Aclaris Therapeutics Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 8, 2023

There are 12 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to Aclaris Therapeutics First Quarter 2023 Conference Call. At this time, all participants are in a listen only mode. There will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Robert Dutti, Head of Investor Relations, please go ahead.

Speaker 1

Thank you. I am Robert Dutti, Head of Investor Relations for Aclaris. Please note that earlier today, we issued a press release highlighting our Q1 2023 financial results and other business matters. For those of you who have not yet seen it, You will find the press release posted under the Press Releases page of the Investors section of our website, www.aclaristx.com. In addition, we will be referring to a slide deck entitled Q1 2023 Investor Conference Call, which can be found on the Investor page of our corporate website And furnished as an exhibit to our Form 8 ks that we filed with the SEC earlier this morning.

Speaker 1

Joining me today for the call Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the company's Future results of operations and financial position, business strategy and plans and objectives for Aclaris' future operations Are considered forward looking statements within the meaning of federal securities laws. Our forward looking statements are based upon current expectations That involve risks, changes in circumstances, assumptions and uncertainties that could cause actual results to differ materially from those reflected in such statements. These risks are described in the Risk Factors section of Aclaris' Form 10 ks for the year ended December 31, 2022, And other filings Aclaris makes with the SEC from time to time. These documents are available under the SEC filings page of the Investors section Aclaris' website, www.aclaristx.com. All the information we provide on this conference call is provided as of today, and we undertake no obligation to update any forward looking statements we may make on this call on the account of new information, future events or otherwise.

Speaker 1

Please be advised that today's call is being recorded and webcast. A link to the webcast can be accessed under the Events page of the Investors section of our website. I'll now turn the call over to Doug.

Speaker 2

Thanks, Bob, and good morning, everyone. I hope you had a great weekend. It is my distinct honor to be speaking with you today following not only my Q1 as CEO, but also the Q1 of operations for our new leadership team. For those who may be newer to the Aclaris Therapeutics story, we were originally founded as a specialty pharma company focused on dermatologic conditions. It is a great credit to my predecessors that a few years ago, the company made the decision to acquire Caulif Life Sciences based in St.

Speaker 2

Louis. The addition of this world class discovery group focused on the human kinome allowed Aclaris to pivot its focus on research and development efforts towards addressing areas As evidenced by a number of recent significant transactions in the I and I space, including Pfizer's acquisition of Arena, Takeda's acquisition of the Nimbus TIC II program and Merck's acquisition of Prometheus, There is tremendous opportunity for significant creation of shareholder value in this space. And we find ourselves in the enviable position of having several key clinical stage assets targeting these potential diseases led by our potential 1st in class MK2 inhibitor zunzumetinib or ATI-four fifty. If you could direct your attention to Slide 3 and the slide presentation, we can discuss the agenda for our call today. We're very pleased to be speaking with you today to provide an overview of our first quarter financial results as well as an update of our timing and plans for the remainder of the year.

Speaker 2

I'll begin by providing a few opening remarks on the company's performance to date for the year. And then we'll turn the call over to Gail, who will provide updates on all of our progress across the clinical development programs. Following that update, Gail and Joe will provide an overview of the final results from the trial in hidradenitis suppurativa or HS, For which we reported top line results back in March. Kevin will then provide an overview of our financial results for the period. And finally, I'll provide some closing comments prior to opening up the call to address your questions.

Speaker 2

Overall, I'm very pleased with performance of our company Through this Q1 of 2023, our team is making tremendous progress advancing all of our various clinical development programs, which is a testament to our team as We're a relatively small company in terms of size and overhead. I also remain impressed with our team's ability to continue to execute global clinical trials in Challenging macro environment that is continually taxed by economic downturn, choke supply chains and global conflicts. Despite all these headwinds, our team is continuing to prosecute these studies and demonstrating creativity and flexibility in the face of hurdles when they arise and for that I could not be more proud. During the Q1 of this year, we completed and reported the top line results of our Phase 2a trial of ATI-four fifty in HS. Although we were disappointed that the efficacy results were not what we had hoped for in this challenging and so relatively misunderstood disease, Our team delivered on time a well executed trial.

Speaker 2

Importantly, this trial further expanded our experience and understanding of ATI-four fifty. The completion of this study has further demonstrated the foundation for the program from both the safety and pharmacodynamic perspective going into our next data readouts in rheumatoid arthritis and Psoriatic arthritis. As a reminder, our company already had positive proof of concept data in our array from our prior Phase 2a trial. Shortly, Gail and Joe will be providing more details on the final results of the trial with a focus on how they inform our continued execution of the rest of the ATI-four fifty program. With that, I'm now going to turn the call over to Gail to begin the discussion on clinical development progress.

Speaker 2

Gail?

Speaker 3

Thank you, Doug, and good morning, everybody. I also want to take a moment to commend the Aclaris team on their execution of the hydrogenitis suppurativa trial, but also on the tremendous work they've done in recent weeks to fully analyze all of the results from the study, thus enabling us to provide you with today's overview. Directing you to Slide 4, the summary of our development pipeline, let's start with our Phase 1 stage clinical asset, ATI-two thousand one hundred and thirty eight, Building on the successes of the ATI-two thousand one hundred and thirty eight single ascending dose study, The multiple ascending dose study in healthy volunteers continues to progress well. We are very much on track to have pharmacokinetic, As we previously announced, Our first clinical trial of ATI-two thousand one hundred and thirty eight in a patient population is planned to be a Phase 2a Proof of concept study in ulcerative colitis. The planning is well underway so that we can be in position to initiate quickly Upon completion of the ongoing multiple ascending dose study, later this year, we will provide you with more details on the ulcerative colitis study after we have the Phase 1 results and have fully finalized the design of this proof of concept study.

