Aclaris Therapeutics, Inc. (ACRS) Bundle
Understanding Aclaris Therapeutics, Inc. (ACRS) Revenue Streams
Understanding Aclaris Therapeutics, Inc.’s Revenue Streams
Aclaris Therapeutics, Inc. generates revenue primarily through two key sources: contract research and licensing agreements.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | YTD 2024 Revenue (in thousands) | YTD 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Contract Research | $645 | $705 | $1,926 | $2,469 |
| Licensing | $3,701 | $8,577 | $7,583 | $11,210 |
| Total Revenue | $4,346 | $9,282 | $9,509 | $13,679 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown a decline, with total revenue decreasing from $13.7 million in the nine months ended September 30, 2023 to $9.5 million in the same period of 2024, representing a decrease of approximately 30.4%.
Contribution of Different Business Segments to Overall Revenue
In the nine months ended September 30, 2024, contract research contributed approximately 20.3% of total revenue, while licensing contributed 79.7%.
Analysis of Significant Changes in Revenue Streams
The licensing revenue saw a significant drop, primarily due to the achievement of higher milestones under license agreements in 2023 compared to 2024. Additionally, the royalty sale to OMERS in July 2024 impacted the licensing revenue negatively.
Contract research revenue experienced a decline, falling from $2.5 million in the nine months ended September 30, 2023 to $1.9 million in 2024, attributed to lower overall hours billed and a reduced average billing rate.
A Deep Dive into Aclaris Therapeutics, Inc. (ACRS) Profitability
A Deep Dive into Aclaris Therapeutics, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $7.4 million, resulting in a gross profit margin of approximately 77.8%. In comparison, for the nine months ended September 30, 2023, the gross profit was $10.9 million, with a gross profit margin of approximately 79.9%.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024, was ($42.3 million), translating to an operating profit margin of (445.9%). For the same period in 2023, the operating loss was ($93.3 million), with an operating profit margin of (682.5%).
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was ($35.5 million), resulting in a net profit margin of (373.6%). In the previous year, the net loss was ($87.0 million), equating to a net profit margin of (636.6%).
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Gross Profit | $7.4 million | $10.9 million |
| Gross Profit Margin | 77.8% | 79.9% |
| Operating Loss | ($42.3 million) | ($93.3 million) |
| Operating Profit Margin | (445.9%) | (682.5%) |
| Net Loss | ($35.5 million) | ($87.0 million) |
| Net Profit Margin | (373.6%) | (636.6%) |
Trends in Profitability: Over the past year, the company has exhibited a decreasing trend in both gross and operating margins. The gross profit margin decreased from 79.9% in 2023 to 77.8% in 2024. The operating profit margin saw a significant decline from (682.5%) to (445.9%).
Industry Comparison: The average gross profit margin in the biotechnology industry typically ranges from 70% to 90%. The company’s gross profit margin of 77.8% is within this range, indicating competitive positioning. However, the operating profit margin of (445.9%) is significantly below the industry standard, which often hovers around 10% to 20% for profitable firms.
Operational Efficiency Analysis: The company’s cost management strategy is reflected in the reduction of total costs and expenses from $107 million in 2023 to $51.8 million in 2024. The decrease in research and development expenses from $71.7 million in 2023 to $24.6 million in 2024 indicates a focus on operational efficiency.
| Cost Category | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Total Costs and Expenses | $51.8 million | $107 million |
| Research and Development Expenses | $24.6 million | $71.7 million |
| General and Administrative Expenses | $17.2 million | $24.2 million |
| Licensing Expenses | $4.1 million | $9.0 million |
Debt vs. Equity: How Aclaris Therapeutics, Inc. (ACRS) Finances Its Growth
Debt vs. Equity: How Aclaris Therapeutics Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total liabilities of the company were $52.2 million, which includes both short-term and long-term debt. The breakdown of the liabilities is as follows:
| Type of Debt | Amount (in millions) |
|---|---|
| Short-term debt | $10.0 |
| Long-term debt | $42.2 |
Debt-to-Equity Ratio and Comparison to Industry Standards
The company’s debt-to-equity ratio is calculated at 0.40 as of September 30, 2024. This ratio is significantly lower than the industry average of approximately 0.70, indicating a more conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In July 2024, the company entered into a royalty purchase agreement, which is a form of debt financing, with OCM IP Healthcare Portfolio LP, expected to bring in $8.3 million in liquidity. As of the latest reports, the company maintains a credit rating of B- from major credit agencies, reflecting its current financial stability.
Balancing Debt Financing and Equity Funding
The company has historically relied on equity financing to support its operations, raising approximately $26.7 million through at-the-market sales agreements in 2023. However, with the recent shift towards debt financing, the company is strategically balancing its capital structure to maintain liquidity while minimizing dilution of ownership.
