ACRS - NASDAQ

Good day, ladies and gentlemen, and welcome to the Q2 2019 Aclaris Therapeutics, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. It is now my pleasure to hand the conference over to Ms. Kamil Ali-Jackson, Chief Legal Officer. Ma’am, you may begin.

Thank you. I’m Kamil Ali-Jackson, Chief Legal Officer for Aclaris. Please note that earlier today, Aclaris issued its press release announcing second quarter 2019 results. For those of you who have not yet seen it, you will find a 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; Dr. Stuart Shanler, our Chief Scientific Officer; Frank Ruffo, our Chief Financial Officer; Dr. David Gordon, our Chief Medical Officer; and Jeff Wayne, our Interim Head of Commercial. 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 sections of Aclaris’ Form 10-K for the year ended December 31, 2018, Form 10-Q for the quarter ended June 30, 2019 filed today and other filings Aclaris makes with the SEC from time to time. These documents are available under the SEC filings section of the Investors page of Aclaris’ website at www.aclaristx.com. All of 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, and thank you everyone for joining us on our Q2 earnings call today. The second quarter has both been rewarding, but also challenging. In June, we reported encouraging interim six-month data from our uncontrolled open label AGA or androgenetic alopecia study. This pilot study was designed to assess the safety and efficacy of the use of topical JAK inhibitors in a new and highly prevalent indication called male and female pattern hair loss. We will have the 12-month data by year end, and if it is consistent with the six-month data, the next step would be to find a strategic partner to conduct a controlled clinical trial with a higher concentration of ATI-502. As a reminder, we used a 0.46% concentration and we believe we can now achieve a concentration higher than 3%. In addition, in June, we reported the results of our topical alopecia areata trial, which unfortunately did not meet expectations and was negative across both the planned primary and secondary endpoints. Although we believe then an unexpectedly, high placebo response and a sub-optimal concentration of ATI-502 were reasons for the failure, we continue to believe in the viability of a topical approach for alopecia areata, but with a higher concentration and currently plan to seek a strategic partner for further development. Recently, we reported positive data from our oral JAK inhibitor, ATI-501 trial, for the more severe forms of alopecia areata. This trial demonstrated a robust efficacy signal and ATI-501 was generally well tolerated. Lastly, we have also advanced our first internally-generated compound from our Confluence acquisition into the clinic. This is a Phase 1 trial, which has been recently initiated with the first patient dosed on August 2. Turning to commercial, RHOFADE prescriptions for the second part of – for the second quarter of 2019 exceeded 23,200, as estimated per the IQVIA monthly National Prescription Audit or NPA data. This is the highest prescription count in a calendar quarter since the fourth quarter of 2017, when the product was owned and still being promoted by Allergan and represents 12% growth as compared to the first quarter of 2019. New prescriptions for RHOFADE achieved growth of 9% in the second quarter of 2019 compared to the first quarter, as estimated per the IQVIA monthly NPA data. RHOFADE outperformed the branded rosacea market as defined by RHOFADE, Mirvaso, Oracea, Finacea and Soolantra brands in the second quarter of 2019, which grew by only 2%. In fact, RHOFADE has outperformed the branded rosacea market as defined above for the last three quarters. Commercial payer coverage for RHOFADE is stable, with coverage for 85% of lives and with unrestricted access for 52% of commercially-insured lives, according to Managed Markets Insight & Technology data. On the IP front, two important patents recently issued. The claims in the first of these issued patents covers the use of an effective amount of isotopic forms of ruxolitinib, including deuterated ruxolitinib to treat alopecia areata. This patent further bolsters our IP estate around different forms of hair loss, including alopecia areata and androgenetic alopecia or male and female pattern hair loss. The second patent involves RHOFADE and provides additional methods of use protection for RHOFADE, which expires in 2035. It is the sixth Orange Book listed patent for this product and contains 37 claims directed to methods of treating facial erythema associated with rosacea. The claim methods include topically administering once-daily on the face of a patient, a composition comprising 1% oxymetazoline as the sole active ingredient. We believe that we have created a company with many valuable assets that has become dislocated from the stock price. We are not satisfied with how the stock is trading. And we are aligned with shareholders and wanting to drive positive returns. To that end, we announced that we are undertaking a strategic business review of our commercial and R&D portfolio of assets to determine how to optimally deploy capital in order to maximize shareholder return. As part of this undertaking, today, we announced the following. We are voluntarily discontinuing the commercialization of ESKATA in the U.S. due to the fact that revenues from product sales were insufficient for us to sustain continued commercialization as a result of the product not achieving sufficient market acceptance by either physicians or patients, and not for any efficacy or safety reasons. We are seeking a strategic partner to commercialize this product both in the U.S. and also worldwide, however, excluding Canada where we already have a partner. We currently also intend to seek a strategic partner to further develop our investigational compounds ATI-501 and ATI-502 both oral and topical JAK 1/3 inhibitors for alopecia. These clinical studies are typically 12 months in duration and the length and costs associated with these studies makes it more advantageous for us to partner our alopecia franchise. We plan to continue to invest in our other immuno-inflammatory drug candidates, including our internally-developed investigational candidate, ATI-450 and oral MK2 inhibitor. If we successfully complete our ongoing Phase 1 clinical trial for this drug candidate, we expect to advance ATI-450 into two Phase 2 clinical trials, one for patients with rheumatoid arthritis and one for an additional inflammatory indication. We plan on providing further updates in the coming weeks, once we have completed our strategic business review. With that, I will hand over the call to David Gordon, our Chief Medical Officer, to review the clinical updates for the quarter. David?

