Ladies and gentlemen, thank you for standing by, and welcome to the Aclaris Therapeutics presents ATI-1777 Clinical Update. I would now like to hand the conference over to your speaker today, Ms. Kamil Ali-Jackson. Thanks, Angie. I'm Kamil Ali-Jackson, Chief Legal Officer for Aclaris. Please note that earlier today, Aclaris issued its press release announcing positive preliminary top-line results from its Phase IIa clinical trial to determine the efficacy, safety, tolerability, and pharmacokinetics of ATI-1777, our investigational topical soft JAK1/3 inhibitor in subjects with moderate to severe atopic dermatitis. For those of you who have not yet seen it, you'll find the release posted under the Press Releases page of the Investors section of our website at www.aclaristx.com. Joining me today for the call are Dr. Neal Walker, President and Chief Executive Officer, David Gordon, our Chief Medical Officer, and Joe Monahan, our Chief Scientific Officer. Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the company's future results of operations and financial position, business strategy, and plans and objectives for Aclaris' future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions, and uncertainties that could cause actual results to differ materially from those reflected in such statements. These risks are described in the Risk Factors section of Aclaris' Form 10-K for the year ended December 31st, 2020, and other filings Aclaris makes with the SEC from time to time. These documents are available under the SEC Filings page of the Investors section of Aclaris' website at www.aclaristx.com. All the information we provide on this conference call is provided as of today, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events, or otherwise. Please be advised that today's call is being recorded and webcast. A link to the webcast can be accessed under the Events page of the Investors section of our website. I'll now turn the call over to Dr. Neal Walker, President and CEO of Aclaris. Neal? Thank you, Camille. Good morning, and thank you to everybody for joining us on the call this morning. We are very pleased to present the preliminary top-line results from our first in-human study utilizing ATI-1777 in patients with moderate to severe atopic dermatitis. As we mentioned in the press release earlier today, this small proof-of-concept study was designed to demonstrate two main outcomes. First, validate the soft JAK approach by assessing the pharmacokinetics of the drug at multiple time points throughout the study. Second, demonstrate efficacy in patients with moderate to severe atopic dermatitis by powering the study to detect statistically significant differences in the mean change from baseline in the EASI score, which was the primary endpoint. We also, of course, assessed the safety, as well as a variety of secondary endpoints, which weren't powered given the small sample size in this study. A couple of key points to consider before I hand it off to Dave Gordon, our CMO, who will walk us through the data in more detail. The primary endpoint was assessed at four weeks. We enrolled patients with moderate to severe disease rather than mild to moderate, like most topicals. Concomitant medications such as topical steroids were not allowed in the study. With that, I will hand it off to Dave, who will walk through the top-line data. Dave? Thanks, Neal. I'm very pleased to present the preliminary headline data from ATI-1777-AD-201 today. I'll start on slide three of the deck. This slide outlines the opportunity and vision for ATI-1777. Atopic dermatitis, or AD, is a very common disease, particularly in the pediatric population, and is one which has been shown to be successfully treated with oral and topical JAK inhibitors. We set out to develop a predominant JAK1/3 inhibitor which could be delivered topically and be what we call soft, meaning it would be rapidly metabolized when drug passed systemically so that drug is delivered directly to the organ of interest, the skin, while limiting systemic exposure to that drug. The medicine was developed as a solution rather than a traditional cream so that we would have the option of developing a spray applicator that could help make application easier in future development. Finally, we aim to target moderate to severe patients, as Neal said, since we believe their unmet need is greater. Today, I'm going to present the data that provides some of these concepts. Slide four illustrates the profile we were aiming for, one where the drug is concentrated in the skin, and any drug passing systemically is rapidly cleared with hepatic metabolism, making systemic exposure limited. On slide five, I summarize the design of the proof-of-concept study, ATI-1777-AD-201. We enrolled subjects to a randomized, vehicle-controlled, double-blind study. Patients with moderate to severe AD with an IGA score of three or four and between 3% and 20% body surface area involvement were recruited. Patients were randomized to either 2% ATI-1777 solution or vehicle. The treatment period was 28 days, and the primary endpoint was change in EASI from baseline. We did not treat the head, palms of hands, soles of feet, groin, or genitalia in the study, so a modified EASI was used which did not assess those areas. Other secondary endpoints are listed on this slide. Moving to slide six. We randomized 50 adult subjects into this study. In this full analysis set, or FAS analysis, we had 23 in the active arm and 25 in the vehicle. Two subjects were randomized to the active arm, but their drug application was not recorded, and they did not return after the first study visit. They were excluded from this FAS analysis. Of the 48 allocated patients, 21 and 18 completed 28 days of treatment in the active and vehicle arms respectively. In the ATI-1777 arm, one subject withdrew consent and one was lost to follow-up. Four subjects withdrew consent in the vehicle arm and three withdrew for adverse events. Slide seven has the demographics. The arms were generally well-balanced. Females were more common than males. 