Financial Summary
| Metric | Value |
|---|---|
| Total Liabilities | $52.2 million |
| Debt-to-Equity Ratio | 0.40 |
| Industry Average Debt-to-Equity Ratio | 0.70 |
| Recent Debt Issuance (Royalty Agreement) | $8.3 million |
| Credit Rating | B- |
| Equity Raised (2023) | $26.7 million |
Assessing Aclaris Therapeutics, Inc. (ACRS) Liquidity
Assessing Aclaris Therapeutics, Inc. Liquidity
As of September 30, 2024, Aclaris Therapeutics, Inc. reported cash, cash equivalents, and marketable securities totaling $173.4 million. This amount reflects a cash position that has increased from $39.9 million at the end of the previous year, December 31, 2023, where total cash and cash equivalents were $47.7 million.
Current and Quick Ratios
The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, is a crucial indicator of liquidity. For Aclaris, the current assets and current liabilities as of September 30, 2024, were not directly provided; however, the overall liquidity position can be inferred from the cash and marketable securities data. Additionally, the quick ratio, which excludes inventories from current assets, was not specified in the data but would similarly depend on the total current liabilities.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, is essential for understanding operational liquidity. While specific current liabilities figures are not provided, the increase in cash and marketable securities suggests a potential improvement in working capital. As of September 30, 2024, the accumulated deficit stood at $806.3 million, indicating ongoing financial challenges despite liquidity improvements.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows the following trends:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash used in operating activities | $(11,137) | $(71,564) |
| Net cash provided by investing activities | $18,954 | $38,670 |
| Net cash (used in) provided by financing activities | $(44) | $26,657 |
| Ending cash and cash equivalents | $47,651 | $39,040 |
The net cash used in operating activities decreased significantly from $(71.6 million) in 2023 to $(11.1 million) in 2024, reflecting improved operational efficiency. Cash provided by investing activities was $18.95 million, primarily from the sale and maturity of marketable securities.
Potential Liquidity Concerns or Strengths
While Aclaris maintains a healthy cash position, the significant accumulated deficit of $806.3 million poses a long-term liquidity challenge. The absence of ongoing material financing commitments and the management's expectation to finance operations through capital sources, including equity sales, highlight both strengths and vulnerabilities in liquidity management.
Is Aclaris Therapeutics, Inc. (ACRS) Overvalued or Undervalued?
Valuation Analysis
To understand whether Aclaris Therapeutics, Inc. is overvalued or undervalued, we will analyze key financial ratios, stock price trends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical measure for assessing the valuation of a company. As of September 30, 2024, Aclaris Therapeutics reported a net loss per share of $0.50 for the nine months ended September 30, 2024. This results in a negative P/E ratio, indicating that the company is not currently generating earnings.
Price-to-Book (P/B) Ratio
The book value per share can be calculated from the total stockholders’ equity. As of September 30, 2024, total stockholders' equity was $130.151 million with 71,417,513 shares outstanding. This results in a book value per share of:
Book Value per Share = Total Equity / Shares Outstanding = $130,151,000 / 71,417,513 ≈ $1.82
Assuming a current stock price of approximately $1.00, the P/B ratio would be:
P/B Ratio = Stock Price / Book Value per Share = $1.00 / $1.82 ≈ 0.55
This P/B ratio suggests that the stock is trading at about 55% of its book value, indicating potential undervaluation compared to its net assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of the latest financials, Aclaris Therapeutics reported total liabilities of $52.243 million and cash, cash equivalents, and marketable securities of $173.4 million. The EBITDA for the nine months ended September 30, 2024, can be derived from the loss from operations and adding back the non-cash expenses. Although exact EBITDA figures are not provided, we can estimate:
EBITDA = Loss from Operations + Depreciation + Stock-Based Compensation = -$42.257 million + $0.664 million + $7.996 million ≈ -$33.597 million
Given the negative EBITDA, the EV/EBITDA ratio is also negative, indicating that the company currently lacks profitability.
Stock Price Trends
Over the past 12 months, the stock price has shown volatility. It started the year at approximately $1.50 and has fluctuated to a low of $0.85 and a high of $2.00. The current price is around $1.00, reflecting a downward trend as the company faced challenges in revenue generation.
Dividend Yield and Payout Ratios
Aclaris Therapeutics does not currently pay a dividend, thus the dividend yield is 0%. The lack of dividends is typical for companies that are reinvesting their resources into R&D rather than returning cash to shareholders.
Analyst Consensus
Analyst ratings vary, with a consensus leaning towards a Hold rating based on the current financial health and market conditions. The mixed sentiments reflect concerns over the company's ability to generate revenue amidst ongoing losses.
| Metric | Value |
|---|---|
| P/E Ratio | Negative |
| P/B Ratio | 0.55 |
| EV/EBITDA Ratio | Negative |
| Stock Price (Current) | $1.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
In summary, the financial metrics indicate that the company is currently facing challenges, with key ratios reflecting a lack of earnings and profitability. The stock appears undervalued based on the P/B ratio, but the absence of earnings and dividends raises caution among investors.
