Ready to go? Yep. Excellent. Thanks again for joining us. This is Guggenheim's Healthcare Innovations Conference. I'm really, I'm Seamus Fernandez, one of the senior biopharma analysts here at Guggenheim. You know, really pleased to have with us Aclaris Therapeutics, and immediately to my right is Dr. Neal Walker, CEO and Chair of Aclaris. Also, joining us in the audience is Kevin Balthaser, CFO. So, you know, Neal, maybe just to start us off, you know, maybe you could just share high-level thoughts on Aclaris and, you know, how you're positioning the company and the research engine going forward. Sure. Thank you for having us here today. Really appreciate it. Aclaris is a development-stage biotech company focused on both large and small molecule therapeutics for various immunoinflammatory diseases. We're really underpinned by a fantastic drug discovery platform and engine that was developed by a number of ex-Pfizer folks that we have on board. We supplement that with a multidisciplinary team that has years of experience in both small molecule and large molecule drug development. We have organically grown a few of our assets, particularly on the oral small molecule side. 2138 is an oral ITK JAK3 inhibitor. We also have a next-gen ITK suite of next-gen ITK inhibitors that are moving their way towards an IND. Around this time last year, we also in-licensed two biologics, TSLP MAB and TSLP IL4R bispecific construct from BiOcean. Both of those right now are in the clinic. We have a big 2026 kind of upon us with a lot of catalysts coming up. Great. And, you know, maybe we can just, you know, start with the atopic dermatitis pursuit there, Basakhatog. And we have some AD data with 2138, but, you know, I think at your analyst day, you talked a little bit about the, you know, blend of opportunities there. So, you know, just in terms of the datasets and catalysts and moving those two programs forward, maybe you can just give us some background there. Sure. Those are certainly two of the most advanced assets. You know, we chose AD for 2138 just given the mechanism, and we did not have long-term talks at the time, so we were able to get a good signal in patients with disease over 12 weeks. What that did is it opened up, you know, based on the data, a whole slew of different indications that we might go in and into, and we are kind of down-selecting now on that front. For the TSLP MAB, because there is a lot of competitive intensity in the respiratory indications, and we have a partner in China that is working on those respiratory indications, which, quite frankly, we do not have the balance sheet to support ex-China, we opted to go into atopic dermatitis, which was a little bit of an off-the-grid indication. We do think that that is meaningful in that we know it's TH2-driven, it's TH2-heavy. TSLP is a pleiotropic molecule, hits a lot of the bad actors that are involved in AD, and that study is actively enrolling now. We look to report out data on that in the back half of 2026. Great. And maybe just in terms of other datasets, in atopic dermatitis, I know there's confusion around this space and whether or not TSLP has been, has shown activity there. What really led you to AD? I know you talked about the other actors, but are there other learnings, more recently around, you know, either TSLP or TSLP-like mechanisms that give you increased confidence in that outcome? Yeah, I think a lot of people obviously reference the Amgen data or Tezspire, perhaps. It wasn't a total failure, actually. They generated some pretty interesting data. I think, you know, part of what got us interested is that we're 70x more potent than Tezspire. Clearly, if you're looking at a 15% concentration of a MAB in the skin, then potency's gonna matter. We're betting on the far greater potency of our molecule to drive an effect there. I think the reasons to believe in AD would consist of the following. We know that, you know, alarmans are important. We've seen efficacious results with other alarmans like IL25 recently from a private company. We also have seen reasonably good results with the OX-40 ligand approaches that are in the same kind of pathway. I think biologically there's a lot of reason to believe, and it's about driving the right study. We generated, what got us excited internally was BiOcean before our transaction had conducted a seven-site study where they looked at about 20-some-odd patients in atopic dermatitis and generated phenomenal results. It was EASI 75 scores of, you know, 94%, 88% on IgA. And, you know, yes, it was an open-label study, but even if I discount that back, you know, provide a discount factor for bias there, it's still remarkable data. I think there was enough for us to invest in a small study and see if we're right. You know, what would the sort of threshold for advancing that program forward be from your perspective? You know, there's a lot coming in atopic dermatitis across the board. Yeah, I think you have to be in the realm of where the AMI data was for the phase two. I think that's kind of the bogey for me. You know, there are a lot of different ways to tackle this disorder. What you're seeing now with kind of the Nectar approach and maybe some orthogonal approaches, there's gonna be treatment layering as there always is in dermatology. As we know, you know, TSLP is probably the most common part of any bispecific