Foamix Pharmaceuticals, Ltd. (NASDAQ:FOMX)
Q2 2016 Earnings Conference Call
August 10, 2016, 08:30 AM ET
Michael Wood - Managing Director, LifeSci Advisors
Dov Tamarkin - Chief Executive Officer
David Domzalski - President, US Subsidiary
Ilan Hadar - Chief Financial Officer
Tyler Van Buren - Cowen and Company
Morgan Williams - Barclays Capital
Louise Chen - Guggenheim Securities
Good day and welcome to the Foamix Pharmaceuticals Second Quarter 2016 Earnings Call. Today’s conference is being recorded. At this time, I would now like to turn the conference over to Mr. Michael Wood of LifeSci Advisors. Please go ahead.
Thank you, operator. Good morning and thank you all for participating in today’s conference call. Earlier today, Foamix released financial results and provided a business update for the second quarter ended June 30, 2016. If you did not yet receive the press release, it’s available on the Investor Relations page of the Foamix’s website at foamixpharma.com. This call is being recorded and a webcast and a replay will be available on the company’s website for the next two weeks.
Before we begin, the company would like to remind you that some of the information contained in the news release and on this conference call contain forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. 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 that 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 results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the Foamix’s 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 release and call.
Participating in today’s call are Dr. Dov Tamarkin, Chief Executive Officer of Foamix, Dave Domzalski, President of Foamix’s U.S. Subsidiary and Ilan Hadar, Chief Financial Officer of the company.
With that, I would like to turn the call over to Dr. Tamarkin. Please go ahead, Dove.
Thank you, Michael. Good morning, everyone, and thank you all for joining our call today. Following my introductory comments, Dave Domzalski will review our clinical development and business activities. Ilan Hadar, our CFO will then provide an update on our second quarter financial results, after which we will open the call for questions.
During the second quarter, we continue to achieve important clinical progress across our pipeline, included initiation of our Phase III clinical trial for FMX101 in moderate to severe acne. We have extremely pleased to have this Phase III program undergoing. Patients with acne and especially was moderate to severe acne in mid of new safe and effective treatments.
There is a very significant market opportunity and we are committed to advancing FMX101 through Phase III development and registration as quickly as possible. As we communicated before, our rule is to report top-line results in the first half of 2017.
We also completed enrollment in our Phase II trial of FMX103 for papulopustular rosacea and plan to declare results from this study by the end of the year. Additionally, we are pleased to report that sales of Finacea Foam by our partner Bayer HealthCare continue to grow. And finally Foamix is well capitalized with over $90 million in cash as of June 30.
I will now turn the call over to David Domzalski for more details about our business and pipeline forward. David?
Thanks Dov and thanks again everyone for joining us this morning for call. During our last conference call, we emphasized our commitment to moving our clinical programs forward and as we update you on the progress in the second quarter of 2016 I’m pleased to report that we have accomplished two important goals.
First, the initiation of the Phase III for our most advanced candidate FMX101 and second the completion of enrollment for the Phase II trial of FMX103 and patients with papulopustular rosacea.
So beginning with FMX101 as Dov mentioned in May we dosed the first patient into Phase III. This 900 patient registration program is designed to evaluate efficacy and safety of FMX101 which is our top minocycline foam and two several multi-center trials of patients with moderate-to-severe acne.
All patients are being randomized into a 12 week double-blind vehicle controlled evaluation. They will be treated once daily with either FMX101 or vehicle. Patients will then have the option to enter to a long-term open label safety extension to evaluate the safety of intermittent use of FMX101 for up to an additional nine months.
The two co-primary efficacy endpoints in these trials are, first, the absolute change from baseline in inflammatory lesion counts in each treatment group at week 12. And also the proportion of patients achieving success at week 12 as defined by an Investigator’s Global Assessment score of clear or almost clear and at least a two grade improvement in this score from baseline at week 12.
Safety evaluation includes reported adverse events, assessments of tolerability, clinical laboratory tests and vital signs. I’m happy to report that patient enrollment of the trials is on schedule and we are actively treating patients as multiple clinical studies. As stated, we expect to report the top-line results from the studies in the first half of next year.
Now let me turn to FMX103 currently being studied in a Phase II trial for the treatment of patients with moderate and severe papulopustular rosacea. In April, we announced the completion of patient enrollment in this Phase II study. This trial is a double-blind randomized vehicle control study in which 233 patients have been enrolled in 18 sites throughout Germany.
