Q1 2021 Vyne Therapeutics Inc Earnings Call

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Welcome to the Vine therapeutic conference call to discuss the first quarter of 2021 financial results went up to.

This time, all participants aren't on with Gnome mode. Following the companies formal remarks, we will open the call for your question. Please goodbyes with this call is being recorded at the company's request I will now turn on the call over to Michael Wood at like sci-fi. There's please go ahead.

Good morning, and thank you for joining us before we begin formal remarks.

Yeah, but some of the information in the press release issued this morning and on this conference call contains forward looking statements that involve risks uncertainties of assumptions that are difficult to predict including statements forecasts, but observations regarding future financial operating performance impacts of the COVID-19 pandemic on vine and observations regarding ongoing operating X.

Fences, a net revenue.

These statements acute observations associated with the commercialization of Amnesty you can still see in the United States. They will also includes plans and expectations regarding the success timing and cost of clinical trials, where is it expected reflect optimism satisfaction with current progress prospects, our projections as well as words such as believe in.

And expect plan anticipate on similar variations identify forward looking statements, but their absence does not mean that a statement is on forward looking such forward looking statements are not a guarantee of performance on the company's actual results could differ materially from those contained in such statements.

Several factors that could cause or contribute to such differences are described in detail inviting therapeutic filings with the SEC. These.

These forward looking statements speak only as the date of today's press release in conference call on the company undertake no obligation to publicly updates any forward looking statements are supplied new information regarding the circumstances. After the date of this call.

In addition to the financial portion of the call went to certain non-GAAP financial information for additional disclosure. It's already to these on got financial measures, including a reconciliation to the most directly comparable gap measures. Please see today's press release, which is posted on the Investor Relations section of the company's web site.

Doctor modulator.

And a topical gel that is being developed for the treatment of mild to moderate atopic dermatitis.

Preparation activities for our upcoming phase two ways study are ongoing and we plan to initiate this study in the third quarter and anticipate topline results before the end of this year.

F C D. One O five which is our minutes cycling and Adapalene combination product candidate for the treatment of moderate to severe acne.

Is now phase III ready.

We continue to be prudent as to when we would commence a phase III program for F. C D. One O five.

This will largely hinge on our results of operations and market conditions, which depend on numerous factors, including the impact of the COVID-19 pandemic recent payer formulary decisions and our ability to successfully enrolled patients that phase III studies.

With our focus efforts on the introduction of Ams Zeke for the treatment of acting as well as our recent launch of <unk> four rosacea on.

Prioritization of resources should remain on these two assets within our acne Rosace a franchise and so we believe the environment is optimal to progressive phase III studies for our next product and acne F. C D. One o'clock.

As we brought on our pipeline beyond Acme amortization advancing FM X 114 into the clinic next quarter is both an important strategic step for our company and also a judicious deployment of our R&D resources.

Let me review the highlights for the quarter.

Beginning with that the next 114.

We created this investigational combination product to address the multifactorial nature of atopic dermatitis and to target both the source and cause of information.

Sydney reduces inflammation by inhibiting cytokine release from inflammatory cells and Fingolimod inhibits the migration of inflammatory cells as.

As well as potentially supporting skin barrier recovery, an important factor for patients afflicted with this inflammatory skin disorder.

On our year end 2020 call on March Dr. Ian Stuart presented compelling preclinical proof of concept data or FM X 114.

We now plans to initiate a phase two a proof of concept study in this third quarter coming up and anticipate topline results prior to the end of this year.

A topic dermatitis represents a large market opportunity with an estimated 30 million patients diagnosed in the U S.

These $22 million a classified as mild to moderate.

And are on treatment topical steroids account for eight out of 10 of the most prescribed products, but associated with negative effects on the endocrine system and skin structure when used for a prolonged period of time.

So there clearly is a need for an alternative that can address the underlying disease pathogenesis and most importantly is safe enough per patient to apply chronically.

We look forward to providing further updates on FM X 114, this year as a product advances.

Regarding our commercial business, we generated revenue of $4.1 million on the first quarter of 2021 compared to $1.8 million in the first quarter of 2020.

We now have further clarity on market access and now anticipate antique and silk C market access to be in the range of 70% to 75% of commercial lives for the balance of this year as Matt why we will discuss further.

We also ended the quarter with $124 million in cash.

I will now turn the call over to Matt Wylie, who will talk about our progress on the commercial from Matt.

Thanks, Dave.

Our sales team continues to perform well despite the pandemic related obstacles that exists in the marketplace.

The team began the year with roughly 35% to 40% access to target physicians live.

Which is advanced to 60% today and continues to improve.

AMC prescription volume in the first quarter came in over 34000, new prescriptions and over 44000 total prescriptions.

