Full Year 2020 Vyne Therapeutics Inc Earnings Call
Good morning, and welcome to the Vine Therapeutics conference call to discuss the fourth quarter and full year 2020 financial results and update at this time all participants are in a listen only mode. 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 at my side Advisors. Please go ahead.
Good morning, everyone and thank you. Thank you for joining us this morning.
Before we begin our formal remarks, let me remind you that some of the information in the press release issued this morning and on this conference call contains forward looking statements that involve risks uncertainties and assumptions that are difficult to predict including statements for accounts that observations regarding future financial and operating performance impacts from the COVID-19 pandemic on buying.
On observations regarding ongoing operating expenses and net revenue.
These statements will include observations associated with the commercialization of balance consultancy United States.
It also true plans and expectations regarding the success timing and cost of clinical trials, where.
Words that express and reflect optimism satisfaction with current progress prospects some 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 could differ materially from those contained in such statements.
Several factors that could contribute to such differences are described in detail on buying therapeutics filings with the SEC. These forward looking statements speak only as of the date on today's press release and conference call on it.
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 the call will include certain non-GAAP financial information for.
For additional disclosures regarding 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 on this morning's call are Dave Domzalski, President and Chief Executive Officer.
Andrew sake, Chief Financial Officer, Dr. Iain Stuart Chief Scientific Officer on my wildly 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 candidates <unk>.
One four.
His review includes a number of slides via the webcast on 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 Davis. Please go ahead.
Thank you Michael and good morning to everyone.
Past few months have been productive for buying 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.
I 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 or customer access issues globally.
As discussed on past calls, we have faced and continue to address these challenges head on.
Despite the headwinds we continue to progress trial on utilization of AMC and silk C driving market share in their respective markets of acne and rosacea.
Matt Wiley, our Chief commercial officer, who 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'll 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.
And just take our CFO will provide a financial update today for Ya.
Our third area of focus is to continue to build a diversified pipeline.
Brett CD, one O five which is on minutes cycling and Adapalene combination.
We held a successful end of phase two meeting with the FDA in November.
The meeting provided clear direction and guidance on the planned phase III clinical and pharmaceutical development for Hep C. D 105.
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 refer to as F. L X 102014.
It's a fixed combination of the Pan JAK inhibitor tofacitinib.
And this thing has seen one phosphate receptor modulator fingolimod and a true.
Optical 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.
It's topic dermatitis is 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 about the next one 2014.
Andy will walk you through the data and discuss the phase Iia program in a day that we plan to initiate in the third quarter of this year and from which we would anticipate generating topline results prior to year end.
2021 has been busy.
We executed new P. B M contracts for both <unk> and <unk> in mid January.
The completion of these agreements is consistent with our goals to achieve broad commercial coverage of AMC you can still see it gives us commercial access to an additional 20 to 25 million new lives.
Forensic we received FDA approval to include new information on the product label referencing the low propensity of P. Acne strains to develop resistance to minocycline, which is the active ingredient in EM Zeke.
This label update can provide further product differentiation for EM, Zeke, which would be useful to health care 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 in <unk>.
<unk> $34 3 million in 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 December 31, 2020, and projected cash flows from revenues.
And now expect to have sufficient cash to fund our operating expense and capital requirements through the end of 2022.
And finally, we executed a one for four reverse stock split on February 12th.
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 strategic and shareholders enter universe.
I will now turn the call over to Matt Wiley, who will give further insight regarding our progress on the commercial from Matt.
Thank you Dave.
Our sales team remains resilient and continues to perform well despite the pandemic related obstacles that exist in the marketplace.
M D prescription volume came in in the fourth quarter at 34000, new prescriptions and over 44000 total prescriptions.
Which represents a 26% and 35% gross over the third quarter respectively.
We continue to expand our reach in trial of M D.
With a number of unique prescribers on the empty exceeding 6700 through the fourth quarter, which represents a 20 per cent increase over the third quarter.
The day, we are now over 7100 unique prescribers of AMC.
Additionally, we've achieved 60% penetration among our target universe, whose productivity has risen to 30 prescriptions per physician launch 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 on prescriptions in these important offices.
