Aclaris Therapeutics, Inc. (ACRS) Q4 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Q4 2017 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 follow at that time. [Operator Instructions]. I would now turn the conference over to Kamil Jackson, Chief Legal Officer. Please go ahead.

Thank you, Candice. I'm Kamil Ali-Jackson, Chief Legal Officer for Aclaris. Please note that earlier today Aclaris issued its press release announcing fourth quarter and year ended 2017 financial 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 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; and Brett Fair, our Chief Commercial 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 operation and financial position, business strategy, and plans and objectives for Aclaris' future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties that could cause actual results to differ materially from those reflected in such statements. These risks are described in the Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of Aclaris' annual report on Form 10-K for the year ended December 31, 2017 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. Additional factors may also be set forth in those sections of our annual report on Form 10-K for the year ended December 31, 2017 to be filed with the SEC later today. We encourage all investors to read these reports and our other SEC filings. 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. Hello, everyone, and thank you all for joining us this morning. I will start with a brief update on our clinical development programs and other business highlights. Then I will hand it off to Brett Fair, our Chief Commercial Office, who will address our ESKATA pre-commercial planning activities. Next Stuart Shanler, our Chief Scientific Officer will review our clinical development plans and timelines, after which Frank Ruffo, our CFO, will review the financial results and 2018 guidance. Following our prepared remarks, we will open up the lines to take your questions. Chris Powala, our Chief Regulatory and Development Officer, will also be available during the question-and-answer portion of the call. Before we begin talking about the continued progress we’ve made across the company, I’d like to first acknowledge our talented and committed employees, whose efforts drive our ability to steadily advance our programs. During 2017, we welcomed many new team members to the company. We now have over 160 employees, who are working on everything from our earliest discovery and drug development efforts, to the commercialization of ESKATA. It’s an honor to work alongside these talented and committed folks every day. We have ambitious goals, and while I’m the one who gets to talk with you about our accomplishments, none of what we do would be possible without the truly unwavering dedication of our entire team as we continue to develop the innovative new therapies for patients. Now I will turn to an overview of some of our recent key accomplishments and highlight our upcoming milestones in 2018 and beyond. In December, the FDA approved ESKATA for the treatment of Raised Seborrheic Keratoses or SKs. ESKATA is the first and only FDA-approved topical, non-invasive treatment for raised seborrheic keratoses. We have generated a high level of excitement around ESKATA and the dermatology community and look forward to our official launch in the second quarter of 2018. Brett Fair will cover this in more detail later in the call. In January, we announced positive topline results from two phase 2 clinical trials of A101 45% topical solution for the treatment of common warts. And we look forward to reporting three months follow-up data imminently. We plan to advance the twice weekly regimen in to pivotal phase 3 trials in the second half of 2018. Over the last year, we also advanced our Janus Kinase or JAK inhibitor programs in alopecia areata, androgenetic alopecia and vitiligo. We have multiple trials ongoing and expect readouts starting in the second quarter through mid-2019. Stu will review our development programs and timeline in more detail later in the call during the clinical section. With regard to our early stage immunology pipeline, we continue to advance the development of our selective MK-2 inhibitor, our portfolio of ITK inhibitors and our portfolio of JAK inhibitors. Our management team based in St. Louis formerly Confluence has continued to lead its world-class team of scientists and researchers in the development of small molecule of kinase inhibitors. The operation continues to grow on both the drug discovery pre-clinical side and also on the service side of the business. We are rapidly advancing our lead assets towards the clinic and remain excited about the potential of these assets in a variety of indications and therapeutic areas. I will now turn it over to Brett Fair, our Chief Commercial Officer, who will provide an update on our commercial activities. Brett?

