BRIDGEWATER, N.J., Nov. 05, 2020 (GLOBE NEWSWIRE) -- VYNE Therapeutics Inc. (Nasdaq: VYNE) today announced financial results for the third quarter ended September 30, 2020 and provided a corporate update.
“The launch of ZILXI™ on October 1st means that VYNE now has two commercial products in the dermatology market. Our immediate priorities for ZILXI are to leverage our sales organization and physician experience with AMZEEQ® to drive rapid uptake, and to gain broad payor acceptance and reimbursement,” said David Domzalski, Chief Executive Officer of VYNE. “For AMZEEQ, we are pleased to see that prescriptions have eclipsed pre-COVID levels for the first time since the shut down in March and that the overall market in acne continues to recover.”
Third Quarter and Recent highlights:
- Changed corporate name to VYNE Therapeutics Inc. and our ticker to "VYNE," effective September 8, 2020.
- ZILXI (minocycline) topical foam, 1.5% for the treatment of inflammatory lesions of rosacea in adults launched and was available in pharmacies nationwide on October 1st.
- First minocycline product of any form to be approved by the FDA for use in rosacea.
- Express Scripts elected to cover ZILXI effective October 2, 2020 on its National Preferred, Flex, and Basic commercial formularies.
- AMZEEQ (minocycline) topical foam, 4% for the treatment of inflammatory lesions of moderate to severe acne vulgaris in adults and patients 9 years of age and older continues to gain market share in acne.
- Prescription volume in Q3 2020 was 32,734, representing 52% growth from Q2 2020.
- Market recovery in acne continues and overall script counts continue to grow.
- Hosted Investor Event: Physician Symposium on October 1st which highlighted the way in which dermatologists use AMZEEQ and plan to use ZILXI in their practices.
- Presenting dermatologists were pleased with the performance of AMZEEQ for their patients and expect to see broad use in acne, and believe ZILXI can quickly become their first in line therapy for rosacea.
- A replay of the event can be accessed on the VYNE Therapeutics website here.
- End of Phase 2 meeting scheduled in Q4 for FCD105.
- Appointed Mr. Patrick G. LePore to serve as a director of the Company.
- Mr. LePore brings more than 40 years of experience in the pharmaceutical industry, in both private and public sectors, and with board and operational experience in each.
Financial Results for the Third Quarter Ended September 30, 2020
Revenues
Revenues totaled $3.3 million for the three months ended September 30, 2020. There were no revenues for the three months ended September 30, 2019. For the three months ended September 30, 2020, our revenues consisted of $2.9 million of product sales primarily associated with AMZEEQ, which was launched in January 2020, and $0.4 million of royalty revenue.
Cost of Goods Sold
Cost of goods sold was $0.4 million for the three months ended September 30, 2020. There was no cost of goods sold in the three months ended September 30, 2019 because the revenues in that period consisted solely of royalties, which do not bear related cost of goods sold.
Our gross margin percentage of 87% was favorably impacted during the three months ended September 30, 2020 by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the three months ended September 30, 2020 was valued at cost, our gross margin for the period then ended would have been 85%.
Research and Development Expenses
Our research and development expenses for the three months ended September 30, 2020 were $6.6 million, representing a decrease of $5.8 million, or 47%, compared to $12.5 million for the three months ended September 30, 2019. Employee-related expenses decreased by $1.7 million. Clinical and manufacturing costs related to AMZEEQ and ZILXI decreased by $4.1 million.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the three months ended September 30, 2020 were $19.8 million, representing an increase of $9.0 million, or 84%, compared to $10.7 million for the three months ended September 30, 2019. Employee-related expenses increased by $3.7 million, primarily due to the expansion of our employee base, including sales force, to support the growth of our operations and including stock based compensation. Sales and marketing expense increased by $5.3 million related to the commercialization of AMZEEQ and ZILXI.
Total Expenses Adjusted for stock based compensation*
Set forth below is a presentation of our total operating expenses for the three months ended September 30, 2020, adjusted to exclude certain non-cash expenses incurred during the period. The adjustments below reflect non-cash expenses of stock based compensation. We believe that the adjusted operating expenses are important measures as they better reflect the ongoing operations of the Company and exclude certain non-cash expenses.
Cash & Cash Equivalents
As of September 30, 2020, VYNE had cash, cash equivalents and investments of $76.9 million. We believe that our cash and cash equivalents and investments and projected cash flows from revenues will provide sufficient resources for our current ongoing needs through December 31, 2021.
Financial Results for the Nine Months Ended September 30, 2020
Revenues
Revenues totaled $16.7 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020, our revenue consisted of $6.1 million of product sales, primarily associated with AMZEEQ, which was launched in January 2020, $10.0 million of license revenue, and $0.6 million of royalty revenue. For the nine months ended September 30, 2019, revenues consisted solely of royalty revenues. The increase in license revenue for the nine months ended September 30, 2020 as compared to license revenue for the nine months ended September 30, 2019 is due to the upfront payment received under the Cutia license agreement for the marketing and sale of our topical minocycline products in China.
