All right. Welcome, everyone, to Jefferies London Healthcare Conference 2025. My name is Roger Song, one of the senior analysts covering SMICA Biotech in the US. It is my pleasure to have the fireside chat with Aclaris Therapeutics. We have Dr. Neal Walker and then Hugh. Hugh, good to have you. Good to be here. Awesome. All right. We have quite a few to cover today, but I think it will be very helpful for Neal. Maybe you can orient the investors in terms of where Aclaris Therapeutics is right now, and then what's the key focus, and then we can go one by one. Sure. Thanks for having us. Aclaris Therapeutics is a clinical-stage biopharmaceutical company focused on both large and small molecule therapeutics. We currently have three clinical-stage assets with an additional preclinical-stage asset, which will come into an IND in 2026, giving us four clinical-stage assets in 2026. Right now, we have 2138, which is an oral small molecule inhibitor of ITK and JAK3, recently reported out positive top-line data in Atopic dermatitis this year. Now we'll be moving on to our second indication, likely in lichen planus or scarring alopecia in 2026. The next clinical-stage asset is a TSLP MAB. That's 045. It's best-in-class TSLP. We are studying that and actively enrolling a study in moderate to severe atopic dermatitis. Next, we have a bispecific, which combines the TSLP with IL4R, and that is going through SAD/MAD work as we speak, and we look to report out that data in early 2026. Finally, we have a next-gen ITK inhibitor where we engineered out the JAK3 component, and we're really excited about that molecule and its applicability in TH2 and TH1 diseases. That will get into an IND in the second half of 2026. Excellent. As I said, right, you have a lot in the pipeline. You have two sides of the story, small molecule and the biologics. With the Q coming from your recent acquisition on licensing, you got another major part of the story. Maybe we will stick with this kind of biologics. You have a two-compound, both with the TSLP as the anchor. The 045, you are running the phase two atopic dermatitis. We understand the previous TSLP compound did not work that well in the later stage development, although they see some signal, pretty promising signal in the early trial. Maybe tell us a little bit how you think about the 045 differentiate from other TSLP. I think you have a couple of key features. What should we expect to see from the phase two data readout in the second half of next year? You want to start with that, Hugh? Sure. Yeah. So the TSLP antibody that we have is highly differentiated based on its resonance time binding to TSLP for over 400 hours. We tested that against GSK, Merck, Upstream Bio, the TSLP receptor. They are 20 hours or less. This is about 20 times more time on TSLP. That is important because it is an alarm that has a very potent activity downstream in TH2 and activating that cascade. Ultimately, we showed that antibody in phase 2A translated that resonance time potency into efficacy that looked like 94% of our subjects had EASI75 response and 88% had IGA0/1, mostly clear in atopic derm. That was an open label, so take it for what it is worth. It was done in the US. Now we are taking that same antibody in phase two, and we will have those data at the end of 2026. That will be a blinded placebo-controlled trial that's ongoing now, and enrollment's going quite well. We're looking to show the differentiation because there isn't a TSLP yet that has shown this kind of activity in atopic derm. This would be a first-in-class approach for this target. Excellent. Okay. I understand the phase 2A is open label, but the drug effect is so profound. Let's just say you have some discount, you have a placebo effect. We know the AD trial, the placebo effect tends to be a little bit higher. Even with all that, you probably still have a pretty good positive phase 2B. The other part is you do have your partner from the licensing agreement. They recently reported on respiratory kind of indication. I know that the wording is the clinically improvement or enhancement. How should we understand that? What does that data give you? I don't think we see the detailed data yet. What data gives you the confidence this AD trial can be positive? Yeah. So what you're referencing is we have a partner in China called CTTQ, and they are busy enrolling two phase three studies in China, one in moderate to severe asthmatics and one in CRS with NP. They also have a large phase two study ongoing in COPD. What we messaged back in May is that we're still working with them to get all of the data sets so that we can have more, so we can have fulsome discussions with various BD partners, which we also talked about earlier in the year. Respiratory is a set that is quite expensive to develop. We don't have that balance sheet. We're looking to partner those programs ex-China. Some of the things we saw in those data sets were various pharmacodynamic markers and clinical effects that support what we saw in the AD study in terms of the potency and best-in-class potency potential that Hugh just mentioned. I think the other thing that gives us confidence on the AD side of things is we've talked a lot about this. There are shortcomings to some of these trial designs where people are enrolling either patients who do not have atopic dermatitis or have disease