ACRS - Aclaris Therapeutics: Q4 Of 2023 Catalyst Makes This A Must Watch

2023-07-11 19:31:22 ET

Summary

• Aclaris Therapeutics, Inc. results from a phase 2b study using zunsemetinib for the treatment of patients with rheumatoid arthritis are expected to be released by Q4 of 2023.
• The global rheumatoid arthritis market is expected to reach $33.3 billion by 2030.
• Results from the phase 2a study using zunsemetinib for the treatment of patients with psoriatic arthritis are expected to be released by the 1st half of 2024.
• Another mid-stage program in the pipeline with potential would be with a drug known as ATI-1777, which is being explored in a phase 2b study to treat patients with atopic dermatitis; results from it are expected by second half of 2023.

Aclaris Therapeutics, Inc. ( ACRS ) is a good speculative biotech play to look into. The reason why I state that is because it expects to release results from its phase 2b dose ranging study, which is using its oral drug zunsemetinib for the treatment of patients with moderate-to-severe rheumatoid arthritis [RA]. Results from this trial are expected to be announce in Q4 of 2023, thus I believe this offers a great opportunity for investors.

Not only that, but there is another shot on goal for this particular drug. That is, zunsemetinib is also being explored in a phase 2a study for the treatment of patients with moderate-to-severe psoriatic arthritis [PSA]. Results from this study are expected to be released in the 1st half of 2024.

These aren't the only catalysts expected to be released within a 1-year period. It is also expected that results, from a phase 2b study using ATI-1777 in patients with mild-to-severe Atopic dermatitis, are expected to be released in the 2nd half of 2023. Lastly, results from a phase 1 multiple ascending dose [MAD] study to evaluate the use of ATI-2138 in healthy volunteers.

Ultimately, this clinical drug is being developed to treat patients with T-cell mediated autoimmune diseases. With advancement of zunsemetinib for the multi-billion-dollar rheumatoid arthritis market, plus several other catalysts expected in the 2nd half of 2023, these are the reasons why I believe that Aclaris Therapeutics is a good speculative biotech play to look into.

Phase 2b Study Using Zunsemetinib Offers Potential Into Large Multi-Billion Dollar Market Opportunity

As I stated above, Aclaris Therapeutics is exploring the use of zunsemetinib for the treatment of patients with rheumatoid arthritis. Rheumatoid arthritis [RA] is a type of autoimmune disease whereby a person's own immune system attacks healthy cells in the body by mistake. When such an event occurs, then it causes inflammation in many parts of the body. The attacking of joints and other parts of the body might cause inflammation and pain, but, believe it or not, RA can become severe. In severe cases, RA attacks organs and can causes issues. Such organs that might be affected in severe cases are: Heart, Lungs and Kidneys. There are several symptoms that these patients might experience, which are as follows:

• Swollen joints.
• Stiffness.
• Fatigue.
• Loss of appetite.
• Fever.

This is a large market opportunity for Aclaris Therapeutics, should it end up being successful. Why do I say that? That's because the global rheumatoid arthritis market is expected to reach $33.3 billion by 2030 . Hopefully, the safety/efficacy data eventually obtained for zunsemetinib will be good enough to do well in this market.

The use of zunsemetinib is being explored in the phase 2b study known as ATI-450-RA-202 . This randomized, double-blind, placebo-controlled study is expected to recruit up to 251 patients with rheumatoid arthritis [RA] who had failed to respond to methotrexate [MTX]. However, it's important to highlight that the drug zunsemetinib will not be given alone, but in that it will be given alongside MTX. That is, zunsemetinib plus MTX will be compared to placebo plus MTX. The following treatment arms are to be deployed:

• ATI-450 20 mg BID [twice daily dosing] + MTX.
• ATI-450 50 mg BID + MTX.
• Placebo + MTX.

The primary endpoint of this study is going to be the number of patients who achieve what is known as ACR20 response following 12 weeks of treatment. The secondary endpoints for this study are going to be: ACR50 response, ACR70 response, DAS28-CRP and other important RA measures. An important catalyst is expected for this particular program, in that Aclaris Therapeutics expects to release results from this phase 2b study in Q4 of 2023. That's because enrollment of this trial was completed on June 13, 2023 .

In order to understand this primary endpoint outcome measure, it is important to understand what the ACR 20 score is. ACR 20 is a measurement of improvement, in that this primary endpoint will be met if zunsemetinib + MTX achieves a 20% improvement in tender or swollen joint counts as well as a 20% improvement in at least 3 of the 5 other criteria. Then, as you can see, ACR 50 and ACR 70 will track a 50% and 70% improvement, respectively.

Where Aclaris Therapeutics can separate itself from JAK inhibitors and Biological therapies, which have been approved for RA and other autoimmune conditions, is in terms of mechanism of action. Zunsemetinib is an MK2 inhibitor. Even though it targets the kinome like other drugs, it might have broader reach of targeting far more kinases. Being a selective mitogen-activated protein kinase 2 [MK2] pathway blockade, it is able block cellular process signaling that ultimately leads to a sustained anti-inflammatory effect.