or trispecific construct. Clearly, other people think it matters in the pathophysiology of disease or they wouldn't include that. You know, I do think there's opportunity, but of course it's gotta be robust enough to be meaningful. Okay. And, you know, maybe we can, we'll come back to the bispecific, but I kind of wanted to stay on the programs where you have clinical data. Can you talk a little bit about 2138, your ITK JAK, and then, you know, also how you're kind of refocusing that program? Sure. So, we developed this molecule quite a long time ago, and, you know, it was under the thesis of JAK1 and JAK2 are ubiquitously expressed. So if you hit JAK3, that's only on immune cells, so you ought to theoretically have a better safety profile. And I think we've seen that with Litfulo, and we have seen over time kind of a moderation. Not every black box is the same. You saw the Tofacitinib black box and then the Rinvoq, and then so TYK2 did not even get one. I do think there's opportunities to take data-driven approaches there. And we like ITK as a booster, because of the TH2 side of the house. and we showed with, and this molecule hits ITK, TXK, and JAK3, a very potent effect, in, in AD across all the efficacy measures and the PD measures. What that does for us, and the safety was, you know, way above our expectations. We really just did not see anything over 12 weeks of dosing. To us, that opens up the landscape quite nicely for a lot of other indications. We could choose to go down the path of LITFULO and alopecia areata or vitiligo. You know, we are starting to look at maybe off-the-grid indications like lichen planus or scarring alopecia where there is nothing approved, tremendously high unmet need areas that we are learning a lot more about. The good news about that is that there have been some good small POC studies done with other similar compounds and investigator-initiated studies that give us, you know, good confidence in the probability of success. Great. You know, the launch of OPZELURA in vitiligo really seemed to open up additional opportunities. You know, it seems like it makes a lot of sense to go after a more targeted indication, to kind of break open payer access. Yeah. I think, quite frankly, Roivant showed us that with going after. Yep. Something like dermatomyositis. And there's a lot of great indications in these, in this day and age with the amount of competitive intensity and the big indications, I think all of us have to consider how we branch out there, at least for the lead. So. Got it. Great. You know, why don't we, let's talk a little bit more about the opportunity for, you know, selective ITKs, and, you know, what you're building with the sort of former Pfizer team that, you know, sort of is generating your molecules internally. Yeah. I think it's important to note, and we noted this during our R&D day, that, you know, the reason you don't have an ITK inhibitor out there is because they're very difficult to drug. This is not easy. Companies tried for over 20 years, but, you know, now drug discovery's advanced to a point where we have more in our quiver to be able to figure it out. What I like, to me, this is my favorite molecule out of the, personally, out of the whole portfolio. I really think it's a game changer. When you think about the prospect, similar to STAT6, of going after the known TH2 indications and targets in a pill, but be able to do so on a broader basis and tune in some TH1, pick some of that up, because we all know that there's heterogeneity in these patient populations. The only way you're going to be able to address that and increase those efficacy responder rates is to pick up a broader swath of those patients. So long as safety is all equal. That's why we engineered out the JAK3. We have an ITK TXK compound advancing and also a pure ITK selective. Each of those is going to be relevant to different indications, and they're exquisitely potent. The team's done a great job. We've even demonstrated that we think we can get QD dosing. To me, that's my, I guess, game changer molecule in the portfolio. Okay. You know, we know that a competitor, or just a, tend not to think about these spaces when they're so underpenetrated as like a competitive spaces, but another molecule from another biotech company is advancing, has been pursuing the ITK mechanism for a number of years. You know, in terms of what you would be looking for in that competitor data, or in data from any other ITK, where would that sort of sit? Where are you most kind of focused from that perspective? Yeah. I mean, look, they've done, they've been working at this a long time. They were mainly focused on a variety of oncology indications and over the last couple of years got more interested in AD. We're rooting for 'em. You know, we think they already showed good proof of concept in their third cohort. They have additional data that I believe is coming out in the first quarter next year. You know, the fact that particularly this day and age when you have like 12-20 competitors out there, the fact that there's two games in town I think is great. I am hoping that they just reinforce the data they already showed and we'll keep focusing in on doing what we're doing. Maybe you just talk a little bit about how you would wanna, or see your own molecules differentiating from that molecule in particular. I always kind