Speaker 3

Moving on to ATI-two thousand two hundred and thirty one, our next generation MK2 inhibitor. We're moving closer with our prospective academic partner To getting to the ultimate objective of studying ATI-two thousand two hundred and thirty one in metastatic breast cancer and in pancreatic cancer. Now shifting to Slide 6. For ATI-seventeen seventy seven, our topical JAK onethree inhibitor, which was designed for skin efficacy and minimize systemic exposure. We are conducting a Phase 2b study in atopic dermatitis As a follow-up to our successful Phase 2a study, the objectives of the trial are to further evaluate the efficacy and safety of ATI-seventeen seventy seven and validate the limited systemic exposures seen in the Phase 2a study.

Speaker 3

We are also studying several dose strengths, including the 2% twice daily dose studied in the Phase 2a trial and several lower dose strengths, as well as assessing once and twice daily applications, so that we know which formulation regimen We also expanded our study population in this study To include children down to age 12, given the importance of this disease in children, The primary endpoint of the trial is percentage change from baseline in the eczema area and severity index score or EASI score at week 4. The target enrollment is 240 patients. We've been very encouraged by the success seen recently with other topical therapies in a broader array of patients and the meaningful medical need in some milder patients. As such, we recently extended the protocol to include not just moderate and severe atopic dermatitis, but some mild patients as well. And we want to is also important because as some of you may have seen reported from other companies conducting trials in atopic dermatitis, Enrollments this past winter season have encountered some challenges, particularly driven by the mild winter in many locations, particularly in the southern and eastern portions of the U.

Speaker 3

S. Since the dryness associated with cold winter weather and heating In the 1st few weeks of this protocol amendment, which just went into effect, We have already seen a meaningful increase in screening. We are updating our guidance in terms of timing of top line results

Operator

We will now move from our

Speaker 4

prior guidance of mid year to second half

Speaker 3

of this year, and we will tighten up that guidance as we continue to learn more about the impact Moving to Slide 7, as a reminder, in our Phase 2a trial, ATI-seventeen seventy seven achieved statistically significant results in the primary efficacy endpoint at week 4 And positive trends were observed in secondary endpoints, including improvements of itch, Percent of modified EASI 50 responders, IGA responder analysis and reduction of body surface area impacted by the disease. Shifting to Slide 8, importantly, ATI-seventeen seventy seven was Observed to have a favorable safety and tolerability profile and because of the soft topical approach, very low plasma levels As ATI-seventeen seventy seven were seen following the topical application, with the average concentrations in patients Never greater than 5% of the IC50 of JAK1-three and only 3 patients Now moving on to ATI-four fifty, We'll begin with a more comprehensive overview of the HS trial now that we have the full data set. As you all know from the top line results We reported in March, ATI-four fifty did not hit either our primary or secondary efficacy endpoints in HS. As shown on Slide 10, we randomized 95 patients into the study with 47 on placebo and 48 on ATI-four fifty.

Speaker 3

Overall, with 32 patients on the placebo arm complete the study And 26 on active treatment. As previously noted, the study did not demonstrate efficacy for ATI-four fifty in the treatment of HS. We saw a modest effect, which was overshadowed by an unusually large placebo effect. I do want to spend the majority of our time today on the elements from this trial that can be applied to our understanding of ATI 450 overall. These elements primarily fall into 2 buckets: safety and pharmacodynamics.

Speaker 3

I will discuss the safety elements in detail and then Joe will discuss the pharmacodynamics. Slide 11 shows the steady demographics and baseline characteristics. We are quite proud that we enrolled a trial That was very representative of real world HS patient populations with more inclusion of historically underrepresented people. From a safety perspective, on Slide 12, we had no serious adverse events on ATI-four fifty, no serious end organ toxicities and no serious or opportunistic infections. What we did see unsurprisingly given the lack of efficacy Is a meaningful number of early discontinuations from treatment shown on Slide 13.

Speaker 3

Overall, we have 15 patients in the placebo arm and 22 active arm discontinued from study treatment. And we saw high discontinuations starting in the early days of the trial. And this observation was the primary reason We made the decision to increase the enrollment last fall. Withdrawals due to loss to follow-up, withdrawal of consent An investigator stated lack of efficacy were relatively balanced between the ATI-four fifty and the placebo treated arms. The divergence in discontinuations was noted for withdrawals due to an adverse event, with 4 withdrawing from the placebo arm And 11 from the ATI-four fifty arm.

