Aclaris Therapeutics Inc (ACRS) 2018 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q2 2018 Aclaris Therapeutics, Inc.

Earnings Conference Call.

(Operator Instructions) As a reminder, this conference call may be recorded.

I would now like to introduce your host for today's conference Kamil Ali-Jackson, Chief Legal Officer.

You may begin.

Thank you, Krystal.

I'm Kamil Ali-Jackson, Chief Legal Officer for Aclaris.

Please note that earlier today, Aclaris issued its press release announcing second quarter 2018 financial results.

For those of you who have not seen it yet, you will find the release posted in the Investors section of our website at www.aclaristx.com.

Joining me for the call today are Dr. Neal Walker, President and Chief Executive Officer; Chris Powala, our Chief Regulatory and Development Officer; Dr. Stuart Shanler, our Chief Scientific Officer; Frank Ruffo, our Chief Financial Officer; Brett Fair, our Chief Commercial Officer; and David Gordon, our Chief Medical Officer.

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 the 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 and Management's Discussion and Analysis of Financial Condition and Results of Operations section of Aclaris' Form 10-K for the year ended December 31, 2017; Aclaris' Form 10-Q for the quarter ended June 30, 2018, to be filed with the SEC later today; and other filings Aclaris makes with the SEC from time to time.

These documents are available under the Financial Information section of the Investors page of Aclaris' website at 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 account of new information, future events or otherwise.

Please be advised that today's call is being recorded and webcast.

A link to the webcast is posted in the Investors section of our website.

I'll now turn the call over to Dr. Neal Walker, President and CEO of Aclaris.

Neal?

Thank you, Kamil.

Good morning, everyone.

I will start with a brief update of our clinical development programs and our other business highlights, and then hand it off to Brett Fair, our Chief Commercial Officer, who will address the ESKATA launch.

Next, Stuart Shanler, our Chief Scientific Officer, will review our clinical development plans and timelines after which, Frank Ruffo, our CFO, will review our financial results.

Following our prepared remarks, we will open up the line to take your questions.

Dr. David Gordon, our new Chief Medical Officer, who recently joined us, will also be available during the Q&A portion of the call.

During the second quarter of 2018, after our National Sales Meeting at the beginning of May, we launched ESKATA 40% Topical Solution to both physicians and patients.

During the first 8 weeks of the launch, which made up the bulk of the second quarter, our field force made significant progress in accomplishing our primary goal of driving account adoption as we initiate our consumer campaigns in the back half of 2018.

In addition to an exciting launch, we have also made good progress in advancing our pipeline during the second quarter.

In July, we completed an end-of-Phase II meeting with the FDA regarding A-101 45% Topical Solution for the treatment of common warts, otherwise known as verruca vulgaris.

And as expected, we are on track to start the pivotal Phase III program in the second half of this year.

Regarding our JAK inhibitor program, we dosed our first patient in a Phase II clinical trial of our oral JAK inhibitor ATI-501 in patients with alopecia areata, which includes the more severe phenotypes of alopecia totalis and universalis.

Turning to our early stage immunology pipeline.

We continue to advance the development of our selective MK2 inhibitor, portfolio of ITK inhibitors and our portfolio of next-generation JAK inhibitors.

Recently, our manuscript on ATI-450, an MK2 pathway inhibitor, was accepted for publication in the Journal of Cancer Research, and we are rapidly advancing this asset towards the clinic.

We remain excited about the potential of these preclinical assets in a variety of indications and therapeutic areas.

In addition, this morning we announced an update on the ATI-501 Topical JAK inhibitor open-label studies.

As a reminder, we are conducting 2 open-label studies.

One at Columbia University and one in Australia, with the primary goal of looking at proof of principle for topical treatment in both alopecia areata and alopecia totalis and universalis.

These studies have enrolled and progressed much slower than anticipated, which has led us to provide interim updates along the way.

The Columbia University study was initially designed as a PK/PD study with a 6-month open-label extension.

In June, we reported interim data from 6 of 11 enrolled patient in the study, which demonstrated positive early results regarding drug concentration in the skin, target engagement at the site of action and a lack of systemic exposure.

Two of the 11 patients withdrew during the PK/PD portion prior to the open-label extension.

The remaining 9 alopecia totalis and universalis patients then rolled into an open-label extension, which is currently ongoing.

I am pleased to report today that we are seeing evidence of hair regrowth in the open-label extension portion of the study, which helps to validate the topical approach to treating alopecia areata, which was the original intent of the study.

The second open-label study was conducted in Australia and was also designed to validate the topical approach in alopecia areata by specifically looking at the efficacy of ATI-502 in patients with alopecia affecting the eyebrows.

The study enrolled 12 patients and 2 patients withdrew early for reasons unrelated to study drug.

In this study, we have also seen early signs of hair regrowth, which has been slower than that demonstrated in the patients in the Columbia University study.

Across the 2 open-label studies, patients range from 5 to 23 weeks on drug and no patient has yet completed the full 6-month treatment period.

As expected, ATI-502 has been generally well tolerated, with no treatment-related serious adverse events reported to date.

Based on the encouraging data results thus far, we plan to extend both trials.

