What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-10 · 113 added, 82 removed, 355 unchanged (35% of the section changed)

26 unchanged sentences

Preferred stock, $ 0.00001 par value;

10,000,000 shares authorized and no shares issued or outstanding at March 31, 2022 and December 31, 2021

10,000,000 shares authorized and no shares issued or outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.00001 par value;

100,000,000 shares authorized at March 31, 2022 and December 31, 2021;

61,737,483 and 61,228,446 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

100,000,000 shares authorized at June 30, 2022 and December 31, 2021;

66,667,580 and 61,228,446 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid‑in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Contract research

12 unchanged sentences

Other comprehensive loss:

Unrealized loss on marketable securities, net of tax of $ 0

Unrealized gain (loss) on marketable securities, net of tax of $ 0

Foreign currency translation adjustment

13 unchanged sentences

Balance at March 31, 2022

Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units

Issuance of common stock under at-the-market sales agreement, net of offering costs of $ 2,341

Unrealized loss on marketable securities

Stock-based compensation expense

Balance at June 30, 2022

Comprehensive

8 unchanged sentences

Balance at March 31, 2021

Issuance of common stock in connection with vesting of restricted stock units

Issuance of common stock in connection with public offering, net of offering costs of $ 8,899

Unrealized gain on marketable securities

Foreign currency translation adjustment

Stock-based compensation expense

Balance at June 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities :

16 unchanged sentences

Proceeds from issuance of common stock in connection with public offerings, net of issuance costs

Restricted stock unit employee tax withholdings

Proceeds from issuance of common stock under the at-the-market sales agreement, net of issuance costs

Payments of employee withholding taxes related to restricted stock unit award vesting

Proceeds from exercise of employee stock options and the issuance of stock

5 unchanged sentences

Additions to property and equipment included in accounts payable

Offering costs included in accounts payable

The accompanying notes are an integral part of these condensed consolidated financial statements.

4 unchanged sentences

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.

In 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 2017, Confluence Life Sciences, Inc.

(now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc.

3 unchanged sentences

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, 2022, the Company had cash, cash equivalents and marketable securities of $ 203.6 million and an accumulated deficit of $ 614.2 million.

As of June 30, 2022, the Company had cash, cash equivalents and marketable securities of $ 255.8 million and an accumulated deficit of $ 634.7 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.

Prior to the acquisition of Confluence, 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.

3 unchanged sentences

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.

The Company’s ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressure, and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID-19 pandemic and geopolitical tensions.

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.

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.

2 unchanged sentences

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2022 and 2021, and the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 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 24, 2022 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, 2022, the results of its operations and comprehensive loss for the three months ended March 31, 2022 and 2021, its changes in stockholders’ equity for the three months ended March 31, 2022 and 2021 and its cash flows for the three months ended March 31, 2022 and 2021.

The accompanying condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statement of stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 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 24, 2022 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 June 30, 2022, the results of its operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021, its changes in stockholders’ equity for the three and six months ended June 30, 2022 and 2021 and its cash flows for the six months ended June 30, 2022 and 2021.

The condensed consolidated balance sheet data as of December 31, 2021 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, 2022 and 2021 are unaudited.

The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2022 and 2021 are unaudited.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, 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.

10 unchanged sentences

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

9 unchanged sentences

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 10 % and 40 % at March 31, 2022.

Probability of success assumptions ranged between 10 % and 40 % at June 30, 2022.

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.

2 unchanged sentences

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, 2022

June 30, 2022

(In thousands)

9 unchanged sentences

Total liabilities

As of March 31, 2022 and December 31, 2021, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs.

The Company’s marketable securities as of March 31, 2022 and December 31, 2021 consisted of commercial paper and corporate, asset-backed, foreign government agency and U.S.

As of June 30, 2022 and December 31, 2021, the Company’s cash equivalents consisted of a money market fund, which was valued based upon Level 1 inputs.

The Company’s marketable securities as of June 30, 2022 and December

31, 2021 consisted of commercial paper and corporate, asset-backed and U.S.

government agency debt securities, which were all 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.

Marketable securities as of December 31, 2021 also included foreign government agency debt securities which were all valued based upon Level 2 inputs.

In determining the fair value of its Level 2 investments, the Company relies on quoted prices for identical securities in markets that are not active.

These quoted prices are 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.

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, 2022 and 2021, there were no transfers into or out of Level 3.

The decrease in contingent consideration of $ 1.2 million during the three months ended March 31, 2022 was mainly due to higher discount rates, resulting from higher risk-free rates and wider credit spreads, being applied to potential payments relative to prior periods.

The overall decrease in contingent consideration was partially offset by the impact of the passage of time.

As of March 31, 2022 and December 31, 2021, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:

March 31, 2022

During the three and six months ended June 30, 2022 and 2021, there were no transfers into or out of Level 3.

A decrease in the fair value of the contingent consideration liability of $ 4.6 million during the six months ended June 30, 2022 was mainly due to higher discount rates, resulting from higher risk-free rates and wider credit spreads, being applied to potential payments relative to prior periods.