30%-40% of subjects were African American. Most patients, approximately 96%, had moderate disease at baseline. Mean baseline BSA was 9.6% in the active arm and almost 7% in the vehicle arm. Baseline EASI was 8.63 and 7.68 in the active and vehicle arms respectively. Slide eight has the primary endpoint. You can see that there was a rapid statistical improvement in the FAS set for active versus vehicle arms. At day 28, the EASI change was -74.4% versus -41.4% in the active and vehicle arms respectively. This was highly statistically significant. If we were to add back the two subjects who I mentioned who didn't have baseline drug recorded and then used their baseline EASI in the last observation carried forward, the results at day 28 remain significant. Slide nine. Slide 9 shows the EASI 50 response at day 28. You can see there was a clear difference in the arms, with 91.3% of subjects achieving this response in the active arms versus 44% in vehicle. Slide 10 shows the IGA response. This response was achieved in 39% in the active arm and 28% in the vehicle arm. Slide 11 shows an improved reduction in favor of the active arm for affected BSA versus the vehicle arm. The active arm reduced 5.6% from a baseline of 9.61, and the vehicle reduced by 2.1% from a baseline of 6.96. Slide 12 shows the itch improvement over time. There was a trend in favor of active, with a reduction of 2.9 in that arm versus 1.7 in the vehicle. The median score at day 28 in the active arm was 1.0 in the active arm, meaning that 50% had a score of one or better. The median score in the vehicle arm was four. In slide 13, we show the plasma levels after topical dosing. The drug levels support the concept we were trying to prove. 86% of the samples were below 1 nanogram per ml, and the average drug levels were never greater than 5% of the IC50 of ATI-1777. Slide 14 has the adverse events that were reported in the study. Both arms were generally well-tolerated. There were no serious adverse events. No subjects withdrew for adverse events in the active arm, and three withdrew for adverse events in the vehicle arm. On slide 15, we list the actual adverse events reported during the study. Only headache, UTI, and elevated CPK were reported in more than one subject. UTIs were reported one in each treatment arm. The patient with severe atrial fibrillation had underlying thyroid disease as part of their history. The only drug-related event in the 1777 arm is application site pruritus. In conclusion, we believe we have proved the concept that ATI-1777 is an effective topical soft JAK inhibitor, meaning that it delivered good, rapid onset efficacy in AD with limited systemic drug exposure. The drug was generally well-tolerated. These data show that ATI-1777 has potential to treat moderate to severe AD, which is traditionally the domain of systemic therapy, and this supports progression to the next stage of development. It's also interesting to think about this as a therapy that could be used in combination with biologics to further improve on efficacy. I will hand back to Neal for concluding comments. Thank you, Dave. As you can tell, we are very excited by the data that we've just presented from this first in human proof of concept study. Our topical soft JAK approach, which is meant to be tissue specific, produced highly statistically significant results in the mean change from baseline on the EASI score. In addition, the secondary endpoint showed impressive percentages in IGA improvement, change in BSA, and EASI-50 responders. Importantly, we also demonstrated the soft nature of the compound. Given the recent potential safety concerns with certain systemic compounds in this indication, we believe we are well-positioned to be used in moderate to severe atopic dermatitis patients, either as monotherapy or potentially as combination therapy with biologics to help drive improved outcomes, which has certainly been demonstrated in the recent literature. We look forward to continuing to develop ATI-1777 in moderate to severe atopic dermatitis. We'll update you accordingly. Operator, please poll for questions. If you would like to ask an audio question, please press star one on your telephone keypad. Again, that's star one to ask an audio question. Your first question comes from the line of Lois Chan with Cantor. Hi. Thanks for taking my question, and congratulations on the great data. I had a few questions for you. First question I had for you is, how are you thinking about your phase II-B trial design? When will you meet with the FDA to discuss this? The second question I often get from