In those patients with more refractory AT/AU, an extension study will allow us to explore the full response in each patient and obtain longer-term safety data.

In addition, we will be providing patients in our larger dose range studies, AUAT-201 Oral and the AA-201 Topical, with the opportunity to roll into an extension study.

These extension studies will provide a unique dataset, allowing us to consider both induction and maintenance of response as a future treatment strategy.

We look forward to providing additional updates on these 2 studies in the coming months.

I will now turn it over to Brett Fair, our Chief Commercial Officer, who will provide an update on our commercial activities.

Brett?

Thank you, Neal, and good morning, everyone.

Following our launch meeting in May, the Aclaris sales force has been successful in opening over 800 ESKATA accounts.

We are very pleased with the base of accounts we have established early in the launch.

We continue to focus on driving clinical integration within these accounts.

We have learned a great deal from the early experience initiative as it relates to proper application technique and understanding the keys to successful integration.

Our sales force continues to implement live patient training sessions and in-services to build on these early learnings as they train HCPs and their staff on ESKATA treatment.

We are impressed and pleased with the effectiveness of ESKATA, and we are seeing favorable patient outcomes with the product.

Feedback from the early experience initiatives supports that ESKATA provides an excellent treatment option for patients with raised SK and one that is easy to administer and delegate within the practice.

Here are the updated survey results from the early experience initiative.

Over 80% of physicians indicated that applying ESKATA is easy or extremely easy.

67% of physicians indicated that they would be comfortable delegating the application of ESKATA to another trained HCP in the office.

An additional 15% will determine delegation once they have had more hands-on experience with the product.

Over 90% of patients said that ESKATA treatment application was easy and was completed in a reasonable amount of time.

Over 80% of patients indicated that the day after treatment, they were comfortable enough with their appearance to go out social.

85% of patients said that they would recommend ESKATA treatment to their friends.

And as previously treated, over 90% of patients said that they would recommend ESKATA over prior treatment methods.

The results from the early experience initiatives were very encouraging as we look to establish ESKATA in these accounts.

The keys to success moving forward center on driving effective clinical and business integration.

With regards to clinical integration, proper patient and lesion identification are important as we reinforce our positioning for raised SKs in the face and neck.

Additionally, proper application technique and expectation setting are important, given the nuances related to the treatment, as we look to drive optimal patient outcomes.

With respect to business integration, implementing DTP and DTC initiatives aimed at connecting the patient to the product will play an important role as we look to drive productivity in ESKATA accounts.

In parallel, with our sales force efforts, our professional relations team continues to focus on organizing live patient demonstrations and product theaters at the major dermatology conferences as well as supporting peer-to-peer speaker programs and webinars.

Live patient demonstrations were conducted at the most recent SCALE and Cosmetic Bootcamp meetings, 2 important meetings in the space.

Aclaris also sponsored a product theater at the most recent Maui Derm and [PPA] meeting that was very well attended, generating high interest in ESKATA.

In addition to our conference activity, we have conducted over 40 peer-to-peer speaker programs, with many more planned throughout the year.

Collectively, these peer-to-peer platforms go a long way in driving HCP interest in ESKATA and communicating the value it can bring to the practices.

With respect to our DTP initiatives, we continue to build our library of in-office materials and assets that will help connect the patient to ESKATA and drive productivity in the office.

With regards to DTC, we have filmed the ESKATA TV commercial and plan to air the commercial beginning in October.

The ESKATA TV commercial is part of a comprehensive consumer campaign that includes both print and digital media with the goal of driving SK awareness and treatment with ESKATA.

Our consumer campaign will encourage patients to see their dermatologist and/or go to eskata.com to find a provider near them.

In summary, we are pleased with account adoption and the overall effectiveness of this product.

We look forward to integrating ESKATA into our accounts and laying a solid foundation in advance for our DTC efforts in the fall.

With that, I'd like to turn the call over to our CSO, Dr. Stu Shanler.

Stu?

Thanks, Brett, and good morning, everyone.

Firstly, regarding our clinical development of A-101 45% Topical Solution for the treatment of common warts or verruca vulgaris.

As Neal mentioned, in July we completed an end-of-phase II meeting with the FDA, and we are on track to begin the Phase III clinical trials in the second half of 2018.

Turning to our JAK inhibitor program or Janus Kinase inhibitor program.

As a reminder, we are developing both oral and topical dosage forms of our JAK inhibitors in order to address the phenotypic spectrum of disease inherent in alopecia areata as in many other dermatologic conditions.

This quarter, we announced that the U.S. FDA granted Fast Track designation to our investigational topical JAK 1/3 inhibitor, ATI-502, for the treatment of alopecia areata, including patchy alopecia areata and the more severe variants of the disease alopecia totalis and alopecia universalis.

The FDA's Fast Track designation is intended to facilitate the development of new therapies for serious conditions and with the potential to address an unmet medical need.

And companies with investigational medicines receiving Fast Track designation may be eligible for more frequent communications with the FDA and may receive an expedited review of a new drug application.

Regarding our topical clinical trials, our AA-201 Topical trial is ongoing and is a Phase II dose-ranging trial of ATI-502 for the topical treatment of alopecia areata.

