Please ensure Javascript is enabled for purposes of website accessibility

VYNE Therapeutics Inc. (VYNE) Q4 2020 Earnings Call Transcript

By Motley Fool Transcribing - Mar 4, 2021 at 1:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

VYNE earnings call for the period ending December 31, 2020.

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

VYNE Therapeutics Inc. (VYNE -0.03%)
Q4 2020 Earnings Call
Mar 04, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome to the VYNE Therapeutics conference call to discuss the fourth-quarter and full-year 2020 financial results and update. [Operator instructions] Following the company's formal remarks, we will open the call for your questions. Please be advised that this call is being recorded at the company's request. I will now turn the call over to Michael Wood of LifeSci Advisors.

Please go ahead.

Michael Wood -- LifeSci Advisors -- Managing Director

Good morning, everyone, and thanking -- thank you for joining us this morning. Before we begin with formal remarks, let me remind you that some of the information in the press release issued this morning and on this conference call contain forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict, including statements, forecasts, and observations regarding future financial and operating performance, impacts for the COVID-19 pandemic on VYNE, and observations regarding ongoing operating expenses and net revenue. These statements will include observations associated with the commercialization of Amzeeq and Zilxi in the United States. They will also include plans and expectations regarding the success, timing, and cost of clinical trials, words that express and reflect optimism and satisfaction with current progress, prospects, and projections, as well as words such as belief, intend, expect, plan, anticipate, and similar variations identified forward-looking statements, but their absence does not mean that a statement is not forward-looking.

These forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could contribute to such differences are described in detail in VYNE Therapeutics' filings with the SEC. These forward-looking statements speak only as of the date of today's press release and conference call and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this call. In addition, the financial portion of this call will include certain non-GAAP financial information.

For additional disclosures regarding to these non-GAAP financial measures, including a reconciliation of the most directly comparable GAAP measures, please see today's press release, which is posted on the investor relations section of the company's website. Participating in this morning's call are Dave Domzalski, VYNE's president and chief executive officer; Andrew Saik, chief financial officer; Dr. Iain Stuart, chief scientific officer; and Matt Wiley, the company's chief commercial officer. Please note that following the company's prepared remarks on the 2020 financial and operating results, Dr.

Stuart will be reviewing the company's pipeline candidate, FMX114. His review includes a number of slides with the webcast, and these are posted on the investor relations section of the company's website. At this time, I'd like to turn the call over to Dave Domzalski. Dave, please go ahead.

Dave Domzalski -- President and Chief Executive Officer

Thank you, Michael, and good morning to everyone. Past few months have been productive for VYNE and we believe the company is well-positioned to deliver value to our shareholders as we continue to execute on our vision. As we think about our key objectives for the year, there are three areas of focus. First is commercial execution.

The past year has certainly posed challenges that have never been seen before in the commercialization of therapeutics. It has been even more challenging for new product launches as companies have faced continued shutdowns and customer access issues globally. As discussed in past calls, we have faced and continued to address these challenges head-on. Despite the headwinds, we continue to progress trial and utilization of Amzeeq and Zilxi, driving market share in their respective markets of acne and rosacea.

Matt Wiley, our chief commercial officer, will provide a more detailed update on both product launches. The second is maximizing our operational leverage. The significant overlap that exists between prescribers for acne and rosacea is a key factor in our commercial strategy. And as we add new products in the future, there will be further opportunities to leverage both our sales organization and R&D capabilities to increase revenue and earnings.

Importantly, we will continue to prioritize our resources carefully and keep a tight control of expenses. Andrew Saik, our CFO, will provide a financial update today for you. Our third area of focus is to continue to build a diversified pipeline. For FCD105, which is our minocycline and adapalene combination, we had a successful end-of-phase 2 meeting with the FDA in November.

The meeting provide a clear direction and guidance on the plan phase 3 clinical and pharmaceutical development for FCD105. And we anticipate initiating this study later this year. Earlier this week, we unveiled a new therapeutic candidate that we believe has tremendous value. This product candidate, which we referred to as FMX114, is a fixed combination of the pan-JAK inhibitor, topacitinib, and sphingosine-1 phosphate receptor modulator, fingolimod, in a topical gel formulation for the treatment of mild to moderate atopic dermatitis.

We believe this has the potential to be the first topical combination JAK inhibitor. Atopic dermatitis has a substantial market opportunity with approximately 22 million patients treated in the United States alone. We issued a press release on Monday highlighting the preclinical efficacy and tolerability data. Our chief scientific officer, Dr.

Iain Stuart, is joining our call this morning to provide an overview of FMX114. Iain will walk you through the data and discuss the phase 2a program in AD that we plan to initiate in the third quarter of this year and from which we would anticipate generating top-line results prior to year-end. 2021 has been busy. We executed new PBM contracts for both Amzeeq and Zilxi in mid-January.

The completion of these agreements is consistent with our goals to achieve broad commercial coverage of Amzeeq and Zilxi and gives us commercial access to an additional 20 million to 25 million new lives. For Amzeeq, we received FDA approval to include new information in the product label referencing the low propensity of P. acnes strains to develop resistance to minocycline, which is the active ingredient in Amzeeq. This label update can provide further product differentiation for Amzeeq, which will be useful to healthcare providers in their treatment selection for patients.

Additionally, we strengthened our balance sheet, raising a combined $81 million in net proceeds from mid-fourth quarter of last year through January of this year. Approximately $46.7 million of this was through a registered direct offering with high-quality investors. And $34.3 million of net proceeds were generated from the sale of common stock through our ATM facility, which is now complete and terminated. In addition to the company's existing cash and investments as of this December 31,2020 and projected cash flows from revenues, we now expect to have sufficient cash to fund our operating expense and capital requirements through the end of 2022.