While this represents modest growth over queue for.

We're very encouraged when comparing this to key market competitors, which declined more than 10% quarter over quarter.

We continue to expand our reach in trial Vanbeek with the number of prescribers of AMV, reaching nearly 5200 in the first quarter, representing a six 4% increase over Q4.

To date, nearly 8000 healthcare prescribers have prescribed AMC.

Additionally, we have penetrated 63% of our target universe, resulting in a prescription being dispensed and their productivity has risen to 21 prescriptions per physician launched a day.

We are pleased with the progress we have made over the course of the year and expect to see continued increase in productivity due to the high volume of patients and prescriptions and these important offices.

It appear on efforts.

And we continue to execute these programs both live and virtually in 2021.

Since the beginning of the year, we have educated nearly 1100 health care providers in our <unk> speaker events and plan to accelerate the pace as we go back to face to face dialogue.

With respect to market access for both products as a result of Cvs Caremark decision not to cover these products and other new branded comparator drugs on its national formulary for 2021, we now anticipate having 70% to 75% of commercial lives covered in the near term and are continuing to focus on pull through efforts with underlying customer.

John.

Looking ahead, the commercial organization is focused on driving patient demand accelerating volume as the market conditions improve.

And continuing to focus on targeted physician penetration and adoption.

We believe all of these efforts will have both near term and long term positive impact on our business as we emerge from the pandemic conditions.

Now I'll turn the call over to Andrew stake.

Thanks, Matt.

Beginning with our balance sheet, our cash position as of March 31 was $124 million.

Which we believe provides cash runway for at least the next 12 months.

We continue to remain focused on cost control and resource prioritization to that and cash used in operating activities. During Q1 was $12 6 million.

Turning to the income statement revenues were $4 1 million for Q1, consisting of $3 $9 million of product sales for <unk> and <unk> $2 million of royalty revenue.

Our Q1 2021, GAAP net loss was $26 million or <unk> 42 per share. This compares to $40 2 million or $3 79 per share from the comparable period in 2020.

Included in the Q1 2021, GAAP net loss for $2 4 million of noncash stock based compensation expense. When we exclude this noncash expense. Our Q1 2021, adjusted net loss was $18.01 million or <unk> 37 per share.

Adjusted operating expenses in Q1 were $25 million, including.

Adjusted SG&A expenses of $14 6 million and adjusted R&D expenses of $5 $9 million.

As we continue to focus on cost control, we believe that operating costs at the level of $20 million to $25 million per quarter, which is what we saw in Q4 2020 in Q1 2021 are sustainable into the future.

These include expenses required to get to the next one.

<unk> hundred 14 phase Iia readout anticipated later this year.

They do not however include incremental cost that would be required for a phase III trials for <unk> hundred five.

Finally, our share count as of March 31 was approximately $51 4 million shares.

For further details on our financials. Please refer to our form 10-Q for the quarter ended March 31, 2021 on filed with the SEC.

Now, let me turn the call back over to Dave for closing comments.

Thanks, Andrew.

We continue to remain laser focused on our key objectives of driving sales for our two launched brands <unk> and executing against our commercial strategy prudently.

Prudently managing our resources and maximizing our operational leverage and building a more diverse pipeline to address unmet needs for patients and providers.

We are encouraged by the progress made across these fronts as we build our business and create long term value for our shareholders.

I will now turn on the call over to the operator and open the call for questions. Thanks.

Thank you.

I'd like to register a question currently press the one followed by the four on your telephone you will hear a threshold from to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press the one followed by the strength.

Again, if you would like to register a question. Please press the one followed by the four on your telephone keypad and just a moment for the first question.

Our first question comes from the line of David <unk> with Piper Sandler. Please proceed with your question.

Hey can you guys hear me.

Yes, we can David debt, Okay, sorry is the operators kind of got it okay. So it is true.

But it's about.

How are you thinking about gross to net.

Over time.

Number one and particularly in the context of your commentary.

On the payer landscape and.

More interested on how you're thinking about steady state gross to net for.

Both.

<unk>.

And then I have a follow up thanks.

Yeah sure David This is Andrew I'll take it.

So look.

Tun has changed since last quarter.

We still believe that commercially covered lives are going to be on that net 200 to $250 per script range.

What's changed is with caremark not putting the national.

Giving us international formulary access to it we're going to keep some synthetic access available to patients.

As a result.

The overall net is going to be lower than that right. Obviously, because we're going to have some prescriptions coming in.

With the cash pay option, we don't know exactly what the percentage is going to be so we're not going to sort of reissue guidance on that but what we can say is this is a hopefully a moderate change right. So we had been expecting between 80% and 85% coverage, we're kind of in that 70% to 75% of commercial lives.