Patients have been randomized to receive ease of high dose of FMX103, which is a 3% minocycline foam a low dose of FMX103, which is a 1.5% minocycline foam or vehicle foam for 12 weeks, followed up by a four week post-treatment evaluation.
Based on the positive clinical data we have generated in acne and the dermatological similarities between papulopustular rosacea lesions and inflammatory acne lesions, we believe FMX103 can be a safe and effective topical treatment for rosacea, offer significant advantages over the current standard of care. The primary trial endpoints are safety, tolerability and efficacy and we expect to report top-line results of this study by the end of this year.
Additionally, we continue to minocycline product candidates FMX102 and plan to conduct a phototoxicity study later this year. Our plan is to present complete results to the FDA as part of our ongoing discussions regarding the clinical development of this program. And regarding FMX-104, our novel topical foam formulation of doxycycline for the management of the acne-like rash that afflicts oncology patients treated with EGFRI drugs such as Erbitux and Vectibix.
As a recall, we reported positive clinical data from a Phase II trial with FDX-104 last year. This data was recently presented in a post recession at this year’s ASCO conference in May and there are currently no drugs approved for this indication and no FDA guidance regarding the clinical and regulatory pathway for such indication. Accordingly, we are continuing to develop the protocol and endpoints for future clinical trials as well as the development of pharmacology and toxicology protocols and manufacturing processes.
Those of you have been following our company note that we have certain strategic collaborative in place with other pharmaceutical companies and which we like into our technology for the development of products final licensees.
We have agreements in place with Bayer Healthcare, Merz, Allergan and Prestium, which was recently acquired by Mylan. Each of these agreements are in various stages of development and we are entitle us to development fees, milestone payments as well as royalties upon commercialization.
Our most advance collaboration as you may know, is with Bayer and in September of last year, Bayer began selling Finacea Foam in United States. [indiscernible] foam product developed using our proprietary foam technology platform.
We have used June the FDA approval of this product last year as an important milestone for us. Based on second quarter 2016 sales, we are entitled to receive $752,000 and royalty from Bayer. Now reflects a 10% increased from the first quarter of this year.
Now turn the call over to Ilan Hadar, who will provide with a financial update. Ilan.
Thank you Dave, good morning everyone, I will provide an overview of Foamix financial results for the second quarter ended June 2016. Total revenues for the quarter were $752,000 compared with $109,000 for the second quarter in 2015. The increase was due to royalty payments received from Bayer Healthcare from sales of Finacea Foam.
R&D expenses in the second quarter were $6.7 million, up from $2.8 million in the same period last year. The increase resulted primarily from an increase of $3.3 million in costs related to the FMX101 and FMX103 clinical trials and an increase of $556,000 in payroll and payroll related expenses due to an increase in number of R&D employees including bonuses and stock based compensation.
SG&A expenses in the second quarter were $2.1 million compared to $2.0 million in the comparable periods last year. For the second quarter of 2016, we recorded a loss of $8.2 million or $0.27 per share basic and diluted compared with a loss of $4.6 million or $0.80 per share for the second quarter of 2015. As of June 30, we had cash, cash equivalents, short and long-term investments of $90.9 million compared with $103.8 million as of December of 31, 2015.
We estimate that our existing cash and cash investments provide sufficient financial flexibility to finance our clinical and business operations well into 2018. For further details on our financials, including the results for six months period of ending June 30, 2016 please refer to our Form 6-K filed with the SEC.
That concludes my review of the company's financial results. We will now like to open the call for questions. Operator.
Thank you [Operator Instructions] And our first question comes from Tyler Van Buren with Cowen and Company.
Tyler Van Buren
Good morning and congrats on the progress. So once the focus is obviously on [indiscernible] by year-end we will see rosacea results. Could you perhaps further describe some of the results that we will see in perhaps some of the secondary endpoints. As well as what is the bar for efficacy so in terms of the products on the market what is the bar for efficacy and tolerability in terms of what is on the market and kind of where do you see unmet need being and where to this product potentially build an existing [indiscernible]. Thank you.
Yes, thanks Tyler it's Dave. We do as we announced our plans to provide the top line results by the end of this year, we are quite pleased with the progress that we are making. We take a look at the market and hold it as a sizeable market well over $1 billion in terms of the potentially when you take a look at the branded topical and the low therapies.