This trial will evaluate the efficacy of 2 concentrations of ATI-502 on the regrowth of hair in a randomized, double-blinded parallel-group vehicle-controlled dose-response trial in up to 120 patients with AA.

This trial is being conducted in the United States and data are expected in the first half of 2019.

Our VITI-201 topical trial, that's VITI for vitiligo, VITI-201, is an ongoing Phase II open-label clinical trial of ATI-502 for the topical treatment of facial vitiligo.

This trial will evaluate the efficacy of ATI-502 on the repigmentation of facial skin in up to 24 patients with vitiligo, and data are expected in this study in the first half of 2019.

Our AGA-201 Topical trial is an ongoing Phase II open-label clinical trial of ATI-502 for the topical treatment of androgenetic alopecia or AGA, also known as male or female pattern hair loss.

This ongoing trial will evaluate the efficacy of ATI-502 on the regrowth of hair in up to 24 patients with AGA, and data are expected in this trial in the first half of 2019.

Additionally, we, today, announced that we have dosed the first patient in our AD-201 topical trial, which is a Phase II clinical trial of ATI-502 in patients with atopic dermatitis or AD.

This open-label trial will evaluate the safety, tolerability and efficacy of ATI-502 applied twice daily to affected skin for 4 weeks in up to 30 adult subjects with moderate-to-severe atopic dermatitis.

This trial is being conducted in the United States, and data from this trial are expected in mid-2019.

Turning to our oral JAK inhibitor program.

AUAT-201 Oral is ongoing and is a Phase II dose-ranging trial of ATI-501, an oral JAK inhibitor for the treatment of AA.

This randomized double-blinded parallel-group vehicle-controlled study will evaluate the efficacy of 2 concentrations of ATI-501 on the regrowth of hair in up to 80 patients with AA.

And this trial is being conducted in the United States, and data are expected in the second half of 2019.

Regarding our earlier-stage immunology assets, as Neal earlier noted, we remain on track to file an investigational new drug application for ATI-450, that's 4-5-0, our oral MK2 inhibitor in mid-2019.

And finally, regarding our ESKATA IP estate, on May 29, U.S. patent number 9980983 or the 983 patent was issued covering methods of treating seborrheic keratosis using a stabilized hydrogen peroxide composition.

Our current marketed product ESKATA includes such stabilized hydrogen peroxide.

This issued U.S. patent is Orange Book listed for ESKATA and is set to expire in April 2035, subject to any patent-term extension or adjustments.

22 of the 25 claims from this 983 patent are now listed in this -- in the Orange Book.

This augments our patent estate -- our ESKATA patent estate in particular, which also includes 2 other Orange Book listed patents as well as numerous pending U.S. and international applications directed to high-concentration hydrogen peroxide formulations and applicators and methods for using such formulations.

With that, I'd like to turn the call over to Frank Ruffo, our CFO, who will provide an overview of the financial results for the quarter.

Frank?

Thanks, Stu.

Good morning, everyone.

As I walk through our second quarter 2018 financial results, please reference the financial tables that can be found in today's press release.

For the quarter ended June 30, 2018, total net revenues were $3.7 million, which consisted of net ESKATA sales of $1.5 million, contract research revenues of $1.1 million and other revenues of $1 million.

In May, we officially launched ESKATA.

As a reminder, we recognize revenue for ESKATA when title is transferred to our specialty wholesaler.

For the most recent quarter, our gross to net realization was about 94%.

Our gross to net discount currently includes the cost of distribution and administrative fees necessary to deliver ESKATA into HCPs offices.

Our gross profit realized on ESKATA sales made during the quarter was 90%.

Cost of goods sold includes a 4% royalty on net sales of ESKATA.

In April 2018, we licensed the rights to commercialize A-101 40% Topical Solution in Canada for the treatment of SK to Cipher Pharmaceuticals.

Under the terms of the license agreement, we received and recognized an upfront payment of $1 million and may receive additional milestone payments upon the achievement of specified regulatory and commercial milestones as well as royalties on the sales of A-101 in Canada.

For the 6 months ended June 30, 2018, total net revenues were $4.8 million, which included contract research revenues of $2.3 million.

Cost of revenues for the quarter and 6 months ended June 30, 2018, were $1.2 million and $2.1 million, respectively.

There were no revenues or cost of revenues in either period in 2017.

During the first half of 2018, our total operating expenses increased to $65.6 million compared to $28.2 million for the first half of 2017, which included $10.1 million and $6.5 million of noncash stock-based compensation, respectively.

During the second quarter of 2018, our total operating expenses increased to $34.5 million compared to $15.3 million for the same quarter in 2017, which included $5.1 million and $3.3 million of noncash stock-based compensation, respectively.

R&D expenses increased $6 million to $14 million for Q2 2018 compared with the prior year.

This increase was due to a $4.1 million increase in our JAK inhibitor development programs, a $1.5 million increase in our medical affairs and drug discovery programs, and a $1.3 million increase in personnel-related expenses including noncash stock compensation.

These quarter-on-quarter increases were offset by a $700,000 decrease realized in 2018 for development expenses related to ESKATA.

Selling and marketing expense increased $10.2 million to $12.4 million for Q2 2018 compared to Q2 2017.

