Aclaris Therapeutics, Inc. (ACRS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Aclaris Therapeutics Announces Investigator-Initiated Trial of ATI-450 for CRS in Hospitalized Patients with COVID-19 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Kamil Ali-Jackson, Chief Legal Officer of Aclaris. Thank you, and please go ahead, ma'am.

Thank you, Chris. I'm Kamil Ali-Jackson, Chief Legal Officer for Aclaris. Please note that earlier today, Aclaris issued its press release announcing its support of an investigator-initiated Phase IIa, randomized, double-blind, placebo-controlled clinical trial to investigate the safety and efficacy of ATI-450, its oral investigational MK2 inhibitor compound as a potential treatment for cytokine release syndrome in hospitalized patients with COVID-19. For those of you who have not yet seen it, you will find the release posted in the Investors section of our website at www.aclaristx.com. Joining me today for the call are Dr. Neal Walker, President and Chief Executive Officer; David Gordon, our Chief Medical Officer; Joe Monahan, our Executive Vice President, Research and Development; and Walter Smith, Senior Vice President, Research and Development. 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 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, 2019, Form 10-Q for the quarter ended March 31, 2020, and other filings Aclaris makes with the SEC from time to time. These documents are available under the SEC's filings page of the Investors section 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 can be accessed through the Events page under 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, and thank you all for joining us on our call today. We are excited about the potential to utilize ATI-450 in patients with COVID-19. ATI-450 potently suppresses many of the key inflammatory cytokines thought to be involved in cytokine release syndrome. The suppression of multiple cytokines is the main mechanistic rationale to study ATI-450 in patients with COVID-19. Additionally, it appears that ATI-450 may also have antiviral and anti-fibrotic activity, which may also be beneficial traits of a drug target for this indication. Joe Monahan, our EVP of R&D, will review the preclinical in vitro and in vivo data as well as the pharmacodynamic data from our clinical study that was previously reported earlier this year. Dave Gordon, our CMO, will then briefly review the clinical study design. Joe?

