Earnings Call: Q2 2021

Aug 12, 2021

Greetings, and welcome to the Viant Therapeutics Second Quarter 2021 Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Thursday, August 12, 2021. I would now like to turn the conference over to Chase Oswald from LifeSci Advisors. Please go ahead. Good morning, everyone, and thank you for joining us. Before we begin formal remarks, let me remind you that some of the information in the press release issued this morning and on this conference call contain forward looking statements that involve risks, uncertainties and assumptions that are difficult to predict, including statements, forecasts and financial and operating performance, impacts of the COVID-nineteen pandemic on Vyme and observations regarding ongoing operating expenses and net revenue. These statements will include observations associated with the commercialization of Amzik and Zixi in the United States. They will also include plans and expectations regarding strategic transactions in the success, timing and cost of clinical trials. Words that express and reflect optimism, satisfaction of current progress, prospects or projections, as well as words such as believes, intend, expect, plan, anticipate and similar variations identify forward looking statements, but their absence does not mean that statement is not forward looking. Such forward looking statements are not a guarantee of performance and the company's actual results may could differ materially from those contained in such statements. Several factors that could cause or contribute to such difference are described in detail in Viant Therapeutics' 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 call. In addition, the financial portion of this call will include certain non GAAP financial information. For additional disclosures relating to these non GAAP financial measures, including a reconciliation to the most directly comparable GAAP measures, please see today's press release, which is posted on the Investor Relations section of our website. Participating in this morning's call are Dave Dunsalski, Vines' President and Chief Executive Officer and Tyler Ziranda, Vines' Chief Financial Officer. Doctor. Ian Stewart, the Company's Chief Scientific Officer and Mukhya Harsh, the Company's General Counsel and Chief Legal Officer will also be online and will be available during the Q and A session. At this time, I would like to turn the call over to Dave Domzalski. Dave, please go ahead. Thank you, Chase, and good morning to everyone. Hopefully, you have had a chance to read the 2 press releases that we issued this morning related to our Q2 earnings and announcing our new license agreement with InfraDerm. On today's call, we'll be going through our Q2 financials. However, I want to spend the majority of my time this morning talking about the change to our corporate strategy and our focus on R and D and advancing our proprietary pipeline. This morning, we released our earnings. Revenue for the quarter was flat compared to last quarter as we continue to face headwinds commercializing our products in this environment. We have been evaluating our commercial and R and D assets for some time in order to determine how to optimally deploy capital and drive shareholder value. During the course of this process, we carefully consider the revenues received from the commercialization of Amzik and ZILSI and the associated costs to drive those revenues. The protracted negative impact of the COVID-nineteen pandemic over the past 18 months during the commercial launches of both Amzik and ZILXY and the current payer landscape has made this an incredibly challenging environment. Throughout this process, we explored several strategic options, including the acquisition of marketed assets, out licensing our approved products outside of the United States and possible partnering or co development relationships with interested parties. As you all are aware, we've had to make considerable cuts to our operating expenses over the past 18 months in light of COVID-nineteen in order to preserve our commercial operation. We have kept our sales force intact throughout this time and our efforts to educate health care providers and increase awareness of both Amzik and Zylchsee. While we have had to balance our cash expenditures for commercial operations throughout these periods of unpredictability and customer access restrictions since the COVID-nineteen pandemic began last March. Important consumer, digital and e commerce initiatives that we would have sequenced during a normal launch cycle have unfortunately needed to be sidelined. Launching new products bring a variety of challenges in any environment, particularly for a company of our size. There is a road map to maximize the potential of our minocycline franchise. We know we have excellent products and responses from patients and the health care providers continues to be very positive. The issue for us is ultimately one of time and money. Though we remain optimistic about the potential of our launch brands, the factors I have discussed coupled with our current operating costs significantly impact our ability to become a profitable enterprise within an acceptable time frame. We believe that our existing minocycline franchise, including our Phase III ready combination product FCD105 has significant value. As we assessed our current minocycline franchise and the costs