0001558370-21-006362 | 10-Q | XBRL Viewer

Print Document View Excel Document

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2021	Apr. 30, 2021
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2021
Entity File Number	001-37581
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	640 Lee Road, Suite 200
Entity Tax Identification Number	46-0571712
Entity Address, City or Town	Wayne
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19087
City Area Code	484
Local Phone Number	324-7933
Title of 12(b) Security	Common Stock, $0.00001 par value
Trading Symbol	ACRS
Security Exchange Name	NASDAQ
Entity Registrant Name	Aclaris Therapeutics, Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		52,107,355
Entity Central Index Key	0001557746
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 35,267	$ 22,063
Short-term marketable securities	93,028	32,068
Accounts receivable, net	817	772
Prepaid expenses and other current assets	5,389	2,590
Total current assets	134,501	57,493
Marketable securities	14,362
Property and equipment, net	1,424	1,654
Intangible assets	7,105	7,123
Other assets	4,007	4,514
Total assets	161,399	70,784
Current liabilities:
Accounts payable	7,292	5,254
Accrued expenses	3,599	5,906
Current portion of lease liabilities	625	603
Discontinued operations - current liabilities	2,989	3,111
Total current liabilities	14,505	14,874
Other liabilities	3,041	3,179
Long-term debt, net	10,692	10,653
Contingent consideration	20,500	4,061
Deferred tax liability	367	367
Total liabilities	49,105	33,134
Commitments and contingencies (Note 17)
Stockholders' Equity:
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at March 31, 2021 and December 31, 2020
Common stock, $0.00001 par value; 100,000,000 shares authorized at March 31, 2021 and December 31, 2020; 52,081,729 and 45,109,314 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
Additional paid-in capital	645,730	542,286
Accumulated other comprehensive loss	(140)	(94)
Accumulated deficit	(533,296)	(504,542)
Total stockholders' equity	112,294	37,650
Total liabilities and stockholders' equity	$ 161,399	$ 70,784

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	52,081,729	45,109,314
Common stock, shares outstanding	52,081,729	45,109,314

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total revenue	$ 1,777	$ 1,407
Costs and expenses:
Cost of revenue	1,202	1,269
Research and development	7,838	7,677
General and administrative	4,827	6,200
Revaluation of contingent consideration	16,439	1,767
Total costs and expenses	30,306	16,913
Loss from operations	(28,529)	(15,506)
Other income (expense), net	(225)	178
Loss from continuing operations	(28,754)	(15,328)
Loss from discontinued operations		(258)
Net loss	$ (28,754)	$ (15,586)
Net loss per share, basic and diluted	$ (0.57)	$ (0.37)
Weighted average common shares outstanding, basic and diluted	50,337,807	41,618,429
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net of tax of $0	$ (35)	$ 60
Foreign currency translation adjustment	(11)	53
Total other comprehensive income (loss)	(46)	113
Comprehensive loss	(28,800)	(15,473)
Contract research
Total revenue	1,535	1,189
Other revenue
Total revenue	$ 242	$ 218

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Unrealized gain (loss) on marketable securities, tax	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balance at beginning of period at Dec. 31, 2019		$ 523,505	$ (66)	$ (453,527)	$ 69,912
Balance at beginning of period (in shares) at Dec. 31, 2019	41,485,638
Increase (Decrease) in Stockholders' Equity
Vesting of restricted stock units		(95)			(95)
Vesting of restricted stock units (in shares)	346,582
Fair value of warrants issued		378			378
Unrealized gain on marketable securities			60		60
Foreign currency translation adjustment			53		53
Stock-based compensation expense		3,453			3,453
Net loss				(15,586)	(15,586)
Balance at end of period at Mar. 31, 2020		527,241	47	(469,113)	58,175
Balance at end of period (in shares) at Mar. 31, 2020	41,832,220
Balance at beginning of period at Dec. 31, 2019		523,505	(66)	(453,527)	69,912
Balance at beginning of period (in shares) at Dec. 31, 2019	41,485,638
Balance at end of period at Dec. 31, 2020		542,286	(94)	(504,542)	$ 37,650
Balance at end of period (in shares) at Dec. 31, 2020	45,109,314				45,109,314
Increase (Decrease) in Stockholders' Equity
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units		(2,579)			$ (2,579)
Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units (in shares)	666,144
Issuance of common stock in connection with public offering		103,348			103,348
Issuance of common stock in connection with public offering (in shares)	6,306,271
Unrealized gain on marketable securities			(35)		(35)
Foreign currency translation adjustment			(11)		(11)
Stock-based compensation expense		2,675			2,675
Net loss				(28,754)	(28,754)
Balance at end of period at Mar. 31, 2021		$ 645,730	$ (140)	$ (533,296)	$ 112,294
Balance at end of period (in shares) at Mar. 31, 2021	52,081,729				52,081,729

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Public Offering
Offering costs netted against proceeds	$ 7,011

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net loss	$ (28,754)	$ (15,586)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	288	576
Stock-based compensation expense	2,675	3,453
Revaluation of contingent consideration	16,439	1,767
Changes in operating assets and liabilities:
Accounts receivable	(45)	4,737
Prepaid expenses and other assets	(2,250)	338
Accounts payable	1,842	(4,317)
Accrued expenses	(2,427)	2,227
Net cash used in operating activities	(12,232)	(6,805)
Cash flows from investing activities:
Purchases of property and equipment		(124)
Purchases of marketable securities	(85,814)	(8,869)
Proceeds from sales and maturities of marketable securities	10,500	22,935
Net cash provided by (used in) investing activities	(75,314)	13,942
Cash flows from financing activities:
Proceeds from issuance of common stock in connection with public offering, net of issuance costs	103,348
Proceeds from debt financing (including warrants), net of issuance costs		10,950
Restricted stock unit employee tax withholdings	(3,014)
Finance lease payments		(57)
Proceeds from exercise of employee stock options and the issuance of stock	416	25
Net cash provided by financing activities	100,750	10,918
Net increase in cash, cash equivalents and restricted cash	13,204	18,055
Cash, cash equivalents and restricted cash at beginning of period	22,063	35,937
Cash, cash equivalents and restricted cash at end of period	$ 35,267	53,992
Supplemental disclosure of non-cash investing and financing activities:
Additions to property and equipment included in accounts payable		16
Fair value of warrants issued in connection with debt financing		263
Offering costs included in accounts payable		$ 30

Organization and Nature of Business

3 Months Ended

Mar. 31, 2021

Organization and Nature of Business

Organization and Nature of Business

1. Organization and Nature of Business

Overview

Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. In July 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. In August 2017, Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof. Aclaris Therapeutics, Inc., ATIL and Confluence are referred to collectively as the “Company.” The Company is a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases. In addition to developing its novel drug candidates, the Company is pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its novel drug candidates.

