Delaware

001-37581

46-0571712

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

Title of Each Class:

Trading Symbol(s)

Name of Each Exchange on which Registered

Common Stock, $0.00001 par value

ACRS

The Nasdaq Stock Market, LLC

Exhibit

Number

Exhibit Description

99.1

Press Release, dated November 7, 2019.

ACLARIS THERAPEUTICS, INC.

By:  

/s/ Frank Ruffo

Date:  November 7, 2019

Frank Ruffo
Chief Financial Officer

  

Completed Strategic  Review and Announced Refocusing of Resources on Immuno-inflammatory Development Pipeline

  

Divested RHOFADE® (oxymetazoline hydrochloride) cream, 1%

  

Repaid $30 Million Term Loan

  

Successful Pivotal Phase 3 Clinical Trials of A-101 45% Topical Solution as a Potential Treatment for Common Warts (THWART-1 and THWART-2)

  

Management to Host Conference Call at 5:00 PM ET today

·

Announced the completion of the strategic review of its business in September 2019, as a result of which Aclaris is refocusing its resources on its immuno-inflammatory development programs and is actively seeking partners for its commercial products and certain clinical development assets. 

o

Divested RHOFADE® (oxymetazoline hydrochloride) cream, 1% (RHOFADE) to EPI Health, LLC in October 2019 for up to $55.0 million, consisting of:

§

Upfront payment of $35.0 million; and

§

Potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the agreement; as well as

§

A high single-digit royalty on net sales, on a product-by-product and country-by-country basis; and

§

25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health from a licensee or sublicensee in any territory outside of the United States, subject to specified exceptions.

o

Seeking partners to:

§

Commercialize A-101 45% Topical Solution, an investigational compound being developed as a potential treatment for common warts (verruca vulgaris);

§

Further develop and commercialize ATI-501 (oral) and ATI-502 (topical), which are investigational Janus Kinase (JAK) 1/3 inhibitor compounds, as potential treatments for alopecia; and

§

Commercialize ESKATA® (hydrogen peroxide) topical solution, 40% (w/w).

·

Recently announced positive results from THWART-1 (WART-301) and THWART-2 (WART-302),  Aclaris’ two pivotal Phase 3 clinical trials of A-101 45% Topical Solution as a potential treatment for common warts.

·

Announced in August that the first subject in its Phase 1 clinical trial of ATI-450,  an investigational oral MK2 inhibitor compound, has been dosed.  ATI-450 is Aclaris’ first internally developed novel compound to enter the clinical phase of development.

·

A-101 45% Topical Solution:

o

A-101 45% Topical Solution met the primary and all secondary efficacy endpoints in both THWART-1 and THWART-2, Aclaris’ pivotal Phase 3 clinical trials for the treatment of common warts.

o

The majority of adverse events (AEs) in THWART-1 and THWART-2 were application site reactions, which were predominantly mild or moderate.  No treatment-related serious adverse

events were observed in the trials. Only one subject in the Phase 3 program had an AE that led to treatment discontinuation.  The most common AEs occurring in more than 5% of subjects in the A-101 45% Topical Solution group were AEs at the application site such as pain, scabbing, erythema, pruritus, pallor and erosion.

o

An open-label safety extension Phase 3 clinical trial (WART-303) evaluating the long-term safety of A-101 45% Topical Solution as a potential treatment for common warts, has completed enrollment of 425 patients. Aclaris expects WART-303 to be completed in the first half of 2020.

·

ATI-450:

o

ATI-450-PKPD-101 -  This is an ongoing Single Ascending Dose / Multiple Ascending Dose (SAD/MAD) safety, pharmacokinetic and pharmacodynamic Phase 1 clinical trial of approximately 60-80 subjects. If successfully completed, Aclaris expects to initiate a Phase 2 clinical trial for ATI-450 in subjects with rheumatoid arthritis in the first half of 2020. Aclaris is also considering developing ATI-450 for an additional inflammatory indication.

·

ATI-1777:

o

ATI-1777 is an investigational topical soft-JAK inhibitor compound that Aclaris is developing as a potential treatment for moderate-to-severe atopic dermatitis.

o

Aclaris expects to submit an IND/regulatory filing for ATI-1777 in mid-2020.

o

If the IND/regulatory filing is allowed, Aclaris expects to initiate a Phase 1/2 clinical trial in the second half of 2020.

·

As described above, on September 5, 2019, Aclaris announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products.  The accompanying condensed consolidated statements of operations and selected condensed consolidated balance sheet data have been recast for all periods presented to reflect the assets, liabilities, revenue and expenses related to Aclaris’ commercial products as discontinued operations. The accompanying financial statement data are generally presented in conformity with Aclaris’ historical format.  Aclaris believes this format provides comparability with its previously filed financial statements. 

