GlobeNewswire Inc | May 6, 2021 07:00AM EDT

May 06, 2021

BRIDGEWATER, N.J., May 06, 2021 (GLOBE NEWSWIRE) -- VYNE Therapeutics Inc. (Nasdaq: VYNE) (VYNE or the Company) today announced financial results for the first quarter ended March31, 2021 and provided a corporate update.

Our sales organization continues to drive utilization of AMZEEQ and ZILXI, with prescriptions for both products gaining momentum, said David Domzalski, Chief Executive Officer of VYNE Therapeutics. During the first quarter, we unveiled our newest candidate FMX114, a combination topical gel product candidate for the treatment of mild-to-moderate atopic dermatitis. We plan to take FMX114 into a Phase 2a study in the third quarter, with top-line results expected before year end.

First Quarter and Recent Highlights:

-- FDA approved AMZEEQ (minocycline) label update to include new information indicating the low propensity of Propionibacterium acnes (more commonly known as P. acnes) to develop resistance to minocycline -- Announced development program for FMX114, a combination topical gel for mild-to-moderate atopic dermatitis (AD) FMX114 is a fixed combination of tofacitinib (pan-JAK inhibitor) and fingolimod (sphingosine 1-phosphate receptor modulator) designed to address the multi-factorial nature of ADPhase 2a clinical study in AD expected to begin in 3Q 2021 with top-line results expected by year endProof of concept demonstrated in an animal model of AD -- Raised $73.1 million net proceeds from a registered direct offering of common stock and through utilization of an at-the-market equity offering program -- Executed 1-for-4 reverse stock split

Financial Performance Three Months Ended March 31,(in thousands, except per share amounts) 2021 2020Total Revenues $ 4,119 $ 1,750 Net Loss $ (20,550 ) $ (40,233 )Diluted Net Loss per Share $ (0.42 ) $ (3.79 )Adjusted Net Loss* $ (18,108 ) $ (38,474 )Adjusted Diluted Net Loss per Share* $ (0.37 ) $ (3.62 )Adjusted EBITDA* $ (17,024 ) $ (37,346 )

* See "Note Regarding the Use of Non-GAAP Financial Measures" elsewhere in this earnings release.

Financial Results for the First Quarter Ended March31, 2021

RevenuesRevenues totaled $4.1 million for the three months ended March31, 2021 compared to $1.8 million for the three months ended March 31, 2020. For the three months ended March31, 2021, our revenue consisted of $3.9 million of product sales, and $0.2 million of royalty revenue. For the three months ended March31, 2020, revenues consisted solely of $1.8 million of product sales.

The increase in product sales is due to the ZILXI product launch in October 2020 and increase in demand for AMZEEQ.

Cost of Goods SoldCost of goods sold was $0.6 million for the three months ended March31, 2021 compared to $0.3 million for the three months ended March 31, 2020. The increase in cost of goods sold is primarily due to an increase in sales volume.

Our gross margin percentage was 85%for both the three months ended March31, 2021and March 31, 2020.

Research and Development ExpensesOur research and development expenses for the three months ended March31, 2021 were $6.3 million, representing a decrease of $9.6 million, or 60.3%, compared to $16.0 million for the three months ended March31, 2020. Employee-related expenses decreased $5.2 million primarily due to severance costs incurred in 2020 due to the merger with Foamix Pharmaceuticals Ltd. (the "Merger"). Clinical trial and manufacturing expenses decreased with the completion of FCD 105 and serlopitant clinical trials and the product launches of AMZEEQ and ZILXI during 2020.

Selling, General and Administrative ExpensesOur selling, general and administrative expenses for the three months ended March31, 2021 were $16.6 million, representing a decrease of $8.8 million, or 34.6%, compared to $25.4 million for the three months ended March31, 2020. Employee-related expenses decreased by $6.1 million primarily due to severance costs incurred in 2020 due to the Merger. Professional services spend decreased as these expenses were incurred in 2020 as a result of the Merger.

Total operating expenses adjusted for stock based compensation*Set forth below is a presentation of our total operating expenses for the three months ended March31, 2021, adjusted to exclude certain non-cash expenses incurred during the period. The adjustments below reflect non-cash expenses of stock based compensation. We believe that the adjusted operating expenses are important measures as they better reflect the ongoing operations of the Company and exclude certain non-cash expenses.

