All right, welcome everyone to the day one of Cantor Global Healthcare Conference. For the next session, we are very excited to host the team of Aclaris Therapeutics. Gentlemen, thank you for taking your time. Representing Aclaris, we have Dr. Neal Walker, CEO, President, and Chair of Board of Directors; Joseph Monahan, Special Scientific Advisor; and Hugh Davis, President and Chief Operating Officer; myself, Prakhar Agrawal, a biotech analyst at Cantor. So maybe, Neal, why don't you just start with a quick overview of Aclaris and some of the key priorities for the company right now? Sure. Thank you for having us here today. So Aclaris is a clinical-stage biopharmaceutical company focused on developing both large molecule therapeutics and small molecule therapeutics. We actually have a world-class research and discovery operation based out of St. Louis, which really gives us large company capability within a small company. And currently, we're working on four different assets. The first asset is a TSLP monoclonal antibody that is currently in a study in atopic dermatitis that is enrolling quite well already. We expect top-line data on that in the second half of 2026. We also have a bispecific built off the same TSLP construct paired with an IL-4R, and that is in SAD/MAD work, and that is due to read out towards the end of this year. And then we'll roll into two Phase 1bs, which will both read out in 2026. We also recently reported out strong data with ATI-2138, which is our oral ITK/ JAK3 small molecule inhibitor in atopic dermatitis, and we'll be moving that into an alternate indication called alopecia areata later in the year. And then finally, we have an ITK NextGen program that is due to get into IND in 2026. So a lot of catalysts, a lot of data events to come in 2026, about four or five, actually. Okay, great. Yeah, I mean, several catalysts and several assets that are moving into mid- to late-stage development. But maybe I want to touch on the bispecific first, if we can start there. ATI-052, which is your TSLP bispecific. Now, when we review the landscape, a lot of the bispecifics are going after IL-13 cytokine rather than IL-4. Why is that, and what's the benefit you foresee in targeting the IL-4 cytokine? Hugh? Yeah, hi. Yeah, thanks for having us. So the advantage I see for ATI-052, or TSLP IL-4R, is that we're hitting both the top and the bottom of the TH2 cascade. And by hitting both IL-4 and IL-13, inhibiting their action on IL-4R, we'll have a much fuller response relative to hitting IL-13 alone. And so when we look at the IL-13s, they've been good success in derm, but they haven't crossed over into respiratory. And so I think the path that we've taken will give us the broader opportunity across all the indications in both respiratory and derm. Got it. And could you remind us about the properties of the half-life and the potency for each target? Yeah, we haven't disclosed the half-life for the bispecific as yet. We will be putting that out toward the end of the year when our SAD/MAD Phase I healthies is complete. But the way the bispecific has been constructed is to be able to have affinity that covers TSLP completely and inhibiting its action over the dosing interval up to 400 hours of residence time. And also, at the same time, being able to hit the IL-4 receptor with an independent 2+2 design. So it's built to have high affinity against both targets, but with complete neutralization of the alarmin. Stoichiometry is usually a key consideration for the bispecific design. You mentioned the 2+2 design for ATI-052. Does that solve these challenges about the stretching material? Have you done some preclinical work around that? Yeah, so as Neal pointed out, we have a research and preclinical group in St. Louis as part of Aclaris. And they've done a really nice job in showing that the TSLP binding sites and the two IL-4R binding sites are actually independent binders that can be fully saturated independently of one another. So the molecule has the greatest potential for success inhibiting both targets. We actually plan to present that data formally at our upcoming R&D Day in October. Okay, got it. Great. And one sort of broader question around the bispecifics is the pros and cons of bispecifics versus co-formulation or a combination-based approach. Maybe just a broader question around these approaches in I&I diseases. What's your take on this? Yeah, well, yeah, you can see both approaches are being taken, bispecifics being more common. But the rationale around a single bispecific hitting two targets is that you have one molecule, and it's able to do the job as long as it's in the same site and the right affinities against the two targets. It's more efficient at being able to have two separate antibodies in the same milieu. So you have lower cost of goods, better pricing, insurance company coverage, but also less risk of anti-drug antibody because you have one protein rather than two separate proteins in the API. So again, with the bispecific, in the case of ATI-052, we've shown that in PBMCs that are