Liquidity

The Company’s condensed consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. As of March 31, 2021, the Company had cash, cash equivalents and marketable securities of $142.7 million and an accumulated deficit of $533.3 million. Since inception, the Company has incurred net losses and negative cash flows from its operations. Prior to the acquisition of Confluence in August 2017, the Company had never generated revenue. There can be no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, development activities, including clinical and preclinical testing of the Company’s drug candidates, will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its drug candidates and to generate revenue from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets or to raise additional capital to finance its operations. The Company will require additional capital to complete the clinical development of ATI-450 and ATI-1777, to develop its preclinical compounds, and to support its discovery efforts.

Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If the Company is unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of its drug candidates, it may need to substantially curtail planned operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies.

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that its condensed consolidated financial statements are issued. As of the report date, the Company does not believe that substantial doubt exists about its ability to continue as a going concern. The Company believes its existing cash, cash equivalents and marketable securities are sufficient to fund its operating and capital expenditure requirements for a period greater than 12 months from the date of issuance of these condensed consolidated financial statements.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2021, the results of its operations and comprehensive loss for the three months ended March 31, 2021 and 2020, its changes in stockholders’ equity for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. The condensed consolidated balance sheet data as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). The financial data and other information disclosed in these notes related to the three months ended March 31, 2021 and 2020 are unaudited. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2021.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP. The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown in economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2021. Except as set forth below, there have been no changes to the Company’s significant accounting policies from those disclosed in the annual report.

Contingent Consideration

The Company initially recorded a contingent consideration liability at fair value on the date of acquisition related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of the development, regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments. Significant judgement was involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of the contingent consideration liability can result from changes to one or more of these assumptions. The Company evaluates the fair value estimate of the contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in the condensed consolidated statement of operations.

The fair value of contingent consideration is estimated using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for commercial milestone and royalty payments and then applying a risk-adjusted discount rate to calculate the present value of the potential payments. Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 4% and 40%. Additionally, estimated future sales levels and the risk-adjusted discount rate applied to the potential payments are also significant assumptions used in calculating the fair value. The discount rate ranged between 5.9% and 8.1% depending on the year of each potential payment.

Recently Issued Accounting Pronouncements

None.

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2021

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values:


	March 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	29,132	$	—	$	—	$	29,132
Marketable securities		—		107,390		—		107,390
Total assets	$	29,132	$	107,390	$	—	$	136,522


Liabilities:
Contingent consideration	$	—	$	—	$	20,500	$	20,500
Total liabilities	$	—	$	—	$	20,500	$	20,500


	December 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	14,955	$	1,500	$	—	$	16,455
Marketable securities		—		32,068		—		32,068
Total assets	$	14,955	$	33,568	$	—	$	48,523


Liabilities:
Contingent consideration	$	—	$	—	$	4,061	$	4,061
Total liabilities	$	—	$	—	$	4,061	$	4,061

As of March 31, 2021 and December 31, 2020, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs. The Company’s cash equivalents as of December 31, 2020 also included commercial paper, which was valued based upon Level 2 inputs. The Company’s marketable securities as of March 31, 2021 and December 31, 2020 consisted of commercial paper and asset-backed and U.S. government agency debt securities, which were valued based upon Level 2 inputs. The Company’s marketable securities as of March 31, 2021 also included corporate debt securities, which were valued based upon Level 2 inputs.

In determining the fair value of its Level 2 investments, the Company relied on quoted prices for identical securities in markets that are not active. These quoted prices were obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities. Quarterly, the Company compares the quoted prices obtained from the third-party pricing service to other available independent pricing information to validate the reasonableness of the quoted prices provided. The Company evaluates whether adjustments to third-party pricing are necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service. During the three months ended March 31, 2021 and 2020, there were no transfers between Level 1, Level 2 and Level 3.

The increase in contingent consideration of $16.4 million during the three months ended March 31, 2021 resulted from updates to the Company’s probability of achieving regulatory milestones and commencing commercialization and estimated future sales level assumptions as a result of the completion of a Phase 2a clinical trial of ATI-450 in subjects with moderate to severe rheumatoid arthritis and the inclusion of estimated future sales related to hidradenitis suppurativa and psoriatic arthritis which are additional planned indications for ATI-450.

As of March 31, 2021 and December 31, 2020, the fair value of the Company’s available for sale marketable securities by type of security was as follows:


	March 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	21,556	$	—	$	(31)	$	21,525
Commercial paper		54,045		—		—		54,045
Asset-backed debt securities		14,062		1		(6)		14,057
U.S. government agency debt securities		17,760		3		—		17,763
Total marketable securities	$	107,423	$	4	$	(37)	$	107,390


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Commercial paper	$	20,483	$	—	$	—	$	20,483
Asset-backed debt securities		4,036		1		—		4,037
U.S. government agency debt securities		7,547		1		—		7,548
Total marketable securities	$	32,066	$	2	$	—	$	32,068

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Property and Equipment, Net

3 Months Ended

Mar. 31, 2021

Property and Equipment, Net

Property and Equipment, Net

4. Property and Equipment, Net

Property and equipment, net consisted of the following:


		March 31,		December 31,
(In thousands)	2021		2020
Computer equipment	$	1,197	$	1,197
Lab equipment		1,340		1,340
Furniture and fixtures		617		617
Leasehold improvements		1,123		1,123
Property and equipment, gross		4,277		4,277
Accumulated depreciation		(2,853)		(2,623)
Property and equipment, net	$	1,424	$	1,654

Depreciation expense was $0.2 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.

Intangible Assets

3 Months Ended

Mar. 31, 2021

Intangible Assets

Intangible Assets

5. Intangible Assets

Intangible assets consisted of the following:


		Gross Cost				Accumulated Amortization
	Remaining		March 31,		December 31,		March 31,		December 31,
(In thousands, except years)	Life (years)	2021		2020		2021		2020
Other intangible assets	6.3	$	751	$	751	$	275	$	257
In-process research and development	na		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	275	$	257

As of March 31, 2021, estimated future amortization expense is as follows:


		Year Ending
(In thousands)		December 31,
2021	$	56
2022		75
2023		75
2024		75
2025		75
Thereafter		120
Total	$	476

Accrued Expenses

3 Months Ended

Mar. 31, 2021

Accrued Expenses

Accrued Expenses

6. Accrued Expenses

Accrued expenses consisted of the following:


		March 31,		December 31,
(In thousands)	2021		2020
Employee compensation expenses	$	1,357	$	3,971
Research and development expenses		1,086		761
Other		1,156		1,174
Total accrued expenses	$	3,599	$	5,906

Debt

3 Months Ended

Mar. 31, 2021

Debt

Debt

7. Debt

Loan and Security Agreement – Silicon Valley Bank

In March 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”). The Loan and Security Agreement provides for $11.0 million in term loans, of which the Company borrowed the entire amount on March 30, 2020. The Loan and Security Agreement is secured by substantially all of the assets of the Company other than intellectual property. In connection with the Loan and Security Agreement, the Company issued to SVB a warrant to purchase up to 460,251 shares of common stock (the “Warrant”) (see Note 8). The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach.