We continue to be encouraged by our non personal promotion specifically on our ability to educate health care providers through our peer to peer speaker programs.
This platform is allowing us to quickly and efficiently communicate the recent information regarding antibiotic resistance that was added into the empty prescribing information.
Our online consumer activation efforts have also been fully deployed per M D.
Since early January.
With respect to market access for AMD, we now have all three major pbms under contract and are working to pull through the underlying plans with the most recent one now.
Turning to the don't see we are clearly seeing the impact of COVID-19 pandemic on the adult day launch.
You May recall, we launched silk C on October 'twenty 'twenty during the second widespread shutdowns.
The state level on physician office Covid related protocols have significantly impair it 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 the habits requires consistent field efforts and additional education.
Despite these headwinds we've generated over 6700, new prescriptions and over 7200 total prescriptions for zone since launch and prescriptions are gaining momentum month over month.
Approximately 6800 health care providers have prescribed <unk> since launch with approximately 70 to 80, new writers per week.
As with MZ healthcare providers have demonstrated keen interest in the zone peer to peer efforts and we continue to execute these programs with urgency during this COVID-19 impacted period educate prescribers on a product.
With respect to still keep payer access I'm pleased to share that our conversations with payers have gone faster than we initially anticipated.
We now have finalized contracts, but from the top three pbms and our focus on pull through execution similar to AMC.
I will now turn the call over to Andrew say to discuss our financials.
Thanks, Matt.
I'd like to start with a review of the balance sheet.
Our cash and investments as of December 31st 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.
$8 million of the T. M 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 you 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.
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 product sales for me on seasons, you'll see in point $2 million of royalty revenues.
GAAP net loss in Q4 was $23 2 million or 55 cents 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 nonrecurring asset disposal charges related to our completion of our restructuring activities. Our fourth quarter 2020, adjusted net loss was $18 million or <unk> 43 cents per share again on a post split basis.
Adjusted operating and operating expenses in Q4 were $27 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 on 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 III trials or E. One O five or potentially progressing at that next $1 14.
<unk> beyond the phase III trials this year, which is built into our current operating plan.
And we will provide more details regarding the phase III program on a few moments.
One note on our previously announced corporate restructuring.
Consistent with the overall cost reduction efforts, we significantly reduced our head count and facility footprint in Israel during 2020.
This caused us to take the aforementioned one time noncash charge of $2 $1 million from 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 did 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 <unk> $10 million of license revenue and $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 noncash 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 90 797 per share.
And finally to share count.
Reflecting the one true for four reverse stock split completed on February 12, our share count as of December 31st was approximately $43 2 million shares.
On a pro forma basis, including the registered direct an ATM.
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 Ian who will go through outside Max 114 program in some detail.
Thank you Andrew what I'd like to do over the next few minutes is talk about on new product candidate <unk>, One 2014, which will initially developing for the treatment of mild to moderate atopic dermatitis or a D.
I'll discuss the potential more of action from the product and review the proof of concept preclinical data we've generated.
Yeah.
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 progressive 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 there are substantial monetary burden from direct and indirect costs. So this patient population.
According to published estimates that on approximately 30 million people in the U S with a D.
Of these approximately 22 million are diagnosed on on treatment.
The roughly 19 million seats that have mild to moderate disease would be in our target market for <unk> one 2014.
According to Symphony Health data.
Over 7 million prescriptions written in 2019 alone for the treatment of a D.
Topical steroids on the mainstay for treatment of mild to moderate atopic dermatitis on them.
In 2019, approximately 2 million on nearly 30% of prescriptions.
If our formulations of triamcinolone Acetonide alone.
That I just can cause a variety of suicide effects, which you may know.
Andres, both dermal and systemic safety concerns, especially with long term use.
These may include rebounds, our rapid relapse upon steroid withdrawal.
As well as damaging impact on skin structure and function.
This is a particular concern on <unk> went up to a third of patients affected our children.
Topical products, we know currently in development for a day include Jack's piece.
<unk> four inhibitors.
Hydrocarbon receptor antagonist.
Primarily affect one component of disease.
