Hello, everyone, and welcome to this latest in a series of fireside chats here at H.C. Wainwright's Inflammatory Skin Diseases Conference. My name is Ram Selvaraju, and I am a Managing Director and Senior Equity Research Analyst in Wainwright's Equity Research Department. I'm joined here by Aclaris Therapeutics, a company that trades under the ticker symbol ACRS on the NASDAQ, and which we cover with a Buy rating and 12-month price target of $16 per share. It's a pleasure to have members of the Aclaris Therapeutics Senior Management Team here with us today. Folks, welcome. Thank you. Thanks. I think it would be helpful, Neal, you're the CEO of the company. Perhaps you can just give us a brief overview of the company's lead candidate, ATI-052, and the rationale for the bispecific approach that you've taken here, particularly in the context of the broad utilization, one might say, in inflammatory skin disease, particularly atopic dermatitis of established monotherapies, and how the company hit upon the specific targets that are being addressed with ATI-052. Sure. Well, I'll start, and I'll hand it off to Hugh. We're really excited about 052. We obviously have already put out SAD/MAD data that show potential for three-month dosing interval and PD effect that would put it in a best-in-class category. We have two additional cohorts that we will be putting out, or three additional cohorts that we'll be putting out later this month, as a final update to the SAD/MAD work, and we already have two I-B studies in flight. One in severe atopic dermatitis and one in asthma. We already messaged earlier this year that we'll be rolling into a II-B in asthma as the first larger study with that construct. As to the specifics around the bispecific construct, I'll pass that to Hugh. Thanks, Neal. Yeah, as you pointed out, we think it's a best-in-class approach because not only do we have a TSLP antibody that is a very long retention time with the best potency in the class that we tested against other candidates and 70 times more potent than tezepelumab. On the IL-4R side, the reason that was chosen in building this construct is because IL-4 and IL-13 both drive Th2 disease, and we feel it's important to neutralize the impact of both of those cytokines on the immune path or portion of this pathway, rather than leaving IL-4 on the table that we've seen in other constructs that have been built. In the end, our molecule, which is a TSLP/IL-4R bispecific, has really the potential, as we saw in the healthy volunteers that Neal mentioned, 100% inhibition of TSLP activity and IL-4 and IL-13 activity downstream from inhibiting chemokine secretion. We believe that this is a best-in-class approach that has synergy relative to the monotherapies that have been on the market, tezi and dupie in this case. In AD, of course, only dupie is approved, not tezepelumab. That's the rationale for going after the targets that we did and why we believe it's going to be better than monotherapy alone, because of the increased synergy that we saw with the potency, that we put out a while back, where our bispecific is four times more potent than the combination of dupie plus tezi combined. To that point, given the nature of the differentiation that you see pharmacologically, pharmacodynamically, what would you anticipate, Hugh, might be the impact clinically on efficacy parameters like IGA and EASI? Yeah. The nice thing about hitting this at the top of the Th2 cascade with TSLP, as we know, TSLP is pleiotropic in its activity, dendritic cells and ILCs, mast cells, and et cetera. We believe we'll be able to show activity in T2-low, as tezi does. At the same time, we would expect even greater activity than what we're seeing with dupie in AD, for instance, where they show 2/3 of patients with a 75% response in EASI. In IGAs, 0/1s of 35%-40%, we're expecting to see a much more enhanced activity profile. We would expect early and late durability of activity that would exceed either dupie in AD or tezi and dupie in asthma. On the dosing convenience side, that clearly is a significant factor in the context of deployment of biologics for treatment of chronic inflammatory diseases like atopic dermatitis. Perhaps you could talk about the phase I-A interim results that have been generated with ATI-052, in particular, also the function of the molecule as this pertains to the possibility of significantly less frequent injection schedule and how this plays into the commercial opportunity. Maybe, Hugh, you can talk about the pharmacodynamic profile and the potential dosing frequency reduction, and then maybe, Neal, you can comment on what implications this might have commercially. Yeah. What we showed and put out recently was that this bispecific has 26-day half-life as a minimum. In fact, the