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VYNE Therapeutics Inc. (VYNE) Q2 2021 Earnings Call Transcript

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VYNE earnings call for the period ending June 30, 2021.

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VYNE Therapeutics Inc. (VYNE -0.92%)
Q2 2021 Earnings Call
Aug 12, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings and welcome to the VYNE Therapeutics second-quarter 2021 earnings call. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question-and-answer session. [Operator instructions] As a reminder, this conference is being recorded, Thursday, August 12, 2021.

I would now like to turn the conference over to Chase Oswald from LifeSci Advisors. Please go ahead.

Chase Oswald -- Investor Relations Contact Officer

Good morning, everyone, and thank you for joining us. Before we begin 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 of annual operating performance, impacts of 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 strategic transactions and the success, timing, and cost of clinical trials.

Words that express and reflect optimism, satisfaction with current progress, prospects, or projections, as well as words such as believe, intend, expect, plan, anticipate, and similar variations, identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance and the company's actual results may, could materially -- differ materially from those contained in such statements. Several factors that could cause or 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.

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In addition, the financial portion of this call includes certain non-GAAP financial information. For additional disclosures relating to these non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, please see today's press release, which is posted on the investor relations section of our website. Participating in this morning's call are Dave Domzalski, VYNE's president and chief executive officer; and Tyler Zeronda, VYNE's chief financial officer; Dr. Iain Stuart, the company's chief scientific officer; and Mutya Harsch, the company's general counsel and chief legal officer, will also be on the line and will be available during the Q&A session.

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, Chase, and good morning to everyone. Hopefully, you all had a chance to read the two press releases that were issued this morning related to our second-quarter earnings and announcing our new license agreement with In4Derm. On today's call, we will be going through our second-quarter financials. However, I want to spend the majority of my time this morning talking about the change to our corporate strategy and our focus on R&D and advancing our proprietary pipeline.

This morning we released our earnings. Tevenue for the quarter was flat compared to last quarter as we continue to face headwinds commercializing our products in this environment. We've been evaluating our commercial and R&D assets for some time in order to determine how to optimally deploy capital and drive shareholder value. During the course of this process, we carefully consider the revenues received from the commercialization of AMZEEQ and ZILXI, and the associated costs to drive those revenues.

The protracted negative impact of the COVID-19 pandemic over the past 18 months during the commercial launches of both AMZEEQ and ZILXI, and the current payor landscape has made this an incredibly challenging environment. Throughout this process, we explored several strategic options, including the acquisition of marketed assets, out-licensing our approved products outside of the United States, and possible partnering or co-development relationships with interested parties. As you all are aware, we've had to make considerable cuts to our operating expenses over the past 18 months, in light of COVID-19 in order to preserve our commercial operation. We have kept our sales force intact throughout this time and our efforts to educate healthcare providers and increase awareness of both AMZEEQ and ZILXI.

While we have had to balance our cash expenditures for commercial operations throughout these periods of unpredictability and customer access restrictions since the COVID-19 pandemic began last March, important consumer, digital, and e-commerce initiatives that we would have sequence during a normal launch cycle have unfortunately needed to be sidelined. Launching new products brings a variety of challenges in any environment, particularly for a company of our size. There is a roadmap to maximize the potential of our minocycline franchise. We know we have excellent products and responses from patients and the healthcare providers continues to be very positive.

The issue for us is ultimately one of time and money. Though we remain optimistic about the potential of our launch brands, the factors I have discussed coupled with our current operating costs significantly impact our ability to become a profitable enterprise within an acceptable timeframe. We believe that our existing minocycline franchise, including our Phase III-ready combination product FCD105 has significant value. As we assessed our current minocycline franchise and the costs associated with commercialization alongside our ambitions for our pipeline, including the transaction announced this morning with In4Derm, which provides us with exclusive access to a novel BETi platform, we came to the conclusion that we cannot appropriately support both a commercial enterprise and R&D operations.

After careful consideration, we have made the strategic decision to explore a sale or license of our minocycline franchise, including the underlying molecule stabilizing technology platform-specific to our minocycline portfolio. We are working with a prominent investment bank to lead us through this process. We believe that the potential of this franchise could be maximized by a partner that can deploy the necessary resources to unlock its true value. Recognizing the continued pressure on our share price, we believe the best way to create value for our shareholders is to focus our resources on our existing R&D capabilities and strong partner network to advance our proprietary pipeline.

As we transition our focus and spend toward developing our pipeline, we will continue to selectively fund certain aspects of the commercial business, including our sales force, for a finite period of time while we actively work to identify a partner for our minocycline franchise. This will reduce our overall burn rates and allow us to make appropriate investments in our pipeline, which we believe will create significant value for our shareholders. Separately in light of the strategic change, we've had a number of discussions with our lenders regarding our outstanding debt. They were very helpful and working through potential options and were willing to provide us a runway to keep the debt outstanding for a period of time during the process of identifying a partner for the minocycline franchise.

When considering the carrying costs and fees, however, associated with doing so, we believe it was more prudent to prepay the loan and use the cash that would have otherwise funded those carrying costs to invest in our pipeline projects. Tyler, our CFO will discuss our cash and cash runway when we get to the financial discussion. Going forward, we will invest in developing therapies for the treatment of immunology and inflammatory conditions with high unmet needs. Drug development is a core competency of VYNE.

