MALVERN, PA—Dr. Neal Walker, president and CEO of Aclaris Therapeutics, Inc., is bullish on the opportunities in the health care and pharma sectors and has been for years. He and his brother started their first health care oriented company when Walker was still completing his residency in dermatology.
“That was a company focused on software and services, actually helping companies conducting clinical trials and drug development,” Walker, a board-certified dermatologist, recalls. “We’ve had a lot of success with selling the company at the right time, passing the baton to a larger organization.”
Walker and his brother have started and sold six companies since then, most of them financed by venture capital or private equity. Aclaris Therapeutics is their first company to go public, which took place in October 2015.
“We’re doing that because we saw a lot of opportunity to establish a leadership position in the dermatology space,” he said.
Consolidation in the “derm space,” among pharmaceutical companies, presented an opportunity, Walker said. “We saw an opportunity to build a large organization, and that’s what we’ve done,” he said.
Building a public company is very different from building a company on private investments, Walker said.
“When you’re in it on the private side, you have one kind of captive group of investors that are clearly in it for the long haul,” he said. “When you go to the public side, there’s always turnover in your investor base.”
Walker says his team decided to take the company public because of the promise of a treatment in the late-stage of development, and an opportunity to take leadership in the dermatology sector.
“To do that, you need to raise more capital, you have to build a bigger story, and the best way to do that is in the public market,” he said. The company licensed several promising drugs and acquired a drug discovery company in St. Louis.
The company recently announced that the U.S. Food and Drug Administration has accepted its New Drug Application for A-101 40 percent, a solution containing concentrated hydrogen peroxide that should be helpful in treating seborrheic keratosis (SK), a common skin condition that is usually treated with minor, but sometimes invasive, surgical procedures.
SK treatments are part of the growing “self-pay” aesthetic dermatology market, where insurance regards the procedure as cosmetic rather than medical, so patients are footing the bill.
“It’s due in large part to everyone’s focus on what they look like,” Walker said. “People want to age a little more gracefully, that’s just the world in which we live at the moment.” Dermatologists, like other doctors, are finding insurance payments getting “compressed,” for medical treatments, and they are able to supplement that with self-pay opportunities, he explained.
There are no currently approved drug treatments for SK, a “white space” with no pharmaceutical alternatives to surgery in the treatment portfolio that Aclaris wants to exploit across the dermatology field.
“All of us dermatologists want to provide our patients with the very best aesthetic outcome,” he said. Surgical options can cause scarring and pigmentation changes, and involve use of local anesthesia or numbing with liquid nitrogen. Topical treatment should offer a less-invasive option for treatment of what is essentially a minor skin condition, he said.
“The FDA’s acceptance of our NDA for A-101 40 percent is a significant achievement that brings Aclaris one step closer to providing an innovative treatment option for SK patients and the physicians who treat the condition,” said Christopher Powala, chief operating officer of Aclaris. “There is a significant need for a non-invasive, topical SK treatment, as SK often appears in highly visible locations like the face and neck and can adversely affect patients’ emotional well-being.”
Being a public company takes a different focus because of the need to grow more rapidly, Walker says. “You have to be thinking about how it might affect your short-term stock price goals, and also your long-term vision, and balancing it,” he says. Private companies tend to have smaller teams than public companies, he adds. Aclaris started this year with 25 full-time employees, but is now “tracking up toward 100 employees,” he said.
Many experts counsel “finding the right people,” but Walker points out that it’s important for company leaders to define “what that right person is.” That might be someone with experience in a specialized area who also understands how that fits into the bigger picture, he says.
“Somebody could be at a super-large company running a $5 billion budget, but they aren’t the right person to be in a five-person company,” he says. “Some of those things you just have to learn on the fly.”
Raising capital effectively is also a key success factor, Walker says. “When you take the money, you have to envision those people sitting around the board room table and interacting with them on a long-term basis,” he says. “So you’d better be darn sure that you share similar philosophies about what you want to accomplish with the company. If you go into that relationship with an adversarial mindset, that’s exactly how it’s going to be. We view our investors as true team members, and the times when that’s held true, things have worked out really great. When it hasn’t, it’s not so much fun.”
Capital raising is much easier now, because of the team’s track record, Walker says. Earlier on, it was about “harvesting that network.”
“You can’t be afraid to call the CEO of a public company,” Walker says, recalling how he asked for advice from the CEO of a large public company, who was extremely helpful.
“After having sat with folks like her and others, I had the knowledge to go in front of my first two VCs,” he said. “It’s trial and error, you take each piece of feedback and incorporate it into your next pitch.”
Investor conferences are a great place for entrepreneurs to learn what others are thinking about and their presentation styles, Walker said. “There’s no better way to learn than to do that,” he said.
Aclaris is based in Malvern, Pennsylvania. More information can be found by visiting the Aclaris website at www.aclaristx.com.