associated with commercialization alongside our ambitions for our pipeline, including the transaction announced this morning with Infraderm, which provides us with exclusive access to a novel Betty platform. We came to the conclusion that we cannot appropriately support both a commercial enterprise and R and D operations. After careful consideration, we have made the strategic decision to explore a sale or license of our minocycline franchise, including the underlying molecule stabilizing technology platform specific to our minocycline portfolio. We are working with a prominent investment bank to lead us through this process. We believe that the potential of this franchise could be maximized by a partner that can deploy the necessary resources to unlock its true value. Recognizing the continued pressure on our share price, we believe the best way to create value for our shareholders is to focus our resources on our existing R and D capabilities and strong partner network to advance our proprietary pipeline. As we transition our focus and spend toward developing our pipeline, we will continue to selectively fund certain aspects of the commercial business, including our sales force for a finite period of time, while we actively work to identify a partner for our minocycline franchise. This will reduce our overall burn rates and allow us to make appropriate investments in our pipeline, which we believe will create significant value for our shareholders. Separately, in light of the strategic change, we've had a number of discussions with our lenders regarding our outstanding debt. They were very helpful in working through potential options and were willing to provide us runway to keep the debt outstanding for a period of time during the process of minocycline franchise. When considering the carrying costs and fees, however, associated with doing so, we believe it was more prudent to prepay the loan and use the cash that would have otherwise funded those carrying costs to invest in our pipeline projects. Tyler, our CFO, will discuss our cash and cash runway when we get to the financial discussion. Going forward, we will invest in developing therapies for the treatment of immunology and inflammatory conditions with high unmet needs. Drug development is a core competency of Vine. We have a track record of successfully developing complex molecules and advancing therapeutics through the clinic and regulatory approval process. We intend to leverage those core capabilities in building an enhanced pipeline of innovative NCEs alongside our current development program for FMX-one hundred and fourteen for the potential treatment of mild to moderate atopic dermatitis. We believe this is the right direction for the company and have the unanimous support of our Board of Directors. This leads me now to the licensing agreement we announced this morning with Inforderm Limited, a spin out of the University of Dundee School of Life Sciences. Dundee is one of the foremost integrated university hospital and biotechnology research institutes in Europe. We've been following the work of this group and have been impressed with their progress in developing multiple novel and differentiated drug discovery platforms relevant to autoimmunity and immuno oncology disciplines. We are particularly impressed with the potential and broad applicability of their work in identifying highly potent and selective bromodomain and extra terminal protein inhibitors, also referred to as BET inhibitors or BETI for short. As outlined in our press release, this partnership with Infraderm provides us exclusive worldwide rights to a novel class of betty compounds. The bet family of proteins are bet family of proteins are epigenetic regulators that control the transcription of genes. Inhibiting bet proteins stalls the transcriptional process and therefore reduces the extent of inflammation in tissues. There's a lot of interest in Betis as therapeutic targets for a wide range of diseases. To date, much of the clinical research, particularly by large pharma, has been focused on oncology. There is also compelling science to show that BET inhibition can play an important role in effectively treating immuno inflammatory diseases. We believe this partnership with Infra derm is transformational for Vine as it exponentially expands our pipeline, providing us with a library of small molecule NCEs and a unique platform to develop both topical and oral veti therapeutics. The initial candidates that we plan to develop, we refer to as VIND-two zero one and VIND-two zero two. The first of these, VIND-two zero one is a pan bromodomain or panBD bet inhibitor. It is a 1st in class soft panBD bet inhibitor that is designed to mitigate systemic drug exposure and will be developed for topical applications. We intend to progress VIND-two zero one into rare neutrophilic dermatological indications such as pyoderma gangrenosum, palmar plantar pustulosis and generalized pustular psoriasis where there is significant unmet need due to a lack of indicated treatment options. Plan to enter this program into the clinic next year after the prerequisite non clinical safety assessments have been completed. The second candidate, BLIND-two zero two is an orally delivered 1st in class BET inhibitor that is highly selective for BD2. Recent research suggests that the majority of pro inflammatory signaling from bet protein action