# EDGAR Filing Document

**Accession Number:** 0001557746
**File Stem:** 0001104659-25-107788
**Filing Date:** 2025-11
**Character Count:** 213445
**Document Hash:** b69c2679a00aa101c42c9a931857a9fe
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-25-107788.hdr.sgml**: 20251106

**ACCESSION NUMBER**: 0001104659-25-107788

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 67

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251106

**DATE AS OF CHANGE**: 20251106

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Aclaris Therapeutics, Inc.
- **CENTRAL INDEX KEY:** 0001557746
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 460571712
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-37581
- **FILM NUMBER:** 251458978

**BUSINESS ADDRESS:**
- **STREET 1:** 701 LEE ROAD
- **STREET 2:** SUITE 103
- **CITY:** WAYNE
- **STATE:** PA
- **ZIP:** 19087
- **BUSINESS PHONE:** 484-324-7933

**MAIL ADDRESS:**
- **STREET 1:** 701 LEE ROAD
- **STREET 2:** SUITE 103
- **CITY:** WAYNE
- **STATE:** PA
- **ZIP:** 19087

?xml version='1.0' encoding='ASCII'? Aclaris Therapeutics, Inc._September 30, 2025

[**Table of Contents**](#TOC)

**7**

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

---

| | |
|:---|:---|
| (Mark one) |  |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2025 | For the quarterly period ended September 30, 2025 |
| OR | OR |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

---

For the transition period from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Commission File Number 001-37581

Aclaris Therapeutics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction ofIncorporation or Organization) 46-0571712(I.R.S. EmployerIdentification No.) <br> 701 Lee Road, Suite 103Wayne, PA (Address of principal executive offices) 19087(Zip Code)

Registrant's telephone number, including area code: (484) 324-7933

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on which Registered |
| Common Stock, $0.00001 par value | ACRS | The Nasdaq Stock Market, LLC |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934:

---

| | |
|:---|:---|
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☒ | Smaller reporting company ☒  |
|  | Emerging growth company ☐  |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No ☒

The number of outstanding shares of the registrant's common stock, par value $0.00001 per share, as of the close of business on October 31, 2025 was 108,345,239.

------

[**Table of Contents**](#TOC)

**ACLARIS THERAPEUTICS, INC.**

**INDEX TO FORM 10-Q**

---

| | |
|:---|:---|
|  | **PAGE** |
| [PART I. FINANCIAL INFORMATION](#PartIFINANCIALINFORMATION_174111) |  |
| [Item 1. Financial Statements](#Item1FinancialStatements_403092) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024](#CONDENSEDCONSOLIDATEDBALANCESHEETS_47857) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024](#CONDENSEDCONSOLIDATEDSTATEMENTSOFOPERATI) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2025 and 2024](#CONDENSEDCONSOLIDATEDSTATEMENTOFSTOCKHOL) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024](#STATEMENTSOFCASHFLOWS_385830) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;[Notes to Unaudited Condensed Consolidated Financial Statements](#NOTESTOUNAUDITEDCONDENSEDCONSOLIDATEDFIN) | 6 |
| [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#Item2ManagementsDiscussionandAnalysis_76) | 22 |
| [Item 3. Quantitative and Qualitative Disclosures about Market Risk](#Item3QuantitativeandQualitative_779367) | 36 |
| [Item 4. Controls and Procedures](#Item4ControlsandProcedures_474377) | 37 |
| [PART II. OTHER INFORMATION](#PARTIIOTHERINFORMATION_777976) |  |
| [Item 1. Legal Proceedings](#Item1LegalProceedings_682668) | 37 |
| [Item 1A. Risk Factors](#Item1ARiskFactors_634620) | 37 |
| [Item 5. Other Information](#Item5OtherInformation_505397) | 37 |
| [Item 6. Exhibits](#Item6Exhibits_510492) | 38 |
| [Signatures](#SIGNATURES_208937) | 39 |

---

[**Table of Contents**](#TOC)

**Part I. FINANCIAL INFORMATION** 

**Item 1. Financial Statements**

**ACLARIS THERAPEUTICS, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

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

---

| | | |
|:---|:---|:---|
|  | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $25256 | $24570 |
| &nbsp;&nbsp;&nbsp;&nbsp;Short-term marketable securities | 70656 | 89024 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, prepaid expenses and other current assets | 4680 | 12357 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 100592 | 125951 |
| Marketable securities | 71297 | 90302 |
| Property and equipment, net | 811 | 1008 |
| Other assets | 2834 | 3066 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $175534 | $220327 |
| **Liabilities and Stockholders' Equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $9187 | $4690 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 9784 | 20333 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income | 3925 | 3890 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 2735 | 2683 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 25631 | 31596 |
| Other liabilities | 1711 | 4439 |
| Deferred income, net of current portion | 17492 | 20038 |
| Contingent consideration | 10600 | 8700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 55434 | 64773 |
| **Stockholders' Equity:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at September 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.00001 par value; 400,000,000 and 200,000,000 shares authorized at September 30, 2025 and December 31, 2024, respectively; 108,342,592 and 107,850,124 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 1067491 | 1058317 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | 597 | 97 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (947989) | (902861) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 120100 | 155554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $175534 | $220327 |

---

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

[**Table of Contents**](#TOC)

**ACLARIS THERAPEUTICS, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(Unaudited)**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
|  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
|  | **2025** | **2024** | **2025** | **2024** |
| Revenues: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract research | $485 | $645 | $1372 | $1926 |
| &nbsp;&nbsp;&nbsp;&nbsp;Licensing  | 2814 | 3701 | 5159 | 7583 |
| Total revenue | 3299 | 4346 | 6531 | 9509 |
| Costs and expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue | 538 | 654 | 1559 | 2087 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 13028 | 5956 | 36061 | 24560 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 4871 | 5653 | 16396 | 17249 |
| &nbsp;&nbsp;&nbsp;&nbsp;Licensing  | 1911 | 1754 | 4256 | 4070 |
| &nbsp;&nbsp;&nbsp;&nbsp;Revaluation of contingent consideration | 100 | 800 | 1900 | 3800 |
| Total costs and expenses | 20448 | 14817 | 60172 | 51766 |
| Loss from operations | (17149) | (10471) | (53641) | (42257) |
| Other income: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 1819 | 1991 | 6003 | 5850 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash royalty income | 716 | 894 | 2510 | 894 |
| Total other income | 2535 | 2885 | 8513 | 6744 |
| Net loss | $(14614) | $(7586) | $(45128) | $(35513) |
| Net loss per share, basic and diluted | $(0.12) | $(0.11) | $(0.37) | $(0.50) |
| Weighted average common shares outstanding, basic and diluted | 122619311 | 71381731 | 122531032 | 71249813 |
| Other comprehensive income: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain on marketable securities, net of tax of $0 | $115 | $890 | $500 | $533 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other comprehensive income | 115 | 890 | 500 | 533 |
| Comprehensive loss | $(14499) | $(6696) | $(44628) | $(34980) |

---

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

[**Table of Contents**](#TOC)

**ACLARIS THERAPEUTICS, INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF**

**STOCKHOLDERS' EQUITY**

**(Unaudited)**

**(In thousands, except share data)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | |
|  | <br>&nbsp;&nbsp;&nbsp;&nbsp;**Shares**  | **Par**<br>**Value** | <br>**Additional**<br>**Paid-in**<br>**Capital** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income** | <br>**Accumulated**<br>**Deficit** | <br>**Total**<br>**Stockholders'**<br>**Equity** |
| **Balance at December 31, 2024** | 107850124 | $1 | $1058317 | $97 | $(902861) | $155554 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with vesting of restricted stock units | 415405 |  | (275) |  |  | (275) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain on marketable securities  |  |  |  | 337 |  | 337 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 3535 |  |  | 3535 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (15085) | (15085) |
| **Balance at March 31, 2025** | 108265529 | $1 | $1061577 | $434 | $(917946) | $144066 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with vesting of restricted stock units | 63265 |  | (9) |  |  | (9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain on marketable securities  |  |  |  | 48 |  | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 3063 |  |  | 3063 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (15429) | (15429) |
| **Balance at June 30, 2025** | 108328794 | $1 | $1064631 | $482 | $(933375) | $131739 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with vesting of restricted stock units | 13798 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain on marketable securities  |  |  |  | 115 |  | 115 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 2860 |  |  | 2860 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (14614) | (14614) |
| **Balance at September 30, 2025** | 108342592 | $1 | $1067491 | $597 | $(947989) | $120100 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | |
|  | <br>&nbsp;&nbsp;&nbsp;&nbsp;**Shares**  | **Par**<br>**Value** | <br>**Additional**<br>**Paid-in**<br>**Capital** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Gain (Loss)** | <br>**Accumulated**<br>**Deficit** | <br>**Total**<br>**Stockholders'**<br>**Equity** |
| **Balance at December 31, 2023** | 70894889 | $1 | $928080 | $(106) | $(770796) | $157179 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with vesting of restricted stock units | 353128 |  | (55) |  |  | (55) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss on marketable securities |  |  |  | (258) |  | (258) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 2089 |  |  | 2089 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (16941) | (16941) |
| **Balance at March 31, 2024** | 71248017 | $1 | $930114 | $(364) | $(787737) | $142014 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with vesting of restricted stock units | 84808 |  | (10) |  |  | (10) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss on marketable securities |  |  |  | (99) |  | (99) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 2903 |  |  | 2903 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (10986) | (10986) |
| **Balance at June 30, 2024** | 71332825 | $1 | $933007 | $(463) | $(798723) | $133822 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock in connection with exercise of stock options and vesting of restricted stock units | 84688 |  | 21 |  |  | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized gain on marketable securities |  |  |  | 890 |  | 890 |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 3004 |  |  | 3004 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss  |  |  |  |  | (7586) | (7586) |
| **Balance at September 30, 2024** | 71417513 | $1 | $936032 | $427 | $(806309) | $130151 |

---

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

[**Table of Contents**](#TOC)

**ACLARIS THERAPEUTICS, INC.** 

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

**(In thousands)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended**  | **Nine Months Ended**  |
|  | **September 30,**  | **September 30,**  |
|  | **2025** | **2024** |
| **Cash flows from operating activities**: |  |  |
| &nbsp;&nbsp;Net loss | $(45128) | $(35513) |
| &nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 352 | 664 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 9458 | 7996 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revaluation of contingent consideration | 1900 | 3800 |
| &nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, prepaid expenses and other assets | 6810 | 3699 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 4484 | (1216) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities | (9348) | (15514) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income | (2510) | 24947 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (33982) | (11137) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;Purchases of property and equipment, net | (87) | (121) |
| &nbsp;&nbsp;Purchases of marketable securities | (35124) | (49555) |
| &nbsp;&nbsp;Proceeds from sales and maturities of marketable securities | 74040 | 68630 |
| &nbsp;&nbsp;Payment of deferred transaction consideration for in-licensed assets | (833) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities | 37996 | 18954 |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;Payment of deferred transaction consideration for in-licensed assets | (3044) |  |
| &nbsp;&nbsp;Payments of employee withholding taxes related to restricted stock unit award vesting | (284) | (76) |
| &nbsp;&nbsp;Proceeds from exercise of employee stock options and the issuance of stock |  | 32 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (3328) | (44) |
| **Net increase in cash and cash equivalents** | 686 | 7773 |
| **Cash and cash equivalents at beginning of period** | 24570 | 39878 |
| **Cash and cash equivalents at end of period** | $25256 | $47651 |
| **Supplemental disclosure of non-cash investing and financing activities:** |  |  |
| &nbsp;&nbsp;Additions to property and equipment included in accounts payable | $12 | $— |

---

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

[**Table of Contents**](#TOC)

**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. Aclaris Therapeutics, Inc. and its wholly owned subsidiaries are referred to collectively as the "Company."

The Company is a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases. The Company's proprietary KINect drug discovery platform combined with its preclinical development capabilities allows the Company to identify and advance potential product candidates that it may develop independently or in collaboration with third parties. In addition to identifying and developing its novel product 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 product candidates. The Company also provides contract research services to third parties enabled by its early-stage research and development expertise.

**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 September 30, 2025, the Company had cash, cash equivalents and marketable securities of $167.2 million and an accumulated deficit of $948.0 million. Since inception, the Company has incurred net losses and negative cash flows from its operations. 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 product candidates, will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its product 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 develop its product candidates 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 potentially worsening global economic conditions caused by a variety of factors including geopolitical tensions, inflationary pressures, tariff policies, and the current shutdown of the U.S. federal government. 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 product 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 Codification ("ASC") Subtopic 205-40, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, 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.

[**Table of Contents**](#TOC)

**2. Summary of Significant Accounting Policies**

**Unaudited Interim Financial Information**

The accompanying condensed consolidated balance sheet as of September 30, 2025, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2025 and 2024, the condensed consolidated statement of stockholders' equity for the three and nine months ended September 30, 2025 and 2024, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024 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 27, 2025 ("Annual Report") 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 September 30, 2025, the results of its operations and comprehensive loss for the three and nine months ended September 30, 2025 and 2024, its changes in stockholders' equity for the three and nine months ended September 30, 2025 and 2024 and its cash flows for the nine months ended September 30, 2025 and 2024. The condensed consolidated balance sheet data as of December 31, 2024 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 and nine months ended September 30, 2025 and 2024 are unaudited. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, 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, 2024 included in the Company's Annual Report.

**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. All intercompany transactions have been eliminated. Based upon the nature and size of 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 and comprehensive loss.

**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, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company's estimates.

**Reclassifications**

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

[**Table of Contents**](#TOC)

**Significant Accounting Policies**

The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2024 included in the Company's Annual Report. There have been no changes to the Company's existing significant accounting policies from those disclosed in the Annual Report.

***Contingent Consideration***

The Company records a contingent consideration liability related to future potential payments resulting from the acquisition of Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) ("Confluence") based upon significant unobservable inputs including the achievement of 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 is 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 and comprehensive loss.

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 (collectively referred to as "probability of success"), which are based on an asset's current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 21% and 40% at September 30, 2025. 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. As of September 30, 2025, the discount rate ranged between 6.8% and 8.4% depending on the year of each potential payment.

***Revenue Recognition***

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

To determine revenue recognition in accordance with ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) performance obligations are satisfied. At contract inception, the Company assesses the goods or services promised within a contract with a customer to identify the performance obligations, and to determine if they are distinct. The Company recognizes the revenue that is allocated to each distinct performance obligation when (or as) that performance obligation is satisfied. The Company only recognizes revenue when collection of the consideration it is entitled to under a contract with a customer is probable.

*Contract Research Revenue*

The Company earns contract research 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 and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. Under ASC Topic 606, the Company elected to apply the "right to invoice" practical expedient when recognizing contract research revenue and as such, recognizes revenue in the amount which it has the right to invoice. ASC Topic 606 also provides an optional exemption, which the Company has elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the "right to invoice" practical expedient.

[**Table of Contents**](#TOC)

*Licensing Revenue*

**Licenses of Intellectual Property** – The Company recognizes revenue received from non-refundable, upfront fees related to the licensing of intellectual property when the intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the license has been transferred to the customer, and the customer is able to use and benefit from the license.