And that is the reduction of inflammatory cytokine release from activating T cells in the skin.
However, it is well known that eight years, a multifactorial disease.
Which is the motivating factor behind our thesis for develop a combination therapy that.
That can be potentially address multiple aspects of the disease.
And if it makes one of 2014 as a fixed combination gel of two approved oral drugs Tofacitinib and fingolimod.
So for setting up as a pan JAK inhibitor, that's been shown to reduce inflammation in atopic dermatitis by inhibiting the release of th two mediated inflammatory cytokines.
Inflammation in the skin.
Besides the kind of negative impacts both skin body of integrity and function, which are key components of the disease.
And Golar mode is a sphingosine one phosphate receptor modulator that is thought to work by inhibiting the migration of inflammatory sales between the lymph nodes and skin.
The goal on what does this by Inactivating sphingosine, one phosphate receptors I have an important role in managing immune cell trafficking around the body.
In addition, there is evidenced that fingolimod can up regulate for ligand and as byproduct from natural moisturizing factor in skin, which are critical to maintaining skin hydration and restoring overall skin barrier function.
We believe <unk> has the potential to be the first topical combination JAK inhibitor product for the treatment of <unk> as well as the first topical products in clinical development.
Utilizing this thing is even one phosphate receptor on mode of action.
These data reflect on latest safety or efficacy preclinical study for <unk>, one 2014, which I think it 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.
Typically used to evaluate preclinical efficacy of investigational products in the treatment of a D.
The mice treated with a topical solution of Dinitrobenzene on <unk> over a 30 day 90 day period, which induces a type two inflammatory response from the skin with some of the pathology to AED.
On page 32 to 39, we then applied each treatment once daily and evaluated the efficacy using a modified atopic dermatitis index or <unk>.
Which is a composite measure of the severity of skin a FEMA.
<unk> erosion and join us appealing.
If you look at it on land plot you can see the offer line represents the control group, which received <unk> alone.
These animals clearly on Washington disease over a seven day treatment period.
We evaluated tofacitinib and Fingolimod monotherapy sales as well and these were also successful in independent living.
Amy <unk> scores.
The most profound reduction scores were observed in the two groups that received <unk> 114 combinations.
These combinations represent two different dose levels containing different concentrations of tofacitinib and fingolimod.
The magnitude of improvement is obvious here.
<unk> hundred 14 appears to have a rapid onset of action on.
<unk> seven there was on 89% reduction meti for 0.6% Tofacitinib, 0.01% single more dose relative to the DNC the control group.
Also of note.
Both fixed combinations have comparable efficacy to triamcinolone, 0.1% creep.
The safety results from this study are presented here on this slide.
We recorded changes on animal weight throughout the treatment period as change in weight is a common syndicate as a whole well on particular treatment is tolerated in preclinical studies.
You can see here that the body weight gains for both <unk> 114 groups continued to develop during treatment.
Comparable to both the NCB decorative control group and to help the control group. The only received the <unk> 114 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 the weight of treatment day, seven compared to <unk> hundred 14 lately as a result of steroids systemic effect on altering metabolic rate.
The clinical images here, particularly on day seven.
The difference outcomes for the three treatment groups.
The animal on the left was on the D&C the control group, where significant presence at our FEMA erosion and join us scaling are evident.
The mental image shows the <unk> hundred 14 combination with almost no evidence of regional skin.
In addition, good skin torn and structure.
Have been demonstrated at the end of treatment.
We see similar efficacy effect on <unk> with the triamcinolone treated animals.
However that is predominantly evidence of skin thinning, which is indicative of a deleterious impact the steroid has on skin.
We are pleased with the preclinical results net.
Next we plan to initiate a phase Iia proof of concept study in patients with mild to moderate.
That will evaluate a single fixed combination of <unk> hundred 14.
Our proposed design for the Phase Iia 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 <unk> hundred 14 gel to vehicle John.
We intend to roll 25 subjects.
Each subject will serve as their own control.
And Robyn criteria specifies that subjects must have two compatible target 80 lesions for treatment upon entry.
