ACRS (Aclaris Therapeutics): ACRS Doesnt Have JAK SHIT (PT: $5)

Part 2 in a Multipart Series on Aclaris (SHORT) / Concert Pharma (LONG) by Art Doyle

Summary of this report:

The skittishness you see in ACRS stock is REALno one wants to be left
holding the bag.
The primary addressable market for the ACRS hydrogen peroxide junk we
already debunked in our first report was narrowed down by management to
just the face on the last conference call. 2019 revenue assumptions
SLASHED. INDICATION AND MARKET COMING INTO QUESTION.
Oral JAK inhibitor beaten handily by first mover CNCE (working with
Columbia University no less). Even Pfizer is ahead.
ACRS lead JAK inhibitor was abandoned in 2012 by Rigel. We know why
Rigel stopped development after Phase 1because we talked to former
employees. Do you? ACRS IP is practically worthless in the JAK space.
INCY shows topical JAK inhibition does NOT work on alopecia areata. Say
goodbye to half of ACRS JAK pipeline (at least).
Full survey with SIGNIFICANT P VALUE reveals dermatologists negative
opinions on Aclaris (our Part 3 reveal).

Key Takeaways:
1) ACRS will be an absolute commercialization catastrophe with their
hydrogen peroxide garbage for SK
2) They will lose the JAK inhibitor battle in dermatology. They wont
even finish in second place.
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The only table you need to see comparing Aclaris and Concert JAK inhibitor dermatology programs:

ACRS CNCE
Topic Concert
Aclaris Therapeutics
Pharmaceuticals

Has regrown hair in humans NO, still in Phase 1 YES

NO, only licensed derm
Company owns entire molecule (all applications from RIGL;
rights, all indications) owes milestones and YES
royalties

Lead molecule based on compound that

has sold billions
NO YES

Lead molecule based on compound

known by every dermatologist in the NO YES
world
Company has partnered other
compounds from platform with major NO YES
pharmaceutical companies

Completed and published dose ranging

oral Phase I
NO YES

Company will have Phase 2 data first in

alopecia areata
NO YES

Lead molecule based on compound that

has proven safety and has been used on NO YES
thousands of people
Lead molecule based on compound that
has already demonstrated TOPICAL proof
of concept in humans in vitiligo and other
NO YES
skin diseases

Lead was never abandoned during NO: RIGL abandoned drug

development after phase 1 YES

Enterprise value $510MM $90MM

Now that we have your attention, lets dig into some of these topics a little deeper:

1) CTP-543 predecessor grown hair before? Concert Pharmaceuticals CTP-543 is a deuterated form
of Incyte Pharmaceuticals Jakafi also known as ruxolitinib. It is a tyrosine kinase inhibitor that is
used clinically currently as a form of chemotherapy in polycythemia vera and myelofibrosis. It,
along with a couple other drugs that belong to the class of drugs known as JAK inhibitors, has
been shown somewhat surprisingly to regrow hair in patients suffering from alopecia areata. So
Aclaris thought they were pretty smart when they licensed a patent from the University of
Columbia that covered the indication of alopecia areata for ruxolitinib. ONE BIG PROBLEM FOR
ACLARIS INVESTORS: CTP-543 has its own composition of matter and thus isnt part of the
University of Columbia patent. If it isnt Jakafi, it isnt covered and Concerts compound isnt
Jakafi. So yes, the base compound for CTP-543 has regrown hair. Aclaris JAK inhibitors have not.
2) Aclaris doesnt own the whole compound? Aclaris tried to do some clever things when they did
this licensing deal with Rigel. They say the deal is exclusive and worldwide. They even rename
the compounds to make it sound like they are Aclaris compounds ATI-50001 and ATI-50002.
But this isnt the case at all. This is from the September 9, 2015 press release announcing the
deal:

Keywords here to look for are for the treatment of alopecia areata and other dermatological
conditions. Yes, Rigel keeps the rest. And you, the ACRS shareholder get to pay Rigel the
whole way: upfront, milestones and royalties (RIGLs enterprise value is WAY lower than
ACRSdid you ever think you invested in the wrong company?).
3) CNCE has some heavyweight partners? Yes. They just sold an asset to Vertex for $250 million
($160 million upfront and $90 million in milestone payments) and if you believe some on the
sellside that asset is about to become part of a bidding war before it closes. They also have an
asset partnered with Jazz, another with Avanir and yet another with Celgene. They are a
partnership machine. Why? Because their drugs are legit. Who does ACRS partner with? No
one.
4) CNCE is going to be first with Phase 2a data in alopecia areata? Yes, by a mile. They already
started their trial and have a massive head start. You can check out the protocol here. One or
two academic sites on there that ACRS probably thought were their friends (ahemColumbia).
And it isnt just that they will be FIRST. They will be first with TRUSTED data from a compound
that people understand. Jakafi is known to everyone. Its trusted. Which brings me to another
point
5) Rigel ABANDONED ATI-50001 in 2012 after its own Phase 1 trial? Aclaris has gone through
great lengths to conceal the identities of the compounds it actually licensed from Rigel. Why the
secrecy guys? We put some pieces together and think we have some answers for you. And these
 answers might explain the secrecy. Buried in two of Aclaris S-1 amendments are two identical
statements that probably should have been redacted but werent. Here is the statement:

So what is the big deal? They left something in there about R548? Well it allows you to connect
the dots to the May 5th Aclaris announcement that their Phase 1 trial with ATI-50001 where they
say, These data are consistent with results from an earlier Phase 1 clinical trial in 44 healthy
volunteers conducted by Rigel Pharmaceuticals. This means that according to our findings, ATI-
50001 *IS* R548 since this was the ORAL JAK inhibitor compound that had the most advanced
clinical work at Rigel according to Rigels disclosures. The Phase 1 clinical trial Aclaris refers to
then took place in 2011. Which is why Aclaris investors might want some answers as to why this
popped up just one year later:

Yes, you read that right. Aclaris licensed partial rights to compounds
from Rigel that Rigel had abandoned long ago. Did Aclaris disclose that
they had been discontinued? Why they had been discontinued? Of
course not. Why were they discontinued after Phase 1? Rigel had
PLENTY of money to go to Phase 2.
What are good reasons to stop a program after Phase 1?

6. What about intellectual property and failed topical approaches to alopecia areata? Aclaris and
Rigel inked their deal on the abandoned Rigel compounds in September 2015. It would appear
that Aclaris was going to try to develop their own partially licensed drugs while trying minimize
competition by acquiring what they thought was valuable intellectual property. Aclaris investors
bought this story that somehow Aclaris was in the lead. Well, in May 2016 all that changed when
Concert Pharmaceuticals comes out with CTP-543 which is a deuterated (improved) form of Jakafi.
Concert has the composition of matter for Jakafi, so it doesnt need the Columbia patent that
Aclaris thinks is so valuable which covers the alopecia areata application of Jakafi. Tough luck.
And while we are on the subject of Jakafi, look what the company that makes and sells Jakafi
(Incyte Pharmaceuticals) just told us about how well topical JAK inhibitors work in alopecia areata:
 Thats correct, one of the drugs that we KNOW works for alopecia areata when taken orally does
NOT work when taken topically. This completely wipes out multiple of Aclaris Therapeutics
developmental programs. They believed topical was the way to go. Mind you, their abandoned
programs from Rigel had never grown hair in the first place! So not only do you have that risk but
you have the transition to topical risk to worry about. Concert, meanwhile, is doing the right thing
and validating the oral approach and keeping its options open on topicals.

Finally, Lets review this wart/SK hydrogen peroxide thing one more time:

Seborrheic Keratosis WARTS

Concentration of H2O2 40% 45%

Which means Less powerful MORE powerful

doesnt that mean? Less dangerous MORE dangerous

Give it to the patient to take
But you are gonna use it? In the doctors office
home
And arent most patients? Adults Kids
How dumb does ACRS
management think investors VERY DUMB EXTREMELY DUMB
are?

This entire hydrogen peroxide program is a JOKE. Get out while you still can. December is just around
the corner

Stay tuned for Part 3 where we share our derm survey. We gave derms
who arent paid by Aclaris ACTUAL clinical data on this hydrogen
peroxide program. And we can tell you exactly how badly this launch is
going to BOMB (if it ever happens).