Good day, ladies and gentlemen and welcome to the First Quarter 2019 Aclaris Therapeutics Inc., 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 be given at that time. [Operator Instructions] As a reminder, today's program may be recorded.

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

Thank you. I'm Kamil Ali-Jackson, Chief Legal Officer for Aclaris. Please note that earlier today Aclaris issued its press release announcing first quarter 2019 results. 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; Dr. Stuart Shanler, our Chief Scientific Officer; Frank Ruffo, our Chief Financial Officer; 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 and involve risks, changes in circumstances, assumptions and uncertainties that could cause actual results to differ materially from those reflected in such statements.

These risks are described in the Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations Section of Aclaris' Form 10-K for the year ended December 31, 2018, Form 10-Q for the quarter ended March 31, 2019, filed today and other filings Aclaris makes with the SEC from time to time.

These documents are available under the SEC filing 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 afternoon, everyone, and thank you for joining us today for our Q1 call. I will start with a brief update of our business highlights and then touch on a few of our clinical development programs. Then I'll hand it off to Stuart Shanler, our Chief Scientific Officer, who will review our clinical development plans and time lines.

Jeff Wayne, our Interim Head of Commercial, will then address our commercial business. 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 Chief Medical Officer, will also be available during the Q&A portion of the call.

Starting with commercial. Today's earnings release highlights our first full quarter results including RHOFADE. RHOFADE net revenues for the first quarter were $3.7 million. We were very pleased with the RHOFADE prescription trajectory during the relaunch, particularly when our field force was operating at about 80% capacity for most of the quarter.

As you might expect, with our new focus on RHOFADE, which is a medical dermatology product, it was anticipated that we might see some turnover in the sales force particularly amongst the more esthetically focused sales reps.

I am pleased to report that over the last four months RHOFADE has been detailed in the field, the initial feedback from both physicians and patients has been very positive.

Total prescriptions for RHOFADE for the rolling four-week period ended April 19th were more than 7,000 for the first time for any rolling four-week period since mid-December according to the IQVIA Xponent data. I believe this trajectory is a credit to the strength of the brand, the market need and importantly, the execution of the commercial team.

As a reminder, our goal is to get back to a monthly TRX run rate of 10,000 by the end of the year. As stated on our last earnings call, we continue to focus our sales efforts and resources on RHOFADE, which is in the primary detail position.

Regarding ESKATA, for now, it remains in the second detail position with a field focus only on productive accounts. Now turning to our pipeline and a few items to note.

We have an exciting and busy year ahead of us, as we expect to report safety and efficacy results from multiple Phase II clinical studies of our clinical development candidates for the treatment of alopecia areata, both the milder and severe forms; androgenetic alopecia, also known as male/female pattern baldness, atopic dermatitis and vitiligo and also Phase III studies for the treatment of common warts.

As a reminder, we are the only company developing both topical and oral treatment options for patients suffering from alopecia areata.

As is the case in many other dermatology indications such as psoriasis and atopic dermatitis, it is important and typical to have both options available to appropriately address patients with all types of disease severity, whether it’d be mild, moderate or severe disease.

To fully characterize the potential treatment regimens for all alopecia areata patients, we have taken the following approach. We have designed our studies to allow enrollment of patients with a broad spectrum of disease severity in both our oral and topical trials.

We have also provided an opportunity for our oral patients to roll into an open label extension phase of the trial where they can receive topical treatment for an additional six months. We have also allowed those in the six-month topical study to remain on treatment up to an additional six months through the same open label extension study.

We maintain that the relative risk/benefit profile of the topical versus an oral is an important consideration in this class and we look forward to sharing this data in the coming months. More recently, we submitted an investigational new drug application for ATI-450 for the treatment of rheumatoid arthritis.

This will be the first internally generated drug candidate from our small molecule technology platform to enter the clinic. We expect to begin a Phase I trial, including single and multiple dose administrations in approximately 80 patients in the second half of 2019.