This change was mainly the result of a $3.5 million increase in direct marketing and professional services in Q2 2018 related to the launch of ESKATA; a $2.8 million increase in other sales and marketing expenses, which were the result of our launch of ESKATA in May 2018 that included our national launch meeting, employee training and sample fulfillment; and a $3.9 million increase in personnel-related expenses, including stock-based compensation due to increased headcount as we completed the hiring of our commercial team, including our field sales force in the first quarter of 2018.

General and administrative expenses increased $3 million to $8.1 million for Q2 2018.

And this increase was mainly the result of a $1.5 million increase in personnel-related expenses, including stock-based comp due to increased headcount, and a $1 million increase in professional, legal, facility and support expenses.

Our G&A expenses incurred in the second quarter of 2018 included a $1.5 million ESKATA launch milestone payment as compared to a $1 million milestone payment that was made in the second quarter of 2017 upon the NDA acceptance of ESKATA.

Our net loss was $31.2 million for the second quarter of 2018 or $1.01 per basic and diluted share compared to $14.8 million or $0.56 per basic and diluted share for the second quarter of 2017.

Our net loss was $61.4 million for the first half of 2018 or $1.99 per basic and diluted share compared to $27.4 million or $1.04 per basic and diluted share for the first half of 2017.

Our operating cash burn for the first half of 2018 was $43.7 million as we incurred $11.8 million in noncash charges and $5.9 million in cash provided from changes in our working capital.

As of June 30, 2018, we had cash and investments of approximately $165 million.

We anticipate this capital will be sufficient to fund our operations into the second half of 2019 without giving effect to any potential new business development transactions or financing activities.

With regards to our financial outlook for the full year 2018, we reiterate our expense guidance from our earnings call in March of this year.

We do not intend to provide quarterly or annual product revenue guidance until we have greater clarity on the ESKATA sales trajectory and key trends underlying product revenue.

As a reminder, we expect 2018 GAAP R&D expenses to be in the range of $67 million to $75 million, including estimated stock-based compensation of $9 million, and expect our 2018 GAAP SG&A expenses, which combine our sales and marketing and G&A line items, to be in the range of $80 million to $86 million, including stock-based comp of $14 million.

As of June 30, 2018, we had roughly 31 million shares of common stock outstanding.

Assuming no material issuances of equity, we would expect our full year 2018 weighted average shares outstanding to be about 31.1 million shares.

And with that, I'll turn the call back over to Neal for a few closing remarks.

Thank you, Frank.

It has been an exciting start to 2018 as we launch our first commercial product ESKATA for patients suffering with raised SKs.

We now have evolved into a commercial-stage biopharmaceutical company with a deep clinical stage pipeline, a broad dermatology and immunology portfolio focused on small molecule therapeutics and a robust discovery engine.

I'm extremely proud of our team's hard work, dedication and most importantly, commitment to dermatology.

We look forward to updating you on our launch progress and multiple clinical pipeline readouts throughout the year.

Krystal, can you please poll for questions?

(Operator Instructions) And our first question comes from Louise Chen from Cantor.

Congratulations on the positive eyebrow data.

I had a few questions here on the JAK program.

So first question I had was, how many patients responded in both the open-label eyebrow and the open-label portion of the Columbia trial?

Sure.

Louise, so when we look at -- let's look at the Columbia study first.

So that was predominantly -- it was all characterized by AT or AU patients, so the most severe phenotype, the hardest to treat.

And we, in large part, extended that study due to some of the slow enrollment in the eyebrow study.

So it was actually a much harder population.

And we had -- out of the first -- if you look in the aggregate so far, we have about 4 out of 9 that are showing nice response rates of varying degrees.

And out of the 6 patients who have actually gone through 4 months already, we have 3 responders.

So we're really excited about that, given the difficulty in treating those patients with more extensive disease.

On the eyebrow study, we -- that has 9 patients in now going through the open-label portion.

And we have 6 out of the 9 patients have new vellus hair growth and terminal hair growth.

And what we're also seeing in that study is the AU patients -- because again, that study was enrolling slowly with just encompassing AT/AU patients, we included -- we started opening that study up to alopecia areata patients.

And we're seeing, not surprisingly, that the alopecia areata patients are responding much quicker.

So we're really encouraged.

The whole intent of both of these studies was to demonstrate that topical was a viable approach, and I feel like we've really hit that.

And I think it's a good read-through to what we might expect in our patchy study moving forward.

Okay.

My second question is on the 2 patients that withdrew in the eyebrow trial.

Can you provide more color on why they withdrew?

Sure.

So there was -- across both of these studies, there were 4 patients that withdrew.

Let's start with the Columbia.

There were 2 patients that withdrew there.

One was due to depression unrelated to study drug and that was somewhat early on.

And then the second patient withdrew in that study due to the fact they didn't want additional biopsies.

And by the way, that highlights one of the reasons why -- at least that study was a little bit slower than we anticipated.

When you're doing biopsies a couple of times in these patients looking for gene signature data and also asking them to hang out all day for blood draws, it's just tough to enroll.

You would think with a site like Columbia, where -- they're one of the leaders in the treatment of this condition that it would be very easy and quick enrollment time, but, in fact, when you layer on some of those things, it's a challenge.

