2018 were $37.5 million, a 68.2% increase over $22.3 million in the same prior year period. The improvement in operating earnings was primarily due to increased net product sales, partially offset by increased research and development expenses.

GAAP net earnings in the third quarter of 2018 were $28.0 million, or $0.52 per diluted share, as compared to $16.0 million, or $0.29 per diluted share, in the same period last year. In addition to higher operating income, GAAP net earnings and diluted earnings per share for the third quarter of 2018 benefited from the reduction in the statutory U.S. federal income tax rate and, to a lesser extent, from stock option exercises.

Weighted-average diluted common shares outstanding were approximately 54.2 million in the third quarter of 2018, as compared to approximately 53.6 million in the third quarter of 2017.

As of September 30, 2018, the Company had $740.5 million in cash, cash equivalents, marketable securities and long term marketable securities, as compared to $273.7 million at December 31, 2017. This increase reflects net proceeds of $364.9 million from the issuance of convertible senior notes and warrants in March 2018, partially offset by purchases of convertible note hedges, as well as increased cash from operations in the nine months ended September 30, 2018.

Financial Guidance
For full year 2018, the Company is updating its prior guidance as set forth below:

Net product sales in the range of $388 million to $395 million, compared to the previously expected range of $385 million to $400 million.
Research and development expenses of approximately $95 million, including the one-time upfront expense of $15 million in the fourth quarter for the acquisition of Biscayne Neurotherapeutics, Inc.
Operating earnings in the range of $120 million to $125 million, compared to the previously expected range of $115 million to $125 million.
The Company expects an effective tax rate of approximately 23% to 25% for the fourth quarter of 2018.
Supernus ranked number one pharmaceutical company worldwide in Fortune’s "100 Fastest-Growing Companies" list for 2018 and number three in all industries
In August 2018, Fortune ranked qualifying companies based on revenue growth rate, EPS growth rate, and three-year annualized total return for the period ended June 29, 2018. In a review of Supernus and using their methodology, Fortune placed Supernus in the top spot in the pharmaceutical industry worldwide and the third spot across all industries.

To view the full list of Fortune’s 100 Fastest-Growing Companies go to: View Source

"I am so proud of our employees. They deserve all the recognition Supernus has received over the past few years, from making the Deloitte Technology Fast 500 list three years in a row to being ranked as the number one Fortune 100 fastest growing pharmaceutical company in the world," said Jack Khattar. "Their hard work and commitment to excellence and to our patients are second to none, and I am very fortunate to be working with such an incredible organization."

Conference Call Details
The Company will hold a conference call hosted by Jack Khattar, President and Chief Executive Officer, and Greg Patrick, Vice President and Chief Financial Officer, to discuss these results at 9:00 a.m. Eastern Time, on Wednesday, November 7, 2018. An accompanying webcast also will be provided.

Please refer to the information below for conference call dial-in information and webcast registration. Callers should dial in approximately 10 minutes prior to the start of the call.

Conference dial-in:
International dial-in:
Conference ID:
Conference Call Name:
(877) 288-1043
(970) 315-0267
2697616
Supernus Pharmaceuticals Third Quarter 2018 Earnings Conference Call

Following the live call, a replay will be available on the Company’s website, www.supernus.com, under "Investor Relations".

Queensland Government invests $1.4 million to support clinical trials and jobs growth

On November 6, 2018 QIMR Berghofer Medical Research Institute has reported its collaboration with US biopharmaceutical company Atara Biotherapeutics, entering into major agreements to manufacture and develop cellular immunotherapies for multiple sclerosis and some cancers (Press release, QIMR Berghofer Medical Research Institute, NOV 6, 2018, View Source [SID1234530846]).

QIMR Berghofer secured the deal thanks to a $1.4 million funding injection from the Queensland Government to expand and upgrade the Institute’s world-class, regulatory-approved cell therapy manufacturing facility, Q-Gen Cell Therapeutics.

The deal with Atara will allow world-first clinical trials to be established locally and in the United States and Europe, giving Queenslanders access to cutting-edge medical treatments.

Under the agreement, Q-Gen will manufacture the immunotherapies for the clinical trials, including those using patients’ own immune cells and others using cells from healthy donors.

QIMR Berghofer and Atara have also extended an existing agreement to collaborate on research and development of new T cell immunotherapies for cancers and autoimmune disorders associated with a number of viruses.