If we successfully complete the trial, we expect to advance ATI-450 into Phase II trials in patients with rheumatoid arthritis as well as in additional inflammatory indications. As a reminder, ATI-450 is an investigational oral compound that targets the production activity of TNF alpha, IL-1, IL-6 and IL-8.

These are all cytokine targets of established biologic drugs. If successful, we believe ATI-450 would be a potential therapeutic option for a broad array of inflammatory indications, including rheumatoid arthritis, psoriasis, CAPS pyoderma gangrenosum, hidradenitis suppurativa inflammatory bowel disease and even oncology.

This advancement of our first internally generated drug candidate to IND ushers in a new era for Aclaris. Over the last two years, along with our colleagues and team in St.

Louis, we have established an internal small molecule drug discovery and development capability which allows us to generate novel drug candidates and drive them through preclinical development and into the later stages of clinical development.

Our institutional knowledge in kinase inhibitors, our biology and chemistry expertise and our connect technology platform combine to allow us to efficiently develop new drugs in the inflammation immunology space and ATI-450 is the first such candidate. I will now turn it over to Dr.

Stuart Shanler, our Chief Scientific Officer, who will provide an update on our other clinical activities and programs.

Stu?.

Thanks Neal and good afternoon everyone. As we enter the spring, we remain focused on reporting key data from our ongoing clinical trials. I'll take a few minutes now to talk about some of the specifics.

Leading off with our common warts program, in September 2018, we initiated our Phase III clinical development program for A101 45% Topical Solution for the treatment of common warts or verruca vulgaris. We have completed enrollment of over 1000 patients in our two pivotal Phase III trials named THWART-1 and THWART-2 for the treatment of common warts.

These studies are progressing as planned and we continue to expect to report topline data in the second half of 2019. Additionally, we expect to complete enrollment of an ongoing open-label safety extension trial this quarter which is a requirement for the NDA filing. We plan to submit the NDA in the first half of 2020.

As a reminder A101 45% topical solution has the potential to be the first FDA approved prescription treatment for common warts. Turning to our JAK or Janus kinase inhibitor trials. As a reminder, we are developing both oral and topical formulations of our JAK1/3 inhibitors for the treatment of alopecia areata.

Our program is investigating these medicines in the full clinical spectrum of disease inherent in alopecia areata ranging from pathway alopecia to alopecia totalis and alopecia universalis. These ATI-501 oral and ATI-502 topical Phase II trials are now fully recruited and we look forward to completing these studies and updating you soon.

AA-201 Topical is a Phase 2 clinical trial of ATI-502 our topical JAK 1/3 inhibitor for the treatment of AA and it is progressing as planned. This randomized double-blinded parallel group vehicle-controlled trial is evaluating the safety efficacy and dose response of two concentrations of ATI-502 on the regrowth of hair in 129 patients with AA.

This study is fully enrolled and data are expected later this quarter as well. Moving to our oral program, AUAT-201 oral is an ongoing Phase 2 dose ranging trial of ATI-501 our oral JAK1/3 inhibitor for the treatment of alopecia aerate.

This randomized double-blinded parallel group placebo-controlled trial is evaluating the safety efficacy and dose response of three doses of ATI-501 on the regrowth of hair in 87 patients with AA. This study is fully enrolled and data from this study are expected in the second half of 2019.

Our topical androgenetic alopecia 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. As a reminder, approximately 70% of men and 40% of women in the United States will experience this at some point in their lives.

Our AGA-201 Topical trial is evaluating the safety and efficacy of ATI-502 on the regrowth of hair in 31 patients with AGA. It is fully enrolled and six and 12-month data are expected later this quarter and in the fourth quarter of 2019 respectively.

This study enrolled 21 male and 10 female patients and we will be evaluating metrics including total hair count, hair width, and investigator, and subject assessments. Additionally, we have two other ongoing open-label clinical trials. For the first VITI-201 Topical for the treatment of vitiligo.