Participants will have <unk> 114 gel apply to one of these lesions and vehicle gel apply to the other by clinical site stuff in order to limit dosing errors and omissions.
The team on will be applied twice daily for four weeks in a double blinded initial phase on the study.
After completion of this phase.
Subjects will continue into a two week open label treatment phase and will then be able to apply to the active drug to both lesions.
We plan to initiate this study in Q3 after we have completed requisite IND, enabling non clinical safety work and anticipate reporting top line results before the end of this year. We look forward to provide further updates on our progress I will notice on the call back to Dave.
Thanks, Ian for providing an update on our exciting new product.
I believe the future is very bright for buying.
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 had been launched within the past year alone and <unk> and <unk>.
We have a phase III ready asset in <unk> hundred five and now a phase II ready asset and that that makes $1 14.
Our balance sheet is strong with cash expected through the end of 2022.
We are 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.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if he like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
In the interest of time, we ask that you each keep to one question.
Our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.
Hi, Good morning, everybody. This is carvey infill movies, a couple of questions from us on a 114. So in the preclinical studies did you observe.
Additive or synergistic pharmaceutical benefits when they pan JAK is added to a excellent PR modulator and also during preclinical how did your team arrived for the two combination dosages.
That is one more project based and the other is more evenly split.
Which doses are you going to be using in phase two thank you.
Hi, Corey.
Yes, we saw on additive benefit I think you can see that from the slide.
We did obviously the volume the Manav therapies.
Individually both performed well on the concentrations we have evaluated today and obviously when we added continent combination they both contribute meaningful additional efficacy to the overall in relation to the clinical doses. The study is still ongoing we still have additional data to collect and analyze on once we'll be in a better position then to determine what study.
Sorry, what concentration will be taking into the and to the phase Iia, but as you can see from the slide I mean, the 0.6% Tofacitinib at a point of view to 1% of Fingolimod again appears to be performing slightly better than the other dose.
What was your what was your other question I got Carver there was a middle one apologies.
Yeah. So I was just wondering your team has two combinations during preclinical one.
More more pet Jack and the other one is a little bit more equally split our members' 0.3 and then he.
0.3, plus point too if I remember correctly.
So why did you I know that the one that has a lot more.
Jack base.
We are conducting a series of experiments leading up to the one we presented today. So we've done significant dose finding both on top of a sudden and on Fingolimod. So the two combinations we're presenting today.
Sure.
We are a low dose tough said them affect on our high dose fingolimod on obviously vice versa. So it was done we've kind of focused on on those particular doses to date.
As I say once we've done we've completed the analysis of this study as I said, we have additional data to come that will be able to make a selection for the for the phase III study.
Got it alright Super helpful. Thank you so much.
Sure.
Thank you. Our next question comes from the line of David <unk> with Piper Sandler. Please proceed with your question.
Hey, thanks.
So on the <unk>.
The payer landscape for both N Z can and Jill can you just talk about the nature of utilization management to the extent, you're seeing that for both products and maybe delve into specifics on you know what kind of step throughs.
Patients are going through.
And the extent to which there on Earth.
And then secondly could you just provide a roadmap of sorts for how we should think about a net realized price for both products. This year with all the contracting.
That's now in place.
For both products.
So good morning, David This is Matt.
So the utilization management.
Here too the most recent major PGM 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 book back for a period of time they.
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.
So we've heard.
Pretty good feedback in fact.
Just got an E mail last night from one of our Representatives, who conducted a speaker program.
And he was asked specifically about the access for AMD and whether he felt that.
He was able to easily get product for patients and he said he has not experienced any major issues and for those that did have prior authorization. They are pretty easy to handle so we.
We feel pretty good about the overall strategy for our payer approach.
Idea of having broad access for our patients is paying off and we would expect debt as we are going through the remainder of the lots over the course of the month.
Net that will continue on.
On both brands.
Yeah. So David this is Andrew I'll take the second part of your question.
So we've indicated in the past that we think that the 200 to $250 after discount.
Net realizable value is what we expect in and nothing has changed on that.
As to the timing this was always around getting cut.
Coverage above net of commercial lives above 80%. So that we can get rid of are denied conversion cart.