that is not even close to being severe or clicking that EASI 16 barrier. One of the things that we introduced into our study design was basically dual review. We have a central reviewer, a dermatologist who is on staff at the CRO. I'm obviously a dermatologist. Both of us look at the pictures as they come in. If there's discordance between either of us, we go to the site, we talk to the dermatologist on site, ask them, "Are you seeing something that we aren't seeing in the pictures?" Have a dialogue. That is when we click through and allow the patient to go in or not. That is important because it's something where we get asked this question all the time, "What about the placebo effect in AD?" The reality is it's one of two things. Either they didn't have it to begin with, that's why you're getting up over 70%, or the severity really wasn't an EASI 16. They come in and they immediately show a response, which is a faux response. We're enrolling actually quite nicely. I think it's a nice thing to have into the study to keep everybody honest. We have real moderate to severe AD patients in this study so far. Yeah. Yeah. I think AD trial now, it's a lot about the design and the conduct, right? So you design the trial correctly, power sufficiently, and then you need to enroll the right patient and then get the result. I think people have to remember, I mean, it is somewhat of a subjective process when you think about just at a baseline level, this is a red scaly rash. There's a lot of things that are red scaly rashes. Unless you're really paying attention and driving that discipline at the site, you're not going to get the right patients in. That's also why it's really hard to cross-trial compare these patient data sets when you look across, which we all like to do, of course. Yeah. Okay. Awesome. Yes. We look forward to that data set. It will be very important for the field as well for the TSLP in the AD. Interesting as the segue is to your second biologic, which is TSLP IL4R. I believe your plan is also doing the atopic dermatitis, maybe along with the respiratory. Before we talk detail about the bispecifics, how do you think about the position between those two? Maybe it's a good problem to have if both of them are pretty positive, particularly if the AD phase two is positive. Strategically, how do you think about this? We can talk more detail about the bispecifics. Okay. With what we think is best-in-class TSLP, those data will come out at the end of 2026 along with the 1b data in both severe asthma and atopic derm on the bispecific. We will have all the data sets at about the same time. The best case, of course, is that we show the same sort of data that we saw in the 2a, in which case we are going to have a real opportunity there to move forward in atopic derm. At the same time, with the bispecific being actually more potent than DUPIXENT and Tezspire combined in an ex vivo assay of PBMCs, we think that we have a real opportunity not just to expand into respiratory, but to really make a difference in max effect. DUPE is a good drug in AD and in asthma, but there's still a lot of room for opportunity. It's two-thirds of patients have a 75% response. There's a third that aren't getting a full response at all. We have that. You also have other things like COPD, where there's complete head space. When you get an approval with 37% response rate, that shows you the high unmet medical need. Having a very potent asset like the bispecific that goes after TSLP and IL4R, you have sort of that TESI and DUPE combination, but we showed four times greater potency than the combination. We even have a synergistic effect. We think there we have real opportunity to even expand the indications into more refractory disease even. Just in terms of maybe part of your question was the cadence of data announcements through 2026, it's likely to actually be the bispecifics that read out, the bispecific data sets that read out first. We'll have SAD/MAD in January timeframe in healthies. Next, we'll roll into two 1b studies, one in moderate to severe asthma, one in moderate to severe atopic derm. We'll get both of those likely before, just due to lower patient numbers than the TSLP MAB data set in AD. Okay. Yeah. I understand the sequence and then also the strategy. Maybe just homing on those two data sets for SAD/MAD, that's in the healthy, what you want to see before you do the AD and the asthma. Because right now, the plan is you do both. What situation you will do both and what situation you may do one or the other, or you do kind of both anyway? Look, we're already into the MAD. SAD went well, and I don't see anything that would prohibit us from doing both studies. We'll report out the traditional SAD/MAD data set, which will be safety, predominantly immunogenicity, some PK, and also some, for what it's worth, PD and healthies, which has more qualitative value than anything, and move forward. I mean, those studies are already in the process of being arranged, and we'll start immediately. Yeah. Probably you want to do that in those two indications in order to see the real signal rather than you would guess from the healthy. Is that the right interpretation? That's correct. I mean, look, the respiratory is taking a page out of the Sanofi FINO study playbook there. You can usually get a pretty good idea even at four weeks in