This study is fully enrolled and we are expected to readout six-month interim data in the middle of this year. For the second, AD-201 Topical, for the treatment of moderate to severe atopic dermatitis, this study is also fully enrolled and we expect to readout data in the middle of this year as well.

Turning briefly now to our intellectual property estate. As we recently announced, last month the United States Patent & Trademark Office issued U.S. Patent Number 10,265,258 or the 258 patent covering methods of using ruxolitinib or an effective amount of isotopic forms of ruxolitinib including deuterated ruxolitinib to treat AA.

This newly issued patent is the latest in a series of patents granted by the USPTO which are exclusively licensed to Aclaris. We continue to expand our robust IP portfolio which includes numerous issued patents and pending patent applications in the U.S. and major international markets.

We're committed to continue work on the expansion of our patent protection for our JAK inhibitors and across our full portfolio of products. I will now turn the call over to Jeff Wayne, our Interim Head of Commercial, who will provide an update on our commercial activities.

Jeff?.

Thank you, Stu and good afternoon everyone. As Neal mentioned earlier, we were very pleased with the steady growth throughout the quarter. RHOFADE growth continues to outpace that of the branded rosacea market.

As you may recall from our last call, we had a successful national sales meeting in February, followed shortly thereafter by a very productive American Academy of Dermatology Meeting.

After the realignment introduced at our national sales meeting in February to reflect our new focus on RHOFADE, we have made significant progress re-staffing our salesforce from an esthetically-focused to a medically-focused sales team.

We currently have 43 of 50 territories filled with trained sales representatives with the remaining territories at various stages of the recruiting process. Our current salesforce alignment is already producing results.

Based on our internal CRM data in just over two months, we've interacted with 88% of our A target prescribers in our staff territories, approximately three times. The salesforce has seen almost 80% of our B targets and averaged just over two times in the same period.

As a result of this reach and frequency, based on IQVIA exponent data through April, 12th, 64% of our targets have written a RHOFADE prescription in the last three months. Since the official full RHOFADE launch in February, we've made significant progress in several key areas.

Based on our most recent IQVIA exponent data for the rolling four-week period ended April 19th compared to the rolling four-week period ending January 25th, the average weekly RHOFADE prescriptions have increased by 20%, the average number of unique RHOFADE prescribers has increased by 18%, and the average number of RHOFADE prescriptions per healthcare provider has increased by 3%.

For the first quarter 2019 compared to the fourth quarter of 2018, although total RHOFADE prescriptions were slightly down by 3% RHOFADE outperformed the branded rosacea market, which declined by 15% based on IQVIA monthly national prescription audit data.

The Aclaris marketing team is working on a new marketing program, which will support the messaging being delivered by our sales team. New rosacea treatment guidelines will be released by the Acne and Rosacea Society in the coming months. We expect that the treatment of persistent facial erythema or PFE will be addressed.

And if it is those new guidelines will be incorporated into our future messaging. As far as commercial payor coverage is concerned RHOFADE continues to be covered for 85% of commercial lives with 52% of commercially covered lives having unrestricted access according to the Managed Markets Insight on Technology or MMIT data.

We are currently working with our new market access team with the goal of improving unrestricted access and gaining additional regional commercial coverage. As a reminder our patient copay card program will fully transition to us on June 30th and we continue to evaluate options to improve the economics of this program.

I'll now hand the call over to Frank Ruffo, our Chief Financial Officer who will discuss our financial results..

Thanks, Jeff. Good afternoon, everyone. As I walk through our first 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 earlier today. For the quarter ended March 31, 2019 total net revenues were $5 million.

This consisted of net RHOFADE sales of $3.7 million, which represents our first full quarter selling RHOFADE. It also includes net sales of ESKATA of $0.1 million and contract research revenues of $1.3 million.

Cost of revenue excluding amortization was $2.8 million for the first quarter of 2019 which included $1.3 million and $300,000 of royalties and cost of goods sold related to RHOFADE and ESKATA respectively and $1.2 million of costs of revenues related to our CRO business. We also recorded non-cash amortization of intangibles of $1.7 million.