Cost of Goods Sold
Cost of goods sold was $0.9 million for the nine months ended September 30, 2020. There was no cost of goods sold in the nine months ended September 30, 2019 because the revenues in that period consisted solely of royalties, which do not bear related cost of goods sold.
Our gross margin percentage of 86% was favorably impacted during the nine months ended September 30, 2020 by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the nine months ended September 30, 2020 was valued at cost, our gross margin for the period then ended would have been 82%.
Research and Development Expenses
Our research and development expenses for the nine months ended September 30, 2020 were $35.7 million, representing a decrease of $0.2 million, compared to $35.9 million for the nine months ended September 30, 2019. Clinical and manufacturing expense for AMZEEQ and ZILXI decreased by $14.1 million. This was offset by an increase of $7.1 million of clinical costs related to serlopitant and employee-related expenses of $6.8 million, including $3.8 million related to severance expenses payable to our former employees, and stock based compensation of $2.8 million.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the nine months ended September 30, 2020 were $71.6 million, representing an increase of $48.7 million, or 213%, compared to $22.9 million for the nine months ended September 30, 2019. Employee-related expenses increased by $24.9 million consisting of $13.3 million primarily due to the expansion of our employee base, including sales force to support the growth of our operations, $6.6 million of stock based compensation and $4.7 million of severance expenses payable to our former employees. Sales and marketing expenses increased by $16.1 million, related to the commercialization of AMZEEQ and ZILXI. We incurred $7.7 million expenses relating to the merger transaction between Foamix and Menlo included in selling, general and administrative expenses.
Goodwill and in-process research and development impairments
Goodwill and in-process research and development impairments for the nine months ended September 30, 2020 were $54.3 million. There were no impairments for the nine months ended September 30, 2019. In the nine months ended September 30, 2020, we recorded impairments of $4.0 million for goodwill and $50.3 million for in process research and development due to the failed clinical trials for serlopitant for the treatment of pruritus associated with prurigo nodularis.
CSR Remeasurement
Contingent Stock Right remeasurement for the nine months ended September 30, 2020 was $84.7 million. For the nine months ended September 30, 2020 we incurred $84.7 million of expense due to the remeasurement of the CSR to fair value which was driven by the result of the failed serlopitant trials. At the time of our merger transaction with Foamix, we entered into a contingent stock right agreement that called for the issuance of additional shares of our common stock to legacy Foamix shareholders upon negative data from both Phase 3 serlopitant trials. Since the trials did not meet the milestones outlined per the agreement, the contingent stock rights were remeasured, resulting in an expense of $84.7 million for the nine months ended September 30, 2020.
Total expenses adjusted for stock based compensation, CSR remeasurement and impairments*
Set forth below is a presentation of our total operating expenses for the nine months ended September 30, 2020, adjusted to exclude certain non-cash expenses incurred during the period. The adjustments below reflect non-cash expenses that we incurred during the period, mainly as a result of the merger transaction and the failed Phase 3 trials for serlopitant. Non-cash expenses for the nine months ended September 30, 2020 were $154.2 million, which included $84.7 million of contingent stock right remeasurement expense, $54.3 million goodwill and in-process research and development impairments, and $15.1 million of share based compensation expense. We believe that the adjusted operating expenses are important measures as they better reflect the ongoing operations of the Company and exclude certain non-cash expenses.
About VYNE Therapeutics Inc.
In March 2020, Menlo Therapeutics Inc. ("Menlo") and Foamix Pharmaceuticals Ltd. ("Foamix") combined to form what is now known as VYNE Therapeutics Inc. VYNE's mission is to improve the lives of patients by developing proprietary, innovative and differentiated therapies in dermatology and beyond.
With expertise in topical medicine innovation as a springboard, VYNE is working to develop and commercialize a variety of solutions using its proprietary Molecule Stabilizing Technology (MST™), and has received FDA approval for AMZEEQ® (minocycline) topical foam, 4%, the world’s first topical minocycline, and for ZILXI™ (minocycline) topical foam, 1.5%, the first minocycline product of any kind to be approved by the FDA for use in rosacea. For more information about our approved products, please see AMZEEQ’s Full Prescribing Information at AMZEEQ.com and ZILXI’s Full Prescribing Information at ZILXI.com.
For more information about VYNE Therapeutics Inc. or its investigational products, visit www.vynetherapeutics.com or follow VYNE on Twitter. VYNE may use its website to comply with its disclosure obligations under Regulation FD. Therefore, investors should monitor VYNE’s website in addition to following its press releases, filings with the U.S. Securities and Exchange Commission, public conference calls, and webcasts.
