Aclaris Therapeutics, Inc. (ACRS) Q1 2019 Earnings Call Transcript

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Aclaris Therapeutics (NASDAQ: ACRS)
Q1 2019 Earnings Call
May 8, 2019, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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’ll conduct a question and answer session and instructions will be given at that time. If anyone should require assistance during the program, please press * then 0 on your touch-tone telephone. 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.

Kamil Ali-JacksonChief Legal Officer

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.

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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 of management discussions and analysis of financial conditions and results of operations sections of Aclaris Form 10-K for the year ended December 31st, 2018, Form 10-Q for the quarter ended March 31st, 2019 filed today, and other filings Aclaris makes with the SEC from time to time. These documents are available under the SEC filings section of the investors page of Aclaris’s 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?

Neal WalkerPresident and Chief Executive Officer

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 will hand it off to Stuart Shanler, our Chief Scientific Officer, who will review our clinical development plans and timelines.

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’ll 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 are very pleased with the Rhofade prescription trajectory during the relaunch, particularly when our field force is 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 salesforce, particularly among the more aesthetically 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 2 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 3 studies for the treatment of common warts.

As a reminder, we’re 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 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 1 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 2 trials in patients with rheumatoid arthritis as well as an additional inflammatory indication.

As a reminder, ATI-450 is an investigational oral compound that targets the production activity of TNF-alpha, IL-1 beta, IL-6, and IL-8. These are all cytokine targets of established biologic drugs. If successful, we believe ATI-450 will 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 pre-clinical development and into the later stages of clinical development.

Our institutional knowledge in kinase inhibitors, our biology and chemistry expertise, and our KINect technology platform combine to allow us to efficiently develop new drugs in the inflammation and immunology space and ATI-450 is the first such candidate.

I will low turn it over to Dr. Stuart Shanler, our Chief Scientific Officer, who will provide an update on our other clinical activities and programs. Stu?

Stuart ShanlerChief Scientific Officer

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 3 clinical development program for A-101 45% topical solution for the treatment of common warts or verruca vulgaris. We have completed enrollment of over 1,000 patients in our two pivotal Phase 3 trials named THWART-1 and THWART-2 for the treatment of common warts. These studies are progressing as planned and we 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, A-101 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 JAK-1/3 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 patching alopecia to alopecia totalis and alopecia universalis. These ATI-501 oral and ATI-502 topical Phase 2 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 JAK1/3 inhibitor for the treatment of AA and it is progressing as planned. This randomized, double-blinded, parallel group control trial is evaluating the safety, efficacy, and dose response of two concentrations of ATI-502 on the regrowth of hair and 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 areata. 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 6 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 read out in 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 read out 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 and Trademark Office issued US Patent No. 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 US PTO, 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 US and major international markets. We’re committed to continue working on the expansion of our patent protection for our JAK inhibitors and across our full portfolio of products.

I’ll now turn the call over to Jeff Wayne, our Interim Head of Commercial, who will provide an update on our commercial activities. Jeff?

Jeff WayneInterim Head of Commercial

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 our national sales meeting in February to reflect our new focus on Rhofade, we have made significant progress restaffing our salesforce from an aesthetically focused to a medically focused sales team.

We currently have 43 or 50 territories filled with trained sales representatives with the remaining territories at various stages in 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 AA target prescribers in our staff territories approximately three times. The sales force has seen almost 80% of our B-targets, an average of just over two times in the same period.

As a result of this reach and frequency, based on IQVIA Xponent 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 Xponent 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. If it is, those new guidelines will be incorporated into our future messaging.

As far as commercial payer 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.

Frank RuffoChief Financial Officer

Thanks, Jeff and good afternoon, everyone. As I walk through our first quarter 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 31st, 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 in costs of goods sold related to Rhofade and Eskata, respectively, and $1.2 million of cost 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 31st, 2018, our total revenue was $1.1 million, which consisted entirely of CRO revenues with $1 million in cost of revenue. 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 pre-clinical work for our MK2 inhibitor as we prepare to file our IND for ATI-450 in April 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 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 Allergen 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 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 31st, 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 potential new 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 turn the call back over to Neal for a few closing remarks.