Thank you, Neal. 2017 was a very productive year for our commercial team. We continued to invest in market research, gaining additional insights from over 2,500 patients and 1,400 HCPs to date. These critical insights have enabled us to finalize the pricing position for ESKATA as well as to refine our consumer and HCP campaigns laying the groundwork for a successful launch in 2018. Our commercial organization expanded to 70 people, as we’ve established our sales, trade, training, and sales operations teams. We successfully onboarded six regional sales managers and 50 sales specialists bringing deep dermatology and buy and bill experience to our organization. Over 90% of our field team has five or more years of dermatology experience and over 70% of the field team has directly relevant buy and bill experience, all of them are performers within the previous organizations. This positions Aclaris well for a successful launch. In 2017, we supported 30 key dermatology conferences. Further strengthening our presence in the space, we generated a high level of corporate awareness, positioning Aclaris as a leading, innovative biopharmaceutical company in dermatology. We also generated a high level of awareness regarding patients’ willingness to pay for SK removal, particularly for lesions located in cosmetically sensitive areas such as the face and neck. We had a strong presence at the recent 2018 American Academy of Dermatology Annual Conference, the largest dermatology meeting of the year, generating a high level of ESKATA awareness, account leads and preorders. Our ESKATA launch reception was well attended with over 200 HCPs attending. Our ESKATA branding activities were highly visible and well received translating into over 300 account leads. We were very pleased with the response we received regarding ESKATA at these meetings. Dermatologists are excited about the product and eager to incorporate it into their practices. Our professional relations team has successfully built an ESKATA speaker bureau comprised of many leading national and regional thought leaders in dermatology. To date, we’ve trained over 60 dermatology speakers and we have a nurse practitioner, physician assistant speaker bureau of training scheduled in the month of April. Peer-to-peer speaker programs remain an important component of our overall launch strategy, and considering the depth of our speaker bureau we are well positioned to successfully launch ESKATA and drive adoption in the offices. Ahead of our official ESKATA launch in the second quarter of this year, our sales team is currently implementing key market readiness activities including establishing ESKATA centers of excellence, scheduling in-service programs, implementing the ESKATA early experience initiative and scheduling ESKATA peer-to-peer speaker programs. We believe this approach builds a solid foundation for a successful launch. In summary, we are very pleased with the launch preparation activities and we are very pleased with high level of excitement generated around ESKATA. We look forward to the launch and another successful year for our team. I will now turn the call over to Dr. Stuart Shanler, our Chief Scientific Officer, who will provide an update on our clinical development program and pipeline. Stu?