is through the interactions with bromodomain 2. By selectively inhibiting BD2, we believe VINE-two zero two could have a more targeted anti inflammatory effect with an improved benefit risk profile. We view VINE-two zero two as having significant potential as a novel oral treatment for major immuno inflammatory indications such as rheumatoid arthritis, ulcerative colitis and multiple sclerosis. Upon final candidate selection and exercise of our option, we intend to commence an IND enabling non clinical safety program and enter the clinic next year as well. BET inhibition is good signs, and we are enthusiastic about the potential broad utility of the vetty platform. Over the coming months, as we prepare to take these NCEs into the clinic, we will provide further details on the initial indication that we intend to pursue for each of programs. With respect to the economics of our partnership with InfraDerm, we structured the transaction to provide us the exclusive right to develop any and all other Betty compounds for any indication worldwide. Additionally, we have the ability to sublicense to a third party the development of any Bedi program in any jurisdiction. This gives us significant optionality in how we deploy our resources and maximize the potential of the platform. In essence, this is a pay as you go or a lacarte model, which provides us the ability to control costs at our discretion. For perspective, the total milestone payments to progress 1 topical product through approval in the United States is approximately $16,000,000 for all indications. Similarly, the total milestone payments to Progress 1 oral product through approval in the United States is approximately $44,000,000 for all indications. This obviously excludes R and D costs and any royalties payable upon commercialization. In summary, we are very excited about the possibilities of the Bedi platform and our collaboration with Infraderm as we prioritize the growth of our pipeline. By coupling Infraderm's deep expertise in rational drug design in the leading edge pharmacologies with Vine's drug development capabilities, we see a strong foundation to build real value for patients and shareholders alike. And we look forward to providing further progress through our updates. Moving to FMX-one hundred and fourteen. We remain on target to enroll the 1st patient in our Phase IIa proof of concept study in mild to moderate atopic dermatitis later this quarter. Clinical trial supplies are at our 3rd party distributor in Australia for subsequent shipment to investigator sites pending approval of the protocol by the local ethics committee. Again, we anticipate having top line results from this study by the end of the year. Turning to commercial. For the Q2, the minocycline franchise exceeded 57,000 prescriptions. This represents an approximate 10% increase over the Q1 of this year and is the highest quarterly prescription count since the launch of both Amzik and Zilpzy. Individually, Amzik had over 47,000 prescriptions and ZILSI 10,000 prescriptions, which both represent quarterly highs. To date, roughly 9,000 unique healthcare providers have prescribed Amzik. We have penetrated 74% of our target universe so far this year, including over 87% of our highest decile targets. Similarly, ZILXI has over 3,300 total unique prescribers since launch in October with a 42% penetration rate of our target universe. Additionally, year to date, our sales team has executed educational speaker programs for over 1600 healthcare practitioners on both Amzik and ZILSI. Market access for Amzik has remained stable as the brand continues to have coverage for approximately 70 2% of commercially covered lives. Market access for ZILTI has improved to approximately 68% of commercial lives, an increase of 7% from last quarter due to successful pull through efforts by our team with downstream custom plans. We view these as positive metrics for the franchise despite our brands continuing to face pandemic related headwinds. You may recall that the sales team began the year with approximately 35% to 40% access to target physicians in a live setting. This has progressed to approximately 60% to 65% recently, but it's clear that the COVID-nineteen pandemic continues to have an impact on the launch of both products. On the IP front, we announced on Monday that we have initiated a patent infringement lawsuit against Perrigo Israel Pharmaceuticals. We filed this lawsuit in response to Perrigo's ANDA filing seeking FDA approval to manufacture and sell a generic version of AmSeq in the United States prior to 12 patents listed in the orange book. We are seeking an order that the effective date of any FDA approval of Perrigo's ANDA be no earlier than the expiration of our list of patents, the latest of which expires on September 8, 2,037. We are confident in the strength of our patents, and we intend to vigorously defend our intellectual property rights in the United States and globally. I'll now turn the call over to Tyler to cover the financials. Tyler? Thanks, Dave, and good morning, everyone. Revenues in the Q2 of 2021 totaled $4,300,000 and consisted of $4,000,000 of product sales from Amzik and Ziltzy and $300,000 of royalty revenues. Our Q2 2021 GAAP net loss was $19,900,000 or $0.39 per share. When excluding $1,900,000 of stock based compensation expense, our Q2 of 2021 adjusted net loss was $18,000,000 or $0.35 per