Kamil Ali-Jackson - CLO and Corporate Secretary Neal Walker - President and CEO Brett Fair - Chief Commercial Officer Stuart D. Shanler - Chief Scientific Officer Frank Ruffo - Treasurer and Chief Financial Officer David Gordon - CMO.

Louise Chen - Cantor Fitzgerald & Co. Tim Lugo - William Blair & Company Adnan Butt - Guggenheim Securities Donald Ellis - JMP Securities David Steinberg - Jefferies.

Good day, ladies and gentlemen and welcome to the Q2 2018 Aclaris Therapeutics, Incorporated Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call maybe 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 am 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 Conditions 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 March 31, 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 ESKATA launch.

Next Stuart Shanler, our Chief Scientific Officer will review or 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 eight 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 option as we initiate our consumer campaigns in the back half of 2018.

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

In July we completed the end of Phase 2 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 3 program in the second half of this year.

Regarding our JAK inhibitor program we dosed our first patient in a Phase 2 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 continued to advance the development of our selective MK-2 inhibitor, portfolio of ITK inhibitors, and our portfolio of next generation JAK inhibitors.

Recently our manuscript on ATI-450 and MK-2 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 two 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 PKPD study with a six month open label extension.

In June we reported interim data from 6 of the 11 enrolled patients in this 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. 2 of the 11 patients withdrew during the PKPD 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 hairy growth 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 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 hairy growth which has been slower than that demonstrated in the patients in the Columbia University study. Across the two open label studies patients range from 5 to 23 weeks on drug and no patient has yet completed the full six month treatment period.

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

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

In addition we will be providing patients in our larger dose range studies, AU/AT 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 two studies in the coming months. I'll 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 the launch meeting in May the Aclaris sales force has been successful in opening over 800 ESKATA accounts. We're very pleased with the base of accounts we have established early in the launch. We will continue to focus on driving clinical integration within these accounts.

We've learned a great deal from the early experience initiative as it relates to proper application technique and understanding keys to successful integration. Our sales force continues to implement live patient training sessions and in services to build on these early learnings and they train HCPs and their staff on ESKATA treatment.

We're impressed and pleased with the effectiveness of ESKATA and we're seeing favorable patient outcomes for the product. Feedback from the early experience initiatives support, the ESKATA provides an excellent treatment option for patients with raised SK. And one that is easy to administer and delegated within 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've had more hands on experience with products.

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 appearance to go out socially.

85% of patients said that they would recommend ESKATA treatment to their friends and if previously treated over 90% of patients said that they would recommend ESKATA over prior treatment methods. The results from the Early Experience Initiative were very encouraging as we looked to establish ESKATA in these accounts.

The keys to success moving forward center on driving effective clinical and business integration. With regard to clinical integration, proper patient and lesion identification are important as we reinforce our positioning for raised SKs in 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 beekeeping the 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 demonstration and product data at the major dermatology conferences as well as supporting peer to peer speaker programs and webinars.

Live patient demonstrations were conducted at most recent SCALE and Cosmetic Bootcamp meetings in this space. There is also response at a product theater at the most recent Maui Derm NP+PA Meeting that was very well attended generating high interest in ESKATA.

In addition to our conference activity we've 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 the account adoption and the overall effectiveness of this product. We look to integrating ESKATA into our accounts and laying a solid foundation in advance of our DTC efforts in the fall. With that I'd like to turn the call over to our CSO Dr. Stu Shanler. Stu..

Thank 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 2 meeting with the FDA and we are on track to begin the Phase 3 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 investigation of topical JAK 1/3 inhibitor ATI-502 for the treatment of Alopecia Areata including therapeutic [ph] Alopecia Areata and the more severe variance of 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 maybe 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 2 dose ranging trial of ATI-502 for the topical treatment of Alopecia Areata.

This trial will evaluate the efficacy of two concentrations of ATI-502 on the regrowth of hair in a randomized double blinded parallel group in-vivo 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 is VITI for vitiligo, VITI-201 is an ongoing Phase 2 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 2 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 AD-201 Topical trial, which is a Phase 2 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 four weeks in up to 30 adult subjects with moderate-to-severe atopic dermatitis. This trial was 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 2 dose ranging trial of ATI-501, an oral JAK inhibitor for the treatment of AA. This randomized double blinded parallel group of vehicle-controlled study will evaluate the efficacy of two 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 or ATI-450 that is 450 our oral MK-2 inhibitor in mid 2019.

And finally regarding our ESKATA IP estate, on May 29th the 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 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 the Orange Book.