And finally, we executed a 1-for-4 reverse stock split on February 12. We had a large number of shares outstanding following the merger last year, which we felt was disproportionate to the market cap and underlying value of the company. Our shareholders approved the reverse split. And we look forward to unlocking shareholder value and continuing to drive additional visibility among the important strategics and shareholders in our universe.

I will now turn the call over to Matt Wiley who will give further insight regarding our progress on the commercial front. Matt.

Matt Wiley -- Chief Commercial Officer

Thank you, Dave. Our sales team remains resilient and continues to perform well despite the pandemic-related obstacles that exist in the marketplace. Amzeeq prescription volume came in in the fourth quarter at 34,000 new prescriptions and over 44,000 total prescriptions, which represents a 26% and 35% growth over the third quarter respectively. We continue to expand our recent trial of Amzeeq with a number of unique prescribers of Amzeeq exceeding 6,700 through the fourth quarter, which represent a 20% increase over the third quarter.

Today, we are now over 7,100 unique prescribers of Amzeeq. Additionally, we've achieved 60% penetration among our target universe whose productivity has risen to 30 prescriptions per physician launched to date. We're pleased with the progress we've made over the course of the year and expect the growth of the productivity to continue due to the high volume of patients and prescriptions in these important offices. We continue to be encouraged by our nonpersonal promotions, specifically on our ability to educate healthcare providers through our peer-to-peer speaker program.

This platform is allowing us to quickly and efficiently communicate the recent information regarding antibiotic resistance that was added into the Amzeeq prescribing information. Our online consumer activation efforts have also been fully deployed for Amzeeq since early January. With respect to market access for Amzeeq, we now have all three major PBMs under contract and are working to pull through the underlying plans for the most recent one now. Turning to Zilxi, we are clearly seeing the impact of COVID-19 pandemic on the Zilxi launch.

You may recall, we launched Zilxi in October 2020 during the second widespread state shutdowns. The state-level and physician office COVID-related protocols have significantly impaired face-to-face interactions between our sales team and doctors over the last few months. The impact of these constraints is more pronounced in a space like rosacea where there hasn't been a meaningful launch in nearly five years, and changing these habits requires consistent field efforts and additional education. Despite these headwinds, we've generated over 6,700 new prescriptions and over 7,200 total prescriptions for Zilxi since launch, and prescriptions are gaining momentum month over month.

Approximately 1,600 healthcare providers have prescribed Zilxi since launch with approximately 70 to 80 new writers per week. As with Amzeeq, healthcare providers have demonstrated keen interest in the Zilxi peer-to-peer efforts, and we continue to execute these programs with urgency during this COVID-impacted period to educate prescribers on our product. With respect to Zilxi payer access, I'm pleased to share that our conversations with payers have gone faster than we initially anticipated. We now have finalized contracts with the -- with the top three PBMs, and our focus on full Zilxi execution similar to Amzeeq.

I will now turn the call over to Andrew Saik to discuss our financials.

Andrew Saik -- Chief Financial Officer

Thanks, Matt. I'd like to start with a review of the balance sheet. Our cash and investments as of December 31 totaled $59 million. As Dave mentioned, since the end of the third quarter, we have raised a combined $81 million in net proceeds from the registered direct offering we completed in January and the ATM, which we subsequently terminated.

Eight million dollars of the ATM amount was generated in 2020 and, therefore, was included in the year-end cash of $59 million. Adding the funds raised in January to the reported $59 million in year-end cash, we have a pro forma year-end balance of approximately $132 million. We estimate that these amounts, combined with our projected cash flows from revenue, should provide cash runway through the end of 2022. We are pleased with our fundraising efforts, but we will continue to remain focused on cost control and prudent resource prioritization.

Moving to the P&L, I'm going to focus mainly on our quarterly results as they are more reflective of our operating structure moving forward. Revenues in Q4 were $4.3 million and consisted of $4.1 million of product sales from Amzeeq and Zilxi and $0.2 million of royalty revenues. GAAP net loss in Q4 was $23.2 million or $0.55 per share on a post-split basis. This compares to $37.8 million or $4.17 per share for the comparable period in 2019.

When excluding $3 million of stock-based compensation expense and $2.1 million of non-recurring asset disposal charges related to our completion of our restructuring activities, our fourth-quarter 2020 adjusted net loss was $18 million or $0.43 per share, again, on a post-split basis. Adjusted operating -- operating expenses in Q4 were $20.7 million, including adjusted SG&A expenses of $15.8 million and adjusted R&D expenses of $4.9 million. This compares to $32.7 million of adjusted operating expenses for the fourth quarter in 2019, which included adjusted SG&A expenses of $18.9 million and adjusted R&D expense of $13.8 million. As mentioned on our previous calls, we believe that operating costs of approximately $25 million per quarter are sustainable into the future, but do not include incremental costs that would be required for the anticipated phase 3 trials for FCD105 or potentially progressing FMX114 beyond the phase 2 trial this year, which is built into our current operating plan.

Iain will provide more details regarding this phase 2 program in a few moments. One note on our previously announced corporate restructuring. Consistent with the overall cost reduction efforts, we significantly reduced our headcount and facility footprint in Israel during 2020. This caused us to take the aforementioned one-time non-cash charge of $2.1 million in the fourth quarter related to the facility reduction.

Additionally, we began liquidation proceedings of our Israeli subsidiary, and as a result, our intellectual property was assigned to our U.S. parent company. We anticipate this will result in a more efficient tax structure for us long term given our reduced presence in Israel, and we do not anticipate that this will have a material tax expense or cash cost to the company. Moving to a high-level review of our full-year numbers.