In the eyebrow study, the reason we had 2 withdraws there, one was just lost to follow up.

And then the other withdrew consent.

So -- all 4 reasons unrelated to anything related to the study drug.

Okay.

And then just one more on the JAK program.

Are there any differences you have seen between patchy AA, AT and AU, I know you talked about it a little bit earlier in your comments, as it relates to the drug?

Yes.

There are, and actually that's not a surprise.

I think we've been pretty consistent from the beginning that we feel like the market -- to address the total phenotypic spectrum, you need both topical and oral.

And the -- we've clearly seen, particularly in these studies, that alopecia areata patients who are patchy respond much quicker and more robustly than AU/AT.

And the only -- with AU/AT, you just need a little bit longer treatment.

So where you might expect to see something, let's call it, at 3 to 4 months in a patchy patient, it may be more like 4 to 6 months for an AU/AT patient.

And that's part of the reason that we are actually now putting -- or offering our patients in all of our studies the opportunity to enroll into an extension study.

Because if you're tracking nicely through 6 months, and we've seen this in the literature, it makes sense to continue the topical treatment.

And then you can start thinking about things like induction treatment, going to maintenance treatment.

And these are all things, actually, that we've started to really think hard about as David Gordon has joined us from GSK.

Okay.

And then just maybe I could squeeze in 1 last question on ESKATA that I get a lot.

Just curious how we should think about the sales progression.

I know you're not giving guidance or any color on the numbers but maybe qualitatively.

As we move into the second half of the year, how do you think about the ramp for the product in light of DTC, your new sales force and anything else?

Yes.

Just let me say one comment on that, and then I'll throw it over to Brett.

One of the things just to keep in mind with this procedure, just like a number of minimally invasive procedures, particularly when you're launching into a new area, is that this involves, oftentimes, 1 treatment.

And actually, we're seeing a lot of good response rates after 1 treatment.

But that depends on the number of lesions.

But if you treat up to 2x, remember that the patient comes in, they come back -- they come in, get treated, they come back in 3 weeks.

They get another treatment and then come back in another 3 to 4 weeks.

So you're talking about just a baseline cycle time of 6 to 7, even possibly 8 weeks depending on the office.

So I would just -- we've talked about that in the past, but that's just something that, with manually invasive procedures, I think we all just have to be aware of on that.

But Brett?

Yes.

Thanks, Neal.

Louise, so -- yes, right now, we have a big base of accounts.

Right now, it's all about integrating the product into the practice.

And in terms of clinical integration, a big component of that is making sure that you're guiding them to the right patient and to the right lesions -- with our positioning for face and neck lesions, it's a really big part of it.

And then the other big part of it is, you need to teach them how to apply the product correctly and set expectations, and they need to get hands-on experience with it.

As Neal said, you've got to see that patient back before they kind of make the total assessment of what is this offering my practice?

What is the offering my patients?

So it is a little bit of an evaluation period and a training period.

And then the other thing, because the product can be delegated, once the physician gets experience with it, then they're going to want to invite their extenders into that process.

So we're doing -- in a lot of these accounts, right now, we're doing multiple training sessions, integrating the product into the practice.

Once you've done that effectively, then everything from there on out is about connecting the patient to the product.

And that's where things like DTP and DTC carry a lot of weight.

So right now, we're focused on driving clinical integration between now and DTC in October.

We think we're in a good place.

I think we'll be in a very good place come the time we activate DTC.

And I think that's when you'll start seeing it really start picking up.

And next our question comes from Tim Lugo from William Blair.

I guess, for the topical, can you talk about the dosing between AA versus androgenetic alopecia study and the atopic derm which was just started?

Yes.

So in AA, we're applying b.i.d., so twice a day, to patients.

And obviously, at least in all the studies we've been conducting to date, we're treating through 6 months.

And then again, giving people the opportunity to extend based on obviously positive results.

And in AD, this is more of proof of principle.

We're really looking at a 4-week study, b.i.d.

application.

And again, just -- I think we're all well aware of some of the work that's going on in AD.

And this is some of the leverage in our portfolio that I've talked about in the past that makes sense for us to put -- use the topical in a variety of indications where we know the mechanism is sound.

And for androgenetic?

For AGA, that is b.i.d.

And that is a 6-month study.

And that's actually enrolling quite nicely as one would expect.

Okay.

And for -- I guess, historically, for the open-label ruxo and TOFA oral studies, I believe the response rates were around 75% in those.

Is it too early to tell how the topical response rate will trend versus that?

And is that a -- is that still kind of a bogey out there for a JAK inhibitor, whether it's topical or oral?

Yes, I think so.

The oral, it just depends on the patient you're treating, right?

So if you have an alopecia areata patient, just patchy patients, you're going to see a compressed time frame to response.

If you have an alopecia universalis or totalis patient, that might take a little longer.

Now one of the things you also have to consider is duration of disease.

If somebody has a 30-year disease, that's going to be more difficult to treat than perhaps somebody who has 3-year disease.

So I don't know that -- the 75% rate is a kind of open label out in the wild rate.