Thanks, Neal. ATI-450 is an inhibitor of MK2, a kinase that has been shown to be a central player in the p38/MK2 signal transduction pathway activated by coronavirus infection and leading to inflammatory cytokine production. The schematic on Slide 5 shows the MK2 pathway has been demonstrated to be activated in response to infection by a number of corona viruses. As shown on Slide 6, while there have been no studies to date to evaluate the role of p38/MK2 in SARS-CoV-2 infection, this pathway has been shown to induce cytokine production following infection by other corona viruses. On the left, IL-6 is up-regulated following infection by the murine hepatitis virus and is blocked by p38 inhibitor. On the right, infection of cells with feline infectious peritonitis virus induces IL-1 beta, and its production is blocked by 2 different p38 inhibitors in the green box. Furthermore, IL-6 and IL-8 induced by infectious bronchitis virus is blocked by p38 inhibitors. These data support the key role of the p38/MK2 pathway coronavirus-induced inflammatory cytokine production and demonstrate that inhibitors of this pathway block production of these key cytokines. While ATI-450 has not been tested to date in coronavirus-infected cells or animals, the data on Slide 7 shows in vivo studies on the left that demonstrate ATI-450 dose-dependent blockade of both TNF-alpha and IL-6 induced by the TLR4 agonist LPS, and further that the potency and maximal efficacy in blocking these 2 cytokines is similar. In human blood on the right, IL-1 beta stimulated cytokines IL-6, TNF-alpha and IL-8 are also potently and completely blocked by ATI-450. We have expanded the analysis of ATI-450 regulated pro-inflammatory cytokine production to include additional virus-related stimuli, as described on Slide 8. SARS-CoV-2 is a positive-sense single-strand RNA virus that is thought to gain entry to the cell through spike protein interaction with and uptake of angiotensin-converting enzyme 2 or ACE2. This infectious agent has the potential to up-regulate inflammation through activation of a number of pattern recognition receptors in the TLR family, including TLR4, TLR7/8 and TLR3. Furthermore, disregulation of the renin-angiotensin system through down-regulation of cell surface ACE2 results in the accumulation of pro-inflammatory angiotensin 2, known to up-regulate the p38/MK2 dependent cytokine production through activation of its AR1 receptor. We have evaluated the impact of ATI-450 on cytokine production driven by various virus-relevant TLRs, as shown on the next slide. In these studies, human whole blood was exposed to activators of the toll-like pattern recognition receptors, TLR3, TLR4 and TLR7/8, and the impact of ATI-450 on cytokine production was evaluated. Concentration-dependent inhibition of multiple key cytokines, including TNF-alpha, IL-1 beta, IL-6, IL-8 and interferon gamma, along with the chemokine IP-10, was observed across the 3 stimuli with potency in the low nanomolar range. These data support a central role for the MK2 pathway in the production of pro-inflammatory cytokines downstream of a variety of relevant stimuli and receptors and demonstrate that ATI-450 is effective in blocking cytokine production across the board. These studies were extended to an in vivo model of ARDS using in hand -- inhaled endotoxin challenge in the rat, as shown on Slide 10, and then ask the question, can ATI-450 block pulmonary inflammation in this rat LPS challenge model? Inhaled LPS induces a neutrophil-driven lung inflammation. And in this study, ATI-450 significantly reduced neutrophils in bronchiole lavage fluid from these rats. The maximal effect observed that the 1 MPK dose is comparable to the potency observed with ATI-450 in the rat's streptococcal cell wall-induced arthritis model. These data provide in vivo evidence that ATI-450 can regulate pulmonary inflammation associated with ARDS. The valuation of ATI-450 regulation of cytokine production was extended to blood samples generated in the Phase I SAD/MAD safety and tolerability studies in humans, as summarized on Slide 11. Ex vivo LPS challenge, human whole blood samples from the clinical study initially focused on 4 key pro-inflammatory cytokines, TNF-alpha, IL-1 beta, IL-6 and IL-8, along with the MK2 target modulation marker, phosphoHsp27. Follow-up studies expanded the cytokine panel to include additional COVID-19 relevant cytokines, including IL-2, GMCSF, MIP-1 alpha and interferon gamma. The results of these studies are summarized on the subsequent slides. On Slide 12, we're looking at whole blood obtained from the MAD cohort subjects following 7 days of dosing. The data presented represents the 4-hour post dose, the Cmax, and the 12-hour post dose, the Ctrough, of the 3 dose groups, the 10, 30 and 50 milligrams as well as placebo, all administered BID. The data are expressed as a percent of pre-dose control simulated samples. In this slide, we're looking at 3 analytes, phosphoHsp27, TNF-alpha and IL-1 beta. If you focus on the yellow lines, reflecting the 50-milligram BID dose, it demonstrates 80% to 95% inhibition of phosphoHsp27, TNF-alpha and IL-1 beta at the 4-hour time point. And this inhibition was maintained across the entire dosing interval during the Ctrough at 12 hours. This 50-milligram dose generated exposures at Ctrough that were 1.4 to 2.4x the IC50 concentrations for each of these 3 analytes. IL-6 and IL-8 were similarly evaluated, as shown on Slide 13, and marked inhibition was also observed and maintained across the dosing interval at the 50-milligram BID dose. We subsequently evaluated the impact of ATI-450 on additional COVID-19-related cytokines using ex vivo simulated whole blood from the 100-milligram SAD, day 1, 1 hour post dose; and the 50-milligram BID MAD, day 7, 4-hour post-dose cohorts. The data is shown on Slide 14. GMCSF, IL-2, MIP-1 alpha and interferon gamma were all markedly inhibited by ATI-450 in both cohorts. The regulation by ATI-450 of multiple key pro-inflammatory cytokines, many of which are being studied in COVID-19 with biologics that block them singly, suggests the potential for broad efficacy with ATI-450 in this disease. In addition to the p38/MK2 pathway role in cytokine storm, there's a second potential mechanism in place supported by preclinical evidence that this pathway may be involved in viral replication and infectivity. On Slide 16, the study on the left demonstrates that a p38 inhibitor reduces the production of infectious MHV virus by 80% in the macrophage cell line. Similarly, on the right-hand side, nearing micro RNAs that target MK2 expression as well as small interfering RNAs targeting MK2 reduced RSV titer significantly in cells compared to infected and non-targeting siRNA cells. The impact of reduction of viral load on survival is shown on the next slide. Cellular analysis were extended to in vivo studies of SARS-CoV infection in the mouse and the impact of the p38 inhibitor on survival. Infected mice die within 5 days, while infected mice treated with the p38 inhibitor demonstrate 80% survival through the course of the 8-day experiment. In combination, these cellular and in vivo data suggest that inhibition of the p38/MK2 pathway has the potential to exert direct antiviral effects in addition to its impact on cytokine storm. Finally, a third line of evidence support a role for ATI-450 in modulating COVID-19-induced pulmonary fibrosis. A [ suprolay ] of cytokine storm-induced ARDS demonstrated with a number of the respiratory coronavirus infections, including COVID-19, is the development of pulmonary fibrosis as summarized on Slide 19. Survivors of ARDS exhibited reduced quality of life and potential mortality as a result of progressive pulmonary fibrosis brought on by the disease. Pulmonary fibrosis was thought to be driven through TGF-beta and the cytokines IL-1 beta, IL-6 and TNF-alpha, all cytokines regulated by MK2 and inhibited by ATI-450. The evaluation of anti-fibrotic therapy for COVID-19 infections have been proposed. There's a body of preclinical data linking the MK2 pathway with lung fibrosis. The study on Slide 20 evaluated the MK2 inhibitor peptide, MMI-0100, in the bleomycin model of lung fibrosis in the mouse. 21 days following intratracheal administration of bleomycin, mouse lung tissue was analyzed by H&E staining. The bleomycin-treated lungs demonstrated significant scarring, tissue damage and collagen deposition compared to the PBS control, as shown on the left 2 hand -- left-hand panels -- 2 left-hand panels. The MK2 inhibitor administered either IP or inhaled, shown in the 2 right-hand panels, protected against tissue damage in this IPF model. These data support an anti-fibrotic role associated with MK2 inhibition and a third potential mechanism by which ATI-450 could impact COVID-19. In summary, ATI-450 has the potential to inhibit multiple key inflammatory cytokines associated with cytokine release syndrome in patients with COVID-19. It also has been shown to inhibit coronavirus replication and infectivity and potentially block COVID-19-induced pulmonary fibrosis. Our next step is to advance ATI-450 into an investigator-initiated trial to evaluate whether the inhibition of multiple key inflammatory cytokines will impact cytokine release syndrome in patients with COVID-19. I'll now pass the presentation to our CMO, Dr. David Gordon, to describe the clinical plan.