Reported for the Adjusted for the(in thousands) three months ended Adjustments three months ended March31, 2021 March31, 2021Research and 6,333 (458 ) 5,875developmentSelling, general and 16,616 (1,984 ) 14,632administrativeTotal operating 22,949 (2,442 ) 20,507expenses

* Adjusted results are non-GAAP financial measures. See "Note Regarding the Use of Non-GAAP Financial Measures" elsewhere in this earnings release.

Cash & Cash EquivalentsAs of March31, 2021, VYNE had cash, cash equivalents, restricted cash and investments of $120.4million. Cash used in operations was $12.6million. We believe that our existing cash, cash equivalents and investments as of March 31, 2021 and projected cash flows from revenues will provide sufficient resources to fund its current ongoing needs for at least the next twelve months. See VYNEs Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 for additional discussion on liquidity.

Conference Call and Live WebcastVYNE management will host a conference call and live webcast today, Thursday, May 6, 2021, at 8:30 am Eastern Time to discuss the financial results and provide a business update.

Toll Free: 800-909-4985International: 312-281-1211Conference ID: 21993618Webcast: http://public.viavid.com/index.php?id=144542

A replay of the call will be archived on the Companys website at www.vynetherapeutics.com promptly after the conference call.

Note Regarding the Use of Non-GAAP Financial Measures

The Company has provided certain non-GAAP financial information as additional information to measure operating performance, including, among others, Adjusted Total Operating Expenses, Adjusted Net Loss, Adjusted Diluted Net Loss per Share and Adjusted EBITDA. The Company believes that its presentation of such non-GAAP measures provides useful information to management and investors regarding its financial condition and operations. Specifically, these measures exclude, among other things, share-based compensation. The Company does not believe that such expenses accurately reflect the Company's ongoing operations, and the Company does not expect to incur similar expenses in future periods. These measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States (GAAP) and may be different from similarly titled non-GAAP measures reported by other companies. The Company has provided required reconciliations to the most comparable GAAP measures elsewhere in the document.

ZILXI and AMZEEQ Important Safety InformationIndications

ZILXI (minocycline) topical foam, 1.5% is for the treatment of adults with pimples and bumps caused by a condition called rosacea. It is not known if ZILXI is safe and effective in children.

AMZEEQ (minocycline) topical foam, 4% is for the treatment of pimples and red bumps (non-nodular inflammatory lesions) that happen with moderate to severe acne in patients 9 years age and older. It is not known if AMZEEQ is safe and effective in children under 9 years of age.

ZILXI and AMZEEQ are both topical forms of the antibiotic minocycline and are available by prescription only. ZILXI and AMZEEQ are for use on skin only (topical use). ZILXI and AMZEEQ are not for use in the mouth, eyes or vagina.

ZILXI and AMZEEQ should not be used for the treatment of infections.

Important Safety Information

-- ZILXI or AMZEEQ should not be used in people who are allergic to ZILXI, AMZEEQ, or any tetracycline medicine. Use of ZILXI or AMZEEQ should be stopped right away if a rash or other allergic symptom occurs. -- ZILXI or AMZEEQ should not be used in women who are pregnant, may become pregnant or are nursing. If a woman becomes pregnant while using ZILXI or AMZEEQ, she should talk to her doctor. Tetracycline medicine when taken by mouth during pregnancy, infancy and/or childhood up to the age of 8 years may permanently discolor teeth (yellow-gray-brown) and may slow the growth of bones. -- ZILXI and AMZEEQ are flammable and fire, flame, and smoking must be avoided when applying and right after applying ZILXI or AMZEEQ. -- People should protect their skin from the sun while using ZILXI or AMZEEQ and avoid sunlight or artificial sunlight such as sunlamps or tanning beds. Use of ZILXI or AMZEEQ should be stopped if skin is sunburned. -- When taken by mouth, minocycline may cause feelings of lightheadedness, dizziness or spinning. People should not drive or operate dangerous machinery if they have these symptoms.

ZILXI and AMZEEQ are both topical foams that contain minocycline, a tetracycline medicine. They are not taken by mouth. However, tetracyclines, when taken by mouth (capsules or tablets), may cause serious side effects, including: diarrhea which may be caused by an infection and cause watery or bloody stools; loss of appetite; tiredness; yellowing of the skin or eyes (jaundice); bleeding more easily than normal; confusion; sleepiness; vision changes, including blurred vision, double vision, or permanent vision loss; unusual headaches; fever; rash; joint pain; body weakness; discoloration or darkening of the skin, scars, teeth, or gums. People should call their doctor right away if these side effects occur.