accumulation ratios that we saw after the fifth dose, in the MAD portion of the study, actually predicts more of a greater than 40-day half-life. We're at least three times, maybe longer, half-life than dupie. That allows us to think about from a pharmacokinetic perspective, going out at least two to three months in dosing interval. Also, the pharmacodynamic half-life is also considerable here and needs to be taken into consideration. As Neal pointed out initially, we were seeing up to three weeks of 100% inhibition of IL-4-stimulated or TSLP-stimulated TARC. In order to have max effect, we don't need 100% inhibition. We believe with our MAD cohorts that we can actually get out to three-month dosing, with substantial inhibition of both the top of TSLP and the bottom of the cascade with IL-4 and 13 inhibition as well. Yeah. To your question, Ram, on the commercial prospects, certainly, there's a big jump going from, let's say, a dupie dosing interval of every two weeks and other flavors of that, to now talking about every month, every two months, three months. We really feel like the sweet spot for I&I diseases, particularly diseases that tend to have flare and quiescent periods in between, is really in the three-month time period. There's a lot of practical issues that from a practitioner standpoint and also just patient differences in terms of whether somebody's going to break through when you start talking about six months or longer in some of these indications. I can get my head around perhaps psoriasis in very, very stable patients when you're talking about six and even 12 months. For a lot of these diseases, I think Q3 months makes sense, and there's really not a practical difference between four injections and two. We have designed this program to make sure that we're concentrating on optimizing the efficacy and safety first, and then certainly the dosing interval plays into that. The reason that patients go on and stay on medications is because it works, right? I think that's the key, and we're happy that our bispecific construct will support three-month dosing. I think it's important to emphasize for our audience just how important focusing on validated targets, both scientifically and clinically, happens to be in immunology, which is a very complex area, and the degree to which there has been notable success in the I&I space for an extended period of time, particularly when we look at biologic drug development in terms of focusing on validated targets. I think that's an important feature of the ATI-052 platform, which clearly focuses on targets that have been well-validated by previous work and validated also commercially. I also wanted to touch upon something that you just mentioned, Neal, which is the safety aspect. There was no conjunctivitis observed in the SAD, MAD healthy volunteer cohorts, since the mechanism of action of Dupixent, in particular, is often associated with ocular surface treatment-emergent adverse events. Maybe you could comment on the specific engineering in the ATI-052 molecule, or the Fc region in particular, that could reduce the risk of these off-target effects. If you could perhaps also comment on how this construct could stack up against dupie, in the context of recent emergent reports of a small but measurable elevation in risk of development of cutaneous T-cell lymphoma in patients who have been treated with dupie for an extended period of time. Yeah. Maybe I'll comment, and Hugh can speak to the specifics of the molecule. I think so far so good. We haven't seen any conjunctivitis. I think if we go back and try to compare ourselves to maybe the most similar molecule out there, which would be Pfizer's trispecific, it seems to me that they also alluded to having either no conjunctivitis or very low amount of it in their study. We don't know the exact number. If I were to look at it from a biologic standpoint, it could be that hitting two parts of that pathway are again, not only working synergistically but also maybe being helpful on the safety side. Those are just guesses. We hope that as we proceed, we see no conjunctivitis or very little. In terms of the cutaneous lymphoma, I'm just not aware of a very high risk in that regard. I'm sure there are some case reports there, but again, we just have a different construct. The bispecific is very different than dupie. Hugh, do you want to comment on the construct? Yeah. It's interesting because when you look at the conjunctivitis in terms of the etiology, it's really hard to nail down, and there's a lot of review out there around IL-13 being a driver of that and causing tears and the like, or inhibiting tears. But at the end of the day, we think that the TSLP portion of the molecule is actually helping to offset some of that at the top end