I actually think in real double-blind placebo-controlled trials, the response rate objectively is going to be lower than that.

When you think about -- and remember, complete response versus partial response and -- so it's a lot more complex than that number.

But I will say this -- and it's just intuitive.

If you think about -- let's just use steroids as an example.

Oral prednisone is always going to work a little quicker than topical steroid, so just as a generalization.

So I think the things that we're seeing in our open-label studies are kind of on par with what we expected.

The less severe patients are responding quite nicely and/or quickly.

And the more severe patients, you just need a little bit more time.

And I guess for ESKATA, I know, last quarter, Brett had mentioned over 700 physicians signed up for the early access training program or just the training program.

Now you're citing 800 accounts open.

Is this a metric that you're going to be giving us going forward?

And how do you -- is 800 a good account base to then deepen into?

Or are you still looking to broaden that number?

So yes.

So it will be -- that's account adoption and that's absolutely what we're focused on kind of heading into a consumer campaign.

You need that base of accounts so that patients have somewhere to go once they see the ads.

And that will be something that we'll continue to update the market on as we progress.

And we're really pleased with 800 accounts out of the gate.

I mean, we're essentially -- well, as of today, 12 weeks into the launch.

And particularly, during the summertime, with people's schedules and docs maybe not -- taking a lot of vacations, I think that's a great number.

Our next question comes from Adnan Butt from Guggenheim Securities.

And really encouraging to see hair growth.

At this time, Neal and others, can you break out how many of the 18 patients are AA or patchy AA versus AT and AU, both in the Columbia and Australia studies?

Sure.

So in the Columbia study, because the original design, recall, was PK/PD in the most severe patients because we're looking at gene signatures there.

So everybody in the Columbia study is AT/AU with kind of recalcitrant disease.

That's the way to think about it.

In the eyebrow study, we had -- we actually started that study looking at AU/AT patients because they usually have eyebrow loss.

Because of the slow enrollment, we had to expand that to include patients with alopecia areata and partial loss.

So out of the 9 patients in the eyebrow study -- sorry.

Go ahead, David.

Out of the original 12, I think 8 of them have AU/AT.

Okay, in the eyebrow study.

So if you pick that up -- so out of the original 12 in the eyebrow study, 8 of the 12 had AU/AT.

So again, both patient populations are of the more severe phenotype.

And as I mentioned, part of the color I can provide is that we're seeing earlier response rates out of the newly enrolled AA patients in that eyebrow study.

There's actually 2 of them.

And it's one of the learnings, right, that you see just in that study.

And again, just to highlight, the -- when we embarked on this path, we really were looking to prove the viability of the topical approach.

We've always talked about how formulation matters, and I think we've gone a long way to proving that out now.

Neal, so that's -- of the 6 patients in eyebrow who responded, 2 are the AA patients.

Is that what you are saying?

Correct.

That's correct.

Okay.

And can you talk about the consistency of hair growth.

I guess, the more pertinent question is, will this data be updated by the end of the year?

Will it be presented anywhere?

Yes.

We will be updating.

And what we're looking to do is because we don't have -- as I mentioned during our prepared remarks, we don't have anybody that's actually through the 6 months, believe it or not.

So that is a -- we want to -- we're going to do it in a cohort fashion.

I think the first thing you'll see is 6 -- the first 6 patients of the Columbia study rolling through with -- getting to the 6-month time period of treatment.

And that way, we present a fuller dataset.

So actually you'll see multiple updates.

And I know that's not ideal, but that's just the way that these have enrolled.

And the fact that it's open label allows us to do that.

Okay.

And -- so multiple updates in the remainder of this year as well.

Correct.

Last one for me is, the -- for the Columbia and eyebrow studies, how does that exposure compare to what you would expect in the 201 study, with the dose-ranging studies?

Yes.

So the -- it's b.i.d.

It's the same kind of treatment regimen over 6 months.

But remember, in the dose-range study, that's patchy.

We have no AU or AT patients in that study.

It basically ranges from about 15% hair loss at the low end to about 90% hair loss at the top end.

And again, I mean, if you look at how you're going to segment this market, where might a topical be useful?

It might be useful in less severe disease.

It might be useful as a maintenance therapy as patients on orals want to maintain their results and roll off the oral.

It might be useful in children, right?

So there's 3 or 4 segments that, as this market evolves, we have to start thinking about those things, and that's exactly why we're doing an extension study to build a long-term safety database.

As you know, we got Fast Track approval.

And we want to continue to learn about how we're going to position both our oral and our topical in a true treatment regimen as the program evolves.

Our next question comes from Donald Ellis from JMP Securities.

I have 3 quick questions.

The first one is regarding the ESKATA early experience trial.

What percent of those physicians are reordering ESKATA?

Second question is regarding feedback on price.

What kind of feedback is your sales force getting on price?

And last question, in the quarter -- how many weeks in the quarter were you actually selling ESKATA versus implementing the free samples in the early experience trial?

I'll hand that off -- thank you for that question, Donald.

I'll hand it off to Brett.

Great.

So in terms of the early experience initiative, the majority of them ended -- placed orders.

So about 90% of them placed orders and came onboard as an account, and then we added on top of that.