But we just don't know what the utilization is going to be going forward. Because we are going to change the synthetic access program right now, it's $75 thats going to change.

But without knowing exactly what the utilization is going to be we're going on we're going to wait and give guidance in the future. When we have more certainty I don't know David if you want to add anything to that.

You captured it.

Andrew I think the key thing too David is this is a relatively recent.

Situation with Cvs Caremark National formulary, as we said before.

We have access our patients have access to our products on a on a custom plans.

So we're just coming out of the pandemic, Matt talked about it.

If you think through the end of last year and the early parts by the beginning of this year access in the field for Representatives get to physicians was 30% to 40% its not about 60%.

Not at a 100% yet and so as we continue to and despite that we continue to see improvement in our business and growth on our prescriptions. So yes, we want to be smart about managing obviously, the the gross to net and the net price per prescription, but also be mindful of access for patients.

<unk>.

Our products so as Andrew outlined we'll keep some form of this co pay card in place at least for the time being until we get a chance to see exactly the impact from caremark National formulary decision.

John.

Okay. That's that's helpful is there a point I guess with any of these plans down the road.

Were you just look at your rebates in the gross to net that you just say, it's just not worth it.

Arms of being in a contracted position because you're certainly not the only one with these with these high gross to net.

And we're seeing it in a lot of areas and a lot of products I should say so how do you think about that philosophically.

Yes.

We believe obviously, it's important to have partnership relationships with payers.

You said it well, it's a balance between.

Access and the right the right the right net price per prescription on gross to net.

Decisions to be made we again this is all early so our plan.

We were preparing to launch these products has always been to.

Partner with the payers make sure that patients have access to physicians have access now all that being said we're constantly looking at.

On the other ways.

A distribution perspective too.

<unk>. So we don't we don't just operated vacuum we think through all of these optionality.

<unk>.

Clearly.

Scenarios that we're considering for the time being again, we want to we want to stay focused on debt.

Everything we cannot get access to physicians continue to drive awareness utilization for our products again, we're only a couple months into the launch of <unk>.

We've yet to have complete open access for the launch of <unk>. The first three months of the launch last year. So we want to continue to do that while we're talking and negotiating with the payers.

Okay. Thanks, Dave.

Got it.

Okay.

Our next question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Hi, Good morning, everyone. Just is carvey haynesville it needs a couple of questions from us.

So given the book, where he was the U S population has already been vaccinated, how should we think about any seasonality in the sales for the rest of 2000 from day. One. It also there's been a lot of innovations in the space, including technology side.

Page laser other topical treatments on the pipeline how should we think about the outlook.

Space and how are you.

Or at least and try to position itself in the future.

Thank you so much.

Okay.

So carbon can you repeat the first one again sorry.

Yes, so give them roughly one third of U S population, that's been vaccinated, how should we think about any seasonality in sales sort of rest of 2021.

Yep.

Yes, no great I got it out so where we are.

We see an opportunity clearly is on assuming that offices continue to open and we continue to see improvements in access, which we're anticipating that to be the case.

There is.

There are some we anticipate a bolus of patients coming back call. It end of summer beginning of the fall.

We did not see that last year because of the shutdown.

And so we're encouraged by.

What we are seeing more and more people are getting vaccinated.

Warmer months are happening here, even if you take a look at our prescription trends last year. Despite a much more onerous shutdowns. When you look at the months of June July August and into September we saw steady growth, 20% compounded growth month over month.

We anticipate seeing this type of opening.

As we again move out of the first quarter in front of me into the second and third quarters, we anticipate seeing that similar type of openness and hopefully we will see that the type of.

Influx of patients into the dermatology offices in the months of August and September as patient as kids are getting ready to go back to school I think for the amortization marketplace, you'll see some of the seasonality right around now starts right around now through the next quarter and we believe that the work we're doing.

The efforts of our sales force is it puts us in a good position to take advantage of that.

Rick.

On to take the second question sure So does Matt.

Regarding the acne space evolution I mean, there are two new players that will presumably come into the market. This year when levy from Cassiopeia in 'twenty, one from Sol gel.

They're interesting products, but one of the things that we count on here first of all we have a once a day product second of all.

Antibiotics have been a mainstay in the acne space for a long time and tetracyclines clearly are effective.

And <unk> sold a lot of the safety issues with those legacy products. So we.

We feel pretty good about where we're positioned in the market. We have a very strong position in the market and we believe that even as these new entrants come into the acne space, we're well positioned to continue to grow in share.

Got it great. Thank you so much everyone.

Alright.

Our next question comes from the line of Oren <unk> with H C. Wainwright. Please proceed with your question.

Thanks, I have a couple if I could just return to the.

Patient access programs it sounds like Youre still modeling this out and trying to figure out.