However, not only does zunsemetinib target a broader range of kinases, but the hope is for it to be developed as a safer alternative compared to other kinases on the market. Other Kinases which have been approved are Xeljanz [tofacitinib] from Pfizer ( PFE ), Gleevec [imatinib mesylate] from Novartis ( NVS ) and Tarceva [erlotinib] from Roche ( RHHBY ). Not only that, but selective MK2 inhibition might allow for greater sustained responses, because of being able to counter an issue with other drugs where tachyphylaxis occurs . Tachyphylaxis occurs when repeat administration of a drug causes it to diminish over time. Selective inhibition of MK2 allows for the blocking of the downstream pathway function, which then might mitigate tachyphylaxis that occurs with other p38 MAPK type inhibitors.

The beauty of zunsemetinib being an MK2 inhibitor is that it acts as a "pipeline in a drug." What do I mean by that? Well, it holds the ability to target a multitude of autoimmune disorders. That's why there is a second shot on goal for zunsemetinib as I stated directly above. There is an ongoing phase 2a study, which is using this drug to also treat patients with psoriatic arthritis.

This brings about another catalyst opportunity for investors to look forward to. That is, Aclaris Therapeutics expects to release results from this phase 2a study in the 1st half of 2024. Should zunsemetinib do well with respect to the upcoming data releases for RA and PSA, then it could be expanded upon to target other autoimmune disorders.

Financials

According to the 10-Q SEC Filing , Aclaris Therapeutics had cash, cash equivalents and marketable securities of $204.4 million as of March 31, 2022. The company has a good amount of cash, and there is no near-term risk of dilution unless the company's plans change. Why do I state that? It is because of two reasons. The first reason is because Aclaris issued a placement notice to sell approximately 3.4 million shares under its ATM Facility for aggregate net proceeds of $26.7 million. This transaction closed in April of 2023. The second reason is because of the estimate it gave on how long it expects its cash to last. It believes that that it has enough cash to fund its operations through the end of 2025.

Risks To Business

There are several risks that investors should be aware of before investing in Aclaris Therapeutics. The first risk to consider would be with respect to the upcoming release of results from the phase 2b study, which is using zunsemetinib for the treatment of patients with RA. The primary endpoint of this study is ACR 20, and there is no assurance that this endpoint will be met.

A second risk to consider would be with respect to the ongoing phase 2a study, which is using this very same drug for the treatment of patients with psoriatic arthritis [PSA]. There is no guarantee that the primary endpoint will be met for this study either and if that happens then it would diminish the prospects for zunsemetinib in the pipeline.

A third risk to consider would be with respect to a prior failed study. I'm talking about a phase 2 study that was exploring the use of zunsemetinib for the treatment of patients with hidradenitis suppurativa [HS]. This phase 2 study failed to meet the primary endpoint of change from baseline in inflammatory nodule/abscess count when the drug was given to patients twice daily over a 12-week period. The study also failed to meet on secondary efficacy endpoints as well.

One thing to note is that what may have caused the failure of this study was the higher placebo rate in HS patients, compared to placebo noted in other studies. It remains to be seen if zunsemetinib can do better in treating patients with RA and PSA, but the risk of a prior failed study in another indication is something to consider before investing here.

Conclusion

The final conclusion is that Aclaris Therapeutics is a good speculative biotech play to look into. That's because it has a shot on goal in two large market indications. I noted above upcoming catalysts from two phase 2 studies. One catalyst is from the release of results from a phase 2b study using zunsemetinib for the treatment of patients with RA. Results from this mid-stage study are expected to be released in Q4 of 2023. A second catalyst would be the release of results from a phase 2a study, which is using zunsemetinib for the treatment of patients with PSA. However, this trial readout is not expected to happen until the 1st half of 2024. The good thing about this biotech is that it has another drugs in its pipeline, thus additional catalysts to look forward to.

For instance, ATI-1777 is a "soft" Janus kinase [JAK] 1/3 inhibitor being advanced for the treatment of patients with mild-to-severe Atopic Dermatitis. This drug is being explored for the treatment of this patient population in a phase 2b study and results from it are expected by the 2nd half of 2023. Then, it has another drug in its pipeline that it is working on, which is ATI-2131, which is an oral covalent ITK/JAK3 inhibitor. As I explained above, it is being developed as a potential treatment for T-cell mediated autoimmune diseases. It is said that the first indication for ATI-2138 will be for the treatment of patients with Ulcerative Colitis [UC]. It is being explored in a phase 1 study with healthy volunteers at the moment, but top-line data from this trial is expected by the 2nd half of 2023.

With advancement of zunsemetinib for the multi-billion-dollar rheumatoid arthritis market, plus several other catalysts expected in the 2nd half of 2023, these are the reasons why I believe that Aclaris Therapeutics, Inc. is a good speculative biotech play to look into.

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