Right now, everybody is just working on the clinical integration within the -- like I said, it's kind of a lengthy process in terms of introducing the product to the practice and training starting with the dermatologist, [NPPA, MA], just spending a lot of time understanding the product and connecting it to the patient.

In terms of the price -- if people can (inaudible), no, we have had no problems with the price really, not with our target audience.

And our orders are coming from the group that we've targeted.

Our targeting methodology contemplated those accounts that are already doing buy and bill procedures, so they're already in tune with patients' willingness to purchase products for aesthetic reasons and pay out of pocket.

So we really had no problem with that at all.

I mean, I even think -- we're definitely in a good place with our pricing.

No concerns on that.

And then in terms of weeks actually selling, we've had to wrap up part of the early experience initiative coming out of our National Sales Meeting.

So I'd say we've probably been out there selling cases for about 10 weeks.

But most of it is really just building on the back of the early experience initiative.

That's year-to-date.

Year-to-date, yes.

Okay.

I think he's asking about the quarter, but that's year-to-date.

Yes.

It's year-to-date.

And our next question comes from Liav Abraham from Citi.

Maybe turning the focus to the warts program for a moment.

Neal, can you just remind us of the trial design and at-home versus physician office administration in the trial and your anticipation for the pace of patient enrollment in these trials?

Sure.

So I'll start, and I'll hand it off to David.

I'll address maybe the first question on at-home versus in-office.

So based on -- we originally had thought about perhaps an in-office procedure.

But based on the risk/benefit profile of the product, in particular, the safety, we thought it was much better positioned as a take-home prescription.

And it would be the only take-home prescription approved, if it gets across the finish line, in the U.S. So we think that's a better way to address this disorder, which is quite prevalent in the general population.

So in terms of enrollment, I think, what we've seen is that the SK studies and the warts studies actually have enrolled quite robustly.

They're relatively easy compared to perhaps some of the challenges we might have had in some of these open-label studies that are much more specific when you're doing PK/PD work or -- as patients in Australia might have microblading or tattooing and just different inclusion and exclusion criteria like that.

And it makes it more of a challenge, but we don't anticipate having any difficulty on the wart enrollment.

In our last 2 studies, we enrolled 158 patients and 159 patients, respectively.

In about 6 to 7 months, start to finish, the study was completed.

And maybe I'll hand it off to Dave just to talk about some of the end points.

Thanks, Neal.

So we came back from, I think, a very successful meeting with the FDA last month, where we agreed the design of the study and got a number of things that we were very happy to come away from that meeting with.

So have our -- we've agreed an approach to get us to an NDA, which would be 2 Phase III studies around about 500 patients each.

The endpoint is going to be clearance of all warts.

The win in that meeting was that they are not going to hold us to a particular number with 1 wart, 2 warts, 3 warts, 4 warts, et cetera, up to 6. They're going to allow us to recruit the patients as they're reflected in clinical practice and then we need to clear all the warts, and that will be at the eighth weekend point.

And then we'll follow patients beyond that for another 12 weeks.

I think that the other win that we've had from that meeting is that we agreed that we could have (inaudible) points which could achieve labeling if we hit them and take into account the statistic -- the statistical plan that we have, but we could get labeling based on clearance of a single wart in patients who only have 1 wart and also clearance of the number of warts per patient and the time to achieve clearance of warts.

So we saw that very much as a win.

So I think, at this point in time, we have a very clear way forward.

It's something that we think that we can deliver on, and we're geared up to start those studies beginning in September this year.

Great.

And then maybe just a question on the atopic derm trial.

Can you just talk a little bit more about the rationale for going that route, Neal?

It is a -- I guess, it's a fairly crowded space at the moment.

And I guess, what you see that you can offer that others can't?

Is it the mode of administration, which is topical?

Just curious as to your rationale for going that route.

Yes.

I think a couple things.

One is we -- our topical has, thus far, shown a very nice risk/benefit profile.

It's been shown to be safe, so far, in the studies that we've utilized it in.

And when we think about perhaps some of the unmet needs in atopic, certainly one could approach it from a systemic route.

But also there's -- I think there's continuing need on the topical front, particularly if you can look at kind of steroid sparing and -- at the end of the day, what you want to see in a study like that is kind of speed to resolution.

And we know JAK inhibitors work quite well in itch, that's part of the process.

And that's why we're just -- we're investing a little bit of money out of the gate just to look at kind of proof of principle here.

And then we'll make our determination whether we pursue that going forward.

(Operator Instructions) And our next question comes from David Steinberg from Jefferies.

I have a question on your levels of patent protection.

I know you mentioned you recently have gotten some new IP.

Could you comment on the relative importance of this IP?

How much further does it protect your product?

And does it actually extends the runway that you have going forward?

Yes.

Let me start, and then I'll let Stu fill in the blanks, if needed.

So if you look at the base IP, I think, The Street has our loss of exclusivity around the 2025 time frame.

And what we've consistently messaged actually since the beginning is that we have multiple barriers in place even ahead of this IP where, if you look at our commercial supply agreement, we have exclusivity on the API that goes to 2028 at a minimum.