**Milestone and Royalty Payments** – The Company considers any future potential milestones and sales-based royalties to be variable consideration. The Company recognizes revenue from development, regulatory and anniversary milestone payments as they are achieved. The Company recognizes revenue from commercial milestones and royalty payments as the sales occur.

***Deferred Income Related to the Sale of Future Royalties***

The Company amortizes its deferred income liability related to the sale of future OLUMIANT® (baricitinib) royalties under the units-of-revenue method by computing a ratio of the proceeds received to the total expected payments over the term of the royalty purchase agreement and then applying that ratio to the period's estimated cash payment (see Note 11). The amortization is based on the Company's current estimate of future royalty payments.

**Discontinued Operations**

As of September 30, 2025 and December 31, 2024, the Company had $2.2 million in discontinued operations reported as other current liabilities in the Company's condensed consolidated balance sheet, related to discontinued commercial products.

**Recently Issued Accounting Pronouncements**

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." This standard requires disclosure of additional information about specific expense categories in the notes to financial statements on an annual and interim basis. This ASU becomes effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the impact of this ASU.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid. This ASU becomes effective for annual periods beginning after December 15, 2024. The Company is assessing the impact of this ASU and, upon adoption, expects that any impact would be limited to additional income tax disclosures in the footnotes to the Company's consolidated financial statements.

[**Table of Contents**](#TOC)

**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:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
| <br>**(In thousands)** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash equivalents | $21707 | $— | $— | $21707 |
| &nbsp;&nbsp;&nbsp;&nbsp;Marketable securities |  | 141953 |  | 141953 |
| Total assets | $21707 | $141953 | $— | $163660 |
| Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration | $— | $— | $10600 | $10600 |
| Total liabilities | $— | $— | $10600 | $10600 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| <br>**(In thousands)** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash equivalents | $22245 | $— | $— | $22245 |
| &nbsp;&nbsp;&nbsp;&nbsp;Marketable securities |  | 179326 |  | 179326 |
| Total assets | $22245 | $179326 | $— | $201571 |
| Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration | $— | $— | $8700 | $8700 |
| Total liabilities | $— | $— | $8700 | $8700 |

---

As of September 30, 2025 and December 31, 2024, the Company's cash equivalents consisted of money market funds, which were valued based upon Level 1 inputs. The Company's marketable securities as of September 30, 2025 consisted of corporate debt securities and U.S. government debt securities, which were all valued based upon Level 2 inputs. The Company's marketable securities as of December 31, 2024 consisted of commercial paper, corporate debt securities, foreign government agency debt securities, and U.S. government and 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. During the three and nine months ended September 30, 2025 and 2024, there were no transfers into or out of Level 3.

The overall $1.9 million increase in the fair value of the contingent consideration liability during the nine months ended September 30, 2025 was primarily due to changes to the probability of success for certain product candidates and the passage of time.

[**Table of Contents**](#TOC)

As of September 30, 2025 and December 31, 2024, the fair value of the Company's available-for-sale marketable securities by type of security was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** | **September 30, 2025** |
| <br>**(In thousands)** | <br>**Book** <br>**Value** | **Gross**<br>**Unrealized**<br>**Gain** | **Gross**<br>**Unrealized**<br>**Loss** | <br>**Fair**<br>**Value** |
| &nbsp;&nbsp;Marketable securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate debt securities<sup>(1)</sup> | $90827 | $379 | $(4) | $91202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. government debt securities<sup>(2)</sup> | 50529 | 222 |  | 50751 |
| &nbsp;&nbsp;Total marketable securities | $141356 | $601 | $(4) | $141953 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Included in Corporate debt securities is $45.7 million with maturity dates between one and three years .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Included in U.S. government debt securities is $25.6 million with maturity dates between one and three years .

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| <br>**(In thousands)** | <br>**Book**<br>**Value** | **Gross**<br>**Unrealized**<br>**Gain** | **Gross**<br>**Unrealized**<br>**Loss** | <br>**Fair**<br>**Value** |
| &nbsp;&nbsp;Marketable securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate debt securities<sup>(1)</sup> | $105154 | $192 | $(156) | $105190 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial paper | 4720 |  | (1) | 4719 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign government agency debt securities | 4911 | 16 |  | 4927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. government and government agency debt securities<sup>(2)</sup> | 64454 | 47 | (11) | 64490 |
| &nbsp;&nbsp;Total marketable securities | $179239 | $255 | $(168) | $179326 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Included in Corporate debt securities is $59.8 million with maturity dates between one and three years .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Included in U.S. government and government agency debt securities is $30.5 million with maturity dates between one and three years .

**4. Property and Equipment, Net**

Property and equipment, net consisted of the following:

---

| | | |
|:---|:---|:---|
| <br>**(In thousands)** | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computer equipment | $1173 | $1198 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lab equipment | 3144 | 3137 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furniture and fixtures | 661 | 661 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leasehold improvements | 817 | 817 |
| &nbsp;&nbsp;Property and equipment, gross | 5795 | 5813 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation | (4984) | (4805) |
| &nbsp;&nbsp;Property and equipment, net | $811 | $1008 |

---

Depreciation expense was $0.1 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $0.3 million and $0.6 million for the nine months ended September 30, 2025 and 2024, respectively.

[**Table of Contents**](#TOC)

**5. Accrued Expenses**

Accrued expenses consisted of the following:

---

| | | |
|:---|:---|:---|
| <br>**(In thousands)** | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee compensation expenses | $3756 | $4979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | 1685 | 2173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred transaction consideration | 2372 | 3927 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Licensing expenses | 1584 | 8645 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring expenses (Note 13) |  | 163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expenses | 387 | 446 |
| Total accrued expenses | $9784 | $20333 |

---

**6. Stockholders' Equity**

**Preferred Stock**

As of September 30, 2025 and December 31, 2024, the Company's amended and restated certificate of incorporation (the "Charter") authorized the Company to issue 10,000,000 shares of undesignated preferred stock. There were no shares of preferred stock outstanding as of September 30, 2025 or December 31, 2024.

**Common Stock**

On June 5, 2025, at the 2025 Annual Meeting of Stockholders, the Company's stockholders approved an amendment to the Charter to increase the authorized number of shares of common stock from 200,000,000 shares to 400,000,000 shares. On June 5, 2025, the Company filed a Certificate of Amendment to the Charter with the Secretary of State of the State of Delaware, which became effective upon filing.

As of September 30, 2025 and December 31, 2024, the Company's Charter authorized the Company to issue 400,000,000 and 200,000,000 shares of $0.00001 par value common stock, respectively. There were 108,342,592 and 107,850,124 shares of common stock issued and outstanding as of September 30, 2025 and December 31, 2024, 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 September 30, 2025.

**Warrants**

In November 2024, the Company issued warrants to Biosion, Inc. ("Biosion") and Chia Tai Tianqing Pharmaceutical Group, Co., Ltd. ("CTTQ") to purchase, in the aggregate, 14,281,985 shares of the Company's common stock (the "Warrants"). The Warrants have an initial exercise price of $0.00001 per share, subject to adjustment as provided in the Warrants. The Warrants are immediately exercisable, subject to any applicable overseas direct investment filing that may be required for the holders. The Warrants will terminate when exercised in full. The Company classified the Warrants within equity because they are indexed to the Company's own stock. The Company assigned an estimated fair value of $44.8 million to the Warrants, which was based on the fair value of the Company's common stock on the date of issuance less the nominal exercise price of $0.00001 per share.

As of September 30, 2025, all of the Warrants were unexercised.

[**Table of Contents**](#TOC)

**7. Stock-Based Awards**

**2025 Equity Incentive Plan**

In April 2025, the Company's board of directors adopted the 2025 Equity Incentive Plan (the "2025 Plan") and in June 2025, the Company's stockholders approved the 2025 Plan. Upon the 2025 Plan becoming effective, no further grants can be made under the Company's 2015 Equity Incentive Plan (the "2015 Plan"). The 2025 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit ("RSU") awards, cash-based awards, and other stock-based awards. The number of shares initially reserved for issuance under the 2025 Plan was 25,532,993 shares of common stock, which includes (i) 9,000,000 new shares of common stock, (ii) 3,957,232 shares of common stock that remained available for future grant under the 2015 Plan upon adoption of the 2025 Plan and (iii) up to 12,575,761 shares of common stock underlying outstanding awards under the 2015 Plan and the 2012 Equity Compensation Plan (as amended and restated, the "2012 Plan"), which may become available for issuance under the 2025 Plan if and as such awards expire, are otherwise terminated, settled in cash, or repurchased by the Company. The shares of common stock underlying any awards that expire, or are otherwise terminated, settled in cash or repurchased by the Company under the 2025 Plan will be added back to the shares of common stock available for issuance under the 2025 Plan. As of September 30, 2025, 12,279,431 shares remained available for grant under the 2025 Plan. The Company had 794,760 stock options and 241,840 RSUs outstanding as of September 30, 2025 under the 2025 Plan.

**2024 Inducement Plan**

In November 2024, the Company's board of directors adopted the 2024 Inducement Plan (the "2024 Inducement Plan"). The 2024 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the "inducement exception" provided under Nasdaq listing rules. The only employees eligible to receive grants of awards under the 2024 Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq rules, generally including individuals who were not previously an employee or director of the Company. Under the terms of the 2024 Inducement Plan, the Company may grant up to 2,000,000 shares of common stock pursuant to nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, and other stock awards. The shares of common stock underlying any awards that expire, or are otherwise terminated, settled in cash or repurchased by the Company under the 2024 Inducement Plan will be added back to the shares of common stock available for issuance under the 2024 Inducement Plan. As of September 30, 2025, 493,500 shares remained available for grant under the 2024 Inducement Plan. The Company had 1,172,000 stock options and 334,500 RSUs outstanding as of September 30, 2025 under the 2024 Inducement 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 343,500 stock options outstanding as of September 30, 2025 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.

**2015 Equity Incentive Plan**

In September 2015, the Company's board of directors adopted 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. Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. Upon the 2025 Plan becoming effective, no further grants can be made under the 2015 Plan. The Company had 9,144,258 stock options and 3,098,491 RSUs outstanding as of September 30, 2025 under the 2015 Plan.

[**Table of Contents**](#TOC)

**2012 Equity Compensation Plan**

In August 2012, the Company's board of directors adopted the 2012 Plan and the Company's stockholders approved the 2012 Plan. Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company had no equity awards outstanding as of September 30, 2025 under the 2012 Plan.

**Stock Option Valuation**

The weighted average assumptions the Company used to estimate the fair value of stock options granted during the nine months ended September 30, 2025 and 2024 were as follows:

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended**  | **Nine Months Ended**  |
|  | **September 30,**  | **September 30,**  |
|  | **2025** | **2024** |
| Risk-free interest rate | 4.28% | 3.85% |
| Expected term (in years) | 6.2 | 6.0 |
| Expected volatility | 82.77% | 81.95% |
| 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 nine months ended September 30, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
| <br>**(In thousands, except share and per share data and years)** | <br>**Number**<br>**of Shares** | <br>**Weighted**<br>**Average**<br>**Exercise**<br>**Price** | **Weighted**<br>**Average**<br>**Remaining**<br>**Contractual**<br>**Term** | <br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  |  |  | **(in years)** |  |
| Outstanding as of December 31, 2024 | 6721967 | $11.12 | 6.8 | $2968 |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 5194155 | 2.16 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited and cancelled | (461604) | 7.34 |  |  |
| Outstanding as of September 30, 2025 | 11454518 | $7.27 | 7.8 | $2157 |
| Options vested and expected to vest as of September 30, 2025 | 11454518 | $7.27 | 7.8 | $2157 |
| Options exercisable as of September 30, 2025 | 4358272 | $13.75 | 5.7 | $911 |

---

The weighted average grant date fair value of stock options granted during the nine months ended September 30, 2025 was $1.60 per share.

**Restricted Stock Units**

The following table summarizes RSU activity for the nine months ended September 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
| <br>**(In thousands, except share and per share data)** | <br>**Number**<br>**of Shares** | **Weighted**<br>**Average**<br>**Grant Date**<br>**Fair Value**<br>**Per Share** | <br><br>**Aggregate**<br>**Intrinsic**<br>**Value** |
| Outstanding as of December 31, 2024 | 2276151 | $5.12 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Granted | 2093713 | 2.23 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Vested  | (608833) | 8.32 | $1355 |
| &nbsp;&nbsp;&nbsp;&nbsp;Forfeited and cancelled | (86200) | 4.67 |  |
| Outstanding as of September 30, 2025 | 3674831 | $2.96 |  |

---

[**Table of Contents**](#TOC)

**Stock-Based Compensation**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue | $191 | $232 | $600 | $707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 964 | 1124 | 3255 | 2192 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 1705 | 1648 | 5603 | 5097 |
| Total stock-based compensation expense | $2860 | $3004 | $9458 | $7996 |

---

As of September 30, 2025, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $12.4 million and $7.3 million, respectively, which is expected to be recognized over weighted average periods of 2.6 years and 2.3 years, respectively.

**8. Net Loss per Share**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
| <br>**(In thousands, except for share and per share data)** | **2025** | **2024** | **2025** | **2024** |
| Numerator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(14614) | $(7586) | $(45128) | $(35513) |
| Denominator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Weighted average shares of common stock outstanding, basic and diluted | 122619311 | 71381731 | 122531032 | 71249813 |
| Net loss per share, basic and diluted | $(0.12) | $(0.11) | $(0.37) | $(0.50) |

---

The Company's potentially dilutive securities, which included stock options and RSUs, 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. For the three and nine months ended September 30, 2025, the basic and diluted weighted-average shares outstanding included the shares of common stock issuable upon exercise of the Warrants, as there were no outstanding contingencies associated with the vesting or exercisability of the Warrants.

The following table presents potential shares of common stock excluded from the calculation of diluted net loss per share for the nine months ended September 30, 2025 and 2024. All share amounts presented in the table below represent the total number outstanding as of September 30, 2025 and 2024.

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended**  | **Nine Months Ended**  |
|  | **September 30,**  | **September 30,**  |
|  | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options to purchase common stock | 11454518 | 6445232 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted stock units | 3674831 | 3071776 |
| Total potential shares of common stock | 15129349 | 9517008 |

---

[**Table of Contents**](#TOC)

**9. Leases**

**Operating Leases**

*Agreements for Office and Laboratory Space*

In May 2023, the Company entered into a lease agreement pursuant to which it leases 11,564 square feet of office space for its headquarters in Wayne, Pennsylvania. The lease commenced in November 2023 and has a term that runs through February 2029.

In February 2019, the Company entered into a sublease agreement 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 May 2029. In January 2023, the Company amended the sublease agreement to add an additional 6,261 square feet of office and laboratory space effective February 2023. The Company exercised its option to terminate the leasing of the additional space effective as of June 30, 2024.