This amortization is related to the intangible asset recorded as a result of the RHOFADE acquisition in 2018. For the quarter ended March 31, 2018 our total revenue was $1.1 million, which consisted entirely of CRO revenues with $1 million in cost of revenues.

Switching to our operating expenses for the first quarter of 2019 our total R&D expenses were $19.9 million compared to $13.6 million for the first quarter of 2018. This included non-cash stock-based compensation expense of approximately $1.6 million.

These increases were mainly due to our ongoing Phase 3 clinical trials for the treatment of common warts our various Phase 2 clinical trials for our JAK inhibitor programs and preclinical work for our MK2 inhibitor as we prepare to file our IND for ATI-450 in April of 2019.

For the first quarter of 2019, our total sales and marketing expenses were $9.8 million compared to $11.2 million for the first quarter of 2018. This included non-cash stock based compensation expense of approximately $600,000.

This decrease was mainly due to a reduction in direct marketing and professional fees, which we incurred last year related to the preparation for the launch of ESKATA in May of 2018.

Personnel related costs including stock based compensation also decreased in 2019, due to the turnover experienced in our salesforce during the first quarter of this year. These decreases were offset by increased marketing costs, which were incurred in the first quarter of 2019 to support our relaunch of RHOFADE.

For the first quarter of 2019 our G&A expenses were $8.2 million compared to $6.3 million for the first quarter of 2018. This included non-cash stock based compensation expense of approximately $2.5 million. This increase was mainly due to additional professional and legal fees incurred under the TSA with Allergan related to RHOFADE.

Both personnel expenses and medical affairs activities increased during the quarter in order to support our increased commercial activity since 2018.

Other income for the first quarter of 2019 decreased by about $0.9 million as compared to the first quarter of 2018 due to $1.1 million of interest expense incurred on our outstanding debt which was borrowed in October of 2018.

Our net loss was $37.6 million for the first quarter 2019 compared to $30.2 million for the first quarter of 2018 while our operating cash burn for the first quarter of 2019 was $31.6 million compared to $21.9 million for the same period in 2018.

In the first quarter of this year, we incurred $7.1 million in non-cash charges and we used $800,000 in cash for changes in our working capital. As of March 31, 2019 we had cash and investments of approximately $137 million and had 41.3 million shares of common outstanding.

We anticipate that our current capital will be sufficient to fund our operations into the fourth quarter of 2020 without giving effect to additional new potential business development transactions or financing activities.

Now turning to our financial outlook for the full year 2019, we reiterate our initial operating expense guidance that we provided in March. I'll now turn the call back over to Neal for a few closing remarks..

Thank you, Frank. We are off to a great start in 2019. This is the start to what we believe will be an exciting year for Aclaris and our shareholders. We have shifted our commercial resources to support the launch of RHOFADE and continue to be pleased with the growth we have seen over the quarter.

Our pipeline also continues to progress with multiple readouts expected this year and we are very excited about moving our first internally generated asset to an IND. We look forward to providing you with additional updates throughout the year.

Jonathan, could you please poll for questions?.

Certainly. [Operator Instructions] Our first question comes from the line of Louise Chen from Cantor. Your question please..

Hi, thanks for taking my questions here. I had a few.

So my first question for you is given your advancement of ATI-450, are you as a company moving into additional verticals outside of dermatology? Should we see more examples of this going forward? And second question I have for you is can you help us frame your strategy for your JAK inhibitor franchise on the hair loss front? You have several programs in development probably the most comprehensive program on the street oral and topical.

So just curious what your go to market strategy here is. And then last question I had was on your AD product, how do you plan to compete with oral JAKs ILs and other products in development? It seems to be a competitive space with a lot of products here, so curious where you plan to stand apart.

Is it dosing convenience, safety, efficacy, all of the above? How do you think about this? Thank you..