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 still the goal.
Obviously, we announced that we signed the caremark contract early.
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% we need to give those time to come up on formulary right. So we always indicated that it was sort of a two to three months lag we're monitoring that assuming that happens in sort of the normal course.
<unk>, we should be able to get rid of the coupon card.
At least the denied conversion card by early April well that means is that you won't see a huge step up in Q1, right. So just to be clear.
You'll see that start to improve hopefully significantly in Q2, and then by mid year, we should be there right. We should be at our at our at our net realizable price of where what our target is a kind of between 202 hundred $50.
Yeah.
Answer your question David.
Yeah, No. That's true that's very helpful, particularly in terms of the cadence for the year. So thanks for that.
Sure.
Thank you. Our next question comes from the line of <unk> Prasad with Barclays. Please proceed with your question.
Hi, Good morning, Thanks, John questions. Just a question each on a one off I am totally.
What Oh, they'll say if I looked at your job.
Doug that you published a couple of days ago and spoke about dose of <unk> prescriptions in the first full year of four.
For launch drugs.
And if I triangulate that with where you are currently December on rate on double H, I still and with around 40 to 45 game prescriptions for the year. So how do I bridged the true.
And secondly on now one O five.
Can you help us understand if there's any variation in the in the molecule stabilizer technically have between and they zone.
105, and if there's any incremental differentiation on clinical benefit and.
Also why would it not cannibalize I'm, saying it seems to color both day nodular on non nodular version, so why would it not cannibalize on thank you.
Well, let me speak to the surrogates versus Matt Thanks for the questions.
So it's hard to do.
The surrogate from the first year, given the fact that we want to still generate pandemics surrogates. All are based on launches that did not launch type.
Type of environment.
So I would I would keep an eye more so on the outer years of what the peak potential of these brands.
Certainly the feedback.
We've gotten an in market research on don't see indicate that there is a clear unmet need.
A clear switching behavior between patients.
From a first therapeutic to something else or discontinuation altogether. So we know that that need in the market exists.
And we've heard that from our physicians as well so we would expect that as this market yields and as we get into a normal.
Ability to launch our products.
That the surrogates R R.
Good tool to help define what the potential is for a brand like <unk>.
Yes.
Hey, I'll just cover off on on the phase two yet.
<unk> 105 does utilize our MST technology, obviously, we're adjusting for different components and concentrations of the two API, but in relation to your question on on efficacy.
As you can see on our IR deck, we will show that approximately 36% of patients on our phase II study, where clear almost clear thats class, leading potential there with respect to efficacy, but as you know there's two sides to that coin is not just about efficacy its about safety as well.
As you know after it makes 105 contains a retinoid adapalene at the prescription strength of 0.3% on we can see in our data that that's particularly well tolerated and skin, particularly important to support compliance to therapy, and obviously ultimately clinical outcomes.
How it compares to Ams Zeke again, you can see on our IR deck, we actually had a mono arm of 3% minocycline and our MST technology, that's actually quite a good surrogate for <unk>, which is 4% minocycline and David we had approximately 30% treatment success. So you suddenly see an additional benefit of adding adapalene and there.
I know you showed nice consistency between the 3% arm Zika sales.
Yes. This is Dave.
Our objective obviously is to continuing to continue to develop new and improved products and and that's our ambition from Rhapsody a 105.
We obviously are combining what's viewed as the gold standard for inflammatory acne.
Which is net of cyclone and spin the gold standard and was the driver behind <unk> and we know Adapalene is one of the if not the most widely used retinoid and very effective for comment auto acne.
As Ian alluded to.
These these retinoid retinoid combination products, often have which include benzoyl peroxide could be quite irritating to the skin.
When you take a look at our our technology our MSA.
Molecule stabilizing technology, our thesis has always been.
Yes.
Could our chassis that we have for our our product could it help.
Mitigate some of the cutaneous adverse events that you see with these retinoid based products.
In our phase II study. It certainly appears that that may be the case, so we've seen substantial efficacy and we've seen very strong.
Safety profile very low cutaneous adverse events.
