On February 27, 2024 Aclaris Therapeutics, Inc. (NASDAQ: ACRS), a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases, reported its financial results for the fourth quarter and full year of 2023 and provided a corporate update (Press release, Aclaris Therapeutics, FEB 27, 2024, View Source [SID1234640502]).

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"As we enter 2024, we are financially strong, focused and motivated," stated Dr. Neal Walker, co-founder and Interim Chief Executive Officer & President of Aclaris. "Returning to the CEO role, I look forward to building on our strong foundation and deep expertise in kinase discovery and development as we look to shape the future of Aclaris."

Research and Development Highlights:

ATI-1777, an investigational topical "soft" JAK 1/3 inhibitor
In January 2024, Aclaris reported positive top-line results from its Phase 2b trial in atopic dermatitis, and is currently seeking a development and commercialization partner for this program.
ATI-2138, an investigational oral covalent ITK/JAK3 inhibitor
Aclaris is assessing the most effective development pathway, including the lead indication, for ATI-2138. Aclaris reported positive results from its Phase 1 MAD trial of ATI-2138 in September 2023.
Zunsemetinib (ATI-450), an investigational oral small molecule MK2 inhibitor
Aclaris plans to support Washington University in St. Louis in its investigator-initiated Phase 1b/2 trials of zunsemetinib as a potential treatment for pancreatic cancer and metastatic breast cancer. Aclaris expects these trials to be primarily funded by grants awarded to Washington University.
ATI-2231, Aclaris’ second MK2 inhibitor, was previously being developed for oncology and Aclaris was supporting Washington University in an investigator-initiated Phase 1a trial of ATI-2231 in patients with advanced solid tumor malignancies. However, Aclaris and Washington University agreed to instead study zunsemetinib in oncology in order to expedite the development timeline by eliminating the need to conduct the Phase 1a trial due to zunsemetinib’s more advanced clinical package.

Discovery

Aclaris plans to continue to advance discovery programs through KINect, its proprietary drug discovery platform.
Financial Highlights:

Liquidity and Capital Resources

As of December 31, 2023, Aclaris had aggregate cash, cash equivalents and marketable securities of $181.9 million compared to $229.8 million as of December 31, 2022.

Financial Results

Fourth Quarter 2023

Net loss was $1.5 million for the fourth quarter of 2023 compared to $27.6 million for the fourth quarter of 2022.

Total revenue was $17.6 million for the fourth quarter of 2023 compared to $7.8 million for the fourth quarter of 2022. The increase was primarily driven by a one-time upfront payment under the license agreement with Sun Pharmaceutical Industries, Inc. (Sun Pharma) received in the fourth quarter of 2023.

Research and development (R&D) expenses were $26.6 million for the quarter ended December 31, 2023 compared to $21.1 million for the prior year period. The $5.5 million increase was primarily the result of an increase in expenses associated with drug candidate manufacturing for zunsemetinib.

General and administrative (G&A) expenses were $8.2 million for the quarter ended December 31, 2023 compared to $7.1 million for the corresponding prior year period. The increase was primarily due to an increase in personnel and stock-based compensation expenses.

Licensing expenses were $5.7 million for the quarter ended December 31, 2023 compared to $0.6 million for the prior year period. The increase was primarily attributable to amounts payable to third parties in connection with amounts earned under the Sun Pharma license agreement.

Revaluation of contingent consideration resulted in a $26.3 million gain for the quarter ended December 31, 2023 compared to a charge of $7.1 million for the prior year period.

Intangible asset impairment charges were $6.6 million for the quarter ended December 31, 2023, representing the full balance of the in-process research and development (IPR&D) intangible asset. The impairment charge resulted from Aclaris’ decision to discontinue further development of the drug candidate for immuno-inflammatory diseases.
Full Year 2023

Net loss was $88.5 million for the year ended December 31, 2023 compared to $86.9 million for the year ended December 31, 2022.

Total revenue was $31.2 million for the year ended December 31, 2023 compared to $29.8 million for the year ended December 31, 2022. The increase was primarily driven by a one-time upfront payment under the license agreement with Sun Pharma received in the year ended December 31, 2023. The increase was partially offset by both a one-time upfront payment received under a license agreement with Eli Lilly and Company and a one-time upfront payment received under a license agreement with Pediatrix Therapeutics, Inc. in the year ended December 31, 2022.

R&D expenses were $98.4 million for the year ended December 31, 2023 compared to $77.8 million for the prior year period.

The $20.6 million increase was primarily the result of higher:
Zunsemetinib development expenses, including costs associated with clinical activities for the Phase 2b trial for rheumatoid arthritis and drug candidate manufacturing costs;
ATI-2138 development expenses, including costs associated with the Phase 1 MAD trial and other preclinical activities; and
Compensation-related expenses due to an increase in headcount.

G&A expenses were $32.4 million for the year ended December 31, 2023 compared to $25.1 million for the prior year period.

The $7.3 million increase was primarily the result of higher compensation-related costs due to increased headcount and the impact of equity awards granted during the year ended December 31, 2023.
Bad debt expense recorded from Aclaris’ determination that collection of amounts due from EPI Health are uncertain as a result of their filing for Chapter 11 bankruptcy protection also contributed to the increase.

Revaluation of contingent consideration resulted in a $26.9 million gain for the year ended December 31, 2023 compared to a charge of $4.7 million for the corresponding prior year period.

Intangible asset impairment charges were $6.6 million for the year ended December 31, 2023, representing the full balance of the IPR&D intangible asset. The impairment charge resulted from Aclaris’ decision to discontinue further development of the drug candidate for immuno-inflammatory diseases.