Full-year 2020 revenue was $21 million and consisted of $10.2 million of product sales from Amzeeq and Zilxi, $10 million of license revenue, and $0.8 million of royalty revenues. Our fiscal-year 2020 GAAP net -- net loss was $255.6 million or $7.88 per share on a post-split basis. Included in the 2020 GAAP net loss were $159.3 million of non-cash expenses, which predominantly occurred in the first half of the year and were related to the Menlo merger. When excluding these non-cash items, our 2020 adjusted net loss was $96.3 million or $2.97 per share.

And finally, to share count. Reflecting the 1-for-4-- for-4 reverse stock split completed on February 12, our share count as of December 31 was approximately 43.2 million shares. On a pro forma basis, including the registered direct and ATM, our share count was 51.3 million shares. Both figures are given on a post-split basis.

For further details on our financials, I will refer you to our Form 10-K for the year ended December 31, 2020 filed with the SEC and available on our website. I will now turn the call over to Iain who will go through FMX114 program and some details.

Iain Stuart -- Chief Scientific Officer

Thank you, Andrew. What I'd like to do over the next few minutes is talk about our new product candidate, FMX114, which we're initially developing for the treatment of mild to moderate atopic dermatitis or AD. I'll discuss the potential mode of action for the products and review the proof of concept preclinical data we've generated. Now, I will outline our upcoming planned development activities for this candidate.

Let me begin first with some background on atopic dermatitis. Many of you are familiar with this category. The condition is also known as atopic eczema. It is a chronic, pruritic inflammatory skin condition that typically affects the face, neck, arms, and legs.

It often starts in early childhood and can persist throughout a patient's lifetime. It can have wide-ranging impact on quality of life and it has substantial monetary burden from direct and indirect costs for this patient population. According to published estimates, there are approximately 30 million people in the U.S. with AD.

Of these, approximately 22 million are diagnosed are on treatment. The roughly 19 million treated that have mild to moderate disease would be in our target market for FMX114. According to Symphony health data, there were over 7 million prescriptions written in 2019 alone for the treatment of AD. Topical steroids are the mainstay for treatment of mild to moderate atopic dermatitis.

And in 2019, approximately 2 million or nearly 30% of prescriptions were for formulations of triamcinolone acetonide alone. Steroid use can cause a variety of suicide effects which you may know, and raised both dermal and systemic safety concerns, especially with long-term use. These may include rebounds or rapid relapse upon steroid withdrawal, as well as damaging impact on skin structure and function. This is a particular concern in AD where up to a third of patients affected are children.

Topical products we know that are currently in development for AD include JAKs, PDE4 inhibitors, an aryl hydrocarbon receptor antagonists, primarily affect one component of disease. And that is the reduction of inflammatory side to kind of release from activating T cells in the skin. However, it is well known that AD is a multifactorial disease, which is the motivating factor behind our thesis for developing combination therapy that can potentially address multiple aspects of the disease. FMX114 is a fixed combination gel of two approved oral drugs tofacitinib and fingolimod.

Tofacitinib is a pan-JAK inhibitor that's been shown to reduce inflammation in atopic dermatitis. By inhibiting the release of Th2-mediated pro-inflammatory cytokines that promote inflammation in the skin. These cytokines negatively impact both skin body of integrity and function which are key components of the disease. Fingolimod is a sphingosine-1 phosphate receptor modulator that is thought to work by inhibiting the migration of inflammatory cells between the lymph nodes and skin.

Fingolimod does this by inactivating sphingosine-1 phosphate receptors and has an important role in managing immune cell trafficking around the body. In addition, there is evidence that fingolimod mode can upregulate filaggrin and its byproduct natural moisturizing factor in the skin, which are critical to maintaining skin hydration and restoring overall skin body function. We believe FMX114 has the potential with the first topical combination JAK inhibitor products for the treatment of AD as well as the first topical product in clinical development that utilizes sphingosine-1 phosphate receptor mode of action. These data reflect our latest safety and efficacy preclinical study for FMX114, which I think will help explain why we're particularly excited by the potential of this combination treatment.

We conducted a study using a common non-clinical mouse model that's typically used to evaluate the preclinical efficacy of investigational products in the treatment of AD. The mice were treated with a topical solution of dinitrochlorobenzene or DNCB over a 39-day period, which induces a type 2 inflammatory response in the skin with similar pathology to AD. On days 32 to 39, we then applied each treatment once daily and evaluated efficacy using a modified atopic dermatitis index or mADI, which is a composite measure of the severity of skin erythema, excoriation erosion, and dryness and peeling. If you look at the lane plot you can see the upper lane represents the control group that received DNCB alone.

These animals clearly had worsening disease over the seven-day treatment period. We evaluated tofacitinib and fingolimod monotherapy gels as well and these were also successful and independent in reducing mADI scores. The most profound reduction scores were observed in the two groups that received the FMX114 combinations. These combinations represent two different dose levels containing different concentrations of tofacitinib and fingolimod.

The magnitude of improvement is obvious here. FMX114 appears to have a rapid onset of action and by day seven there was an 89% reduction of mADI with a 0.6% tofacitinib, 0.01% fingolimod dose relative to the DNCB the control group. Also, of note, both fixed combinations have compatible efficacy to triamcinolone 0.1% cream. The safety results from the study are presented here on this slide.

We recorded changes in animal weight throughout the treatment period as a change in weight is a common surrogate as to how well a particular treatment is tolerated in preclinical studies. You can see here that the bodyweight gains for both FMX114 groups continued to develop during treatment of more compatible to both DNCB negative control group and a healthy control group that only received the FMX114 vehicle. In contrast, the group which received triamcinolone 0.1% cream was a significant amount of weight throughout the treatment course. These animals lost approximately one-fifth of their weight at treatment day seven compared to FMX114.