Thanks Brett. Firstly regarding our clinical trials of A-101 45% topical solutions for the treatment of common warts; in January 2018, we reported positive results from two phase 2 clinical trials that’s WART 202 and WART 203 of A-101 45% topical solution, an investigational new drug for the treatment of common warts. A-101 45% met all primary, secondary and exploratory endpoints of each trial analyzed to date achieving clinically and statistically significant clearance of common warts. We anticipate completion of the post-treatment three month, open label follow-up portion of the WART-203 trial in the coming weeks. We have scheduled an end of phase 2 meeting with the FDA for mid-2018 and we plan to initiate two phase 3 clinical trials in the second half of 2018. Turning now to our Topical JAK inhibitor program; our ongoing clinical trials include AA-202 Topical, which is a phase 2 clinical trial of ATI-502, formerly ATI-50002 for the topical treatment of Alopecia Areata. This trial is to evaluate the pharmacokinetics, pharmacodynamics, and safety of ATI-502 compared with placebo in 12 patients with AA. It is a randomized, double-blind, placebo-controlled trial and is being conducted at two investigational centers within the United States and topline data are expected in the first half of 2018. After completing the 28 day portion of that trial, patients will then enter a six-month open label extension during which all patients will receive drug. Our AU ATB-201 trial is a phase 2 open label clinical trial of ATI-502 for the topical treatment of AA that will evaluate the effect of ATI-502 on the regrowth of eyebrows in up to 24 patients without Alopecia Areata. This trial is being conducted at two investigational centers in Sydney and Melbourne, Australia and topline qualitative data are expected in mid-2018. Our AA-201 topical trial is a phase 2 trial of ATI-502 for the topical treatment of AA that will evaluated the effect of two concentrations of ATI-502 on the regrowth of hair on the scalp in a randomized double-blinded parallel group, vehicle controlled, dose response trial in up to 120 patients with AA. This trial is being conducted at 25 investigational centers within the United States and data are expected by year-end 2018. Our VITI 201 topical trial that’s VITI 201 topical is an ongoing phase 2 open label clinical trial of ATI-502 for the topical treatment of facial vitiligo. This trial will evaluate the effect of ATI-502 on the re-pigmentation of facial skin in up to24 patients with vitiligo and data are expected in the first half of 2019. Our AGA-201 topical trial is a planned phase 2 open label clinical trial of ATI-502 for the topical treatment of androgenetic alopecia, that’s AGA, also known as male/female patter hair loss, and this trial is anticipated to begin in the first half of this year. This trial will evaluate the effect of ATI-502 on the regrowth of hair in up to 24 patients with AGA and data are expected in the first half of 2019. Regarding our oral JAK inhibitor program, AUAT-201 Oral is a phase 2 randomized, double-blinded parallel groups and vehicle controlled dose response trial of ATI-501 that’s formally ATI-50001, an overall JAK inhibitor for the treatment of AA and this is anticipated to begin in the first half of 2018. Data are expected in mid-2019. Turning to our early stage immunology assets, we are on track to file an investigational new drug application or IND for ATI-450, our oral MK2 inhibitor in mid-2019. We also expect to find INDs for both or soft JAK and JAK ITK inhibitor programs by year-end 2019. As you can see, we have multiple programs and trials both ongoing and planned and we look forward to providing updates as we continue to advance our pipeline. With that I’ll turn the call over to Frank Ruffo, who will provide an overview of the financial results for the year. Frank?

Thanks Stu. Good morning. As I walk through fiscal 2017 financial results and 2018 financial guidance information, please reference tables that can be found in today’s press release. As of December 31, 2017 we had roughly $209 million in cash, cash equivalents and marketable securities which we believe is sufficient to fund our current operating activities in to the second half of 2019, without giving effect of potential new business development transactions or financing activities. For the full year of 2017, our total operating expenses were 72.9 million compared to 48.6 million for the full year of 2016. Our operating net cash burn for 2017 was 54.7 million versus 34.6 million for the prior year. On a quarter-over-quarter basis, our total operating expenses for the fourth quarter of 2017 were $25.7 million, compared to $19 million in the third quarter of 2017 and 11.6 million for the fourth quarter of 2016. Our operating cash burn for the most recent quarter was $17.9 million. Net loss was 22.9 million for the fourth quarter of 2017, compared to 11.5 million for the same quarter in 2016. Our net loss was 68.5 million for the full year of 2017, compared to the 48.1 million for 2016. R&D expenses increased by 6.2 million in the fourth quarter of 2017 compared to the prior year. This was primarily the result of a 2.3 million increase in expenses related to our common wart trials, a $2 million increase in pre-clinical and clinical development expenses related to our JAK inhibitor portfolio and a $1.5 million increase personnel related expenses including stock-based compensation due to increased headcount. We also incurred a $1.5 million increase in medical affair expenses and other costs including expenses related to our early stage drug discovery programs. These increases in 2017 were offset by a $1.3 million in expenses due to the completion of our phase 3 clinical trials and NBA cost for ESKATA that were incurred in the fourth quarter of 2016. General and administrative expenses for the fourth quarter of 2017 increased 7.8 million compared to the same period in 2016. The quarter-over-quarter increase was primarily attributable to a $3.3 million increase due to pre-commercial activities for the launch of ESKATA and a quarter-over-quarter increase of 2.9 million in personnel related expenses including stock-based comp due to increased commercial and administrative headcount. Now turning to our 2018 financial outlook; we anticipate 2018 R&D expenses to be in the range of 67 million to 75 million or 58 million to 66 million when excluding non-cash estimated stock based compensation expense. We expect that our 2018 SG&A expenses to be in the range of 80 million to 86 million or 66 million to 72 million when excluding non-cash estimated stock based compensation expense. As of December 31, 2017 we had roughly 30.8 million shares of common stock outstanding, and assuming no material issuances of equity, we would expect our full year 2018 weighted average share count to be about 31 million. With that I’ll turn the call back over to Neal for some closing remarks.