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

---

| | | |
|:---|:---|:---|
| <br>**(In thousands)** | **September 30,** <br>**2025** | **December 31,** <br>**2024** |
| **Operating Leases:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross cost | $4530 | $4530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated amortization | (2102) | (1688) |
| Other assets | $2428 | $2842 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of lease liabilities | $533 | $481 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 1711 | 2117 |
| Total operating lease liabilities | $2244 | $2598 |

---

Amortization expense related to operating lease right-of-use assets and accretion of operating lease liabilities totaled $0.1 million for each of the three months ended September 30, 2025 and 2024, and $0.4 million for each of the nine months ended September 30, 2025 and 2024.

**10. Agreements Related to Intellectual Property**

**Exclusive License Agreement – Biosion, Inc.**

In November 2024, the Company entered into an exclusive license agreement (the "Biosion Agreement") with Biosion, pursuant to which it received the exclusive rights to develop, manufacture and commercialize bosakitug (ATI-045) and ATI-052 worldwide, excluding Mainland China, Macau, Hong Kong and Taiwan ("Greater China"). In connection with the Biosion Agreement, the Company also entered into a collaboration agreement (the "CTTQ Agreement") with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreement and CTTQ Agreement, the Company, agreed to, in the aggregate, (i) pay $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issue the Warrants, and (iii) pay $6.2 million for the reimbursement of certain development costs and drug product material as set forth in the Biosion Agreement.

In addition, the Company agreed to pay, in the aggregate, (i) up to $125 million upon the achievement of specified regulatory milestones commencing with product approval, (ii) up to $795 million upon the achievement of specified sales milestones, (iii) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions as set forth in the Biosion Agreement, and (iv) a portion of any sublicense consideration received from the grant of any sublicense or similar rights under any of the rights or licenses granted to the Company under the Biosion Agreement.

[**Table of Contents**](#TOC)

The Company will expense these payments in the period when either they are determined to be probable of occurring or when the payment is triggered.

**License Agreement – Sun Pharmaceutical Industries, Inc.**

In December 2023, the Company entered into an exclusive patent license agreement with Sun Pharmaceutical Industries, Inc. ("Sun Pharma"). Under the license agreement, the Company granted Sun Pharma exclusive rights under certain patents that the Company exclusively licenses from a third party. The patents relate to the use of deuruxolitinib, Sun Pharma's Janus kinase ("JAK") inhibitor, or other isotopic forms of ruxolitinib, to treat alopecia areata or androgenetic alopecia. Under the license agreement, Sun Pharma has paid the Company upfront, regulatory and commercial milestone payments, and has agreed to pay the Company other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma's net sales. The Company has separate contractual obligations under which the Company has agreed to pay to third parties a portion of the consideration it may receive under the license agreement.

The Company recognized $1.5 million of licensing revenue during the three and nine months ended September 30, 2025, a portion of which was payable to third parties.

**License Agreement – Pediatrix Therapeutics, Inc.**

In November 2022, the Company entered into a license agreement with Pediatrix Therapeutics, Inc. ("Pediatrix"), under which the Company granted Pediatrix the exclusive rights to develop, manufacture and commercialize lepzacitinib in Greater China. Pediatrix has paid the Company an upfront payment, and has agreed to pay the Company development, regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a tiered royalty ranging from a low-to-high single digit percentage of net sales of lepzacitinib by Pediatrix in Greater China. A portion of the consideration received from Pediatrix is payable to the former Confluence equity holders as described below under the caption "—Agreement and Plan of Merger - Confluence."

**License Agreement – Eli Lilly and Company**

In August 2022, the Company entered into a non-exclusive patent license agreement with Eli Lilly and Company ("Lilly"). Under the license agreement, the Company granted Lilly non-exclusive rights under certain patents and patent applications that the Company exclusively licenses from a third party. The patents and patent applications relate to the use of baricitinib, Lilly's JAK inhibitor, to treat alopecia areata. Under the license agreement, Lilly has paid the Company upfront, anniversary, regulatory and commercial milestone payments. In addition, Lilly has agreed to pay the Company other commercial milestone payments upon the achievement of specified milestones and additional anniversary payments as set forth in the agreement, as well as a low single-digit royalty calculated as a percentage of Lilly's net sales of baricitinib for the treatment of alopecia areata. The Company has separate contractual obligations under which the Company has agreed to pay to third parties an amount equal to any regulatory and commercial milestone payments it receives under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties it may receive under the license agreement. In July 2024, the Company entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System ("OMERS"), pursuant to which the Company sold to OMERS a portion of the Company's future royalty payments and the remaining anniversary payments associated with the license to Lilly (see Note 11).

The Company recognized $1.3 million and $3.6 million of licensing revenue during the three and nine months ended September 30, 2025, respectively, all of which was payable to third parties. The Company recognized $0.7 million and $4.6 million of licensing revenue during the three and nine months ended September 30, 2024, respectively, a portion of which was payable to third parties.

**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. In July 2023, EPI Health filed a voluntary

[**Table of Contents**](#TOC)

petition for relief under Chapter 11 of the United States Bankruptcy Code. Through the bankruptcy process, EPI Health and its parent company, Novan, Inc., sold the RHOFADE assets to a third party, which excluded the Company's asset purchase agreement with EPI Health and the outstanding amounts due. The sale was approved by the bankruptcy court in September 2023. As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health had been fully reserved. During the three months ended September 30, 2025, the Company sold all of its right, title and interest in its bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible.

**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. 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 September 30, 2025 and December 31, 2024, the balance of the Company's contingent consideration liability was $10.6 million and $8.7 million, respectively (see Note 3).

**11. Sale of Future Royalties**

In July 2024, the Company entered into a royalty purchase agreement with OMERS. Under the royalty purchase agreement, the Company sold to OMERS a portion of the Company's future royalty payments and the remaining anniversary payments associated with the Company's existing license to Lilly relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata.

Under the terms of the royalty purchase agreement, the Company received an upfront payment of $26.5 million. In exchange, OMERS acquired a portion of the royalty payable by Lilly to the Company for worldwide net sales of OLUMIANT for the treatment of alopecia areata from April 1, 2024 through the remainder of the royalty term under the Company's license agreement with Lilly, and 100% of the remaining anniversary milestone payments payable by Lilly to the Company under the license agreement.

The Company evaluated the arrangement and concluded that the proceeds from the sale of future royalties should be recorded as deferred income on the condensed consolidated balance sheet, as the criteria for debt classification were not met in accordance with ASC Topic 470. In particular, the Company does not have significant continuing involvement in the generation of the cash flows due to OMERS and there are no guaranteed rates of return to OMERS. The Company recognizes non-cash royalty income under the "units-of-revenue" method in the condensed consolidated statements of operations and comprehensive loss. For the three and nine months ended September 30, 2025, the Company recognized $0.7 million and $2.5 million of non-cash royalty income, respectively. For each of the three and nine months ended September 30, 2024, the Company recognized $0.9 million of non-cash royalty income. As of September 30, 2025, the current and non-current portions of the remaining deferred income recognized under the units-of revenue method were $3.9 million and $17.5 million, respectively. As of December 31, 2024, the current and non-current portions of the remaining deferred income recognized under the units-of revenue method were $3.9 million and $20.0 million, respectively.

**12. Income Taxes**

The Company did not record a federal or state income tax benefit for losses incurred during the three and nine months ended September 30, 2025 and 2024. The Company concluded that it is more likely than not that its deferred tax

[**Table of Contents**](#TOC)

assets will not be realized which resulted in recording a full valuation allowance during those periods.

On July 4, 2025, the One Big Beautiful Bill ("OBBB") Act, which includes a broad range of tax reform provisions, was signed into law in the United States and the Company continues to assess its impact. The Company currently does not expect the OBBB Act to have a material impact on the consolidated financial statements.

**13. Restructuring Charges**

In December 2023, the Company's board of directors approved a reduction of the Company's workforce by approximately 46%, which was completed as of December 31, 2024. During the nine months ended September 30, 2025, the Company made cash severance payments of $0.2 million to impacted employees. During the three and nine months ended September 30, 2024, the Company recognized severance expense of $26 thousand and $2.6 million, respectively, and made cash severance payments of $5.2 million to impacted employees during the nine months ended September 30, 2024.

**14. 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 and earns revenue through licensing of the Company's intellectual property. The contract research segment earns revenue from the provision of laboratory services.

All intersegment revenue has been eliminated in the Company's condensed consolidated statement of operations and comprehensive loss. All customers and revenue pertaining to the Company's segments are based in the United States and all assets are held in the United States. The Company does not report asset information by segment because it is not regularly provided to the Company's chief executive officer, who is the Company's chief operating decision maker ("CODM").

Since inception, the Company has incurred net losses and has an accumulated deficit of $948.0 million as of September 30, 2025. As such, the CODM uses segment loss from operations for each segment in assessing segment performance by comparing the results of each segment to forecast. All intercompany activity is eliminated in the intersegment elimination column in the tables below.

[**Table of Contents**](#TOC)

A reconciliation of operating loss to total consolidated loss before income taxes for the three and nine months ended September 30, 2025 and 2024 is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(In thousands)** | | | | |
| **Three Months Ended September 30, 2025** | <br>**Therapeutics** | **Contract**<br>**Research** | **Intersegment**<br>**Elimination** | <br>**Total** |
| Revenue from external customers | $2814 | $485 | $— | $3299 |
| Intercompany revenue |  | 4130 | (4130) |  |
| Cost of revenue |  | 4454 | (3916) | 538 |
| Research and development: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bosakitug | 3062 |  |  | 3062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-2138 | 1469 |  |  | 1469 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-052 | 1837 |  |  | 1837 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discovery | 2340 |  |  | 2340 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Research and development project expenses | 8708 |  |  | 8708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | 2993 |  |  | 2993 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other research and development expense<sup>(1)</sup> | 1541 |  |  | 1541 |
| Total research and development | 13242 |  | (214) | 13028 |
| General and administrative  |  | 467 |  | 467 |
| Licensing  | 1911 |  |  | 1911 |
| Revaluation of contingent consideration | 100 |  |  | 100 |
| Segment operating loss | $(12439) | $(306) | $— | $(12745) |
| Non-segment general and administrative |  |  |  | 4404 |
| Other income  |  |  |  | 2535 |
| Loss before income taxes |  |  |  | $(14614) |
| **(In thousands)** |  | **Contract** | **Intersegment** |  |
| **Three Months Ended September 30, 2024** | **Therapeutics** | **Research** | **Elimination** | **Total** |
| Revenue from external customers | $3701 | $645 | $— | $4346 |
| Intercompany revenue |  | 3035 | (3035) |  |
| Cost of revenue |  | 3485 | (2831) | 654 |
| Research and development: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-2138 | 745 |  |  | 745 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discovery | 1263 |  |  | 1263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Research and development project expenses | 2008 |  |  | 2008 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | 1970 |  |  | 1970 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other research and development expense<sup>(1)</sup> | 2182 |  |  | 2182 |
| Total research and development | 6160 |  | (204) | 5956 |
| General and administrative  |  | 905 |  | 905 |
| Licensing  | 1754 |  |  | 1754 |
| Revaluation of contingent consideration | 800 |  |  | 800 |
| Segment operating loss | $(5013) | $(710) | $— | $(5723) |
| Non-segment general and administrative |  |  |  | 4748 |
| Other income  |  |  |  | 2885 |
| Loss before income taxes |  |  |  | $(7586) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Other segment items for the Therapeutics segment consist primarily of the following research and development expenses: former development assets, stock-based compensation, depreciation and amortization, and regulatory.

[**Table of Contents**](#TOC)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(In thousands)** | | | | |
| **Nine Months Ended September 30, 2025** | <br>**Therapeutics** | **Contract**<br>**Research** | **Intersegment**<br>**Elimination** | <br>**Total** |
| Revenue from external customers | $5159 | $1372 | $— | $6531 |
| Intercompany revenue |  | 11085 | (11085) |  |
| Cost of revenue |  | 11983 | (10424) | 1559 |
| Research and development: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bosakitug | 9293 |  |  | 9293 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-2138 | 4395 |  |  | 4395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-052 | 3874 |  |  | 3874 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discovery | 5306 |  |  | 5306 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Research and development project expenses | 22868 |  |  | 22868 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | 8904 |  |  | 8904 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other research and development expense<sup>(1)</sup> | 4950 |  |  | 4950 |
| Total research and development | 36722 |  | (661) | 36061 |
| General and administrative  |  | 1989 |  | 1989 |
| Licensing  | 4256 |  |  | 4256 |
| Revaluation of contingent consideration | 1900 |  |  | 1900 |
| Segment operating loss | $(37719) | $(1515) | $— | $(39234) |
| Non-segment general and administrative |  |  |  | 14407 |
| Other income  |  |  |  | 8513 |
| Loss before income taxes |  |  |  | $(45128) |
| **(In thousands)** |  | **Contract** | **Intersegment** |  |
| **Nine Months Ended September 30, 2024** | **Therapeutics** | **Research** | **Elimination** | **Total** |
| Revenue from external customers | $7583 | $1926 | $— | $9509 |
| Intercompany revenue |  | 10122 | (10122) |  |
| Cost of revenue |  | 11558 | (9471) | 2087 |
| Research and development: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-2138 | 1560 |  |  | 1560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discovery | 4408 |  |  | 4408 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Research and development project expenses | 5968 |  |  | 5968 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | 9002 |  |  | 9002 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other research and development expense<sup>(1)</sup> | 10241 |  |  | 10241 |
| Total research and development | 25211 |  | (651) | 24560 |
| General and administrative  |  | 3033 |  | 3033 |
| Licensing  | 4070 |  |  | 4070 |
| Revaluation of contingent consideration | 3800 |  |  | 3800 |
| Segment operating loss | $(25498) | $(2543) | $— | $(28041) |
| Non-segment general and administrative |  |  |  | 14216 |
| Other income  |  |  |  | 6744 |
| Loss before income taxes |  |  |  | $(35513) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Other segment items for the Therapeutics segment consist primarily of the following research and development expenses: former development assets, stock-based compensation, depreciation and amortization, and regulatory.

[**Table of Contents**](#TOC)

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "may," "might," "can," "will," "to be," "could," "would," "should," "expect," "intend," "plan," "objective," "anticipate," "believe," "estimate," "predict," "project," "potential," "likely," "continue," "ongoing" or similar expressions, or the negative of such words, are intended to identify "forward-looking statements." We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those under the caption "Risk Factors" in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K filed with the SEC on February 27, 2025 ("Annual Report"), and in our other filings with the Securities and Exchange Commission ("SEC"). Statements made herein are as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes for the year ended December 31, 2024, which are included in our Annual Report.

**Overview**

We are a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases. Our proprietary KINect drug discovery platform combined with our preclinical development capabilities allows us to identify and advance potential product candidates that we may develop independently or in collaboration with third parties. In addition to identifying and developing our novel product candidates, we are pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our novel product candidates. We also provide contract research services to third parties enabled by our early-stage research and development expertise.

