Good morning, everyone. I'm Carvey Leung, a Bio pharma Associate here at Cantor. Thank you for hosting a fireside chat with us at our Annual Healthcare Conference. To start, can you please tell us your role to the company?
Hi, I'm Neal Walker. I'm the CEO.
Joe Monahan, CSO.
Kevin Balthaser, CFO.
Great. For those that aren't familiar with the story, can you please provide a brief overview of Aclaris and its current focus areas?
Sure. So A claris is a clinical stage biopharmaceutical company focused on developing small molecule, oral therapeutics for various immunoinflammatory diseases. As a reminder, we have world-class expertise in our folks down in St. Louis, along with a drug discovery platform. And right now, we are focused on ATI-2138, which is our oral small molecule. It's an ITK and JAK3 inhibitor, and we're looking at that right now for atopic dermatitis, and we'll be expanding that post, hopefully successful results early next year. We also are investing in a preclinical molecule called an ITK inhibitor. That's a highly selective inhibitor that just works on ITK, and as well as a number of discovery programs and of course, our platform.
Great. Autoimmune diseases are highly competitive markets. What distinguishes you from the competition, and what gives you the confidence that you can overtake the competition?
Yeah, so it's a great question because the competitive landscape. I think the big difference between 10 years ago and now is that the cycle times are very fast. You know, before you could work on a compound for a few years and figure you got a lot of room, a lot of buffer, and now, competitors are popping up every day. So, you know, I think the biggest value prop we have is that I mentioned we have kind of world-class scientific expertise in discovery and translational medicine, and that's headquartered down in St. Louis.
And it's not just the people there, it's also the understanding of what tests to do and how to funnel the molecule through the appropriate battery of tests before you get into a drug development candidate, and that's something we're really good at. We also have decades of experience. Collectively as a team, we've kind of been there, done that in large pharma and small pharma. We understand which kind of molecules make sense to pick and which don't. And probably the best way to think about it is large pharmaceutical company at kind of capability within a small company.
You mentioned ATI-2138 and being a JAK3 and ITK. Can you talk more about the MOA for this compound?
Sure, Joe?
Yeah. So, ATI-2138 is an irreversible covalent inhibitor of both ITK and JAK3. ITK is a kinase that's downstream of the T-cell receptor and is particularly important in the regulation of Th2 T cells and Th2 related activities, including the production of cytokines such as IL-4 and IL-13, that are targeted by the biologics such as Dupixent. And so by modulating the Th2 side of the equation, one can modulate particular functions associated with atopic disease and autoimmune disease. On top of ITK, the compound also inhibits JAK3 covalently and selectively. JAK3 is a cytokine that is a kinase that's associated with common gamma cytokine signaling, including IL-2, IL-4, IL-7, IL-15, all T cell-associated cytokines.
So by blocking JAK3 selectively and potently with ATI-2138, we block the cytokine signaling, and by blocking ITK, we block the Th2 effect. So together, we believe we have potentially a safer compound by not hitting the other JAK isoforms and a efficacious compound, particularly in AD, based on the ITK effect and the JAK3 effect.
Why are you going after atopic dermatitis as your first indication? Were there reasons for the shift from inflammatory bowel disease to AD?
Yeah, I think, you know, at the end of last year, when our lead didn't work out, we opted to reprioritize our thinking in terms of just the clinical strategy and obviously, saving dollars was important, and the original plan was to do an inflammatory bowel disease study in addition to even a rheumatoid arthritis study. Unfortunately, those studies take a long time, you know, two-plus years, and cost a lot of money. And so what we did when I came back into the CEO role was just take a look at how can we get a catalyst quicker, and also, how do we prove out the concept with the molecule? And so atopic dermatitis is still a disease area of high unmet need.
There are still not a lot of great options out there for patients. You know, obviously, Dupixent's done quite well, but there's still a lot of headroom there on the efficacy side and the safety side, so we opted to go with that because we can do a twelve-week study. We get results in early 2025 and it's a spot-on mechanistic match, so JAK3, you know, we know that's going to work. We know ITK works on the Th2 side of the house, and so combining those two together gives us a more targeted approach.
How does ATI-2138 compare to existing JAK inhibitors in terms of potency and selectivity?
Yeah, so, generally, JAK inhibitors target the ATP site with reversible inhibitors, and the ATP site in JAKs is highly conserved. So with reversible inhibitors, you can get bias associated with different JAK isoforms, but high degrees of selectivity has not been achieved. Most of these inhibitors are low nanomolar potency. With ATI-2138, we take advantage of the cysteine residue that's present in the ATP site, that's only present in the JAK3 ATP site, not present in any other JAK isoforms. And by ligating that with a covalent compound, we're able to get high potency, picomolar potency on the target, as well as very high selectivity, several thousand-fold selectivity against JAK1, JAK2, and TYK2.
Knowing that, JAK3 is one of the only isoforms of JAK that has tissue-restricted expression. It's expressed in lymphoid and myeloid tissue, and the high degree of selectivity. You have the potential to have good efficacy and maybe an improved safety profile. On top of that, with ATI-2138, as we mentioned earlier, we also hit ITK. The combination of hitting ITK and JAK3 selectively provides us potential enhanced efficacy over JAK inhibitors, high potency, and maybe broader efficacy.
