Aclaris Therapeutics, Inc. 10-Q

Item 1. Financial Statements ACLARIS THERAPEUTICS, IN C. CONDENSED CONSOLIDATED BALANCE SHEET S (Unaudited) ​ (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ 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 ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 2 Table of Contents ACLARIS THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) ​ (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2021 2020 ​ Revenues: ​ ​ ​ ​ ​ ​ ​ Contract research ​ $ 1,535 ​ $ 1,189 ​ Other revenue ​ ​ 242 ​ ​ 218 ​ 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 ) ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 3 Table of Contents ACLARIS THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) ​ (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ Total ​ ​ ​ ​ Par ​ Paid ‑ in ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Value Capital Loss Deficit Equity Balance at December 31, 2020 ​ 45,109,314 ​ $ — ​ $ 542,286 ​ $ ( 94 ) ​ $ ( 504,542 ) ​ $ 37,650 ​ Issuance of common stock in connection with exercise of stock options and warrants and vesting of restricted stock units ​ 666,144 ​ ​ — ​ ​ ( 2,579 ) ​ ​ — ​ ​ — ​ ​ ( 2,579 ) ​ Issuance of common stock in connection with public offering, net of offering costs of $ 7,011 ​ 6,306,271 ​ ​ — ​ ​ 103,348 ​ ​ — ​ ​ — ​ ​ 103,348 ​ Unrealized loss 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 March 31, 2021 ​ 52,081,729 ​ $ — ​ $ 645,730 ​ $ ( 140 ) ​ $ ( 533,296 ) ​ $ 112,294 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Other ​ ​ ​ Total ​ ​ ​ ​ Par ​ Paid ‑ in ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Value Capital Income (Loss) Deficit Equity Balance at December 31, 2019 ​ 41,485,638 ​ $ — ​ $ 523,505 ​ $ ( 66 ) ​ $ ( 453,527 ) ​ $ 69,912 Vesting of restricted stock units ​ 346,582 ​ ​ — ​ ​ ( 95 ) ​ ​ — ​ ​ — ​ ​ ( 95 ) 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 March 31, 2020 ​ 41,832,220 ​ $ — ​ $ 527,241 ​ $ 47 ​ $ ( 469,113 ) ​ $ 58,175 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 4 Table of Contents ACLARIS THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ 2021 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 ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents ACLARIS THERAPEUTICS, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ​ ​ 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. ​ ​ 6 Table of Contents 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. ​ 7 Table of Contents ​ 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. ​ ​ 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 ​ ​ 8 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ 9 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ 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. ​ ​ 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 ​ 10 Table of Contents ​ ​ 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 ​ ​ ​ ​ 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. ​ ​ 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. ​ 11 Table of Contents 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. U pon 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. ​ ​ 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, 12 Table of Contents 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. 13 Table of Contents ​ 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. ​ ​ 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 14 Table of Contents 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 ​ ​ ​ 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. ​ ​ 15 Table of Contents 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. ​ ​ 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. ​ ​ 16 Table of Contents 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. ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 17 Table of Contents 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. ​ ​ 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 18 Table of Contents 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. ​ ​ ​ 19 Table of Contents