The most common side effect of ZILXI is diarrhea. The most common side effect of AMZEEQ is headache.

These are not all of the possible side effects for ZILXI or AMZEEQ. People should contact their doctor for medical advice about side effects and be sure to tell their doctor about all of their medical conditions and medicines they take before using ZILXI or AMZEEQ.

People are encouraged to report negative side effects of prescription drugs to the FDA. Visit www.fda.gov/medwatch or call 1-800-FDA-1088.

Please see full Prescribing Information for ZILXI and AMZEEQ.

About VYNE Therapeutics Inc.VYNE's mission is to improve the lives of patients by developing proprietary, innovative and differentiated therapies in dermatology and beyond.

With expertise in topical medicine innovation as a springboard, VYNE is working to develop and commercialize a variety of solutions using its topical formulation capabilities, including its proprietary Molecule Stabilizing Technology (MST), and has received FDA approval for AMZEEQ (minocycline) topical foam, 4%, and for ZILXI (minocycline) topical foam, 1.5%. For more information about our approved products, please see AMZEEQs Full Prescribing Information at AMZEEQ.com and ZILXIs Full Prescribing Information at ZILXI.com.

For more information about VYNE Therapeutics Inc. or its investigational products, visit www.vynetherapeutics.com or follow VYNE on Twitter. VYNE may use its website to comply with its disclosure obligations under Regulation FD. Therefore, investors should monitor VYNEs website in addition to following its press releases, filings with the U.S. Securities and Exchange Commission, public conference calls, and webcasts.

Investor Relations:Joyce AllaireLifeSci Advisors, LLC646-889-1200jallaire@lifesciadvisors.com

Andrew SaikChief Financial OfficerVYNE Therapeutics908-731-6180Andrew.Saik@vynetx.com

Cautionary Statement Regarding Forward-Looking StatementsThis release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the development and commercialization of VYNEs products and product candidates, including FCD105 and FMX114, and other statements regarding the future expectations, plans and prospects of VYNE. All statements in this press release which are not historical facts are forward-looking statements. Any forward-looking statements are based on VYNEs current knowledge and its present beliefs and expectations regarding possible future events and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those set forth or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the COVID-19 pandemic and its impact on our business operations and liquidity, including our ability to progress a preclinical or clinical trial; adverse events associated with the development and commercialization of our product candidates and approved products; the outcome and cost of pre-clinical and clinical trials for current and future product candidates; determination by the FDA that results from VYNEs pre-clinical and clinical trials are not sufficient to support registration or marketing approval of product candidates; the outcome of pricing, coverage and reimbursement negotiations with third party payors for AMZEEQ, ZILXI or any other products or product candidates that VYNE may commercialize in the future; whether, and to what extent, third party payors impose additional requirements before approving AMZEEQ and ZILXI prescription reimbursement; our ability to negotiate contracts with pharmacy benefit managers and other third-parties; the eligible patient base and commercial potential of AMZEEQ, ZILXI or any of VYNEs other products or product candidates; risks of potential litigation by third-parties regarding infringement of third-party intellectual property; risks that VYNEs intellectual property rights, such as patents, may fail to provide adequate protection, may be challenged and one or more claims may be revoked or interpreted narrowly or will not be infringed; risks that any of VYNEs patents may be held to be narrowed, invalid or unenforceable or one or more of VYNEs patent applications may not be granted and potential competitors may also seek to design around VYNEs granted patents or patent applications; additional competition in the acne and dermatology markets; risks related to our indebtedness; inability to raise additional capital on favorable terms or at all; VYNEs ability to recruit and retain key employees; volatility in our stock price may result in rapid and substantial increases or decreases in our stock price that may or may not be related to our operating performance or prospects; and VYNEs ability to stay in compliance with applicable laws, rules and regulations. For a discussion of other risks and uncertainties, and other important factors, any of which could cause VYNEs actual results to differ from those contained in the forward-looking statements, see the section titled Risk Factors in VYNEs Annual Report on Form 10-K for the year ended December 31, 2020, as well as discussions of potential risks, uncertainties, and other important factors in VYNEs subsequent filings with the U.S. Securities and Exchange Commission. Although VYNE believes these forward-looking statements are reasonable, they speak only as of the date of this announcement and VYNE undertakes no obligation to update publicly such forward-looking statements to reflect subsequent events or circumstances, except as otherwise required by law. Given these risks and uncertainties, you should not rely upon forward-looking statements as predictions of future events.