We have a track record of successfully developing complex molecules and advancing therapeutics through the clinic and regulatory approval process. We intend to leverage those core capabilities in building an enhanced pipeline of innovated NCEs alongside our current development program for FMX114 for the potential treatment of mild to moderate atopic dermatitis. We believe this is the right direction for the company and have the unanimous support of our board of directors. This leads me now to the licensing agreement we announced this morning with In4Derm Limited, a spin-out of the University of Dundee School of Life Sciences.

Dundee is one of the foremost integrated university hospitals and biotechnology research institutes in Europe. We've been following the work of this group and have been impressed with their progress in developing multiple, novel, and differentiated drug discovery platforms relevant to autoimmunity and immuno-oncology disciplines. We are particularly impressed with the potential and broad applicability of their work in identifying highly potent and selective bromodomain and extra terminal protein inhibitors. Also referred to as BET inhibitors or BETi for short.

As outlined in our press release, this partnership with In4Derm  provides us exclusive worldwide rights to a novel class of BETi compounds. The BEt-family of proteins are epigenetic regulators that control the transcription of genes. Inhibiting BET proteins stalls the transcription process and therefore reduces the extent of inflammation and tissues. There's a lot of interest in BETi as therapeutic targets for a wide range of diseases.

Today, much of the clinical research, particularly by large pharma, has a focus on oncology. There is also compelling science to show BET that inhibition can play an important role in effectively treating immunoinflammatory diseases. We believe this partnership with In4Derm is transformational for VYNE  as it exponentially expands our pipeline, providing us with a library of small molecule NCEs and a unique platform to develop both topical and oral BETi therapeutics. The initial candidates that we plan to develop, we refer to as VYN201 and VYN202.

The first of this VYN201 is a pan-Bromodomain or pan-BD BET inhibitor. It is a first-in-class soft pan-BD BET inhibitor that is designed to mitigate systemic drug exposure and will be developed for topical applications. We intend to progress VYN201 into rare neutrophilic dermatological indications such as pyoderma gangrenosum, palmoplantar pustulosis, and generalized pustular psoriasis, where there is significant unmet need due to a lack of indicated treatment options. Plan to enter this program into the clinic next year after the prerequisite non-clinical safety assessments have been completed.

The second candidate, VYN202, is an orally delivered first-in-class BET inhibitor that's highly selected for BD2. Recent research suggests that the majority of pro-inflammatory signaling from BET protein action is through the interactions with Bromodomain 2. By selectively inhibiting BD2, we believe VYN202 can have a more targeted anti-inflammatory effect with an improved benefit-risk profile. We view VYN202 as having significant potential as a novel oral treatment for major immunoinflammatory indications such as rheumatoid arthritis, ulcerative colitis, and multiple sclerosis.

Upon final candidate selection and exercise of our option, we intend to commence an IND-enabling non-clinical safety program and enter the clinic next year as well. BET inhibition is good science and we are enthusiastic about the potential broad utility of the BETi platform. Over the coming months as we prepare to take these NCEs into the clinic, we will provide further details on the initial indication that we intend to pursue for each of these programs. With respect to the economics of our partnership with In4Derm, we structured the transaction to provide us the exclusive right to develop any and all of their BETi compounds for any indication worldwide.

Additionally, we have the ability to sub-license to a third party the development of any BETi program in any jurisdiction. This gives us significant optionality in how we deploy our resources and maximize the potential of the platform. In essence, this is a pay-as-you-go or a-la-carte model, which provides us the ability to control costs at our discretion. For perspective, the total milestone payments to progress one topical product through approval in the United States is approximately $16 million for all indications.

Similarly, the total milestone payments to progress one oral product through approval in the United States is approximately $44 million for all indications. This obviously, excludes R&D costs and any royalties payable upon commercialization. In summary, we are very excited about the possibilities of the BETi platform and our collaboration with In4Derm as we prioritize the growth of our pipeline. By coupling In4Derm's deep expertise and rational drug design in leading-edge pharmacologists, with VYNE drug development capabilities, we see a strong foundation to build real value for patients and shareholders alike, and we look forward to providing further progress through our updates.

Moving to FMX114, we remain on target to enroll the first patient in our Phase IIa proof of concept study in mild-to-moderate atopic dermatitis later this quarter. Clinical trial supplies are at our third-party distributor in Australia for subsequent shipment to investigator sites pending approval of the protocol by the local ethics committee. Again we anticipate having top-line results from this study by the end of the year. Turning to commercial.

Tor the second quarter the minocycline franchise exceeded 57,000 prescriptions. This represents an approximate 10% increase over the first quarter of this year and is the highest quarterly prescription count since the launch of both AMZEEQ and ZILXI. Individually, AMZEEQ had over 47,000 prescriptions and ZILXI 10,000 prescriptions, which both represent quarterly highs. Today, roughly 9,000 unique healthcare providers have prescribed AMZEEQ.