Thank you, Frank. 2017 has been a pivotal year for Aclaris, as we continue to build out a highly experienced team and transition in to a commercial stage biopharmaceutical company. We have a deep clinical stage pipeline, a dermatology and immunology portfolio focused on small molecule therapeutics and a robust discovery engine. In 2018, we look forward to building on this foundation with the launch of ESKATA, as a cash paid procedure performed in physician offices and also delivering on our JAK inhibitor and immunology pipeline. [Ieala], can you please call for questions.

[Operator Instructions] And our first question is from Louise Chen of Cantor. Your line is now open.

So first question I have was on ESKATA, do you have any guidance in revenues for 2018? If not, how should we think about it, and how and when will you recognize revenues for this product? Also with respect to your wart product, just curious how competitive the twice a week versus once a week product is? What do you compare this to an OTC market? How often are patients treated there and how long are they treated for? And then last question is just on some of your pipeline here on vitiligo and ATI-450, if you could talk about the market opportunity and who you’ll compete with in these markets? Thanks.

This is Neal. So on the guidance front we aren’t providing revenue guidance, but we will be providing key performance indicators that Brett can walk through, and I’ll hand it off to Brett for that right now.

Thanks Neal. So in terms of the key performance indicators for this year, this year really is about getting accounts onboard and getting the accounts trained making sure that clinically it’s a great product and get them set up so that it’s also integrated from a business perspective. Once we lay the foundation with those accounts [indiscernible] and they are wired for sound, and we can turn up the volume there, and that’s part of the reason why we’re not providing guidance for ’18. We’re being pretty thoughtful and disciplined about setting up each of those accounts. So account adoption will be important, physicians training will be important this year for us. I think speaker programs, the number of programs we’re running will be important.

And Louise, this is Frank, on recognizing revenue according to the most recent revenue pronouncements out there, we’ll be recognizing revenues when we ship product into our distributor for ESKATA. So those will be recognized right up front.

Hey Louise, it’s Neal, back to your development stage question. So on the wart product, so the two-times a week versus once a week, we think it actually enhances compliance, it’s just a little bit easier for patients to remember rather than just once a week. And as it relates to the OTC market, there really isn’t a good comparison there. The fact is that OTC products are usually multiple times a day usage over many months, and and so an Rx product with a profile where you have twice a week administration over 8 weeks which is essentially 16 applications and to have the clearance rates that we demonstrated, it’s not even close to what you could achieve with OTC therapeutics. And as a reminder, when we look at the wart market in general, most people have targeted the genital wart space and that only represents 17% of the entire wart market. And the reason people have gone there historically is because it’s easier to treat those warts than common warts. Common warts have traditionally been more difficult to treat and this would be the first approved product for common warts. So again kind of consistent with our philosophy of going after white space and particularly with all the reimbursement headwinds, we want to go to an area where it’s very difficult to step edit or prior authorize you out of the script which is obviously happening a lot; and with the profile like this where we can drive 16 treatments over basically two months, it’s a really, really strong profile and when you see the three-month data, the follow-up data that we’ll be reporting within the next week or so, it will be even a better profile. So we’re excited about that, and I think it’s something that we’ll be talking a lot more about. On the vitiligo front market opportunity, this is something that’s pretty interesting on a prevalence basis. It’s 1% to 2% of global prevalence which is on par with psoriasis. This again is another area where there is nothing approved for the treatment of vitiligo, and it’s something we’re really excited about. There are a couple other companies out there looking at topicals, and I think as people recognize the value in vitiligo, there will be more competitors. We feel really well positioned here. We have a compound that targets JAK 1/3 with 500 or more selectivity than JAK 2 and really able to drive, hit the mechanism right on the head with that assay. On the ATI-450, it’s as you know an MK-2 inhibitor and that just as a reminder works downstream of the P38 MAP kinase which work at the top of the funnel. And the guys at Confluence basically developed this to overcome two major limitations with the P38 MAP kinase, and that was one Tachyphylaxis. In some indications, it was only a transient effect in terms of efficacy, and then also there’s some toxicity issues. But with the MK2 inhibitor working further downstream, we’re able to overcome those limitations. And because it’s an anti-TNF and anti-IL1 beta, we actually have a host of indications that we can target both on the derm and non-derm side. We’re looking at things like psoriasis, psoriatic arthritis, hidradenitis, pyoderma gangrenosum, and things like that, and then certainly we’ll look at adjacencies in non-derm indications as well.