**Our Key Product Candidates**

***Bosakitug, an Investigational, Novel Anti-TSLP Monoclonal Antibody***

Bosakitug (ATI-045) is an investigational, novel, humanized anti-thymic stromal lymphopoietin ("TSLP") monoclonal antibody that specifically binds to human TSLP, blocking its interaction with the receptor complex and disrupting signal transduction. This mechanism prevents immune cells targeted by TSLP from releasing proinflammatory cytokines. Bosakitug has potential best-in-class properties, including a very high affinity to TSLP, very high potency, an extremely low dissociation rate from TSLP leading to long residence time and enhanced neutralization activity, and a half-life that can potentially support an extended dosing interval. Bosakitug has the potential to treat a variety of atopic, immunologic and respiratory diseases. We exclusively license global rights (excluding Mainland China, Macau, Hong Kong and Taiwan ("Greater China")) to bosakitug from Biosion, Inc. ("Biosion").

In a Phase 2a, single-arm, proof-of-concept trial in 22 U.S. patients with moderate to severe atopic dermatitis conducted by Biosion, bosakitug demonstrated a positive pharmacodynamic, safety and efficacy profile, with 94% of patients achieving a 75% improvement in the Eczema Area and Severity Index ("EASI"), 65% of patients achieving EASI-90, and 88% of patients achieving an Investigator's Global Assessment ("IGA") score of 0 or 1 (clear or almost clear skin), at week 26 (n=17). Bosakitug was generally well-tolerated with no serious adverse events reported. The most common treatment-emergent adverse event was headache (22.7% of patients). Grade 1 injection site reactions, primarily tenderness, occurred in 47.6% of patients.

[**Table of Contents**](#TOC)

In June 2025, we initiated a Phase 2 trial to investigate the efficacy, safety, tolerability, pharmacokinetics ("PK") and pharmacodynamics ("PD") of bosakitug compared to placebo in approximately 90 patients with moderate to severe atopic dermatitis. The primary endpoint is percent change from baseline in EASI at week 24. Secondary endpoints at week 24 include EASI response (EASI-50, EASI-75, EASI-90), validated IGA response, body surface area ("BSA") response, and Peak Pruritus Numerical Rating Scale ("PP-NRS") score, relative to baseline. We expect to announce top-line data in the second half of 2026.

Bosakitug is also currently being studied in severe asthma, chronic rhinosinusitis with nasal polyps and moderate to severe chronic obstructive pulmonary disease in China by Chia Tai Tianqing Pharmaceutical Group, Co., Ltd. ("CTTQ"). CTTQ licenses bosakitug from Biosion in Greater China. Our clinical focus for bosakitug will remain on dermatological immuno-inflammatory indications and further global (excluding Greater China) development in respiratory indications will be dependent on entering into potential partnerships.

***ATI-2138, an Investigational Oral Covalent ITK/JAK3 Inhibitor***

ATI-2138 is a highly potent and selective novel investigational dual inhibitor of interleukin-2-inducible T cell kinase ("ITK") and Janus kinase 3 ("JAK3") for the potential treatment of T cell-mediated autoimmune diseases. The ITK/JAK3 compound interrupts T cell signaling through the combined inhibition of ITK/JAK3 pathways in lymphocytes.

In July 2025, we announced positive top-line results from our open-label, single-arm Phase 2a trial of ATI-2138 in patients with moderate to severe atopic dermatitis. The trial met the primary and key secondary endpoints. The trial was designed to investigate the safety, tolerability, PK, efficacy, and PD of 10 mg of ATI-2138 administered twice daily ("BID") for 12 weeks. The trial enrolled 14 patients in the United States, with 12 patients completing treatment and up to 10 patients available for the per protocol analysis. The primary endpoints were safety related parameters and the secondary endpoints included PD and efficacy related measures. No meaningful safety findings were observed, and ATI-2138 was very well tolerated. We observed consistent and rapid improvement across the efficacy assessments, with a mean and median improvement in EASI score at week 12 of 61% and 77%, respectively. Excluding one patient determined to be a statistical molecular outlier by more than four standard deviations who demonstrated systemic findings inconsistent with atopic dermatitis alone including significant non-lesional inflammation and who was not fully compliant with study drug administration, the mean and median improvement in EASI score at week 12 was 77% and 82%, respectively. At week 12, 63% of patients experienced a greater than or equal to 4-point improvement (which is considered a clinically meaningful response) in PP-NRS. ATI-2138 demonstrated near complete and sustained inhibition and occupancy of ITK ranging from approximately 90% at peak to 60% to 70% at trough, and a high level of inhibition of JAK3. Proteome and transcriptome lesional skin tap strip analyses showed significant ATI-2138-dependent reduction of multiple inflammatory pathways associated with ITK, including strong downregulation of Th2, Th17, and T cell receptor ("TCR") pathways, along with the Th1 pathway and fibrosis-related markers.

We are exploring the potential of ATI-2138 in additional indications that are relevant to the mechanism of action, including lichen planus, scarring alopecias, and alopecia areata. We plan to initiate a Phase 2 trial in the additional indication in the first half of 2026.

***ATI-052, an Investigational, Novel Anti-TSLP and Anti-IL-4R Bispecific Antibody***

ATI-052 is an investigational, novel, humanized anti-TSLP and anti-interleukin-4 receptor ("IL-4R") bispecific antibody that exhibits high binding affinity to and dual blockade of both the upstream TSLP receptor signal transduction and downstream IL-4R activation thereby inhibiting this central proinflammatory pathway. ATI-052 targets TSLP, which sits at the top of the inflammatory cascade; by targeting IL-4R, it blocks both downstream IL-4 and IL-13, which are key cytokines involved in Th2-mediated inflammation and allergic diseases. ATI-052 utilizes the same TSLP antigen-binding fragment ("Fab") as bosakitug but is engineered to bind more tightly to the neonatal Fc receptor ("FcRn"), potentially extending its half-life. In addition, the AQQ mutation in the Fc limits effector functionality, reducing off-target binding and potential toxicity. ATI-052 has the potential to treat a variety of atopic, immunologic and respiratory diseases. We exclusively license global rights (excluding Greater China) to ATI-052 from Biosion.

[**Table of Contents**](#TOC)

Our Investigational New Drug ("IND") application for ATI-052 was cleared by the U.S. Food and Drug Administration ("FDA") in April 2025, and in June 2025, we initiated a Phase 1a/1b program. The randomized, blinded, placebo-controlled Phase 1a portion is designed to evaluate the safety, tolerability, PK and PD of ATI-052 in healthy volunteers receiving single ascending doses ("SAD") and multiple ascending doses ("MAD"). We expect to announce top-line results from the Phase 1a SAD/MAD portion in early 2026. We plan to initiate Phase 1b proof-of-concept trials in asthma (subject to IND submission and clearance) and atopic dermatitis in the first half of 2026, with top-line results from both trials expected in the second half of 2026.

***Next-Generation ITK Inhibitors***

We are developing next-generation covalent ITK selective inhibitors with differentiated pharmacological properties and selectivity profiles. These JAK3-sparing inhibitors have the potential to differentially modulate T cell biology across a broad range of disease indications with extended half-lives and best-in-class potential potency, ITK occupancy, and ITK activation. We are progressing to lead candidate selection and expect to file an IND application for a next-generation ITK inhibitor in the second half of 2026.

**Discovery and Preclinical Programs**

We conduct small molecule drug discovery through KINect, our proprietary drug discovery platform. We also engage in discovery efforts for novel, injectable, multi-specific antibodies. Through our integrated discovery approach, we can progress product candidates from concept through lead optimization, employing robust screening cascades and protein characterization techniques to identify molecules with desired therapeutic properties.

Our KINect platform allows us to address challenges associated with difficult to drug kinases including selectivity and biochemical efficiency, through a unique combination of our proprietary chemical library of kinase inhibitors, our novel approaches to inhibitor modalities, our expertise in structure-based drug design, and our custom kinase assays. Our approach involves the following mechanisms: (1) reversible and irreversible covalent inhibitors, (2) molecular glue/complex targeted inhibitors, (3) tissue specific inhibitors, and (4) targeted protein degraders. These novel approaches are currently being utilized to prosecute additional validated, difficult to drug kinase targets with the goal of demonstrating broad target utility. Our small molecule discovery efforts center on targeting kinases that play pivotal roles in various inflammatory and autoimmune pathways.

Our discovery efforts to develop multi-specific antibodies are focused on generating antibodies with superior target affinity, specificity, and potency utilizing combinations of (a) two or more clinically validated targets with non-overlapping biology, (b) clinically validated targets with novel biology, and/or (c) synergistic target combinations in an effort to address shortcomings of multi-drug administration. This complementary approach to our small molecule programs enables us to pursue optimal therapeutic modalities for each target and indication of interest. For example, we are progressing several bispecific antibodies utilizing the bosakitug anti-TSLP binding region paired with binding fragments targeting other undisclosed cytokine signaling pathways.

We intend to evaluate both internal and external development options, including strategic partnerships, for these assets.

**Other Investigational Product Candidates**

***Lepzacitinib, an Investigational Topical "Soft" JAK 1/3 Inhibitor***

Lepzacitinib (ATI-1777) is an investigational topical "soft" JAK 1/3 inhibitor for the potential treatment of atopic dermatitis and potentially other dermatologic conditions. "Soft" JAK inhibitors are designed to be topically applied and active in the skin, but rapidly metabolized and inactivated when they enter the bloodstream, which may result in low systemic exposure. We are currently seeking a global development and commercialization partner for this program (excluding Greater China). In 2022, we granted Pediatrix Therapeutics, Inc. ("Pediatrix") exclusive rights to develop and commercialize lepzacitinib in Greater China.

[**Table of Contents**](#TOC)

**Financial Overview**

Since our inception, we have incurred significant net losses. Our net loss was $45.1 million for the nine months ended September 30, 2025 and $132.1 million for the year ended December 31, 2024. As of September 30, 2025, we had an accumulated deficit of $948.0 million. We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates from discovery through preclinical and clinical development. In addition, our product candidates, even if they are approved by regulatory agencies for marketing, may not achieve commercial success. We may also not be successful in pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates. Furthermore, we have incurred and expect to continue to incur significant costs associated with operating as a public company, including legal, accounting, investor relations and other expenses. As a result, we will need substantial additional funding to support our continuing operations.

We have historically financed our operations primarily with sales of equity securities and non-dilutive financing. In the near term, we expect to finance our operations through these and other capital sources, including potential partnerships with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on commercially acceptable terms, or at all. If we fail to raise capital or enter into such agreements as, and when needed, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.

**Impact of Macroeconomic Conditions on Our Business**

Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including inflationary pressure, tariff policies, geopolitical conflicts, and the current shutdown of the U.S. federal government, have led to economic uncertainty globally. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. If, however, economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.

**Acquisition and License Agreements**

***Exclusive License Agreement with Biosion***

In November 2024, we entered into an exclusive license agreement (the "Biosion Agreement") with Biosion pursuant to which we received the exclusive rights to develop, manufacture and commercialize bosakitug and ATI-052 worldwide, excluding Greater China. In connection with the Biosion Agreement, we also entered into a collaboration agreement (the "CTTQ Agreement") with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreement and CTTQ Agreement, we agreed to, in the aggregate, (i) pay $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issue warrants (the "Warrants") to purchase 14,281,985 shares of our common stock and (iii) pay $6.2 million for the reimbursement of certain development costs and drug product material as set forth in the Biosion Agreement.

In addition, we agreed to pay, in the aggregate, (i) up to $125 million upon the achievement of specified regulatory milestones commencing with product approval, (ii) up to $795 million upon the achievement of specified sales milestones, (iii) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions as set forth in the Biosion Agreement, and (iv) a portion of any sublicense consideration received from the grant of any sublicense or similar rights under any of the rights or licenses granted to us under the Biosion Agreement. We will expense these payments in the period when either they are determined to be probable of occurring or when the payment is triggered.

***Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP***

In July 2024, we entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System ("OMERS"). Under the royalty purchase agreement, we

[**Table of Contents**](#TOC)

sold to OMERS a portion of the future royalty payments and the remaining anniversary payments associated with our existing license to Eli Lilly and Company ("Lilly"), relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata (see "—License Agreement with Eli Lilly and Company"). Under the terms of the royalty purchase agreement, we received an upfront payment of $26.5 million. In exchange, OMERS acquired a portion of the royalty payable by Lilly to us for worldwide net sales of OLUMIANT for the treatment of alopecia areata from April 1, 2024 through the remainder of the royalty term under our license agreement with Lilly, and 100% of the remaining anniversary milestone payments payable by Lilly to us under the license agreement. The royalty payments and milestones we sold to OMERS represent our entire financial interest in the Lilly license agreement after taking into account our other contractual third-party obligations.

We recognized $0.7 million and $2.5 million of non-cash royalty income during the three and nine months ended September 30, 2025, respectively. We recognized $0.9 million of non-cash royalty income during each of the three and nine months ended September 30, 2024.

***License Agreement with Sun Pharmaceutical Industries, Inc.***

In December 2023, we entered into an exclusive patent license agreement with Sun Pharmaceutical Industries, Inc. ("Sun Pharma"). Under the license agreement, we granted Sun Pharma exclusive rights under certain patents that we exclusively license from a third party. The patents relate to the use of deuruxolitinib, Sun Pharma's JAK inhibitor, or other isotopic forms of ruxolitinib, to treat alopecia areata or androgenetic alopecia. Under the license agreement, Sun Pharma has paid us upfront, regulatory and commercial milestone payments, and has agreed to pay us other regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a mid single-digit tiered royalty calculated as a percentage of Sun Pharma's net sales. We have separate contractual obligations under which we have agreed to pay to third parties a portion of the consideration we may receive under the license agreement. We may seek to monetize this asset.

We recognized $1.5 million of licensing revenue during the three and nine months ended September 30, 2025, a portion of which was payable to third parties.

***License Agreement with Pediatrix Therapeutics, Inc.***

In November 2022, we entered into a license agreement with Pediatrix under which we granted Pediatrix the exclusive rights to develop, manufacture and commercialize lepzacitinib in Greater China. Pediatrix has paid us an upfront payment, and has agreed to pay us development, regulatory and commercial milestone payments upon the achievement of specified milestones set forth in the agreement, and a tiered royalty ranging from a low-to-high single digit percentage of net sales of lepzacitinib by Pediatrix in Greater China. A portion of the consideration received from Pediatrix is payable to the former Confluence (as defined below) equity holders as described below under the caption "—Agreement and Plan of Merger with Confluence."

***License Agreement with Eli Lilly and Company***

In August 2022, we entered into a non-exclusive patent license agreement with Lilly. Under the license agreement, we granted Lilly non-exclusive rights under certain patents and patent applications that we exclusively license from a third party. The patents and patent applications relate to the use of baricitinib, Lilly's JAK inhibitor, to treat alopecia areata. Under the license agreement, Lilly has paid us upfront, anniversary, regulatory and commercial milestone payments. In addition, Lilly has agreed to pay us other commercial milestone payments upon the achievement of specified milestones and additional anniversary payments as set forth in the agreement, as well as a low single-digit royalty calculated as a percentage of Lilly's net sales of baricitinib for the treatment of alopecia areata. We have separate contractual obligations under which we have agreed to pay to third parties an amount equal to any regulatory and commercial milestone payments we receive under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties we may receive under the license agreement. In July 2024, we entered into a royalty purchase agreement with OMERS pursuant to which we sold to OMERS a portion of our future royalty payments and the remaining anniversary payments associated with the license to Lilly (see "—Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP" above).