Queensland’s Minister for State Development, Manufacturing, Infrastructure and Planning, Cameron Dick, said the two agreements would support approximately 40 full-time jobs at QIMR Berghofer and Q-Gen.

"Through our government’s support, QIMR Berghofer can now expand its cell therapy facility Q-Gen Cell Therapeutics, including purchasing specialised laboratory equipment," he said.

"As a result of this facility upgrade, Atara has agreed to extend its agreement with QIMR Berghofer to collaborate on research and development of new immunotherapies for cancers and autoimmune disorders associated with a number of viruses.

"The two agreements will support 40 full-time jobs at QIMR Berghofer and its Q-Gen facility at Herston as well as grow QIMR Berghofer’s reputation as a world-leader in the immunotherapy field.

"Our government’s investment will strengthen our state’s push into the sophisticated advanced manufacturing of cell therapy products by enabling QIMR Berghofer to secure agreements and attract additional cell therapy manufacturing from not only Atara, but also other biomedical and pharmaceutical companies.

"Projects like this underpin the Queensland Biomedical 10-Year Roadmap and Action Plan, which was developed in close consultation with industry to diversify Queensland’s industry base, create high-value knowledge-based jobs of the future and drive export growth for the industry by 2027."

The Minister for Health Steven Miles said immunotherapy had emerged as the "fourth pillar" of cancer treatment, along with surgery, chemotherapy and radiotherapy.

"Immunotherapy works by training the immune system to recognise and destroy cancer and other harmful cells," he said.

"These agreements put Queensland’s biomedical capabilities on the world stage."

Atara has also exercised its option under an existing licence agreement with QIMR Berghofer to an exclusive, worldwide licence to develop and commercialise a specific T cell immunotherapy that "turbo charges" a patient’s immune cells to treat autoimmune conditions associated with the Epstein-Barr virus, such as multiple sclerosis.

All of the immunotherapies were developed by the head of QIMR Berghofer’s Tumour Immunology Laboratory, Professor Rajiv Khanna AO, and his team.

Professor Khanna said the agreements with Atara were a win for Queensland patients.

"We are delighted to partner with Atara and the Queensland Government to bring much-needed new T cell immunotherapies to patients," he said.

"We are very excited by the possibility that in future, we might be able to offer new treatment options to patients with certain virus-associated cancers and autoimmune conditions like multiple sclerosis."

QIMR Berghofer’s Director and CEO, Professor Frank Gannon, said the Queensland Government’s funding was a major boost for advanced manufacturing in the state.

"Q-Gen is the one of the largest dedicated cell therapy manufacturing facilities in Australia," he said.

"It is already a world-class facility that has secured regulatory approval to manufacture immunotherapies for clinical trials in Australia and the United States. It will now be upgraded to also manufacture for clinical trials in Europe and to meet the demand created by this deal with Atara.

"The Queensland Government’s support will allow us to expand our cell therapy manufacturing program, providing a major boost for Queensland’s biotech sector."

Atara’s Global Head of Research and Development, Dr Dietmar Berger, said he was excited about the collaboration with QIMR Berghofer and increasing biotechnology development in the region.

"Atara is delighted that the Queensland Government is supporting QIMR Berghofer, as well as the growth of the biotechnology community in Queensland," he said.

NewLink Genetics Announces Publication of Abstracts for Presentation at the Society for Immunotherapy for Cancer (SITC) Conference

On November 6, 2018 NewLink Genetics Corporation (NASDAQ:NLNK) reported that the following abstracts have been published and are now available on the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Conference 2018 website (Press release, NewLink Genetics, NOV 6, 2018, View Source [SID1234530845]).

Abstracts for poster presentation at the SITC (Free SITC Whitepaper) Annual Meeting, November 7-11, 2018

Abstract 11213: A phase 1a clinical trial of NLG802, a prodrug of indoximod with enhanced pharmacokinetic properties, Rixe, O., et al. (Poster #P331). Author will be present Friday, November 9th, 12:45-2:15 PM and 6:30-8:00 PM.
Abstract 10294: The immunogenomic impact of indoximod on the tumor microenvironment of melanoma patients, Yu, J., et al. (Poster #P142). Author will be present Saturday, November 10th, 12:20-1:50 PM and 7:00-8:30 PM.
Abstract 10304: Effects of indoximod plus gemcitabine/nab-paclitaxel on tumor microenvironment of patients with metastatic pancreatic cancer, Yu, J., et al. (Poster #P706). Author will be present Saturday, November 10th, 12:20-1:50 PM and 7:00-8:30 PM.
Posters will be accessible Friday, November 9th, and Saturday, November 10th, from 8 AM to 8 PM, in Exhibition Hall E of the Walter E. Washington Convention Center, Washington, D.C.

