Aclaris Therapeutics Reports Fourth Quarter and Full Year 2023 Financial Results and Provides a Corporate Update
- None.
- Increased R&D expenses and intangible asset impairment charges impacting financial results
- Bad debt expense due to uncertainties regarding collection from EPI Health after Chapter 11 bankruptcy filing
The financial results and corporate update from Aclaris Therapeutics indicate a strategic shift in the company's development pipeline, with a particular focus on advancing drug candidates through various clinical trial phases. The reported net loss reduction in Q4 2023, compared to the same quarter in the previous year, suggests improved operational efficiency or successful cost management strategies. However, the year-over-year net loss increase signals ongoing investments in R&D that have yet to yield profitable returns. Aclaris' liquidity position, with a decrease in cash reserves from the previous year, could raise concerns about long-term sustainability but may also reflect the company's aggressive investment in its pipeline.
Investors should note the one-time payments contributing to the revenue, which are non-recurring and may not indicate a trend of increasing revenue. The increase in R&D and G&A expenses aligns with the company's developmental progress but will need to be monitored to ensure they don't consistently outpace revenue growth. The revaluation of contingent consideration resulting in significant gains both for the quarter and the year is a non-cash adjustment that investors should consider separately from operational performance.
The progress of Aclaris' drug candidates, particularly the positive top-line results from the Phase 2b trial of ATI-1777 for atopic dermatitis, represents a potential advancement in treatment options for immuno-inflammatory diseases. The decision to seek a development and commercialization partner can be seen as a strategic move to mitigate risk and finance further development. The shift in focus to zunsemetinib for oncology trials, bypassing earlier phase trials due to its more advanced clinical package, indicates a strategic reprioritization which could expedite the development timeline and potentially lead to earlier monetization of the asset.
For stakeholders, the positive results from early-phase trials may suggest a promising future; however, it is crucial to recognize the inherent risks in drug development, particularly during the transition from clinical trials to commercialization. The impairment charge on the IPR&D asset reflects the volatility and unpredictability of drug development, where changes in strategy can lead to significant financial adjustments.
The biopharmaceutical sector is highly competitive and Aclaris' focus on kinase inhibitors for immuno-inflammatory diseases positions it within a niche yet growing market. The company's proprietary drug discovery platform, KINect®, could provide a competitive edge in identifying novel drug candidates. The potential treatments for conditions like atopic dermatitis, pancreatic cancer and metastatic breast cancer address significant unmet medical needs, which could translate into substantial market opportunities upon successful development and approval.
Collaboration with academic institutions like Washington University in St. Louis and the pursuit of grants for funding trials could alleviate some financial burden while leveraging academic expertise. The licensing agreement with Sun Pharma, contributing to the revenue spike, reflects the company's ability to monetize its developments, a positive sign for future partnerships and licensing deals. However, the dependency on such deals for revenue generation underscores the importance of a robust pipeline and the successful progression of drug candidates through the clinical and regulatory process.
WAYNE, Pa., Feb. 27, 2024 (GLOBE NEWSWIRE) -- Aclaris Therapeutics, Inc. (NASDAQ: ACRS), a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases, today announced its financial results for the fourth quarter and full year of 2023 and provided a corporate update.
“As we enter 2024, we are financially strong, focused and motivated,” stated Dr. Neal Walker, co-founder and Interim Chief Executive Officer & President of Aclaris. “Returning to the CEO role, I look forward to building on our strong foundation and deep expertise in kinase discovery and development as we look to shape the future of Aclaris.”
Research and Development Highlights:
- ATI-1777, an investigational topical “soft” JAK 1/3 inhibitor
- In January 2024, Aclaris reported positive top-line results from its Phase 2b trial in atopic dermatitis, and is currently seeking a development and commercialization partner for this program.
- ATI-2138, an investigational oral covalent ITK/JAK3 inhibitor
- Aclaris is assessing the most effective development pathway, including the lead indication, for ATI-2138. Aclaris reported positive results from its Phase 1 MAD trial of ATI-2138 in September 2023.
- Zunsemetinib (ATI-450), an investigational oral small molecule MK2 inhibitor
- Aclaris plans to support Washington University in St. Louis in its investigator-initiated Phase 1b/2 trials of zunsemetinib as a potential treatment for pancreatic cancer and metastatic breast cancer. Aclaris expects these trials to be primarily funded by grants awarded to Washington University.
- ATI-2231, Aclaris’ second MK2 inhibitor, was previously being developed for oncology and Aclaris was supporting Washington University in an investigator-initiated Phase 1a trial of ATI-2231 in patients with advanced solid tumor malignancies. However, Aclaris and Washington University agreed to instead study zunsemetinib in oncology in order to expedite the development timeline by eliminating the need to conduct the Phase 1a trial due to zunsemetinib’s more advanced clinical package.