The term loan repayment schedule provides for interest only payments beginning April 1, 2020 and continuing through March 1, 2022, followed by 24 consecutive equal monthly installments of principal, plus monthly payments of accrued interest, starting on April 1, 2022 and continuing through the maturity date of March 1, 2024. All outstanding principal and accrued and unpaid interest will be due and payable on the maturity date. The Loan and Security Agreement provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street Journal plus 2% and (ii) 6.75%.

The Loan and Security Agreement includes a final payment fee equal to 5% of the original principal amount borrowed. The Company has the option to prepay the outstanding balance of the term loans in full, subject to a prepayment premium of (i) 3% of the original principal amount borrowed for any prepayment on or prior to the first anniversary of March 30, 2020, (ii) 2% of the original principal amount borrowed for any prepayment after the first anniversary and on or before the second anniversary of March 30, 2020 or (iii) 1% of the original principal amount borrowed for any prepayment after the second anniversary of March 30, 2020 but before March 1, 2024.

As of March 31, 2021 and December 31, 2020 the outstanding principal balance on the SVB Loan and Security Agreement was $11.0 million.

Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity

Stockholders' Equity

8. Stockholders’ Equity

Preferred Stock

As of March 31, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock. There were no shares of preferred stock outstanding as of March 31, 2021 or December 31, 2020.

Common Stock

As of March 31, 2021 and December 31, 2020, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $0.00001 par value common stock.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding. No dividends have been declared through March 31, 2021.

Warrants

The Warrant issued to SVB in March 2020 had an initial exercise price of $0.956 per share, subject to adjustment as provided in the Warrant. The Warrant became immediately exercisable in full upon the funding of the term loan facility. The Company assigned a fair value of $0.4 million to the Warrant using a Black-Scholes valuation methodology, and also concluded that the Warrant was indexed to its own stock and therefore classified the Warrant as an equity instrument. In January 2021, SVB net exercised the Warrant in full, and the Company issued to SVB 388,119 shares of common stock.

Equity Purchase Agreement with Lincoln Park Capital Fund, LLC

In August 2020, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”) which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to Lincoln Park, at its discretion, up to $15.0 million of shares of its common stock over the 36-month term of the Purchase Agreement. Upon execution of the Purchase Agreement, the Company issued 121,584 shares of its common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Purchase Agreement. The commitment shares were valued using the closing price of the Company’s common stock on the effective date of the Purchase Agreement resulting in an aggregate fair value of $0.3 million. Through December 31, 2020, the Company sold 2,111,170 shares of its common stock to Lincoln Park under the Purchase Agreement for net proceeds of $7.7 million. The Company terminated the Purchase Agreement in January 2021 in connection with the public offering of common stock described below. The Company did not sell any additional shares prior to terminating the Purchase Agreement.

January 2021 Public Offering

In January 2021, the Company closed a public offering in which it sold 6,306,271 shares of common stock at a price to the public of $17.50 per share, for aggregate gross proceeds of $110.4 million. The Company paid underwriting discounts and commissions of $6.6 million, and also incurred expenses of $0.4 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $103.3 million.

Stock-Based Awards

3 Months Ended

Mar. 31, 2021

Stock-Based Awards

Stock-Based Awards

9. Stock-Based Awards

2015 Equity Incentive Plan

In September 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and the Company’s stockholders approved the 2015 Plan. The 2015 Plan became effective in connection with the Company’s initial public offering in October 2015. Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit (“RSU”) awards, performance stock awards, cash-based awards and other stock-based awards. The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock. The number of shares of common stock that may be issued under the 2015 Plan will automatically increase on January 1 of each year ending on January 1, 2025, in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or (ii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that expire, are otherwise terminated, settled in cash or repurchased by the Company under the 2015 Plan and the 2012 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of January 1, 2021, the number of shares of common stock that may be issued under the 2015 Plan was increased by 1,804,372 shares. As of March 31, 2021,

2,937,121 shares remained available for grant under the 2015 Plan. The Company had 2,725,405 stock options and 2,385,853 RSUs outstanding as of March 31, 2021 under the 2015 Plan.

2017 Inducement Plan

In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”). The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Company had 439,500 stock options and 25,758 RSUs outstanding as of March 31, 2021 under the 2017 Inducement Plan. All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired.

2012 Equity Compensation Plan

Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 549,561 were outstanding as of March 31, 2021. Stock options granted under the 2012 Plan expire after ten years.

Stock Option Valuation

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the three months ended March 31, 2021 and 2020 were as follows:


	Three Months Ended
	March 31,
	2021		2020
Risk-free interest rate	0.90	%	0.97	%
Expected term (in years)	6.3		6.2
Expected volatility	76.60	%	85.28	%
Expected dividend yield	0	%	0	%

The Company recognizes compensation expense for awards over their vesting period. Compensation expense for awards includes the impact of forfeitures in the period when they occur.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2021:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
(In thousands, except share and per share data and years)	of Shares	Price		Term	Value
				(in years)
Outstanding as of December 31, 2020	2,871,498	$	15.16	6.8	$	4,890
Granted	880,600		24.06
Exercised	(27,632)		15.06			224
Forfeited and cancelled	(10,000)		21.93
Outstanding as of March 31, 2021	3,714,466	$	17.25	7.3	$	31,732
Options vested and expected to vest as of March 31, 2021	3,714,466	$	17.25	7.3	$	31,732
Options exercisable as of March 31, 2021	2,083,539	$	17.56	5.9	$	18,085

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2021 was $16.15 per share.

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2021:


		Weighted
		Average
		Grant Date		Aggregate
	Number	Fair Value		Intrinsic
(In thousands, except share and per share data)	of Shares	Per Share		Value
Outstanding as of December 31, 2020	2,244,157	$	3.83
Granted	565,600		24.06
Vested	(377,371)		5.94	$	8,892
Forfeited and cancelled	(20,775)		2.85
Outstanding as of March 31, 2021	2,411,611	$	8.25

Stock-Based Compensation

Stock-based compensation expense included in total costs and expenses on the condensed consolidated statement of operations included the following:


	Three Months Ended
	March 31,
(In thousands)	2021		2020
Cost of revenue	$	247	$	260
Research and development		876		816
General and administrative		1,552		2,377
Total stock-based compensation expense	$	2,675	$	3,453

As of March 31, 2021, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $17.1 million and $17.8 million, respectively, each of which is expected to be recognized over a weighted average period of 3.4 years.

Net Loss per Share

3 Months Ended

Mar. 31, 2021

Net Loss per Share

Net Loss per Share

10. Net Loss per Share

Basic and diluted net loss per share is summarized in the following table:


	Three Months Ended
	March 31,
(In thousands, except for share and per share data)	2021		2020
Numerator:
Net loss	$	(28,754)	$	(15,586)
Denominator:
Weighted average shares of common stock outstanding, basic and diluted		50,337,807		41,618,429
Net loss per share, basic and diluted	$	(0.57)	$	(0.37)

The Company’s potentially dilutive securities, which included stock options, RSUs and warrants, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share. Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same. The following table presents potential shares of common stock excluded from the calculation

of diluted net loss per share for the three months ended March 31, 2021 and 2020. All share amounts presented in the table below represent the total number outstanding as of March 31, 2021 and 2020.