investors is, if there's minimal systemic exposure, how is the drug working? The last question is, have there been any blockbuster topicals, and if not, why not? Why could this be a potential opportunity? What unmet need does this address? Thank you. Yeah. Let me handle that, and then if Dave has anything to fill in, I'll hand it to him. In terms of the phase IIb trial design, it's pretty straightforward. This was an early kind of POC study to help inform that phase IIb trial design and also give us time to incorporate this into a spray. It'll be a traditional atopic dermatitis trial design. We won't be allowing concomitant treatment. We do anticipate doing at least four weeks. We might extend it to eight weeks, but I think the data at four weeks was quite compelling, and in my mind, you need to show that to have a viable product in AD. I think the phase IIb trial design is pretty straightforward. The next steps that we'll be discussing would be, whether you migrate down into 12 and older. In terms of the minimal systemic exposure, I think it's well known in the literature that you don't need systemic effect to drive outcome. I would just point you to topical steroids as an example, which drive really nice results, topical calcineurin inhibitors, topical JAK inhibitors, including ours. You can see the data we generated. It's not a condition that you need to drive a systemic effect on. How I liken it to people who maybe don't understand that concept is that if I gave a patient with atopic dermatitis oral steroids and topical steroids, I would get the same result. I just might get it quicker with oral steroids. In terms of the potential opportunity, I think that the difference in topicals versus systemics is predominantly price. I think the market opportunity remains pretty much the same. I think as we migrate up the severity ladder, I think you have an opportunity to improve on the reimbursement there. I do think there's more of an unmet need there. We've certainly seen a lot of people piling into that space. Now what I think we have, and if you really look at this data, even with a small patient set, a lot of investors ask us to compare ourselves to topical ruxolitinib. I would say compare us to some of the systemics. Just look at the IGA percentages in this small study. I think, given all the safety concerns, we have a real shot at maybe changing the paradigm there. We actually are very excited by the data. It exceeded our expectations, and when you look at some of those secondary measures, even though we didn't necessarily report P values on those because we didn't adjust for multiplicity, which I think is extremely conservative in an early-stage study, you can see by the error bars we hit them. We're pretty excited. Great. Thank you. Your next question comes from the line of Tim Liu with William Blair. Thanks for taking the question, and congratulations on the results as well. Maybe just some housekeeping. Do you have the percentage of patients which achieved the modified EASI 75 and 25 for both arms? Then extending, just more of a general question, you enrolled a lot more females in the study than males. How do you think that generally impacted the study? Let me address the second one, and I'll hand Dave to Dave for the first question. On the second one, with these small studies, you're always going to have a little bit of imbalance, and I would actually point you to the kind of diversity of our patient population, which I think is pretty unusual in these early studies. If you look across some of the other studies that have been conducted in this space, we actually enrolled a disproportionate number of African American patients in this study. I think that was one of the keys when you look at the demographic data. I would also say that the placebo group also had lower baseline BSAs and that's another factor I think may be driving some of the placebo response there. Dave, do you want to comment on the modified EASI question? The EASI 75? Excuse me. Yeah, 75/25 results. Yeah. This was the preliminary headline data. We've presented everything that we have analyzed at this point. We're not holding any key efficacy data back at this point. For whatever reason, we selected the EASI 50 as the one to include in that analysis, and I think you can see the EASI 50 looks very good. Over the coming weeks, we'll get the Full Analysis Set, and we'll have the EASI 75 and EASI 90 at that time, but we don't have it at this time. Just maybe for the patients that were lost to follow-up or withdrew consent, it looked like the vehicle group had more of these patients than the active, but you used LOCF. How do you think that those kind of losing, I guess nine patients in total impacted the results? I think you touched upon this a bit during the presentation. Yeah. I think there's two groups, I guess. Just talking about the Full Analysis Set, first of all. I think it's really important to assess efficacy as not being achieved in those patients who drop out. Because if you've got moderate to severe AD and you're very symptomatic, and then you get a vehicle, and it's just not achieving the kind of success that you would hope for, patients drop out, and that's an efficacy metric. That's why I think the Last Observation Carried Forward analysis is really important and the right way to assess the drug. We