And our next question is from Adnan Butt with Guggenheim Securities. Your line is now open.

Let me ask first on the alopecia study, what should be the expectation. For instance, for the PK study that’s going on, would expect any sign of activity at this time or not or should we wait for the eyebrow study to kind of gauge activity?

This is Neal, I’ll handle that question. So, I think the expectation is primarily looking at the biomarker that was the original design of the study. It is a 28 day study. We wouldn’t expect necessarily clinically meaningful hair growth, but we would certainly expect to see early signs. You could see kind of a little stubbly sort of hair growth and that would be very exciting particularly over that short of a treatment period. So I would look for that when we report out that data. And we also will slightly alter that design originally we had just called off the 28 day study to look at biomarkers when we decided to actually extend that in to a six-month open label extension, since we’ll have 12 patients in there. And that will involve taking the eight patients on drug and the four patients on vehicle and rolling them in to that open label expansion.

So Neal for the eyebrow study, the expectation there is for growth, right, that’s what’s you’re clarifying.

Exactly. So the eyebrow is a little bit different. That’s designed as a six month study, and we’re looking for basically qualitative eyebrow growth. We want to look at pictures from baseline and then compared them to the three and six months’ time points and looking at full clinically meaningful hair growth.

And just one on earlier stage pipeline, you mentioned 450 the MK-2 inhibitor; you clarified some of its attributes. So I wanted to ask where exactly in pre-clinical testing it is. And then secondly, the markets are fairly well served with existing drugs, how do you expect this 450 to differentiate itself to make expand to the market that you mentioned at a high level.

So in terms of the stage we are going through the GMT manufacturing process at the moment and we’re on track to get in to an IND in the first part of 2019. In terms of differentiating, the fact that you have an potentially an oral anti-TNF or anti-IL1 beta would be a great differentiator versus the injectable products that are currently on the market. So I think it would stack up very nicely just on mode of administration and the we’ll see when we get in to clinical studies, we think it’s going to have a robust effect that remains to be seen. We got to prove that out in the clinic, but I think we’ll be able to differentiate both on safety and efficacy there.

And just if I can sneak one on ESKATA, I think I heard it mentioned that you’ve seen some pre-orders already. I had expected more of a sampling program earlier in the launch. So where in the year should we set expectations to see some revenues from that growth?

We’re launching in the second quarter and the 300 pre-orders have come from 300 accounts and I think that’s an important distinction, because when we look at in an account it’s not just a single dock office. As I have mentioned in previous calls one of the macro factors in dermatology is that you’re seeing kind of these roll-up phenomenon in dermatology where a lot of the offices are combining. So what we’re excited about is these accounts represent in a lot of cases multiple offices sometimes, but upwards of 100 within one account. So we’ll be obviously providing key performance indicators as we kind of sequence out of the second quarter and report the second quarter revenues in August.

