Concurrent with today’s announcement, Aclaris also announced that it is conducting a strategic review of its business to determine how to optimally deploy its capital to maximize shareholder return. On a preliminary unaudited basis, as of
December 31, 2023 , Aclaris’ aggregate cash, cash equivalents and marketable securities was approximately$182 million .Aclaris also reiterates the following business plans:
- ATI-1777: Aclaris is seeking a development and commercialization partner for ATI-1777, its investigational topical “soft” JAK 1/3 inhibitor. Aclaris recently reported positive top-line results from its Phase 2b trial in atopic dermatitis.
- ATI-2138: Aclaris is assessing the most effective pathway including the lead indication for ATI-2138, its Phase 2 ready investigational oral covalent ITK/JAK3 inhibitor. Aclaris announced positive results from its Phase 1 MAD trial of ATI-2138 in 2023.
- Discovery: Aclaris plans to continue to advance discovery programs through KINect®, its proprietary drug discovery platform.
I don’t love the verbiage they use here, from the sounds of “optimally deploy its capital” and “reiterates the following business plans” it appears the initial desire is to continue their research and development pipeline. However, this situation seems ripe for an activist, indeed Tang Capital and BML Advisors both own 6+% of the shares each. Tang Capital could throw out an offer, similar to RPHM, and change the direction of the strategic review.
My back of envelope liquidation estimate:
As usually, these are very much swag estimates, ACRS does a nice job of breaking out their R&D expense by program, feel free to get more granular in your estimates.
On the positive side (from an investment perspective), the company did do a 46% reduction-in-force in December, halted zunsemetinib development and appear mostly in a standstill on ATI-1777 and ATI-2138 as they decide on next steps. On the negative side, the co-founder is now the interim CEO, he might not want to sell and might rather continue on developing new drugs, but the activist shareholders and high cost of capital will hopefully change his mind. This is on the riskier side of the broken biotech spectrum, but remains at a pretty attractive discount to net cash.
Disclosure: I own shares of ACRS