Speaker 3

When we dug a bit deeper, however, we noted that the majority of patients in the active arm Who withdrew due to an adverse event, 7 of the 11 were not seeing treatment related efficacy. Their AN count was either worse or no better than at the start of the study. While most of the adverse events Leading to discontinuation of treatment were only moderate in intensity, it is not surprising that patients who are not seeing a benefit Further, the adverse events that led to discontinuation We're most commonly related to worsening HS, like new groin abscess, subcutaneous abscess or worsening acne, which is closely related to HS. We also had a few subjects withdraw due to headache or dizziness, which is a known phenomenon that occurs in some patients early in the treatment period and typically resolves even when patients continue treatment. And with further investigator education on this topic, we saw no further discontinuations for this reason.

Speaker 3

And of course, we also provided this education to investigators for the ongoing rheumatoid arthritis and psoriatic arthritis trials. It's important to note pertaining to our current rheumatoid arthritis trial, we are well into an advanced stage of our enrollment process And we are seeing a discontinuation rate in the trial that is quite stable and below our model projections when we initiated the trial. Now let's move on to the other topic that captured attention from the top line results, elevations in creatine phosphokinase or CK, which is shown on Slide 14. When we issued our press release, we noted that there were 10.4% We're 5 patients that had reported treatment emergent adverse events of elevated blood CK level. Subsequent to top line, as we finalized our data, we learned that one of these patients had their elevated CK prior to receiving study drug.

Speaker 3

So this was not a treatment emergent event. And as such, that patient has been removed from that category, which brings the percentage book down below the 10% threshold that we reported. Overall though, CK elevations were common in patients, both on ATI-four fifty and on placebo, With 19 patients with reported elevations of CK levels in laboratory drawers during some point in the study, 6 of these were on placebo and 13 on ATI-four fifty. The majority of these were modest elevations. However, as you can see, on Study Drug, we also had 3 Grade 2, 2 Grade 3 and 1 Grade 4 CK elevation.

Speaker 3

However, moving to Slide 15, the treatment emergency K elevations that were Grade 2 and above We're most typically transient and most typically return to baseline even when patients continued on treatment. Many of them were associated with a history of exercise. More importantly is what the CK elevations were not associated with. There were no associated adverse events that would suggest something more severe was going on. For example, no reported muscle pain, weakness, Kidney abnormalities or CK elevations that were not from a skeletal muscle source.

Speaker 3

We do know that benign CK elevations have been seen with other effective anti inflammatory treatments like TNF inhibitors Moving to Slide 16. Overall to date, We are very pleased with the safety profile we see with ATI-four fifty through the current stage of clinical development. The adverse event profile has continued to be as expected. We've seen transient CK elevations In some patients that generally disappear with continued treatment and who do not have any muscle related symptoms, We've seen no meaningful effects on kidney or liver or cytopenias and no serious or opportunistic infections. Lastly, it is important to note that in preparation for Phase 3, we've completed our chronic toxicology studies.

Speaker 3

And with all of the pathology results now available, there are no issues of concern identified. With that, I'd like to turn the call over to Joe to discuss the pharmacokinetic and pharmacodynamic findings from the HS study. Joe?

Speaker 5

Thanks, Gail. Good morning, everyone. Let me start by saying that at the outset, we believe mechanistically ATI-four fifty had a chance of demonstrating efficacy in the HS study. However, we believe it is likely that the disease is perhaps driven more locally in the skin I would now like to share what we have learned from the HS study pharmacokinetic and pharmacodynamic analysis. Briefly, the PK for ATI-four fifty behaved as expected, with a modest accumulation across the 1st week of dosing And peak and trough drug levels similar to those observed in the Phase 1 MAD study and the Phase 2a RA study.

Speaker 5

For PD, we took two approaches to understand ATI-four fifty pharmacodynamics in HS patient blood as shown on Slide 18. First, we conducted an analysis of cytokines in ex vivo stimulated patient blood on a small sample subset of 5 patients from 2 sites. We compared samples from both placebo and ATI-four fifty treated HS patients with healthy donor controls analyzed in parallel. We look to 4 pro inflammatory cytokines, TNF alpha, IL-one beta, IL-six and IL-eight after the first dose and then again at the end of the study. If you direct your attention to Slide 19, you can see we provide side by side comparisons across 3 of the ATI-four fifty studies completed to date.

Speaker 5

The 7 day MAD study in volunteers, the 12 week RA Phase 2a study And the 12 week HS study. ATI-four fifty inhibited all 4 cytokines analyzed, While the data shown focuses on inhibition of TNF alpha and IL-one beta. On day 1, near complete inhibition of these 2 pro inflammatory cytokines is observed across all three studies, suggesting that their production in healthy subjects, RA patients and HS patients is similarly dependent on the MK2 pathway and sensitive to ATI-four fifty. Also important to note here is that ATI-four fifty potently inhibits these cytokines at the end of each dosing period, Either 7 days or 12 weeks, consistent with a lack of pathway reprogramming and tachyphylaxis across all of these studies and continued dependence of inflammatory cytokine production on MK2. Our second analysis This consisted of evaluating the impact of ATI-four fifty on endogenous plasma cytokines in HS patients.