of, I'm not, I'm not gonna say worry, but you tend not to want to have a lot of overlap with dermatologic indications because dermatologists tend to be quite conservative. Right. You're the dermatologist in the room. You can actually say something about that. You know, we, again, I think the two biggest points of differentiation between ours and the Corvus CPI-818 molecule would be potency. We showed that at our R&D day, orders of magnitude more potent. And that's important when you have a covalent molecule. You know, these electrophiles can be promiscuous, so you want to be careful with how high you're dosing. I think the other thing is just the whole thought process about, you know, what do you want to hit, right? I think where we sit today is that I think you do want to be able to address not only ITK for TH2, but also TXK for the TH1, because we know that's a problem. We know every biologic that reports out data talks about heterogeneity and how they can't hit that other side. You know, the only way in my mind to increase those percentages in terms of responder rates is to be more broadly applicable. That's why JAKs are so successful, right? Even with the black box, they do that in spades. They're very, very effective, and even in spite of that black box, you know, look at Rinvoq's revenue. It's fantastic. Got it. Are there any safety concerns just to selecting ITK or selective ITK inhibition that, you know, that you would be watching for or might be a focus? Yeah. I mean, I think whenever you're in an immunosuppressive area, you just theoretically have exposure to things like upper respiratory infection, things like that. Nothing too different when you think about the mild AE potential that is on target, with quite frankly the JAK tech class or TIC2 class. Got it. Let's step back to the TSLP opportunity, but maybe move a little bit more towards the TSLP bispecific. You know, remind us a little bit of how you see this, you know, differentiating. I think we've started to hear a little bit more about bispecifics either having half-life management challenges or, you know, potentially even anti-drug antibodies emerging a little bit more frequently. Where are you in that sort of journey with your bispecific? We're through the SAD work. We're almost complete with the MAD work. We'll have that by the end of the year and announce it in the January timeframe. I think we'll learn a lot, you know, to your point, by then. In terms of differentiation, you know, there's a lot of constructs out there, right? I don't know that any one construct will win the day across all the indications. We'll see. Time will tell on that. We do believe that it's important to hit IL4 to get a more fulsome effect when you're hitting the receptor. You take out both four and thirteen plus the TSLP. Others are taking a different approach. Again, I think it just depends on the indication about who will win that argument. We do know that some folks are looking at, you know, combos of single, single MABs. I think there's immunogenicity, CMC constraints with that. There are lots of considerations across all of these different approaches. I think the good news is that, you know, there's no clear, I guess, leader right now. I think there's a lot of ways to win. I firmly believe that not every bispecific will win and just take over the entire market. It's, even when you look at AD, you know, we always talk about how competitive that space is. Right now it's just Doopy, Lebri, and Nemo, right? Still a long way to go. You've lived through the psoriasis, you kind of evolution. You know, I would've never personally predicted that we'd be back to orals in psoriasis, but here we are, you know? A lot of growth yet to occur. What, you know, other presentations, are worth thinking about? Would you, you know, move or redevelop, potential topicals, at any point, or are you, you know, gonna remain exclusively focused on systemic? I think, you know, that's more my history, right? And like I, you know, we went through a long period of time where, as you know, the gross to nets were very unfavorable in that. I think some of the other companies in the space are showing that maybe the pendulum's swinging back a little bit. We could certainly look at that with our technology, particularly with the oral small molecules. There's always a home, you know? The beauty of derm is that, you know, derms tend to be polypharmacists. They'll use mixtures of biologic, oral, topical, mix and match to get the desired effect. Yeah, I mean, it stinks, having to kind of abandon that over the years. If it made sense, we would look into that again. Got it. Great. Maybe we can go a little bit more specifically into your proof of concept trial with the TSLP. You talked about kind of the threshold that you would wanna target. One of the things that we have been seeing over time is this sort of rising placebo rate over time. Can you help us understand what do you think is the real rising placebo rate versus the more challenging aspects of designing a clinical trial that really needs to be well controlled? Yeah. It is a big problem. This is not an objective process. You know, it's not like if somebody comes in with 140 over 90 on blood pressure, you know what it is, right? You're talking about people that are coming in to these clinics with basically a red rash. Unfortunately, what happens