[**Table of Contents**](#TOC)

We recognized $1.3 million and $3.6 million of licensing revenue during the three and nine months ended September 30, 2025, respectively, all of which was payable to third parties. We recognized $0.7 million and $4.6 million of licensing revenue during the three and nine months ended September 30, 2024, respectively, a portion of which was payable to third parties.

***Asset Purchase Agreement with EPI Health***

In October 2019, we sold RHOFADE (oxymetazoline hydrochloride) cream, 1% ("RHOFADE"), to EPI Health, LLC ("EPI Health") pursuant to an asset purchase agreement. In July 2023, EPI Health filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. Through the bankruptcy process, EPI Health and its parent company, Novan, Inc., sold the RHOFADE assets to a third party, which excluded our asset purchase agreement with EPI Health and the outstanding amounts due. The sale was approved by the bankruptcy court in September 2023. As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health had been fully reserved. During the three months ended September 30, 2025, we sold all of our right, title and interest in our bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible.

***Agreement and Plan of Merger with Confluence***

In 2017, we entered into an Agreement and Plan of Merger (the "Confluence Agreement"), with Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) ("Confluence"), Aclaris Life Sciences, Inc., our wholly owned subsidiary ("Merger Sub"), and Fortis Advisors LLC, as representative of the equity holders of Confluence. Pursuant to the terms of the Confluence Agreement, Merger Sub merged with and into Confluence, with Confluence surviving as our wholly owned subsidiary.

Under the Confluence Agreement, we 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, we 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 we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we 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.

**Restructuring** 

In December 2023, our board of directors approved a reduction of our workforce by approximately 46%, which was completed as of December 31, 2024. During the nine months ended September 30, 2025, we made cash severance payments of $0.2 million to impacted employees. During the three and nine months ended September 30, 2024, we recognized severance expense of $26 thousand and $2.6 million, respectively, and made cash severance payments of $5.2 million to impacted employees during the nine months ended September 30, 2024.

**Components of Our Results of Operations**

**Revenue**

***Contract Research***

We earn 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 and are generally billed on a monthly basis in arrears for services rendered.

[**Table of Contents**](#TOC)

***Licensing***

Licensing revenue primarily consists of upfront consideration, royalties and milestone payments earned pursuant to license and acquisition agreements with third parties, as described above.

**Cost and Expenses**

***Cost of Revenue***

Cost of revenue consists of the costs incurred in connection with the provision of contract research services. Cost of revenue primarily includes:

● employee-related expenses, which include salaries, benefits, and stock-based compensation;

● outsourced professional scientific services;

● depreciation of laboratory equipment;

● facility-related costs; and

● laboratory materials and supplies used to support the services provided.

***Research and Development***

Research and development expenses consist of expenses incurred in connection with the discovery and development of our product candidates. These expenses primarily include:

● expenses incurred under agreements with contract research organizations ("CROs"), as well as clinical trial sites and consultants that conduct our clinical trials and preclinical studies, and investigator-initiated trials;

● manufacturing scale-up expenses and the cost of acquiring and manufacturing active pharmaceutical ingredients and preclinical and clinical trial materials, including domestic technology transfer expenses;

● quality assurance and quality control costs;

● outsourced professional scientific development services;

● medical affairs expenses related to our product candidates;

● employee-related expenses, which include salaries, benefits, and stock-based compensation;

● expenses relating to regulatory activities, including filing fees paid to regulatory agencies; and

● laboratory materials and supplies used to support our research activities.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect to continue to incur research and development expenses in the near term as we continue the development of our product candidates and pursue our discovery programs. We expense research and development costs as incurred. Our direct research and development expenses primarily consist of external costs including fees paid to CROs, consultants, clinical trial sites, regulatory agencies and third parties that manufacture our preclinical and clinical trial materials and are tracked on a program-by-program basis. We do not allocate personnel costs or other indirect expenses to specific research and development programs.

The successful development of our product candidates is highly uncertain. We cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of discovery, as well as clinical trials, which vary significantly over the life of a project as a result of many factors, including:

● the number of clinical sites included in the trials;

● the length of time required to enroll suitable subjects;

● the number of subjects that ultimately participate in the trials;

● the number of doses subjects receive;

[**Table of Contents**](#TOC)

● the duration of subject follow-up; and

● the results of our clinical trials.

Our expenditures are subject to additional uncertainties, including the preparation of regulatory filings for our product candidates. We may obtain unexpected results from our clinical trials or other development activities. We may elect to discontinue, delay or modify the development, including clinical trials, of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

***General and Administrative***

General and administrative expenses consist principally of salaries and related costs, including stock-based compensation, for personnel in executive, administrative, finance and legal functions. General and administrative expenses also include facility-related costs, patent filing and prosecution costs, professional fees for legal, auditing and tax services, investor relations costs, business development costs, insurance costs, and travel expenses.

***Licensing***

Licensing expenses consist of third-party contractual obligations incurred under license and acquisition agreements with third parties, as described above.

***Revaluation of Contingent Consideration***

Revaluation of contingent consideration consists of changes in the fair value of our contingent consideration liability between reporting dates, as described below.

**Other Income**

***Interest Income***

Interest income primarily consists of interest earned on our cash, cash equivalents and marketable securities.

***Non-cash Royalty Income***

Non-cash royalty income includes income related to the proceeds from the sale of future royalties to OMERS, recognized under the "units-of-revenue" method.

**Critical Accounting Estimates**

This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and judgments on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. There have been no material changes to our significant accounting policies and use of estimates as disclosed in the footnotes to our audited consolidated financial statements for the year ended December 31, 2024 included in our Annual Report.

[**Table of Contents**](#TOC)

**Contingent Consideration**

We record a contingent consideration liability related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs including the achievement of 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 is involved in determining the appropriateness of these assumptions. These assumptions are considered Level 3 inputs. Revaluation of our contingent consideration liability can result from changes to one or more of these assumptions. These assumptions are highly dependent on the outcome and timing of the development of certain of our product candidates. We evaluate the fair value estimate of our contingent consideration liability on a quarterly basis with changes, if any, recorded as income or expense in our condensed consolidated statement of operations and comprehensive loss. Any such changes could have a material impact on our financial results.

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 our estimates include the probability of achieving regulatory milestones and commencing commercialization (collectively referred to as "probability of success"), which are based on an asset's current stage of development and a review of existing clinical data. Probability of success assumptions ranged between 21% and 40% at September 30, 2025. 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. As of September 30, 2025, the discount rate ranged between 6.8% and 8.4% depending on the year of each potential payment.

During the nine months ended September 30, 2025, we recorded a charge to the contingent consideration liability of $1.9 million, which was primarily due to changes to the probability of success for certain product candidates and the passage of time.

**Results of Operations**

**Comparison of Three and Nine Months Ended September 30, 2025 and 2024**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,**  | **Three Months Ended September 30,**  | **Three Months Ended September 30,**  | **Nine Months Ended September 30,**  | **Nine Months Ended September 30,**  | **Nine Months Ended September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** | **Change** | **2025** | **2024** | **Change** |
| Revenues: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Contract research | $485 | $645 | $**(160)** | $1372 | $1926 | $**(554)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Licensing  | 2814 | 3701 | **(887)** | 5159 | 7583 | **(2424)** |
| Total revenue | 3299 | 4346 | **(1047)** | 6531 | 9509 | **(2978)** |
| Costs and expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue | 538 | 654 | **(116)** | 1559 | 2087 | **(528)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 13028 | 5956 | **7072** | 36061 | 24560 | **11501** |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 4871 | 5653 | **(782)** | 16396 | 17249 | **(853)** |
| &nbsp;&nbsp;&nbsp;&nbsp;Licensing  | 1911 | 1754 | **157** | 4256 | 4070 | **186** |
| &nbsp;&nbsp;&nbsp;&nbsp;Revaluation of contingent consideration | 100 | 800 | **(700)** | 1900 | 3800 | **(1900)** |
| Total costs and expenses | 20448 | 14817 | **5631** | 60172 | 51766 | **8406** |
| Loss from operations | (17149) | (10471) | **(6678)** | (53641) | (42257) | **(11384)** |
| Other income: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income | 1819 | 1991 | **(172)** | 6003 | 5850 | **153** |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash royalty income | 716 | 894 | **(178)** | 2510 | 894 | **1616** |
| Total other income | 2535 | 2885 | **(350)** | 8513 | 6744 | **1769** |
| Net loss | $(14614) | $(7586) | $**(7028)** | $(45128) | $(35513) | $**(9615)** |

---

[**Table of Contents**](#TOC)

**Revenue**

***Contract research***

The decrease in contract research revenue for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively, was driven by lower overall hours billed for laboratory services. The decrease during the nine-month period was partially offset by a higher average billing rate.

***Licensing***

The decrease in licensing revenue during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to a larger milestone achieved under the Sun Pharma license agreement during the three months ended September 30, 2024.

The decrease in licensing revenue during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to a larger milestone achieved under the Sun Pharma license agreement and higher licensing revenue earned under the Lilly license agreement during the nine months ended September 30, 2024. We sold a portion of the royalties we may receive under the Lilly license agreement to OMERS in July 2024.

**Costs and Expenses**

***Cost of Revenue***

The decrease in cost of revenue for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was driven by lower overall hours billed for laboratory services.

***Research and Development***

The following table summarizes our research and development expenses by product candidate or, for unallocated expenses, by type:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** | **Change** | **2025** | **2024** | **Change** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bosakitug | $3062 | $— | $**3062** | $9293 | $— | $**9293** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-2138 | 1469 | 745 | **724** | 4395 | 1560 | **2835** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ATI-052 | 1837 |  | **1837** | 3874 |  | **3874** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discovery | 2340 | 1263 | **1077** | 5306 | 4408 | **898** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other research and development | 363 | 854 | **(491)** | 1034 | 7398 | **(6364)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | 2993 | 1970 | **1023** | 8904 | 9002 | **(98)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 964 | 1124 | **(160)** | 3255 | 2192 | **1063** |
| Total research and development expenses | $13028 | $5956 | $**7072** | $36061 | $24560 | $**11501** |

---

*Bosakitug*

The expenses incurred for bosakitug during the three and nine months ended September 30, 2025 consisted primarily of product candidate manufacturing costs and clinical development expenses associated with a Phase 2 trial in atopic dermatitis.

*ATI-2138*

The increase in expenses for ATI-2138 during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to preclinical development expenses associated with toxicity studies, which was partially offset by a decrease in clinical development expenses associated with a Phase 2a trial in atopic dermatitis.

[**Table of Contents**](#TOC)

The increase in expenses for ATI-2138 during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to an increase in preclinical development expenses and clinical development expenses associated with a Phase 2a trial in atopic dermatitis.

*ATI-052*

Research and development expenses related to ATI-052 for the three and nine months ended September 30, 2025 primarily consisted of product candidate manufacturing costs, preclinical development activities, and clinical development expenses associated with a Phase 1a/1b program.

*Discovery*

Discovery expenses increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to increased investment in our discovery-stage programs as we progressed our next generation ITK selective inhibitors toward candidate selection.

*Other research and development*

The decrease in other research and development expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to clinical development expenses associated with former development assets.

*Personnel and stock-based compensation*

The increase in personnel expenses during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to higher headcount. The increase in stock-based compensation expense during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was due to higher forfeiture credits during the nine months ended September 30, 2024.

***General and Administrative***

The following table summarizes our general and administrative expenses:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended**  | **Three Months Ended**  | **Three Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** | **Change** | **2025** | **2024** | **Change** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel | $1930 | $1189 | $**741** | $5667 | $5041 | $**626** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional and legal fees | 771 | 1854 | **(1083)** | 2688 | 3881 | **(1193)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Facility and support services | 707 | 480 | **227** | 1931 | 1676 | **255** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other general and administrative | (242) | 482 | **(724)** | 507 | 1554 | **(1047)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 1705 | 1648 | **57** | 5603 | 5097 | **506** |
| Total general and administrative expenses | $4871 | $5653 | $**(782)** | $16396 | $17249 | $**(853)** |

---

*Personnel and stock-based compensation*

The increase in personnel expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to higher headcount. The increase in stock-based compensation expense during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was due to higher forfeiture credits during the nine months ended September 30, 2024.

[**Table of Contents**](#TOC)

*Professional and legal fees*

The decrease in professional and legal fees during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to business development expenses incurred in the prior year in connection with the royalty purchase agreement with OMERS.

*Other general and administrative*

The decrease in other general and administrative expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to the sale of our bankruptcy claims against EPI Health.

***Revaluation of Contingent Consideration***

The revaluation of contingent consideration loss decreased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 mainly due to higher discount rates resulting from changes in credit spreads being applied to potential payments during the three months ended September 30, 2025.

The revaluation of contingent consideration loss decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 mainly due to changes in estimated sales levels and changes to the probability of success for certain product candidates during the nine months ended September 30, 2024.

***Other Income***

*Non-cash Royalty Income*

Non-cash royalty income includes income related to the proceeds from the sale of a portion of our OLUMIANT® royalty payments to OMERS in July 2024.

**Liquidity and Capital Resources**

**Overview**

Since our inception, we have incurred net losses and negative cash flows from our operations. We have financed our operations over the last several years primarily through sales of our equity securities and non-dilutive financing. We may engage in additional equity and other financing transactions in order to raise funds. We may receive royalties and milestone payments under third-party licensing and acquisition agreements. In addition, to the extent we are able to consummate transactions with potential third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, we may receive upfront payments, milestone payments or royalties from such arrangements that would increase our liquidity.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $167.2 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view towards liquidity and capital preservation.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than our contingent obligations under the Confluence Agreement, Biosion Agreement and CTTQ Agreement, which are summarized above under "Overview—Acquisition and License Agreements," and our lease obligations.

[**Table of Contents**](#TOC)

**Cash Flows**

Cash and cash equivalents were $25.3 million as of September 30, 2025 compared to $24.6 million as of December 31, 2024. We also had $142.0 million in short- and long-term marketable securities as of September 30, 2025 compared to $179.3 million as of December 31, 2024.

The sources and uses of cash that contributed to the change in cash and cash equivalents were:

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** |
| Cash and cash equivalents beginning balance | $24570 | $39878 |
| Net cash used in operating activities | (33982) | (11137) |
| Net cash provided by investing activities | 37996 | 18954 |
| Net cash used in financing activities | (3328) | (44) |
| Cash and cash equivalents ending balance | $25256 | $47651 |

---

***Operating Activities***

Cash flow related to operating activities was the result of:

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** |
| Net loss | $(45128) | $(35513) |
| Non-cash adjustments to reconcile net loss to net cash used in operating activities | 11710 | 12460 |
| Change in accounts receivable, prepaid expenses and other assets | 6810 | 3699 |
| Change in accounts payable and accrued expenses | (4864) | (16730) |
| Change in deferred income | (2510) | 24947 |
| Net cash used in operating activities | $(33982) | $(11137) |

---

Net cash used in operating activities increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily as a result of proceeds from the royalty sale to OMERS and lower net losses after adjusting for non-cash items during the nine months ended September 30, 2024. This increase was partially offset by a decrease in cash used for accounts payable and accrued expenses, which was due to the timing of payments to vendors and severance payments in connection with the reduction in our workforce.