Speaker 5

We carried out this analysis on all 95 patients at time points where it was confirmed that subjects were dosed Along with healthy donor controls, evaluating samples at day 1 pre dose and at trough. If you turn your attention to Slide 20, you can see that endogenous plasma pro inflammatory cytokines and CRP At baseline, we're lower in the HS Phase 2a study compared with the RA Phase 2a study, which appears consistent with a lower level of systemic inflammation in these HS patients. The next slide provides comparisons between the RA and HS Phase 2 studies analyzing the impact of ATI-four fifty on endogenous plasma levels of TNF alpha, IL-six, IL-eight And MIP-one beta. While pre dose levels of cytokines were lower in HS patients compared to RA patients in the Phase 2a studies, A similar persistent decrease in cytokine levels near to or below healthy donor levels was observed in both studies. Directing your attention to Slide 22, you can see the comparison between both studies evaluating the anti inflammatory cytokine IL-one receptor antagonist, which is elevated in both HS and RA patients and is not inhibited in either study by ATI-four fifty.

Speaker 5

These data demonstrate a pro inflammatory selective modulation of endogenous plasma cytokines in both RA and HS patients. Lastly, I would like to direct your attention to Slide 23, which shows sustained inhibition of the plasma acute phase Systemic inflammation marker, CRP, in HS patients following ATI-four fifty treatment. This inhibition of CRP is similar to that observed in the ATI-four fifty Phase 2a RA study. CRP levels are reduced to the upper limit of normal after 7 days of dosing And this inhibition was retained through study completion at 12 weeks in both the HS and RA2a studies. To summarize on Slide 24, the ATI-four fifty dependent ex vivo stimulated cytokine inhibition in whole blood Demonstrating consistent results across three studies with marked and sustained inhibition of pro inflammatory cytokines and clear evidence of MK2 dependence and durability of response.

Speaker 5

In terms of the endogenous pharmacodynamic plasma biomarker analysis, We saw a subset of cytokines elevated in HS blood relative to healthy donors, but to a lesser extent than observed in the RA study, Which suggests that HS is perhaps less systemically driven than other diseases such as RA. ATI-four fifty inhibition trends with pro inflammatory cytokines was similar in both HS and RA Phase 2a studies, Reducing levels near to or below healthy donor levels. The elevated anti inflammatory cytokine IL-1Ra Was not modulated by ATI-four fifty in either study, suggestive of a pro inflammatory cytokine specific effect. The acute phase systemic inflammation marker, CRP, demonstrated persistent inhibition in patients administered ATI-four fifty In both the HS and RA studies, in contrast to the effect previously observed with global p38 inhibitors. These data are consistent with ATI-four fifty demonstrating a similar systemic anti inflammatory effect on both HS and RA patients and we believe correspond to positive efficacy readouts from our completed RA trial, However, not HS.

Speaker 5

I'll turn it back over to Gail.

Speaker 3

Thanks, Joe. Before I turn the call over to Kevin To touch on our financials, I'd like to finish up with the ATI-four fifty clinical program. I'm pleased to let you know that we are in the later stages In terms of enrollment for the rheumatoid arthritis Phase 2b trial and everything is very much on track. We expect to have top line results from this 240 patient international trial in the Q4 of this year. It is also worth noting that we have an independent data safety monitoring committee that meets regularly and to date That committee has not raised any issues related to safety from this trial.

Speaker 3

Lastly, touching on the Phase IIa psoriatic arthritis Since this trial was the last of the 450 trials to get started, it was also going to be running a bit behind The rheumatoid arthritis in HS trials. This study is also heavily dependent on recruitment in our numerous Polish clinical trial sites. Based on some of the tensions in the regions surrounding Ukraine, it took a little bit longer than anticipated for site activations. However, we've recently seen good momentum in screening and enrollment from our Polish sites. And as a result, We are adjusting our guidance for top line results of this trial from end of twenty twenty three into the first half of twenty twenty four.

Speaker 3

This assumes we fully complete the enrollment towards the end of this year. Overall, despite various hurdles, I am very pleased With the professionalism of our development team, as well as all of our various partners and trial sites and the commitment of so many physicians and patients. I look forward to reporting the results to you. Let me now turn the call over to Kevin to discuss our Q1 results.

Speaker 6

Thank you, Gail, and good morning, everyone. Our financial highlights are projected on Slide 25. Let us begin with our cash position. We ended Q1 with cash, cash equivalents and marketable securities of $204,000,000 which was compared to $230,000,000 at Year end. Additionally, near the end of Q1, we sold 3,400,000 shares Under our ATM facility for aggregate net proceeds of $26,700,000 This transaction closed in April After the close of the Q1, so those funds will be recognized as part of our second quarter results.

Speaker 6

With the addition of those funds, We believe that our current cash, cash equivalents and marketable securities will continue to be sufficient Costs associated with conducting a Phase 3 development program for ATI-four fifty. Regarding our financial performance for the quarter, Our net loss was $28,200,000 for the Q1 of 2023 compared to $18,800,000 During the Q1 of 2022. This difference is primarily driven by the advancement of our ongoing clinical programs. Total revenue for the quarter was $2,500,000 compared to $1,500,000 in the prior year's quarter. This increase was driven by Higher licensing revenue, primarily from royalties earned on out licensed intellectual property during the Q1 of 2023.

Speaker 6

R and D expenses were $22,600,000 for the Q1 of this year compared to $14,300,000 in the Q1 of 2022. As previously mentioned, this increase has been driven by the advancements of ATI-four fifty, ATI-seventeen seventy seven And ATI-two thousand one hundred and thirty eight. General and administrative expenses were $8,800,000 during Q1 of 2023 versus $6,100,000 during the same period in 2022. This increase was primarily driven due to increased compensation expenses With that, I will now turn the call back over to Doug for closing remarks. Doug?