We have penetrated 74% of our target universe so far this year, including over 87% of our highest decile targets. Similarly, ZILXI has over 3,300 total unique prescribers since launch in October with a 42% penetration rate of our target universe. Additionally, year to date our sales team has executed educational speaker programs for over 1,600 healthcare practitioners on both AMZEEQ and ZILXI. Market access for AMZEEQ  has remained stable as the brand continues to have coverage for approximately 72% of commercially covered lives.

Market access for ZILXI has improved to approximately 68% of commercial lives. An increase of 7% from last quarter due to successful pull-through efforts by our team with downstream custom plans. We view these as positive metrics for the franchise. Despite our brands continuing to face pandemic-related headwinds.

You may recall that the sales team began the year with approximately 35% to 40% access to target physicians in a live setting. This has progressed to approximately 60% to 65% recently, but it's clear that the COVID-19 pandemic continues to have an impact on the launch of both products. On the IP front, we announced on Monday that we have initiated a patent infringement lawsuit against Perrigo Israel Pharmaceuticals. We filed this lawsuit in response to Perrigo's ANDA filing seeking FDA approval to manufacture and sell a generic version of AMZEEQ in the United States prior to 12 patents listed in the Orange Book.

We are seeking an order that the effective dates at any FDA approval of Perrigo's ANDA be no earlier than the expiration of our listed patents, the latest of which expires on September 8, 2,037. We are confident in the strength of our patents and we intend to vigorously defend our intellectual property rights in the United States and globally. I'll now turn the call over to Tyler to cover the financials. Tyler?

Tyler Zeronda -- Chief Financial Officer

Thanks, Dave, and good morning, everyone. Revenues in the second-quarter 2021 totaled $4.3 million and consisted of $4 million of product sales from AMZEEQ and ZILXI and $0.3 million of royalty revenues. Our second-quarter 2021 GAAP net loss was $19.9 million or $0.39 per share. When excluding $1.9 million of stock-based compensation expense, our second-quarter 2021 adjusted net loss was $18 million or $0.35 per share.

For the second quarter of 2021, adjusted operating expenses were $20.3 million, including adjusted SG&A expenses of $14.4 million and adjusted R&D expenses of $6 million. We historically guided to adjusted operating expenses of approximately $20 million to $25 million per quarter, which is where we have been landing over the last three quarters from Q4 2020 through Q2 2021. As we transition our focus and spend toward developing our pipeline, we anticipate that Q3 adjusted operating expense should be at the low end of that range while we continue to selectively fund certain aspects of our commercial business, including our sales force while we seek a potential partner for our minocycline franchise. This amount also includes $1.5 million to $2 million of severance and related benefits associated with our restructuring plan that Dave described earlier, but excludes any non-cash charges.

We expect to substantially complete our transition to an R&D-focused biopharmaceutical company by the end of this year. Therefore, beginning in the fourth quarter, we expect to further reduce our adjusted operating expenses to arrange a $15 million to $20 million, including the anticipated $4 million milestone payment related to the exercise of the license agreement for the oral BETi VYN202. Based on our current plans to conduct a Phase IIb trial for FMX114 assuming positive results in the Phase IIa trial later this year and to progress both VYN201 and VYN202 into the clinic in 2022, we anticipate that our adjusted operating expenses will be approximately $10 million per quarter next year. Now turning to the balance sheet, our cash position as of June 30th was $104 million.

As Dave outlined in his prepared remarks, subsequent to June 30th, we prepaid our outstanding debt of $35 million in addition to a 4% prepayment fee. As a result, our pro forma cash position as of June 30th after giving effect to the full prepayment of the loan facility was approximately $68 million. We believe that this cash will be sufficient to fund our operations through the second quarter of 2022. I want to point out that this projection does not take into account any potential proceeds from the sale or license of the topical minocycline franchise, new business development transactions, or additional financing activities.

Finally, our shares outstanding as of June 30th totaled 51.5 million shares. For additional information regarding our second-quarter results and prior period comparisons, please refer to today's earnings release in our Form 10-Q filed with the SEC. Now let me turn the call back over to Dave for closing comments.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Tyler. Well, we've covered a lot in this call. To summarize, we are refocusing the company from a commercial enterprise and therapeutic dermatology to a biopharmaceutical company with unique and proprietary assets. Our partnership with In4Derm provides us access to an exciting BETi platform for both topical and oral treatments for immuno-inflammatory diseases of high unmet medical need.

We intend to leverage our existing development capabilities and a strong network of discovery and preclinical science partners to develop products and advance a series of truly innovative new medicines throughout the clinic. Through our reductions in SG&A--related operational expenses and repayment of debt, we are cleaning up our balance sheets so we can focus on advancing our pipeline as I outlined earlier. We're excited about the prospects of these programs as we anticipate multiple early stage clinical milestones over the next 12 to 24 months. Making the strategic shift was not an easy decision.

However, I have complete conviction that this is the right decision and the clearest path to create value for our shareholders. Our team is already busy at work to execute on our plans and I look forward to updating you on our progress. That concludes our prepared remarks. I will now turn the call over to the operator and open the call for questions.

Thank you.

Questions & Answers:


Operator

Thank you. [Operator instructions] And our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed.