Synlogic Presents Preclinical Data from First Synthetic BioticTM Clinical Candidate in Immuno-Oncology at the Society for Immunotherapy of Cancer’s (SITC) 33rd Annual Meeting

On November 6, 2018 Synlogic, Inc. (Nasdaq: SYBX), a clinical-stage drug discovery and development company applying synthetic biology to beneficial microbes to develop novel living medicines, reported the presentation of preclinical data from its first immuno-oncology (IO) program at the 33rd Annual Meeting & Pre-Conference Programs of the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) (SITC 2018) (Press release, Synlogic, NOV 6, 2018, View Source [SID1234530844]). Synlogic’s first Synthetic Biotic clinical candidate (SYNB1891) is designed to induce the production of type I interferon (IFN) through dual activation of innate immune pathways. Data that will be presented at SITC (Free SITC Whitepaper) 2018 demonstrate that SYNB1891 generated significant anti-tumor activity, systemic immunity and long-term immunological memory in mouse tumor models. The data highlight the advantages of SYNB1891 for the potential treatment of cancers that are resistant to current immunotherapy approaches.

"Our goal is to design Synthetic Biotic medicines that enable us to expand the benefits of immunotherapy broadly across tumor types," said Aoife Brennan, M.B., Ch. B., Synlogic’s president and chief executive officer. "Tumors have multiple mechanisms to evade the immune system and our Synthetic Biotic platform is uniquely suited to address this area of unmet medical need given our ability to engineer multiple mechanisms in a single biotic. We are excited to move this first program into the clinic."

"Our Synthetic Biotic drug candidate, SYNB1891, enabled dual activation of the innate immune system via both the bacterial chassis and its STING agonist payload in mouse tumor models," said Jose Lora, Ph.D., Synlogic’s vice president of research. "We have engineered a non-pathogenic bacterial strain to deliver immunostimulatory molecules directly into the tumor microenvironment, which has the potential to induce a local immune response and establish systemic immunity while minimizing systemic toxicity."

In a presentation, Development of a STING Agonist-producing Synthetic Biotic Medicine to Activate Innate and Adaptive Immunity and Drive Antitumor Immune Responses, to be given at the SITC (Free SITC Whitepaper) 33rd Annual Meeting on Friday, November 9, 2018, Synlogic scientists will describe an engineered strain of E. coli Nissle, (SYNB1891) that produces cyclic di-AMP (CDA) which stimulates the STING pathway. Recent studies have demonstrated that activation of the STimulator of INterferon Genes (STING) pathway can play a critical role in the initiation of an anti-tumor immune response via activation of antigen presenting cells (APCs) and presentation of tumor antigens. SYNB1891 can be delivered directly into the tumor where it remains active for several days to stimulate a local immune response. When the bacteria are engulfed by APCs within the tumor, the STING pathway is activated within the cell resulting in a type I IFN response. In addition, the bacterial chassis used in Synlogic’s Synthetic Biotic approach is believed to be able to stimulate the innate immune system by several other mechanisms, including via Toll-like receptors (TLRs), potentially adding to the magnitude of the overall immune response.

In preclinical studies that will be presented at SITC (Free SITC Whitepaper) 2018, Synlogic has demonstrated that:

In vitro, SYNB1891 produces biologically-relevant levels of CDA, activating both mouse and human APCs
In a reporter assay, SYNB1891 induced production of higher levels of type I IFN protein compared to naked CDA, and in human primary APCs SYNB1891 treatment resulted in significantly higher expression of genes encoding type I IFN-beta and IL-6, when compared to naked STING-agonist treatment
Treatment with the un-engineered E. coli Nissle (SYNB) alone resulted in increased tumoral innate cytokine levels and anti-tumor activity, demonstrating that the bacterial chassis itself triggers complementary innate immunity pathways which are further potentiated by arming the bacteria with STING agonist
SYNB1891 prototype-treated tumors demonstrate upregulation of an inflammation-related gene signature
SYNB1891 prototype treatment of B16.F10 melanoma tumors resulted in an early rise in innate-immune cytokines and at later times resulted in T cell activation in tumors and tumor-draining lymph nodes
These pharmacodynamic changes correlated with robust anti-tumor responses and complete tumor regressions
Mice that exhibited complete regression of tumors in response to SYNB1891 prototype treatment demonstrated long-term immunological memory when re-challenged with tumor cells >40 days post tumor eradication
Investor and Analyst Event Details
On Saturday, November 10, 2018, at the SITC (Free SITC Whitepaper) 33rd Annual meeting in Washington D.C., Synlogic will also host an Investor and Analyst Event. The program will feature commentary from experts Filip Janku, M.D., Ph.D., Associate Professor in the Department of Investigational Cancer Therapeutics and Center Medical Director for the Clinical and Translational Research Center at MD Anderson Cancer Center, and Dmitriy Zamarin, M.D., Ph.D., Assistant Attending Physician in Gynecologic Medical Oncology and Immunotherapeutics Services at the Memorial Sloan Kettering Cancer Center who will discuss the unmet medical need and current landscape in immuno-oncology, as well as company representatives who will outline Synlogic’s plans for clinical development of its clinical candidate, SYNB1891.

Presentations will begin at 12:30 pm, until 2:00 pm. ET, on Saturday, November 10, 2018.

The event will be webcast live and available via a link on the company’s website in the Events Calendar in the Investors and Media section.

Aclaris Therapeutics Reports Third Quarter 2018 Financial Results and Provides Update on Clinical and Commercial Developments

On November 6, 2018 Aclaris Therapeutics, Inc. (NASDAQ:ACRS), a dermatologist-led biopharmaceutical company focused on identifying, developing, and commercializing innovative therapies to address significant unmet needs in aesthetic and medical dermatology and immunology, reported financial results for the third quarter of 2018 and provided an update on its clinical development and commercial programs (Press release, Aclaris Therapeutics, NOV 6, 2018, View Source [SID1234530841]).

In October, Aclaris entered into a definitive asset purchase agreement with Allergan Sales, LLC to acquire worldwide rights to RHOFADE (oxymetazoline hydrochloride) cream, 1% and additional intellectual property. The acquisition includes an exclusive license to certain intellectual property for RHOFADE, which is approved in the United States for the topical treatment of persistent facial erythema (redness) associated with rosacea in adults. Aclaris expects this acquisition to close in the fourth quarter of 2018.

During the third quarter of 2018, total net revenue was $1.6 million, which consisted of net sales of ESKATA (hydrogen peroxide) Topical Solution, 40% (w/w) of $0.5 million and contract research revenue of $1.1 million.

In September, Aclaris initiated the Phase 3 program for A-101 45% Topical Solution (A-101 45%) for the treatment of common warts (verruca vulgaris).

Aclaris has completed enrollment in the ongoing AA-201 topical formulation trial of ATI-502 in patients with patchy alopecia areata (AA), a less severe phenotype of AA, data from which is expected in the first half of 2019.

"This is an exciting time for Aclaris. With the anticipated closing of the acquisition of RHOFADE in the fourth quarter, we will take another major step toward establishing ourselves as a fully integrated biopharmaceutical company with multiple commercial products, a robust clinical-stage pipeline and drug discovery engine," said Dr. Neal Walker, President and Chief Executive Officer of Aclaris.

Clinical Pipeline Update:

A-101 45% Topical Solution –

Initiated Phase 3 program (THWART-1 and THWART-2) for the treatment of common warts in September 2018. Topline data are expected in the second half of 2019.

Plan to commence an open-label safety extension trial investigating A-101 45% for the treatment of common warts in 2019.

JAK Inhibitor Trials:

AA-202 Topical –

An ongoing Phase 2 clinical trial of ATI-502, a topical JAK 1/3 inhibitor, for the treatment of AA.

Data from the full cohort of patients expected before year end.

After completing the 28-day portion of the trial, patients entered a 6-month open-label extension during which all continuing patients will receive drug. Treatment period extended in August 2018 for an additional 6 months to allow for full year of drug exposure.

Evidence of hair regrowth in the open-label extension portion of this trial has been observed.

Safety results – generally well-tolerated; no treatment related serious adverse events reported to date.

AUATB-201 Topical –

An ongoing Phase 2 open-label clinical trial of ATI-502 for the topical treatment of AA in Australia.

In this trial, Aclaris is evaluating the safety and efficacy of ATI-502 on the regrowth of eyebrows in patients with AA, including patients with alopecia totalis (AT) and alopecia universalis (AU). Interim update:

12 patients have been enrolled; 5 continue in the trial. Patients will also enroll in a 12 month extension phase of the trial after completing 6 months.

Evidence of eyebrow hair regrowth has been observed in two patients.

Safety results – generally well-tolerated; no treatment-related serious adverse events reported to date.

AA-201 Topical –

Completed enrollment of this ongoing Phase 2 clinical trial of ATI-502 for the topical treatment of AA.

This randomized, double-blinded, parallel-group, vehicle-controlled trial will evaluate the safety, efficacy and dose response of two concentrations of ATI-502 on the regrowth of hair in approximately 120 patients with AA. This trial is being conducted in the United States and data are expected in the first half of 2019.

VITI-201 Topical – Completed enrollment of this ongoing Phase 2 open-label clinical trial of ATI-502 for the topical treatment of vitiligo. This trial will evaluate the safety and efficacy of ATI-502 on the repigmentation of facial skin in 33 patients with vitiligo, and data are expected in 2019.

AGA-201 Topical – Completed enrollment of this ongoing Phase 2 open-label clinical trial of ATI-502 for the topical treatment of androgenetic alopecia (AGA), also known as male/female pattern hair loss. This trial will evaluate the safety and efficacy of ATI-502 on the regrowth of hair in 31 patients with AGA, and data are expected in the first half of 2019.

AD-201 Topical – an ongoing Phase 2 open-label clinical trial of ATI-502 in patients with atopic dermatitis (AD). This trial will evaluate the safety and efficacy of ATI-502 applied twice daily to affected skin for four weeks in approximately 30 adult patients with moderate-to-severe AD, and data are expected in mid-2019.

AUAT-201 Oral – an ongoing Phase 2 dose ranging trial of ATI-501, an oral JAK 1/3 inhibitor for the treatment of AA. This randomized, double-blinded, parallel-group, placebo-controlled trial will evaluate the safety, efficacy and dose response of three concentrations of ATI-501 on the regrowth of hair in approximately 80 patients with AA, and data are expected in the second half of 2019.

ATI-450 (MK-2 Inhibitor) – Investigational New Drug application on track for submission to the FDA in mid-2019.

Recent Corporate Highlights:

In October, Aclaris entered into a Loan and Security Agreement with Oxford Finance LLC. The Loan Agreement provides for up to $65 million in term loans. Of the $65 million, Aclaris borrowed $30 million on October 31, 2018. The remaining $35 million will become available for draw beginning on the closing date of the RHOFADE acquisition and ending on the earlier of March 31, 2019 or an event of default.

In October, Aclaris closed an underwritten public offering of 9,941,750 shares of Aclaris’ common stock at a price to the public of $10.75 per share, which includes the full exercise of the underwriters’ option to purchase 1,296,750 additional shares, for total gross proceeds of $106.9 million. Aclaris paid underwriting discounts and commissions of $6.4 million. All of the common stock in the offering was sold by Aclaris.

Issued US Patent # 10,098,910 – In October, Aclaris was issued a U.S. patent with 18 claims directed to an applicator containing a formulation of high concentration hydrogen peroxide and methods of using such an applicator to treat seborrheic keratosis (SK), warts and other indications, which is scheduled to expire in 2035. Orange Book listed.

Co-authored an article titled: "Inhibition of the Stromal p38MAPK/MK2 Pathway Limits Breast Cancer Metastases and Chemotherapy-Induced Bone Loss" in the journal Cancer Research. ATI-450, an investigational drug, is a selective inhibitor of p38 mitogen-activated protein kinase-activated protein kinase 2 (p38MAPK/MK2) interface and an attractive candidate for stromal-targeted therapy.

Commercial Update:

Over 1,050 ESKATA accounts opened to date.

Sales force focused on driving clinical and business integration in existing ESKATA accounts in addition to expanding account base.

National DTC campaign initiated on October 1.

Financial Highlights:

Third Quarter 2018 Financial Results

For the quarter ended September 30, 2018, total net revenues were $1.6 million, which consisted of net sales of ESKATA of $0.5 million and contract research revenue of $1.1 million, compared to $0.7 million for the quarter ended September 30, 2017, all of which was contract research revenue. For the nine months ended September 30, 2018, total net revenues were $6.4 million, which consisted of net sales of ESKATA of $2.0 million, contract research revenue of $3.4 million, and other revenue of $1.0 million, compared to $0.7 million for the nine months ended September 30, 2017, all of which was contract research revenue. Cost of revenues for the quarter and nine months ended September 30, 2018 were $1.2 million and $3.3 million, respectively, compared to $0.5 million for both the quarter and nine months ended September 30, 2017.

For the quarter ended September 30, 2018, total operating expenses were $33.9 million, compared to $19.0 million for the third quarter of 2017. For the nine months ended September 30, 2018, total operating expenses were $99.5 million, compared to $47.2 million for the same period in 2017.

Research and development (R&D) expenses for the quarter and nine months ended September 30, 2018 were $15.9 million and $43.5 million, respectively, compared to $10.9 million and $26.6 million, for the same periods of 2017. The increases of $5.0 million and $16.9 million were mainly the result of the expansion of Aclaris’ JAK inhibitor and common wart programs, as multiple Phase 2 trials of ATI-501 and ATI-502 and Phase 3 trials of A-101 45% are ongoing in 2018. There were also increases in medical affairs activities related to ESKATA and costs associated with drug discovery programs as a result of the acquisition of Confluence in August 2017. Personnel expenses, including stock-based compensation, increased due to increased headcount to support these programs and as a result of the acquisition of Confluence in August 2017. These increases were offset by a decrease in costs related to the development of ESKATA leading to Aclaris’ NDA submission in February 2017 following the completion of the clinical trials.

Sales and marketing (S&M) expenses for the quarter and nine months ended September 30, 2018 were $11.4 million and $35.0 million, respectively, compared to $3.6 million and $7.2 million, for the same periods of 2017. The increases of $7.8 million and $27.8 million were mainly the result of increases in direct marketing and professional fees, as well as other commercial expenses incurred to support the launch of ESKATA in May 2018. Personnel

expenses, including stock-based compensation, increased as Aclaris completed the hiring of its field sales force in the first quarter of 2018.

General and administrative (G&A) expenses for the quarter and nine months ended September 30, 2018 were $6.6 million and $21.0 million, respectively, compared to $4.6 million and $13.4 million, for the same periods of 2017. The increases of $2.0 million and $7.6 million were mainly the result of higher personnel expenses, including stock-based compensation, due to increased headcount to support the commercial launch of ESKATA, and as a result of the acquisition of Confluence in August 2017. G&A expenses for the nine months ended September 30, 2018 also included a $1.5 million ESKATA-related milestone payment, whereas the nine months ended September 30, 2017 included a $1.0 million ESKATA-related milestone payment.

For the quarter ended September 30, 2018, net loss was $32.7 million, or $1.06 per basic and diluted share, as compared to $18.2 million, or $0.63 per basic and diluted share, for the third quarter of 2017. For the nine months ended September 30, 2018, net loss was $94.2 million, or $3.04 per basic and diluted share, as compared to $45.6 million, or $1.68 per basic and diluted share, for the same period of 2017.

Liquidity and Capital Resources

As of September 30, 2018, Aclaris had aggregate cash, cash equivalents and marketable securities of $134.3 million compared to $208.9 million as of December 31, 2017.

Aclaris anticipates that its cash, cash equivalents and marketable securities balances, including the proceeds from the public offering of common stock in October and the initial drawdown from the loan facility with Oxford, will be sufficient to fund its operations into the second half of 2020, without giving effect to any potential new business development transactions or financing activities.

2018 Financial Outlook

Aclaris has updated its expected 2018 GAAP R&D expenses to be in the range of $62 to $64 million, including estimated stock-based compensation of $7 million.

Aclaris updated its expected 2018 GAAP selling, general and administrative (SG&A) expenses, which combine its Sales and marketing and General and administrative line items, to be in the range of $77 to $79 million, including estimated stock-based compensation of $14 million.

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.