share. For the Q2 of 2021, adjusted operating expenses were $20,300,000 including adjusted SG and A expenses of $14,400,000 and adjusted R and D expenses of $6,000,000 We've historically guided to adjusted operating expenses of approximately $20,000,000 to $25,000,000 per quarter, which is where we have been landing over the last three quarters from Q4 2020 through Q2 2021. As we transition our focus and spend toward developing our pipeline, we anticipate that Q3 adjusted operating expense should be in the low end of that range, while we continue to selectively fund certain aspects of our commercial business, including our sales force, while we seek a potential partner for our minocycline franchise. This amount also includes $1,500,000 to $2,000,000 of severance and related benefits associated with our restructuring plan that Dave described earlier, but excludes any non cash charges. We expect to substantially complete our transition to an R and D focused biopharmaceutical company by the end of this year. Therefore, beginning in Q4, we expect to further reduce our adjusted operating expenses to a range of $15,000,000 to $20,000,000 including the anticipated $4,000,000 milestone payment related to the exercise of the license agreement for the oral betty BYN-two zero two. Based on our current plans to conduct a Phase 2b trial for FMX-one hundred and fourteen, assuming positive results in the Phase 2a trial later this year and to progress both VYN-two zero one and VYN-two zero two into the clinic in 2022, we anticipate that our adjusted operating expenses will be approximately $10,000,000 per quarter next year. Now turning to the balance sheet. Our cash position as of June 30 was $104,000,000 As Dave outlined in his prepared remarks, subsequent to June 30, we prepaid our outstanding debt of $35,000,000 in addition to a 4% prepayment fee. As a result, our pro form a cash position as of June 30, after giving effect to the full prepayment of the loan facility, was approximately $68,000,000 We believe that this cash will be sufficient to fund our operations through the Q2 of 2022. I want to point out that this projection does not take into account any potential proceeds from the sale or license of the topical minocycline franchise, new business development transactions or additional financing activities. Finally, our shares outstanding as of June 30 totaled 51,500,000 shares. For additional information regarding our Q2 results and prior period comparisons, please refer to today's earnings release and our Form 10 Q filed with the SEC. Now let me turn the call back over to Dave for closing comments. Thanks, Tyler. Well, we've covered a lot in this call. To summarize, we are refocusing the company from a commercial enterprise in therapeutic dermatology to a biopharmaceutical company with unique and proprietary assets. Our partnership with Infraderm provides us access to an exciting Betty platform for both topical and oral treatments for immuno inflammatory diseases of high unmet medical need. We intend to leverage our existing development capabilities and strong network of discovery and preclinical science partners to develop products and advance a series of truly innovative new medicines throughout the clinic. Through our reductions in SG and A related operational expenses and repayment of debt, we are cleaning up our balance sheet, so we can focus on advancing our pipeline as I outlined earlier. We are excited about the prospects of these programs as we anticipate multiple early stage clinical milestones over the next 12 to 24 months. Taking the strategic shift was not an easy decision. However, I have complete conviction that this is the right decision and the clearest path to create value for our shareholders. Our team is already busy at work to execute on our plans and I look forward to updating you on our progress. That concludes our prepared remarks. I will now turn the call over to the operator open the call for questions. Thank you. Thank And our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed. Hi, good morning everyone. This is Karvi in for Louise. Congrats on the quarter and the lines on your agreement and thank you for taking our questions. First question is, what are some potential competitive advantages of Bedi or Bt inhibitor versus other immuno inflammatory treatments for rare skin diseases? Secondly, as mentioned earlier, this class of drug has been more investigated in oncology. So what are some key findings from preclinical research that kind of pushed for the agreement? And lastly, there are a plethora of rare skin diseases and you had described a few during your opening statement. So are there specific ones that you're super interested in and what is going to be your process in narrowing down which ones to pursue? Thank you. Great, Karvi. I'll turn it over to Ian. Hi, good morning, Karvi. So the initial indications, let's talk about the topical to start with. The challenges with some of these neutrophilic dermatoses and Dave in the prepared remarks talked about pyoderma gangrenosum generalized bursal psoriasis, amoplantar bursulosis, as they all have one common theme and that is pretty catastrophic inflammatory signaling where a more targeted approach may not necessarily provide the best clinical outcome. So there are others who have looked at specific monoclonal antibodies against specific receptors and have come up with