Lately, as a result of steroid systemic effect on altering metabolic rate. The clinical images here taken on day seven, show the difference outcomes for the three treatment groups. The animal on the left was in the DNCB control group, where the significant presence of erythema, erosion, and dryness scaling are evident. The middle image shows the FMX114 combination with almost no evidence of lesional skin.

In addition, good skin tone and structure have been demonstrated at the end of treatment. We see similar efficacy effect on lesional skin with the transient untreated animal. However, there is preliminary evidence of skin thinning which is indicative of a deleterious impact the steroid has on skin. We are pleased with the preclinical results.

Next we plan to initiate a phase 2a proof of concept study in patients with mild to moderate AD that will evaluate a single fixed combination of FMX114. A proposed design for the phase 2a study, as outlined here on this slide, including the efficacy and safety assessments that will be conducted during the trial. This will be a randomized double-blinded trial designed to compare the safety and efficacy of FMX114 gel to vehicle gel. We intend to roll 25 subjects where each subject will serve as their own control.

And roving criteria specifies that subjects must have two compatible target 80 lesions for treatment upon entry. Participants will have FMX114 gel applied to one of these lesions and vehicle gel applied to the other by clinical site staff in order to limit dosing errors and or omissions. The team will be applied twice daily for four weeks and a double-blinded initial phase of the study. After completion of this phase, subjects will continue into a two-week open label treatment phase and then be able to apply the active drug to both lesions.

We plan to initiate a study in Q3 after we have completed the requisite IND-enabling non-clinical safety work, and anticipate reporting top-line results before the end of this year. We look forward to provide full updates on our progress. I will now return the call back to Dave.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Iain, for providing an update on our exciting new product. I believe the future is very bright for VYNE. We are eager to get beyond the impediments caused by this pandemic the past year and leverage the potential of our products and commercial operations. We have worked hard to deliver on our vision of creating a fully integrated pharmaceutical company with commercial products and a growing pipeline.

We now have two approved products that have been launched within the past year alone in Amzeeq and Zilxi. We have a phase 3 ready asset in FMX105 and now a phase 2 ready asset in FMX114. Our balance sheet is strong with cash expected through the end of 2022. We were completely focused on delivering against our key objectives of commercial execution, maximizing operational leverage, and continuing to build a diversified pipeline.

All with the singular aim of creating long-term value for our shareholders. And that concludes our prepared remarks. We are happy to open up the call for questions. I will turn the call back over to our operator.

Thank you.

Questions & Answers:


Operator

Thank you. At this time we'll be conducting a question-and-answer session. [Operator instructions] Our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Carvey Leung -- Cantor Fitzgerald -- Analyst

Hi, good morning, everybody. This is Carvey on for Louise. A couple of questions from us on 114. So, in the preclinical studies did you observe a -- additive or synergistic pharmaceutical benefits when a pan-JAK is added to an S1PR modulator.

And also during preclinical, how did your team arrive at two combination dosages that is one more pan-JAK base and the other is more evenly split, and which doses are you going to be using in phase 2? Thank you.

Iain Stuart -- Chief Scientific Officer

Hi there, Carvey. This is Iain. Yeah, we saw an additive benefit. I think, you can see that from this slide.

We did obviously evaluate the model therapies, and individually both perform well at the concentrations we evaluated today. And obviously when we added the combatant -- combination they both contribute meaningful additional efficacy to the -- the overall. In relation to the clinical doses, the study is still ongoing. We still have additional data to collect and analyze.

And once we'll be in a better position then to determine what study -- sorry what concentration will be taking into the -- into phase 2a. Well, as you can see from the slide, I mean, the 0.6% tofacitinib and 0.01% fingolimod, again, appears to be performing slightly better than the other dose. What was your -- what was your other question again, Carvey, the middle one? Apologies.

Carvey Leung -- Cantor Fitzgerald -- Analyst

Yeah. So, I was wondering if your team has two combinations now during preclinical one is more -- more pan-JAK and the other one is a little bit more evenly split. I remember it's like 0.3 and then the 0.3 plus 0.2, if I remember correctly. So, why did you end up with the one that is a lot more JAK base?

Iain Stuart -- Chief Scientific Officer

We've -- we've conducted a series of experiments leading up to the one we've presented today so we've done significant dose finding both on tofacitinib and on fingolimod. So, the two combinations we're presenting today show effectively a low dose to offset the effect and high dose fingolimod on -- on obviously vice versa. So, we've done -- we've kind of focused then on -- on those particular doses today. As I say, once we're done, we've completed the analysis of this study as a series of additional data to come, then we'll be able to make a selection for the -- for the phase 2a study.

Carvey Leung -- Cantor Fitzgerald -- Analyst

Got it. All right, super helpful. Thank you so much.

Operator

Thank you. Our next question comes from line of David Amsellem with Piper Sandler. Please proceed with your question.

David Amsellem -- Piper Sandler -- Analyst

Thanks. So, on the -- the payor landscape for both Amzeeq and Zilxi. Can you just talk about the nature of utilization management to the extent you're seeing that for -- for both products and maybe delve into specifics on, you know, what kind of step those patients are -- are going through and the extent to which they're you know onerous? And then, secondly, can you just provide a roadmap of sorts for how we should think about the net realized price for -- for both products this year with all the contracting that's now in place for both products? Thanks.

Matt Wiley -- Chief Commercial Officer

So, good morning, David. This is Matt. So, the utilization management, you know, prior to the most recent major PBM contract, represented roughly a third of all commercial lives. So, the -- the primary utilization management is a prior authorization either for the diagnosis and treatment of acne rosacea and or a step therapy.

Some of these are electronically adjudicated so there's an electronic look back for a period of time. They don't seem to be all that onerous. The physicians are able to get through these and certainly the more recent work that we've done with spec pharmacies is intended to help that process along. And so, we've -- we've heard pretty good feedback.

