On November 6, 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 third quarter of 2023 and provided a corporate update (Press release, Aclaris Therapeutics, NOV 6, 2023, View Source [SID1234637007]).

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"Throughout the first three quarters of this year, I believe our company has performed remarkably well in terms of executing across our clinical development programs," stated Doug Manion, M.D., Chief Executive Officer of Aclaris. "Most importantly, we are rapidly approaching the topline data read-outs for our two most advanced clinical programs, zunsemetinib in rheumatoid arthritis this month and ATI-1777 in atopic dermatitis around the end of this year. This level of high-quality execution is further exemplified as we advance ATI-2138 in patients with ulcerative colitis, and we’re pleased to collaborate with Washington University as they advance ATI-2231 in patients with advanced solid tumor malignancies."

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 patients with moderate to severe rheumatoid arthritis (RA) completed enrollment in June 2023. Aclaris continues to expect topline data this month.
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 patients 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 patients with mild to severe AD completed enrollment in September 2023. Aclaris continues to expect topline data around the end 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 analysis of the PK, PD and safety, Aclaris is progressing ATI-2138 into Phase 2a clinical development in ulcerative colitis, which it expects to initiate in early 2024. Aclaris reported the data in September 2023.
Preliminary data from the MAD trial demonstrated:
ATI-2138 was generally well tolerated at all doses tested in the trial;
ATI-2138 had dose proportional PK; and
a dose-dependent inhibition of both ITK and JAK3 exploratory PD biomarkers, with near maximal inhibition achieved at the 30 mg total daily dose.
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. Aclaris is also currently exploring options to use ATI-2231 as a potential treatment for immuno-inflammatory diseases.
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 September 30, 2023, Aclaris had aggregate cash, cash equivalents and marketable securities of $187.0 million compared to $229.8 million as of December 31, 2022.

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

Financial Results

Third Quarter 2023

Net loss was $29.3 million for the third quarter of 2023 compared to $20.0 million for the third quarter of 2022.
Total revenue was $9.3 million for the third quarter of 2023 compared to $19.0 million for the third quarter of 2022. The decrease was primarily driven by a one-time upfront payment under the non-exclusive patent license agreement with Eli Lilly and Company (Lilly) received in the third quarter of 2022.
Research and development (R&D) expenses were $23.9 million for the quarter ended September 30, 2023 compared to $23.7 million for the prior year period.
The $0.2 million increase was primarily the result of:
An increase in ATI-2138 development expenses, including costs associated with a Phase 1 MAD trial and other preclinical activities; and
An increase in compensation-related expenses due to an increase in headcount.
The increases were partially offset by a decrease in zunsemetinib costs associated with the completion of the Phase 2a trial in patients with hidradenitis suppurativa.
General and administrative (G&A) expenses were $7.1 million for the quarter ended September 30, 2023 compared to $5.8 million for the corresponding prior year period. The increase was primarily due to increased compensation-related expenses due to an increase in headcount.
Licensing expenses were $7.3 million for each of the quarters ended September 30, 2023 and September 30, 2022, resulting from separate third-party contractual obligations related to the non-exclusive patent license agreement with Lilly.
Revaluation of contingent consideration resulted in a $1.7 million charge for the quarter ended September 30, 2023 compared to a charge of $2.2 million for the prior year period.
Year-to-date 2023

Net loss was $87.0 million for the nine months ended September 30, 2023 compared to $59.3 million for the nine months ended September 30, 2022.
Total revenue was $13.7 million for the nine months ended September 30, 2023 compared to $22.0 million for the nine months ended September 30, 2022. The decrease was primarily driven by a one-time upfront payment under the non-exclusive patent license agreement with Lilly received in the nine months ended September 30, 2022.
R&D expenses were $71.7 million for the nine months ended September 30, 2023 compared to $56.7 million for the corresponding prior year period.
The $15.0 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; and
Compensation-related expenses due to an increase in headcount.
G&A expenses were $24.2 million for the nine months ended September 30, 2023 compared to $18.0 million for the prior year period.
The $6.2 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 nine months ended September 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 $0.6 million gain for the nine months ended September 30, 2023 compared to a gain of $2.4 million for the corresponding prior year period.