***Investing Activities***

Cash flow related to investing activities was the result of:

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** |
| Purchases of property and equipment, net | $(87) | $(121) |
| Purchases of marketable securities | (35124) | (49555) |
| Proceeds from sales and maturities of marketable securities | 74040 | 68630 |
| Payment of deferred transaction consideration for in-licensed assets | (833) |  |
| Net cash provided by investing activities | $37996 | $18954 |

---

The increase in net cash provided by investing activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 resulted primarily from lower purchases of marketable securities and higher proceeds from sales and maturities of marketable securities during the nine months ended September 30, 2025.

[**Table of Contents**](#TOC)

***Financing Activities***

Cash flow related to financing activities was the result of:

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended**  | **Nine Months Ended**  |
| | **September 30,**  | **September 30,**  |
| <br>**(In thousands)** | **2025** | **2024** |
| Payment of deferred transaction consideration for in-licensed assets | $(3044) | $— |
| Payments of employee withholding taxes related to restricted stock unit award vesting | (284) | (76) |
| Proceeds from exercise of employee stock options and the issuance of stock |  | 32 |
| Net cash used in financing activities | $(3328) | $(44) |

---

Net cash used in financing activities increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the payment of deferred transaction consideration in connection with the Biosion Agreement during the nine months ended September 30, 2025.

**Funding Requirements**

We anticipate we will incur net losses in the near term as we continue the development of our product candidates and continue to discover and develop additional product candidates. We may not be able to generate revenue from these programs if, among other things, our clinical trials are not successful, the FDA does not approve our product candidates currently in clinical trials when we expect, or at all, or we are not able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates.

Our primary uses of capital are, and we expect will continue to be, research and development expenses, compensation and related expenses, laboratory and related supplies, professional and legal expenses, and administrative and overhead costs. Our future funding requirements will be heavily determined by the resources needed to support the development of our product candidates, without taking into account any potential business development activities.

As a publicly traded company, we incur and will continue to incur significant legal, accounting, and other similar expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC and the Nasdaq Stock Market LLC, requires public companies to implement specified corporate governance practices that could increase our compliance costs.

We believe our existing cash, cash equivalents and marketable securities are sufficient to fund our operating and capital expenditure requirements for a period greater than 12 months from the date of issuance of our condensed consolidated financial statements that appear in Item 1 of this Quarterly Report on Form 10-Q based on our current operating assumptions. We will require additional capital to develop our product candidates and to support our 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 us to continue to implement our long-term business strategy. Our ability to raise additional capital may be adversely impacted by potentially worsening global economic conditions caused by a variety of factors including geopolitical tensions, tariff policies, inflationary pressures, and the current shutdown of the U.S. federal government. If we are unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of our product candidates, we may need to substantially curtail our planned operations.

We may raise additional capital through the sale of equity or debt securities. In such an event, our stockholders' ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a holder of our common stock.

Because of the numerous risks and uncertainties associated with research and development of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our funding requirements in the near term will depend on many factors, including:

[**Table of Contents**](#TOC)

● the number and development requirements of the product candidates that we may pursue;

● the scope, progress, results and costs of preclinical development, laboratory testing and conducting preclinical and clinical trials for our product candidates;

● the costs, timing, and outcome of regulatory review of our product candidates;

● the extent to which we in-license or acquire additional product candidates and technologies;

● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;

● our ability to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates; and

● our ability to earn revenue as a result of licenses to, or partnerships or other arrangements with, third parties.

***Leases***

We occupy space for our headquarters in Wayne, Pennsylvania under a lease agreement which has a term through February 2029. We also occupy office and laboratory space in St. Louis, Missouri under a sublease agreement which has a term through May 2029.

Our aggregate remaining lease payment obligation for these two spaces was $2.7 million as of September 30, 2025.

***Agreement and Plan of Merger with Confluence***

We have agreed to certain payment obligations in accordance with and subject to the terms of the Confluence Agreement (see "Overview—Acquisition and License Agreements—Agreement and Plan of Merger with Confluence"). As of September 30, 2025, the balance of our contingent consideration liability was $10.6 million.

***Exclusive License Agreement with Biosion; Collaboration Agreement with Biosion and CTTQ***

We have agreed to certain payment obligations in accordance with and subject to the terms of the Biosion and CTTQ Agreements (see "Overview—Acquisition and License Agreements—Exclusive License Agreement with Biosion").

***R&D Obligations***

We enter into contracts in the normal course of business with CROs, contract manufacturing organizations and other service providers for clinical trials, preclinical studies and testing, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

**Segment Information**

We have 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.

**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

[**Table of Contents**](#TOC)

**Item 4. Controls and Procedures**

(a) *Evaluation of Disclosure Controls and Procedures*

Under the supervision of and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q. The term "disclosure controls and procedures," as set forth in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms promulgated by the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2025, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

(b) *Changes in Internal Control Over Financial Reporting*

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

**PART II. OTHER INFORMATION** 

**Item 1. Legal Proceedings**

From time to time, we are subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings, and we are not aware of any other pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.

**Item 1A. Risk Factors**

Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Our risk factors have not changed materially from those described in "Part I, Item 1A. Risk Factors" of our Annual Report.

**Item 5. Other Information**

***Adoption, Modification and Termination of Rule 10b5-1 Plans and Certain Other Trading Arrangements.***

During the quarter ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Regulation S-K).

[**Table of Contents**](#TOC)

**Item 6. Exhibits**

---

| | |
|:---|:---|
| **ExhibitNo.** | **Document** |
| 3.1 | [Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-37581), filed with the SEC on October 13, 2015).](https://www.sec.gov/Archives/edgar/data/1557746/000110465915070341/a15-21034_1ex3d1.htm) |
| 3.2 | [Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-37581), filed with the SEC on August 7, 2023](https://www.sec.gov/Archives/edgar/data/1557746/000155837023013491/acrs-20230630xex3d2.htm)). |
| 3.3 | [Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-37581), filed with the SEC on June 5, 2025).](https://www.sec.gov/Archives/edgar/data/1557746/000155837025008430/acrs-20250605xex3d1.htm) |
| 3.4 | [Amended and Restated Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-37581), filed with the SEC on June 24, 2020).](https://www.sec.gov/Archives/edgar/data/1557746/000155837020007743/tmb-20200623xex3d1.htm) |
| 10.1+\* | [Employment Agreement, effective as of July 28, 2025, by and between the Registrant and Roland Kolbeck.](acrs-20250930xex10d1.htm) |
| 31.1\* | [Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act.](acrs-20250930xex31d1.htm) |
| 31.2\* | [Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act.](acrs-20250930xex31d2.htm) |
| 32.1\*\* | [Certifications of Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act.](acrs-20250930xex32d1.htm) |
| 101.INS | XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Filed herewith.

\*\* These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

+ Indicates management contract or compensatory plan.

[**Table of Contents**](#TOC)

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | ACLARIS THERAPEUTICS, INC. | ACLARIS THERAPEUTICS, INC. |
| Date: November 6, 2025 | By: | /s/ Neal Walker |
|  |  | Neal Walker |
|  |  | Chief Executive Officer |
|  |  | *(On behalf of the Registrant)* |
| Date: November 6, 2025 | By: | /s/ Kevin Balthaser |
|  |  | Kevin Balthaser |
|  |  | Chief Financial Officer |
|  |  | *(Principal Financial Officer)* |

---

## Exhibit 10.1

**Exhibit 10.1**

**EMPLOYMENT AGREEMENT**

This EMPLOYMENT AGREEMENT (the "***Employment Agreement***"), effective as of July 28, 2025 ("***Agreement Effective Date***"), is made by and between Aclaris Therapeutics, Inc., a corporation organized under the laws of the State of Delaware ("***Employer***") and Roland Kolbeck ("***Executive***").

WHEREAS, Executive desires to provide services to Employer and Employer desires to retain the services of Executive;

WHEREAS, Employer and Executive desire to formalize the terms and conditions of Executive's employment with Employer; and

WHEREAS, this Employment Agreement has been duly approved and its execution has been duly authorized by Employer's Board of Directors (the "***Board***").

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein Employer and Executive hereby agree as follows:

**SECTION 1. EMPLOYMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1** **General.** Employer hereby agrees to employ Executive in the capacity of Chief Scientific Officer ("***CSO***"). Executive hereby accepts such employment upon the terms and subject to the conditions herein contained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2** **Authority and Duties.** Executive shall have full responsibility as the CSO of Employer and all authority normally accorded to such position. Executive agrees to perform such duties and responsibilities commensurate with the position of CSO as may reasonably be determined by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2.1 Reporting.** During Executive's employment with Employer, Executive will report directly to, and take direction from, the Chief Executive Officer (the "***CEO***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2.2 Time to Be Devoted to Employment.** During Executive's Employment with Employer, Executive shall diligently devote his efforts, business time, attention and energies to the business of Employer and will not, while employed by Employer, undertake or engage in any other employment, occupation or business enterprise that would, as determined in the sole discretion of Employer, interfere with Executive's responsibilities and the performance of Executive's duties hereunder except for (i) reasonable time devoted to volunteer services for or on behalf of such religious, educational, non-profit and/or other charitable organization as Executive may wish to serve, (ii) reasonable time devoted to activities in the non-profit and business communities consistent with Executive's duties; and (iii) reasonable time devoted to service as a member of the board of directors of the entities listed on <u>Exhibit A</u> (as described in Section 1.3) or as otherwise permitted pursuant to Section 1.3. This restriction shall not, however, preclude Executive (x) from owning less than one percent (1%) of the total outstanding shares of a publicly traded company, or (y) from employment or service in any capacity with Affiliates of Employer. As used in this Employment Agreement, "Affiliates" means an entity under common management or control with Employer.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.3** **Other Responsibilities.** Notwithstanding Section 1.2.2 above, Executive will not engage in any other for-profit business, profession or occupation, including as a member of a board of directors of any third party, for compensation which would materially conflict or materially interfere with the rendition of services hereunder, without the prior written consent of the Board, which shall not be unreasonably withheld. Any uncertainty as to whether such a conflict exists will be raised by Executive for determination by the Board, acting reasonably. The Board acknowledges that Executive has ongoing participation in other private and public businesses that have been disclosed by Executive and are listed on <u>Exhibit A</u> and that such participation does not, as of the Agreement Effective Date, conflict with his role at Employer. Employer reserves the right to revisit Executive's outside activities and may, in its sole, but reasonable, discretion, revoke its approval of Executive's outside activities (including Executive's activities listed on <u>Exhibit A</u>) in the event Employer concludes that any such activities conflict with Executive's obligations to Employer. For avoidance of doubt, in the event that Employer determines, in its sole, but reasonable, discretion, that a conflict of interest exists between Executive's obligations to Employer and Executive's outside activities (including Executive's activities listed on <u>Exhibit A</u>) then Employer may request that Executive resign from any such role and/or terminate any such outside activity. The parties agree that Executive's refusal to comply with such a request from Employer will constitute Executive's resignation without Good Reason (as defined in Section 3.1.7 herein), with immediate effect, and Executive will not be eligible for the severance benefits set forth in either Sections 3.2.1 or 3.2.3 herein. Except for the businesses listed on <u>Exhibit A</u>, which have already been approved, Executive agrees to disclose to the Board and receive prior written consent from the Board to participate as a director, with any competing company whether it is a private or public company. Executive further agrees to disclose any other director positions with any other company that may materially affect his ability to perform his duties and responsibilities under this Employment Agreement. Notwithstanding the above, nothing herein shall limit or preclude Executive from managing any passive investments made by Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.4** **Location of Employment.** Executive's principal place of employment during his employment with Employer shall be Executive's primary residence (or other remote work location) or such other location as Employer and Executive shall agree; provided however, that from time to time Executive may be required to travel to Employer's offices, including Employer's principal executive office currently located in Wayne, Pennsylvania and Employer's office in St. Louis, Missouri.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.5** **Background Check.** Executive's employment is conditioned on, and subject to, satisfactory proof of identity and right to work in the United States, and Executive's satisfactory completion of a background check and other applicable pre-employment screenings. If the foregoing condition is not satisfied, this Employment Agreement, including Employer's obligations herein, shall become immediately null and void.

**SECTION 2. COMPENSATION AND BENEFITS**

**2.1** **Salary.** Beginning as of the Agreement Effective Date, Employer will pay to Executive an annual base salary of $457,000 payable subject to standard federal and state payroll withholding requirements in accordance with the regular payroll practices of Employer ("***Base Salary***"). The annual Base Salary may be increased (but not decreased without written consent of Executive) during the term of this Employment Agreement by the Board in its sole discretion.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2** **Additional Compensation.** In addition to the salary set forth in Section 2.1, Executive shall be entitled to receive a cash bonus in accordance with the terms of this Section 2.2. For each fiscal year of Employer, beginning January 1, during the Employment Term (as defined in Section 2.5 hereof), Executive shall be eligible to receive a cash bonus based on (i) the "***Annual Bonus Expectancy Amount***," which shall be an amount equal to 40% of Executive's Base Salary for the applicable fiscal year (provided that for fiscal year 2025, Executive's base salary for purposes of calculating his bonus under this section shall be the total salary paid to him for the year), and (ii) Executive's attainment of performance targets and other reasonable criteria established by the Board, to the extent possible, by the end of the first month of such fiscal year. Depending on the targets and criteria which are achieved or met, the amount of the cash bonus actually payable to Executive for each fiscal year will be an amount from zero to and above the Annual Bonus Expectancy Amount. Any cash bonus amount payable pursuant to this Section 2.2 shall be paid to Executive as soon as practicable, but in no event later than two and one-half (2 1/2) months, following the end of the fiscal year to which it relates. For the avoidance of doubt, Executive does not have to be employed by Employer on the date such bonus is approved or paid by Employer to receive such bonus, but Executive needs to be employed by Employer through the end of the fiscal year to which it relates.