Thanks, Louis. This is Neal. So I'll take those, and see if the team has any additional answers after I complete opening comments on that. So, on the first question just on the advancement of MK2 and looking at verticals outside of derma, I think the answer is yes. With the team that we have in place out of St.

Louis, we believe we have world-class expertise in both inflammation and immunology. And since we're developing from a philosophy approach we're developing small molecule therapeutics, we have the ability to look at both oral and topical dosage forms.

And certainly on the oral side, it behooves us to take a look at what we refer to as adjacencies in both immunology and inflammation.

And that's why when we see something that's really on target with something like an MK2 inhibitor that hits TNF-alpha and IL-1 beta going after things like RA or CAPS and things that aren't traditionally derm diseases or even inflammatory bowel disease.

I think it makes sense for us to look at those opportunities, particularly given the size and scale of those opportunities. So you will see more of that from us in the future, and I think that's the prelude. On the next question in terms of the strategy for our JAK inhibitor hair loss franchise, yeah, we've said this from the beginning.

We continue to believe that the best way to go after this market and look at it more holistically is to develop both orals and topicals in this category. And I think people have to just think about alopecia areata very similar to atopic or psoriasis and think about it in the terms of mild moderate and severe disease.

So, certainly when you think about it that way, you can understand that utilizing oral therapies in those with more severe disease perhaps out of the gate makes a lot of sense. And in milder patients you may want to start with a topical. And then even with those with more severe disease, you may want to transition to a topical over time.

So I think the treatment paradigm in this category is in the process of being defined. So when we think about long-term use and being on these drugs for a long time particularly with a patient population that is in general quite young you're going to want to check that safety box with -- both with the topical in particular.

We feel pretty strongly about that approach and certainly our clinical trial strategy supports that. As a reminder in our topical study, we're looking at patients with disease severity between 15% and 95%, which is a pretty wide band. On the last question on the AD product, so our strategy here was pretty simple.

We decided to take our solution that's really geared at a hair loss indication; it's a better vehicle for hair loss and just do a quick open-label study in about 20 or so patients in AD.

And our strategy was to go into moderate to severe patients, because from our perspective that would be a differentiator using a topical on a more severe patient population rather than the much more crowded mild to moderate sector.

And should we see the results that we might expect coming out of that open label, the next step would be to transition to our soft JAK inhibitors. So we've talked about that in the past and I think that's quite differentiated in that it works topically.

And once it hits the plasma, it is rapidly metabolized providing that extra layer of safety which is particularly important in this patient population. So I think we believe we will be differentiated in the long run by having a soft drug approach in this category that preserves the efficacy that we know JAKs has in this category..

Thank you..

Thank you. Our next question comes from the line of Liav Abraham from Citi. Your question please..

Good afternoon. A couple of questions from my end. Firstly, as it relates to your sales force you talked about some turnover. Can you just remind us the number of reps you have at the moment and what you're doing on this front what your steady state number of reps should be this year.

And are you fully staffed at the moment? Secondly on RHOFADE, can you talk a little bit about gross to nets in the quarter and how you anticipate this progressing during the year and how you anticipate RHOFADE revenues developing on a quarterly basis this year.

And then thirdly, as it relates to your JAK portfolio, Neal and team, I'd be curious how you're thinking about duration of therapy both in a real world setting and I guess more specifically for your clinical trials as you move some of them into later stage clinical development. Thank you..

Yeah. Thanks, Liav. I'll touch on a couple and then hand it off to Frank and Jeff to fill in the gaps. So on the first question related to the sales force, so we had targeted a 50 rep field force and we did through our alignment and understanding the prescriber level data that we inherited from Allergan.

Currently we have 43 staff, so we do have additional positions to fill there. We do think 50 is the right number to fully cover the territories that we've identified that are important.

And certainly what we're doing in the interim is our regional sales managers are being helpful on some of these unmanned territories and calling on some of the key A and B accounts. But it is -- some of the turnover I think is just part and parcel of what we have in the derm space right now.