The overall decrease was partially offset by an increase in the contingent consideration liability as a result of the impact of the passage of time.

As of June 30, 2022 and December 31, 2021, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows:

June 30, 2022

(In thousands)

3 unchanged sentences

Asset-backed debt securities (1)

Foreign government agency debt securities

government agency debt securities

Total marketable securities

(1) Included in Corporate debt securities is $ 9.1 million with maturity dates between one and five years.

(2) Included in US government agency debt securities is $ 14.9 million with maturity dates between one and five years.

(1) Included in Asset-backed debt securities is $ 7.2 million with maturity dates between one and five years.

December 31, 2021

19 unchanged sentences

Property and equipment, net

Depreciation expense was $ 0.2 million for each of the three months ended March 31, 2022 and 2021.

Depreciation expense was $ 0.2 million for each of the three months ended June 30, 2022 and 2021, and $ 0.4 million for each of the six months ended June 30, 2022 and 2021.

Intangible Assets

5 unchanged sentences

Total intangible assets

Amortization expense was $ 19 thousand for each of the three months ended March 31, 2022 and 2021.

As of March 31, 2022, estimated future amortization expense was as follows:

Amortization expense was $ 19 thousand for each of the three months ended June 30, 2022 and 2021, and $ 38 thousand for each of the six months ended June 30, 2022 and 2021.

As of June 30, 2022, estimated future amortization expense was as follows:

(In thousands)

12 unchanged sentences

In July 2021, the Company repaid in full the $ 11.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees as of the payoff date, for a total payment of $ 11.7 million.

Following this repayment, all of the Company’s obligations under the Loan and Security Agreement are deemed to be terminated, except as set forth in the agreement.

Stockholders’ Equity

Preferred Stock

As of March 31, 2022 and December 31, 2021, 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, 2022 or December 31, 2021.

As of March 31, 2022 and December 31, 2021, 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.

There were 61,737,483 and 61,228,446 shares of common stock issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, 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 June 30, 2022 or December 31, 2021.

As of June 30, 2022 and December 31, 2021, 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.

There were 66,667,580 and 61,228,446 shares of common stock issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

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, 2022.

No dividends have been declared through June 30, 2022.

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.

1 unchanged sentence

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.

In January 2021, SVB net exercised the Warrant in full, and the Company issued 388,119 shares of common stock to SVB.

January 2021 Public Offering

2 unchanged sentences

As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $ 103.3 million.

June 2021 Public Offering

In June 2021, the Company closed a public offering in which it sold 8,098,592 shares of common stock at a price to the public of $ 17.75 per share, for aggregate gross proceeds of $ 143.8 million.

The Company paid underwriting discounts and commissions of $ 8.6 million, and also incurred expenses of $ 0.3 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 $ 134.9 million.

Sales of Common Stock Pursuant to At-The-Market Facility

In April 2022, the Company sold 4,838,709 shares of its common stock at a weighted average price per share of $ 15.50 , for aggregate gross proceeds of $ 75.0 million, pursuant to a sales agreement with SVB Securities LLC and Cantor Fitzgerald & Co., as sales agents, dated May 20, 2021.

The Company paid selling commissions and other fees of $ 2.2 million in connection with the sale.

Stock-Based Awards

8 unchanged sentences

As of January 1, 2022, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 2,449,137 shares.

As of March 31, 2022, 3,685,011 shares remained available for grant under the 2015 Plan.

The Company had 3,957,556 stock options and 1,394,476 RSUs outstanding as of March 31, 2022 under the 2015 Plan.

As of June 30, 2022, 3,372,766 shares remained available for grant under the 2015 Plan.

The Company had 4,130,376 stock options and 1,454,934 RSUs outstanding as of June 30, 2022 under the 2015 Plan.

2017 Inducement Plan

1 unchanged sentence

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 410,600 stock options and 5,575 RSUs outstanding as of March

31, 2022 under the 2017 Inducement Plan.

The Company had 410,600 stock options and 2,375 RSUs outstanding as of June 30, 2022 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.

1 unchanged sentence

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 484,145 were outstanding as of March 31, 2022.

The Company granted stock options to purchase a total of 1,140,524 shares under the 2012 Plan, of which 473,977 were outstanding as of June 30, 2022.

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, 2022 and 2021 were as follows:

Three Months Ended

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended

Risk-free interest rate

5 unchanged sentences

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2022:

The following table summarizes stock option activity for the six months ended June 30, 2022:

(In thousands, except share and per share data and years)

1 unchanged sentence

Forfeited and cancelled

Outstanding as of March 31, 2022

Options vested and expected to vest as of March 31, 2022

Options exercisable as of March 31, 2022

The weighted average grant date fair value of stock options granted during the three months ended March 31, 2022 was $ 9.97 per share.

Outstanding as of June 30, 2022

Options vested and expected to vest as of June 30, 2022

Options exercisable as of June 30, 2022

The weighted average grant date fair value of stock options granted during the six months ended June 30, 2022 was $ 9.89 per share.