Thanks, Neal, and good afternoon everyone. Neal mentioned highlights from the R&D program, and I’ll take a few minutes to provide a few more specifics. As mentioned in our previous calls, our Phase 3 clinical development program for A-101 45% Topical Solution for the treatment of common warts or verruca vulgaris was initiated in September 2018. We have completely enrolled over 1,000 patients in our two pivotal Phase 3 trials, named THWART-1 and THWART-2 for the treatment of common warts. These studies are progressing as planned and we expect to report data in the second half of 2019. Since the last call, we completed enrollment of the open-label safety extension trial, which is a requirement for the NDA filing. As a reminder, A-101 45% Topical Solution has the potential to be the first FDA approved prescription treatment for common warts. Turning to our JAK inhibitor trials. We have been developing oral ATI-501 and topical ATI-502, our JAK 1/3 inhibitors with a focus on alopecia and we also conducted additional open-label studies in androgenetic alopecia or AGA, vitiligo and atopic dermatitis. We previously announced results from the oral and topical Phase 2 alopecia studies and six months data from our open label AGA study. Let me briefly summarize these results. First, AA-201 Topical. This was our Phase 2 randomized, double-blind, parallel-group, vehicle controlled trial, which evaluated the safety, efficacy and dose response of two concentrations of ATI-502 on the regrowth of hair in 129 patients with alopecia areata. In June 2019, we announced that ATI-502 did not achieve statistical superiority at the primary or secondary endpoints in this trial. Moving to our oral program, AUAT-201 Oral was our Phase 2 dose ranging trial of ATI-501 for the treatment of alopecia areata. This randomized double-blinded placebo-controlled trial evaluated three doses of ATI-501 and the regrowth of hair in 87 patients with alopecia areata. In July 2019, we announced that ATI-501 achieved statistically significant improvement over placebo in several measures of hair growth, including the primary endpoints and certain secondary endpoints in this trial. The primary efficacy endpoint compared relative reductions in hair loss across the treatment groups. The reductions were 6% in the placebo group versus 26%, 30% and 26% in the 400, 600 and 800 groups, respectively. These changes were all highly statistically significant and ATI-501 was observed to be generally well-tolerated at all doses. The most common adverse events across all the groups for nasopharyngitis, influenza, upper respiratory tract infection, UTI, acne, elevated CPK and sinusitis. Our topical AGA study, AGA-201 Topical is an ongoing Phase 2 open label clinical trial of ATI-502 for the topical treatment of AGA also known as male or female pattern hair loss. 31 patients with AGA were enrolled. The six-month interim results that we reported in June describe a positive signal in both males and females. 12 months data are expected in the fourth quarter of 2019. As stated in June, Topical 502 has potential to be an innovative medicine that could bring benefit to both males and particularly females with AGA. Turning now to new results. AGA-201 Topical, a Phase 2 open label uncontrolled clinical trial evaluated the safety and efficacy of 0.46% ATI-502 in 22 adult subjects with moderate to severe atopic dermatitis. It had a 28-day treatment phase and the primary objective was the assessment of safety and tolerability. ATI-502 was observed to be generally well-tolerated and no treatment-related serious adverse events were reported. 7 of the 17 evaluable subjects or 41% met the secondary endpoints of achieving a Physician Global Assessment or PGA score of less than or equal to one, with at least 2-point change from the baseline score, which had to be 3 or 4 on the 5-point PGA scale. These results suggest that a topical JAK inhibitor emollient-containing solution may be a viable option for the treatment of atopic dermatitis. This is encouraging for ATI-1777, an internally developed investigational topical soft-JAK inhibitor, which could be a potential treatment for moderate-to-severe atopic dermatitis. VITI-201 Topical is an ongoing Phase 2 open-label uncontrolled clinical trial evaluating the safety and efficacy of 0.46% ATI-502 on the re-pigmentation of facial skin in 34 patients with vitiligo. Although an interim analysis at six months demonstrated evidence of re-pigmentation in some patients, the response rate has been slow and not sufficient to be clinically meaningful. As a result, we have decided to discontinue this program after completion of this trial. ATI-502 has been generally well-tolerated, and no treatment-related serious adverse events have been reported to date. I’d like to finish with a brief mention of ATI-450, an early drug candidate that we’re very excited about. ATI-450 is our MK2 inhibitor, a small molecule oral drug that we believe can target TNF, interleukin-1, interleukin-6 and interleukin-8 pathways. In the first half of 2019, we successfully filed the IND for this drug, and I’m pleased to announce that we have now got the first patients in this Phase 1 trial. The next step after the Phase 1 single and multiple ascending dose study is to advance ATI-450 and for the Phase 2 trials. One in patients with rheumatoid arthritis, and one for an additional inflammatory indications. I will now hand this over to Frank Ruffo, our CFO, to review our second quarter financial results.

Thanks, David. Good afternoon, everyone. As I walk through our second quarter financial results, please reference the financial tables that can be found in today’s press release. For further detail, please refer to the MD&A section in our Form 10-Q that was filed today. For the quarter ended June 30, 2019, total net revenues were $5.9 million, which consisted of net RHOFADE sales of $4.7 million, net ESKATA sales of $300,000 and contract research revenues of $900,000. It should be noted that wholesaler inventories for RHOFADE increased by two weeks during the second quarter, which positively impacted our RHOFADE sales during the quarter by about $700,000 based on average weekly wholesaler demand. At June 30, 2019, wholesaler inventory balances for RHOFADE were within normal levels to efficiently service patient demand. Cost of revenue, excluding amortization, was $2.7 million for the second quarter of 2019 and included $1 million and $700,000 of royalties and cost of goods related to RHOFADE and ESKATA, respectively. We also recorded a recurring, non-cash amortization charge of $1.7 million related to the intangible asset recorded as a result of the RHOFADE acquisition in 2018. Our cost of revenues for the CRO business were $1 million in Q2 and included non-cash share-based comp and depreciation charges of about $300,000. Looking back at the quarter ended June 30, 2018, our total revenue was $3.7 million, which consisted of net ESKATA sales of $1.5 million, contract research revenues of $1.1 million and other revenue of $1 million from a one-time milestone payment. Cost of revenue was $1.2 million for the second quarter of last year and was comprised of $200,000 of costs related to ESKATA product sales and $1 million of costs incurred for our CRO business that again included non-cash share-based comp and depreciation charges of about $300,000. As we mentioned today, product sales of ESKATA to date have been insufficient for us to sustain continued commercialization of the brand. And accordingly, we have discontinued sales of ESKATA effective today. Now, switching to our operating expenses, for the second quarter of 2019, our total R&D expenses were $17.7 – $17.6 million – that’s $17.6 million compared to $14 million for the second quarter of last year. Q2 R&D expenses included non-cash stock-based compensation expense of approximately $1.7 million. The increases experienced in 2019 were mainly the result of our ongoing Phase 3 clinical trials for the treatment of common warts and other increases related to our ATI-450 program. These increases were partially offset by decreases in spending for our various Phase 2 clinical trials for our JAK inhibitor programs as most of these projects were at or near completion at the end of the second quarter of this year. For the second quarter of 2019, our total sales and marketing expenses were $7.2 million compared to $12.4 million for the second quarter of 2018. This decreased experience in 2019 was mainly due to a reduction in direct marketing professional fees, which we incurred last year in advance of the launch of ESKATA, which was in May of 2018. Personnel-related costs also decreased in 2019 due to the turnover experienced in our commercial personnel during the first half of this year. And these decreases were partially offset by increased marketing costs, which were incurred in the second quarter of 2019 to support our relaunch of RHOFADE. For the second quarter of 2019, our G&A expenses were $8 million, which included non-cash stock-based comp of approximately $2.7 million. This compared to $8.1 million for the second quarter of 2018, which included a milestone payment of $1.5 million as well as $2.3 million of non-cash stock-based compensation. The increase in 2019, when excluding the 2018 previously mentioned milestone payment was mainly due to the cost incurred under the transition service agreement with Allergan related to RHOFADE. Also both medical affairs activities and personnel costs increased during the quarter in order to support our increased commercial activity and our infrastructure. During the second quarter of 2019, we performed an interim impairment analysis due to the recent decline in our stock price. Since the fair value of our dermatology therapeutics reporting unit is less than its carrying value, we recorded a non-cash goodwill impairment cost charge of $18.5 million, writing off the full balance of goodwill from our balance sheet. Other income, net, for the second quarter of 2019 decreased by about $800,000 as compared to the second quarter of 2018 due to interest expense incurred on our outstanding debt, which was borrowed back in October 2018. Our net loss was $49.9 million for the second quarter of 2019, compared to $31.2 million for the second quarter of 2018. During the second quarter of this year, we incurred $26.3 million in non-cash charges. Our second quarter of 2019 cash burn was approximately $10 million less than our first quarter of this year. Our operating cash burn for the second quarter of 2019 was $21.4 million compared to $21.8 million for the same period in 2018. Also changes in our working capital provided $2.2 million in cash. As of June 30, 2019, we had cash and investments of approximately $116 million and had 41.3 million shares of common stock outstanding. We anticipate that our current capital be sufficient to fund our operations into the fourth quarter of 2020, without giving effect to any additional potential new business development transactions or financing activities. Now turning to our most current financial outlook for the full year 2018 – 2019, we continue to reiterate our initial operating expense guidance that we provided in March for both GAAP R&D and G&A expenses. Today we are reducing our guidance, estimates for GAAP sales and marketing expenses to now be in the range of $32 million to $35 million, including $3 million of stock-based compensation compared to our original estimate of $37 million to $40 million, which included $4 million of stock-based compensation. That is it. So I will turn the call back over to Neal for some closing remarks.

Thank you, Frank. As we mentioned in today’s release, we are undertaking a strategic business review of our commercial and R&D portfolio of assets to determine how to optimally deploy our current capital to maximize shareholder value. Conducting this assessment internally with our management team and working with our board is our top priority. We plan to deliver clear financial direction and updated timelines on our business strategy and an update for everyone in the coming weeks. We also look forward to reporting on the common wart Phase 3 results that will be available later this year. Thank you for your attention. And Brian, can you please poll for questions?

Yes, sir. My pleasure. [Operator Instructions] And our first question will come from Louise Chen with Cantor. Your line is now open.

Hi, thanks for taking my question. I had a few here. So, first question I had was on your AD data. And could you give us more thoughts on what gives you confidence in your next step here on this opportunity, and then the second question I had was on the market opportunity for ATI-450 both in RA and other inflammatory conditions what makes this compound special and how will you differentiate yourself from the competition? And then the last question here is on RHOFADE. Just curious what you think your peak market opportunity is and how long do you think it will take you to get there?

Sure. Hey, Louise. It’s Neal. I’ll address the first two and then hand off the last one to Frank. So on the AD front, I think a couple of points are worth noting. One is that we offer to treat moderate to severe patients and we know that JAK inhibitors were pretty well in atopic dermatitis. So we really wanted to understand if Topical Solution could work in a more severe patient population. And we also wanted to test the idea of using a solution, which could be converted into a spray in this patient population and note that we would – that we would not have any side effects in that regard. And what we found was that it was extremely well tolerated. We had rapid itch resolution by week two. We were down 3.29 points on a mean basis on the patient reported its scores and 4 points on a medium basis. And then, importantly, I think Dave mentioned this earlier on the PGA, which would be the regulatory endpoint, we achieved a 0.1 with a 2 point reduction with 41.2% of patients at four weeks, and that’s in a moderate to severe patient population with a solution that has – that was not necessarily optimized. So we’re really encouraged in that data as a bridge to our 1777, which is a soft-JAK, which as we’ve mentioned before works topically on the skin and gets rapidly metabolized once it hits the plasma. So it’s exceedingly safe or the projection is that it would be exceedingly safe and we’ve been able to incorporate an emollient into that solution, making it kind of tailor-made for an atopic dermatitis population. And I think what’s exciting is that, we have at least a view now that JAK 1/3 works pretty well, along a number of measures and based on the 41% in the PGA in a moderate to severe patient population is more than competitive, in fact better than some of the existing data that’s been reported to date. And we think that with a spray that contains an emollient, compliance will be enhanced and that we’ll have a differentiated product in a soft-JAK that is due to be in an IND in the mid-part of 2020. So I think that all is pretty exciting and I think this speaks to how we designed some of these clinical programs and doing some open label work and I think very quickly, understanding what signals were there in different diseases in a pretty cost efficient way. On the market opportunity for ATI-450 on your second question, this is just think about all the biologics out there that address TNF-alpha, IL-1 beta IL-6 et cetera, this is an oral small molecule that can address those diseases, so there’s a myriad of conditions that one