We have a lot of smaller companies that are staffing up and we made the choice to look at more medical derm -- more of the medically derm oriented sales force. Regarding the gross to net, I'll hand that off to Frank..

Yeah. Liav, as far as the gross to net is concerned, as we mentioned on last call gross to nets under Allergan's watch were in between 60% and 70%. We're certainly in that same area. I can tell you that gross to net has improved since our fourth quarter number and it is moving in the right direction or continues to move.

As far as revenues as it relates ongoing quarterly revenues as Neal mentioned, the game plan here is get it back to 10,000 prescriptions per month.

Come December, that certainly is going to have some progression coming off of $3.7 million in Q1, but I think with that number posted and three quarters remaining we're certainly on the way to getting to where current analyst consensus is and in fact we're pretty comfortable with that..

And then I'll hand it off to Dave for your last question on the JAK inhibitor portfolio and duration of therapy from a real world approach..

Yeah, I mean I think the duration of therapy question gets to the heart of what we're trying to do with our JAK portfolio. So what we know is that the JAK inhibitors grow good hair in alopecia, and we know that once you stop the JAK inhibitors you'll lose that benefit.

We know that young people with decades of life left are the unmet need in this population. So the question is, how can you deliver the drugs in a safe way for decades when we know that systemic JAKs are associated with the toxicities that I'm sure you know about, the VTEs, the severe infections lymphoma et cetera.

So I think that's why topical JAK approach, I think has utility and we see that being used and being tolerable, safer option for JAK inhibition over the long-term. So I think that typical JAK inhibition is a long term multiple years approach to treating alopecia..

Yeah, Liav just to build on that it's a really great question. I mean, I think the differentiating it's a key question when you look to differentiate between indications. Something like atopic dermatitis, which often people treat mainly as kind of a flair and then you treat and then you put the medicine aside.

In this particular indication as Dave indicated, you have to keep maintaining treatment or the hair will fall out again. So it certainly sets you up for treating over a longer period of time and as such you have to really make sure that you have safe therapeutic options.

So it's an area where the treatment paradigm is, I think evolving and I think you've seen that when you look at those of us who are in this field, people are looking at endpoints now of nine months and 11 months in the clinical trials and that's kind of migrated out from six months and I think we've seen that from a practical basis out with the patients who have been treated off label with tofacitinib and ruxolitinib at some of the academic centers.

Oftentimes those patients sometimes need upwards of a year of dosing even on the oral to see the effect that they deem as success. So I think that's the kind of neat thing about this market is that it's building just like a psoriasis or AD has built in the past..

Actually, Neal you mentioned it before but that switch from oral to topical might be very important for some of these more severe patients. And as you said we're studying that within our program..

Thanks very much..

Thank you. Our next question comes from the line of Pasha Sarraf from SVB Leerink. Your question please..

Hi, thank you. This is Dylan Dupuis sitting in for Pasha. Two questions. Number one, how should we be thinking about the market opportunity for common warts given the modest sales we've seen so far for ESKATA? And then number two, if you could comment on the disease severity of patients in the Phase 2 study for ATI-502 in alopecia.

I know that these patients are treated across a spectrum of severity in the disease. We're just trying to figure out where the majority of patients are lying within the spectrum. Thank you..

Yeah, so I'll take the second question first, this is Neal. Thanks for the question. In terms of disease severity as I indicated in the Phase 2 topical study, patients who enrolled go anywhere from 15%, 15 1-5% hair loss to up to 95%. The median duration of disease is approximately two years. So that is a pretty wide range of disease spectrum.

In the oral study, it goes from basically greater than 50% all the way up to total scalp and hair loss. I'm sorry, 3-0. From 30% all the way up to total scalp and body loss. In terms of the question around the wart market opportunity, so wart versus SKs two very different markets.

The ESKATA market was defined by an in-office procedure, cash pay procedure not reimbursed. The wart opportunity is a reimbursed prescription that the patient will use at home and will be covered by third-party payers.