Unknown speaker -- Cantor Fitzgerald -- Analyst

Hi. Good morning, everyone. This is Carvey in for Louise. Congrats on the quarter and the lines in your agreement, and thank you for taking our questions.

Our first question is what are some potential competitive advantages of BETi or BET inhibitor versus other immuno-inflammatory treatments for rare skin diseases? Secondly, as mentioned earlier the class of drugs has been more investigated in oncology, so what are some key findings some preclinical research that kind of pushed for the agreement? And lastly, there are plethora of 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 ones to pursue? Thank you.

Dave Domzalski -- President and Chief Executive Officer

Great, Carvey. I'll turn it over to Iain Stuart.

Iain Stuart -- Chief Scientific Officer

Hi. Good morning, Carvey. So the initial indications. Let's talk about the topical to start with.

The challenges with some of this neutrophilic dermatosis and Dave in the prepared remarks talked about pyoderma gangrenosum generalized pustular psoriasis palmoplantar pustulosis. As it all have one common theme and that is pretty catastrophic inflammatory signaling where a more targeted approach may not necessarily provide the best clinical outcome. So there are others who have looked at specific monoclonal antibodies against specific receptors and I've come up with a somewhat limited clinical response. The BETi's particularly VYN201, which is a pan-Bromodomain BETi inhibitor has the potential to have a much broader anti-inflammatory effect in-vitro data that we have generated and In4Derm have generated have actually shown great utility across a number of T helper cell groups that are relevant to these pretty catastrophic dermatoses.

So we're quite excited about the direct applicability of 201 to these diseases. Moving to 202, this is a BD2 or Bromodomain 2 selective BET inhibitor. So why is that important? And again and referring back to Dave's remarks, BD2 appears to be driving the majority of anti-inflammatory effects through the BET protein signaling pathway. So it does make sense to obviously target that one more selectively.

Equally, most of the early stage BET inhibitors that have been targeted toward oncology where pan BD inhibitor and binding to BD1 has been implicated and maybe a narrower benefit-risk profile, which obviously lends itself to oncology indications. But maybe not necessarily to broader autoimmune diseases as the ones that Dave referred to such as rheumatoid arthritis, UC Crohn's, and multiple sclerosis. Again, we want to develop a 202 as it orally delivered selected BD2 inhibitor BETs. Work In4Derm to date have shown exquisite selectivity to BD2 versus BD1.

We are working on, obviously, identifying a candidate for further development, but that is also progressing very well as well at this stage.

Dave Domzalski -- President and Chief Executive Officer

Anything else, Carvey?

Unknown speaker -- Cantor Fitzgerald -- Analyst

Yeah. Maybe on your opening statement and talked about different skin diseases that this is applicable. So maybe you can talk about which specific ones are you most interested in, which ones you're most excited for? And what's going to be your process in narrowing down, which one to be important at the beginning?

Iain Stuart -- Chief Scientific Officer

Sure. So the three diseases,  as I said, were pyoderma gangrenosum, generalized pustular psoriasis, and palmoplantar pustulosis. We obviously will be conducting a great deal among clinical work to specifically target or prioritize not order. But what's most what they have all in common other than this pretty catastrophic neutrophilic response to the immune system is that they are either significantly life-threatening or certainly life quality limiting.

So for example, pyoderma gangrenosum, the mortality rate for an untreated pyoderma gangrenosum is 100%. So these patients tend to suffer from obviously very large very embedded ulcers in their skin that ultimately can come septic and it's that sepsis becomes systemic. Clearly, that has significant impacts on mortality. Palmoplantar pustulosis,  if you get a margin large blisters on the palms and soles of the feet tremendously debilitating if you can't use your hands or you can't walk.

Clearly, that is an area that we will also be looking at. Generalized pustular psoriasis similarly is almost like a broader cutaneous presentation of that. Others have looked in this space as well. Very difficult to control as a chronic and relapsing condition and also has significant mortality related to it.

So it will be based on in-vitro data, ex vitro data, not animal models as we start to prioritize that sequence, but those are the three that we're kind of honing in on right now.

Dave Domzalski -- President and Chief Executive Officer

Hey, Carvey, this is Dave too. I would also share that there's been some work that's been done with BETi. As we know, there's one company that's looking at developing a topical BETi for psoriasis. We know that a product -- it's a topical BET inhibitor could also very well be applicable for diseases such as atopic dermatitis because of its potential anti-inflammatory effects.

But these are marketplaces that, as you know, there's been a lot of work in it. We're quite familiar with those marketplaces. We have a product for atopic dermatitis that's getting ready to go into Phase IIa study. Our combination Tofacitinib, Fingolimod product FMX114.

So ultimately our mission is to develop products that can treat significant unmet needs. And the areas that Ian outlined, there is no indicated product. And if we can advance there, we believe that can be tremendous for patients. And so what we're really excited about that the prospects of this platform.

Unknown speaker -- Cantor Fitzgerald -- Analyst

Great. Awesome. Thank you so much and congrats again. Thank you.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Carvey.

Operator

The next question comes a line of Ken Cacciatore with Cowen. Please proceed.