activated by TSLP and IL-4, we've been able to show that we can inhibit the CCL17 production, four times greater potency than Tezi and Dupi combined in that assay. So it shows that if you build your bispecific properly, it has a lot of advantages over the combination. Right, got it. And the asset is in a Phase I SAD/MAD trial. So maybe just remind us about what are you testing there and when would you expect the trial to read out? Right, so it's a healthy volunteer SAD and MAD initially. Those data will report out first part of the year. It'll complete at the end of this year, and safety, tolerability, and PK. And it's important because, again, we're going after two targets. And so with sort of a Dupi-Tezi combo in one molecule, you need to make sure the safety profile is appropriate for the respiratory and derm indications. And then the PK is going to be particularly important. And so we have a YTE mutation in the Fc, and that'll give us enhanced half-life and should also be an advantage for us, but we need to nail that down in humans. Okay, and what about the immunogenicity profile? Will the healthy volunteer data be enough to de-risk that? Yeah, I believe it will be because the TSLP antibody that's used in the bispecific is the same as the ATI-045 mAb. And we already know that that antibody is very low immunogenicity risk. And so I think that'll carry over into the bispecific. Okay, got it, and I know you have to announce plans for testing two cohorts in different indications in the Phase 1b trial. We haven't announced indications, but will both be in derm, both be in respiratory? If you can provide more color there. There'll be one in respiratory and one in derm, and both of those will read out in 2026. Okay, got it. And maybe moving on to your TSLP antibody ATI-045. Obviously, one pushback I get from investors during my discussions is that TSLP space is getting crowded on the antibody space, and tezepelumab is already a very potent antibody. So do we have enough data to suggest that the potency differentiation that 045 has over Tezi will be enough to translate clinically? Yeah, I think we do. So far, all of the other TSLPs that have come out, even though it's a very crowded area, as you point out, are not going into atopic derm for the most part. We took that risk because we think it's a good bet to make based on the 2A data. It's because of the potency that ATI-045 has. It's not just potency, meaning that it has the same efficacy at a lower concentration, but it's actually how it gets there. It gets there through a very low off-rate. That low off-rate off of the TSLP translates into a very long residence time, 400 hours. We compared that to the GSK clones, the Merck, the Upstream Bio antibodies, and we know that those are on the order of 10-20 hours versus 400. As we move forward, we think that that's a real advantage. Got it. And can you walk us through some of the key learnings of the Phase 2a data that was conducted in the U.S., the proof of concept trial? And that obviously gave you conviction to start the Phase II monotherapy trial. Sure. Yeah, the 2a trial was a 24-week trial in 20 subjects and at seven U.S. sites. And what we showed was heretofore extremely high activity in that EASI-75. We had 94% response, and 88% of the subjects had an IGA of zero or one, which is clear, mostly clear. And we think that not only the potency and the residence time translated into this activity that we saw, but at the same time, we know that 24 weeks of therapy was really key to success. And we actually showed that the highest response rate was actually four weeks after the last dose at week 28. And that actually carried on for an additional 10 weeks after the last dose with EASI-75 and IGA 0/1 scores still above the 75% mark. So we're very excited about the potential now for the Phase 2a trial or, sorry, Phase II trial that's ongoing. Yeah, and I think just two points on that. It really validated all of the preclinical work that we had done. So you sometimes wonder if that's going to translate. And we had done five or six different assays comparing to the relevant competitive landscape showing that it's important to bind up the alarmin, which seems quite logical, right? You don't want to bind it and then cycle off. You want to bind it and hold it so it never has a chance to hit the receptor. And the first kind of clinical proof point in our hands with that was the AD study. Yes, it was open label, but I had the ability to go and we were doing diligence on this asset before we in-licensed it and chat with some of the dermatologists who conducted the study and just get important contextual tidbits from them about kind of what did they see beyond the data in terms of the rapidity of the response and how patients felt, which is really what happens in the real world. Again, I think that was a very strong proof point and just aggregated onto the preclinical evidence in addition to what we know from our partner doing various studies in China. We feel quite confident in the potency narrative that we've put out there. I