·

Contract research revenues decreased to $1.0 million and $3.1 million for the quarter and nine months ended September 30, 2019, compared to $1.1 million and $3.4 million for the quarter and nine months ended September 30, 2018. Cost of revenue was $0.8 million and $3.0 million for the quarter and nine months ended September 30, 2019, compared to $1.1 million and $3.1 million for the quarter and nine months ended September 30, 2018. These amounts included non-cash stock-based compensation, and amortization and depreciation expenses, of $0.2 million and $0.8 million for the quarter and nine months ended September 30, 2019, respectively, and $0.3 million and $0.8 million for the quarter and nine months ended September 30, 2018, respectively.

·

Research and development expenses were $16.2 million and $53.3 million for the quarter and nine months ended September 30, 2019, respectively, compared to $15.2 million and $41.5 million for the quarter and nine months ended September 30, 2018, respectively. The increases were mainly the result of a $4.0 million milestone payment made by Aclaris to Rigel Pharmaceuticals, Inc. for the achievement of a specified development milestone, and activities associated with preclinical development and the recently initiated Phase 1 clinical trial for ATI-450.  These increases were offset in part by decreases in expenses for several Phase 2 clinical trials of ATI-501 and ATI-502 and two Phase 3 clinical trials of A-101 45% Topical Solution, which reached or neared completion in the third quarter of 2019.

·

General and administrative expenses were $6.7 million and $21.1 million for the quarter and nine months ended September 30, 2019, respectively, compared to $6.1 million and $20.5 million for the quarter and nine months ended September 30, 2018, respectively.

·

Total costs and expenses from continuing operations for the third quarter of 2019 were $23.8 million, compared to $22.5 million for the third quarter of 2018. For the nine months ended September 30, 2019, total costs and expenses were $96.6 million, compared to $65.1 million for the same period in 2018. These amounts included non-cash stock-based compensation expenses of $4.0 million and $12.9 million for the quarter and nine months ended September 30, 2019, respectively, compared to $4.0 million and $12.4 million for the prior year periods, respectively. For the nine months ended September 30, 2019, there was also an $18.5 million non-cash charge for the impairment of goodwill. There was no such charge in the prior year.

·

Loss from continuing operations was $23.1 million for the third quarter of 2019, compared to $20.6 million for the third quarter of 2018. Loss from continuing operations was $94.1 million for the nine months ended September 30, 2019, compared to $58.5 million for the nine months ended September 30, 2018.

·

Loss from discontinued operations was $32.2 million for the third quarter of 2019, compared to $12.1 million for the third quarter of 2018, and was $48.7 million for the nine months ended September 30, 2019, compared to $35.6 million for the nine months ended September 30, 2018.

·

Net loss, which combines loss from continuing and discontinued operations, was $55.3 million for the third quarter of 2019, compared to net loss of $32.7 million for the third quarter of 2018, and was $142.8 million for the nine months ended September 30, 2019, compared to $94.2 million for the nine months ended September 30, 2018.

·

As a result of Aclaris’ new strategic direction announced on September 5, 2019,  which resulted in the reclassification of expenses related to its commercial products, Aclaris’ prior full-year 2019 estimated operating expense guidance no longer represents an accurate estimate of its anticipated operating expenses, and Aclaris does not believe that updated full-year guidance for 2019 would be meaningful.    

·

Aclaris now anticipates that its cash, cash equivalents and marketable securities as of September 30, 2019, after giving effect to both the upfront payment from the sale of RHOFADE and the full repayment of the loan facility with Oxford Finance LLC, will be sufficient to fund its operations into the third quarter of 2021, without giving effect to any potential new business development transactions or financing activities.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Revenues:

Product sales, net

$

—

$

—

$

—

$

—

Contract research

Other revenue

—

—

—

Total revenues, net

Costs and expenses:

Cost of revenue (1)

Research and development (1)

Sales and marketing (1)

General and administrative (1)

Goodwill impairment

—

—

—

Amortization of definite-lived intangible

—

—

—

—

Total costs and expenses

Loss from operations

Other (expense) income, net

Loss from continuing operations

Loss from discontinued operations (1)

Net loss

$

$

$

$

Net loss per share, basic and diluted

$

$

$

$

Weighted average common shares outstanding, basic and diluted

(1) Amounts include stock-based compensation expense as follows:

Cost of revenue

$

$

$

$

Research and development

Sales and marketing

—

—

—

—

General and administrative

Loss from discontinued operations

Total stock-based compensation expense

$

$

$

$

September 30, 2019

December 31, 2018

Cash, cash equivalents and marketable securities

$

$

167,972

Total assets

160,416

275,566

Total current liabilities

38,989

27,342

Total liabilities

75,141

60,442

Total stockholders' equity

85,275

215,124