somewhat limited clinical response. The Beckys, particularly VYN-two zero one, which is a pan bromodomain betty inhibitor, has the potential to have a much broader anti inflammatory effect. In vitro data that we have generated and Infoderm have generated have actually shown great utility across a number of T helper cell groups that are relevant to these pretty catastrophic dermatoses. So we're quite excited about the direct applicability of 201 to these diseases. Moving to 202, this is a BD2 or bromodomin2 selective BET inhibitor. So why is that important? And again referring back to Dave's remarks, BD2 appears to be driving the majority of anti inflammatory effects through the BITS protein signaling pathway. So it does make sense to obviously target that one more selectively. Equally, most of the early stage BET inhibitors that have been targeted towards oncology were pan BD inhibitors. And binding to BD1 has been implicated in maybe a more narrower benefit risk profile, which obviously lends itself to oncology indications, but maybe not necessarily to broader autoimmune diseases as the ones that David referred to such as rheumatoid arthritis, UC Crohn's and multiple sclerosis. Again, we want to develop a 202 as an orally delivered selected BD2 inhibitor or bets. Work that infoderm have done today have shown exquisite selectivity to BD2 versus BD1. And we are working on, obviously, identifying a candidate for further development, but that is also progressing very well as well at this stage. Anything else, Kirby? Yes. Maybe during your opening statement, you talked about different skin diseases that this is applicable. So maybe you can talk about which specific ones are you more interested in, which ones you're more excited for? And what's going to be your process in narrowing down which one to be important in the beginning? Sure. So the 3 diseases, as I said, were pyoderma gangrenosum, generalized pustulosuriasis and palmitoplantar pustulosis. We obviously will be conducting a great deal of non clinical work to specifically target or prioritize that order. But what most what we have all in common other than this pretty catastrophic neutrophilic response to immune system is that they are either significantly life threatening or certainly life quality limiting. So for example, pyoderma gangrenosum, the mortality rate for an untreated pyoderma gangrenosum is 100%. So these patients tend to suffer from obviously very large, very embedded ulcers in their skin that ultimately can come with septic and if that sepsis becomes systemic, clearly that has significant impact on mortality. Palma plantar pustulosis, if you can imagine large blisters on the palms and soles of the feet, tremendously debilitating if you can't use your hands or you can't walk. Clearly, that is an area that we will also be looking at. Generalized pustular psoriasis similarly is almost like a broader cutaneous presentation of that. Others have looked in this space as well, very difficult to control as a chronic and relapsing condition and also has significant mortality related to it. So it will be based on in vitro data, ex vivo data, not animal models as we start to prioritize that sequence. But those are the 3 that we're kind of honing in on right now. Dick Harvey, this is Dave too. I would also share that there's been some work that's been done with Vet EASE. We know that there's one company that's looking at developing a topical Vet E for psoriasis. We know that a product, a topical bet inhibitor could also very well be applicable for diseases such as atopic dermatitis because of its potential anti inflammatory effects. But these are marketplaces that as you know, there's been a lot of work in it. We're quite familiar with those marketplaces. We have a product for atopic dermatitis that's getting ready to go into a Phase 2a study, our combination tofacinib, vengolimab product FMX 114. So ultimately our mission is to develop products that can treat significant unmet needs and the areas that Ian outlined, there is no indicated product. And if we can advance there, we believe that could be tremendous for patients. And so we're really excited about that and the prospects of this platform. Great. Awesome. Thank you so much and congrats again. Thank you. Thanks, Harvey. The next question comes from the line of Ken Cacciatore with Cowen. Please proceed. Hey, Dave. Obviously, tough year and share your disappointment in the core assets that you're now going to seek to divest. Can you just talk about the decision process going forward? You are going to continue to spend behind the marketing. So just wondering as you're working through the strategic options, you must feel good to continue to want to spend to preserve the franchise as is ahead of another decision, it sounds like by year end. So can you give us some context on where we may stand in terms of monetizing these assets and again the decision to continue to spend before it sounds like under any scenario you're going to pull back spending by Q1. Thanks so much. Yes, sure, Ken. Thanks. So first of all, we believe that there indeed will be a home for this franchise. We believe there's a lot of value for this minocycline franchise as outlined earlier. The issue is ultimately one of time and resources. And a partner that has the resources and the bandwidth to take this franchise to certainly maximize the potential of it. And again, I want to stress this is an entire franchise. 