- Discovery
- Aclaris plans to continue to advance discovery programs through KINect®, its proprietary drug discovery platform.
Financial Highlights:
Liquidity and Capital Resources
As of December 31, 2023, Aclaris had aggregate cash, cash equivalents and marketable securities of
Financial Results
Fourth Quarter 2023
- Net loss was
$1.5 million for the fourth quarter of 2023 compared to$27.6 million for the fourth quarter of 2022. - Total revenue was
$17.6 million for the fourth quarter of 2023 compared to$7.8 million for the fourth quarter of 2022. The increase was primarily driven by a one-time upfront payment under the license agreement with Sun Pharmaceutical Industries, Inc. (Sun Pharma) received in the fourth quarter of 2023. - Research and development (R&D) expenses were
$26.6 million for the quarter ended December 31, 2023 compared to$21.1 million for the prior year period. The$5.5 million increase was primarily the result of an increase in expenses associated with drug candidate manufacturing for zunsemetinib. - General and administrative (G&A) expenses were
$8.2 million for the quarter ended December 31, 2023 compared to$7.1 million for the corresponding prior year period. The increase was primarily due to an increase in personnel and stock-based compensation expenses. - Licensing expenses were
$5.7 million for the quarter ended December 31, 2023 compared to$0.6 million for the prior year period. The increase was primarily attributable to amounts payable to third parties in connection with amounts earned under the Sun Pharma license agreement. - Revaluation of contingent consideration resulted in a
$26.3 million gain for the quarter ended December 31, 2023 compared to a charge of$7.1 million for the prior year period. - Intangible asset impairment charges were
$6.6 million for the quarter ended December 31, 2023, representing the full balance of the in-process research and development (IPR&D) intangible asset. The impairment charge resulted from Aclaris’ decision to discontinue further development of the drug candidate for immuno-inflammatory diseases.
Full Year 2023
- Net loss was
$88.5 million for the year ended December 31, 2023 compared to$86.9 million for the year ended December 31, 2022. - Total revenue was
$31.2 million for the year ended December 31, 2023 compared to$29.8 million for the year ended December 31, 2022. The increase was primarily driven by a one-time upfront payment under the license agreement with Sun Pharma received in the year ended December 31, 2023. The increase was partially offset by both a one-time upfront payment received under a license agreement with Eli Lilly and Company and a one-time upfront payment received under a license agreement with Pediatrix Therapeutics, Inc. in the year ended December 31, 2022. - R&D expenses were
$98.4 million for the year ended December 31, 2023 compared to$77.8 million for the prior year period.
- The
$20.6 million increase was primarily the result of higher:- Zunsemetinib development expenses, including costs associated with clinical activities for the Phase 2b trial for rheumatoid arthritis and drug candidate manufacturing costs;
- ATI-2138 development expenses, including costs associated with the Phase 1 MAD trial and other preclinical activities; and
- Compensation-related expenses due to an increase in headcount.
- The
- G&A expenses were
$32.4 million for the year ended December 31, 2023 compared to$25.1 million for the prior year period.
- The
$7.3 million increase was primarily the result of higher compensation-related costs due to increased headcount and the impact of equity awards granted during the year ended December 31, 2023. - Bad debt expense recorded from Aclaris’ determination that collection of amounts due from EPI Health are uncertain as a result of their filing for Chapter 11 bankruptcy protection also contributed to the increase.
- The
- Revaluation of contingent consideration resulted in a
$26.9 million gain for the year ended December 31, 2023 compared to a charge of$4.7 million for the corresponding prior year period. - Intangible asset impairment charges were
$6.6 million for the year ended December 31, 2023, representing the full balance of the IPR&D intangible asset. The impairment charge resulted from Aclaris’ decision to discontinue further development of the drug candidate for immuno-inflammatory diseases.
About Aclaris Therapeutics, Inc.
Aclaris Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates to address the needs of patients with immuno-inflammatory diseases who lack satisfactory treatment options. The company has a multi-stage portfolio of drug candidates powered by a robust R&D engine exploring protein kinase regulation. For additional information, please visit www.aclaristx.com.
