VYNE Therapeutics Inc. Q2 FY2021 earnings call

• The company is refocusing from a commercial enterprise to a biopharmaceutical company with a focus on R&D and advancing the proprietary pipeline. - Announced a license agreement with In4Derm, providing exclusive access to a novel BETi platform for topical and oral treatments of immuno-inflammatory diseases. - FMX114 is on target to enroll the first patient in its Phase 2a proof-of-concept study in mild to moderate atopic dermatitis later in the quarter. - Conducted a patent infringement lawsuit against Perrigo Israel Pharmaceuticals regarding Perrigo's ANDA filing for a generic version of AMZEEQ. - Adjusted operating expenses for Q3 are expected to be in the low-end of the $20 million to $25 million per quarter range while selectively funding aspects of the commercial business.

Revenue for the second quarter of 2021 totaled $4.3 million, consisting of $4 million from product sales of AMZEEQ and ZILXI and $0.3 million of royalty revenues. The minocycline franchise exceeded 57,000 prescriptions in the second quarter, representing an approximate 10% increase over the first quarter. AMZEEQ had over 47,000 prescriptions, ZILXI had 10,000 prescriptions, both quarterly highs. AMZEEQ had penetrated 74% of its target universe, and ZILXI had a 42% penetration rate of its target universe.

• Q3 adjusted operating expenses are anticipated to be in the low-end of the $20 million to $25 million per quarter range. - By the end of the year, the company expects to further reduce adjusted operating expenses to a range of $15 million to $20 million, including a $4 million milestone payment related to the license agreement for VYN202. - Next year, adjusted operating expenses are anticipated to be approximately $10 million per quarter. - Cash position as of June 30th was $104 million, and after prepaying debt, pro forma cash position was approximately $68 million, sufficient to fund operations through Q2 2022.

• Protracted negative impact of the COVID-19 pandemic on commercializing products. - Uncertainties in the payer landscape affecting the commercialization of products. - Risks associated with patent litigation, including potential challenges in defending intellectual property rights against ANDA filings like Perrigo's for AMZEEQ.

Q: What are some potential competitive advantages of BETi versus other immunoinflammatory treatments for rare skin diseases? Secondly, as mentioned earlier the cost of drug has been more investigated in oncology. So, what are key findings on preclinical research that kind of pushed for the agreement? And lastly, there are [Indiscernible] rare skin diseases and you have described a few during your opening statement. So, are there specific ones that you're super interested and what is going to be your process in narrowing down which wants to pursue?

A: Iain Stuart responded discussing the potential of BETi in rare skin diseases like pyoderma gangrenosum, generalized pustular psoriasis, and palmoplantar pustulosis, citing in vitro data showing broad anti-inflammatory effects.

Q: Obviously tough year and share your disappointment in the core assets that you're now going to seek to divest. Can you just talk about the decision process going forward you are going to continue to spend behind these -- the marketing? So just wondering as you're working through the strategic options, you must feel good to continue to want to spend to preserve the franchise as is ahead of another decision. It sounds like by year-end. So can you give us some context on where we may stand in terms of monetizing these assets and again the decision to continue to spend before. It sounds like under any scenario you're going to pull back spending by Q1.

A: Dave Domzalski responded discussing the decision to continue some spending on the franchise while seeking a partner, with plans to materially complete the transition by year-end and reduce operating expenses significantly by the turn of the year.