Our next question is from Donald Ellis with JMP Securities. Your line is now open.

Could you give us some more details about the early experience initiative and maybe some more information about the revenue recognition? It sounds like you’re going to use the wholesaler. So you’re going to ship to the wholesaler, record revenue in that quarter and then the wholesaler shifts to the position and as where the pull-through is. So will we see a little lumpiness initially in the revenue recognition?

I’ll take the first part of that question and hand it off to Brett. So as far as revenue recognition, there may be a little bit of lumpiness. Upfront we’ll have, as Neal mentioned we’ll have these orders. We will shift these in to the wholesale. We recognize revenue when we shift, not necessarily when the wholesale ships in to the positions often. So to be clearer, we’ll have some cost that will be engrossed in there. We don’t expect a lot upfront, so we’ll have a decrement to the gross revenue to some extent, but again to be clear the revenue will be recognize when we ship in to our one distributor at (inaudible).

And I have a couple of follow-up questions, you’ve finalized the price, can you give us kind of a range of what the price is going to be and then what your plans might be for DTC?

Hey, Don, its Brett, I’ll answer the rest of the questions. So in terms of price, we’ve priced it a $130 per skew, the minimum order is a case of 12, so $1560 per case. The office still market up, we think most of the market up about 100% that will really vary from practice to practice. I think we’ll see an opportunity to price it higher than that and we’ll take advantage of that. So that’s the price fees. In terms of our early experience and will touch on DTC briefly. So in terms of early experience initiative, the thinking there is, we have a group of accounts that are really important to us in a number of ways. Either they participated in advisory capacity, advised ad Boards throughout the year. Many of these people are in our speaker bureau and regional influencers. And some of these people just kind of key offices scattered nationally. Well we want them to have early experience with the product ahead of everybody else, because of the regional influencers. So the thinking about the early experience initiative is, we set them up with product so that they have an opportunity to try on three to four patients. And it’s a platform for our reps to go in there and make sure that they are guiding the clinical integration perfectly in those practices. Basically teaching them how to apply it, guiding to the right patient, to the right lesions who are positioning it for lesions in cosmetically sensitive areas out of the gate, because our value proposition is so high there, and we want them to have their first experience with the product to be something special. So we’ll guide them to the clinical integration and teach them now to apply the product and rub it in and then also set expectations for their patients. And then we’ll gather some of the feedback internally and we’ll take that in to our national sale meetings. So it’s kind of good for setting up those centers of excellence that will be influencing and supporting our efforts once we launch and it’s also good for us internally, getting that early feedback from this crew. So we’re kind of partnering with them, that’s the thinking behind that process. Once we get launched, then the reps will follow similar process with each account that they open up, they want to make sure that they’re very thoughtful and very disciplined about clinically integrating the product. And then we’ll start bringing that account adoption along. We feel that account adoption will be at a good enough place come the fourth quarter. It will be able to activate the consumer. We know that we have a tremendous opportunity to engage consumers. The patient willingness to pay is significantly than the dermatologist even know currently. We’ve been educating on that over this past year, but once we drive in patients that are asking specifically for ESKATA, they’re not going to turn them down. So towards the back half of the year or maybe right now we’re looking at that October 1 timeframe and that really will be driven by once we have a corporate level with a number of account adoption we have.

And our next question is from Tim Lugo with William Blair. Your line is now open.

Just a follow-up on setting up the early launch; will the feathers of excellence setting these up occur around 2018 or maybe in the 2019 or you got something that’s occurring right now, part of these regional leaders touching the product as we speak. And since DTC is going to start in Q4, but yet your rev-racking in to the wholesaler, do you believe that there could be a wholesaler bump in your revenues leading up to that DTC campaign?