VYNE THERAPEUTICS INC.CONDENSED CONSOLIDATED BALANCE SHEETS(U.S. dollars in thousands, except per share data)(Unaudited) March 31 December 31 2021 2020Assets Current Assets: Cash and cash equivalents $ 118,516 $ 57,563 Restricted cash 855 855 Investment in marketable securities 1,027 1,027 Trade receivables, net of allowances 10,755 15,819 Prepaid and other assets 3,872 4,591 Inventory 8,092 7,404 Total Current Assets 143,117 87,259 Property and equipment, net 529 555 Operating lease right-of-use assets 1,407 1,583 Prepaid and other assets 4,118 4,345 Total Assets $ 149,171 $ 93,742 Liabilities and shareholders? equity Current Liabilities: Trade payables $ 3,490 $ 4,780 Accrued expenses 13,521 11,452 Employee related obligations 3,787 4,360 Operating lease liabilities 647 757 Other 104 104 Total Current Liabilities 21,549 21,453 Liability for employee severance benefits 206 312 Operating lease liabilities 784 853 Long-term debt 33,274 33,174 Other liabilities 457 457 Total Liabilities 56,270 56,249 Commitments and Contingencies ? ? Shareholders' Equity: Preferred stock: $0.0001 par value; 20,000,000 sharesauthorized at March31, 2021 and December31, 2020, ? ? respectively; no shares issued and outstanding atMarch31, 2021 and December31, 2020, respectivelyCommon stock: $0.0001 par value; 75,000,000 sharesauthorized at March31, 2021 and December31, 2020,respectively; 51,386,596 and 43,205,221 shares issued 5 4 and outstanding at March31, 2021 and December31,2020, respectivelyAdditional paid-in capital 679,642 603,685 Accumulated deficit (586,746 ) (566,196 )Total Shareholders' Equity 92,901 37,493 Total Liabilities and Shareholders' Equity $ 149,171 $ 93,742

VYNE THERAPEUTICS INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except per share data)(Unaudited) Three months ended March 31 2021 2020Revenues Product sales $ 3,889 $ 1,750 Royalty revenues 230 ? Total Revenues 4,119 1,750 Cost of goods sold 601 271 Operating Expenses: Research and development 6,333 15,953 Selling, general and administrative 16,616 25,415 Total Operating Expenses 22,949 41,368 Operating Loss 19,431 39,889 Interest expense 1,062 1,067 Other expense (income), net 57 (723 )Loss Before Income Tax 20,550 40,233 Income tax (benefit) expense ? ? Net Loss $ 20,550 $ 40,233 Loss per share basic and diluted $ 0.42 $ 3.79 Weighted average shares outstanding - basic and 48,868 10,627 diluted