could go after here and when we think about dermatology indications, one could think of psoriasis, hidradenitis, many others even atopic dermatitis. Again, looking at it from an oral small molecule approach, but there are also many opportunities beyond dermatology, including rheumatoid arthritis, and a variety of inflammatory disorders, and I think the trick for us is to choose the ones that make the most sense going forward. So we think this is a massive market opportunity across the board and has the potential to address a number of diseases, and really it’s kind of a platform product. On RHOFADE, what I would tell you is that, we’ve said before the peak market opportunity here is 300 million in gross prescription value. Obviously, there is a gross-to-net discount that we need to manage and that’s an ongoing process. You kind of manage that through getting better coverage and also looking at your – how you adjudicate your co-pay card. So I think we showed nice growth with RHOFADE in the second quarter, particularly given that we had about 40 reps on average staffing our territories during the quarter.

Okay, thank you very much.

Thank you. And our next question will come from Liav Abraham with Citi. Your line is now open.

Good afternoon. Neal, in your prepared remarks, you referenced the upcoming data for the warts program. Can you just comment on your – within the context of your strategic review, can you comment on your commitment to the commercialization of this product, assuming the data are positive? And then secondly, a follow-on question on RHOFADE Since the relaunch of the product, perhaps you can give us some sense of patient experience with the product and maybe some data points on gross to net progression throughout the year and refill rates just to get a sense of kind of the patient experience with the product?

I think the patient experience has been quite positive. We’ve heard that time and time and again both from patients and physicians. I think that’s reflective of the TRX growth that we’ve seen and the expansion of our physician base in those clicking through within NRxs and new prescribers we’ve seen steady growth there. So we’ve been happy with that. On the gross to net side, as I mentioned before, we have been in the range of 60 to 70. That’s what we talked about. In the early days, we continue to be in that range. There are obviously various levers one can pull to get that lower and we’re exploring those. I think one of the most effective ways is just to get better coverage with the plants and we are talking to a number of those plants now as that transition has proceeded. And I think there are opportunities to do that. So we’re encouraged by all those and that’s why we haven’t necessarily scaled up on the sales force. We want to make sure that we’re driving profitable scripts and being mindful of the coverage in certain areas. From a refill perspective, I think again the TRX numbers kind of speak for themselves. We’ve seen good refill rates and that’s one of the things in our messaging that we’re trying to always improve it. This drug is really meant to be used chronically. It’s not supposed to be used as a one-off, just to get rid of the redness. It really is supposed to be used on a daily basis over long periods of time, and that’s the way we expect it to evolve, and have a –

This is Jeff. In addition to Neal’s comments, I think we also have recently seen a new treatment guidelines published for the treatment of rosacea, which include products like RHOFADE for the treatment of persistent facial erythema, and the fact that multiple products often have to be used to treat rosacea patients because they have multiple systems. So this has been part of messaging all along and now it’s supported by the most recent guidelines that came up, and we hope that will increase the dialog between the patient and the physician in terms of their use of RHOFADE to treat erythema.

