On August 7, 2023 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 second quarter of 2023 and provided a corporate update (Press release, Aclaris Therapeutics, AUG 7, 2023, View Source [SID1234633858]).

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"During the second quarter of this year, we continued to make positive strides across our clinical development pipeline, most notably through the completion of enrollment in our Phase 2b trial of zunsemetinib in patients with rheumatoid arthritis, which positions that trial to be our next Phase 2 data read-out," stated Doug Manion, M.D., Chief Executive Officer of Aclaris. "The next several quarters are lining up well with data read-outs for each of our clinical stage development therapeutics, all created by our KINect drug discovery platform."

Research and Development Highlights:

Zunsemetinib, an investigational oral small molecule MK2 inhibitor:
Currently being developed as a potential treatment for immuno-inflammatory diseases

Rheumatoid Arthritis (ATI-450-RA-202): This Phase 2b placebo-controlled dose ranging trial to investigate the efficacy, safety, tolerability, pharmacokinetics (PK) and pharmacodynamics (PD) of multiple doses (20 mg and 50 mg twice daily) of zunsemetinib in combination with methotrexate in subjects with moderate to severe rheumatoid arthritis (RA) completed enrollment in June 2023. Aclaris continues to expect topline data in the fourth quarter of 2023.

Psoriatic Arthritis (ATI-450-PsA-201): This Phase 2a placebo-controlled trial to investigate the efficacy, safety, tolerability, PK and PD of zunsemetinib (50 mg twice daily) in subjects with moderate to severe psoriatic arthritis (PsA) is ongoing. Aclaris continues to expect topline data in the first half of 2024.
ATI-1777, an investigational topical "soft" Janus kinase (JAK) 1/3 inhibitor:
Currently being developed as a potential treatment for mild to severe atopic dermatitis (AD)

Atopic Dermatitis (ATI-1777-AD-202): This Phase 2b vehicle-controlled trial to determine the efficacy, safety, tolerability, and PK of multiple doses and application regimens of ATI-1777 in subjects with mild to severe AD is ongoing. Aclaris continues to expect topline data in the second half of 2023.
ATI-2138, an investigational oral covalent ITK/JAK3 inhibitor:
Currently being developed as a potential treatment for ulcerative colitis; Aclaris is also exploring additional indications for other T cell-mediated autoimmune diseases

Healthy Volunteers (ATI-2138-PKPD-102): This two-week Phase 1 MAD (multiple ascending dose) trial to investigate the safety, tolerability, PK and PD of ATI-2138 in healthy volunteers has been completed. Based on a preliminary analysis of the PK, PD and safety, Aclaris believes the data support the progression of ATI-2138 into Phase 2 clinical development in ulcerative colitis. Aclaris expects to report the data in September 2023.
ATI-2231, an investigational oral MK2 inhibitor compound:
Currently being explored as a potential treatment for pancreatic cancer and metastatic breast cancer as well as in preventing bone loss in patients with metastatic breast cancer

This is the second MK2 inhibitor generated from Aclaris’ proprietary KINect drug discovery platform and is designed to have a long plasma half-life.

Aclaris is supporting Washington University in a first-in-human investigator-initiated Phase 1a trial of ATI-2231 in patients with advanced solid tumor malignancies. Aclaris expects clinical development activities to be initiated in the second half of 2023.
Financial Highlights:

Liquidity and Capital Resources

As of June 30, 2023, Aclaris had aggregate cash, cash equivalents and marketable securities of $210.8 million compared to $229.8 million as of December 31, 2022. Aggregate cash, cash equivalents and marketable securities as of June 30, 2023 included $26.7 million of net proceeds from the sale of 3.4 million shares under its ATM facility in April 2023.

Aclaris continues to anticipate that its cash, cash equivalents and marketable securities as of June 30, 2023 will be sufficient to fund its operations through the end of 2025, without giving effect to any potential business development transactions or additional financing activities.

Financial Results

Second Quarter 2023

Net loss was $29.6 million for the second quarter of 2023 compared to $20.5 million for the second quarter of 2022.

Total revenue was $1.9 million for the second quarter of 2023 compared to $1.5 million for the second quarter of 2022. The increase was driven by higher licensing revenue primarily from royalties earned on out-licensed intellectual property.

Research and development (R&D) expenses were $25.3 million for the quarter ended June 30, 2023 compared to $18.8 million for the prior year period.
The $6.5 million increase was primarily the result of higher:
Zunsemetinib development expenses related to drug candidate manufacturing and costs associated with clinical activities for a Phase 2b trial for RA.
ATI-2138 development expenses, including costs associated with a Phase 1 MAD trial and other preclinical activities.
Compensation-related expenses due to an increase in headcount.

General and administrative (G&A) expenses were $8.3 million for the quarter ended June 30, 2023 compared to $6.1 million for the prior year period. The increase was primarily due to 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. Compensation-related expenses also increased due to an increase in headcount.

Licensing expenses were $0.6 million for the quarter ended June 30, 2023 resulting from separate third-party contractual obligations related to the non-exclusive patent license agreement with Lilly. There were no licensing expenses for the quarter ended June 30, 2022.

Revaluation of contingent consideration resulted in a $1.5 million gain for the quarter ended June 30, 2023 compared to a gain of $3.4 million for the prior year period.
Year-to-date 2023

Net loss was $57.7 million for the six months ended June 30, 2023 compared to $39.3 million for the six months ended June 30, 2022.

Total revenue was $4.4 million for the six months ended June 30, 2023 compared to $3.0 million for the six months ended June 30, 2022.

R&D expenses were $47.9 million for the six months ended June 30, 2023 compared to $33.1 million for the prior year period.
The $14.8 million increase was primarily the result of higher:
Zunsemetinib development expenses, including costs associated with clinical activities for a Phase 2b trial for RA and a Phase 2a trial for PsA.
ATI-2138 development expenses, including costs associated with a Phase 1 MAD trial and other preclinical activities.
Compensation-related expenses due to an increase in headcount.

G&A expenses were $17.1 million for the six months ended June 30, 2023 compared to $12.2 million for the prior year period.
The $4.9 million increase was primarily the result of higher compensation-related costs, including stock-based compensation, due to increased headcount and the impact of equity awards granted during the six months ended June 30, 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 $2.3 million gain for the six months ended June 30, 2023 compared to a gain of $4.6 million for the prior year period.