Speaker 2

Thanks to you, Gail, Joe and Kevin for those comprehensive overviews. Before we shift the call to addressing your questions, I'd like to make a few final comments. I'm very pleased with the quality and execution of our entire team here at Aclaris. We're blessed to have a world class large pharma quality research engine that is very atypical for a biotech company of our size. The conference team continues to deliver unique and novel potential medicines against targets addressing significant unmet medical needs.

Speaker 2

The fruits of that labor include ATI-four fifty, ATI-seventeen seventy seven, ATI-two thousand one hundred and thirty eight along with ATI-two thousand two hundred and thirty one with more to come. We're very optimistic about the broad potential of HI-four fifty and very eager to complete and report on the current clinical trials. We took a shot at a very difficult disease in HS knowing that we already had positive RA data in hand. We're now laser focused on the completion and timely reporting of results of ongoing trials in RA and psoriatic arthritis, the planning for Phase 3 studies for those indications and the continued exploration of the MK2 mechanism in other INI Importantly, we continue to execute on these programs in a fiscally prudent and conservative manner. It is also gratifying to see that several top tier investors have either taken or increased their positions in our stock recently.

Speaker 2

These are very exciting times for Aclaris and the next several quarters are no exception. We have a lot of work in front of us, but we have the right team in place to execute And we look forward to apprising you of our progress as we continue forward. Operator, we now would like to open the line for questions.

Speaker 1

Thank

Operator

you. One moment for our first question. And our first question comes from the line of Louise Chen with Cantor. Your line is now open.

Speaker 7

Hi, congratulations on all the progress this quarter and thanks for taking my questions. So I wanted to ask you first on the read through from HS to your RA study. I know a lot of people are anticipating results from that at the end of this year. And wondering how you think about that elevated CK level, if you might see that in the RA study? And then second question I wanted to ask You was on the atopic dermatitis enrollment and did any of that have to do with more drugs being available or really just the winter season?

Speaker 7

And if you move into milder patients, how well do you think the drug will do in milder patients? Or what kind of efficacy have you seen in that patient population? And the last question is just on UC. How did you come to choose this as your first indication? And how quickly can you get to proof of concept since this market is rapidly evolving.

Speaker 7

Thank you.

Speaker 2

Thanks, Louise. Doug here. So regarding the read through from HS to RA, not focusing on CPK, we see nothing but positive. So we have Significantly more confidence in the safety profile of the drug and there's really no red flags. I've developed dozens of drugs and it's real luxury to have one that is looking as this one is.

Speaker 2

Obviously, we have to complete the program, but so far it's tracking to be to have an extremely attractive and we think competitive Safety profile. And the drug works systemically exactly as we thought of as it would in HS and as it did in the RA Phase 2a. So we're very bullish in terms of what all that means in terms of the RA study that's going to read out in the Q4 of this year. Regarding CPK, I mean, I think Gail did a great job of kind of elaborating what we did and didn't see in the study, but we just need to just be cognizant. Elevations of CPK are clinically irrelevant.

Speaker 2

I mean, most people would not even follow these in regular clinical practice. They go up and down based on exercise And your overall level of activity, the concern would be if there was any associated symptoms with it, muscle weakness, muscle pain, None of which we saw or if in fact it looked like it was of cardiac origin and we've looked at the CK fractionation on many of these patients and there's been no elevations of CK MB. So we do not think that we have a CPK issue. As we mentioned, there's a data monitoring board that's overseeing the RA study, they've not raised any red flags at all in terms of the prosecution of the study. So I think we're in good shape.

Speaker 2

Moving on to the atopic dermatitis enrollment question. We've been following the space and lots of other companies have experienced the same things that we have. It's a little ironic for people who live in the west part of the country because they had a very, very snowy winter. But in the areas of the U. S.

Speaker 2

That we're doing the AD Phase 2b study, Which is mostly in the Northeast and the Southeast. In fact, it was a very mild winter and we and everybody else were seeing slowed enrollment. We do think that expanding the enrollment criteria to mild is going to certainly enhance the uptick in We're confident in terms of the timelines that we issued today. We don't have data. The Phase 2a study was done in moderate to severe atopic dermatitis.

Speaker 2

We believe our drug is going to work very effectively in those mild patients and we'll look forward to see the results in the second half of this year. And then lastly, regarding ulcerative colitis, that was a very nice deal for Merck and Prometheus, and I think they have some interesting data in UC. But my experience is you don't ever kind of throw in the towel just because there are other folks that are kind of hunting in the same area. We think that mechanistically, ATI-two thousand and thirty eight looks very attractive in the indications that we're seeking. UC initially and a whole bunch of other T cell diseases subsequently, and we'll see how the market evolves.

Speaker 2

But if you look at the Prometheus deal and the Arena deal With Pfizer, there's an awful lot of people investing in IBD and we think that we're going to be very competitive in that space.

Speaker 7

Great. Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Corrine Jenkins with Goldman Sachs. Your line is now open.

Speaker 8

Yes. Good morning, everyone. You alluded to this a little bit on the prepared remarks, but could you further contextualize how these CK elevations compare relative to Other oral therapies that are approved and in development for dissimilar indications, including like the JAKs, TIK2s and TNF alphas. And then have you sought or received any feedback from KOLs regarding what's tolerable there? And then I have a follow-up.

