Welcome everyone to Jefferies 2026 Global Healthcare Conference. My name is Roger Song, senior and cover small/mid-cap biotech. It is my pleasure to have the fireside chat with our next company, Aclaris Therapeutics. We have a full crew here, Neal Walker, CEO, Roland Kolbeck, CSO, and Hugh Davis, President. Welcome, gentlemen. Thanks. Awesome. All right, Neal, why not you kick off? Tell us what's the high-level overview of Aclaris as of now, and then what you are expecting to see in the coming months to year. Sure. Hello everybody. Neal Walker, the CEO of Aclaris, and Aclaris is a biotechnology company focused on both large and small molecule therapeutics. We have three assets in the clinic, one on the way into the clinic, getting into an IND in the back part of this year. Currently, we are running two phase I-B studies with our ATI-052 bispecific. It's a TSLP IL-4R. Those are due to read out in the second half of this year. We are also moving our TSLP mAb through a moderate to severe atopic dermatitis phase II study that will read out at the end of the year. We have, on the small molecule side, ATI-2138 is our oral ITK/JAK3. We'll be starting up a study in lichen planus in that in the second half. Finally, we have our next gen ITK, where we've engineered out the JAK3. That is headed towards an IND in the second half of the year. Excellent. Well, you have a lot of cats in your house, maybe we pick one to start. Why don't we start with the bispecific, because probably that's the one investors are most interested and then probably have the biggest upside potential. Maybe we start from the field, right? Bispecific, multispecific is definitely the buzz right now for atopic dermatitis. By the way, we just put out a AD landscape update a couple of days ago, right before the conference. We did a pretty comprehensive, derm survey, talking about all the new modality. Your name is up there, so we put you there, and then I think you get some pretty interesting finding. Everyone, if they're interested, can take a look. Maybe from your modality, which is a TSLP plus IL-4 receptor. We see data from Pfizer. We see data from Sanofi. Maybe just from your perspective, how you see the read-through from those competitors/peers read through to your program. Sure. By the way, that was a really well-done assessment of the AD landscape. I read through it over the last couple of days, so thank you for that. Thank you. On the competitive landscape front, I think we've seen a few large data sets now, starting with J&J looking at an IL-4R, IL-31, which didn't meet the efficacy levels that they would've liked to see. Later on in the first quarter, we saw Pfizer report out on highly positive data with their tri-specific that hits IL-4, IL-13, and TSLP. Finally, we saw Sanofi report out data on their IL-13, TSLP in AD as well, which sounded a little bit mixed with the limited data disclosure. I think the best read-through for us was the Pfizer data because our bispecific targets IL-4R, which by definition takes out IL-4 and IL-13, and we also hit TSLP, which is exactly the three inflammatory mediators that the Pfizer drug hits in a tri-specific format. We were excited to see that. We think that in addition to a number of recent preclinical papers that show the advantage and the additive and synergistic effect that one gets by targeting two different aspects of the same inflammatory pathway. We think it makes sense to continue to pursue that in AD, and we're looking forward to reporting out on our phase I-B data. Excellent. All right. You did report some SAD/MAD data early on in healthy volunteer. I think the PK looks pretty good. Half-life is also supportive, the long-acting perspective. Also ADA, the immunogenicity, I think that's probably the one of the key component and appreciated, but I think they're increasingly aware by the investor community, this is a critical material with the J&J's compound. All of those aspects seems pretty good. I know you want to highlight the PD, seems unappreciated by the people. Maybe Hugh or Neal, you want to talk about the SAD/MAD finding, why you think it's a lot more de-risking than other people think? Sure. I'll take that. Right, we read out our healthy volunteer SAD and MAD data, and the pharmacokinetics was quite good. We see duration of PK that takes us out to 16 weeks. Just from a PK perspective, we think we could dose this drug up to monthly, I'm sorry, every three monthly. Then the pharmacodynamics took us a bit by surprise in that we could see by looking at both sides of the molecule, the TSLP binding side and the IL-4R binding side, that we could show complete inhibition of either TSLP or IL-4 activated TARC secretion at 100%. Our MAD studies took us out again for 12 weeks after the last dose. Our TSLP potency was really quite evident because it actually took us out throughout the whole 20 weeks of the study, which was 16 weeks after the last dose. On the IL-4R side, it was also nice to see that by having this avidity to the target, the receptor, that we could also get 100% inhibition with the IL-4 stimulated TARC. This molecule has the ability to really hit both sides, both targets, in a much more impressive way, we think, than either is able to do alone. What's the level of the ADA you have been seeing? Yeah. For the healthy volunteers, we saw very low incidence and very low titer of the incidence. We saw no impact on clearance in terms of the PK. In fact, our half-life is greater than three times that of Dupixent. On the other side, this activity that we're seeing is really showing us that it's really a very potent molecule throughout the whole dosing. It's pretty difficult to put into context