	March 31,
	2021	2020
Options to purchase common stock	3,714,466	3,429,933
Restricted stock unit awards	2,411,611	3,870,059
Warrants	—	460,251
Total potential shares of common stock	6,126,077	7,760,243

Leases

3 Months Ended

Mar. 31, 2021

Leases

Leases

11. Leases

Operating Leases

Agreements for Office Space

The Company has a sublease agreement with Auxilium Pharmaceuticals, LLC (the “Sublandlord”) pursuant to which it subleases 33,019 square feet of office space for its headquarters in Wayne, Pennsylvania. The sublease has a term that runs through October 2023. If for any reason the lease between Chesterbrook Partners, LP (“Landlord”) and Sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate. In December 2020, the Company entered into a sub-sublease agreement under which it sub-subleased 8,115 square feet. The sub-sublease term runs concurrently with the original sublease agreement.

In February 2019, the Company entered into a sublease agreement with a third party for 20,433 square feet of office and laboratory space in St. Louis, Missouri. The lease commenced in June 2019 and has a term that runs through June 2029.

Supplemental balance sheet information related to operating leases is as follows:


		March 31,		December 31,
(In thousands)	2021		2020
Operating Leases:
Gross cost	$	5,240	$	5,240
Accumulated amortization		(1,279)		(1,111)
Other assets	$	3,961	$	4,129

Current portion of lease liabilities	$	625	$	603
Other liabilities		2,730		2,894
Total operating lease liabilities	$	3,355	$	3,497

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $0.3 million for each of the three months ended March 31, 2021 and 2020.

Finance Leases

Laboratory Equipment

The Company leased laboratory equipment which it used in its laboratory space in St. Louis, Missouri under two finance lease financing arrangements which the Company entered into in August 2017 and October 2017, with terms ended in October 2020 and December 2020, respectively.

Related Party Transactions

3 Months Ended

Mar. 31, 2021

Related Party Transactions

Related Party Transactions

12. Related Party Transactions

Mallinckrodt plc

In April 2018, Bryan Reasons was appointed to the Company’s board of directors. Subsequently, in March 2019, Mr. Reasons became the Chief Financial Officer of Mallinckrodt plc. Prior to Mr. Reasons joining Mallinckrodt plc, the Company entered into a master services agreement with a subsidiary of Mallinckrodt plc, pursuant to which Confluence provides laboratory services to the subsidiary (“Mallinckrodt”) in the ordinary course of business. Mr. Reasons was not involved in the negotiation or execution of the agreement, but may be deemed to have an interest in the ongoing transactions based on his employment as an executive officer of Mallinckrodt plc. During the three months ended March 31, 2021 and 2020, the Company invoiced Mallinckrodt for $20 thousand and $0.2 million, respectively, under the master services agreement. As of March 31, 2021 and December 31, 2020, the Company had $20 thousand and $24 thousand, respectively, of outstanding accounts receivable balances from Mallinckrodt. Mr. Reasons had no financial interest in these transactions.

Agreements Related to Intellectual Property

3 Months Ended

Mar. 31, 2021

13. Agreements Related to Intellectual Property

Asset Purchase Agreement – EPI Health, LLC

In October 2019, the Company sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement. EPI Health agreed to pay the Company a high single-digit royalty calculated as a percentage of net sales on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, ten years from the date of the first commercial sale of RHOFADE in such country. The Company recorded royalty income under the asset purchase agreement of $0.2 million during each of the three months ended March 31, 2021 and 2020. Royalty income is included in other revenue on the condensed consolidated statements of operations and comprehensive loss. EPI Health has also agreed to pay the Company potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the asset purchase agreement, and 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions.

Agreement and Plan of Merger – Confluence

In August 2017, the Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”). In November 2018, a development milestone specified in the Confluence Agreement was achieved, as a result of which the Company paid the former Confluence equity holders $2.5 million in cash and issued 253,208 shares of its common stock with a fair value of $2.2 million. Under the Confluence Agreement, the Company also agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement. In addition, the Company agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. In addition to the payments described above, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances.

Income Taxes

3 Months Ended

Mar. 31, 2021

Income Taxes

Income Taxes

14. Income Taxes

The Company did not record a federal or state income tax benefit for losses incurred during each of the three months ended March 31, 2021 and 2020. The Company concluded that it is more likely than not that its deferred tax assets will not be realized which resulted in recording a full valuation allowance during those periods.

Discontinued Operations

3 Months Ended

Mar. 31, 2021

Discontinued Operations

Discontinued Operations

15. Discontinued Operations

The following table presents information related to liabilities reported as discontinued operations in the Company’s condensed consolidated balance sheet:


	March 31,		December 31,
(In thousands)	2021		2020
Accounts payable	$	971	$	1,175
Accrued expenses		2,018		1,936
Discontinued operations - current liabilities	$	2,989	$	3,111

Segment Information

3 Months Ended

Mar. 31, 2021

Segment Information

Segment Information

16. Segment Information

The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. Corporate and other includes general and administrative expenses as well as eliminations of intercompany transactions. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States.

The Company’s results of operations by segment for the three months ended March 31, 2021 and 2020 are summarized in the tables below:


(In thousands)			Contract		Corporate		Total
Three Months Ended March 31, 2021	Therapeutics		Research		and Other		Company
Total revenue	$	242	$	3,200	$	(1,665)	$	1,777
Cost of revenue		—		2,769		(1,567)		1,202
Research and development		7,936		—		(98)		7,838
General and administrative		—		629		4,198		4,827
Revaluation of contingent consideration		16,439		—		—		16,439
Loss from operations	$	(24,133)	$	(198)	$	(4,198)	$	(28,529)


(In thousands)			Contract		Corporate		Total
Three Months Ended March 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	218	$	3,407	$	(2,218)	$	1,407
Cost of revenue		—		3,386		(2,117)		1,269
Research and development		7,778		—		(101)		7,677
General and administrative		—		753		5,447		6,200
Revaluation of contingent consideration		1,767		—		—		1,767
Loss from operations	$	(9,327)	$	(732)	$	(5,447)	$	(15,506)
Loss from discontinued operations	$	(257)	$	—	$	(1)	$	(258)

Intersegment Revenue

Revenue for the contract research segment included $1.7 million and $2.2 million for services performed on behalf of the therapeutics segment for the three months ended March 31, 2021 and 2020, respectively. All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations.

Legal Proceedings

3 Months Ended

Mar. 31, 2021

Legal Proceedings

Legal Proceedings

17. Legal Proceedings

Securities Class Action

On July 30, 2019, plaintiff Linda Rosi (“Rosi”) filed a putative class action complaint captioned Rosi v. Aclaris Therapeutics, Inc., et al. in the U.S. District Court for the Southern District of New York against the Company and certain of its executive officers. The complaint alleges that the defendants violated federal securities laws by, among other things, failing to disclose an alleged likelihood that regulators would scrutinize advertising materials related to ESKATA and find that the materials minimized the risks or overstated the efficacy of the product. The complaint seeks unspecified compensatory damages on behalf of Rosi and all other persons and entities that purchased or otherwise acquired the Company’s securities between May 8, 2018 and June 20, 2019.