do think it's important in AD when you consider that just look at the literature. This is all over the literature that if you accept the fact that you get about 15% of the mAb absorbed into the skin, then potency has to matter at that level, right? You need something that's going to bind and stay stuck. So we'll see studies enrolling and we'll see what we get. Yeah. And so that's the reason why tezepelumab was not that effective in atopic dermatitis. I think it's important. Yeah, if you look at it, if you look at all the other competitors in the TSLP landscape, everybody's orders of magnitude more potent than Tezi. So I think there's certainly room there, particularly when you look in the peripheral tissues. Got it. And in that trial, I mean, obviously, there were a little bit more moderate EASI patients. I think the whole AD trial space, you're seeing more moderate patients getting enrolled into the trials. But maybe just walk us through what gave you confidence that as you move to a little bit higher baseline EASI, you shouldn't see much difference in efficacy. Yeah, if you look at the literature, there's really no functional difference between a moderate and severe patient. It's really a number, right? Once you click over 21, okay, now you're in severe. But what's the real practical difference between an EASI 20 and an EASI 21? Nothing. You'd struggle to tell the difference. Now, if you're looking at the very top end of that distribution, like tails of the distribution, the really recalcitrant EASI 60s or 70s, yeah, of course, those patients probably have a little bit more going on, a little bit different presentation. It might be more difficult to treat. But in general, moderate and severe are very similar in their response rates. I think that's true when you look at a lot of these different therapeutic classes. So, I'm not. In fact, I'd rather have more severe because I'm going to have less of a chance of a placebo effect. Yeah, absolutely. And so we have the ongoing Phase 2b. Just remind us how the enrollment is going in that trial. It's going quite well. We're ahead of plan, which is actually remarkable, at least for me, because it's summer and usually it's a little slower at that time. So we're doing quite well, even though we're putting in a lot of extra guardrails, more than most, probably more than any other company in terms of just making sure we're getting the right patients in the study. Got it. And just remind us the geographic split of this trial? So we're U.S., Canada, and also planning a presence in Europe. I don't have an exact split because it's actively going on at the moment, but it isn't just in the U.S. Right. And you mentioned about guardrails to manage the placebo as well. So maybe just before we get into the steps that you're taking, why are we seeing such a high placebo response in atopic dermatitis trials? I mean, last year we saw that with AnaptysBio, Q32 Bio as well. Maybe just your views. Yeah, I think we've seen an uptick in that over the years when you look at compare when Dupi did their studies and got approved in 2017, much different landscape now. Now you're getting people who have cycled through various therapies. So you're losing some of the patients that might be ideal, which again, more severe, right? Less likely to respond to placebo. I think you're getting, unfortunately, too many mild patients pushed into these studies as well in an effort to competitive enrollment. It's challenging. So the placebo rate, at least as it relates to the mean change from baseline on EASI, has migrated from, call it 30%, maybe up to between 40% and 50%. And it's just, it's a phenomenon we're seeing. It starts at the site level and getting the right patient in and making sure that they're not too mild because that's when you're going to see that. Okay. You mentioned about the site. So are you using a lot more dermatology-focused sites here? We're almost exclusively using derm-led sites because you want a board-certified dermatologist adjudicating this. Atopic derm can often be a very confusing disease to diagnose. There's things that mimic it, and usually, you don't have to biopsy the lesion to diagnose it. It's a clinical diagnosis, but there are things that aren't evident to the untrained eye, so if you get a site that's just used to throwing in patients, let's say with a red scaly rash, that's not atopic dermatitis. I've seen everything from fungal infections all the way to genodermatoses get enrolled in these studies over the years, and it's just people make mistakes, right, so the way to guard against that, the only way to guard against that is to adjudicate pictures as they go into the study, and you can do that through a central reviewer who's a dermatologist. Then in our case, we're doing both. We have a central reviewer through the CRO who's a board-certified derm and then me. So we do dual approval on that. If we're not sure, we have a conversation about it. If we're still not sure, we call the site, talk to the physician who enrolled the patient, try to understand the background