Neal WalkerPresident and Chief Executive Officer

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 relaunch of Rhofade and continue to be please 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.

Questions and Answers:

Operator

Certainly. Ladies and gentlemen, if you have a question at this time, please press * then 1 on your touch-tone telephone. If your question has been answered and you’d like to remove yourself from the queue, please press the # key.

Our first question comes from the line of Eu Chen from Cantor. Your question, please.

Louise ChenCantor Fitzgerald — Analyst

Hi, thanks for taking my questions here. I had a few. 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? The second question I had for you was 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 on the street, oral and topical. So, just curious what your go to market strategy here is.

The 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, I’m 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.

Neal WalkerPresident and Chief Executive Officer

Thanks, Louise. This is Neal. I’ll take those and see if the team has any additional answers. So, on the first question 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. Since we’re developing small molecule therapeutics, we have the ability to look at both oral and topical dosage forms.

Certainly, on the oral side, it behooves us to take a look at what we refer to as adjacencies in both immunology and inflammation. That’s why when we see something 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 and hair loss franchise, we 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. I think people have to think about alopecia areata similar to atopic or psoriasis and think about it in the terms of mile, moderate, and severe disease.

Certainly, when you think about it that way, you can understand that utilizing oral therapies and those with more severe disease out of the gate makes a lot of sense and in milder patients, you may want to start with a topical and even with those with more severe disease, you may want to transition to a topical over time. I think the treatment paradigm in this category is in the process of being defined.

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 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 — our strategy here was pretty simple. We decided to take our solution that’s really geared at a hair loss indication and just do a quick open label study in about 20 or so patients in AD. Our strategy was to go to moderate to severe patients because from our perspective, that would be a differentiator using a topical in a more severe patient population rather than the much more crowded mild to moderate sector.

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. 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’ll be differentiated in the long run by having a soft drug approach in this category that preserves the efficacy we know JAKs have in this category.

Operator

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

Liav AbrahamCitigroup — Analyst

Good afternoon, a couple of questions from my end — firstly, as it relates to your salesforce, 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 net 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? Then thirdly, as it relates to your JAK portfolio, Neal and team, I’d be curious how you are 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.

Neal WalkerPresident and Chief Executive Officer

Thanks, Liav. So, I’ll touch on a couple then hand it off to Frank and Jeff to fill in the gaps. On the first question related to the salesforce — we had targeted a 50-rep field force. We did that through our alignment and understanding the prescriber-level data that we inherited from Allergen. Currently, we have 43 staff. 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.

Certainly, what we’re doing in the interim is our regional sales managers are being helpful on some of those unmanned territories and calling on some of the key A and B accounts. But some of the turnover is part and parcel to what we have in the derm space right now. We have a lot of smaller companies staffing up and we made the choice to look at more of a medically derm-oriented salesforce.

Regarding the gross to net, I’ll hand that off to Frank.

Frank RuffoChief Financial Officer

Liav, as far as the gross to net is concerned, as we mentioned on the last call, gross to net is under Allergen’s watch. We’re 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 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. I think with that number posted and three quarters remaining, we’re certainly on the way to getting to where current analyst consensus is. 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.

David GordonChief Medical Officer

Yeah. I think the duration of therapy question gets to the heart of what we’re trying to do with our JAK portfolio. What we know is that the JAK inhibitors grow good hair in alopecia and we know that once you stop the JAK inhibitors, you lose that benefit. We know that young people who have decades of life left are the unmet need in this population.

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

Neal WalkerPresident and Chief Executive Officer

Liav, just to build on that, it’s a really great question — I think it’s a key question when you look to differentiate between indication, 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. It certainly sets you up for treating over a longer period of time. As such, you have to really make sure you have safe therapeutic options.

It’s an area where the treatment paradigm is 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 at 9 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 in some of the academic centers.

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

David GordonChief Medical Officer

You mentioned it before, but that switch from oral to topical might be very important for some of these more severe patients. We’re studying that within our program.

Operator

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

Dylan DuPuisSVB Leerink — Analyst

Hi, 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 amount of sales we’ve seen so far for Eskata? Number two, if you could comment on the disease severity of patients in the Phase 2 study for ATI-502 in alopecia. I know these patients are treated across a spectrum of severity and we’re just trying to figure out where the majority of patients are lying within the spectrum. Thank you.