This augments our patented state, our ESKATA patent of state in particular which also includes two 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 would 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 dollars 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 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 license agreement we received and recognized an upfront payment of $1 million and they 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 six 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 six 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 a $10.1 million and $6.5 million of non-cash 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 non-cash stock based compensation respectively. R&D expenses increased $6 million to $14 million for Q2 2018 compared to 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 non-cash 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 expenses 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 2018 included $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 non-cash 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 launched our first commercial product ESKATA for patients suffering with raised SKs.

We now have evolved into a commercial staged biopharmaceutical company with a deep clinical stage pipeline, a broad dermatology and immunology portfolio focused on small molecule of therapeutics, and a robust discovery engine. I am 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. Your line is open. .

Hi, thanks for taking my questions and 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, thanks Louise. So when we look at -- let's look at the Columbia Study first, so that was predominately -- it was all characterized by 80 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 enrolment 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 four out of nine that are showing nice response rates of varying degrees and out of the six patients who have actually gone through four months already, we have three responders.

So we're really excited about that and given the difficulty in treating those patients with more extensive disease. On the eyebrow study, we -- that has nine patients in now going through the open label portion and we have six out of the nine patients have new balanced 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 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, thank you.

My second question is on the two 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 was four patients that withdrew. Let's start with the Columbia. There were two 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 from that study due to the fact they didn't want additional biopsies.

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 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 are one of the leaders in the treatment of this condition that it would be very easy and quick enrolment time but in fact when you layer on some of those things it is a challenge.

And the eyebrow study, the reason we had two withdrawals there was one was just lost to follow up and then the other withdrew consent. So all four reasons unrelated to anything related to the study group..

Okay, and then just more on the JAK program, are there any differences you have seen between patchy AA, AT, and AU, I know you talked about a little bit earlier in your comments as it relates to the drug?.

Yeah, 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 we've clearly seen particularly in these studies that, that Alopecia Areata patients who are patchy respond much quicker and more robustly than AU/AT. And the only -- AU/AT you just need a little bit longer treatment.

So where you might expect to see something let's call it three to four months in a patchy patient it may be more like four to six months for an AU/AT patient.

And that is part of the reason that we are actually now putting or offering our patients in all of our studies the opportunity to roll into an extension study because if you're tracking nicely through six 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, thank you and then just maybe I can squeeze in one last question 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, thank you?.

Yeah, just let me say one comment on that then I will 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 often times one treatment.

Actually we're seeing a lot of good response rates after one treatment but that depends on the number of lesions. But if you treat up to two times remember that the patient comes in, they come back, they come and get treated, they come back in three weeks, they get another treatment and then come back in another three to four weeks.

So you're talking about just the baseline cycle time of six to seven even possibly eight weeks depending on the office. So I would just -- we have talked about that in the past but that's just something that was minimally invasive procedures. I think we all just have to be aware of on that. Brett. .

Thanks Neal. Good morning Louise. So, right now we have a big base of accounts. Right now it is 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 into the right lesion with the position 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 in said expectations and they need to get hands on experience with it.

As Neal said you got to see that patient back before -- kind of make a total assessment of what is this offering my practice, what is this offering my patients. So it's a little bit of an evaluation period and a training period.

And then the other thing, because the party can be delegated once the physician gets the experience with it then they're going to want to invite their expenders into that process. So we are 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 the 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 will be in a very good place come the time we activate DTC. And I think that is when you will start seeing -- it really start picking up..

Okay, thank you very much..

Thank you and our next question comes from Tim Lugo from William Blair. Your line is open. .

Thanks for taking the question.

Just on the topical, can you talk about the dosing between AA versus androgenetic alopecia study which was discarded?.

Yeah, so in AA we are applying BID, so twice a day to patients and obviously at least in all the studies we have been conducting to date we're treating through six months. And then again giving people the opportunity to extend based on obviously positive results. And AD, this is more of a proof of principle.

We are really looking at four weeks study BID 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..

[Question Inaudible]. .

For AGA that is BID and that is a six month study. And that's actually enrolling quite nicely as well..

And for I guess historically for the open label -- and Tulsa overall studies, I believe the response rate is well around 75% in those, is it too early to tell how the topical response rate will trend versus that is that still kind of bogey out there for JAK inhibitor, topical or oral?.

Yeah, I think so the oral it just depends on the patient you are treating, right. So if you have eight Alopecia Areata patient, just patchy patients you are going to see a compressed timeframe to response. If you have a Alopecia Universalis or Totalis patient that might take a little longer now.