context about what they saw that we're not seeing in the picture, and then make a call. I can tell you in the ATI-2138 study in AD, we probably excluded over half of the patients that were put in front of us because they either didn't have AD or it just wasn't of the correct severity. So that's one piece to control the placebo rate. And if you think about it, it's kind of logical that if you put somebody in who perhaps doesn't have real EASI 16, but then they come in and get adjudicated once they're on treatment, they're immediately going to get assessed lower in almost all cases, right? Because they weren't EASI 16 to begin with. So you can do that by looking at the pictures and saying, does this look like the calculation represent? And there's two other pieces to that. One is EASI as a composite score of extent and severity. You'd much rather have severity drive that number because, again, if they end up in the placebo group, less likely to respond than if you have a lot of mild extent and you just use good skincare, that could respond. Yeah. And the other interesting piece is some patients may be flaring up while entering the trial. So how do you control for that? Are these really, as you mentioned, EASI 20 or they are maybe EASI 15? But at the time of entry into the trial, these patients were EASI 20. Yeah. So you look at the, so what you get when we get the pictures and the EDC data, and it's all blinded, of course, but you get a flavor for that. And you can ask the doctor if you're not sure if it looks like you got an EASI-90 on your hands or they're headed. You can tell when basically by looking at the pictures that they're in a bad flare, you have a conversation. Say, is this a one-off or is this kind of stable disease? Because you don't want that, to your point. So that, again, I just go back to the pictures. And that's, it'll be, it's important when you start looking at how they're doing as the study proceeds and whether the data is concordant or not. Meaning we've seen this before where an EASI-90 doesn't necessarily match up with an IGA score. Why is that, right? It's good. So those are the types of things that you can use the pictures as a tool. Do you also use blood-based markers like TARC levels to, or is that not feasible in the trial? That's a little bit more challenging, I think. And that's why you've seen that in some of those studies. There can be a variability there. Now, if you biopsy and tape strip everybody, that's impractical, right? That would be more consistent. We found that in our ATI-2138 study that the consistent robust decreases in those PD biomarkers were in the skin and maybe a little bit not as robust, although still solid systemically. Got it. It's a pretty fascinating topic, but maybe in the interest of time, we can probably move on to some of the longer-term questions for ATI-045. So when the Phase II reads out next year, what's the profile that you're hoping to see for it to be competitive in this space? So first of all, the AD space has a ton of head space, right? We're not like at the end game with psoriasis where we're talking about kind of dosing duration now and things like that because we've maxed out the PASI score. In AD, we're not even close to maxing out, right? I mean, maybe JAK inhibitors are close to getting there, but obviously they have the black box piece. So I think on the biologic side, there's a ton of room to think about durability, onset of action, whether you tease out the different endpoints of interest, like what makes the patient feel good or bad itch, right? So things like that we'll be looking closely at. And obviously, the OX40s have a different profile than the IL-4Rs, which are a little different than IL-13. There's room for all of them, mainly because in this space, there's a lot of treatment layering. I mean, it just happens all the time. Yeah. Yeah, we've seen that with psoriasis as well. Yep. And so, what's the long-term strategy here for 045? Will you be looking for partnerships for either of the? I know you have said respiratory might be one sort of area where partner may make sense, but it can be a little bit challenging for investors to really understand because how come one indication is partnered out and the other indication is not? So just maybe help us put some meat on the table. No, you're absolutely right. It'll all go together. I mean, it's exceedingly difficult. You can only really parse out indications on a kind of regional basis, maybe. So we're already having the active dialogue on the respiratory front. The AD would be the cherry on top from my perspective because you'd be the only game in town there. Okay. Got it. And so maybe let's talk about the ITK/JAK3 inhibitor and then some of the data that you have generated as well recently. Before we go into the specifics, walk us through the differentiation versus, let's say, Corvus had some data in atopic dermatitis as well for their molecule CPI-818. So how is your molecule different versus theirs? Yep. So ATI-2138 is a dual inhibitor of ITK and JAK3. The ITK component of