Ken Cacciatore -- Cowen and Company -- Analyst

Hey, Dave. Obviously, a tough year and share your disappointment in the core assets that you're not going to seek to divest. Can you just talk about the decision process going forward you are going to continue to spend behind 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, 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. Thanks so much.

Dave Domzalski -- President and Chief Executive Officer

Yeah. Sure, Ken. Thanks. So, first of all, we believe that there indeed will be a home for this franchise.

We believe there's a lot of value for this minocycline franchise as outlined earlier. The issue is ultimately one of uptime and resources. And a partner that has the resources and the bandwidth to take this franchise to certainly maximize its potential of it. And again, I want to stress this is an entire franchise.

Two marketed products AMZEEQ and ZILXI, Phase III-ready asset-ready asset and a platform with long IP. So this is not a single asset sale or out license and we think there's certainly no value for that. We're getting this process initiated right away. We believe it's prudent to keep some basic support behind this franchise while we go through this process and part a potential partner may want the infrastructure that goes along with that.

So we're not at all abandoning the franchise-stopping supply quite the opposite. We're going to keep things moving along, but for a finite period of time. The salesforce will continue to be engaged we intend this to go into the fourth quarter. I think alongside of that though as I outline and as Tyler commented and we will and have already significantly cut back supported A&P expenditures and we'll continue to do this ratably as you move through the balance of this year while we're going through obviously this process.

And then, we envision by the time we get to the end of the year we will materially have completed this transition. And by the time we get to the turn of the new year, our operating expenditures would be dropped in half as Tyler outlined, we've been running at an opex rate. We've guided 20 million to 25 million per quarter. Over the last few quarters, we've certainly been on the low end of that.

That will continue to fall as we move through the next two quarters. And then again by the time we get to the turn of the year, we anticipate that our opex expense will be down to around 10 million quarters, so literally a cut in half. So really only around 40 million opex for the entire year for 2022. So hopefully that provides some color.

I'll see if Tyler has got anything else to add or.

Tyler Zeronda -- Chief Financial Officer

I think you covered it well, Dave.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Ken.

Operator

The next question comes the line of David Amsellem with Piper Sandler. Please proceed.

David Amsellem -- Piper Sandler -- Analyst

Hey, thanks. So just a few questions here. Regarding the assets you require, can you talk about the extent to which there was competition for them? And I guess maybe another way of asking it is were there other parties as far as you know that were looking into the assets? I just wanted to get a sense to regarding the extent to which you think you were able to find something that really nobody else was looking at. So that's No.

1. And No. 2, regarding your strategic thinking on the minocycline franchise. I guess my question here is as we eventually move out of the pandemic, and let's all assume that that will happen at some point, but was it just your view that the challenges with payers, in particular, were just too great and the resource challenges were too significant even as you moved out of the pandemic? And I apologize I'm losing my voice so I'll stop there.

Dave Domzalski -- President and Chief Executive Officer

OK. No problem. So first of all regarding the partnership that we have with In4Derm again, I can't stress enough how really we are with it. We believe it's potentially transformational for the company.

If this is an outstanding group that we are partnering with. As I outlined David we've been following them for some time. It's a group over in Scotland. Iain has been -- had contacts have been watching this team and we talk with them for some time and we believe we're very fortunate.

We've been looking and I've commented on this for the past year-plus that one of our key objectives is to broaden our pipeline. And I've been very clear we would and everybody should expect that we would move beyond 505B2s, beyond tetracyclines, beyond foams, beyond topicals, and move toward broader indications and NCEs that can address significant unmet needs for patients. And we believe the partnership that we have with In4Derm is huge for that and it is a core for our business going forward. We're fortunate as outlined there's been a fair amount of work for BET inhibitors especially some large pharma companies.

It's a real credit to the team and to the relation that we've structured with In4Derm that we were able to forge this partnership with them at this stage. So we're excited and we also believe we're fortunate and thrilled to be working with them. So I think coming back to your second question David on the decision process and indeed I think we all hope and believe that at some point in time this pandemic will be behind us. But it has been 18 months going on 20 months that we've been facing the and not unlike other companies everybody out there.

It's tough as I said commercializing and launch products in any environments especially for smaller companies of our scale. I said in the past know there's no playbook on how to do that in within a pandemic. I'm enormously proud of the job that the team has done navigating over this time period, but it has been challenging. And as I outlined we've had to make a variety of adjustments, cuts to the operation, and the organization to sustain our commercial efforts.

Ultimately as I share it's an issue of time and money we have -- we don't we do not have unlimited resources and we've looked at what's the best way for us to deploy capital and to maximize shareholder value. Certainly, when thinking through the uncertainties of this current environment we believe that the franchise in the hands of a partner that doesn't have the constraints that we do will obviously maximize the potential for that business. And that was what was driving the decision and that move. And then the subsequent proceeds that we anticipate we'll get from that will certainly be incredibly helpful for us as we advance our pipeline that I've outlined earlier.

So we're looking at multiple clinical milestones over a 12 to 24 month period. The first of which will be coming up we anticipate before the end of the year for FMX114, our Phase IIa study. And then, as we move toward the balance of '22 and that's when we'll start looking at potentially additional milestones for FMX114 and that will begin to start seeing the milestones the clinical milestones for our BETi  products VYN201 and 202. So that's the decision behind it.