And when we just compare versus let it just in literature comparison.
Quite profound so obviously, we need to take this into the pivotal program, which we anticipate doing later this year.
Assuming we get results anywhere on the same general.
Arena that we've seen in phase II.
As Ian outlined we think it could be a best in class products.
We've done a fair amount of market research I'll turn on some comment on.
But we think that this product could be the biggest.
The three that we have some in the tetracycline class between <unk> and FCB 105.
The initial feedback that we're getting in the market researches that.
This is clearly additive.
Not so much a cannibalization.
For sure there is obviously going to be some cannibalization anytime that you launched a new product but.
It seems to be much more additive in terms of the potential for the brand. So I will turn it to Matt for some additional color on that yes. So a couple of things about this market research. So visit demand study with one hundreds of physicians, we do a pre and post of utilization and we look at impact based on a product profile from 105, and others that may be entering the market.
We've found in this study.
Net FTE 105, we never disclose what our peak share was in previous studies for <unk>, one on one or AMC, but I can tell you that the implied share.
<unk> 105 is about double what we saw on the <unk> study.
It is really encouraging.
The other thing Thats encouraging out of this study is that.
Clearly you want to understand what the impact is to your in line brand and so what is the cannibalization opportunity.
On <unk>, what what is that ultimately going to be a peak.
When this enters the market.
And what we found in the studies that the cannibalization of AMC is going to be less than 20%.
Now again this is in a vacuum with product profiles.
But we're encouraged by that because we feel that AMD is oftentimes either used alone or in combination that spoke to the patient.
AMC will still offer that opportunity for clinicians to treat their patients the way that they want to but SCD 105 offers new patients that come into the practice or others that are unsatisfied.
Clearly beneficial alternatives.
Thank you very helpful.
We've got a philosophy.
Yes.
Thank you. Our next question comes from the line of Patrick Dolezal with lifestyle capital. Please proceed with your question.
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 need moderate to severe market.
Blockbuster opportunity.
Rather rapid fashion in the mild to moderate market has lagged a little bit. Despite some some really great potential. There can you just help us think about some of the relevant factors at play here and maybe provide any general sense from a successful therapy might look like.
The mild to moderate setting.
And perhaps speak to why you ultimately chose to pursue this topical therapy in mild to moderate thank you.
Sure I'll offer a day of again offer a few.
Comments upfront net turnover to Ann but no ads.
In outlining its initial commentary.
Commentary.
On a moderate space is a big space right. So there's 22 million patients treated for atopic dermatitis in the U S and around $19 million of that $22 million or mild or moderate so we know a lot of the.
The R&D a lot of work in recent times has been around moderate to severe.
Ah patients, but obviously the big opportunity in terms of patient volume to be addresses in the mild to moderate category.
And thinking through.
As we were developing this product what what are the needs for patients and treat a disease as Ian outlined it's a it's a multifactorial disease and <unk>.
Our belief is that the best way to address the multifactorial disease is to have a multi modal products.
Hence why we developed <unk> 2014, which combines the pan JAK tofacitinib with the sphingosine one fingolimod.
I think there's two.
Outline is clear different modes of action.
That can help address the the condition and I think a key component is the potential for this product to improve skin barrier function.
Which is which is a key lever we believe from patients that have atopic dermatitis, especially when you're dealing with such a large number of patients being in the pediatric range. So.
Yes.
The thesis behind us.
So far we're again, we're very encouraged with with the preclinical data that we've just.
<unk> earlier this morning.
Quite encouraged by we are eager to get into a phase Iia study later this year with with the aim to have the topline read out before the end of the year, So sorry to Ian for any additional thoughts or color around it I think Patrick you kind of hit the nail on the head the mortgages of aerospace is a very busy space on development a lot of high volume.
Some developments such as biologics as Dave covered off on.
Should the biggest unmet need is in the mild commodity space.
Steroids.
Work on behalf of specific challenges and therefore, we still see a huge unmet need there on a mild to moderate sales are up to 19 million patients in the U S.
Our net in that category that are using steroids on and off that will have to be managed long term, we see this as a potential replacement for steroids.