Can you walk through your clinical trial for ATI-2138, and when should we expect new data to be reported?
We expect data in the first half of 2025, and it's a pretty straightforward study. It's 12 weeks, open-label. We'll be enrolling about 15 patients or so, and it will be in moderate to severe atopic dermatitis, 10 milligrams BID, all the traditional efficacy readouts that most atopic dermatitis trials report out on. We're also going to have a very heavy pharmacodynamic component, as kind of Joe mentioned earlier. One of the things that we want to do with this strategy of going after AD is form a bridge between this molecule and the next-gen ITK selective.
So if in vivo we can tease out the PD effects between ITK and JAK3, which we can, and hopefully we'll be able to show that it'll paint a nice kind of road to why people should be excited about ITK selective inhibitors.
Okay. And relative to other treatments, including biologics, other JAKs, how do you anticipate positioning this product relative to others?
So as I said before, there's a ton of headroom. We're right at the front edge of the growth curve for atopic dermatitis. Obviously, lots of people are investing in it. And as Joe mentioned, we believe this is a much more targeted approach. I think people look at, you know, the word, you know, the mnemonic JAK and say, "Oh, my God, it's the same as everything else." Well, JAK3, as Joe just explained, is very different. It's a much more targeted approach, works south of the gamma chain cytokines, and then kind of adding ITK onto that to boost the horsepower on the Th2 side of the house makes a lot of biological sense.
So, you know, we think about the market in general, divided into JAK inhibitors on the one side, and so there's a lot of room there from a safety perspective, you know, to be successful and then to improve the standard of care, and then on the biologic side, you know, there's a lot of room on the efficacy, so we know these are heterogeneous. This is a heterogeneous disease, and certainly, you know, the efficacy and safety have not been optimized, so we're excited about it, and just as a reminder, you know, ritlecitinib is a covalently bound JAK3/ITK. It's the only other game in town out there, and they have an approval in alopecia areata, and they're doing a large study in vitiligo, so they've kind of proved out the concept of this approach.
We've tested our molecule head-to-head versus theirs in our own internal labs as part of kind of our value prop, and we're able to do this, and we're, you know, much more potent than they are. So we view this as a fast follower approach to what they've already developed. And certainly, there's opportunities in AD, but I would also think about down the road, alopecia areata, where they've already gotten approval there. We know it works quite well. That's a new growing market, and also vitiligo. So, really look at this molecule has a lot of potential and a lot of indications.
So I know you're working on next-gen selective ITK inhibitors. Maybe you can give an overview of these, and you can talk about the technical challenges in developing ITK inhibitors, and how did you overcome these?
Yeah, so historically, knowing the role of T cells in immunoinflammatory diseases and the fact that ITK is a kinase that's downstream of the T-cell receptor, there's been significant interest in ITK for the last 20 or so years. There was significant effort from biopharmaceutical companies in the early 2000s to try to develop ATP competitive inhibitors of ITK, and for the most part, they all failed, and they failed because they couldn't incorporate both drug-like properties with compounds that had high biochemical efficiency. And so that's been the issue with ITK as far as a targeted kinase. A lot of interest, but difficult to drug.
The approach that we took, and as Neal said, ritlecitinib has taken, is looking at the cysteine residue that's present in the active site of ITK to form a, to generate a compound that has good drug-like properties, has high reversible binding, and also has an electrophile that's juxtaposed to the cysteine residue to form a covalent bond to it, and with that, we're able to overcome a lot of the issues that plagued the drug companies for the first 10 years of drug discovery around ITK, so ATI-2138 is a compound that has those properties. As far as the next generation compound, as you know, ATI-2138 has similar potency against ITK and JAK3.
For the next generation compound, we wanna engineer out the JAK3 cross-reactivity and get rid of any issues associated with JAK safety and the black box warning. So the goal there is to generate highly selective and potent ITK inhibitors. And there's another T cell kinase called TXK, and we're interested in setting up pharmacological approaches to look at very selective ITK inhibitors and then ITK/TXK inhibitors, and try to understand which ones might be good for what type of indications, and potentially bring one or more compounds forward to development candidate status.
Okay, and what are the potential indications of your next-gen selective ITK inhibitor?
I think atopic dermatitis is a great match for it, based on the mechanism Joe just walked through, you know, particularly the Th2 side of the house. But also, if you can tickle TXK a little bit, you also take care of the heterogeneity issue that we see with some of these other pharmacological approaches, where they don't, where they only hit Th2. So we know that AD, as patients get older, tends to pick up a little Th1 action as well. You know, I think that. I'm sorry, what was the-
So you mentioned AD. Could there be other indications-
Oh, yes.
Possible for-
So in addition to AD, you know, you can look at a variety of Th2-driven respiratory diseases as well. So I think these are, I mean, these are large markets, right? We know that biologics and JAK inhibitors are targeting a number of these markets, and so they're well established, and we think that the ITK approach is gonna be a solid one.
In terms of addressable population, within AD, what would be the market size be for ITK inhibitor?
So, again, I mean, look at what Dupixent's doing. We're over $11 billion now. You know, the JAK inhibitors are on a good trajectory, so I think the target addressable markets are quite large, and particularly when you come on the heels of a lot of development with biologics, with an oral approach, that perhaps, you know, leverages the same mechanistic approach that they are.
Okay. Should we expect any other data from the rest of the pipeline, maybe within 12-18 months?
Over the next 12- 18 months, we would anticipate getting top-line data on ATI-2138. We would expect to get into an IND with the ITK. We are with our MK2 molecule looking to start a couple of oncology indications in metastatic breast and pancreatic cancer. That will initiate within the next 12- 18 months. And so those would be the main things that I would point you to.
Great. Switching to more of organizational questions, what were the main factors that led to the recent restructuring of the company?
You know, it's always. You know, biotech's hard, right? It's always difficult when your lead doesn't work out how you expect, and that happened at the end of last year. And so at that point, you know, you have to come in and rationalize cost and look at different priorities within the portfolio, and, you know, that's basically what we did. Unfortunately, we had to let go of about half the company.
We also, as I mentioned before, looked at indications that could perhaps be more cost efficient and get us a catalyst a little bit earlier. We also did some things like, you know, you've seen this summer that we monetized part of our IP royalty stream with Lilly and baricitinib, and that brought in almost $30 million. So I think, you know, we've done a good job of buttressing the balance sheet. We have, you know, cash out to 2028 on the current plan, and just focusing on very concentrated spend. We're spending against ATI-2138. If that's successful, we'll roll into a couple of phase II-B's, you know, looking at atopic and things like alopecia areata. We're investing in a very targeted fashion in ITK as you know, the lead asset coming out of the discovery platform.
We've cut back on further discovery spend there, and all that sets up for a very robust balance sheet, and you know, we've just gotta get into the catalyst.
Okay, and looking ahead, what's your long-term vision for the company? How do you see the company in the next, say, five to 10 years?
So, you know, we feel very strongly about the team that we've assembled, and clearly, as Joe mentioned, even with the ITK, it's interestingly, you know, people tend to forget about some of these targets when they can't drug it, right? And this was the case with MK2, a tough target to drug, although it didn't work out, it was still an exciting target that had proven biology. Same with ITK. You know, it was something for twenty years that companies have not been able to drug. And I personally like those targets because I know the biology, I know there's a ton of literature out there, and if you can just develop that molecule, then you're in the game.
So, you know, I think just leveraging that discovery platform and the wisdom of, you know, our team down in St. Louis, all ex-Pfizer folks down there, and I think we're, you know. Immunology's a large growing area. There's a lot of interest, and I think if we just keep doing our job, we can grow into one of the leading immunology companies.
Fantastic. Those are my questions. We open the floor for any questions from the audience. Yes.
Oh, I wanted to ask you, atopic dermatitis seems to be a crowded space, so how do you think you're going to stand above the rest of your assets?
Sure. So I think, number one, all these spaces are so crowded now, and I always kind of chuckle about it because whatever we think the competitive landscape is, it's probably two X worse when you factor in ex U.S. drug development. You know, the thing with looking at things like ITK, as an example, and 2138, the value prop to me, again, going back to Joe's comment, is the targeted approach, right? So again, people hear JAK, and you just think, "Oh, all JAK inhibitor is the same." They're not. They're very different, and just look at the kind of path of how the FDA looked at black box warnings and how they watered it down over time.
You know, they went from Tofa to Rinvoq to TEC, you know, so ritlecitinib didn't even get a black box. So, you know, I think it targeting JAK3 and taking a data-driven approach, along with adding in ITK, has a lot of potential in improving the efficacy bar. So I would really hope in this study that we're conducting now, that we would have efficacy on par or better than Rinvoq, as an example. And I do think that the safety, just given the fact that it's very focused on lymphoid and myeloid cells versus being ubiquitous, I think the safety profile is going to be better. So. And again, I look at AD as a good proof of concept, starting point. So I do think that there's a lot of potential there, but I also am really excited about alopecia areata.
You know, it's a space we know very, very well. We've worked with Angela Christiano and the folks at Columbia for years on, in different drug development capacities, and you know, we also think there's opportunity in vitiligo. So to me, being able to follow ritlecitinib with that is a pretty de-risked approach, and then following on with the ITK, which, you know, honestly, that's one of the molecules I'm most excited about. The literature is very clear, the biology is very clear. You just got to be able to drug it.
I have another question. So what about the international rights? Is that something that you have for your compounds and something you can monetize or you think about monetizing? How does that work?
It is. So we own worldwide rights, and we would certainly, you know, to my earlier comments about monetizing the b aricitinib IP earlier this year, we look at all those as aspects or and capabilities to raise non-dilutive capital. And so we would continue to explore that. In fact, you know, we're in active dialogue with our soft JAK that we reported out positive data on earlier this year. And again, it's just about deciding where you want to invest your capital. So we're trying to be prudent there.
Awesome. Thank you for having us.
Thank you.
Thanks for coming.
Thank you.