Speaker 2

Yes. So let me talk first nice to hear your voice, Karen. So and Gail can elaborate in terms of the impact of CPK of other mechanisms in the INI space. But the CPK Issue, for lack of a better word, in our clinical trials has been a bit of a nothing burger for investigators. So dermatologists and rheumatologists Understand that asymptomatic CPK elevations are really nothing to worry about.

Speaker 2

Some have even asked us why it is that we're measuring them, but it's kind of So we've seen we've heard zero concerns from clinicians that this is a clinically significant finding. Gail, do you want to elaborate about DP calibrations with other mechanisms?

Speaker 3

Sure. So I think one of the things to just recognize is While not necessarily covered in the label because it doesn't seem to be a safety concern at all, if you look through the literature, particularly TNF and JAK inhibitors And particularly in rheumatoid arthritis, juvenile arthritis and inflammatory bowel disease, but also in skin diseases, You see these what sort of been termed benign CK elevations where the CK seems to be Going up as a way of showing muscle regeneration and improvement in muscle bulk and muscle function As you decrease inflammation, there's been some basic science research as well with JAK inhibitors that supports that. Myocyte differentiation is an important element of what may be going on here. And that's, I think, pretty typical of What we would expect to see and what we have seen to date, with really no evidence of anything pathologic happening.

Speaker 8

Thanks. And then you noted, but didn't really show, an evaluation of other endogenous cytokines such as Just among others IL-seventeen, IL-twelve and twenty three. And maybe could you just speak qualitatively to what you saw there and comment on whether you're seeing An emerging profile with respect to the cytokine knockdowns that can inform future development decisions?

Speaker 2

Yes. I'll let Joe take that.

Speaker 5

Yes. So with the 2 cytokines that you mentioned, with IL-seventeen, there was a subset of patients where IL-seventeen Was measurable and was elevated. And in those patients, ATI-four fifty resulted in a reduction in the level of IL-seventeen. With IL-twelve, IL-twelve was elevated in HS patients and endogenous And ATI-four fifty did result in a reduction in IL-twelve as well. So in both those cytokines, there was a reduction in the measurable

Speaker 8

Okay, great. Well, thanks for that.

Speaker 2

Thanks, Frank.

Operator

Thank you. One moment for our next question, please. And our question comes from the line of Thomas Smith with SVB Securities. Your line is now open.

Speaker 9

Hey, guys. Good morning. Thanks for taking the questions. I guess, first on the HS study and the CNS Adverse events, dizziness, headache, tremor,

Speaker 10

do you have a

Speaker 9

sense for the ideology for these signals? And, can you clarify if there were any discontinuations due to the CNS events?

Speaker 2

Yes. Hey, Tom, Doug here. So the in animal studies at least, we do not believe our drug crosses the blood brain barrier. There's a little bit of an enigma to us that there'd be any such symptoms, but I'll let Gail speak on clarification.

Speaker 3

Yes. So I'd start by saying that, that signal of some headaches, some dizziness, we've seen also We've seen throughout our program. We've seen it in our Phase 1 unit studies where patients have very care monitoring because they stay in the unit For several days or even a few weeks. And in those cases, it tends to be really both not unusual, but also transient. So in most of the cases, when they've been looking at this, there hasn't been any real rationale for why patients may feel this way.

Speaker 3

As Doug already said, we don't have evidence that ATI-four fifty crosses into the CNS. Other things that might cause headache and dizziness like changes in blood pressure Have really not been seen in any of our studies, including those where patients were very closely monitored in those Phase 1 unit settings. I think the good news is when patients know that it's going to be something that may occur and is likely to resolve, what we found is patients are willing to stay on the treatment.

Speaker 9

Okay, understood. That's helpful. And then on the RA study, you provided some color on the discontinuation rate. Can you just elaborate on that at all? And if you can't provide an exact number, can you maybe characterize it relative to DHS discontinuation rate?

Speaker 9

Is it roughly In line or half or a third, like how should we think about that discontinuation rate?

Speaker 2

Yes. So we can't elaborate. It's a blinded study, but suffice Say, we base our power calculations on precedent Phase 2b and Phase 3 studies and we're tracking at or below the discontinuation rates that have been seen in Competitive studies.

Speaker 3

And I'd only just add to that that rate has been very stable over time.

Speaker 9

Okay, great. Got it. Appreciate it. Thanks for taking the questions guys.

Speaker 2

Thanks, Tom.

Operator

Thank you. One moment for our next question. And our next question will come from the line of Alex Thompson with Stifel. Your line is now open.

Speaker 9

Hey, thanks for taking my questions. Just one more quick one on the CK elevation. I wonder if you could sort of comment on where the 4 treatment emergent adverse events sort of fit in that table On Slide 14, in terms of what grade of CK elevation was observed. And then maybe Joe could comment a little bit on PK and what kind of

Speaker 2

Yes. So let me start. So it's always been I mean, I'm a clinician. I run lots of clinical studies. It's always strange to me that some people, some investigators will choose to Tick off as a clinical adverse event and asymptomatic laboratory adverse event.