One of the things you also have to consider is duration of diseases. Some has 30 years disease that's going to be more difficult to treat than perhaps somebody who has three year disease. So I don't know that the 75% rate is 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, 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 steroids, 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 more quickly and the more severe patients you just need a little bit more time..

Thanks for the clarity, 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 are citing 800 accounts open, is this the metric that you are going to be giving us going forward and how do you -- 800 is a good account base deepen into or you are still looking to broaden that number?.

So, yes, so it will be -- that is 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 will 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 summer time with people's schedules and docs maybe not taking a lot of vacation, I think that's a great number..

Thanks for the question..

Thank you, our next question comes from Adnan Butt with Guggenheim Securities. Your line is open. .

Hey thanks for taking the question and really encouraging to see hair growth.

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

Sure, so in the Columbia study because the original design recall was PKPD in the more 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 enrolment we had to expand that to include patients with Alopecia Areata and partial loss. So out of the nine patients in the eyebrow study….

I think the original 12 I think are from AU/AT. .

Okay, in the eyebrow study. So, as you pick that up so out of the original 12 in the eyebrows study 8 of the 12 had AU/AT. So again both patient populations 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 is actually two of them and it's one of the learning's right that you see just in that study. And again just to highlight when we embarked on this path we really were looking to prove the viability of the topical approach, we have always talked about how formulation matters and I think we have 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 has actually through the six 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 the first 6 patients of the Columbia study rolling through with getting to the six month time period of treatment and that way we present a fuller data set.

So, actually you will 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 series?.

Correct. .

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

Yes, so it is BID, it is the same kind of treatment regimen over six 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% parallels at the low end to about 90% parallels 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, might be useful in less severe disease, it might be useful as a maintenance therapy as patients on orals want to maintain the results and roll off the oral. It might be useful in children, right.

So there's three or four 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 the long-term safety database.

As you know we've 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..

Great, thank you..

Thank you. Our next question comes from Donald Ellis from JMP Securities. Your line is open..

Good morning, I have three 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 your sales force is getting on price? And then last question, in the quarter how many weeks in the quarter we are actually selling ESKATA versus implementing the free samples in the Early Experience Trial? Thanks.

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I will hand that off, thank you for that question Donald. I will hand it off to Brett. .

Great, thanks, how are you Don. So in terms of the early experience initiative the majority of them ended up placing orders, so about 90% of them placed orders and came on board as account and we added on top of that.

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

In terms of the price, if you look at the price 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 by 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 are definitely in a good place with our pricing. No concerns on that.

And then in terms of we actually selling, we had to wrap up part of the early experience initiative coming out of our national sales meeting. So I'd say we're 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 initially -- oh, year-to-date, yeah..

I think it doesn’t have a quarter but that is year-to-date?.

Yeah, it is year-to-date. .

Great, thank you. .

Thank you and our next question comes from Liav Abraham from Citi. Your line is open. .

Good morning, maybe just 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 enrolment in these trials?.

Sure, so I will start and I will hand it off to David. I will address the -- 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 and particularly the safety, we thought it was much better positioned as a take home prescriptions. And it would be the only take home prescription approved and it gets across the finish line in the U.S.

And 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 wart 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 PKPD work or as patients in Australia might have microblading or tattooing and just different inclusion exclusion criteria like that makes it more of a challenge.

But we don't anticipate having any difficulty on the wart enrolment. Our last few studies we enrolled 158 patients and 159 patients respectively. In about six to seven months start to finish the study was completed. And then maybe I will hand it off to David to just to talk about some of the end points. .

Yeah, thanks Neal. So we can buy it from I think a very successful meeting with the FDA last month for reactivating the design of the study. And got a number of things that were very happy to come away from that meeting. Sp we have -- we have agreed on approach to get us to an NDA which would be two Phase 3 round about 500 patients each.

The end point is going to be clearance of all warts. But when in meeting -- they're not going to hold us to a particular number with one wart, two wart, three wart, etc.

They are going to allow us to recruit the patient as they reflect in the clinical practice and then we need to clear all the warts and that will be at the 8 weekend point and then we'll follow patients beyond for another 12 weeks.

I think that the other way that we had from that meeting is that we agreed that we could have -- point should achieve labeling if we hit them and take into the statistical point that we have but we could get labeling based on clearance of a single wart and patients who only have one 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 when. So I think at this point in time we have a very clear way forward of something that we think that we can deliver on and we are geared to start those studies that we are getting in September this year..

Great, thank you and then maybe just a question on the atopic derm trial, can you just talk a little bit more about your 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, I'm just curious of your rationale for going that route?.