**2.3** **Executive Benefits**. In addition to the salary and additional compensation set forth in Sections 2.1 and 2.2, Executive shall also be entitled to the following benefits during Executive's employment hereunder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.1 Expenses**. Employer will promptly reimburse Executive for expenses he reasonably incurs in connection with the performance of his duties (including business travel and entertainment expenses), in accordance with Employer's standard expense reimbursement policy, as the same may be modified by Employer from time to time; provided, however, that Executive has provided Employer with documentation of such expenses in accordance with the Employer's expense reimbursement policies and applicable tax requirements. For the avoidance of doubt, to the extent that any reimbursements payable to Executive are subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the "***Code***"): (a) any such reimbursements will be paid no later than December 31 of the year following the year in which the expense was incurred, (b) the amount of expenses reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year, and (c) the right to reimbursement under this Employment Agreement will not be subject to liquidation or exchange for another benefit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.2 Employer Plans.** Executive will be eligible to participate on the same basis as similarly situated full-time employees in Employer's employee benefit plans and programs, as they may be interpreted, adopted, revised or deleted from time to time in Employer's sole discretion, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and programs. All matters of eligibility for coverage or benefits under any benefit plan shall be determined in accordance with the provisions of such plan. Employer retains the unilateral right to amend, modify or terminate any of its employee benefit plans and programs at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.3 Vacation**. Executive shall be eligible for paid vacation leave (not including regular holidays) in accordance with Employer's applicable vacation or PTO policy

------

and consistent with the needs of the business. Vacation must be scheduled at those times convenient to Employer's business as reasonably determined by the CEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.4 Coverage**. Nothing in this Employment Agreement shall prevent Executive from participating in any other compensation plan or benefit plan made available to similarly situated full-time employees of Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3.5 Withholding**. All compensation shall be subject to withholding of taxes and deductions of other amounts as may be required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4** **Initial Equity Awards**. Subject to approval by Employer's Board (or Compensation Committee of the Board), Executive will be granted (i) a nonqualified stock option award to purchase 510,000 shares of common stock of Employer, with an exercise price equal to the fair market value of a share of common stock of Employer on the date of grant, and (ii) a restricted stock unit award for 145,500 shares of common stock of Employer, each of which will vest in equal installments over a four-year period from the approved grant date. These awards will be granted under and governed by the terms of Employer's 2025 Equity Incentive Plan and stock option award agreement and restricted stock unit award agreement used in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.5 Employment Term**. Unless earlier terminated pursuant to Section 3.1, Executive's employment by Employer pursuant to this Employment Agreement shall continue until the second anniversary of the Agreement Effective Date (the "***Initial Term***"). Thereafter, this Employment Agreement shall be automatically renewed for successive one (1) year periods (any subsequent employment period being referred to herein as the "***Renewal Term***", and together with the Initial Term, the "***Employment Term***"); provided, however, that either party may elect to not renew this Employment Agreement by written notice to such effect delivered to the other party at least ninety (90) days prior to expiration of the Initial Term or the Renewal Term.

**SECTION 3. TERMINATION OF EMPLOYMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1** **Events of Termination.** Executive's employment with Employer will terminate upon the occurrence of any one or more of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.1 Death.** In the event of Executive's death, Executive's employment will terminate on the date of death.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.2 Disability.** In the event of Executive's Disability (as hereinafter defined), Employer will have the option to terminate Executive's employment by giving a notice of termination to Executive. The notice of termination shall specify the date of termination, which date shall not be earlier than thirty (30) calendar days after the notice of termination is given. For purposes of this Employment Agreement, "***Disability***" has the meaning set forth in Employer's long term disability plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.3 Termination by Employer for Cause.** Employer may, at its option, terminate Executive's employment for Cause (as hereinafter defined) by unilateral action of the Board of Directors upon giving a notice of termination to Executive. "***Cause***" shall mean (i) Executive's conviction of, or guilty plea to, a felony (other than traffic violations); (ii) any act(s) or omission(s) by Executive which constitutes gross negligence or a material breach of Executive's

------

duty of loyalty; (iii) any material breach by Executive of Employer's personnel policies; (iv) refusal to follow or implement a clear and reasonable directive of Employer; (v) breach of fiduciary duty; or (vi) a material violation or breach by Executive of this Employment Agreement (other than an event described in the foregoing clauses) or any other agreement between the parties. If Executive's employment is terminated for Cause pursuant to this Section 3.1.3, the effective date of such termination shall be the later of the date the notice of termination is given or the date set forth in such notice of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.4 Without Cause By Employer.** Employer may, at its option, terminate Executive's employment for any reason whatsoever (other than for the other reasons set forth above in this Section 3.1 that would constitute "Cause" to terminate) by giving a notice of termination to Executive, and Executive's employment shall terminate on the later of the date the notice of termination is given or the date set forth in such notice of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.5 By Executive.** Executive may, at any time, terminate Executive's employment for any reason whatsoever by giving a notice of termination to Employer. Executive's employment shall terminate on the earlier of (i) thirty (30) calendar days after the date of receipt by Employer of the notice of termination or (ii) such earlier date as the Employer and Executive shall agree.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.6 Termination Upon Non-Renewal**. Either party may terminate this Employment Agreement and Executive's employment hereunder by providing the other party notice in accordance with Section 2.5 above, in which case this Employment Agreement and Executive's employment hereunder shall terminate on the last date of the Initial Term or the Renewal Term, as the case may be. For the avoidance of doubt, Executive shall continue to be employed by Employer, on the same terms and conditions as set forth in this Employment Agreement during the ninety (90)-day notice period provided by either party to the other party in accordance with Section 2.5 above, unless, Employer, in its sole discretion elects to have Executive cease work for Employer, in all capacities, during such notice period. In such event, Employer shall pay Executive all compensation in accordance with Section 3.2.3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1.7 For Good Reason by Executive**. Executive may, at his option, terminate Executive's employment for "***Good Reason***" by giving a notice of termination to Employer in the event that, in the absence of events that would support a termination of Executive for Cause:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)there is a material failure of Employer (or successor employer) to pay Executive's salary or additional compensation or benefits hereunder in accordance with this Employment Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)Executive's Base Salary is materially decreased without his prior written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)Executive is assigned duties materially inconsistent with his title and the responsibilities set forth in Executive's job description, without Executive's prior written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)Executive's place of employment is changed to a location that is greater than fifty (50) miles from Executive's current place of employment (disregarding for this purpose any remote work arrangements); or

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)any other material violation or breach by Employer of this Employment Agreement. Notwithstanding the foregoing, none of the events described in clauses (i) through (iv) above shall constitute Good Reason unless Executive shall have notified Employer in writing describing the event which constitute Good Reason within thirty (30) days after Executive first becomes aware of such event and then only if Employer shall have failed to reasonably cure such events, if curable, within thirty (30) days after Employer's receipt of such written notice and Executive elects to terminate his employment as a result within thirty (30) days following the end of such thirty (30) day period (assuming, for the avoidance of doubt, that Employer does not elect to cure).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2** **Certain Obligations of Employer Following Termination of Executive's Employment**. Following the termination of Executive's employment under the circumstances described below, Employer will pay to Executive, subject to standard federal and state payroll withholding requirements and in accordance with its regular payroll practices, the following compensation and provide the following benefits (provided that the continuing payments of Executive's then-current Base Salary, as described below, shall occur no less frequently than monthly):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2.1 Termination by Employer Without Cause or by Executive for Good Reason.** In the event that Executive's employment is terminated by Employer pursuant to Section 3.1.4 ("***Without Cause by Employer***") or by Executive pursuant to Section 3.1.7 ("***Termination by Executive for Good Reason***") hereof, and Executive, or his estate, as the case may be, executes and does not revoke a separation agreement containing a release upon such termination, in a form provided by the Employer, of any and all claims against Employer and all related parties with respect to all matters arising out of Executive's employment by Employer, or the termination thereof (the "***Release***") in accordance with Section 3.7, Executive, or his estate, as the case may be, shall be entitled to the following payments and benefits, which payments and benefits shall be paid in accordance with this Section 3.2.1 and Section 3.7:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Continuing payments of Executive's then-current Base Salary for the Severance Period (as defined in Section 3.5 herein), payable subject to standard federal and state payroll withholding requirements in accordance with Employer's regular payroll practices on Employer's normal payroll schedule over the Severance Period, subject to Section 3.7;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)In the event that the effective date of the Executive's termination occurs on or after the last day of the fiscal year but before any bonuses for such fiscal year have been approved or paid by Employer, then Executive will receive, as an additional severance benefit, an amount equal to the bonus Executive would have been paid in accordance with Section 2.2 (the "***Prior Year Bonus Severance***"). The Prior Year Bonus Severance will be paid at the same time bonuses are paid to other executives and in no event later than two and one-half (2 1/2) months following the end of the fiscal year in which the termination date occurs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)So long as Executive is eligible, and so long as Executive remains eligible, for and upon his timely election of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, or, if applicable, state or local insurance laws ("***COBRA***"),

------

Employer will continue to pay, directly to the healthcare provider when due, Employer's portion of the medical, vision and dental coverage premiums (and Executive will be responsible for Executive's portion) for a period of twelve (12) months after the effective date of Executive's termination (the "***COBRA Payment Period***"); provided that, if at any time Employer determines, in its sole discretion, that the payment of the COBRA premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums for the remainder of the COBRA Payment Period, Employer will instead pay Executive on the first day of each month of the remainder of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings, for the remainder of the COBRA Payment Period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)In the event such termination of employment occurs on or within three (3) months prior to or within twelve (12) months following the effective date of a Change of Control (as defined herein), Executive shall be entitled to the <u>additional</u> following payments and benefits (for the avoidance of doubt, Executive shall also be entitled to the amounts set forth in Section 3.2.1(i)-(iii)):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Employer shall pay to Executive a lump sum payment equal to the Annual Expectancy Bonus Amount (target bonus), less applicable deductions and withholdings, paid within thirty (30) days of the later of (a) the effective date of the Change of Control or (b) Executive's termination, if such termination occurs on or after the effective date of a Change of Control; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)In the event such termination of employment occurs (A) on or within three (3) months prior to the effective date of a Change of Control, all unvested stock options and other equity awards held by Executive and outstanding on the effective date of termination shall become fully vested on the effective date of the Change of Control, or (B) within twelve (12) months following the effective date of a Change of Control, provided that any surviving corporation or acquiring corporation assumes Executive's stock options and/or other equity awards, as applicable, or substitutes similar stock options or equity awards for Executive's stock options and/or equity awards, as applicable, in accordance with the terms of Employer's applicable equity incentive plans, all such unvested stock options and other equity awards held by Executive and outstanding on the effective date of termination shall become fully vested on the date of such termination.

For purposes of this Employment Agreement, "***Change of Control***" means, in each case as approved by the Board and the requisite stockholders of Employer, (i) any consolidation or merger of Employer with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of Employer immediately prior to such consolidation, merger or reorganization, own, in the aggregate, less than 50% of the surviving entity's voting power and/or outstanding capital stock immediately after such consolidation,

------

merger or reorganization, or any transaction or series of related transactions (including any transaction which results from an option agreement or binding letter of intent with a third party) to which Employer or any of its stockholders is a party in which in excess of 50% of Employer's voting power and/or outstanding capital stock is transferred, or pursuant to which any person or group of affiliated persons obtains in excess of 50% of Employer's voting power and/or outstanding capital stock, excluding any consolidation or merger effected exclusively to change the domicile of Employer; or (ii) any sale, license or other disposition (including through a Board and stockholder approved division or spin-off transaction) of all or substantially all of the assets of Employer and/or any of its subsidiaries or any sale, exclusive license or other disposition of all or substantially all of Employer's intellectual property, as reasonably determined based upon the potential earning power of the assets or intellectual property; provided, however, that none of the following shall constitute a Change of Control: (A) transfers of capital stock by an existing stockholder as a result of death or otherwise for estate planning purposes or to such stockholder's affiliates or to any of Employer's other existing stockholders, and (B) issuances of equity securities of Employer in connection with financings for working capital and other general corporate purposes; and, provided further, that such "Change of Control" qualifies as either a change in ownership of Employer as defined in Section 409A of the Code ("***Section 409A***") or a change in the ownership of a substantial portion of Employer's assets as defined in Section 409A, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2.2 Termination by Executive Other than For Good Reason; Termination Upon Non-Renewal by Executive; Death; Disability; Termination by Employer for Cause**. In the event Executive's employment is terminated by Executive other than for Good Reason pursuant to Section 3.1.5 hereof ("***By Executive***") or by Executive pursuant to Section 3.1.6 hereof ("***Termination Upon Non-Renewal***"), or by Employer pursuant to Section 3.1.1 ("***Death***"), Section 3.1.2 ("***Disability***") or Section 3.1.3 ("***Termination by Employer for Cause***") hereof, Executive shall be entitled to no further compensation or other benefits under this Employment Agreement except as to that portion of any unpaid salary and other benefits accrued and earned by him hereunder up to and including the effective date of such termination and to offer COBRA coverage at Executive's cost pursuant to applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2.3 Termination Upon Non-Renewal by Employer**. In the event Executive's employment is terminated by Employer pursuant to Section 3.1.6 hereof, then during the ninety (90)-day notice period of Section 2.5, Employer shall continue to pay to Executive his then-current Base Salary and benefits subject to standard federal and state payroll withholding requirements and in accordance with Employer's regular payroll practices, and no later than the effective date of termination of employment, Employer shall pay to Executive any such unpaid salary accrued and earned by him up to and including the effective date of termination. In addition, in the event Executive's employment is terminated by Employer pursuant to Section 3.1.6 hereof, then provided Executive executes and does not revoke a Release in accordance with Section 3.7, Executive shall be entitled to the following, which payments and benefits shall be paid in accordance with this Section 3.2.3 and Section 3.7:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)Continuing payments of Executive's then-current Base Salary for the Severance Period payable subject to standard federal and state payroll withholding requirements in accordance with Employer's regular payroll practices on Employer's normal payroll schedule over the Severance Period, subject to Section 3.7;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)In the event that the effective date of the Executive's termination occurs on or after the last day of the fiscal year but before any bonuses for such fiscal year have been approved or paid by Employer, then Executive will receive, as an additional severance benefit, an amount equal to the Prior Year Bonus Severance. The Prior Year Bonus Severance will be paid at the same time bonuses are paid to other executives and in no event later than two and one-half (2 1/2) months following the end of the fiscal year in which the termination date occurs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)So long as Executive is eligible, and so long as Executive remains eligible, for and upon his timely election of coverage under COBRA, Employer will continue to pay, directly to the healthcare provider when due, Employer's portion of the medical, vision and dental coverage premiums (and Executive will be responsible for Executive's portion) for the COBRA Payment Period; provided that, if at any time Employer determines, in its sole discretion, that the payment of the COBRA premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Code or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums for the remainder of the COBRA Payment Period, Employer will instead pay Executive on the first day of each month of the remainder of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings, for the remainder of the COBRA Payment Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3** **Nature of Payments.** All amounts to be paid by Employer to Executive pursuant to Sections 3.2.1(i) — (iv) and 3.2.3(i) — (iii) are considered by the parties to be severance payments and are in lieu of, and not in addition to, any benefits to which Executive may otherwise be entitled under any Employer severance plan, policy or program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4** **Duties Upon Termination.** During the Severance Period, if there is a Severance Period applicable to Executive's termination of employment from Employer, Executive shall fully cooperate with Employer in all matters relating to the winding up of Executive's pending work including, but not limited to, any litigation in which Employer is involved, and the orderly transfer of any such pending work to such other employees as may be designated by Employer. Notwithstanding the foregoing, such cooperation requirement shall not unreasonably interfere with his then current employment or business activities. With Employer's prior approval, Executive shall be reimbursed for all expenses reasonably incurred in connection with such cooperation. Following the end of the Severance Period, Executive will be released from any duties and obligations hereunder (except those duties and obligations set forth in Article 4 hereof). In the event of termination of Executive's employment pursuant to Sections 3.1.1 through 3.1.7 hereof, the obligations of Employer to Executive will be as set forth in Section 3.2 hereof. Upon termination, Executive shall immediately resign from any other position he may hold with Employer.

**3.5** **Severance Period**. "Severance Period" shall mean a period of twelve (12) months beginning on the effective date of Executive's termination of employment with Employer.