Speaker 2

And so we really don't have an explanation as to why Those four events were toggled as such. There were elevations of CPK in patients on placebo that were just by luck they have not to have them be Adverse events, I'll let Gail elaborate regarding the magnitude of the elevations.

Speaker 3

Yes. And what I can say is you're best looking at Slide 15 in our deck in the graph on the right. You'll notice there we have one CK elevation in bright blue that at baseline and did not occur on treatment at all. That was one of our originally reported ones that is no longer being considered Treatment emergent adverse event because it was not treatment emergent. And you can see that one which didn't happen on treatment was almost the highest CK elevation that we saw in the study.

Speaker 3

The 2nd highest one we saw in the study and these were both higher grade elevations is that yellow one. And again, this was A single increase in CK, patient had a history of exercise and had no symptoms whatsoever.

Operator

And when it

Speaker 3

came back on lab, she came back in. It was already down. And by the next follow-up visit, it was entirely down to normal. So These CK elevations that were reported as adverse events are in that graphic to the right, excluding the blue one, which turned out to, of course, not be Emergent. But I think you can see that there's a range there of moderate to higher elevations.

Speaker 3

And then of course, interestingly enough, there's this one patient in purple where the CK elevation at, on treatment was no higher In terms of grade of toxicity in the CK elevation before treatment, so that was considered sort of a grade 0 change.

Speaker 5

And to address the question about the target for PK and PD with this study. So we have targeted the 50 milligram dose to generate PD inhibition of greater than 80 And the pharmacokinetics in the HS study demonstrated that. And I think if you look at the Data that we had on the ex vivo cytokine production, you're seeing that at day 85 at trough and at peak, we're seeing greater than 90% inhibition TNF alpha and greater than 80 some percent inhibition of IL-one beta. So I think

Speaker 1

we achieved that. And just to close on the PK question.

Speaker 2

So now have chronic COGS through 26 to 39 weeks. We didn't see Any muscle toxicity in any of the preclinical toxicology studies have been run to date. We've had 0 symptomatic disease elevations in any humans today. And you see the date on Slide 15 that these are transient. They go away while on drug.

Speaker 2

We don't believe that we have a We'll continue to monitor the rest of the program, of course.

Speaker 9

Great. Thanks.

Operator

Thank you. One moment for our next question, please. And our next question comes from the line of Roger Song with Jefferies. Your line is now open.

Speaker 11

Great. Thanks for taking the question and appreciate all the details for the HS data. Maybe just one quick one. I know a lot of questions about the CPC and just adding one, hopefully, that's not too much for you. And in terms of the I understand this the CPK Elevation transient and the kind of a self resolve And it's very good you don't have the symptoms associated.

Speaker 11

Just curious how long usually it takes patients to develop any symptoms While they have some on and off for the CPK Elevation and how concerned we should be if you take the longer term therapy and that they may have this kind of episodic elevation event. Thank you.

Speaker 2

Yes. And so to date, we only have safety data in humans through week 12 in our program. We now with the chronic tox Having been completed, we'll be able to dose beyond 12 weeks. But there's nothing in the profile of CPK that we're seeing today that would suggest that there's going to be any Long term issues with this. It would be different if there was smoldering elevations of CPK through 12 weeks, then you might think that there's something chronic going on, but that isn't the profile that you're seeing at So I think the likelihood is relatively low, but first, let's do the studies and do the longer term follow-up.

Speaker 2

Gail, anything you want to add

Speaker 3

The only thing I'd add is measuring CK is not like measuring blood pressure. You know if your blood pressure goes up and stays up That can cause harm. And of course, we haven't seen any blood pressure changes in our studies that are meaningful, of course. But with CK, it's a normal biologic thing. It's It's something that fits in your muscle cells and when you do things day to day that may impact your muscles, You get increased turnover of those muscle cells and your CK can go up.

Speaker 3

And that's not associated with any harm, Unless there's something underlying going on or something else going on in your body, and we have no evidence of that. So even Transient CK elevations, over a long period of time, such as these are something I would expect to see in you or in me in the course of our normal daily life in any case.

Speaker 11

All right, great. Yes, that's comforting. In terms of the cytokine, maybe Can you just let us know for your RA Phase 2b study, anything you can make a comment related to The baseline cytokine consistent with your prior or the disease background or have you ever seen those kind of for cytokine data yet.

Speaker 2

Yes. And so this is a blinded study. So we have not looked Yes, and we wouldn't look anyways until we're looking at the top line results. But Joe, anything you want to add about what we're actually going to be looking at in terms of cytokines in the Phase 2b RA study?

Speaker 5

Yes. So on the Phase 2b study, we will be looking at endogenous cytokine levels. We won't be doing the ex vivo analysis and that we've already demonstrated In the 2a study, the dependence of these ex vivo cytokines on MK2 and the sensitivity of ATI-four fifty.

Operator

And our next question comes from the line of Ditesh Patel with H. C. Wainwright. Your line is now open.

Speaker 11

Thank you, guys. Just standing in for Raghuram Selvaraju, H. C. Wainwright. Several questions.

Speaker 11

How do you see the competitive landscape Shaping up in atopic dermatitis and what do you consider to be the key differentiators for ATI-seventeen seventy seven?