2 market of products Amzik and Zylksy, a Phase 3 ready asset and a platform with long IP. So this is not a single asset sale or out license. And we think there's certainly value for that. We're getting this process initiated right away. We believe it's prudent to keep some basic support behind this franchise while we go through this process in part, a potential partner may want the infrastructure that goes along with that. So we're not at all abandoning the franchise, stopping supply, but quite the opposite. We're going to keep things moving along, but for a finite period of time. The sales force will continue to be engaged. We intend this to go into the Q4. I think alongside of that though, as I outlined and as Tyler commented, we will and have already significantly cut back supported A and P expenditures and we'll continue to do this ratably as we move through the balance of this year. With while we're going through obviously this process. And then we envision by the time we get to the end of the year, we will materially have completed this transition. And by the time we get to the turn of the New Year, our operating expenditures will be dropped in half. As Kyle outlined, we've been running at an OpEx rate of we've guided $20,000,000 to $25,000,000 per quarter. Over the last few quarters, we've certainly been on the low end of that. That will continue to fall as we move through the next two quarters. And then again, by the time we get to the turn of the year, we anticipate that our OpEx expense will be down to around $10,000,000 a quarter or so, literally cut in half. So really only around a 40,000,000 OpEx for the entire year for 2022. So hopefully that provides some color. I'll see if Tyler's got anything else to add or? I think you covered it well, Dave. Okay. Thanks, Ken. The next question comes from the line of David Amsellem with Piper Sandler. Please proceed. Hey, thanks. So just a few questions here regarding the assets you acquired. Can you talk about the extent to which there was competition for them? And I guess maybe another way of asking it is, were there other parties as far as you know that were looking into the assets. I just wanted to get a sense regarding the extent to which you think you were able to find something that really nobody else was looking at. So that's number 1. And number 2, regarding your strategic thinking on the minocycline franchise, I guess my question here is, as we eventually move out of the pandemic and let's all assume that that will happen at some point, was it just your view that the challenges with payers in particular, excuse me, were just too great and the resource challenges, were too significant even as you move out of the pandemic? And I apologize, I'm losing my voice, so I'll stop there. Okay. No problem. So first of all, regarding the partnership that we have with Infraderm, again, I can't stress enough how thrilled we are with it. We believe it's potentially transformational for the company. This is an outstanding group that we are partnering with. As I outlined, David, we've been following them for some time. It's a group over in Scotland. Ian has had contacts, have been watching this team and talk with them for some time and we believe we're very fortunate. We've been looking and I've commented on this for the past year plus that one of our key objectives is to broaden our pipeline. And I've been very clear, we would and everybody should expect that we would move beyond 505(2)s, beyond tetracyclines, beyond foams, beyond topicals and move towards broader indications and NCEs that can address significant unmet needs for patients. And we believe the partnership that we have with Infraderm is huge for that and is a core for our business going forward. We're fortunate. As I outlined, there's been a fair amount of work for BED inhibitors, especially with some large pharma companies. It's a real credit to the team and to the relation that we've structured with Infra derm that we were able to forge this partnership with them at this stage. So we're excited and we also believe we're fortunate and thrilled to be working with them. So I think coming back to your second question, David, on the decision process. And indeed, I think we all hope and believe that at some point in time, this pandemic will be behind us. But it has been 18 months going on 20 months that we've been facing the and not unlike other companies, everybody out there. It's tough, as I said, commercializing and launching products in any environment, especially for smaller companies of our scale. I've said in the past, there's no playbook in how to do that within a pandemic. I'm enormously proud of the job that the team has done navigating over this time period. But it has been challenging. And as I outlined, we've had to make a variety of adjustments, cuts to the operation, and the organization to sustain our commercial efforts. Ultimately, as I shared, it's an issue of time and money. We have we do not have unlimited resources. And when you look at what's the best way for us to deploy capital and to maximize shareholder value, certainly when thinking through the uncertainties of this current environment, we believe that the franchise in the hands of a partner that doesn't have the constraints that we do will obviously maximize the potential for that business. And that was what was