I’ll take the first part of that. Do I think there’s any kind of ramp up going in to that DTC campaign? By that point our wholesaler will be pretty well stocked. Clearly they’ll have two to three weeks’ worth of inventory. And if we felt that we had to kind of push that inventory a little bit in order to meet demand we would. But I think for the most part, anywhere between two to may be four weeks of inventory with our distributor/wholesaler should be adequate to stock up for a DTC campaign.

And Tim in terms of the centers of excellence, we’ll continue to establish those throughout the year within dermatology and then as we start looking cascade outside of dermatology, we’ll be looking to set up centers of excellence in some of those specialties, things come to mind like plastic surgeons and some of the others.

And maybe a word or question for the upcoming phase 3 discussion and the phase 2 to discuss some of the agency. What is the best outcome for a number of warts need to be treated in the phase 3 and the phase 2 earlier in the year looked good to me. That doesn’t seems like the market is assigning much value to that program yet. What do you think right now the market is? Is it missing?

So in terms of the best outcome is always to treat the smallest or the least number of warts. So if you got an outcome where you treated one target wart and you used that as adjudication of the primary endpoint, that that would be tremendous. I think the way we design the study was to take the feedback from the agency early on and treating multiple warts and we obviously hit across all endpoints in that fashion. So I think a range of outcome is all favorable and more than likely that we have to treat multiple warts. In terms of what the markets missing. I think it’s kind of looking at – I think you have to start at the top of the funnel and understand the progression of the work patient if you will. So there’s 22 million patients out there in the prevalent population of the US on just common warts, as I mentioned before that represents 50% of the total wart market. The general wart market actually is extremely well and that was only addressing only 17% of the market. People with common warts are just as likely to go see treatment as those with general warts. And I think what it’s missing is that when people understand that, this would be the first approved RX for this indication. It gives you more flexibility on pricing, you don’t have to snap at it, you don’t have to prior off. It just sets for a more robust launch in that category. And I think when you count the efficacy again, 16 treatment over eight weeks and compare that to anything available at the moment, either on the RX side for general warts or over the counter, it’s no context. You’re talking about treatments that go 12 weeks, 16 weeks, three times a day, two times a day, and then on the over the counter side months of treatment, multiple times a day. So when you look at the burden and the cost of treatment for the patient, it actually is on par with atopic dermatitis and that’s from a 2004 burdened treatment study, and so I’m sure it’s even greater, but we have 2004 data. So I think we’re doing our best to kind of educate the market on what the opportunity is there. And that’s sometimes the challenge with wide-space market opportunities.

And our next question is from Seamus Fernandez with Leerink Partners. Your line is now open.

Just three quick questions, so first, Neal can you talk a little bit about the synergy of an aesthetic product like ESKATA with medical products and also whether or not you see opportunities to access additional marketed assets given the pullback that we’re seeing from other med-derm players in the markets. The second question is, can you just help us understand better how the JAK actually works in vitiligo, and what might be the risk to clinical success and how we should think about the timing of efficacy and how chronic treatment looks in this market. And then lastly, apart from the eyebrow study which I know everybody is focused on but has been – is more likely to kind of deliver results in the sort of late second quarter timeframe. Can you just help us understand when we’re going to see additional data with the topical and the timing of those data sets?

So the first question on synergy between aesthetic and medical products. It’s interesting, as I mentioned before a lot of the phenomenon going on in derm right now is a lot of these practices are consolidating. And as such you see a number of dermatologist with different areas of interest, whether its medical or aesthetic or kind of a combo of both or surgery, they are combining in to one practice. And that’s to diversify their revenue generating opportunities. So I think the effect on that is that in past you would have very distinct sales forces that would target very distinct offices. I think that that will change in the future. When you have similar call points it can’t be a one-to-one overlap. But you will get some synergy out of that overtime. On the access to marketed product, we’re always kind of active on the BD front, we’re always looking to maximize shareholder value and look at ways to leverage what we’ve built. We now have a nice commercial infrastructure and of course where there are interesting opportunities we’ll look at them. It’s an interesting time given what you said with some companies’ kind of declaring out of med-derm, you know that creates opportunities for companies like our self. On the JAK inhibitor front to your question about how it works in vitiligo. I’ll talk about it at a high level and them maybe hand it off to Stu. So there’s two main things that you have to do in vitiligo. One is you have to shut off the auto immune tag, you have to shut off the inflammation and then you have to wait a little bit until the re-pigmentation occurs. And that’s a function of basically breaking up the melanocyte to stimulate the pigment production and then have it arised and actually be clinically evident. And maybe I’ll just hand it off to Stu to talk a little bit more in detail about that.