Neal WalkerPresident and Chief Executive Officer

I’ll take the second question first. In terms of disease severity, as I indicated in the Phase 2 topical study, patients who are enrolled go anywhere from 15% hair loss to up to 95%. The median duration of the disease is approximately two years. That is a pretty wide range of disease spectrum. In the oral study, it goes from basically greater than 30% all the way up to total scalp and body loss.

In terms of the question around the wart market opportunity — wart versus SK are two very different market. 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. So, I don’t think there’s any kind of link between those two from a market perspective.

Operator

Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press * then 1. Our next question comes from the line of Tim Lugo from William Blair. Your question, please.

Tim LugoWilliam Blair & Company — Analyst

Thanks for taking my question. I don’t believe I got the median length of disease enrolled in the oral trial. I know it was two years for the topical. Maybe could you talk about AGA? I know Neal in the past, you’ve mentioned patients who go bald very quickly in the early 20s, that’s a different patient population than someone who will lose their hair over a decade. How are you accounting for that in the AGA trial?

David GordonChief Medical Officer

So, taking the first question first, the median time in the oral study was about four years. So, the duration had a split from six 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. It’s going to be a steer. Obviously, we’re not powered to look at that kind of question, but we’ll get some indication.

Neal WalkerPresident and Chief Executive Officer

It’s a good question. This first study out of the gate, obviously, was open label. We’re looking at proof of concept. As a reminder, we enrolled both males and females. One of the key points in your question is moving forward, one of the patient populations you want to study, you usually want to catch these patients when they’re in the process of losing their hair. If you look historically back at Propecia and things like Rogaine, if somebody’s 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’re in the evolution of the disease. Certainly, female patients lose their hair in different patterns. We’re quite excited about the potential in that market. There’s certainly an unmet need. The females are very intolerant of losing hair, a lot less tolerant than males.

We’re excited to present our data from a POC perspective. When we think about designing a next study, that would involve answering some of the questions that you’ve asked along the lines of how severe the disease is and then you go with milder to moderate forms of that disease in a clinical trial setting.

Tim LugoWilliam Blair & Company — Analyst

Okay. Fair enough. For 450, you’ve mentioned in the past going into an orphan indication for maybe a fast-to-market strategy. Is that still a possibility?

David GordonChief Medical Officer

All of the diseases that Neal mentioned earlier are in scope. We pick RA as the initial indication because I think strategically it helps us make the right decision. RA, I think it’s a disease that will allow us to recruit quite quickly. We can get a reasonably quick read on some of the biomarkers in RA. It will allow us discharge the tachyphylaxis risk, which has 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 for an anti-TNF or an anti-IL-1. We can make the best strategic decisions. We may end up going in RA or psoriasis or ankylosing spondylitis or pyoderma gangrenosum or hidradenitis. I think we just make the best strategic decisions and we do exploratory studies at that time to guide us.

Neal WalkerPresident and Chief Executive Officer

I think just to pile on there — 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. That’s an IL-1 beta-driven disease. Certainly, that is in the suite of indications that we would explore. 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.

Tim LugoWilliam Blair & Company — Analyst

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

David GordonChief Medical Officer

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 quickly and efficiently as possible and discharge some of these clinical questions that we have about the pharmacodynamic efficacy. So, our plan is to be fairly aggressive with that timeline and be into rheumatoid arthritis patients on a pretty aggressive timeline.

Operator

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

Neal WalkerPresident and Chief Executive Officer

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.

Operator

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

Duration: 42 minutes

Call participants:

Kamil Ali-JacksonChief Legal Officer

Neal WalkerPresident and Chief Executive Officer

Stuart ShanlerChief Scientific Officer

Jeff WayneInterim Head of Commercial

David GordonChief Medical Officer

Frank RuffoChief Financial Officer

Louise ChenCantor Fitzgerald — Analyst

Liav AbrahamCitigroup — Analyst

Dylan DuPuisSVB Leerink — Analyst

Tim LugoWilliam Blair & Company — Analyst

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