In fact, just got an email last night from one of our representatives who conducted a speaking program and he was asked specifically about the access for mADI and whether he felt it. He was able to easily get the product for patients and he said he had not experienced any major issues. And for those that did have prior authorization, they were pretty easy to handle. So, you know, we feel pretty good about the overall strategy for our payor approach.

The idea of having broad access for our patients is paying off and we would expect that as we are pulling through the remainder of the lives of the course of the month, that -- that will continue on both brands.

Andrew Saik -- Chief Financial Officer

Yeah. So, David, this is Andrew Saik. I'll take the second part of your question. So -- so, we've indicated in the past that we think that the $200 to $250 after-discount net realizable value is -- is what we expect and nothing's changed on that.

As to the timing, you know, this was always around getting coverage above of -- many of commercial lives above 80% so that we get rid of our denied conversion card. We've indicated in the past that we have a goal of getting rid of that early in Q2 as early as April 1st. That's -- that's still the goal. You know, obviously, we -- we announced that we signed the Caremark contract early this year.

That was a great milestone, gives us access to a number of commercial lives, and certainly is helping us along our way to reaching our goal of over 80%. You know, we need to give those time to come up on the formulary, right? So, we always indicated that it was sort of a two to three-month lag. We're monitoring that, assuming that happens in sort of the normal course, we should be able to get rid of the coupon card at least the denied conversion card by early April. What that means is that you won't see a huge step up in Q1, right? So just to be clear.

You know you'll see that start to improve hopefully significantly in Q2. And then, by midyear, we should be there, right? We should be at our -- at our -- at our net realizable price of where -- of what our target is of kind of between $200 and $250. Does that answer your question, David?

David Amsellem -- Piper Sandler -- Analyst

Yeah. That's -- that's very helpful, per -- particularly in terms of the cadence for the year. So, thanks for that.

Andrew Saik -- Chief Financial Officer

Sure.

Operator

Thank you. Our next question comes from the line of Balaji Prasad with Barclays. Please proceed with your question.

Balaji Prasad -- Barclays -- Analyst

Hi, good morning. Thanks to have my questions. Just a question each on one of VYNE Zilxi. With the -- Zilxi, if I look at your dec that you published a couple of days ago and spoke about 250K prescriptions portfolio for -- for launch drugs.

And if I translate that bit where you are currently with your December rate and double it, I still end with around 40K to 45K prescriptions for the year. So, how do I bridge the two? And secondly, on 105, can you help us understand if there's any variation in the -- in the molecules to present technique you have between in the Zilxi and the 105, and if there's an incremental differentiation of clinical benefit? And also, why would it not cannibalize Amzeeq? It seems to color both the nodular are non-nodular versions, so why would it not cannibalize Amzeeq? Thank you.

Matt Wiley -- Chief Commercial Officer

Well, let me speak to the surrogates first. This is Matt. Thanks for the questions. So, it's -- it's hard to view the surrogates in the -- in the first year, given the fact that we launch Zilxi during a pandemic.

So, the surrogates all are based on launches that are not on in this type of environment. So, I would -- I would keep an eye more so on the outer years of what do you think as what gives of these brands. And you know, certainly, the feedback that we've gotten in -- in market research on Zilxi indicates that there's a clear unmet need. There's a clear switching behavior between patients from a first therapeutic to something else or -- or discontinuation altogether.

So, we know that that need in the market exists and we've heard that from our positions as well. So, we would expect that as this market heals and as we get into a normal ability to launch our product that the surrogates are -- are a good tool to help define what the key potential is for a brand like Zilxi.

Iain Stuart -- Chief Scientific Officer

Hey, I'll just cover off on -- onto phase 2, yeah. FMX105 does utilize our MST technology. Obviously, we're adjusting for different components and concentrations of the two APIs. But in relation to your question on -- on efficacy, as you can see in our IR dec, we are sure that approximately 36% of patients in our phase 2 study were clear, almost clear, that class leading potential their respect to efficacy.

But, as you know, there are two sides to that coin. It's not just about efficacy, it is about safety as well. As you know, FMX105 contains a retinoid, adapalene at the prescription strength of 0.3%. And we can see in our data that that's particularly well tolerated in the skin, potentially important to support compliance to therapy and obviously ultimately clinical outcomes.

How it compares to Amzeeq, again, as you can see on our IR dec, we actually had a monad ARM of 3% minocycline and our MST technology that's actually quite a good surrogate for Amzeeq, which is 4% minocycline, and there you had approximately 30% treatment success. So, you certainly see an additional benefit of adding adapalene in there. And then, you showed nice consistency between the 3% ARM and Amzeeq itself.

Dave Domzalski -- President and Chief Executive Officer

David, this is Dave. You know what, our -- our objective obviously is to continuing -- to continue to develop new and improved products and that's our ambition for FCD105. We obviously are combining what's viewed as the gold standard for inflammatory acne which has been a side plan, that's been the gold standard and was the driver behind Amzeeq. And we know adapalene is one of the -- if not the most widely used retinoid and very effective for common acne as in alluded to, you know, these -- these retinoids -- the retinoid combination products often which include nasal peroxide could be quite irritating to the skin.

And when, you know, take a look at our -- our technology, our -- our MST, our molecules stabilize and technology, our -- our thesis has always been -- our -- could -- could our chance that we have for our our product could it help, you know, mitigate some of the cutaneous adverse events that you see with these retinoid-based products. In -- in our phase 2 study, it certainly appears that that may be the case. So, we've seen substantial efficacy, we've seen very strong safety profile, very low cutaneous adverse events and -- and when we just compare versus liter -- just in literature comparison, it -- it's quite profound. So, obviously, you know, we need to take this into the pivotal program which we anticipate doing later this year.