in terms of PD comparison because everyone uses a slightly different assay. Maybe what's the closest head-to-head comparison we can make for the PD markers, understanding your healthy volunteer ex vivo stimulation. What should we looking at? We don't want to make a not necessary apple-to-apple comparison to other programs. I think the PD assay we have developed is, first of all, a very, very robust PD assay. We are stimulating with IL-4 concentrations and TSLP concentrations, which are probably about 500 to 1,000-fold above the levels you would see in disease. I think possibly other comparable PD effects is, again, are assays where you stimulate ex vivo with cytokines and for example, you look at downstream STAT6 phosphorylation that has been done in monocytes by others. I think that's probably an assay which is similar to what we have done here. We looked at CCL17 release. Others have done simply receptor occupancy studies using flow cytometry. I think that's another way of doing it. Overall, we feel really, really comfortable with the results we have generated with our assay. Yeah. Okay, good. Obviously you will not stop at here, right? You just want to give us a little bit early kind of lead indicator how the compound works. You are in clinic in patient asthma, and then atopic dermatitis, and we can ask about the expectation for it in a minute. Interestingly, you also recently announced you want to move forward into phase II for asthma. You already made that decision. The question too for why you want to do that right now already, start the phase II, at least the planning now, and then how you make that decision. You already see some data or what is the maybe external research you already think is enough to move into the asthma? I think it's based on what we already know internally, the argument about whether a bispecific with a construct that hits IL-4R and TSLP will work in a setting where we already know Dupixent and tezepelumab work quite well in that indication is a very easy argument to make. All we're simply saying is we've got the ability to target both molecules within the same construct. From our perspective, that doesn't take a lot of thinking about. If we had the balance sheet, we would certainly go forward with both AD and asthma at the same time. In light of constraints there, we're going to operationalize on the asthma study. With the recent capital that we raised, we will be actually starting that in the fourth quarter of this year. We're excited about that. Next would be AD. Got it. You start fourth quarter this year. That will be how the timing going to look like compared to your phase I-B readout? We get the phase I-B readouts in the early second half, and then we'd roll in towards the later part of the fourth quarter into the phase II asthma study. Got it. Let's talk about those phase I-B data readout. Maybe we start with atopic dermatitis. That is well designed. It's placebo controlled, with decent size. What you want to see there, and what will going to make you feel comfortable moving? I think from a baseline level, what I'd like to see, just given that it's a small study, is good directionality in terms of that additive or synergistic effect. That's what I expect to see in looking at the aggregate of the PD and clinical effects that we're studying in that particular study. In terms of the next layer up, if we saw a 5% bump along a number of efficacy measures, that would be kind of the next layer of upside. I think the home run scenario is if we see basically a 10% bump on various efficacy measures, which would be quite clinically meaningful in that condition. Got it. Okay, great. By the way, that resonate pretty well with the survey as well. 5%, 10%, 15%. I think for novel mechanism, multi-specific, people probably looking for 10% as the clear superiority, but 5% start to think about it's different. Right. Okay, good. What will the next step look like for the AD? I think this is a classical Aclaris type of the proof concept, fast, quick, and then capital efficient way to do it. What kind of a scenario of the profile will make you, what kind of decision for the next step? Yeah. I think if we hit even the base case, we're going to move forward into atopic. We really believe in the power of this asset. We know that TSLP is a key component in the pathophysiology of this disease, and pairing it up with a downstream mediator like IL-4 just makes sense. I think if we achieve the efficacy bump that we expect, this could absolutely represent first-line treatment option. Okay. Because this time you test one type of dose, right? How big the dose ranging you will do for the next step? You want to comment on it? Yeah. Your standard approach is going to be three different dosing exposures, if you will. Honing in, and that's what the phase 1-Bs are going to be able to do for us, honing in on the exposure response in a patient population, in order to understand the dose and the dosing interval that can get us to that trough concentration that's going to be meaningful. Your standard would be three active arms with a placebo, but you're going to have to figure out that dose and dosing interval together. Mm-hmm. Potentially you will test every three months, but probably it's at the maintenance or a bit longer after the 16 or 24 weeks induction. Is that the? Yeah. In AD, you're going to do induction. In asthma, we're considering induction as well. Sometimes it's not done, sometimes it is. I think you can get to steady state faster and be more meaningful. Earlier in the trial with induction. At the end of the day, it's really going to be about what the maintenance is going to look like in terms of