Leerink starts Aclaris at OP

Leerink initiated coverage of Aclaris Therapeutics (NASDAQ:ACRS) with an “outperform” rating and $54 price target. The stock closed at $28.04 on Monday.

Analyst Seamus Fernandez writes that the company’s lead asset, A-101, a high concentration formulation of hydrogen peroxide, offers a new treatment option for patients with seborrheic keratosis (SK), with reduced risk of dyspigmentation and scarring. SK is a common, noncancerous skin growth.

“With two successful Phase 3 studies complete, A-101 is de-risked and could achieve $300-million to $400-million in peak sales,” he said. A-101 also is being developed into a treatment for common warts, which could provide incremental commercial opportunity, he added.

Mr. Fernandez said the opportunity for “significant upside potential” resides in Aclaris’ janus kinase (JAK) inhibitors program for the treatment of immune-mediated hair loss disorders, such as alopecia areata (AA). He figures oral JAK inhibitors alone could achieve peak annual sales of $2-billion to $3-billion in AA, with Aclaris taking significant market share.

“We assume A-101 is approved and successful for SK, with a 50% probability of success for A-101 for common warts,” he said. A-101 accounts for about $18 a share in his discounted cash flow analysis. “Assuming only a 40% probability of success, Aclaris’ oral JAK program in hair loss disorders accounts for about 70% of our $54 price target,” he added.