Yeah, I think a couple of things; one is we are topical as it has thus far shown a very nice risk benefit profile. You know 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 I think there's a continuing need on the topical front particularly if you can look at kind of steroids 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 on 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 gauges to look at kind of proof of principle here. And then we'll make our determination whether we pursue that going forward..

Okay, thank you..

[Operator Instructions]. And our next question comes from David Steinberg from Jeffrey. Your line is open. .

Thanks very much. I had 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 those IP, how much further does it protect your product and does it actually extend the runway that you have going forward? Thanks. .

Yeah, let me start and I will 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 20 to 25 timeframe.

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 ATI that goes to 2028 at a minimum.

We have additional IP that issued about two years ago that is broad based IP with 70 plus claims that encompasses the applicator, formulation, all things -- 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 2030's, 2035 timeframe 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 standalone, that reads on stabilized hydrogen peroxide. We have talked about this since the beginning as well.

That's really important, when you're talking about concentration concentrations of the levels we're dealing with. It's very difficult to keep this, our product stable over time. So, getting that IP was a big win. It is the third Orange Book listable patent. It stands separate and distinct from the main IP estate and that takes us to 2035.

So you know I think when we look at 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 to that analysis..

Okay, thanks and then I was wondering if you could offer some color, little more color from the field.

I know it is early in the ESKATA lines but -- maybe give us some -- an example of what sort of push back you are getting from some of the doctors commercially, maybe anecdote on how much they are willing to embrace the new product?.

Okay, I will let Brett answer that. .

How are you doing David. So I think pushback, we haven't gotten a lot of pushback on the products from the people that we've targeted. I mean we have targeted as the targeting methodology contemplates those that do a lot of buying of those products so they get it.

And I think when you do get pushback from an account just to really try to understand it, those that were pushed back on ESKATA will be a little bit more reluctant. Just trying to understand how it fit into their practice.

They're currently doing cross surgery today and they are trying to get their head around where this would sit in and it's really that's where the peer to peer is so critical because it paints a picture of how this product can offer something different to practice and also that it can be delegated and liberate the providers time.

Those are those important benefits to the practice. And then the other thing it really is important for us, just to make sure that we're going, sticking to our to our positioning.

We talk about positioning the safe than that but it is an area where they are reluctant to go there with crowd surgery in an area where they're willing to take initial trial with ESKATA.

So, from sales execution perspective position there is critical and then from a peer-to-peer perspective the programs and product theaters and live patient demonstration and all that really speak to the value we can bring to the practice.

The one set of -- your second question was you talk about those that are willing to embrace the product?.

Right, exactly, just sort of anecdotes there as any surprises, any comments on willingness to embrace and how excited they are and that sort of thing?.

Yeah, so some of them has gotten the treatment right. They fully understand it, they are using it in the patients, and the right lesions, and their initial trials and experience with it has 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 up really well for the long term but this product really works. And if you rub it in too hard, if they go too aggressive with it. You can get some edema and you can get some bread associated with it that is the sometimes you need to revaluate that.

So, what I referenced on is going in and say look lets schedule a retraining and make sure you're focusing on right lesions in the right patient types and here's how you apply the product, just raise that expectations. All the new losses so that every time going forward that they use the product, they are using it perfectly.

So we have had some emphasis of retraining there but other than that I think people are pretty excited about the response that they're getting with the treatment. It is a conflict treatment, it's easy, it's quick and the patients look good.

The next day results is well, you know have a lot of dreaming, trusting, and the bleeding that you do with some of the other procedures are currently using. So there's 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 patient in the practice and that's DTP and DTC will play the role. .

Yeah, and David this is Neal, just to build a little bit on that. I think we have been very consistent from the beginning.

And you have covered us a long time that in a more simplistic way to think about is it does break across midterm aesthetic and the aesthetic doctors it's a lot easier to put it into the flywheel and strictly med derm toxic, 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..

Great, okay and then one final quick question. You clearly have a lot in your plate so commercializing ESKATA and then with your late stage pipeline, but you have been fairly active in business development. What are you liking out , what is probability you have used in licensing or buying something in the next six or nine months or so..

So yeah, I mean you know our history but we don't comment specifically on BD, it is not a surprise, right. I mean we're opportunistic with things. Look at a lot of stuff and we're always going to look at you know assets that enhance that we believe enhance shareholder value..

Okay, thanks. .

Thank you and I am showing no further questions from our phone lines and I would 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 are really excited about the launch. We remain committed to our 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 one 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, you may all disconnect. Everyone have a wonderful day..