------

**3.6** **Release**. Notwithstanding any provision of this Employment Agreement to the contrary, in no event shall the timing of Executive's execution of the Release, directly or indirectly, result in Executive designating the calendar year of payment, and if a payment that is subject to the requirements of Section 409A of the Code and is subject to execution of the Release could be made in more than one taxable year based on when the Release is executed or becomes effective, payment shall be made in the later year.

**3.7** **Commencement of Severance Payments**. The severance payments and benefits set forth in Sections 3.2.1(i) — (iv) (Termination by Employer Without Cause, by Executive for Good Reason) and Sections 3.2.3(i) — (iii) (Termination Upon Non-Renewal by Employer) above will not be paid or provided unless Executive executes and does not revoke the Release and the Release is enforceable and effective as provided in the Release on or before the date that is the sixtieth (60<sup>th</sup>) day following the effective date of termination (such 60<sup>th</sup> day, the "***Severance Pay Commencement Date***"). No cash severance payments will be paid pursuant to Sections 3.2.1 or 3.2.3 prior to the Severance Pay Commencement Date. On the Severance Pay Commencement Date, Employer will pay in a lump sum the aggregate amount of the cash severance payments that Employer would have paid Executive through such date had the payments commenced on the effective date of termination through the Severance Pay Commencement Date, with the balance paid thereafter on the applicable schedules described above. Notwithstanding any other provision of this Employment Agreement to the contrary, it is intended that the payment of severance upon termination for Good Reason by Executive in accordance with Section 3.1.7 satisfy the safe harbor set forth in Treasury Regulation Section 1.409A-1(n)(2)(ii)), and any severance payment made pursuant to this Employment Agreement shall satisfy the exemptions from the application of Section 409A of the Code provided under Treasury Regulation Sections 1.409A-1(b)(4), and 1.409A-1 (b)(9).

**SECTION 4**.**CONFIDENTIALITY, INVENTION RIGHTS, NON-COMPETITION AND NON-SOLICITATION**

**4.1** **Confidentiality, Invention Rights, Non-Competition and Non-Solicitation.** The parties hereto have entered into a Confidentiality, Invention Rights, Non-Competition, and Non-Solicitation Agreement, which may be amended by the parties from time to time without regard to this Employment Agreement. The Confidentiality, Invention Rights, Non-Competition, and Non-Solicitation Agreement contains provisions that are intended by the parties to survive and do survive termination of this Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2** **Remedies**. Executive acknowledges and agrees that (a) Employer will be irreparably injured in the event of a breach by Executive of any of his obligations under this Article 4; (b) monetary damages will not be an adequate remedy for any such breach; and (c) in the event of any such breach, the Employer will be entitled to injunctive relief, in addition to any other remedy which it may have, and Executive shall not oppose such injunctive relief based upon the extent of the harm or the adequacy of monetary damages.

**SECTION 5. MISCELLANEOUS PROVISIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1** **Severability.** If in any jurisdiction any term or provision hereof is determined to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired, (b)

------

any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction, and (c) the invalid or unenforceable term or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2** **Execution in Counterparts**. This Employment Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement (and all signatures need not appear on any one counterpart), and this Employment Agreement shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3** **Notices**. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed duly given when delivered by hand, or when delivered if mailed by registered or certified mail, postage prepaid, return receipt requested, or private courier service or via facsimile (with written confirmation of receipt) or email (with written confirmation of receipt) as follows:

If to Employer, to:

Aclaris Therapeutics, Inc.

701 Lee Road, Suite 103

Wayne, PA 19087

Attention: Legal Department

E-mail: legal@aclaristx.com

If to Executive, to the current address on file with Employer,

or to such other address(es) as a party hereto shall have designated by like notice to the other parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.4** **Amendment.** No provision of this Employment Agreement may be modified, amended, waived or discharged in any manner except by a written instrument executed by Employer and Executive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.5** **Entire Agreement.** This Employment Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties hereto, oral or written, with respect to the subject matter hereof, including but not limited to any prior offer letter or written embodiment of the employment relationship between Executive and Employer. No representation, promise or inducement has been made by either party that is not embodied in this Employment Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.6** **Applicable Law.** This Employment Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to contracts made and to be wholly performed therein without regard to its conflicts or choice of law provisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.7** **Headings.** The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.8** **Binding Effect; Successors and Assigns.** Executive may not delegate his duties or assign his rights hereunder. This Employment Agreement will inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, legal representatives, and successors. Employer may assign this Employment Agreement to any entity purchasing all or substantially all of the assets of Employer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.9** **Waiver, etc.** The failure of either of the parties hereto to at any time enforce any of the provisions of this Employment Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Employment Agreement or any provision hereof or the right of either of the parties hereto to thereafter enforce each and every provision of this Employment Agreement. No waiver of any breach of any of the provisions of this Employment Agreement shall be effective unless set forth in a written instrument executed by the party against whom or which enforcement of such waiver is sought, and no waiver of any such breach shall be construed or deemed to be a waiver of any other or subsequent breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.10** **Continuing Effect.** Provisions of this Employment Agreement which by their terms must survive the termination of this Employment Agreement in order to effectuate the intent of the parties will survive any such termination, whether by expiration of the term, termination of Executive's employment, or otherwise, for such period as may be appropriate under the circumstances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.11** **Representations and Warranties of Executive.** Executive hereby represents and warrants to Employer that to the knowledge of Executive, Executive is not bound by any non-competition or other agreement which would prevent his performance hereunder. Executive hereby certifies that he is not under investigation by the FDA for debarment action, has not been debarred under the Generic Drug Enforcement Act of 1992 (21 U.S.C. 301 et seq.), and is not otherwise being investigated, restricted or disqualified from performing services relating to clinical trials by the FDA or any other regulatory authority or professional body in any other jurisdiction. Executive will inform Employer promptly in the event of any such debarment, investigation, restriction or disqualification, which shall constitute a breach of this Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.12** **Section 409A of the Code.** This Employment Agreement is intended to comply with Section 409A of the Code and its corresponding regulations, or an exemption, and payments may only be made under this Employment Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable. Payment under this Employment Agreement is intended to be exempt from Code Section 409A under the "short-term deferral" exception set forth in Treasury Regulation Section 1.409A-1(b)(4), to the maximum extent applicable, and then under the "separation pay" exception set forth in

------

Treasury Regulation Section 1.409A-1(b)(9), to the maximum extent applicable. All payments to be made upon a termination of employment under this Employment Agreement may only be made upon a "separation from service" within the meaning of Treasury Regulation Section 1.409A-1(h) (or any successor provision) (a "***Separation from Service***"). For purposes of Code Section 409A, the right to a series of installment payments under this Employment Agreement shall be treated as a right to a series of separate payments. In no event may Executive, directly or indirectly, designate the calendar year of a payment. If the termination of employment giving rise to the payments described in Section 3.2.1 is not a Separation from Service, then the amounts otherwise payable pursuant to Section 3.2.1 will instead be deferred without interest and paid when Executive experiences a Separation from Service. Notwithstanding anything in this Employment Agreement to the contrary or otherwise, with respect to any expense, reimbursement or in-kind benefit provided pursuant to this Employment Agreement that constitutes a "deferral of compensation" within the meaning of Section 409A of the Code and its implementing regulations and guidance, (a) the expenses eligible for reimbursement or in-kind benefits provided to Executive must be incurred during the Employment Term (or applicable survival period), (b) the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar year, (c) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (d) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit. Notwithstanding any provision to the contrary in this Employment Agreement, if Executive is deemed by Employer at the time of his Separation from Service to be a "specified employee" for purposes of Section 409A(a)(2)(B)(i) of the Code, and if any of the payments due upon Separation from Service set forth herein and/or under any other agreement with Employer are deemed to be "deferred compensation," then to the extent delayed commencement of any portion of such payments is required to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code and the related adverse taxation under Section 409A of the Code, such payments will not be provided to Executive prior to the earliest of (i) the expiration of the six (6)-month period measured from the date of Executive's Separation from Service with Employer, (ii) the date of Executive's death or (iii) such earlier date as permitted under Section 409A of the Code without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 5.12 will be paid in a lump sum to Executive, and any remaining payments due will be paid as otherwise provided in this Employment Agreement or in the applicable agreement. No interest will be due on any amounts so deferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.13** **Section 280G**. Notwithstanding any other provision of this Employment Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by Employer or its affiliates to Executive or for Executive's benefit pursuant to the terms of this Employment Agreement or otherwise (the "***Covered Payments***") constitute parachute payments (the "***Parachute Payments***") within the meaning of Section 280G of the Code and, but for this Section 5.13, would be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the "***Excise***

------

***Tax***"), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit (as defined below) to Executive of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit to Executive if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under clause (i) above is less than the amount under clause (ii) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. "***Net Benefit***" shall mean the present value of the Covered Payments net of all federal, state, local, foreign income, employment and excise taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Any such reduction shall be made in accordance with Section 409A and the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Covered Payments consisting of cash severance benefits that do not constitute nonqualified deferred compensation subject to Section 409A shall be reduced first, in reverse chronological order; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) all other Covered Payments consisting of cash payments, and Covered Payments consisting of accelerated vesting of equity based awards to which Treas. Reg. §1.280G-1 Q/A-24(c) does not apply, and that in either case do not constitute nonqualified deferred compensation subject to Section 409A, shall be reduced second, in reverse chronological order; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) all Covered Payments consisting of cash payments that constitute nonqualified deferred compensation subject to Section 409A shall be reduced third, in reverse chronological order; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) all Covered Payments consisting of accelerated vesting of equity-based awards to which Treas. Reg. § 1.280G-1 Q/A-24(c) applies shall be the last Covered Payments to be reduced.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any determination required under this Section 5.13 shall be made in writing in good faith by an independent accounting firm selected by Employer and reasonably acceptable to Executive (the "***Accountants***"). Employer and Executive shall provide the Accountants with such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5.13. For purposes of making the calculations and determinations required by this Section 5.13, the Accountants may rely on reasonable, good-faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Accountants' determinations shall be final and binding on Employer and Executive. Employer shall be responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 5.13.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)It is possible that after the determinations and selections made pursuant to this Section 5.13. Executive will receive Covered Payments that are in the aggregate more than the amount intended or required to be provided after application of this Section 5.13 ("***Overpayment***") or less than the amount intended or required to be provided after application of this Section 5.13 ("***Underpayment***").

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event that: (A) the Accountants determine, based upon the assertion of a deficiency by the Internal Revenue Service against either Employer or Executive that the Accountants believe has a high probability of success, that an Overpayment has been made or (B) it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally and conclusively resolved that an Overpayment has been made, then Executive shall pay any such Overpayment to Employer together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of Executive's receipt of the Overpayment until the date of repayment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) In the event that: (A) the Accountants, based upon controlling precedent or substantial authority, determine that an Underpayment has occurred or (B) a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly by Employer to or for the benefit of Executive together with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date the amount should have otherwise been paid to Executive until the payment date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.14** **Dispute Resolution.** The parties recognize that litigation in federal or state courts or before federal or state administrative agencies of disputes arising out of the Executive's employment with the Employer or out of this Employment Agreement, or the Executive's termination of employment or termination of this Employment Agreement, may not be in the best interests of either the Executive or Employer, and may result in unnecessary costs, delays, complexities, and uncertainty. The parties agree that any dispute between the parties arising out of or relating to the negotiation, execution, performance or termination of this Employment Agreement or the Executive's employment, including, but not limited to, any claim arising out of this Employment Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights Act of 1966, as amended, the Family Medical Leave Act, the Executive Retirement Income Security Act, and any similar federal, state or local law, statute, regulation, or any common law doctrine, whether that dispute arises during or after employment, shall be settled by binding arbitration in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association; *provided however,* that this dispute resolution provision shall not apply to any separate agreements between the parties that do not themselves specify arbitration as an exclusive remedy. The location for the arbitration shall be the Philadelphia, Pennsylvania metropolitan area. Any award made by such panel shall be final, binding and conclusive on the parties for all purposes, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators' fees and expenses and all administrative fees and expenses associated with the filing of the arbitration shall be borne by Employer. The parties acknowledge and agree that their obligations to arbitrate under this Section survive the termination of this Employment Agreement and continue after the termination of the employment relationship between Executive and Employer. The parties each further agree that the arbitration provisions of this Employment Agreement shall provide each party

------

with its **exclusive remedy,** and each party expressly waives any right it might have to seek redress in any other forum, except as otherwise expressly provided in this Employment Agreement. By election arbitration as the means for final settlement of all claims, **the parties hereby waive their respective rights to, and agree not to, sue each other in any action in a Federal, State or local court with respect to such claims, but may seek to enforce in court an arbitration award rendered pursuant to this Employment Agreement. The parties specifically agree to waive their respective rights to a trial by jury, and further agree that no demand, request or motion will be made for trial by jury.**

**[SIGNATURE PAGE FOLLOWS]**

------

**IN WITNESS WHEREOF** the parties have executed this Employment Agreement as of the date first above written.

---

| | | | |
|:---|:---|:---|:---|
|  | **ACLARIS THERAPEUTICS, INC.** | **ACLARIS THERAPEUTICS, INC.** | **ACLARIS THERAPEUTICS, INC.** |
|  | By: | /s/ Neal Walker | /s/ Neal Walker |
|  | Name: | Name: | Neal Walker |
|  | Title: | Title: | Chief Executive Officer |
| Agreed to and Accepted this 28th day of July, 2025. |  |  |  |
|  | **EXECUTIVE** | **EXECUTIVE** | **EXECUTIVE** |
|  | /s/ Roland Kolbeck | /s/ Roland Kolbeck | /s/ Roland Kolbeck |
|  | Roland Kolbeck | Roland Kolbeck | Roland Kolbeck |

---

------

**Exhibit A**

**List of Entities Referenced in Section 1.2.2.**

Tolerance Bio, Inc. (Scientific Advisory Board)

------

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Neal Walker, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2025 of Aclaris Therapeutics, Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2025

---

| |
|:---|
| /s/ Neal Walker |
| Neal Walker |
| Chief Executive Officer |
| (principal executive officer) |

---

------

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Kevin Balthaser, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2025 of Aclaris Therapeutics, Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2025

---

| |
|:---|
| /s/ Kevin Balthaser |
| Kevin Balthaser |
| Chief Financial Officer |
| (principal financial officer and principal accounting officer) |

---

------

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATIONS OF**

**PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Neal Walker, Chief Executive Officer of Aclaris Therapeutics, Inc. (the "Company"), and Kevin Balthaser, Chief Financial Officer of the Company, each hereby certifies that, to the best of his knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;**1.** The Company's Quarterly Report on Form 10-Q for the period ended September 30, 2025, to which this Certification is attached as Exhibit 32.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

&nbsp;&nbsp;&nbsp;&nbsp;**2.** The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

**IN WITNESS WHEREOF**, the undersigned have set their hands hereto as of the 6<sup>th</sup> day of November 2025.

---

| | |
|:---|:---|
| /s/ Neal Walker | /s/ Kevin Balthaser |
| Neal Walker | Kevin Balthaser |
| Chief Executive Officer <br>(principal executive officer) | Chief Financial Officer <br>(principal financial officer and principal accounting officer) |

---

\* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Aclaris Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

------