There is some similarities to the acne marketplace some of the products that's commonly used to treat the rosacea or antibiotics, the fact the largest talk in terms of gross revenue of the brand and probably sort of markets that is used right now for the treatment of rosacea is a product called [indiscernible] product from Galpharma. A multi $100 million brand and the same piece of supplies as we have discussed previously for acne.
rosacea itself is generally considered more of an inflammatory condition where as acne also obviously a high inflammatory characteristics but also is a bacterial condition. [indiscernible] as an antibiotic has significant anti-inflammatory qualities and the thesis in our - according to our belief is that it is going to be a effective product to treat the [indiscernible] potential to reduce those side effects that are out there.
So we believe again a lot of the opportunity that for acne apply to rosacea hopefully that gives you a sense of our view of the market itself. A lastly, in terms of endpoints the emphasis as this [indiscernible] obviously when we get those results, we will communicate those and those will be than the driver that will determine how we best structure our basic protocol going forward.
Tyler Van Buren
Great. Thanks for the color.
Got it. Thank you.
Our next question comes from Doug Tsao with Barclays.
Hi. Good morning, this is Morgan Williams on for Doug. I was just hoping you maybe provide update on timing for some of the collaboration program specifically in Mylan and Allergan. And then also if you could comment on your bandwidth to pursue additional collaborations considering all that you have going on your internal development programs?
Sure. I’ll ask along the comment on the timing of collaborations wide and with that regarding bandwidth obviously the [indiscernible]. We have a company are certainly laser focused on the work we have doing with our lead product, which is FMX101 per acne and FMX102 ratio. Obviously FMX101 currently in the middle of a Phase III program and FMX103 we complete enrollment or two that want to complete enrollment in our Phase II program.
So in terms of district collaborations, we are obviously opportunistically will be selective about that, I mean it has to be meaningful to our company. One of the things that nice is that the current collaboration that we have in place specifically Bayer being the most notable. We have collaborations like this in place. Remember, that better needs there is [indiscernible] for us to mitigate and gives us additional flexibility.
So number two, on internal clinical development programs. Obviously more become much more focused around internal efforts and our clinical development programs. We are always looking at open [indiscernible] opportunities so other people selective about that make sure that nothing is in the way for focus on FMX101 and FMX 103. And with that, I’ll turn over to Ilan for any additional color and [indiscernible].
Thank you. Regarding the coloration with our other expertise, we can only say that late-stages development not provide any more color due to of course confidentiality. And then as I said before, when we will be able to provide more data and future guidance revenues and at this time reflect cannot be anymore accumulation.
Okay, great. Thank you for the update.
And next, we will here from Louise Chen of Guggenheim Securities. Please go ahead.
Could you just give us some more color around the FMX102 phototox study, when we continue results from that? And then I know with respect to last quarter, but any update on the FMX101 and manufacturing [indiscernible] will be appreciated. Thank you.
Yes. No problem. In regarding 102 as we can indicate in the past…
It looks like we missed. Operator.
David, could you please check your mute button.
[indiscernible]. So we will fill for Dave. With regard to FMX102 as we communicated in the past, this is a pediatric condition and when we spoke to the FDA with regard to this project, they requested us to do a human photo-safety test before we move on into further clinical trials. And as we said in our press release, we are now approaching the step of initial in the study, which we will [indiscernible].
[indiscernible] you are now live.
Yes, okay. Can you hear us now?
Yes, we can.
Okay, good. So, thanks for the comments on one or two [indiscernible] the prototype study out of a battery of [indiscernible] safety studies that we need for FMX101 and as Dov said, we are kind of moving to the prototype studies and we expect of this by the end of the year. The other question that Brendon that you had on the manufacturing process.
We continue to advance our efforts with our manufacturer ASM, we are quite pleased that how things are progressing and as we communicated in the past that we will continue our efforts as we move towards final registration batches that we will produce prior to [indiscernible]. So right now, we are quite pleased on how things are progressing, as you know we have made a significant amount of product for various clinical trials and thanks for [indiscernible]. So I hopefully that addresses your question on that as well.
Thanks so much.
And we have no further questions at this time.
Okay. Thank you, operator. And thank you all for joining us on the call today. So in closing, as the second quarter of 2016 was another very productive period for Foamix and we have a number of significant milestones ahead of us this year as we continue to grow and advance our clinical program particular at FMX101 and FMX103.
So I look forward to updating you as we move toward our goal developing, commercial our proprietary innovative and differentiated topical drugs for dermatological therapies. So thank you again to all on this call and have a good day. We look for to speak with each other. Take care.
That does conclude today’s conference. We thank you all for your participation. You may now disconnect.
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