continuing the sustainability of the effect. Okay. Then just confirming, the base case is comparable to Dupixent or you want to be 5%? No. No, I think we want to see directionality in terms of that additive or synergistic effect. That would mean that we're better than Dupixent. Better than Dupixent. Okay. Got it. All right, so that's atopic dermatitis. I think Pfizer already made the decision moving to the phase III, so that's, as you said earlier, this is a more direct comparison to your approach that give us some of the confidence. On the asthma side, in a single dose, right? I understand why you want to do that, because this is more validated, you didn't want to see if any surprise to you. Tell us what you want to see from that single dose phase I-B, and then, or you already made decision moving to phase II, but on the other side is, what kind of profile will make you feel more or less confident for the phase II? Yeah. like you said, in the asthma study, we are testing a single dose, and the endpoint is after four weeks of dose administration. It's going to be, again, it's a small study. It's 16-patient study, and we are enrolling moderate asthmatics that have high levels of T2 markers, high levels of FeNO above 35 ppb, also eosinophils above 150 circulating eosinophils I'm talking about. What we want to see in that short time period is a pronounced effect on these two biomarkers, the FeNO reduction and the reduction in eosinophils. As an efficacy marker, we're going to look at FEV1 improvement in that patient population. Based on other biologics within that timeframe, we are expecting to see similar or better effects as Dupixent. I think that's roughly what the expectations are for us. Got it. Similar question, what kind of delta you want to see, you feel good about a phase II? Yeah, I think it's similar like in AD, if you see a little bit of a bump 5%-10% improvement, I think that would be really great. Mm-hmm. Okay, good. All right. We don't want to talk about your other kids. Before we move on to other pipeline, anything else you want to highlight for the ATI-052? All right, good. ATI-045. This is actually an even bigger phase II trial for AD. The same TSLP, but just the monoclonal antibody. What you want to achieve there? You already have the respiratory study done in China, and then they report a positive data, and then what you want to see from that trial, and then what kind of profile you will think it's worthwhile continue pursuing and then also balancing the ATI-052. Yeah, I think we have to think about capital allocation in light of having positive data sets across the board. I think if the data is spectacular with the TSLP mAb, then one would entertain moving that forward as a monotherapy. In AD, particularly given the safety history with TSLP in general, you could definitely see a place for that as an orthogonal mechanism to something like a Dupixent. That would probably be better done in a partner's hands with a full complement of respiratory and atopic dermatitis data. We'd like to see stat sig in the study, we'd like to see efficacy that is on par with Dupixent. I do think that the bispecific, if it keeps producing the data that we expect it to produce, will necessarily cannibalize the TSLP mAb. I think we're going to be over-indexing on the spend on the bispecific moving forward. Yeah, makes sense. I know you want to over-index for the bispecific, but if you do the partner for the TSLP mAb, would that create a competition? I think you say something like this is the best in class TSLP. Maybe other company, your partner can use that combination. Yeah. I think they're just different. The market can be served in numerous ways, just as we've seen with orthogonal mechanisms out of companies like Nektar or Sanofi with OX40 and things like that. There's lots of different patient subsets that one could go after, and I think looking at a bispecific is very different if we're thinking about that as either first line or perhaps hitting those patients who are Dupixent failures. I think there's room for both. This is a very fast evolving market in the AD space at least, and still a lot of room for multiple approaches. Make sense. The other thing is in terms of data timing, I think you just said phase I-B for ATI-052 is early part of the second half, which is the coming weeks. In terms of the TSLP, it's still fourth quarter. Yeah. The cadence of data will be the phase I-Bs will come first. Can't tell you which one will be first, but that'll be first. The last data readout of the year will be the TSLP mAb. Got it. Okay. Thank you for confirming. Then we talk about this, you have a China partner. Basically, they acquired the rights for the mab. They did say top line respiratory indication is positive. Do we expect to see any data from that program or what have you seen and how much you can disclose? Yeah. Not much in the way of updates on that from when we last talked about that at a earnings call a few earnings calls ago. We know that they're in two phase III studies with asthma and CRSwNP, and a phase II study with COPD. As near as I can tell, those will be reading out sometime either late 2027, maybe into 2028. Not exactly sure. Again, just to reinforce what we had said a number of months ago, everything we've seen to date is quite encouraging and supports our position about the potency of the compound. Okay. Got it. Oh, for the phase I-B, those two readouts, you just say you may not wait for both to read out, you can put them one by one? Yeah, it just depends when they both finish in, and so it's very likely just sitting here today, I would say that they would be reported at different times. Okay, good. Maybe