did lose these two other patients who didn't make it into the FAS. It was a strange time to be running a trial. During a pandemic, there was a lot of anxiety about COVID and all the rest of it. I have no idea why these patients didn't come back, but they didn't. The right way to do it was what we presented in the analysis set, but it also made sense to do a sensitivity analysis where we added those subjects back in, and we assumed the worst, i.e., that they had no improvement over time. As I said during the presentation, if we assumed that and we counted no change from baseline, the result was still significant on the primary endpoint. Thank you for that. Maybe briefly, can you just talk about the next studies? You mentioned potential combination in your summary. Is that the next phase IIb, maybe flash phase III or? Yeah, I think that is potentially a very clinically meaningful way to use the drug and could be, I think, as a result of that clinical value, commercially valuable as well. I think in phase II-B, we would do something along the lines of a more traditional atopic dermatitis study, and when we're assessing different concentrations, do it as monotherapy as opposed to combination. Yeah. Tim, Dave's right. You have your bread and butter study, which you just mentioned, then I think that the next one is really from a programmatic perspective, looking at how you can expand the applicability of something like this. Certainly, we've seen in the literature people do studies with mid-potency topical steroids layering on to biologics or even JAK inhibitors. In fact, a lot of the oral JAK inhibitors have concomitant topical steroids at a baseline throughout the whole study. I think it would be really intriguing to put something that's mechanistically spot on, a topical JAK inhibitor like this that has low systemic exposure, onto a biologic and see if we see what has been seen in the literature, which is, in some cases, 20% increases in efficacy. If you add that to something like a DUPIXENT, which really had 38% on the IGA at 16 weeks. You can see the results here we're driving at four weeks. You can imagine what increment you might drive, and I think that's interesting to us to start thinking about that. Definitely. Thank you for all the questions. Your next question comes from the line of Thomas Smith with Leerink Partners. Hey, guys. Good morning. Thanks for taking the questions, and congrats on the data. Just the first question, can you just help put some of the PK data in context, specifically against topical RUX? How does 1777 compare versus the plasma concentrations that we're seeing in the topical RUX studies? A couple things. One is, when you look at topical RUX, and this is why I mentioned this in some of my previous comments, their primary endpoint was eight weeks. They certainly have four-week data as well, but they looked at eight weeks. They're looking at a mild to moderate population as well. There's always nuances in these trials that make some cross-trial comparisons difficult. As it relates to the systemic concentration, I think you can see by that graph we put in, we just decided to put every time point. Those aren't means. That's every single time point we measured. It's like 148 time points, and we only had three time points that kind of creeped above the level that we care about, which is one nanogram per mL, which is essentially nothing. I don't think any other topical can make that claim. Just for context, again, we did this in moderate to severe patients. We didn't get a lot of severe patients in there, but when you're doing RUX had about 25% or 30% mild patients in their study. Just by definition, you're not going to have the same disruption in skin barrier. I think from a systemic standpoint, we kind of just get everything we expected from a soft perspective. Remember, we also designed this as JAK1/3, and we think that that's important. We don't think JAK2 makes a lot of sense in this indication. I think along a couple of measures, very competitive. Got it. Okay. Then just along the safety tolerability profile, appreciate the color on the patient with AFib. Can you just clarify, I guess, in either the patient with AFib or the increased CPK, were these seen in patients that had, I guess, recorded plasma values that were perhaps a little bit higher? Is there anything notable, I guess, around the CPK increase or the AFib AE? No, Dave can tell you the details on that. There's actually medical history that's more relevant than whether there was PK. I don't think we saw any levels of PK that would explain any of the adverse events actually. The patient with AF, as I mentioned, did have an underlying history of thyroid disease and was on treatment for that. It wasn't deemed to be related to 1777. I think it's reasonable to assume that was probably related to the underlying disease. The patient with the elevated CPK was a patient who had been doing some construction work and had had a period of heavy manual physical labor. That's well established to be associated with rises like CPK if you've been stressing muscles like that. They had a follow-up CPK a week later. It was straight back to normal again, which is, again, very typical of that CPK rise when it's associated with physical exertion. A very rapid spike then back down again. Okay. Got