something like moderate to severe AD. You certainly don't see a plateauing of effect at four weeks by any means. I think we're excited to see both data sets in short order. Yeah. And then for the phase two, phase 1b for those two indications, what's the design? Is it placebo-controlled or what's the key endpoints we're going to see? They're both placebo-controlled. Do you want to speak to the endpoints? I mean, they're the usual, right? In severe asthma, it's moderate to severe patients. It's a 12 to four. It's placebo-controlled mostly for the blind in the study. In the end of the day, we're looking at FINO and FEV1, and we're looking at safety and PK in a patient population. In the AD 1B, there we have five doses weekly. There we're going to be able to actually get a fair amount of activity data in AD. There you have more of a challenge, right? You have to have, with skin being the largest organ, you need to have the bioavailability. You need to have enough drug in order to have effect. There, I think we'll have a real opportunity to be able to do some comparative work as well with other assets. Got it. And then the question back to the strategy between those, because I understand you will have by the end of next year, you probably will have the data set from both in both in AD. Asthma probably is different because the TSLP you're not pushing forward by yourself. But for AD, how are you going to decide which one you will move forward if both data set, let's say, relatively promising, particularly for the TSLP 045, you have the placebo-controlled phase 2B? Yeah, it's a good question. I think there is room in these markets for both approaches. It just depends, like you said, what kind of data you see. I could envision where you have a nice effect in moderate to severe AD and think about something as safe as TSLP as being more of a background maintenance therapy in patients with mild to moderate disease, particularly if you're getting Q3 month injections. There are a lot of places to play in AD because it's a treat the flare. Lots of people compare it to psoriasis, which has a very different cadence to that disorder. I think anything where you can just layer in a smothering of the flares would be good. We'll see. I mean, we always have to think about capital allocation. I think if the bispecific comes out as we expect, then you could probably see us investing a lot more on that side of things. Again, we have active partner dialogue on the TSLP MAB vis-à-vis how advanced that asset is in three different respiratory indications just in China alone. Yeah, that's right. Another interesting thing I learned from one of my other covered companies, they see some data in AD population with asthma comorbidity. Would that be another maybe potential differentiator between the 052 versus the 045? Yeah, I think so. I mean, obviously, we know there's that kind of atopic triad. I mean, the ability to bridge across diseases and a lot of those exist in the same patient would be great. Keep in mind, of course, if you're going down into pediatric populations too, sometimes it's even more severe disease. The safety profile is going to be really important. When you're talking about differentiation, you want good efficacy, but you also want to be able to have a really good safety profile for being able to move down into younger populations too. Yeah. Got it. Okay. Great. As we mentioned, you do have another angle of the pipeline, though it's small molecule, which is also very interesting biology or the new target ITK plus JAK3. So maybe just tell us what's the current strategy because I understand you had positive data in the AD space as well, and then you are moving towards the other indication. Yeah. So 2138 hits ITK and JAK3 and obviously generated quite strong data, but we do have this next-gen ITK where we've engineered out the JAK. The whole idea there would be to get the same kind of clinical effect and maintain the efficacy of JAK, but not have kind of the JAK black box hanging over you. You can't have all your assets in one indication. It doesn't make a lot of sense. I can ask you the question again. We're saving a topic for our next-gen ITK. We think it's a game-changer molecule in that regard, potently hitting the TH2 side of the house, but also tickling TH1. You cover a company that goes after ITK selective. We think the right approach is hitting ITK and hitting TXK, mainly because we know there's a heterogeneity in a lot of these diseases. That's why the efficacy is capped in things like asthma with Dupixent and also AD with Dupixent, because there's a very distinct TH1 phenotype there that is not being addressed. By hitting both, you're able to basically broaden the applicability of your molecule to the patient population at large. We are super excited about that approach with the next-gen ITK. We think you go into all the same indications in respiratory and derm that kind of DUPIXENT out, and you do it with an oral small molecule. As it relates to 2138, great molecule, very potent, great PD, all in the aggregate showed with the efficacy and PD and safety that there's a lot of places one can go there. We decided to go into things like lichen planus, scarring alopecia because there's nobody playing there just yet. I think it's very similar to what Roivant did with their JAK1 TYK2. They went into dermatomyositis, which