Also on the mild moderate severe category, you'll also see a lot of companion drug use with steroids as well such as the percent on other products aren't coming through tend to do on studies.
Steroids are used items on a run on fees on a concomitantly used to get control of players again, we can also see opportunities from that if it makes 114 net as well.
Okay.
Yes.
Thank you. Our next question comes from the line of our inland that with H C. Wainwright. Please proceed with your question.
Hi, I have a few I just.
To go back to the commercial business.
You highlighted in <unk> that there is a lot of evidence of drug switching which makes a lot of sense. Because this is a chronic condition I am trying to get your sense on how <unk> 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 are it does it have to be failures on other therapies or are you just hoping that docs have enough experience and an in patient profiling and they know this isn't it isn't going to be a good candidate for X y and Z existing therapies I want to start them on.
On an zeke and I'm willing to do.
Go through the hassle of Tas to get there.
Yes, so it's a great question.
I can speak to the.
The avenues by which <unk> 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 been specifically the ESI contract.
We are on the national preferred formulary. So those patients can easily get to AMD out of the gate.
Roughly half of our prescriptions are coming from those that are stepping through something else that we're having.
Net sales something else and what otherwise satisfies step therapy.
Prior authorization.
And look the as almond share shifting.
Between AMC and others in the category we are seeing.
Additive.
Opportunity. So for instance, if patients on a retinoid in.
They need additional.
Sure.
Paul therapeutic advantages of AMC, then we'd see empty added to those types of drugs.
We see a lot more switching between oral antibiotics and AMC.
And I think that's an important point to make as well.
So it both ways and.
I am pleased with the way that worked 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 as the amount of switching patients over time, so that seems to have some some durability and I think it also speaks to the point you made.
On some dissatisfaction in the market, especially as it relates to ROI antibiotics.
Alright, Thank you and just regarding <unk> script trends.
Things have obviously you know just you've had a lot of weather and other factors I'm sure and late in the year on into January and February but I'm just wondering.
Big picture can you remind us what sort of seasonality is there any perspective, acne and rosacea spaces, both from a actual season weather perspective, but.
Also the typical new year insurance resetting factor.
I guess, how much should we be adjusting in our minds. The earlier script volume, we're seeing now for a normalized run rate.
Yes.
I think you talked about seasonality of deductibles and out of pocket.
So on the actual seasonality I guess, maybe on Earth day, yes.
Yes, so we definitely see the deductible seasonality in both markets.
Fairly pronounced acne.
And usually you start to see.
Emerging from that.
The March April timeframe, so we would expect.
Over time as it relates to disease day seasonality, we do see very clear seasonal patterns in rosacea.
In how those patients search.
Symptoms online and also what we see in diagnosis rates. So we see this diagnosis authorization patients start to increase in late March.
May June is typically when the weather changes that's when the symptoms become more pronounced and our patients.
So work on.
The.
Tip of that happening now and we would.
Two to three months to see.
<unk>.
And by the way, we do take advantage of that as we think about our consumer paid search.
Buying in advertising for rosacea, we typically breast that into those.
Months, so ramping up those efforts now as well.
Yeah, I would say to theirs.
There's a bit of a bolus of.
Ah patients going into dermatology offices, <unk> Zeke for acne treatment as you.
Moving to the end of the summer and at the beginning of the fall, which coincides obviously with kids going back to school, we didn't see that that's 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 debt.
The modeling suggest that and I think between the inherent seasonality of that Matt was outlining for rosacea and what we would anticipate to be.
Kids getting back to school on getting back into the classrooms in the high school and college settings as we move through the summer months are a fall that's at all aligned quite nicely with ads Andrew's outline that as we've talked about starting to get to that.
Oh.
More appropriate realized net price per prescription, which we should start seeing that as we move into the call. It the midpoint of this year like all of that really really works nicely with us if we're seeing the type of price per per Rx that we anticipate in that two to 250 range and we are in kind of call. It a steady state by the time, we move into the mid year beginning of the third.
Third quarter, again that ticks and ties quite nicely with.
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 the beginning of the fall months.
Alright, I appreciate the help thanks.