On September 5, 2019, an additional plaintiff, Robert Fulcher (“Fulcher”), filed a substantially identical putative class action complaint captioned Fulcher v. Aclaris Therapeutics, Inc., et al. in the same court against the same defendants.

On November 6, 2019, the court consolidated the Rosi and Fulcher actions (together, the “Consolidated Securities Action”) and appointed Fulcher “lead plaintiff” for the putative class.

On January 24, 2020, Fulcher filed a consolidated amended complaint in the Consolidated Securities Action, naming two additional executive officers as defendants, extending the putative class period to August 12, 2019, and adding allegations concerning, among other things, alleged statements and omissions throughout the putative class period concerning ESKATA’s risks, tolerability and effectiveness. The defendants filed a motion to dismiss the consolidated amended complaint on April 17, 2020. Following briefing and oral argument on February 25, 2021, the motion was granted in part and denied in part on March 29, 2021, and the issues in dispute significantly narrowed. The defendants filed an answer to the remaining aspects of the consolidated amended complaint on April 19, 2021.

The Company and the other defendants dispute plaintiffs’ claims in the Consolidated Securities Action. At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter.

Stockholder Derivative Action

On November 15, 2019, plaintiff Keith Allred (“Allred”) filed a derivative stockholder complaint captioned Allred v. Walker et al. in the U.S. District Court for the Southern District of New York against certain of the Company’s directors and executive officers. The complaint alleges that the defendants, among other things, breached their fiduciary duties as directors and/or officers in connection with the claims alleged in the Consolidated Securities Action. The complaint seeks, among other things, unspecified compensatory damages on behalf of the Company.

On November 25, 2019, an additional plaintiff, Bruce Brown (“Brown”), filed a substantially identical complaint captioned Brown v. Walker et al. in the same court against the same defendants.

On December 12, 2019, the court consolidated the Allred and Brown actions under the caption In re Aclaris Therapeutics, Inc. Derivative Litigation (the “Consolidated Derivative Action”) and directed that future derivative cases filed in or transferred to the court arising out of substantially the same transactions or events be similarly consolidated. Thereafter, on January 11, 2020, the court stayed – subject to certain conditions – all deadlines in the Consolidated Derivative Action pending resolution of the defendants’ anticipated motion to dismiss the Consolidated Securities Action. The stay expired on April 27, 2021, but may be reinstated pending further developments in the

Consolidated Securities Action. No further proceedings have yet occurred or been scheduled in the Consolidated Derivative Action.

At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter.

Product Liability Lawsuit

On December 18, 2020, plaintiff Daurie Mancini filed an amended complaint under the caption Daurie Mancini v. Aclaris Therapeutics, Inc. et al in the Superior Court of New Jersey Ocean County against the Company and certain third parties alleging injuries as a result of the plaintiff’s alleged treatment with ESKATA in 2019. The amended complaint seeks unspecified compensatory and punitive damages. The Company filed a motion to dismiss the amended complaint on March 15, 2021. Briefing on the Company’s motion to dismiss has not been completed.

The Company disputes plaintiff’s claims and intends to defend the matter vigorously. At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2021
Summary of Significant Accounting Policies
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2021, the results of its operations and comprehensive loss for the three months ended March 31, 2021 and 2020, its changes in stockholders’ equity for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. The condensed consolidated balance sheet data as of December 31, 2020 was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles in the United States (“GAAP”). The financial data and other information disclosed in these notes related to the three months ended March 31, 2021 and 2020 are unaudited. The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. The unaudited interim financial statements of the Company included herein have been prepared, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2021.
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP. The condensed consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, ATIL and Confluence. All intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the condensed consolidated statement of operations.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown in economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates.
Reclassifications	Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation.
Significant Accounting Policies	Significant Accounting Policies The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on February 25, 2021. Except as set forth below, there have been no changes to the Company’s significant accounting policies from those disclosed in the annual report.
Contingent Consideration	Contingent Consideration The Company initially recorded a contingent consideration liability at fair value on the date of acquisition related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of the development, regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments. Significant judgement was involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of the contingent consideration liability can result from changes to one or more of these assumptions. The Company evaluates the fair value estimate of the contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in the condensed consolidated statement of operations. The fair value of contingent consideration is estimated using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for commercial milestone and royalty payments and then applying a risk-adjusted discount rate to calculate the present value of the potential payments. Significant assumptions used in the Company’s estimates include the probability of achieving regulatory milestones and commencing commercialization, which are based on an asset’s current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 4% and 40%. Additionally, estimated future sales levels and the risk-adjusted discount rate applied to the potential payments are also significant assumptions used in calculating the fair value. The discount rate ranged between 5.9% and 8.1% depending on the year of each potential payment.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements None.

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value of Financial Assets and Liabilities

Schedule of assets and liabilities measured at fair value on a recurring basis


	March 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	29,132	$	—	$	—	$	29,132
Marketable securities		—		107,390		—		107,390
Total assets	$	29,132	$	107,390	$	—	$	136,522


Liabilities:
Contingent consideration	$	—	$	—	$	20,500	$	20,500
Total liabilities	$	—	$	—	$	20,500	$	20,500


	December 31, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	14,955	$	1,500	$	—	$	16,455
Marketable securities		—		32,068		—		32,068
Total assets	$	14,955	$	33,568	$	—	$	48,523


Liabilities:
Contingent consideration	$	—	$	—	$	4,061	$	4,061
Total liabilities	$	—	$	—	$	4,061	$	4,061

Schedule of the fair value of available for sale marketable securities


	March 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Corporate debt securities	$	21,556	$	—	$	(31)	$	21,525
Commercial paper		54,045		—		—		54,045
Asset-backed debt securities		14,062		1		(6)		14,057
U.S. government agency debt securities		17,760		3		—		17,763
Total marketable securities	$	107,423	$	4	$	(37)	$	107,390


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gain		Loss		Value
Marketable securities:
Commercial paper	$	20,483	$	—	$	—	$	20,483
Asset-backed debt securities		4,036		1		—		4,037
U.S. government agency debt securities		7,547		1		—		7,548
Total marketable securities	$	32,066	$	2	$	—	$	32,068

Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2021

Property and Equipment, Net

Schedule of property and equipment, net


		March 31,		December 31,
(In thousands)	2021		2020
Computer equipment	$	1,197	$	1,197
Lab equipment		1,340		1,340
Furniture and fixtures		617		617
Leasehold improvements		1,123		1,123
Property and equipment, gross		4,277		4,277
Accumulated depreciation		(2,853)		(2,623)
Property and equipment, net	$	1,424	$	1,654

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Intangible Assets

Schedule of intangible assets


		Gross Cost				Accumulated Amortization
	Remaining		March 31,		December 31,		March 31,		December 31,
(In thousands, except years)	Life (years)	2021		2020		2021		2020
Other intangible assets	6.3	$	751	$	751	$	275	$	257
In-process research and development	na		6,629		6,629		—		—
Total intangible assets		$	7,380	$	7,380	$	275	$	257