Thanks, Joe. While we were very interested in the data that Joe just presented and thinking about the potential that ATI-450 has in COVID-19, we were approached by investigators from the University of Kansas Medical Center, Dr. Greg Gan and Dr. Deepika Polineni, who were very aligned in their thinking about the potential and proposed to us a study which was along the lines of what we were thinking would be the way to progress into the clinic at Aclaris. The study that was then subsequently designed and developed has been submitted to FDA, and we now have approval to progress this design. And the study is the study which is presented on Slide 22. So it's a double-blind, randomized, control trial of ATI-450 in patients with moderate to severe COVID-19. We are seeking to recruit patients who have a confirmed diagnosis of COVID-19 that are hospitalized but not intubated and ventilated, and they would have evidence of pulmonary involvement based on chest x-ray or they would have evidence of respiratory failure requiring the criteria at the bottom of the eligibility slide, so less than 93% oxygen saturation on room air, or requiring oxygen supplementation to maintain levels greater than 93%, or a Pa02/Fi02 ratio of less than 300, or Tachypnea. So patients missing that criteria would be randomized to either ATI-450 50 milligrams BID or placebo BID, and the treatment period would be 14 days. We would continue to follow for all the key outcomes up to day 28. So the key end points that we're looking at are in the box on the right-hand side of this slide. The primary end point is the responders on day 14, responders being defined as those patients who are alive and free of respiratory failure, i.e., not requiring oxygen supplementation on day 14. Secondary end points includes change in oxygenation, time of hospitalization, time to intubation as required, the proportion of patients who go on to progression to ARDS, mortality, and of course, we would look at safety as end points as well. And importantly, we would be doing some exploratory work in this study as well, looking at the levels of various cytokines, for example. And we would be able to correlate those to clinical responses within the study. And the study itself will give us the opportunity to look at the role of ATI-450 in inhibiting these cytokines in a group of patients with elevated cytokines at baseline as part of their disease process. So it will also give us important information about ATI-450. So we're very excited to be working with such a good group as we have identified at the University of Kansas Medical Center. This study, as I said, has now been approved for progression by the FDA and is progressing through the last steps to set this up, and we intend to start this study imminently. With that, I will pass it back to Neal for closing remarks and to open for questions.