of the cascade. But because the etiology is not quite known, it's still more of a measured value, and we were happy, at least initially, not to see any conjunctivitis, and we'll be seeing output from our I-Bs and AD by the end of the year. So we'll have some good patient data there as well. Maybe we could shift just briefly to thinking about endpoint sensitivity and specific endpoints that you will look to use to evaluate 052 and potentially benchmark in the context of the competitive landscape in atopic dermatitis. In particular, I was wondering about the EASI outcome measure in comparison to endpoints that specifically address itch, like PP-NRS. Maybe you could talk a little bit about which of these types of outcome measures you expect to be particularly pertinent in evaluating and elucidating the efficacy profile of a drug like ATI-052. Well, you hit the nail on the head. The itch component is a key one for us. We think, obviously, that's the main symptom, and if you can get rid of itch early, then you start allowing the skin to heal and just decrease inflammation. For us, looking at both EASI and itch in tandem and wanting to see not just a small benefit, but something on the 10% side, just a lift in terms of that efficacy. I also want to, by the way, see something that's hopefully more rapid because that's another need in the market. Again, AD, in particular, is a treat the flare disease. The quicker you can get rid of that flare, the better off the patient is. I think we'll be paying close attention to the itch scores early on, and this is an eight-week primary, but we'll be following the patients out 10 weeks post that day 57 primary. We chose that because we think we can see something that early, which I also think will be a pretty nice advantage. Just as a reminder, we're treating all severe patients in this first study. Also, I just wanted to revisit one thing regarding the dosing and administration. Clearly, since Dupixent has been on the market for an extended period of time, there are now both prefilled syringes as well as these invisible needle pens. I'm assuming that ultimately, formulation work with ATI-052 would enable the drug to be amenable to be presented in all of these types of forms from an injector presentation standpoint. Is that correct? Yes. That's exactly what we're pursuing. Yep. Okay. Again, going into now the more complicated aspect of the competitive landscape, bispecifics versus trispecifics, this is a canonical ongoing discussion, but I think 052 presents a particularly unique way to address this debate. For elucidating purposes for our audience, there are multiple competing multi-specific bimodal constructs out there currently in the clinic. Perhaps the most notable one, which reported favorable mid-stage results only recently, was Pfizer's tilrekimig. Sanofi has lunsekimig. These are multi-specific antibodies targeting TSLP and IL-4 and IL-13. I think it would be helpful for you to point out to our audience how a bispecific construct can both emulate and indeed overhaul a trispecific construct, and the manner in which the specific uniqueness of your bispecific construct might actually provide advantages that cannot be achieved with existing trispecific constructs. Yeah. The way our molecule was designed is it's a two plus two design. We actually have two binding Fabs that bind TSLP, and each of those Fabs bind TSLP across the entire TSLP molecule. It completely binds at the N- and C-terminus, and that's why we have that 400-hour residence time on TSLP by the TSLP part of the molecule. On the bispecific, to your point, Ram, is by inhibiting IL-4R, we also then inhibit IL-4 and IL-13. In an effect, it is a trispecific in terms of its inhibitory activity. We have the advantage of the IL-4R binding portions, the two single-chain Fvs. We also have two binding sites there that can bind IL-4R. We have a bispecific that has four independent binding sites, two to TSLP and two to IL-4 receptor, and they all operate independently and can be fully saturated, and they don't affect the affinity of the binding to the other target when the first target is bound. A molecule like Pfizer is monovalent to each of those three targets. Whereas again, we're divalent with biparatopic approaches on TSLP and independent binding at all four binding sites. We really have a very highly optimized molecule, along with the enhanced half-life with the YTE extension that, as I mentioned, exceeds 40 days if you look at the accumulation factor. That's also a big advantage over the Pfizer molecule, which basically in their PR said that they could dose up to one month, and so I'm assuming that their half-life is much shorter than that. Many different advantages to this construct. I think it might be helpful for you to also