But assuming we'd get results anywhere in the same general arena that we've seen in phase 2, as -- as being outlined we think it could be a best-in-class product. You know, we've done a -- a fair amount of market research. I'll -- I'll -- I'll turn some to -- add to the comment on -- but we think that this product could be the biggest of -- of the -- the three that we have in the tetracycline class between Amzeeq, Zilxi, and FCD105. You know, the initial feedback that we're getting in the market research is that -- yeah, this -- this is clearly additive, not so much of cannibalization play for sure.

There's obviously going to be some cannibalization anytime that you -- you launch a -- a new product. But, you know, it -- it -- it seems to be much more additive in terms of the potential for the brand. So, I'll turn to Matt for some additional color on that.

Matt Wiley -- Chief Commercial Officer

Yeah. So, you know, a couple of things about this, Mark. So, there's a demand study with hundreds of physicians. You know, we do a pre and post of utilization and we look at impact based on a product profile for 105 and others that -- that maybe entering the market.

And what we've found in this study is that FCD105 -- but we never disclosed what our -- our peak share was in previous studies for FMX-101 or Amzeeq. But I can tell you that the implied share for FCD105 is about double what we saw in -- in the Amzeeq study which is really encouraging. The other thing that's encouraging out of this study is that, you know, clearly, you won't understand what the impact is to your in-line brand. And so, what is the cannibalization opportunity on Amzeeq? What -- what is that ultimately going to be at peak when this enters market.

And what we found in the study is that the cannibalization of Amzeeq is going to be less than 20%. Now, again, this isn't a vacuum with product profiles but we're encouraged by that because we feel that Amzeeq is oftentimes either used alone or in combination that is bespoke to the patient and people still offer that opportunity for clinicians to treat their patients the way that they -- they want to. But FCD105 offers new patients that -- that come into the practice or others that aren't satisfied a -- a clearly beneficial alternative.

Balaji Prasad -- Barclays -- Analyst

Thank you. Very helpful.

Matt Wiley -- Chief Commercial Officer

God bless you.

Operator

Thank you. Our next question comes from line of Patrick Dolezal with LifeSci Capital. Please proceed with your question.

Patrick Dolezal -- LifeSci Capital -- Analyst

Hi, thanks for taking the question, and congrats on the new program in atopic derm. And so, starting there, you know, I guess we've seen the moderate-to-severe market become a blockbuster opportunity and a rather rapid fashion, and the mild-to-moderate market is lagged a little bit but some -- some really great potential there. Could you just help us think about some of the relevant factors at play here and maybe provide, in a general sense, what a successful therapy might look like in the mild-to-moderate setting. And -- and perhaps speak to why you ultimately chose to pursue this topical therapy in mild-to-moderate.

Thank you.

Dave Domzalski -- President and Chief Executive Officer

Sure. I'll -- I'll offer -- it's Dave again, offer a few comments upfront then turnover Iain but, you know, as -- as Iain outlined in his initial commentary, the mild-to-moderate space is a -- is a big space, right? So, there's 22 million patients treated for atopic dermatitis in the U.S. and around 19 million of -- of that 22 million are -- are mild-to-moderate. So, we know a lot of the -- the R&D and a lot of work in -- in recent times.

It's been around, moderate-to-severe patients. But obviously, the -- the -- the big opportunity in terms of patient volume to be addressed is in the mild-of-moderate category. And thinking through, you know, as we were developing this product, you know, what -- what are the needs for patients and -- and treat the disease as Iain outlined, it's -- it's a -- it's a multi-factorial disease and our belief is that the best way to address a multi-factorial disease is to have a -- a multi-modal product. And hence, why we developed FMX-114 which combines the pan-JAK tofacitinib with the -- the sphingosine-1 fingolimod.

We think there's two -- and Iain outlined as, you know, clear, different modes of action that can help address the -- the condition and I think a key component is that the potential for this product improves skin barrier function which -- which is -- which is a key lever we believe for patients that have atopic dermatitis, especially when you're dealing with such a large number of patients being in the pediatric range. So, yeah, that -- that's -- that's the -- the thesis behind this. So far, again, we're very encouraged with -- with the -- the pre-clinical data that we've just provided earlier this morning. We're quite encouraged by or eager to get into a phase 2a study later this year with -- with the aim to have the top-line read out before the end of the year.

So, I'll turn it to Iain for any additional thoughts or color around it.

Iain Stuart -- Chief Scientific Officer

Yeah, I think Patrick, you -- you're going to hit the nail on the head. The moderate-to-severe space is a very busy space in development. There's a lot of high-value therapeutics in development such as biologics as -- as they've covered off on. They -- they should -- the -- the biggest unmet need is in the mild-to-moderate space.

Sto -- steroids work but they have a specific challenges and therefore, we still see a huge unmet need there in mild-to-moderate. This is are up to 19 million patients in the U.S. that are -- that in that category that are using steroids on and off to have them be managed long term. We see this as a potential replacement for steroids.

Also, in the mild and moderate-to-severe category, you'll also see a lot of companion drug use with steroids as well. So, such as [Inaudible] and other products that are coming through -- tend to due on studies where steroids are used, either as a run-in phase or concomitantly used to get control of flares. Again, we can also see opportunities with FMX-114 there as well.

Operator

Thank you. Our next question comes from the line of Oren Livnat with H.C. Wainwright. Please proceed with your question.

Oren Livnat -- H.C. Wainwright & Co. -- Analyst

Hi. I have a few. Just to go back to the commercial business, you highlighted in rosacea that there is a lot of evidence of drug switching which, you know, makes a lot of sense because this is a chronic condition. I'm trying to get your sense on how Amzeeq and acne compares to that.