it. Yeah, thanks, David. That's really helpful context. Then I guess, just last question around how you're thinking about dosing strength and formulation. I guess, is there anything notable in terms of the application site pruritus, or is there any thought to exploring other doses or other formulations for 1777? One instance of application site pruritus, I would sit there and question whether that was truly related or not. Patients have pharyngitis, right? I actually think the vehicle was quite good relative to others who have also generated data along those lines and shown an occasional application site pruritus or an occasional application irritation. You're just going to get that. The question is, does it become a real trend? We absolutely have the ability to look at other formulations. We really like this formulation. 2% is the max we can get into this topical. Certainly ability to do a little dose range. That's why we're going to do a phase IIb, and there's always tweaks you can make along the way, but nothing that we saw in this data set gives us pause, and as a group, we've done a lot of these studies over the years. We have a lot of experience in this area. Okay, great. Thanks, Neal. Yeah, appreciate you guys taking the questions, and you guys forgot about the data. Thank you. Your next question comes from the line of Ram Selvaraju with H.C. Wainwright. Hi, good morning. This is Muzz calling on behalf of Ram. Congrats again on the results. We were wondering if you are envisaging combining a phase IIb/III trial, and when you might expect to begin the phase IIb. We're working right now to establish a timeline on the phase IIb, so we're not ready to formally message that. It'll be probably in the early part of next year. Perhaps late this year, but more likely early next year, but we haven't firmed that up yet. In terms of the design, as I mentioned, I think it's a traditional phase IIb study design, and four weeks, we'll just put in more patients. I think as you saw in the data, pretty compelling trends and getting nice confidence interval spread even with just 23 patients in the active arm. Whether that morphs into a phase IIb/III, that remains to be seen. We have to have a lot of internal discussions, and this was a program that we're starting to think a lot harder and a lot stronger about, just given the context around some of the systemic issues that we're seeing in this indication. More to come on that. Certainly makes sense. We were wondering what metrics and biomarkers you're giving the most prominence and importance. How do you define success in the phase IIb? It's going to be along the lines of what we've presented here. I think it's really going to be driven by obviously clinical response, but I think it's going to be important to continue to look at systemic exposure and just build the database showing that the systemic exposure is very limited and then put that in the context of IC50s, for example, and how that relates to potential pharmacological effect. Obviously, we would look at all the other things that you'd expect us to look at with a JAK, like effect on hematological parameters, infective risk, and all of those kinds of things. Looks like so far, these infections, we're not having a problem with that, but I think those are the things we'll keep an eye on. Okay, great. Just finally, will the future clinical trials involve any JAK inhibitor as a comparison drug? When are you expecting to disclose the full phase IIa data set? We'll be looking at a publication strategy, just like we did with RA in terms of adding additional data, which really isn't going to change the story that we just presented. I don't think there's much utility to comparing ourselves to other topical JAKs. They all work reasonably well, and really the value prop from my perspective is showing the efficacy, but showing the PK that we just demonstrated. I would rather invest capital in looking at combo therapy with perhaps biologics rather than just trying to compare and say, "Can I beat another topical JAK by one or two points, or vice versa?" To me, I don't think that adds much. Okay, great. Just if I can finally squeeze one in, if you can clarify the preclinical studies involving ATI-1777 to lay the groundwork for this trial. Yeah. The drug was pretty well-tolerated in the preclinical space. I don't think we identified any true areas of concern. We did preclinical work systemically with the rat and topically with the mini pig. I think we ended up with, in the rat, the NOAEL was something like about 5,000 nanograms per mil when we looked at the concentration. You can put that into context with the nanograms per mil that we're seeing topically. In the mini pig topically, it was pretty well-tolerated as well. I think the upper dose that we tested ended up being the NOAEL there, too, and that's from 28-day tox. That's very helpful, Callum. Thanks so much, and congrats again. Thank you. Thank you. There are no questions at this time. I would like to hand the conference back to Mr. Walker for any additional or closing remarks. Thank you, operator. Really appreciate it. Thanks, everybody, for joining us on the call today, and we look forward to providing further updates as we move forward. Thank you. Thank you for participating in today's conference call. You may now disconnect your lines at this time.