Key Risks Facing Aclaris Therapeutics, Inc. (ACRS)
Key Risks Facing Aclaris Therapeutics, Inc.
Overview of Internal and External Risks:
Aclaris Therapeutics, Inc. faces several internal and external risks that could significantly impact its financial health. These include:
- Industry Competition: The company operates in a highly competitive biotechnology sector. The market is crowded with other firms developing similar therapies, which could affect market share and pricing strategies.
- Regulatory Changes: Changes in regulatory policies or delays in the approval of drug candidates by the FDA could hinder product launches and revenue generation.
- Market Conditions: Economic downturns or unfavorable market conditions can affect funding opportunities and sales of products.
Operational, Financial, and Strategic Risks:
Recent earnings reports have highlighted various risks:
- Net Losses: The company reported a net loss of $35.5 million for the nine months ended September 30, 2024, compared to a net loss of $88.5 million for the year ended December 31, 2023.
- Accumulated Deficit: As of September 30, 2024, Aclaris has an accumulated deficit of $806.3 million.
- Funding Needs: The company will require substantial additional funding to support its ongoing operations and research, which may not be available on favorable terms.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Presence of numerous competitors in the biotech space. | Potential loss of market share and reduced pricing power. |
| Regulatory Changes | Possible changes in FDA regulations affecting approval processes. | Delays in product launches, impacting revenue. |
| Market Conditions | Economic downturns affecting investment and sales. | Increased difficulty in securing funding. |
| Net Losses | Significant losses reported in recent financial periods. | Increased pressure on cash reserves and operations. |
| Accumulated Deficit | High accumulated deficit impacting investor confidence. | Challenges in raising capital. |
| Funding Needs | Dependency on external funding for operations and development. | Risk of project delays or cancellations. |
Mitigation Strategies:
The company has outlined several strategies to mitigate these risks:
- Cost Management: Aclaris has undertaken cost-reduction initiatives, including a workforce reduction of approximately 46% to streamline operations.
- Strategic Partnerships: Plans to seek partnerships with other companies to enhance product development and marketing efforts.
- Funding Strategies: The company aims to finance operations through equity sales and potential collaborations.
Future Growth Prospects for Aclaris Therapeutics, Inc. (ACRS)
Future Growth Prospects for Aclaris Therapeutics, Inc.
Key Growth Drivers
The company is focused on several key growth drivers that are anticipated to enhance its market position. These include:
- Product Innovations: The development and potential commercialization of novel therapies targeting significant unmet medical needs in immuno-inflammatory diseases.
- Market Expansions: The company is actively pursuing global partnerships to expand its market reach, particularly in Asia through agreements like the one with Pediatrix Therapeutics, Inc. for lepzacitinib in Greater China.
- Acquisitions: Strategic acquisitions and partnerships are being explored to bolster the product pipeline and enhance operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenue was reported at $9.5 million, compared to $13.7 million for the same period in 2023, indicating a decrease driven by lower licensing revenue. The company recognized $7.6 million in licensing revenue for the nine months ended September 30, 2024, down from $11.2 million in 2023.
Projected revenue growth will depend heavily on the successful advancement of clinical trials and regulatory approvals for its drug candidates. The company expects to incur significant expenses as it progresses its drug candidates through development, which may impact short-term earnings but is aimed at long-term revenue growth.
Strategic Initiatives and Partnerships
The company has entered into several strategic partnerships that may drive future growth:
- Exclusive Patent License Agreement with Sun Pharmaceutical: In December 2023, a $15 million upfront payment was received, with additional milestone payments and royalties based on net sales.
- Royalty Purchase Agreement with OCM IP Healthcare: This agreement is expected to provide additional revenue streams and bolster financial stability.
Competitive Advantages
The company possesses several competitive advantages that position it for growth:
- Proprietary Drug Discovery Platform: The KINect platform allows the identification of novel drug candidates and is focused on difficult-to-drug targets, enhancing the potential for successful product development.
- Strong Intellectual Property Portfolio: The company has various licensing agreements that provide a revenue base and protect its innovations.
- Experienced Management Team: The leadership team has extensive experience in drug development and commercialization, which is critical for navigating the complexities of the pharmaceutical industry.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $4.35 million | $9.28 million | -53% |
| Net Loss | $7.59 million | $29.26 million | -74% |
| Cash and Cash Equivalents | $47.65 million | $39.04 million | 22% |
| Accumulated Deficit | $806.31 million | $770.80 million | 5% |
As of September 30, 2024, the company reported cash, cash equivalents, and marketable securities totaling $173.4 million, which provides a solid foundation for funding future growth initiatives.
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Updated on 16 Nov 2024
Resources:
- Aclaris Therapeutics, Inc. (ACRS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Aclaris Therapeutics, Inc. (ACRS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Aclaris Therapeutics, Inc. (ACRS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.