We have additional IP that issued about 2 years ago that is broad-based IP with 70-plus claims that encompasses the applicator, the formulation, all thing -- stabilization agent, all things that are quite critical to making the whole entire product package unique.

And that's an extension of the base IP.

So that takes us into the low 2030s, 2035 time frame.

And then what we have achieved now, and I think our team did a great job in pulling this forward, is we've got separate and distinct IP from the base IP estate that stands alone that reads on stabilized hydrogen peroxide.

And we've talked about this since the beginning as well.

That's really important when you're talking about concentrations of the levels we're dealing with.

It's very difficult to keep this product stable over time.

So that -- getting that IP was a big win.

It's the third Orange Book listable patent.

It stands separate and distinct from the main IP estate and that takes us to 2035.

So I think when we look at kind of -- the kind of course of LOE out there, the fact that we're at 25, I think we've got at least 5 to 10 more years that should be tacked on that analysis.

Okay.

And then I was wondering if you could offer some color -- a little more color from the field.

I know it's early in the ESKATA lines.

But what's -- maybe give us some -- an example of what sort of pushback you're getting from some of the doctors and, conversely, maybe an anecdote on how much they're willing to embrace with new product?

I'll let Brett answer that.

So I think pushback -- we haven't gotten a lot of pushback on the product from the people that we've targeted.

I mean we've targeted -- as I said, the targeting methodology contemplates those that do a lot of buy and bill product, so they get it.

And I think when you do get pushback from an account, they're really trying to understand it.

Those that will push back on ESKATA are being a little bit more reluctant.

They're trying to understand how it would fit into their practice.

They're currently doing cryosurgery today and they're trying to get their head around where this would fit in and it's really -- that's why the peer-to-peer is so critical because it paints a picture of how this product can offer something different to the practice.

And also that it can be delegated and liberate the provider's time.

So those are important benefits to the practice.

And then the other thing that really is important for us is to make sure that we're going -- sticking to our positioning.

When we talk about positioning for the face and neck, that's an area where they're reluctant to go there with cryosurgery.

And that's an area where they're willing to take an initial trial with ESKATA.

So from a sales execution perspective, positioning there is critical.

And then from a peer-to-peer perspective, the programs and product theaters and live patient demonstrations and all that really speak to the value it can bring to the practice.

The ones that have -- your, sorry, second question was talk about those that are willing to embrace the product?

Right.

Exactly.

The sort of anecdotes there.

Any surprises?

Any comments on willingness to embrace?

And how excited they are and that sort of thing?

Yes.

And they -- so some of them have gotten the treatment right away.

They fully understand it.

They're using it on the right patients and the right lesions.

And their initial trials and experience with it have gone pretty well.

So now they're starting to hand it down within the practice.

Some of them -- the product really works, and I'm pleased.

I mean, that sets us up really well for the long term, but this product really works.

And if you rub it in too hard or if they go too aggressive with it, you can get some edema and you can get some redness associated with it that -- they -- sometimes they need to reevaluate that.

So what our reps has done is going in and say, look, let's schedule a retraining and make sure you're focusing on the right lesions and the right patient types.

And here's how you apply the product.

Here's how you set expectations.

Here's how -- all the nuances, so that every time, going forward, that they use the product, they're using it perfectly.

So we've had some instances of retraining there.

But other than that, I think people are pretty excited about the response that they're getting with the treatment.

It's a comfortable treatment.

It's easy.

It's quick.

And the patients look good the next day.

It resolves well.

You don't have a lot of edema and crusting and bleeding that you do with some of the other procedures they're currently using.

So a lot of them are seeing it and just really liking it.

Now it's about trying to get them to connect it to the right patients in the practice.

And that's where DTP and DTC will play a big role.

Yes.

And Dave, this is Neal.

Just to build a little bit on that.

I think we've been very consistent from the beginning.

And you've covered us a long time that -- in a more simplistic way to think about is it does break across med derm and aesthetic.

And the aesthetic docs, it's a lot easier to put it into the flywheel and the med -- the strictly med derm docs, it's a little bit more work, right?

So -- and that's just part and parcel of any minimally invasive procedure product launch.

And I think that's -- we haven't been surprised by that.

Right.

Okay.

And then one final quick question.

You clearly have a lot on your plate, both commercializing ESKATA and then with your late-stage pipeline, but you have been fairly active in business development.

What are you looking at now?

What's the probability of you in-licensing or buying something in the next 6 to 9 months or so?

So yes.

I mean, you know our history, but we don't comment specifically on BD.

That's not a surprise, right?

I mean, we're opportunistic with things.

We look at a lot of stuff.

And we're always going to look at assets that enhance -- that we believe enhance shareholder value.

And I am showing no further questions from our phone lines.

I'd now like to turn the conference back over to Neal Walker for any closing remarks.

I want to thank everybody for joining us this morning.

We're really excited about the launch.

We remain committed to our pipeline.

We're really pleased with the results that we've generated to date on our topical alopecia program.

We've been consistent from day 1 that, that is an important approach to this condition.

And we look forward to updating the market on our progress on that front, and really look forward to reporting out on our dose-range study in patchy alopecia in the first part of next year.

Thank you, everybody, for joining.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude the program, and you may all disconnect.

Everyone, have a wonderful day.