We believe it's clearly the right decision. We're excited moving forward. But again it was a difficult decision it was not an easy decision, but we believe it's the right decision and we're moving forward.

David Amsellem -- Piper Sandler -- Analyst

Understood. And if I may sneak in a follow-up and thankfully I have my voice back. So in terms of 114 assuming you do see favorable data, how should we think about the trajectory of R&D spending? I know you said you're going to be cutting the burn, but at some point, R&D is going to ramp up and certainly AD programs can be quite large and expensive. So as we move through 2022 is it safe to say that we're going to see a real uptick in R&D and that will initially the burn will sort of reaccelerate? Obviously, a very different kind of burn, but just help us think through that yet.

Tyler Zeronda -- Chief Financial Officer

Yeah, Dave, this is Tyler. I'll take that question. So in terms of next year from an opex perspective, I mentioned that the $10 million per quarter that assumes success in Phase IIa in bringing FMX114 into the 2B trial. And so that as we look further in potentially success beyond Phase IIb trial.

We could see expenses increase beyond 2022, but we'll look at that as we get the final trial design and things of that nature. But just to reiterate for the Phase IIb that we anticipate that's within the $10 million per quarter that would that we'd estimate.

Dave Domzalski -- President and Chief Executive Officer

Yeah. I think that at further context of that David is that includes not just a potential Phase IIb, but obviously, the work that we would be doing for both VYN201 and 202 and taking those into the clinic. So we believe certainly when we move into next year, we will have obviously, a significantly reduced opex and the majority of that will be for the R&D efforts that were we will be conducting across three programs. So when you couple that or compare that versus say one Phase III program for FCD105 that we've outlined before that would cost 35 million-plus for two pivotal Phase III studies and a long-term extension.

We will be able to get assuming success in the 2A study for FMX114. We'll be able to -- our plan is to have obviously a IIB study dose-ranging study and a couple of early stage Phase I, Phase II studies for both VYN201 and 202.and that's all within the 10 million per quarter that Tyler outlines. So obviously, as you move out beyond two years then things can change, but as we said I would do those is as high-class items for us to deal with. And we're excited about the prospect and assuming we demonstrate proof of concept and efficacy for these programs.

I think things will fall into place after that. I can't -- again, I can't stress enough how excited about this platform and the prospects of it going forward. So hopefully I'll give you some context over the next 18 months of spend.

David Amsellem -- Piper Sandler -- Analyst

Yeah. That's helpful. Thanks, Dave.

Dave Domzalski -- President and Chief Executive Officer

Got it. Feel better.

David Amsellem -- Piper Sandler -- Analyst

Thank you.

Operator

The next question comes the line of Patrick Dolezal with LifeSci Capital. Please proceed.

Patrick Dolezal -- LifeSci Capital -- Analyst

Hi. Thanks for taking the questions. So I think I'm understanding the decision-making process behind the divestiture of the existing commercial assets, but kind of going forward. How do you plan to prioritize the pipeline to avoid such pitfalls in the future? Obviously, there's been a bit of a strategic reprioritization in terms of the targeted disease areas, but perhaps speaking more specifically to 114.

If you could describe to us why the commercial environment is different and mild-to-moderate atopic derm versus acting in rosacea? And whether there's any reason to believe that similar headwinds might be faced for that program? And then maybe providing context around the BET inhibitor and the indications are going after that would be helpful as well.

Dave Domzalski -- President and Chief Executive Officer

Yeah. Sure, Patrick. Well obviously, with the BET inhibitor platform and I want to stress that it's a platform for us to develop and work in partnership with In4Derm and multiple programs, multiple tension shots on goal over the course of time. But, obviously, we're going to be disciplined in the side where we take these assets first, but these are new chemical entities.

The topical program that Iain outlined our intent to take it into rare skin diseases and when and for the oral program be your larger broader ionized type of indications rheumatoid arthritis, ulcerative colitis, Crohn's, etc. And our view is that assuming we're successful, we will have highly differentiated products and markets that have significant unmet needs. And will create the right profile for payers, as we advance these programs. I think similarly to what you mentioned around 114, there obviously is significant unmet needs still for atopic dermatitis.

We focus specifically on the mild-to-moderate area with 114. Most -- a lot of the work that's being done is in your moderate-to-severe area and we believe from a commercial perspective that it's more prudent to address the mild-to-moderate arena where there's not a lot of optionality, or other than steroids, or products that are relatively have minimal effectiveness. So we're encouraged certainly by our preclinical animal data that we shared earlier in this year. We're excited to get this program off the ground this Phase IIa.

We are a first-in-human study and assuming that the results of there -- if they're anywhere in the range of what we showed in our preclinical data, we think that will that could be highly beneficial obviously for patients and providers and for the payer arena. So that's our view on it and hopefully, that provides you some color and some context.

Patrick Dolezal -- LifeSci Capital -- Analyst

That's helpful. Thanks and I guess just one more. Perhaps if you could just provide details around the head of this forum and a filing your ticket for the likelihood of marketing approval and time frame. And any impact as it relates to the successful licensing or sale of the minocycline portfolio?