Yes, Neal pretty much hit it on the head. We have to shut down the inflammation that is causing the disruption of the melanocytes, that’s the pigment cells. So it’s actually a very similar mechanism to that seen in alopecia areata and its largely an (inaudible) gama driven pathway. So we see the same type of biomarkers that we see in alopecia areata and those are down regulated by the use of the JAK inhibitors. Now the opportunity to treat the [label] topically is a very opportunity there, because the target for the drug is superficial relative to some of the alopecia disorders, because the pigment cells would (inaudible) at the epidermal junction which is actually fairly superficial and easy to access topically. So we think there’s a big opportunity there to affect the mechanism by applying a topical drug that will suppress the primarily interfering gama generated inflammatory inflammation and suppress that pathway, and allow the melanocytes to repopulate and to try making (inaudible).

This is Neal again Seamus. So to your last question on the timing of the eyebrow study relative to some of the other topical JAK inhibitor work, so you are correct to kind of back-part the second quarter on the eyebrow study and then we’re looking at the second quarter for reporting out the PKPD study, the biomarker result and then the end of the year for 120 patient topical study in patch alopecia areata. That’s kind of how it sequences.

And our next question is from Liav Abraham of Citi. Your line is now open.

Just a couple of quick questions; on your warts program I appreciate that you have in the phase 2 meeting with the FDA coming up. Any color that you can provide on what the phase 3 program will look like from a trial design perspective. I assume you’re targeting very similar trial design to the recent phase 2. Any commentary on that would be helpful, and when is the timelines for a phase 3 read-out? And then just second question on the eyebrow trial. Given that that’s an open-label trial, is there any anecdotal commentary that you can provide on what you’re seeing in that trial thus far?

It’s Neal. So on the end of phase 2 meeting, of course we designed our – we had a guidance tele-con with the agency just trying to understand what they might be looking for in terms of endpoints and we designed the last phase 2 study to kind of consort with some of that guidance. So similar to the question that we were asked earlier, obviously we’ll be looking to look at basically messaging the endpoints that we just accomplished. So we think it’s probably going to be treating multiple warts and we’ll be looking at clearance a week post the last treatment and then looking at a three month follow-up. And then we’ll see at that in the phase 2 meeting. And in terms of the phase 3 study, we intend to kick those off in the back part of the year and it should take about 10 to 12 months from start to finish. They’re relatively quick enrollers but that’s what we would guide to. So we would anticipate starting in the back part of this year, and we’d have data in the back part of 2019. On the eyebrow study of course, we’ll announce the data when we get a full dataset. We do remain excited about the topical program as we consistently said from the beginning.

And I’m showing no further questions. I would now like to turn the call back to Neal walker for any further remarks.

Well I want to thank everybody for joining the call. We’re really excited about where 2018 will lead to. We’re very excited about the ESKATA launch and the build that we’ve already seen through the AD which is one of the key meetings, it’s the biggest international meeting we have in our space, and we kind of papered the town, left few Hungarian emboldened by the reception we had there. And we’re also very excited about our pipeline. We have multiple read-outs through the year, we will report our first revenue in the August timeframe for ESKATA. And we look forward to reporting out on our pipeline as we continue throughout the year. Thanks everybody for joining the call.

Ladies and gentlemen, thank you for participating in today’s conference. You may now disconnect. Everyone have a great day.