Thanks, Dave. I want to thank everybody for joining us here this morning. We look forward to providing further updates as we progress through the first stages of studying ATI-450 in patients with COVID-19. Chris, could you please poll for any question?

[Operator Instructions] And our first question comes from the line of Louise Chen with Cantor.

So I had a few. First one I had was, how did you choose the dose for the studies? And what are your thoughts on side effect profile? And then secondly, in terms of patient selection, what kind of patients are you looking at, severity of disease, age, any comorbidities? And then last one, I was just curious how fast do you think this will enroll. Are there certain parts of the country that you're going after that are hotspots? Or how are you choosing these sites that you're going to do the studies in?

Yes. David here. So the dose was selected based on the data from the Phase I study where we showed that the maximum dose tested there was well tolerated. It had good kinetics and had the maximal and I think optimal effect on inhibition of the key cytokines that we think are relevant here. So on that basis, we've taken that as the [ dose ] that moved into the study with. In terms of the adverse event profile, I don't know if you remember from the presentation of the Phase I data, it actually looked very well tolerated in that study, and we didn't really see any limiting adverse events. So we don't think we're going to see anything here over the 14 days of the treatment period that would be significant in the context of COVID-19. What we did see in Phase I was a pharmacodynamic effect on neutrophils that we think was very consistent with having an active drug on the cytokines of interest. So we saw small reduction in neutrophils. But actually, I don't -- I think a lot of these patients are going to come in with elevated neutrophils in this study. So I don't think that would be a problem, and it wasn't even a problem in patients who were coming in with normal levels. So I think that should be -- I don't think the toxicity of ATI-450 based on what we've observed so far is going to be an issue in this patient group. The group of patients that we selected for the study was that -- the initial thinking for the study was that we wanted to select a group who had significant disease but weren't the critical patients. We thought that what we could do in those patients was not only show a benefit for each one of those patients but hopefully show that we could prevent the progression of disease to the point that they would need intubation and ventilation within an intensive care setting. So we thought that those 2 things would mean that we were showing benefit at a patient level, but if we could prevent that progression in terms of care, we could also help the health care utilization, which I think is going to be very important in the management of the pandemic. And of course, we'd also look at things like just general hospitalization time, and that would also be able to -- lead us to be able to show a benefit in terms of health care utilization. In terms of patients, we're taking adult patients over the age of 18, and we are going to stratify these based on those over and above 60 years old as the one stratification factor. In terms of speed of recruitment, I think that's why we've selected the kind of study size that you see in this proposal. We've got 36 patients that we're aiming to recruit. And you'll see a lot of studies that are being proposed at the moment of the order of 200 to 400 and upwards from there. And I think that the number of studies that's ongoing and the number of patients that are hospitalized, I think it's going to take quite a long time for some of these studies to generate data. What we wanted to do here was conduct a hypothesis-generating study, which would tell us quickly whether we were seeing a signal and we were seeing that the drug was well tolerated in these patients that would give us clear evidence to go and do that more definitive study so that we hope by studying a group of patients of this size, we can get a quicker read on the effects of the drug. Kansas University is going to be the key site, but they are also considering working with -- they have 2 other identified sites that they may expand this to. So eventually, the study may be expanded over 3 sites, and we think that will help recruitment. Obviously, it's difficult to predict exactly how long this study will take because the whole COVID-19 picture is moving all the time. But we think that by having a combination of a group of patients that are -- have a high unmet need, are readily available, spread out over 3 centers and a drug that has the potential that Joe described, we hope that we'll be able to recruit this reasonably quickly.