is you either get patients, all too often with disease that does not really meet the criteria. It's too mild, and that could be a contributor to the placebo effect. Unfortunately, you get a lot of patients that do not even have AD, a lot. The way to tackle that, the only way you can tackle that is you can try the training and all this and that, but that's not gonna do it. You have to look at pictures. When you, when we screen in patients for this study, we have an independent dermatologist at the CRO. We have myself, and both of us look at the pictures separately. We both look at our responses. If there's discordance or we're not sure in any way, we talk about it. If we still can't get there, we go and we ping the site. We talk to the enrolling physician. What are we missing? You know, is there something we're not seeing in the pictures? And if we can get there, we let 'em in. If we can't, we don't. Sometimes I've had, suggested biopsies and, you know, a biopsy will come back and say it wasn't AD, you know? This happens more than I think a lot of people would care to admit. but it is important, you know, particularly in these competitive landscapes, to stack the deck, you know, as much in the favor of like, these are the right patients that you're studying that actually have moderate disease. You can get a real view of whether your drug's going to work. I think when you see some of these really outlier placebo responses, like 70+%, that clearly tells me after having done this for so long that something really went wrong in the study. The placebo response has migrated up for sure, but I would say it's migrated up from like a 20% range to a 40% range. Okay. If you start seeing things much higher than that, something else went wrong. Got it. Okay. Understood. And then when you look at, you know, let's just say, the data look more like, you know, what would the data that you would say you kind of mentioned AMLI as kind of the phase two AMLI as sort of a guidepost? What's your thoughts? What are your thoughts on the phase three AMLI on a relative basis? Just because, I think there's been a different reaction to those data after the phase two data. Yeah. Yeah. It was a, it was a little worse. And, you know, I struggle a little bit because of what I just mentioned with, and I know we all look at placebo-adjusted responses, but when you kind of look at the immense variability, between studies of an EASI 16 in one patient, in one, in one study is definitively not an EASI 16 in another. They can be very different. I find it exceedingly difficult, unless I was to look at pictures and really get the context behind what those patient populations look like, to really understand and comment on that, right? Yeah. To me, it's part of, with the issue with what I, I've been seeing, like in terms of when these patients come in, is you see there's a tremendous variability. Yeah. If an EASI 16 does not look really all that similar to another EASI 16, there is your answer. That is why that one study did not work out. All you need is maybe a half dozen patients to swing that way. Got it. Okay. Super helpful. What about timing? I'll jump it around a little bit. You know, in terms of your catalysts next year, the key catalysts that you're most focused on, including, you know, when some of your preclinical programs are really potentially poised to move into the clinic. Yeah. The cadence will go like this through 2026. We'll get SAD, MAD data reported out in healthies, which will give you a safety view on PK, half-life, some ADA data. That'll be the first step. We'll roll immediately into two 1B studies, one in moderate to severe asthma, one in moderate to severe AD. This is all with the bispecific. You get three bispecific readouts in 2026. Those two 1Bs will click through maybe in like mid-year towards second half. At the end of the year, you'll get the TSLP MAB studies. That'll probably come in towards the tail end. Lastly, we'll be getting the next-gen ITK in the second half next year into an IND and get started into the clinic. and then finally, not like this is really a catalyst, but we'll be initiating work with 2138 in that, in that additional indication. Okay. A lot of catalysts, a lot going on, for sure. One question is just your ownership of indications, for the antibodies that have been licensed in. So I know you're moving forward in atopic dermatitis, but what's your ownership of the indications with the bispecific and the TSLP as well? Like we own all rights to that on a global basis for TSLP. It's ex-China. Right now, there's work ongoing with the TSLP MAB in respiratory indications, two phase three studies in severe, one in severe asthma, one in CRS with NP, and then a large phase two COPD study. That's all clipping away there. If we were to do anything in that, it would be with a partner. Those are very, you know, phase three work is very expensive. That's not something we have to on our balance sheet, although our balance sheet is strong for what we're doing. Great. Just remind us the balance sheet, your cash position and cash runway. Over $167 million at the last reporting. We get into Q3 of 2028. Okay. Great. Fantastic. Right on time. Neal, thanks so much. Really appreciate the time and look forward to a very, very busy, actually, 2026. Absolutely. Thank you for everything. Great project. Thanks so much, Neal. All right.