comment on how you're looking at the overall biologics portfolio inside of Aclaris. Clearly, ATI-052 looks to be positioned as the flagship, but maybe you can talk a little bit about how you see ATI-052 relative to bosakitug, which was obviously the predecessor and that informed a lot of the work that you're now doing, as well as how you see the overall biologics portfolio being built out. Another aspect, of course, is that Aclaris is very unique among biotech companies in having both an active biologics development portfolio, as well as a small molecule portfolio and longstanding discovery expertise in the small molecule world, particularly from a kinase modulation standpoint. I think it would be helpful for you to talk a little bit about how you see the two halves of the whole, so to speak, coming together, potentially allowing you to evaluate combinatorial regimens, whether sequential or applied concomitantly in the context of inflammatory skin disorders as this pertains to elements of your biologics portfolio, as well as the small molecules that you have in your pipeline. Yeah. No, those are great questions and points. I think simply, when we look at how the biologics portfolio has evolved, of course, we have a study ongoing with the TSLP mAb, and if that's positive, we do believe that a very safe TSLP might have a place in the treatment of AD patients across the spectrum, just as background therapy. We'll see that readout towards the back part of the year. Certainly, as the bispecific keeps generating good data, I think you'll see us investing more there, particularly if we generate the data we expect, which is that boost in efficacy, and we get that 1 + 1. I think that's where the dollars will flow mainly, and that's what we're planning already, at least the first II-B study in asthma that would kick off at the turn of the year, That's how we think about the biologic side. On the oral small molecule side, we have a couple of assets there. One is the next-gen ITKs that are headed towards IND, and then we have 2138, which is quite an interesting molecule. It inhibits the T cell receptor function like a cyclosporine might, and it also inhibits downstream cytokines that are driven by JAK3. There's a lot of indications one could go after there, and I think you bring up, as usual, a great point. In this world where you're hearing a lot about combination approaches and therapy, and certainly dermatologists use polypharmacy all the time. I think it's a great way to think about things where if you really want to get somebody across the finish line, let's say in AD quickly, you put out the fire with a hammer like 2138, and then perhaps you have the bispecific or the TSLP mAb or combinations thereof that could be more baseline maintenance therapy. Those approaches 100% exist in dermatology and many other therapeutic areas. I think it's something that we've been thinking about and makes a lot of sense if you can develop regimens that take care of the acute and then handle the durability or maintenance over the course of the year. Yeah, I think it's important to emphasize for our audience that not only is this a unique aspect of the Aclaris value proposition, the ability to potentially pair and combine, mix and match biologics with small molecules, but it's also appropriate to maybe think about a more comprehensive and holistic approach to symptom management and indeed the underlying disease pathophysiology. When one thinks about potential combinatorial regimens or sequential regimens that involve, as you pointed out, Neal, a hammer-like approach with a small molecule, combined with an upstream approach like an anti-TSLP. I was also wondering just before we leave the biologics topic and talk a little bit more in depth about the small molecule portfolio more directly, with respect to the biologic lead candidate, are you thinking about a specific clinical readout that might be a core triggering mechanism for a future business development transaction or partnership that would further optimize the value of this asset? If so, what kind of clinical readout do you think is likely to achieve critical mass, so to speak, in the eyes of potential strategic partners? Yeah. I would say that, post putting out the SAD and MAD data and showing the wonderful PK and PD that Hugh already mentioned, has generated interest. Certainly, I think we always have to be aware of that as smaller companies, because once you know that you've proved out the concept, then the whole effort revolves around stepping on the gas and putting up multiple indications. We, of course, have already messaged doing a phase II-B in asthma. With a bigger balance sheet or a large partner, one might endeavor to go after four indications or five indications at once, and then it just