Schedule of estimated future amortization expenses


		Year Ending
(In thousands)		December 31,
2021	$	56
2022		75
2023		75
2024		75
2025		75
Thereafter		120
Total	$	476

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2021

Accrued Expenses

Schedule of accrued expenses


		March 31,		December 31,
(In thousands)	2021		2020
Employee compensation expenses	$	1,357	$	3,971
Research and development expenses		1,086		761
Other		1,156		1,174
Total accrued expenses	$	3,599	$	5,906

Stock-Based Awards (Tables)

3 Months Ended

Mar. 31, 2021

Stock-Based Awards

Assumptions used to determine fair value of stock options granted


	Three Months Ended
	March 31,
	2021		2020
Risk-free interest rate	0.90	%	0.97	%
Expected term (in years)	6.3		6.2
Expected volatility	76.60	%	85.28	%
Expected dividend yield	0	%	0	%

Summary of stock option activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
(In thousands, except share and per share data and years)	of Shares	Price		Term	Value
				(in years)
Outstanding as of December 31, 2020	2,871,498	$	15.16	6.8	$	4,890
Granted	880,600		24.06
Exercised	(27,632)		15.06			224
Forfeited and cancelled	(10,000)		21.93
Outstanding as of March 31, 2021	3,714,466	$	17.25	7.3	$	31,732
Options vested and expected to vest as of March 31, 2021	3,714,466	$	17.25	7.3	$	31,732
Options exercisable as of March 31, 2021	2,083,539	$	17.56	5.9	$	18,085

Summary of restricted stock units activity


		Weighted
		Average
		Grant Date		Aggregate
	Number	Fair Value		Intrinsic
(In thousands, except share and per share data)	of Shares	Per Share		Value
Outstanding as of December 31, 2020	2,244,157	$	3.83
Granted	565,600		24.06
Vested	(377,371)		5.94	$	8,892
Forfeited and cancelled	(20,775)		2.85
Outstanding as of March 31, 2021	2,411,611	$	8.25

Stock-based compensation expense


	Three Months Ended
	March 31,
(In thousands)	2021		2020
Cost of revenue	$	247	$	260
Research and development		876		816
General and administrative		1,552		2,377
Total stock-based compensation expense	$	2,675	$	3,453

Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2021

Net Loss per Share

Basic and diluted net loss per share


	Three Months Ended
	March 31,
(In thousands, except for share and per share data)	2021		2020
Numerator:
Net loss	$	(28,754)	$	(15,586)
Denominator:
Weighted average shares of common stock outstanding, basic and diluted		50,337,807		41,618,429
Net loss per share, basic and diluted	$	(0.57)	$	(0.37)

Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders



	March 31,
	2021	2020
Options to purchase common stock	3,714,466	3,429,933
Restricted stock unit awards	2,411,611	3,870,059
Warrants	—	460,251
Total potential shares of common stock	6,126,077	7,760,243

Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases

Schedule of supplemental balance sheet information related to operating leases


		March 31,		December 31,
(In thousands)	2021		2020
Operating Leases:
Gross cost	$	5,240	$	5,240
Accumulated amortization		(1,279)		(1,111)
Other assets	$	3,961	$	4,129

Current portion of lease liabilities	$	625	$	603
Other liabilities		2,730		2,894
Total operating lease liabilities	$	3,355	$	3,497

Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2021

Discontinued Operations

Schedule of discontinued operations


	March 31,		December 31,
(In thousands)	2021		2020
Accounts payable	$	971	$	1,175
Accrued expenses		2,018		1,936
Discontinued operations - current liabilities	$	2,989	$	3,111

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=109226691&loc=SL51724579-110230

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109222650&loc=d3e1474-107760

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721677-107760

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109222160&loc=SL51721533-107759

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721659-107760

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721665-107760

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109226691&loc=d3e2941-110230

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721675-107760

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721683-107760

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=109222650&loc=d3e1361-107760

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721671-107760

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721673-107760

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721663-107760

+ Details

Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Information

Summary of results of operations by segment


(In thousands)			Contract		Corporate		Total
Three Months Ended March 31, 2021	Therapeutics		Research		and Other		Company
Total revenue	$	242	$	3,200	$	(1,665)	$	1,777
Cost of revenue		—		2,769		(1,567)		1,202
Research and development		7,936		—		(98)		7,838
General and administrative		—		629		4,198		4,827
Revaluation of contingent consideration		16,439		—		—		16,439
Loss from operations	$	(24,133)	$	(198)	$	(4,198)	$	(28,529)


(In thousands)			Contract		Corporate		Total
Three Months Ended March 31, 2020	Therapeutics		Research		and Other		Company
Total revenue	$	218	$	3,407	$	(2,218)	$	1,407
Cost of revenue		—		3,386		(2,117)		1,269
Research and development		7,778		—		(101)		7,677
General and administrative		—		753		5,447		6,200
Revaluation of contingent consideration		1,767		—		—		1,767
Loss from operations	$	(9,327)	$	(732)	$	(5,447)	$	(15,506)
Loss from discontinued operations	$	(257)	$	—	$	(1)	$	(258)

Organization and Nature of Business (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Aug. 31, 2020	Dec. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Production information
Cash, cash equivalents and marketable securities			$ 142,700
Accumulated deficit		$ 504,542	$ 533,296
Lincoln Park Capital Fund, LLC \| Purchase Agreement
Production information
Common stock sell	$ 15,000
Purchase agreement term	36 months
Common stock, sold		2,111,170
Proceeds from common stock		$ 7,700
Term Loan Facility
Production information
Loan borrowed				$ 11,000

Summary of Significant Accounting Policies (Details)	3 Months Ended
Summary of Significant Accounting Policies (Details)	Mar. 31, 2021
Minimum
Contingent Consideration [Abstract]
Percentage of Assets Current Stage of Development and Review	4.00%
Percentage of Discount Rates Applied to Contingent Payment	5.90%
Maximum
Contingent Consideration [Abstract]
Percentage of Assets Current Stage of Development and Review	40.00%
Percentage of Discount Rates Applied to Contingent Payment	8.10%

Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Assets:
Marketable securities	$ 107,390		$ 32,068
Liabilities:
Transfers from Level 1 to Level 2	0	$ 0
Transfers from Level 2 to Level 1	0	0
Transfers into or out of Level 3	0	0
Revaluation of contingent consideration	16,439	$ 1,767
Confluence
Liabilities:
Revaluation of contingent consideration	16,400
Recurring
Assets:
Cash equivalents	29,132		16,455
Marketable securities	107,390		32,068
Total assets measured at fair value	136,522		48,523
Liabilities:
Contingent consideration	20,500		4,061
Total liabilities measured at fair value	20,500		4,061
Recurring \| Level 1
Assets:
Cash equivalents	29,132		14,955
Total assets measured at fair value	29,132		14,955
Recurring \| Level 2
Assets:
Cash equivalents			1,500
Marketable securities	107,390		32,068
Total assets measured at fair value	107,390		33,568
Recurring \| Level 3
Liabilities:
Contingent consideration	20,500		4,061
Total liabilities measured at fair value	$ 20,500		$ 4,061

Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Marketable securities:
Amortized Cost	$ 107,423	$ 32,066
Gross Unrealized Gain	4	2
Gross Unrealized Loss	(37)
Fair Value	107,390	32,068
Corporate debt securities
Marketable securities:
Amortized Cost	21,556
Gross Unrealized Loss	(31)
Fair Value	21,525
Commercial paper
Marketable securities:
Amortized Cost	54,045	20,483
Fair Value	54,045	20,483
Asset-backed securities
Marketable securities:
Amortized Cost	14,062	4,036
Gross Unrealized Gain	1	1
Gross Unrealized Loss	(6)
Fair Value	14,057	4,037
U.S. government agency debt securities
Marketable securities:
Amortized Cost	17,760	7,547
Gross Unrealized Gain	3	1
Fair Value	$ 17,763	$ 7,548

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Property and Equipment, Net
Property and equipment, gross	$ 4,277		$ 4,277
Accumulated depreciation	(2,853)		(2,623)
Property and equipment, net	1,424		1,654
Depreciation expense	200	$ 300
Computer equipment
Property and Equipment, Net
Property and equipment, gross	1,197		1,197
Lab equipment
Property and Equipment, Net
Property and equipment, gross	1,340		1,340
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	617		617
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	$ 1,123		$ 1,123

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Definite-lived intangible assets
Accumulated Amortization	$ 275	$ 257
Intangible assets, net
Gross cost	7,380	7,380
In-process research and development
Definite-lived intangible assets
Gross Cost	$ 6,629	6,629
Other intangible assets
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items]
Remaining life	6 years 3 months 18 days
Definite-lived intangible assets
Gross Cost	$ 751	751
Accumulated Amortization	$ 275	$ 257

Intangible Assets - Future Amortization Expenses (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Future amortization expenses
2021	$ 56
2022	75
2023	75
2024	75
2025	75
Thereafter	120
Total	$ 476

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Accrued Expenses
Employee compensation expenses	$ 1,357	$ 3,971
Research and development expenses	1,086	761
Other	1,156	1,174
Total accrued expenses	$ 3,599	$ 5,906

Debt (Details) $ in Millions		1 Months Ended
Debt (Details) $ in Millions	Mar. 30, 2020	Mar. 31, 2020 USD ($) installment shares	Mar. 31, 2021 USD ($)	Jan. 31, 2021 shares	Dec. 31, 2020 USD ($)
SVB
Debt Instrument [Line Items]
Common stock warrants \| shares		460,251		388,119
Term Loan Facility
Debt Instrument [Line Items]
Loan borrowed		$ 11.0
Number of consecutive monthly installments \| installment		24
Annual interest rate		6.75%
Final payment fee percentage		5.00%
Term Loan Facility \| SVB
Debt Instrument [Line Items]
Loan borrowed			$ 11.0		$ 11.0
Term Loan Facility \| Prepayment prior to the first anniversary of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage	3.00%
Term Loan Facility \| Prepayment between the first and second anniversaries of the Funding Date
Debt Instrument [Line Items]
Prepayment fee percentage	2.00%
Term Loan Facility \| Prepayment after the second anniversary of the Funding Date but before March 1, 2024
Debt Instrument [Line Items]
Prepayment fee percentage	1.00%
Term Loan Facility \| Prime Rate
Debt Instrument [Line Items]
Basis spread over LIBOR		2.00%

Stockholders' Equity (Details) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended	12 Months Ended
	Jan. 31, 2021 USD ($) $ / shares shares	Aug. 31, 2020 USD ($) shares	Mar. 31, 2021 USD ($) Vote $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Mar. 31, 2020 USD ($) $ / shares shares
Class of Stock [Line Items]
Preferred stock, shares authorized \| shares			10,000,000	10,000,000
Preferred stock, shares outstanding \| shares			0	0
Common stock, shares authorized \| shares			100,000,000	100,000,000
Common stock, par value (in dollars per share) \| $ / shares			$ 0.00001	$ 0.00001
Dividend declared			$ 0
Number of votes per share \| Vote			1
January 2021 Public Offering
Class of Stock [Line Items]
Proceeds from common stock	$ 103,300
Shares, Issued \| shares	6,306,271
Shares Issued, Price Per Share \| $ / shares	$ 17.50
Proceeds From Issuance Of Common Stock, Gross	$ 110,400
Payments Of Underwriting Discounts And Commissions	6,600
Payments of Stock Issuance Costs	$ 400
Lincoln Park Capital Fund, LLC \| Purchase Agreement
Class of Stock [Line Items]
Common stock sell		$ 15,000
Purchase agreement term		36 months
Common stock shares issued \| shares		121,584
Aggregate fair value		$ 300
Common stock, sold \| shares				2,111,170
Proceeds from common stock				$ 7,700
SVB
Class of Stock [Line Items]
Common stock warrants \| shares	388,119				460,251
Initial exercise price \| $ / shares					$ 0.956
Fair value of warrants					$ 400

Stock-Based Awards (Details) - shares		3 Months Ended		44 Months Ended
Stock-Based Awards (Details) - shares	Jan. 01, 2021	Mar. 31, 2021	Mar. 31, 2020	Sep. 14, 2015	Dec. 31, 2020	Sep. 30, 2015
Stock-based awards
Options granted (in shares)		880,600
Options outstanding		3,714,466			2,871,498
Stock Option Valuation
Risk-free interest rate (as a percent)		0.90%	0.97%
Expected term (in years)		6 years 3 months 18 days	6 years 2 months 12 days
Expected volatility (as a percent)		76.60%	85.28%
Expected dividend yield (as a percent)		0.00%	0.00%
2017 Inducement Plan
Stock-based awards
Options outstanding		439,500
2017 Inducement Plan \| Restricted stock unit awards
Stock-based awards
Number of shares outstanding		25,758
2015 Equity Incentive Plan
Stock-based awards
Number of shares authorized						1,643,872
Number of shares available for grant		2,937,121
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent)		4.00%
Additional shares available	1,804,372
Options outstanding		2,725,405
2015 Equity Incentive Plan \| Restricted stock unit awards
Stock-based awards
Number of shares outstanding		2,385,853
2012 Equity Compensation Plan
Stock-based awards
Number of shares available for grant		0
Options granted (in shares)				1,140,524
Options outstanding		549,561
Term of award (in years)		10 years

Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Options, Number of Shares
Number of Shares, beginning balance	2,871,498
Number of Shares, Granted	880,600
Number of Shares, Exercised	(27,632)
Number of Shares, Forfeited and cancelled	(10,000)
Number of Shares, ending balance	3,714,466	2,871,498
Number of Shares, Options vested and expected to vest	3,714,466
Number of Shares, Options exercisable	2,083,539
Options, Weighted Average Exercise Price
Weighted Average Exercise Price, beginning balance (in dollars per share)	$ 15.16
Weighted Average Exercise Price, Granted (in dollars per share)	24.06
Weighted Average Exercise Price, Exercised (in dollars per share)	15.06
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share)	21.93
Weighted Average Exercise Price, ending balance (in dollars per share)	17.25	$ 15.16
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share)	17.25
Weighted Average Exercise Price, Options exercisable (in dollars per share)	$ 17.56
Options, Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term (in years)	7 years 3 months 18 days	6 years 9 months 18 days
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years)	7 years 3 months 18 days
Weighted Average Remaining Contractual Term, Options exercisable (in years)	5 years 10 months 24 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value	$ 31,732	$ 4,890
Aggregate Intrinsic Value, Exercised	224
Aggregate Intrinsic Value, Options vested and expected to vest	31,732
Aggregate Intrinsic Value, Options exercisable	$ 18,085
Weighted average grant-date fair value of stock options granted (in dollars per share)	$ 16.15

Stock-Based Awards - RSUs (Details) - Restricted stock unit awards $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) $ / shares shares
RSU, Number of Units
Units outstanding, beginning of period \| shares	2,244,157
Granted \| shares	565,600
Vested \| shares	(377,371)
Forfeited and cancelled \| shares	(20,775)
Units outstanding, end of period \| shares	2,411,611
RSU, Weighted Average Grant Date Fair Value Per Unit
Weighted average grant date fair value, beginning balance (in dollars per share) \| $ / shares	$ 3.83
Weighted average grant date fair value, granted (in dollars per share) \| $ / shares	24.06
Weighted average grant date fair value, vested (in dollars per share) \| $ / shares	5.94
Forfeited and cancelled, estimated grant date fair value (in dollars per share) \| $ / shares	2.85
Weighted average grant date fair value, ending balance (in dollars per share) \| $ / shares	$ 8.25
Aggregate intrinsic value of awards that vested during the period \| $	$ 8,892

Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock-based compensation expense
Stock-based compensation expense	$ 2,675	$ 3,453
Unrecognized stock-based compensation cost, options	17,100
Unrecognized compensation, RSUs	17,800
Cost of revenue.
Stock-based compensation expense
Stock-based compensation expense	247	260
Research and development
Stock-based compensation expense
Stock-based compensation expense	876	816
General and administrative
Stock-based compensation expense
Stock-based compensation expense	$ 1,552	$ 2,377
Options to purchase common stock
Stock-based compensation expense
Weighted average recognition period unrecognized stock-based compensation cost (in years)	3 years 4 months 24 days

Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Numerator:
Net loss	$ (28,754)	$ (15,586)
Denominator:
Weighted average shares of common stock outstanding, basic and diluted (in shares)	50,337,807	41,618,429
Net loss per share, basic and diluted	$ (0.57)	$ (0.37)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Net Loss per Share - Anti-dilution (Details) - shares	3 Months Ended
Net Loss per Share - Anti-dilution (Details) - shares	Mar. 31, 2021	Mar. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	6,126,077	7,760,243
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	3,714,466	3,429,933
Restricted stock unit awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders	2,411,611	3,870,059
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders		460,251

Leases (Details) $ in Thousands	3 Months Ended		12 Months Ended
Leases (Details) $ in Thousands	Mar. 31, 2021 USD ($) ft² item	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($) ft²	Feb. 28, 2019 ft²
Lessee, Lease, Description [Line Items]
Area leased, sublease agreement \| ft²	33,019			20,433
Number of lease financing arrangements \| item	2
Amortization expense	$ 300	$ 300
Sub-subleased \| ft²			8,115
Operating Leases:
Gross cost	4,277		$ 4,277
Accumulated amortization	(2,853)		(2,623)
Property and equipment, net	1,424		1,654
Current portion of lease liabilities	$ 625		$ 603
Financial position	us-gaap:OtherLiabilitiesCurrent		us-gaap:OtherLiabilitiesCurrent
Other liabilities	$ 2,730		$ 2,894
Financial position	us-gaap:OtherLiabilitiesNoncurrent		us-gaap:OtherLiabilitiesNoncurrent
Total operating lease liabilities	$ 3,355		$ 3,497
Operating Leases
Operating Leases:
Gross cost	5,240		5,240
Accumulated amortization	(1,279)		(1,111)
Property and equipment, net	$ 3,961		$ 4,129

Related Party Transactions (Details) - Mallinckrodt plc. - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020
Related Party Transactions
Invoice amount	$ 20		$ 200
Outstanding accounts receivable	$ 20	$ 24

Agreements Related to Intellectual Property (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended
	Oct. 31, 2019	Nov. 30, 2018	Aug. 31, 2017	Mar. 31, 2021	Mar. 31, 2020
Agreements Related to Intellectual Property
Revenue, Net				$ 1,777	$ 1,407
EPI Health LLC
Agreements Related to Intellectual Property
Percentage of Sale of EPI Health Cream	1.00%
Potential milestone payments				20,000
Percentage of upfront and license fees	25.00%
Term of agreement	10 years
EPI Health LLC \| Royalty
Agreements Related to Intellectual Property
Revenue, Net				$ 200	$ 200
Agreement and Plan of Merger \| Confluence
Agreements Related to Intellectual Property
Payment in cash		$ 2,500
Number of shares		253,208
Fair value of common stock		$ 2,200
Additional contingent consideration based on milestones, maximum, per Agreement			$ 75,000
Royalty term			10 years

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020
Income Taxes
Federal income tax benefit	$ 0	$ 0
State income tax benefit	$ 0	$ 0

Discontinued Operations (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract]
Accounts payable	$ 971	$ 1,175
Accrued expenses	2,018	1,936
Discontinued operations - current liabilities	$ 2,989	$ 3,111

Segment Information (Details) $ in Thousands	3 Months Ended
Segment Information (Details) $ in Thousands	Mar. 31, 2021 USD ($) segment	Mar. 31, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments \| segment	2
Total revenue	$ 1,777	$ 1,407
Cost of revenue	1,202	1,269
Research and development	7,838	7,677
General and administrative	4,827	6,200
Revaluation of contingent consideration	16,439	1,767
Loss from operations	(28,529)	(15,506)
Loss from discontinued operations		(258)
Dermatology Therapeutics Segment
Segment Reporting Information [Line Items]
Total revenue	242	218
Research and development	7,936	7,778
Revaluation of contingent consideration	16,439	1,767
Loss from operations	(24,133)	(9,327)
Loss from discontinued operations		(257)
Contract Research Segment
Segment Reporting Information [Line Items]
Total revenue	3,200	3,407
Cost of revenue	2,769	3,386
General and administrative	629	753
Loss from operations	(198)	(732)
Corporate and Other
Segment Reporting Information [Line Items]
Total revenue	(1,665)	(2,218)
Cost of revenue	(1,567)	(2,117)
Research and development	(98)	(101)
General and administrative	4,198	5,447
Loss from operations	(4,198)	(5,447)
Loss from discontinued operations		(1)
Intersegment Eliminations \| Contract Research Segment
Segment Reporting Information [Line Items]
Total revenue	$ 1,700	$ 2,200

Legal Proceedings (Details)	Jan. 24, 2020 item
Executive officer
Other Commitments [Line Items]
Number of defendants	2