I mean, it's a little more of an acute condition right. And so, assuming that people are having to step through other therapies or at least have to date to get to your product, how do you get new patients on your drug, if it's not first-line therapy? It -- does it have to be failures on other therapies or are you just hoping that docs have enough experience and -- you know, in -- in patient profiling? And I know this isn't going to be a good candidate for X, Y, and Z existing therapies. I want to start them on Amzeeq and I'm willing to go through the hassle of PEAs to get there.

Dave Domzalski -- President and Chief Executive Officer

Yeah. So, it's a great question and -- you know, I can speak to the -- the avenues by which Amzeeq is used today. Roughly half of our patients have not been on any previous RF therapy which I think speaks to some of the open access that we have and specifically, the ESI contract where we're -- we're on the National Preferred Formularies. So, those patients can easily get the Amzeeq out of the gate.

Roughly half of our prescriptions are coming from those that are stepping through something else or have -- have primarily failed something else and would otherwise satisfy a step therapy or a prior authorization. And, you know, look, the -- the as we examine share shifting between Amzeeq and the others in the category, we're seeing some additive opportunities. So, for instance, if patients on a retinoid and they need additional, you know, additional therapeutic advantages of Amzeeq, then we see Amzeeq added to those types of drugs. We see a lot more switching between oral antibiotics and Amzeeq and I think that's an important point to make as well.

So -- so, we see it both ways and, you know, I'm pleased with the way that work -- this is shaking out because this has been consistent really since we first launched. We've seen roughly the same amount of de novo patients and the same amount of -- of switching patients both times. So, that seems to have some -- some durability, and I -- I think it also speaks to the point of you're making due to some dissatisfaction in the market, especially as it relates to oral antibiotics.

Oren Livnat -- H.C. Wainwright & Co. -- Analyst

Thank you. And just regarding, you know, script trends, you know, things have obviously, you know, just you've had a lot of weather and other factors I'm sure late in the year and into January and February. But I'm just wondering big picture, can you remind us what sort of seasonality is there in the respective acne and rosacea spaces both from an actual-season-weather perspective but, you know, also the typical new year, you know, insurance-resetting factors. I guess, how much should we be adjusting in our minds the earlier script volume we're seeing now for a normalized run rate?

Dave Domzalski -- President and Chief Executive Officer

Yeah. So, that's I -- I think you're talking about seasonality of -- of deductibles and out-of-pocket. Of course --

Oren Livnat -- H.C. Wainwright & Co. -- Analyst

Plus actual seasonality, I guess, maybe in rosacea.

Matt Wiley -- Chief Commercial Officer

Yeah. So -- so, we definitely see the deductible seasonality in -- in both markets as -- as fairly pronounced in acne. And usually, you -- you start to see emergence from that in the -- the manageable timeframe. So, we would expect to see that ease over time.

You know, as it relates to disease state seasonality, we do see very clear seasonal patterns in rosacea, both in how those patients search for symptoms online, and also what we see in diagnosis rates. So, we see the diagnosis of rosacea patients start to increase in late March, April, May, June. That's typically when the weather changes, that's when the symptoms become more pronounced and for [Technical difficulty] system. So, we're just on the -- the tip of that happening now and we would expect next two to three months to see additional flows of patients.

And -- and by the way, we do take advantage of that as we think about our consumer-paid search, buying, and advertising for rosacea. We typically press that into those -- those peak months. So, we're ramping up those efforts now as well.

Dave Domzalski -- President and Chief Executive Officer

Yeah. I -- I would say too there's -- there's a bit of a bolus of -- of -- of patients going into dermatology offices for Amzeeq for acne treatment as you move to the end of -- of the summer and the beginning of the fall which coincides obviously with kids going back to school. You know, we -- we didn't see that -- that typical trend this past year obviously for COVID reasons. We would anticipate that we should see that back to a more normalized environment this year as more and more patients are getting vaccinated against COVID and as the economy continues to open up all -- all the -- the modeling suggests that.

And I think between the inherent seasonality that Matt was outlining for rosacea and what we would anticipate to be, you know, kids getting back to school and getting back into the classrooms in -- in the high school and college settings as we move through -- through the summer months into the fall, that should all align quite nicely with, as Andrew's outlined and as we've talked about, are starting to get to that, you know, that -- that more appropriate realized net price per prescription which we should start seeing that as we move into the, you know, call it the midpoint of this year. I think all that really -- really works nicely with that. We're seeing that type of price per Rx that we anticipated that 200 to 250 range and we're in kind of call it a steady state by the time we move into the midyear beginning of the third quarter. Again, that ticks and ties quite nicely with, you know, the seasonality and the bolus of patients we would anticipate to see into the clinic for rosacea seeking treatment, as well as kids going back to school at the end of the summer and beginning of the fall months.

Oren Livnat -- H.C. Wainwright & Co. -- Analyst

All right. I appreciate the help. Thanks.

Dave Domzalski -- President and Chief Executive Officer

You got it, Oren.

Operator

Thank you. Ladies and gentlemen, our final question this morning comes from the line of Tim Chiang with Northland Securities. Please proceed with your question.

Tim Chiang -- Northland Securities -- Analyst

Hi. Thanks. David, could you just comment on where you see out-of-pocket costs for Amzeeq, Zilxi, you know, once -- once all of the major PBMs and -- and the coupons come out, you know -- you know, what is the normalized out-of-pocket costs going to be for the -- for both of your products, let's say, by the time we get to around May, June?

Dave Domzalski -- President and Chief Executive Officer

Yeah. Sure, Tim. Yeah, I -- I'd say probably an average out-of-pocket cost is somewhere around the $50 range, you know, probably capped at about $75 which is what we have for our coupon program. But, you know, if you just think through a Tier 3 formulary status, what's a, you know, an average out-of-pocket's cost, it's going to be somewhere around that $50 range.