becomes a speed to market. That's always in the back of our mind, like how to stay, once you generate a POC, how to continue to maintain your lead if you feel like you have best-in-class potential. I would, of course, draw folks' attention to the fact that the I&I space has been one of the most avidly sought-after areas by strategic acquirers. We all remember the examples of companies like Prometheus and Telavant. Clearly it will be very interesting to see what happens next with ATI-052. If we could just switch gears for a second and touch upon some salient features of the small molecule portfolio. I think it would in particular be helpful to educate our audience on three aspects, how you see 9494, which is a JAK-sparing ITK inhibitor, versus ATI-2138, which you mentioned earlier effectively has a dual mechanism targeting ITK and JAK3, and how you're thinking about indication prioritization and overall development prioritization of these two molecules. Also, if you could talk a little bit about how you see the differential indications of things like alopecia areata and vitiligo on the one hand, versus lichen planus on the other. Yeah. Roland, do you want to comment on that? Yeah, sure. I can start talking a little bit about the distinction of the ITK specific and the dual ITK/JAK3 inhibitor. ATI-2138, that's our furthest advanced small molecule inhibitor. That's an ITK/JAK3 dual inhibitor, as you're pointing out, has a very unique pharmacology. The way to think about it is probably like a bispecific antibody. It includes the JAK3 inhibition part, which again, the closest competitor is ritlecitinib, and includes the ITK inhibition and the closest is soquelitinib from Corvus. By inhibiting ITK, what 2138 does, it inhibits T cell receptor signaling on CD8 cytotoxic T cells and CD4 T cells, which is antigen driven, and then with JAK3 and inhibits the cytokines which really drive the T cell survival, proliferation, differentiation, and activation. We believe, again, this is a great molecule, has that dual activity, and because JAK3 and ITK are really restricted to the immune system, it's also quite different from the other JAK isoforms, which are JAK1, JAK2, are widely expressed in many different tissues. We have a very potent and powerful molecule here. It's way more potent than ritlecitinib on JAK3, about 5-fold more potent than on ITK, about 50-fold more potent than the Corvus compound. We have Neal, you want to jump in here? Yeah, sure. In terms of indications, Ram, the way we think about it, that we're trying to pick indications that can leverage the unique pharmacology in 2138. We've taken a while to down select to that. We'll be going live with that towards the end of this month. You are correct. We've talked about alopecia, some scarring alopecias, vitiligo, tougher to treat diseases that would benefit from having a dual mechanistic approach, that will be very different from just an ordinary JAK, because we are going through the TCR pathway as well as JAK3. Also indications like lichen planus. We put out a fair amount of data on that indication back last October during our R&D Day. I think what's exciting to us about lichen planus is that it really is a great mechanistic fit for the dual mechanism of 2138, and there's kind of a spectrum of diseases that one can tackle within that category. They're basically lichenoid dermatitis under the microscope when you look at it histologically. That would be both oral and cutaneous lichen planus, which are in the same category, but kind of a little bit different diseases. Lichen planopilaris, which is a scarring alopecia. One can do a study where you look at all three of those indications, and they're distinct opportunities within the market, and there's nothing approved for any of them. I think that's where we're leaning, but we'll be formalizing all that at the end of the month. I think, relative to 9494, when you're talking about engineering out the JAK3, the whole goal is to get JAK-like efficacy in a pill without the safety baggage, right? Just like somebody with an oral STAT6 may say, "I have an oral dupie," well, we'll have an oral JAK with JAK-like efficacy that tackles the heterogeneity. I would go after every indication that dupies in with that molecule. Very exciting. I think we're going to have to leave it there, unfortunately. Really appreciate all of you taking the time to talk through the salient aspects of the Aclaris story with our audience. Clearly a very exciting company with multiple future clinical outcomes and data readouts coming up, and clearly additional information that we can look forward to with regard to the small molecule side of things. Definitely want to thank all of you, and thank you to our audience for their attention. Thank you. Thank you. Thank you.