Speaker 2

It's a great question. Thanks. The landscape in fact is getting more attractive. I think We've all been pleasantly surprised with the successful launch of the Incyte topical jack. And by the way, that topical jack is basically just the oral jack that's applied on the skin.

Speaker 2

So not surprisingly with it, you do see a fairly high level of systemic exposure, which I think is why the FDA opted to give them the class labeling with the black box. So the number one area of differentiation that we're seeking with our soft topical JAK program Is to have similar, if not better efficacy to OXOLURA, but with minimal systemic exposure and thus a significant likelihood of us getting the class labeling. We don't know what's going to be in the label until we have the labeling discussions with the U. S. FDA and they'll be based on finalized Phase 3 data.

Speaker 2

But just if you look at what we have from our Phase 2a study, there are minimal the minimus exposure seen in patients, which I think is tracking well to the asset profile that we're trying to achieve.

Speaker 11

Great. And then just switching gears to psoriatic arthritis. What might be possible to reaccelerate

Speaker 2

And just to point out, It is a difficult part of the world to be doing these types of studies. We've seen quite an uptick In enrollment, just in the last few months as we've been able to get through regulatory hurdles with the Polish government. So I think we are on track to achieve What we set out to do, but Gail, anything you want to add in terms of enrollment for it?

Speaker 3

I'd always say that like all of our studies, we track them very closely in terms of enrollment And take actions as it makes sense. In this particular study, as I said earlier, we started this a bit later. There was the Challenges in the part of the world with Ukraine and then with many, many companies switching over to having more studies in Poland. But at this point, the study is going well. We're tracking the enrollment we expected.

Speaker 3

We're seeing screening continue to improve. So I think we're on track at present.

Speaker 2

And lastly, we have a high level of investment enthusiasm for this. So it isn't for lack of enthusiasm, but there are some headwinds in that part of the world that we're dealing with.

Speaker 11

Great. Thank you so much for the color there.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Julian Harrison with BTIG. Your line is now open.

Speaker 10

Hi, good morning. Thank you for taking my questions. First on the HS data, while it wasn't the primary endpoint, I'm curious if Your comment on what the placebo rates of high score 50, 75 and 100 were? And then on the topical JAK ATI 1777, Just

Speaker 6

curious if you

Speaker 10

could talk more about the specific changes to the inclusion criteria behind that protocol amendment and how much would you expect this to affect baseline characteristics For the overall study population.

Speaker 2

Yes. So we're not going into a lot more details regarding the EPC results for HS. Suffice it to say that placebo had a very good day on basically every endpoint. In fact, placebo did better in this study than ACTIV Did in some of the more successful Phase 3 studies that have already been published. Atopic dermatitis, do you want to comment about that?

Speaker 3

Sure. So the atopic dermatitis study, first I'd start by saying we carefully looked through the literature and where there was available data on response rates In mild patients, and the feeling was that we did not need to repower the study. Certainly, Having OXELURA clinical trial data helped us come to those kind of decisions. What we didn't do is We kept the upper range as it was with the moderates and severes, but we included the IgA Class 2, which is mild in the study. We also dropped body surface area from greater than equal to 5 to greater than equal to 3.

Speaker 3

And for easy inclusion, we also dropped this from greater than or equal to 5 to greater than or equal to 3. So across the board, We simply move to including a somewhat milder population as well. And as we said, screening is going great there.

Speaker 11

Great. Thank

Speaker 1

you. Thanks, Julian.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Tim Lugo with William Blair. Your line is now open.

Speaker 4

Hey, this is Lachlan on for Tim. Thanks for taking the questions. A quick follow-up on the enrollment for atopic dermatitis. Are you limiting the A portion of patients in the trial that could fall into that sort of new milder cohort. If you could just talk about that.

Speaker 4

And then, Dale, on the CK elevations, you mentioned a lot of them seem to be associated with exercise. So I'm wondering in the RA and PSA studies, are there any sort of limitations or restrictions on Things like patients exercising before a visit in the product.

Speaker 2

Gail will take both of those.

Speaker 3

Sure. So in terms of the atopic dermatitis study, the Excuse me, what was the question again? I need to have James, somebody remind me.

Speaker 4

You're limiting the number

Speaker 3

of trials. Yes, sorry. Yes, in terms of that, no, not at all. The study was well enrolled at the point where we're at. We certainly still have room to enroll, but we want to make sure we get adequate number of mild patients.

Speaker 3

We're not doing any kind of stratification for mild, moderate or severe. And at this point, my hope would be that we see plenty of mild patients In terms of the CK question, The reality is that if you look at the HS study, it is a much younger population. Our mean age is in the mid-30s. Most RA studies, including our 2A study, is anywhere from mid-50s to mid-60s as a mean age. Also, RA, as a disease where people are entering with moderate to severe Musculoskeletal disease with significant arthritis, it's unusual for it to have quite the same type of problem with people just Deciding to go out and do a really intensive exercise regime.

Speaker 3

That said, you always want to keep things as real world as possible In these studies and CK elevations like we saw in the HS study with these

Speaker 2

Operator, any more questions?

Speaker 4

No, that's it for me. Thanks.

Operator

I will turn the call back over to Mr. Mannion for closing remarks.

Speaker 2

All right. There's no further questions. I just want to thank everyone again for their time, interest and continued

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.

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Earnings Conference Call
Aclaris Therapeutics Q1 2023
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