And relative to your question on warts, our first job is to generate positive data there. So we look forward to doing that and we’ll be giving more color on what we’re doing from a business perspective in the coming weeks, as I mentioned before.

Thank you.

Thank you. And our next question will come from the line of Donald Ellis with JMP Securities. Your line is now open.

Thank you. Good afternoon, guys. My question is about RHOFADE. Correct me, if I’m wrong, but looking at those numbers, it looks like at least in the near term until it grows that continuing to commercialize RHOFADE is consuming cash that maybe could be used for some of your other interesting R&D programs. Would you consider divesting RHOFADE to generate cash from the sale as well as save burning cash every quarter?

Sorry, I think there’s some static there. Hopefully everybody can hear me. But certainly in the early days of the launch, one usually consumes cash particularly in – we’re in six months or so now. And I think you can tell by some of our revised guidance that we’ve ratcheted down some of the sales and marketing spend and I think the revenue growth that we’ve seen has been pretty good considering what we’ve deployed against the brand. And as I kind of mentioned to Liav in the last question, part of doing an overall business review is looking at everything. Looking at the commercial side of the business and the R&D side of the business. And just to be candid, when you have your stock price is in this position, you have to look at all these things and see where is it most efficient to deploy your capital with an eye on your cash runway. So that’s where we’re looking at.

Thank you very much.

Thank you. And our next question will come from the line of Tim Lugo with William Blair. Your line is now open.

Thanks for the question. Going back to the strategic review, it sounds like you’re expecting partnerships may be from one company that could be interested in the R&D assets versus another company, which may be interested in the commercial assets. Is this a correct way to think about it?

Yeah, I think so. Tim, we’ve always been pretty active in BD on both acquiring and having a lot of connectivity within the space. So I think the universe within the dermatology ecosystem has changed quite a bit over the years. And hard to predict, who you might ultimately deal with on each of these sorts of assets. But like I mentioned before, with particularly the alopecia assets, those studies are longer, they’re more expensive, we’re incorporating some reformulation work with the both the oral and the topical. And we believe very strongly in both of those programs and we think it need some deeper pockets and if we can monetize that along the way, I think that can benefit the company in the short and the long term and allow us to more efficiently deploy the capital we do have into more efficient indications and trial designs like things like AD and some of the work we’re doing with ATI-450.

Okay. And for the soft topical, can you just kind of review the confidence on why it should have better efficacy than 502? Is it obviously, I assume there’s some pre-clinical data point to that. And are you still hitting the 1-2-3 subtypes relatively in a similar fashion or that kind of toggled between the programs?

Yes, good question. So the potency for the soft-JAK is in the ballpark of the potency of 502 and the selectivity as we had mentioned before for JAK 1/3 versus 2 is perhaps a little bit less selective there, but we feel very good about the mechanistic basis of – we know not just from our programs, but across both oral and other topical programs that JAK inhibitors work very, very well on both the anti-inflammatory side and also on the itch. And look, we had a, what I would refer to as a sub-optimal solution for this study and we drove a 41.2% response rate, that really is numerically better than anybody else has produced on that front from a topical perspective in a long time. So we’re quite confident that mechanistically this makes sense. And as I’ve mentioned before, one of the value props you want to have in atopic dermatitis is you want to be very safe and I think having the soft drug approach makes a lot of sense. And I also think it makes a lot of sense to target those patients with more severe disease, which you can use topical in – as a complementary therapy to systemic therapy and it also use it in certainly the utility in mild to moderate patients to be worked in moderate to severe.

Understood. Thanks for that clarity. And maybe one last question. Looking ahead to the warts data that’s always been discussed as a separate project, separate SKU, separate packaging price distribution. However, ESKATA, obviously under – will be available for us during the strategic review, I assume. So would one company interested in taking on ESKATA kind of a ready-made product once they obviously also be interested in the warts product, which still would obviously have maybe less competition in the market?

Yes, I think that’s a fair point. I think that’s a very reasonable scenario, if that’s something that we have to do.

Okay. Thank you for the question.

Thank you. And I’m showing no further questions in the queue at this time. So, now it is my pleasure to hand the conference back over to Dr. Neal Walker, President and Chief Executive Officer for any closing comments or remarks.

Thanks to everybody for joining the call with us tonight. And we look forward to updating you as we make progress again in the coming weeks. Good night.