VYNE THERAPEUTICS INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(U.S. dollars in thousands)(Unaudited) Three months ended March 31 2021 2020Cash Flows From Operating Activities: Net Loss $ 20,550 $ 40,233 Adjustments required to reconcile net loss to net cash used in operating activities:Depreciation and amortization 27 93 Changes in marketable securities and bank deposits, ? (153 )netChanges in accrued liability for employee severance (108 ) (13 )benefits, net of retirement fund profitStock-based compensation 2,442 1,759 Non-cash finance income, net (66 ) (347 )Changes in operating assets and liabilities, net of effects of businesses acquired:Decrease (increase) in trade receivables, prepaid and 5,783 (9,297 )other assetsDecrease (increase) in other non-current assets 404 (3,027 )Increase in accounts payable and accruals 205 856 Increase in inventory (688 ) (1,849 )Net cash used in operating activities (12,551 ) (52,211 )Cash Flows From Investing Activities: Purchase of fixed assets ? (42 )Cash acquired through merger ? 38,641 Proceeds from sale and maturity of marketable ? 27,381 securitiesNet cash provided by investing activities ? 65,980 Cash Flows From Financing Activities: Proceeds related to issuance of common shares through 73,127 ? offerings, net of issuance costsProceeds related to issuance of stock for stock-based 376 140 compensation arrangements, netNet cash provided by financing activities 73,503 140 Increase in cash, cash equivalents and restricted 60,952 13,909 cashEffect of exchange rate on cash, cash equivalents and 1 (37 )restricted cashCash, cash equivalents and restricted cash at 58,418 44,584 beginning of the periodCash, cash equivalents and restricted cash at end of $ 119,371 $ 58,456 the periodCash and cash equivalents $ 118,516 $ 57,601 Restricted cash 855 855 Total cash, cash equivalents and restricted cash $ 119,371 $ 58,456 shown in statement of cash flowsSupplementary information on investing and financing activities not involving cash flows:Cashless exercise of warrants and restricted stock * *unitsIssuance of shares under employee stock purchase plan $ ? $ 163 Additions to operating lease right of use assets $ ? $ 287 Additions to operating lease liabilities $ ? $ 287 Supplemental disclosure of cash flow information: Interest received $ 5 $ 177 Interest paid $ 963 $ 973 Fair value of assets acquired $ ? $ 117,270 Less liabilities assumed ? 5,827 Net acquired ? 111,443 Less cash acquired ? 38,641 Merger net of cash acquired $ ? $ 72,802

* Represents an amount less than one thousand

Non-GAAP Financial MeasuresThe following tables reconcile non-GAAP financial measures presented in this press release or that may be presented on the Companys conference call with analysts and investors. The Company believes that these non-GAAP financial measures provide management, analysts, investors and other users of the Companys financial information with meaningful supplemental information regarding the performance of the Companys business. These non-GAAP financial measures should not be considered superior to, but rather in addition to, other financial measures prepared by the Company in accordance with GAAP, including the year-to-year results. The Companys method of determining these non-GAAP financial measures may be different from other companies methods and, therefore, may not be comparable to those used by other companies, and the Company does not recommend the sole use of these non-GAAP measures to assess its financial and earnings performance. For reasons noted above, the Company is presenting certain non-GAAP financial measures for the three months ended March 31, 2021 and March 31, 2020. In order for investors to be able to more easily compare the Companys performance across periods, the Company has included comparable reconciliations for the 2020 period in the reconciliation tables below.

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)The following table provides a reconciliation of Net loss (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the three months ended March31, 2021 and 2020 (in thousands):

Three Months Ended March 31, 2021 2020 Net loss (GAAP) (20,550 ) (40,233 )Interest expense, net 1,057 1,035 Depreciation and amortization 27 93 EBITDA (non-GAAP) (19,466 ) (39,105 ) Share based compensation expense 2,442 1,759 Adjusted EBITDA (non-GAAP) (17,024 ) (37,346 )

Reconciliation of Net Loss and Adjusted Net Loss (non-GAAP)

The following tables provide detailed reconciliations of various other income statement data between GAAP and non-GAAP amounts for the three months ended March31, 2021 and 2020 (in thousands, except per share data):

Three months ended March 31 2021 2020 Net Loss (GAAP) (20,550 ) (40,233 )Share based compensation expense 2,442 1,759 Adjusted Net Loss (non-GAAP) (18,108 ) (38,474 ) Research and development expense (GAAP) 6,333 15,953 Share based compensation expense (458 ) (516 )Adjusted Research and development expense (non-GAAP) 5,875 15,437 Selling, general and administrative expense (GAAP) 16,616 25,415 Share based compensation expense (1,984 ) (1,243 )Adjusted Selling, general and administrative expense 14,632 24,172 (non-GAAP) Total Operating Expenses (GAAP) 22,949 41,368 Share based compensation expense (2,442 ) (1,759 )Adjusted Total Operating Expenses 20,507 39,609 Total Operating Loss (GAAP) (19,431 ) (39,889 )Share based compensation expense 2,442 1,759 Adjusted Total Operating Loss (non-GAAP) (16,989 ) (38,130 ) Net loss per common share - basic and diluted (GAAP) (0.42 ) (3.79 )Share based compensation expense 0.05 0.17 Adjusted Net loss per share - basic and diluted (0.37 ) (3.62 )(non-GAAP)Weighted average number of common shares outstanding - 48,868 10,627 basic and diluted