Mutya Harsch -- General Counsel and Chief Legal Officer

Hi. Hi. Good morning it's Mutya Harsch. So with respect to the Paragraph IV litigation, we obviously expected that there would be ANDA filings to AMZEEQ.

This is something that's not new to this therapeutic class in particular we knew that it was likely to come. We obviously can't comment on the specifics of the litigation, but we're well prepared to deal with this litigation. As we've filed an infringement action earlier this week. We have 12 patents listed in the Orange Book and have had experience dealing with Perrigo in the past with regard to the Finacea Foam Litigation that we worked with LEO Pharma.

With respect to the sale and the Paragraph IV litigation. I mean I don't think that any partner or potential partner would be surprised if there is a Paragraph IV litigation already outstanding. There is going to be a stay until December 2023. And we'll deal with it as the matter's progressed and obviously we have strong confidence in the strength of our patent and we're going to vigorously defend them.

Patrick Dolezal -- LifeSci Capital -- Analyst

Great. Thank you.

Mutya Harsch -- General Counsel and Chief Legal Officer

You're welcome.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Patrick.

Operator

The next question comes the line of Oren Livnat with H.C. Wainwright. Please proceed.

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

Hey. I don't mean to beat a dead horse, but I do want to follow up a little bit on David's questions regarding the decision to exit the commercial business. Can you just talk about your view of that landscape, evolution in general? If the pandemic was over, do you think we're still in a new normal and that it's just not really viable? It's realistic resources for a small company. One molecule to launch into the space now given [Inaudible]? It really just a question of scale and breadth of the portfolio or is a molecule-specific atopical or the acme space particular are uniquely challenging? And then, I do have some other pipeline question

Dave Domzalski -- President and Chief Executive Officer

Yes. Thanks, Oren. So I do not one to speculate, but the reality is that we've been in a pandemic for 18 months and we've had to deal with that. And I'll just reiterate again, it's challenging to launch a product for any company especially a company of our scale.

That we've demonstrated out of the gates the potential of AMZEEQ going all the way back to the first few months of 2020, but then the world changed. COVID changed then we've been wrestling with this ever since. As you recall, we had a period of four months or so where we basically shut down and try and pivoted to a digital process. That's tough for small companies, larger companies certainly have more resources.

We certainly again believe in the potential of the franchise, but when we balance the current environment in commercialization with the COVID and -- as I'm and challenged with the payer arena. Balance that with the opportunity we have to advance our pipeline. Ideally, you'd like to be able to do both, but for a company our scale we don't have that ability and we believe again that the opportunity to maximize shareholder value is to transition and focus our efforts on advancing our very unique and proprietary pipeline. We're obviously, excited about that.

Coming back again to just the overall environment. These are really good products. There's a really good franchise and patients have spoken very well of AMZEEQ and ZILXI as have providers. We've got a franchise we've got a Phase III ready asset with FCD105.

The results in the Phase II study were potentially best in class. But ultimately we can't predict the future. We've been dealing with this for over a year and a half or still, we all know right now what's going on in the environment and additional issues with the COVID variant. And I have no idea how long it's going to go.

But we believe that it was clearly the prudent responsible decision to make this change now because if it doesn't change or not ratably change we could be in a different situation. As we move into next year and so that's the rationale behind it. We believe again a partner that's got the appropriate resources and structure to maximize the potential of this and we look forward to having discussions.

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

Yeah. I don't doubt the -- I think it's pretty obvious from an optionality perspective, but there's a lot more exciting to take the latter strategy with the pipeline. It's another company's transition from commercial to a R&D and it's worked out pretty well. To that effect and that BETi platform you mentioned there's an exciting science there into in-vitro and preclinical.

Or all in-vitro that you're basing your decision on right now. Is there specific some topical I guess proof of concept in your mind with regard to this platform? I assume the oral targeting of these inflammatory pathways is not necessarily the same as the topical. Do you have a unique technology in mind to marry with this? Or is this just spread it and forget it so to speak and that should hopefully mimic what you're seeing in the test tube.

Iain Stuart -- Chief Scientific Officer

I like that Oren spread and forget it. Yes. There is. So as I said in my comments a little bit earlier it's one of Louise's questions.

The VYN201 is a pan-Bromodomain BET inhibitor. And I also mentioned the fact that Bromodomain one may potentially impact on the overall benefit-risk of the product. So we really dressing that three ways and this is what makes VYN201 quite unique. I wanted to give topical.

Obviously inherently there's the potential to reduce overall systemic exposure to these active ingredients. Two, we've actually programmed in a specific metabolic liability so that any drug that is systemically exposed is rapidly inactivated and cleared by the liver. So that obviously keeps a systemic exposure low. And the other one is to these fair remarks we're targeting neutrophilic dermatoses for the Retin-A indicated indication that these are potentially lethal disorders.

And we see great utility applications for that. So the three elements where we see the uniqueness of VYN201 is a topical. As I said we are aware of one other Bromodomain and terminal inhibitor that's been developed on topical psoriasis. But we believe and of course, ours would also be equally applicable to psoriasis as a more general dermatological indication.

We see the biggest need is in is pretty catastrophic neutrophilic dermatoses.