And again, we have -- we have a coupon program and we'll continue to have it in place that, you know, the patient would pay $35. And so, if an out-of-pocket was -- was $50 for that particular patient and -- and have they leveraged the coupon that we have, you know, they pay $35, we'd pay the difference, yeah, the other $15. We think that, based on all the research we've done, that's a-- that's a good number that mitigates abandonment of prescriptions. Matt and the team's done a lot of research on it, we've got -- we've spent a lot of thought into this, it goes with our -- our -- our total strategy on -- on payer access and -- and -- and reimbursement.

But generally speaking, patients that have insurance coverage, a -- a out-of-pocket Tier 3 formulary position is going to put you at around $50 or so of copay.

Tim Chiang -- Northland Securities -- Analyst

OK. Great. And maybe just one follow-up. You know, obviously, COVID is having an impact on -- on Amzeeq and Zilxi.

But just in terms of the typical patient, I mean, what -- what is the typical patient that's getting Amzeeq? Is -- is it mostly middle-aged women or more adolescents that are getting Amzeeq at this point? And -- and I'm sort of wondering if, you know, the -- the age stratification will change some once we get to the other side of the pandemic.

Matt Wiley -- Chief Commercial Officer

Yeah. So -- so, we -- we obviously take a look at two things. One is the age range of diagnosed acne patients generally. And what we found when we did that exercise through claims analysis is that the majority of the patients diagnosed are between the ages of 12 and 24.

That's what we see with Amzeeq as well. We see the majority of our patients are actually between the ages of 10 and 20 now the way that we analyze in real-time. We have bracketed age ranges that are a little bit different than the claims analysis that we did about a year and a half ago. But the -- the age range for Amzeeq prescriptions is typically in that 10 to 20-year-old range with some falling outside of that.

That's what we would expect and, you know, it's -- it's kind of falling in line with what we saw initially with diagnosed patients. So, we would expect that to continue.

Dave Domzalski -- President and Chief Executive Officer

Yeah. Tim, I -- I -- I think one thing that shouldn't get lost since it's probably a good way to -- to kind of wrap up the call here unless you have other questions is, you know, for last year, despite all the headwinds, despite all the challenges with COVID which we've all talked about many times over is we generate over 100,000 prescriptions for Amzeeq. Over 100,000 despite all the challenges, despite the fact that our -- our salesforce was basically shut down for about four months. You know, we had -- we had the first quarter of -- of the launch of Amzeeq which we were -- last year which we were quite thrilled with the uptake for the brand.

And then as we all know, we were all in shutdown mode, lockdown, salesforce was locked out for -- for about four months. And then ratably, start to see things bounce back through the summer and into the fall. And by the end of the year, again, we generated 100,000 prescriptions for Amzeeq which is -- which is no small accomplishment. So, we're certainly very encouraged by the potential for this brand.

And for Zilxi, we're -- we're just getting started. We -- we haven't even had that chance of having unfettered access. We at least got a quarter of that last year for Amzeeq and we haven't even had that opportunity yet for Zilxi. So, we're quite bullish about the potential for both of these brands.

I think in terms of the age -- age range that you're asking regarding Amzeeq, you know, it's in that, you know, early teens, you know, older -- older -- older adolescents through teens into the early 20s. And as we've often said, Zilxi picks up where Amzeeq leads off. You know, prevalence for Zilxi is at 30% to 50%, 60% range. So, we've got -- we know we've got two great products.

We know that the feedback that we've received from patients once they get a chance to try it's been excellent. For Zilxi, it's just a function of us being able to get access to physicians, communicate the -- the features and benefits of the product, let them try those that have -- that we've been able to get access to those that have -- have been educated on Zilxi that have tried the product, the response has been really, really good. So, we're -- we're certainly encouraged by all the underlying metrics. We're certainly encouraged by what's happening on a -- on a broader basis globally with vaccinations continuing to -- to increase.

And yeah, we're certain -- certainly anticipating that, you know, the market and the offices will begin to open and continue to open up as you move through the spring and into the summer months. And as you get to that steady state, hopefully by mid-year or so.

Tim Chiang -- Northland Securities -- Analyst

OK. Great. Thanks, Dave.

Dave Domzalski -- President and Chief Executive Officer

You got it.

Operator

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Domzalski for any final comments.

Dave Domzalski -- President and Chief Executive Officer

Thank you, operator, and thanks to everyone who has participated on -- on the call today. We're obviously very excited about our -- how our business has continued to progress, the prospects for our in-line products Amzeeq and Zilxi, as well as our pipeline of products including FCD105 and FMX-114. We look forward to providing you further updates as we move and progressed through the upcoming quarters. Thanks, be well and stay safe.

We look forward to talking with you soon.

Operator

[Operator signoff]

Duration: 66 minutes

Call participants:

Michael Wood -- LifeSci Advisors -- Managing Director

Dave Domzalski -- President and Chief Executive Officer

Matt Wiley -- Chief Commercial Officer

Andrew Saik -- Chief Financial Officer

Iain Stuart -- Chief Scientific Officer

Carvey Leung -- Cantor Fitzgerald -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Balaji Prasad -- Barclays -- Analyst

Patrick Dolezal -- LifeSci Capital -- Analyst

Oren Livnat -- H.C. Wainwright & Co. -- Analyst

Tim Chiang -- Northland Securities -- Analyst

More VYNE analysis

All earnings call transcripts

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Foamix Pharmaceuticals Ltd. Stock Quote
Foamix Pharmaceuticals Ltd.
VYNE
$0.40 (-0.03%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.