So two very different markets, two very different sets of data and so I don't think there's any kind of link between those two from a market perspective..

Great. Thank you very much..

Thank you. [Operator Instructions]. Our next question comes from the line of Tim Lugo from William Blair. Your question please..

Thanks for taking the question. I don't believe I got the medium length of disease enrolled in the oral trial. I know it was two years for the topical.

And maybe could you talk about AGA? Is that -- I know Neal in the past you've mentioned that patients who go bald very quickly like in their early 20s that's a different patient population than someone who will lose their hair over let's say a decade.

How are you accounting for that in the AGA trial?.

So taking the first question first, the median time in the oral study was about four years. So the duration had a split from 6 months all the way up to 12, but the median is about four years.

In the AGA study, it's a relatively small study so we'll get a bit of a steer as to whether patients with longer duration of disease have a different outcome as to those patients with shorter duration of disease, but it's going to be a steer. It's not that obviously we're not powered to look at that kind of question, but we'll get some indication..

Yes -- and just, so this is Neal, Tim. It's a good question. So this first study out of the gate obviously was open label looking at kind of proof of concept. And as a reminder, we enrolled both males and females.

And so one of the, I think, key points in your question is moving forward one of the patient populations that you want to study, you usually want to catch these patients when they are just in the process of losing their hair.

If you look historically back at Propecia and things like Rogaine you want to -- if somebody is 10, 20 years into their disease and they have full scalp hair loss if you're a male it's a much harder job to get to a cosmetically acceptable result. It's much easier to catch the patients when they are kind of in the evolution of the disease.

And certainly female patients lose their hair in different patterns. And we're quite excited about the potential in that market. There is certainly an unmet need. Females are very intolerant of losing hear, a lot less tolerant of it than males.

And so we're excited to present our data from a POC perspective and then when we think about designing perhaps a next study that would involve answering some of the questions that you've asked along the lines of how severe is the disease. And I think you go with kind of mild or moderate forms of that disease in a clinical trial setting..

Okay, fair enough. And for 450, I think in the past you've mentioned going into an orphan indication for maybe a fast to market strategy.

Is that still a possibility?.

So all the diseases that Neal mentioned earlier are in scope. We picked RA as the initial indication because strategically, I think it helps us make the right decision. RA will -- I think it's a disease that will allow us to recruit quite quickly.

We can get a reasonably quick reads on some of the biomarkers in RA that will allow us to discharge the tachyphylaxis that's been associated with P38 inhibitors of which we are differentiated mechanistically.

Then I think if we get positive results from that study it really opens up all the indications where an anti-TNF or an anti-IL-1 could work and we can make the best strategic decisions. But we may end up going in RA or psoriasis or ankylosing spondylitis or pyoderma gangrenosum or hidradenitis.

I think we just need to make the best strategic decisions when we do exploratory studies at that time to guide us..

I think, Tim just to pile on there so I think the, nice thing about the MK2 inhibitor is that it is, anti-TNF anti-IL-1 beta and anti-IL-6. So it has very nice applicability across diseases that are spot on mechanistic matches for that activity. One of them more to the point of your question is CAPS. It's an IL-1 beta driven disease.

Certainly that is in the suite of indications that we would explore. And the positioning of an oral small molecule in that indication versus some of the injectables, I think would be quite favorable from a patient compliance perspective..

Understood and one quick one so the SAD MAD study will be in RA patients then not in normal healthy or are you just going to be looking at some blood markers in normal healthy as well?.

So we're going to conduct the SAD MAD study in healthy volunteers, but we did that because our intent is to get into patients as strictly and efficiently as possible. And discharge some of these clinical questions that we have. But the pharmacodynamic efficacy shows that will our plan is to be fairly aggressive with that timeline.

And be into rheumatoid arthritis patients on a pretty aggressive timeline..

All right, thank you..

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Neal Walker for any further remarks..

Thank you everybody for joining us here this afternoon. We look forward to reporting out on our next data catalyst throughout the year. Thank you..

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day..