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

OK. Oh, and if I may on the other Paragraph IV situation, which I understand you can't comment that much. Can you just remind us, is there a draft guidance on that front for topical minocycline? Should we assume that any ANDA filer has to do actual clinical trials? And if they filed ANDA, should be assume they already did?

Mutya Harsch -- General Counsel and Chief Legal Officer

That's a good question. There is no product-specific guidance yet it's out there for topical minocycline. But if you look at the referenced other paragraph or product-specific guidance for a topical complex products like tenacious foam, they had to do a clinical trial.

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

Right. So I guess you can file it and hope it works out, but if that guidance comes out that you have to do a trial. That ends as pretty much a pretty square one, right?

Mutya Harsch -- General Counsel and Chief Legal Officer

I can't predict, but I think you're on the right track.

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

OK. Appreciate it. Thanks.

Dave Domzalski -- President and Chief Executive Officer

Thanks, Oren.

Iain Stuart -- Chief Scientific Officer

Thanks, Oren.

Operator

The next question comes from Balaji Prasad with Barclays. Please proceed.

Balaji Prasad -- Barclays Investment Bank -- Analyst

Hi. Good morning and thanks for the questions. Dave, hi. While I can understand the commercial challenges currently.

I wanted to understand the rationale behind these sales further especially with the Para IV against it. I'm trying to get your thoughts on how can such a commercial agreement of all with the risk of IP? And from your own perspective, would it have been better for you to mitigate this IP risk and then explore a sale? On the same extension of that question. Also want to understand the value of the tech platform, which also plans to sell with the Para IV against the lead asset generated from this platform. Lastly, wouldn't retaining the tech platform as you continue to build a newer derm pipeline made more sense, or do you see no synergies all with this platform now? Thanks.

Dave Domzalski -- President and Chief Executive Officer

Yeah. Thanks, Balaji. I'll take the last two and then I'll turn it to Mutya for your first one. In terms of platform, it's not just me.

Let's be very clear. The platform is our molecule stabilizing technology specific for minocycline. It is not specific to the rest of our portfolio of products. As we've talked about over the course of the last several years developing a topical tetracycline or topical minocycline is very unique.

We have upwards of nearly a dozen different foam platforms within our library. The only one that works is specifically this MST  platform for a minocycline franchise. It is as we talk about the past it's our oil-based or lipid-based foam technology, which is very specific. If you took to say these tetracyclines in this case minocycline and you try to use any one of our other platforms that we have it would not work it would degrade.

And so I just want to get be clear and subsequently taking other compounds and dropping it into that platform would be very difficult. So when I say that it's the franchise including the platform it's specific just to the minocycline product line that we have AMZEEQ, ZILXI, and FCD105, which all have minocycline. So, hopefully, that helps.

Balaji Prasad -- Barclays Investment Bank -- Analyst

Yeah.

Mutya Harsch -- General Counsel and Chief Legal Officer

Yeah. And with regard to the earlier questions and I think I'm understanding what you're asking. I mean we're obviously open to all different forms of deal structures whether it's a license or whether it's a sale. And with regard to sale or license while there's a Paragraph IV litigation outstanding I mean we've -- we know a number of deals that have occurred where there is a Paragraph IV litigation outstanding.

Obviously, the parties will need to factor that in with regard to what the deal terms might look like. There's certainly precedent for it for deals that have occurred with Paragraph IV outstanding. I don't actually think that that's going to be an issue as I mentioned before with regard to the strength of our litigation as folks get into due diligence on our patents. I think that they'll feel the same.

Furthermore, I think that as you know litigation Hatch-Waxman litigation can go on for a long period of time. The wait until the resolution of such a litigation would not be prudent for us. As we want to be able to progress our strategic -- that strategy as soon as we can. So again I don't think that it's going to be an issue and we've certainly seen other deals where there is P4 litigation outstanding in connection with the life or death.

Balaji Prasad -- Barclays Investment Bank -- Analyst

Thank you.

Mutya Harsch -- General Counsel and Chief Legal Officer

Sure.

Operator

And there would appear to be no further questions. I'll turn the call back over for any closing remarks

Dave Domzalski -- President and Chief Executive Officer

OK. Thank you, operator. Again, we cover a lot here today. It's a transformational time period for our company.

We've got a lot of work to do. We look forward to providing you an update on our progress in the coming months and next quarter. So thank you again for taking time out of your days and we look forward to speaking with you soon. Thanks.

Have a great rest of the week and a great weekend.

Mutya Harsch -- General Counsel and Chief Legal Officer

Thank you.

Operator

[Operator signoff]

Duration: 60 minutes

Call participants:

Chase Oswald -- Investor Relations Contact Officer

Dave Domzalski -- President and Chief Executive Officer

Tyler Zeronda -- Chief Financial Officer

Unknown speaker -- Cantor Fitzgerald -- Analyst

Iain Stuart -- Chief Scientific Officer

Ken Cacciatore -- Cowen and Company -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Patrick Dolezal -- LifeSci Capital -- Analyst

Mutya Harsch -- General Counsel and Chief Legal Officer

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

Balaji Prasad -- Barclays Investment Bank -- Analyst

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