Cautionary Note Regarding Forward-Looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “anticipate,” “believe,” “expect,” “intend,” “may,” “plan,” “potential,” “will,” and similar expressions, and are based on Aclaris’ current beliefs and expectations. These forward-looking statements include expectations regarding its development plans for its development programs, including its plans to seek a development and commercialization partner for ATI-1777 and its strategic review of its business. These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Risks and uncertainties that may cause actual results to differ materially include uncertainties inherent in the conduct of clinical trials, Aclaris’ reliance on third parties over which it may not always have full control, Aclaris’ ability to enter into strategic partnerships on commercially reasonable terms, the uncertainty regarding the macroeconomic environment and other risks and uncertainties that are described in the Risk Factors section of Aclaris’ Annual Report on Form 10-K for the year ended December 31, 2023, and other filings Aclaris makes with the U.S. Securities and Exchange Commission from time to time. These documents are available under the “SEC Filings” page of the “Investors” section of Aclaris’ website at www.aclaristx.com. Any forward-looking statements speak only as of the date of this press release and are based on information available to Aclaris as of the date of this release, and Aclaris assumes no obligation to, and does not intend to, update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Aclaris Therapeutics, Inc. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (unaudited, in thousands, except share and per share data) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Contract research | $ | 566 | $ | 866 | $ | 3,035 | $ | 4,395 | ||||||||
| Licensing | 17,004 | 6,722 | 28,214 | 25,100 | ||||||||||||
| Other | — | 165 | — | 257 | ||||||||||||
| Total revenue | 17,570 | 7,753 | 31,249 | 29,752 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue (1) | 725 | 877 | 3,423 | 4,023 | ||||||||||||
| Research and development (1) | 26,646 | 21,072 | 98,384 | 77,813 | ||||||||||||
| General and administrative (1) | 8,214 | 7,146 | 32,412 | 25,133 | ||||||||||||
| Licensing | 5,703 | 637 | 14,658 | 7,937 | ||||||||||||
| Revaluation of contingent consideration | (26,300 | ) | 7,100 | (26,900 | ) | 4,700 | ||||||||||
| Intangible asset impairment | 6,629 | — | 6,629 | — | ||||||||||||
| Total costs and expenses | 21,617 | 36,832 | 128,606 | 119,606 | ||||||||||||
| Loss from operations | (4,047 | ) | (29,079 | ) | (97,357 | ) | (89,854 | ) | ||||||||
| Other income, net | 2,189 | 1,444 | 8,509 | 2,946 | ||||||||||||
| Loss before income taxes | (1,858 | ) | (27,635 | ) | (88,848 | ) | (86,908 | ) | ||||||||
| Income tax benefit | (367 | ) | — | (367 | ) | — | ||||||||||
| Net loss | $ | (1,491 | ) | $ | (27,635 | ) | $ | (88,481 | ) | $ | (86,908 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.02 | ) | $ | (0.41 | ) | $ | (1.27 | ) | $ | (1.33 | ) | ||||
| Weighted average common shares outstanding, basic and diluted | 70,866,315 | 66,685,580 | 69,808,855 | 65,213,944 | ||||||||||||
| (1) Amounts include stock-based compensation expense as follows: | ||||||||||||||||
| Cost of revenue | $ | 337 | $ | 314 | $ | 1,456 | $ | 1,151 | ||||||||
| Research and development | (2,367 | ) | 1,517 | 6,801 | 3,745 | |||||||||||
| General and administrative | 3,296 | 2,982 | 12,285 | 10,143 | ||||||||||||
| Total stock-based compensation expense | $ | 1,266 | $ | 4,813 | $ | 20,542 | $ | 15,039 | ||||||||
| Aclaris Therapeutics, Inc. | |||||||
| Selected Consolidated Balance Sheet Data | |||||||
| (unaudited, in thousands, except share data) | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| Cash, cash equivalents and marketable securities | $ | 181,877 | $ | 229,813 | |||
| Total assets | $ | 197,405 | $ | 254,596 | |||
| Total current liabilities | $ | 30,952 | $ | 21,938 | |||
| Total liabilities | $ | 40,226 | $ | 56,975 | |||
| Total stockholders' equity | $ | 157,179 | $ | 197,621 | |||
| Common stock outstanding | 70,894,889 | 66,688,647 | |||||
| Aclaris Therapeutics, Inc. | |||||||||
| Selected Consolidated Cash Flow Data | |||||||||
| (unaudited, in thousands) | |||||||||
| Year Ended December 31, 2023 | Year Ended December 31, 2022 | ||||||||
| Net loss | $ | (88,481 | ) | $ | (86,908 | ) | |||
| Depreciation and amortization | 863 | 797 | |||||||
| Stock-based compensation expense | 20,542 | 15,039 | |||||||
| Revaluation of contingent consideration | (26,900 | ) | 4,700 | ||||||
| Intangible asset impairment charge | 6,629 | — | |||||||
| Deferred taxes | (367 | ) | — | ||||||
| Changes in operating assets and liabilities | 9,389 | (1,195 | ) | ||||||
| Net cash used in operating activities | $ | (78,325 | ) | $ | (67,567 | ) | |||
Aclaris Therapeutics Contact:
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