It on.
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.
Hi, Thanks.
David could you just comment on where you see out of pocket costs for <unk>.
Once all of the major Pbms and the coupons come out.
What is the normalized out of pocket costs on a base for both of your products, let's say by the time, we get to around May June.
Yes.
Yeah sure Tim let's.
I'd say, probably on average out of pocket cost is somewhere around the $50 range.
Yes, probably capped at about 75, which is what we have for our coupon program, but.
If you just think through.
A tier three formulary status, what's a an average out of pocket cost is going to be somewhere around that $50 range and again, we are we have a coupon program.
We will continue to have it in place that.
The patient would pay $35 and so if an out of pocket was was 50 for that particular patient and they have de leveraged the coupon that we have.
They pay 35, we'd pay the difference you had a $15.
That based on all the research we've done.
Good number.
That mitigates abandonment of prescriptions, Matt and the team has done a lot of research on it we've not put a lot of thought into this it goes what are our total strategy on on payer access and reimbursement, but generally speaking patients that have insurance coverage a out of pocket.
Tier three formulary, because there's just going to put you at around a $50 co pay.
Okay, Great and maybe just one follow up.
Obviously, COVID-19 jevan and impact on on <unk>, but just in terms of.
The typical patient.
What is the typical patient that's getting in <unk> is it mostly.
Yeah.
Middle aged women or more at a lessons that are getting <unk> at this point and I am sort of wondering if.
The age gender vacation will change some once we get to the other side of the pandemic.
Yeah. So so.
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 as debt. The majority of the patients diagnosed from between ages 12 and 24.
What we see with <unk> as well, we see a 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 age range for AMC prescriptions is typically in that 10 to 20 year old range with some falling outside of that what we would expect.
It's kind of falling in line with what we saw initially with diagnosed patients. So we would expect that to continue.
Yes, Tim I think one thing that Shouldnt get lost and it's probably a good way to.
Kind of wrap up the call here unless you have other questions as well.
So for last year, despite all the headwinds despite all the challenges with Covid, which we've all talked about many times over as we generated over 100000 prescriptions Ramsey over 100000, despite all the challenges. Despite the fact that our sales force was basically shut down for about four months.
We had the first quarter of the launch of <unk>, which we were last year, which we were quite thrilled with the uptake for the brand and then as we all know we're all on shutdown mode locked down sales force was locked out for about four months and then ratably starting to see things bounce back through the summer and into the fall.
By the end of the year again, we generate over 100000 prescriptions for <unk>, which is which is no small accomplishment.
So we're certainly very encouraged by the potential for this brand and four zone. We're just getting started we haven't even had that chance of having unfettered access we at least got a quarter of that last year for Ramsey.
We haven't even had that opportunity GAAP results. So we're quite bullish about the potential for both these brands I think in terms of the age age range that you are asking regarding <unk>, yes.
It's in that.
Our early teens.
Auto out all of our older adolescents through teen since early twenties said, if we've often said is obviously picks up where AMC equally.
Leaves off.
Prevalence for <unk> is that 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 has been excellent for <unk>.
It's just a function of us being able to get access to physicians communicate.
On the features and benefits of the product let them try those out of that we've been able to get access to those that have been educated on silk C. That have tried the product. The response has been really really good. So we're certainly encouraged by all the underlying metrics.
We're certainly encouraged by what's happening on a on a broader basis globally.
Vaccinations continuing to to increase and yes, we are certain certainly.
This is <unk>.
The markets in your offices will begin to open and continue to open up as we move through the spring and into the summer months and that should get to that steady state hopefully by midyear or so.
Okay, great. Thanks, David.
Got it.
Thank you ladies and gentlemen. This concludes our question and answer session I will turn the floor back to Mr. John Suski for any final comments.
Operator, and thanks to everyone who participated on the call today, we're obviously very excited about.
How our business has continued to progress the prospects for our in line products and Zika and silk C as well as our pipeline of products, including <unk> 105 in <unk> 2014, we look forward to providing you further updates as we move and progress through the upcoming quarters, thanks be well and stay safe and we look forward to talking with you soon.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.