ATI-2138, if you compare it to the CPI-818 compound, it's somewhere 20-50 times more potent. And that was seen in enzyme assays and it was seen in cellular assays. And also, if you look at target engagement in the clinic, we got similar target engagement at a 10 mg dose compared to a 200 mg dose of the Corvus compound. So we saw a translation of the higher potency with ATI-2138 compared to the Corvus compound in the clinic as well. Right. And so on the data that you showed, I think it was back in June, I thought one thing that was super interesting was the itch response, which looked probably even better than JAKs. So maybe just walk us mechanistically why that is happening and how do you see that translating to when you do the trial with your ITK selective inhibitor? Yeah. So JAK inhibitors typically do have a good itch response. That's typically driven through JAK1 because JAK1 regulates the signaling of three key pruritic cytokines, that being IL-31, IL-13, and IL-4. With 2138, we're not hitting JAK1. We're only hitting JAK3. JAK3 does regulate IL-4 signaling, but ITK through its blockade of TH2 cells and activation regulates IL-31, IL-13, and IL-4. And we've shown that in vivo studies and in cellular studies. So the fact that ITK can knock down these three key itch-driven cytokines leads to, I think, the conclusion that the anti-itch property of 2138 in this AD study was primarily driven through ITK. Right. Remind us why you're not testing this in atopic dermatitis, but moving forward with alopecia? We like it as an indication. We think the profile of an ITK next gen is better suited. That has the potential to be a real game changer in the space. So we think that 2138, given its mechanism and the fact that it has JAK as part of it, probably better suited for something like alopecia or vitiligo, where long-term JAK use is just more first line versus second line in AD. Got it. Okay. And so the next gen ITK, that will be obviously selective, but how will the potency differ between 2138 or the Corvus molecule? Yeah. So the next-gen compounds first will have engineered out the JAK3 cross-reactivity, so they won't hit JAK3. Secondly, from a potency standpoint, they'll be comparable or better potent, have better potency than 2138. So they retain at least the differential of 2138 versus the CPI-818, which, as I said, 20- to 50-fold. They're also going to. There's a sister kinase of ITK called TXK, which is expressed in T cells. And with these compounds, this next-generation set of compounds, we're engineering the compounds such that they have differential cross-reactivity with TXK. So we have some that are just ITK selective, and we have some that are ITK and crossing over on TXK. Having this range of potencies and pharmacologies will allow us to differentially modulate different subsets of T cells and potentially have applicability in different diseases. And then finally, I think we're looking at improving the half-life of these next generation compounds, which would facilitate once-a-day dosing. What's your view on the Corvus data in atopic dermatitis? It's been a small sample, and they've been releasing cohort by cohort. But as you make decisions on broader investments for this program, any thoughts on Corvus data? Yeah. I mean, I think they proved out the concept of ITK in the last cohort. It has a signal in AD, and that's not surprising if you look at the literature. And I think, and that's with a relatively modestly potent molecule. And I think that's why it was important for us to get our own data out there and show the PD work that we've done to support the art of the possible with a very potent molecule that has the right properties. Okay. And what's the timing of entering clinic for the next gen? End of 2026. Yeah, and in terms of the cash situation, just remind us what's the cash runway right now and also the non-dilutive financing options that you could explore? Yeah. So we have a latest report, about $181 million on the balance sheet that gets us through mid-year 2028 and easily 15 months of cash post the last catalyst, and we're able to deliver everything we've talked about with 052 through 1b POCs, the TSLP mAb in AD, 2138, and an additional indication, ITK IND plus POC study. We can deliver all that. In terms of non-dilutive capital, I mentioned before we have active BD dialogue going on on the respiratory front. But I think more near term, we have that second piece of our IP royalty with Sun Pharma that we're looking to monetize. If you recall, we did a similar deal last year with the Lilly royalty stream. So we see that as low-hanging fruit to bring that in. Can you remind us about the timing of that Sun Pharma possible monetization? We were in dialogue now in terms of monetizing. I mean, I would, it could be possible to do this year, which would be great because we'd basically almost end the year with the same amount of cash as we started the year with. Okay. All right. That's all the time we have today. Thank you to the Aclaris team for joining us, and thank you to the audience for listening.