Our next question comes from the line of Thomas Smith with SVB Leerink.

I guess I was just curious because it is a relatively small Phase II study here. Could you just give us maybe a little more color around the magnitude of the signal you would need to see in the study to consider moving on to the next steps? Do you have a specific predefined threshold in mind?

Yes. So to answer that question, Thomas, I could probably give you a little bit of the early context of how we were thinking about this study. We were planning to study this in a sample size of what you see using end point of oxygenation, which we think is very clinically relevant. And this study would be powered to be able to describe a significant difference in oxygenation versus vehicle group. The FDA asked us to look at the end point that you see here, which is -- what you see a lot of studies being asked to look at, which is responders based on respiratory failure. I think this is going to be hypothesis-generating on the study. But if you assume 50% placebo rate versus reasonable based on the available data, you will have -- as based on a provision estimate and the provision we'd have 70% power to have a 30% window. So if we got up to about 80% responders, we would have power to [ show ] the difference versus placebo. But with hypothesis generating, I think that, that would be a big spread to show that. And I think that we'll be looking at some of the secondary end points to be -- to assess the efficacy in the study as well.

And our last question comes from the line of Tim Lugo with William Blair.

This is Lachlan on for Tim. So I was wondering, are there any restrictions on standard of care in the trial? And specifically, any sort of interactions with the drugs that might be used there? I know dexamethasone, just recently there was a study showing that, that was providing a benefit. So are there going to be any restrictions on those drugs? And then second, you mentioned you'll be collecting data on cytokines so that you can see how they correlate with clinical response. Can you just give more detail on, I guess, what you'll be collecting, what kind of information that will give you, both in terms of the treatment of COVID but also the objectives, more data on how the drug is acting in people?

Yes. So in terms of drugs alleging study, we are asking immunosuppressing drugs to be stopped. So we wouldn't be allowing systemic immunosuppressant drugs other than the ATI-450 during the study. Patients coming in with hydroxychloroquine, we have to start that at the end of the study. We are allowing ongoing treatment with remdesivir because I think while we were putting this together, it was considered to be -- there was -- the term used was that it was becoming a standard of care. So we would allow that at the background as well. And then it would be conventional supportive assessments as well. And sorry, I didn't quite catch the second question. Is it about the pharmacodynamic and cytokines?

Yes. So you mentioned you were going to be obviously looking at a range of cytokines to see how they correlate with clinical response. I was just wondering if you could give any more color there in terms of what it will tell you about the treatment of COVID but also just about ATI-450 and I think, any supplement, I guess, on data that you would have?

Yes. So we're going to be looking at the cytokines that were -- that Joe talked about in his presentation, what we've seen as being suppressed in the Phase I study and that we think are relevant in CRS, in cytokine release syndrome. We're going to look at those at baseline and then followed up during the study. And we will -- one, I think that will tell us something about ATI-450, and it will be the first time that we all have seen that in a group of patients with elevated cytokines at baseline. So I think it will be generally interesting for the effect of ATI-450, but I think it will be very useful to correlate the reduction in those cytokines with any clinical response that we see. So we'll be looking at that panel of those cytokines that Joe mentioned.

And this does conclude today's question-and-answer session. I would now like to turn the call back to Neal Walker for closing remarks.

Well, thank you all for joining us this morning. We are excited about progressing this asset given the early efficacy that we've seen with individual cytokine approaches in COVID-related CRS, and we have a multiple-cytokine approach. So we are excited about embarking on this program. And we look forward to providing further updates as we progress through this first stage of studying ATI-450 in patients with COVID-19. I think it's also important to note that we don't see any impact on our runway going forward. This was baked into our plan. The team has been working really hard since late March, early April with these investigators on designing a clinical trial, doing all the support of in vivo and in vitro preclinical work and importantly, looking at the cytokines of interest in an expanded analysis from our SAD/MAD work to really form the mechanistic rationale of approaching this in a prudent fashion. So we -- this has been baked into our plan, and we look forward to updating you as we make progress. Thanks, everybody, for joining the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.