Restricted Stock Units

The following table summarizes RSU activity for the three months ended March 31, 2022:

The following table summarizes RSU activity for the six months ended June 30, 2022:

(In thousands, except share and per share data)

1 unchanged sentence

Forfeited and cancelled

Outstanding as of March 31, 2022

Outstanding as of June 30, 2022

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

3 unchanged sentences

Total stock-based compensation expense

As of March 31, 2022, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 23.2 million and $ 18.6 million, respectively, which is expected to be recognized over weighted average periods of 3.5 years and 3.2 years, respectively.

As of June 30, 2022, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $ 23.7 million and $ 18.3 million, respectively, which is expected to be recognized over weighted average periods of 3.2 years and 3.0 years, respectively.

Net Loss per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands, except for share and per share data)

4 unchanged sentences

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, 2022 and 2021.

All share amounts presented in the table below represent the total number outstanding as of March 31, 2022 and 2021.

net loss per share for the three and six months ended June 30, 2022 and 2021.

All share amounts presented in the table below represent the total number outstanding as of June 30, 2022 and 2021.

Options to purchase common stock

3 unchanged sentences

Agreements for Office and Laboratory 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 Company has a sublease agreement 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.

If for any reason the lease between the 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 to a third party.

10 unchanged sentences

Total operating lease liabilities

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, 2022 and 2021.

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 June 30, 2022 and 2021 and $ 0.5 million for each of the six months ended June 30, 2022 and 2021.

Agreements Related to Intellectual Property

2 unchanged sentences

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, 2022 and 2021.

The Company recorded royalty income under the asset purchase agreement of $ 0.3 million and $ 0.2 million

during the three months ended June 30, 2022 and 2021, respectively, and $ 0.5 million and $ 0.4 million during the six months ended June 30, 2022 and 2021, respectively.

Royalty income is included in other revenue on the condensed consolidated statements of operations and comprehensive loss.

1 unchanged sentence

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”).

Under the Confluence Agreement, the Company 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.

The Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”).

Under the Confluence Agreement, the Company has agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $ 75.0 million based upon the achievement of specified future regulatory and commercial milestones set forth in the Confluence Agreement.

In addition, the Company has 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.

As of March 31, 2022 and December 31, 2021, the balance of the Company’s contingent consideration liability was $ 27.2 million and $ 28.4 million, respectively (see Note 3).

The Company did not record a federal or state income tax benefit for losses incurred during the three months ended March 31, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, the balance of the Company’s contingent consideration liability was $ 23.8 million and $ 28.4 million, respectively (see Note 3).

The Company did no t record a federal or state income tax benefit for losses incurred during the three and six months ended June 30, 2022 and 2021.

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.

11 unchanged sentences

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, 2022 and 2021 are summarized in the tables below:

The Company’s results of operations by segment for the three and six months ended June 30, 2022 and 2021 are summarized in the tables below:

(In thousands)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Total revenue

5 unchanged sentences

(In thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Total revenue

1 unchanged sentence

Research and development

Sales and marketing

General and administrative

1 unchanged sentence

Loss from operations

(In thousands)

Six Months Ended June 30, 2022

Total revenue

Cost of revenue

Research and development

General and administrative

Revaluation of contingent consideration

Loss from operations

(In thousands)

Six Months Ended June 30, 2021

Total revenue

Cost of revenue

Research and development

General and administrative

Revaluation of contingent consideration

Loss from operations

Intersegment Revenue

Revenue for the contract research segment included $ 2.9 million and $ 1.7 million for services performed on behalf of the therapeutics segment for the three months ended March 31, 2022 and 2021, respectively.

Revenue for the contract research segment included $ 3.2 million and $ 1.9 million for services performed on behalf of the therapeutics segment for the three months ended June 30, 2022 and 2021, respectively, and $ 6.1 million and $ 3.5 million for the six months ended June 30, 2022 and 2021, respectively.

All intersegment revenue has been eliminated in the Company’s condensed consolidated statement of operations.

5 unchanged sentences

The complaint alleged 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 (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”) and find that the materials minimized the risks or overstated the efficacy of the product.

The complaint sought 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.

The complaint sought 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.

8 unchanged sentences

The parties signed and filed a settlement agreement in July 2021.

On August 18, 2021, the court preliminarily approved the proposed

settlement, directed that notice be given to the putative class and scheduled the final approval settlement hearing for November 30, 2021.

On August 18, 2021, the court preliminarily approved the proposed settlement, directed that notice be given to the putative class and scheduled the final approval settlement hearing for November 30, 2021.

Notice was subsequently given to the putative class.

1 unchanged sentence

The Company’s financial obligation under the settlement was $ 2.7 million, which was within the limits of its insurance coverage.

Subsequent Event

Sales of Common Stock Pursuant to At-The-Market Facility

The Company paid selling commissions of $ 2.2 million in connection with the sale.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements