VYNE Therapeutics: Rapidly Progressing In The Dermatology Market

Summary

• VYNE has two approved products and a late-stage asset.
• The company has adequate cash after the recent offering.
• The company is a leader in the acne and rosacea markets.
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Photo by Ivan Bajic/E+ via Getty Images

VYNE Therapeutics (NASDAQ:VYNE) has two approved dermatological products and one that's phase 3 ready targeting moderate to severe acne vulgaris. The two approved products are, in fact, variations on the same molecule - minocycline - in a topical foam formulation, one being at 4% concentration targeting non-nodular moderate to severe acne vulgaris, and the other being at 1.5% concentration targeting rosacea. Phase 3 ready lead pipeline asset FCD105 is minocycline plus adapalene foam targeting moderate to severe acne vulgaris. The company’s proprietary Molecule Stabilizing Technology (MST) used in all three products enables the topical delivery of unstable therapeutic agents through a proprietary, lipophilic foam vehicle. The pipeline looks like this:

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The approved indication for AMZEEQ is - “AMZEEQ is a prescription medicine used on the skin (topical) for the treatment of pimples and red bumps (non-nodular inflammatory lesions) of moderate to severe acne in patients 9 years of age and older.” The target indication for FCD105 is - “the treatment of moderate-to-severe acne vulgaris in patients 12 years of age and older.”

Commercial opportunity for the approved products

AMZEEQ is targeting a $5bn market. The Acne market saw 22mn Trx in 2019, growing at 5% yoy. Acne has seen consistently >2M active, diagnosed acne patients per year under HCP care. Worldwide, there are 40-50M acne sufferers (of which 10M are moderate-to-severe).

AMZEEQ prescription has seen 15% compounded monthly growth rate and 35% quarterly growth since approval, see below:

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Zilxi is approved for Rosacea. Rosacea is a $1bn market with 4.4mn Trx in 2019. According to the company’s research, 73% of patients indicate that they are likely to seek a better solution than their current treatment. More than 70% switch or discontinue Rosacea therapy after first diagnosis.

Since approval, Zilxi has seen the following growth figures:

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FCD105 for acne

This lead pipeline asset has potential to become best in class. It adds adapalene to AMZEEQ's minocycline formulation. This produces a multimodal mode of action:

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Adapalene is widely prescribed for Acne, accounting for 1.7mn prescriptions and nearly $630mn in sales in 2019. Branded adapalene products represent 15% of the acne market. A combination formulation could be a game-changer if it demonstrates efficacy.

In its phase 2 study, FCD105 demonstrated the following data:

Source

FCD105 treatment group was statistically superior to Vehicle and 0.3% Adapalene treatment groups and numerically superior to the 3% minocycline treatment group at Week 12 for IGA Treatment Success (IGA0/1).

In its other primary endpoint, as well, the molecule demonstrated positive data:

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FCD105 treatment group was statistically superior to Vehicle and 0.3% Adapalene treatment groups and numerically superior to the 3% minocycline treatment group at Week 12 for absolute reduction in inflammatory lesions.

A comparison with historical data of competing products shows the following:

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As we can see, that data is comparable but not well differentiated for efficacy. However, for safety, FCD105 seems to have better data than historical comparators:

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Financials

VYNE has a market cap of $345mn and a cash balance of $58mn. Last June, the company did a dilutive offering. Then in January this year, it again raised another $50mn. Since then, though, the stock has appreciated a lot, more than doubling from the previous months as of now, and more than quadrupling at one point in February. However, those figures also need to take into account the reverse stock split at 1-4 that the company did in February. The stock did go up 40% after the FDA approved a label expansion for the stock - the label update refers to a low propensity of P. acnes strains to develop resistance to minocycline, the active ingredient in AMZEEQ.

On March 4, the company announced earnings. Key highlights are:

• Total revenues of $4.2mn for the quarter ended December 2020 and $20.9mn for the year.
• The above figure is equally distributed between license and product revenues.
• ZILXI (minocycline) topical foam, 1.5%, for the treatment of inflammatory lesions of rosacea in adults, launched and became available in pharmacies nationwide on Oct. 1.
• First minocycline product of any form to be approved by the U.S. Food and Drug Administration (“FDA”) for use in Rosacea.
• Held an end-of-Phase 2 meeting with the FDA establishing the key elements of the Phase 3 program to support a New Drug Application (“NDA”) for FCD105 (3% minocycline/0.3% adapalene foam).

Bottom line

VYNE operates in a major market, and although the market is highly competitive and differentiated, the company has been able to create a niche for its products. It has a decent cash runway, and it's rapidly progressing its pipeline. Its current price also is heavily discounted from its 52-week highs, especially given the reverse split. As such, VYNE may present an opportunity at these prices.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.