What exactly what levers you can push and pull.

Can you just talk a little bit about what that process is like how long do you need to trial.

Different options before we might have.

I guess, an optimal solution going forward.

And to what extent already are you pushing through prior ops, where you guys arent covered either from the doctor or it would help the specialty pharmacy channel such that you are incentivizing payers to return to the table.

Sure. So this is Matt again, let me let me talk about the synthetic access program. First this is one that we have to balance the out of pocket costs on abandonment rates.

And so thats something that were.

Analyzing very carefully and as we make the changes we're going to.

Like an equalizer, we will we will balance these things very.

Very carefully to make sure that we don't offset.

Volume.

The out of pocket.

No.

Evolution.

So thats.

Let me.

Can you just repeat the second part of the question I apologize.

Second part of my first question.

Is it just it is prior off actually.

Obviously, that's an important variable in and bringing managed care to the table for you and everybody else and I'm, just wondering to what extent, you've you've got doctors or the specialty pharmacy, helping to successfully push through prior offs already.

Yeah. So we've seen pretty good prior authorization adjudication roughly half of our covered lives have some form of utilization management. Some of that is electronically adjudicated step therapy.

So there is going to be that electronic look back through through EMR.

On the rest is going to be through prior authorizations. The good news is that by.

By partnering with our specialty pharmacy network, we're roughly 50% of our.

Trade goes through they are really skilled at helping physicians navigate prior authorizations and so we have really good adjudication, where the criteria is met now where the criteria is not that obviously the prior authorizations would not go through but we've seen really good.

SaaS.

With our prior authorization thus far.

Yes, I would say what shouldn't be lost in any of these discussions on that when we take a look at both the act amortization category yes.

Or why is the tretinoin, there's really only two franchises that have been growing business, which is.

Which is ours and in the active space.

One other product of Cleveland and amortization space.

Modest moving from Rofin.

So we're out there.

Making getting access to customers and continuing to improve that in the.

The initiatives that we have out there, including the peer to peer selling efforts that Matt had talked about.

Are paying off for us and we were certainly anticipating improved access.

And I continue to drive prescriptions for both these products as we move to the following quarters.

And if I may just how material is this label change for antibiotic resistance Kim kind of late in the game.

Is that something that you expect to be able to leverage both or either or and.

The field or even more importantly from managed care that might've been resistant to a cover you know should be less resistant no pun intended.

Yeah, We think it's a we think it's very important.

Part of the reason, we developed a product like <unk> is to address the concerns from health care providers and the broader clinical environments around better antibiotic stewardship.

And we've got data to support that there is a very low propensity for.

Here, three or better co pay scenario.

We will continue that part of the program.

On the the other side, where patients don't have coverage, where there is an NBC block we are making some alterations to that program for AMC.

Brazil see it's still $75 out of pocket as this is a.

We're still on launch motive is healthy and.

And certainly we'll make adjustments, where we reserve the right to make adjustments to that program in the future, but that will stay as is so.

So we're going to continue these programs in light of the Cvs Caremark decision.

And we will make adjustments as needed overtime to balance out profitability.

Patient access.

Great. Thanks, and then I guess, one more if I may could you just provide some qualitative feedback on the reception that providers are having <unk> just curious how doctor Emily implementing this product into their existing treatment paradigm throws Asia.

Yeah. So so far the feedback that we've gotten from physicians has been very positive.

Physicians of either introduced the product in concert with other therapeutic regimens there comfortable with others are implementing as monotherapy and we're seeing.

Good feedback early on from those physicians and so.

It's still early I mean, we have 11000 prescriptions, so far but everything that we are hearing back is good and one of the positive things to keep in mind here is that the refill right on Bill C.

Is is.

Is good and growing even though it's early.

And that is a testament to the fact that these patients are getting relief.

Operated on our questions.

As a reminder, if you wish to ask a question kindly press. The one followed by the four on your telephone keypad.

Our next question is a follow up question from the line of Orange <unk> with a T. Wait time from please proceed with your question.

Sorry to make you stay here longer just probably more on it.

Increased patient volume and seeking treatment for rosacea itself. We've got our efforts deployed not just a direct feel that birds from representatives to offices as they continue to open but we're trying to supplement that through.

A large number of peer to peer events, which again will be ongoing for the next several months.

Alright I appreciate it.

Got it.

And we are showing no further questions on the audio lines at this time I will turn the conference back over to you.

Thank you operator, and thanks to everyone that joined on the call today are too.

Two and for the thoughtful questions. We look forward to continuing to provide you updates as we progress our business I wish everybody a great rest of the week and look forward to speak with you soon take care. Thank you.

This does conclude today's conference call. We thank you for your participation and ask that you kindly disconnect. Your lines have a good day everyone.

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