talk about the small molecule franchise. Sure. You have a lead, it's ITK/JAK3. Data, I think for AD is also pretty encouraging, but also you decided not to move forward rather go to the alopecia or lichen planopilaris indication, and then you also move forward with selective ITK. Just tell us a little bit more about this franchise. Sure. It's kind of followed a natural progression, if you will. The first molecule we had innovated around was ATI-2138, and you can think of that as a pretty large hammer. It hits ITK, TXK, and JAK3, and it does so quite robustly. There's a lot of indications that we could have gone after. We used atopic dermatitis as a proof of concept in disease. We like the ITK next gen, where we've engineered out the JAK3 as a better target product profile, just engineering out the JAK for indications like AD. Recently, we just completed a pretty lengthy indication down-selection process and came up with lichen planus, which is a great mechanistic fit since ATI-2138 is the only therapeutic that has JAK inhibition in its mechanism that also hits the T cell receptor. That's important. Think of combining a cyclosporine, hitting the T- cell receptor along with a JAK mechanistically very potent in terms of anti-inflammatory activity. Lichen planus was great for that because part of its pathophysiology is antigenic stimulation through the T cell receptor. It has a very unique mechanism that's tailor-made for that indication. The other factors there were just efficient clinical drug development. There's nothing approved in that category. We have proof of concept with the use anecdotally with cyclosporine, with other JAK inhibitors, strong results there on the efficacy side. There's three different phenotypes that one can go after within lichen planus. One is mucosal, which is pretty devastating when you think about some patients needing to be tube-fed that the ulcers get so burdensome in the esophagus and the oral mucosa. Cutaneous is the second phenotype, and then third would be that which affects the hair follicle and causes scarring alopecia. I think it's pretty exciting. It's a way to go study and pick up three indications within one subset of disease, and it's just a beautiful mechanistic fit. Got it. Then in terms of the current JAK inhibitor, any off-label use or any anecdotal use for lichen planus? Yeah, there's been some IIS studies done. There's been case series of people using various approved JAK inhibitors off label, which is great because it just paints the picture for us of understanding the probability of success and that's even with what we would characterize as sub-optimal mechanisms for this particular indication. I feel really good about the probability of success there, and the unmet need is clear, and at the end of the day, there's nothing approved. We're deep into discussions with regulatory authorities on the most appropriate path. My guess is, sitting here today, we'll have some ways to expedite some of this development, which is great when we're talking about capital efficiency. Yeah. Okay, good. We definitely talk about the capital allocation. If the ATI-052 is positive, then how you would balancing the biological side versus the small molecule side? Well, we think the two game-changer molecules in our portfolio are the bispecific and the next-gen ITK. I think what you'll see is a gradual shift of capital being allocated to those two programs, and we have to get the ITK next-gen through the IND in the coming months. I think that once that happens, it unlocks a tremendous amount of value for the company, and it would behoove us to invest there like we're investing in the bispecific. Yeah. Got it. Okay. For the selective ITK, you have one company is focusing on that, and then what do you want to achieve for your next- gen selective ITK? Yeah. We're really excited about it. ITK is a validated target. Us and others have shown that over the past couple of years. When we think about STAT6 as a target, it's often referred to as kind of the oral Dupixent. We would refer to this as an oral JAK inhibitor without the JAK inhibitor kind of safety or label baggage. We know how well JAK inhibitors work in indications like AD and others. I think it's really exciting to be able to offer patients a pill that can hit the Th2 side as robustly as ITK does, but also importantly weave in the Th2 or Th1 or Th17 endotypes that we know exist in indications like atopic, like asthma, and many others as we're learning more about these diseases. You found this in the research you just published, that there is a clear kind of dividing line between those patients who want to be on orals and those patients who want to be on injectables. It's never been, since I've practiced dermatology, and it never will be the case where one modality trumps all the others. There's some patients who just prefer orals and some patients who prefer injectables, and that's good. That means that there's a nice market opportunity for all these modalities. Mm-hmm. Yeah. By the way, AD, as we preview or review, it can be $90 billion. We talk about obesity at $100 billion, $150 billion. I think AD can be as big as the pricing, et cetera, pricing, the dynamic over there. Okay. I think we hit all the key high points. Neal, anything else that you want to highlight? No, just a very active next 12 months in terms of catalysts across the portfolio. We have a lot of ways to win. We have $191 million on the balance sheet. We're fully funded through the end of 2028. That includes starting and conducting a phase II study in asthma with the bispecific. Awesome. All right. Thank you, gentlemen. Thank you. Thank you, everyone. Thank you.