was smart, right? In these highly competitive landscapes that just get more competitive every day, it's all about what lead indication you select. We're not saying we won't go to some of these other places, but as a lead, we have to be very thoughtful. Yeah. Yeah. Makes sense strategically. And then maybe from the clinical perspective, how do you think about the research from atopic dermatitis to this lichen planus and the one part of the? It's a spot-on mechanistic match. I think the fact that both are skin disorders, you have good confidence that you're going to get the right penetration at the site of action. We do know, by the way, that there have been investigator-initiated studies run with others in the class, similar molecules that have shown quite potent effects. That gives us confidence in the biology and the scientific rationale. Interesting. Okay. Great. I'm not that familiar with lichen, just to be very honest. I think maybe a lot of investors are also the first time hearing this indication, but it's part of the alopecia or the scarring alopecia, right? Maybe just give us a little bit kind of a baseline in terms of what's the current treatment and what's the competitor landscape. You said it's less crowded, so it seems not much kind of going on there. What's the current treatment? What's the main need? You can address. Yeah. Oral steroids, cyclosporin, mycophenolate mofetil, all old drugs that are the reason we now have a great and growing market in AD because that was poorly addressed with those drugs. There is nothing specifically approved in scarring alopecia or lichen planus. The worry with lichen planus is it does have premalignant potential, particularly when it is situated on the mucosa. There is cutaneous, there is mucocutaneous, and then there is scarring alopecia, which is actually orphan, which can have its attractive nature. These things are devastating, particularly for women with scarring alopecia. Once it scars down and it gets past three to four years, there is nothing you can do. Tremendous unmet need, nothing approved. We are excited about that. If we can go in and own that space again as a lead and then expand from there, that is how we are thinking about it. Yeah. Obviously, you're a dermatologist, so you know the main need, and then probably a lot of the other company not aware. Any biology reason not many drugs are developing in that indication? It's just more challenging or you can say that? I think as it relates to the scarring alopecia part, they are challenging, but they're a little bit off the grid indications. A lot of people tend to pile into the same indications we all follow, right? I think just trying to get an understanding of maybe those that aren't as populated, again, for the lead. Then understanding the biology at a fine level. We know what JAK3 does. We know what ITK does. Interesting. Okay. What's the epidemiology for that population? For lichen planus, it's a prevalence of about 1% or so. And then lichen planopilaris, like I said, is orphan. It's about 50,000 patients. So not a terribly small number, large enough to make a market out of. And then some of the other scarring alopecia are a little bit more prevalent, like 2%, 3%. Okay. Yeah. Rare disease have their own place for sure, and then bigger market and have the other commercial implication. Okay. In terms of the ITK selective inhibitor, I understand you're hitting the TXK and then the TH1 portion versus ITK for the TH2. So beyond atopic dermatitis, any other indication you think can fit well for this ITK versus? I think virtually all the respiratory indications because we know that there's only a certain amount of headroom that you have with just hitting TH2 purely. We know there's a TH1 component to a lot of those. That is why you see a lot of people messaging about low, high EOs and all that, but they aren't able to address it. I think that for us is particularly exciting. Just as a reminder, we're advancing both ITK selective and ITK TXK. We have two programs that we consider next-gen. The similarity between both is engineering out the JAK3. Kind of look at it as a franchise. You have 2138. That's very broad-acting. Then you drill down, you remove the JAK3 into ITK TXK, and then you have very selective ITK. Got it. Okay. Great. Maybe that's a very important question. You have a broad pipeline, but I think you have been pretty capital efficient. How's the cash position right now, and then how this will support all the pipeline development? We have almost $170 million on the balance sheet that gets us into Q3 of 2028. We have plenty of runway. Our burn is such that the way all these kind of studies sequence on and off, we're only burning about $10-$13 million a quarter. Pretty efficient with our spend. Look, 2026 is going to be a massive year. We've got three readouts on the bispecific. We got a key readout on the TSLP MAB. We got 2138 starting in its lead indication. We got a next-gen ITK coming into view in an IND and starting clinical studies. We believe that the bispecific and our next-gen ITK are massive game changers because of their broad applicability. We'll prioritize the spend accordingly. Excellent. Great. We're right on time. Congrats for all the progress so far. We look forward to 2026. Thank you. We appreciate it. Appreciate it. Yes. Thank you, everyone. Yes. Thank you, everyone.