driving the decision and that move and then the subsequent proceeds that we anticipate we'll get from that will certainly be incredibly helpful for us as we advance our pipeline that I've outlined earlier. So we're looking at multiple clinical milestones over a 12 to 24 month period, the first of which will be coming up we anticipate before the end of the year for FMX-one hundred and fourteen, our Phase IIa study. And then as we move towards the balance of 22 and that's when we'll start looking at potentially additional milestones for FMX-one hundred and fourteen and then we'll begin to start seeing the milestones, the clinical milestones for our BETTY products, spine 201 and 202. So that's the decision behind. We believe it's clearly the right decision. We're excited moving forward. But again, it was a difficult decision. It was not an easy decision, but we believe it's the right decision and we're moving forward. Understood. And if I may sneak in a follow-up and thankfully I have my voice back. So in terms of 114, assuming you do see favorable data, how should we think about the trajectory of R and D spend? And I know you said you're going to be cutting the burn, but at some point, R and D is going to ramp up and certainly AD programs can be quite large and expensive. So as we move through 2022, is it safe to say that we're going to see a real uptick in R and D and that eventually the burn will sort of reaccelerate? Obviously, it's very different kind of burn, but just help us think through that. Yes, David. This is Tyler. I'll take that question. So in terms of next year from an OpEx perspective, I mentioned the $10,000,000 per quarter, that assumes success in the Phase 2a in bringing FMX-one hundred and fourteen into the 2b trial. And so that as we look further in potentially success beyond the Phase IIb trial, we could see expenses increase beyond 2022, but we'll look at that as we get the final trial design and things of that nature. But just to reiterate, for the Phase 2b that we anticipate, that's within the $10,000,000 per quarter that we've estimated. Yes. I think that further context to that, David, is that includes not just a potential Phase 2b, but obviously the work that we will be doing for both VIN-two zero one and two zero two and taking those into the clinic. So we believe certainly when we move into next year, we will have obviously a significantly reduced OpEx and the majority of that will be for the R and D efforts that we're we'll be conducting across 3 programs. So when and when you couple that or compare that versus say 1 Phase 3 program for FCD105 that we've outlined before, that would cost $35,000,000 plus for 2 pivotal Phase 3 studies in a long term extension. We will be able to, again, assuming success in the 2a study for FMX-one hundred and fourteen, we'll be able to our plan is to have obviously a IIb study, a dose arranging study and a couple of early stage Phase 1, Phase 2 studies for both VIN-two zero one and two zero two. And that's all within the $10,000,000 per quarter that Tyler outlined. So obviously as you move out beyond 2 years, then things can change. But as we say, I would view those as high class items for us to deal with. And we're excited about the prospects and assuming we demonstrate proof of concept and efficacy for these programs, I think things will fall into place after that. I can't stress enough how we're excited about this platform and the prospects of it going forward. So hoping that gives you some context over the next 18 months of spend. Yes, that's helpful. Thanks, Dave. Got it. Feel better. Thank you. Yes. The next question comes from the line of Patrick Dolezal with LifeSci Capital. Please proceed. Hi, thanks for taking the questions. So I think I'm understanding the decision making process behind the divestiture of the existing commercial assets. But kind of going forward, how will you plan to prioritize the pipeline to avoid such pitfalls in the future? Obviously, there's been a bit of a strategic reprioritization in terms of the targeted disease areas. But perhaps speaking more specifically to 114, if you could describe to us why the commercial environment is different in mild moderate atopic derm versus acne rosacea and whether there's any reason to believe that similar headwinds might be faced for that program? And then maybe providing context around the BET inhibitors and the indications you're going after there would be helpful as well. Yes, sure, Patrick. Obviously, with the bet inhibitor platform, and I want to stress that, that's a platform for us to develop and work in partnership with Infra derm, multiple programs, multiple potential shots on goal over the course of time. But obviously we're going to be disciplined and decide where we take these assets first. But these are new chemical entities. The topical program that Ian outlined, our intent be to take it into rare skin diseases. And when and for the oral program, that'd be your larger broader INI type of indications, rheumatoid arthritis, ulcerative colitis, Crohn's, etcetera. And our view is that assuming we're successful, we will have highly differentiated products in markets that have significant unmet needs and will create the right profile for payers as we advance these programs. I think similarly to what you mentioned around 114, there obviously is significant unmet need still for atopic dermatitis. We focus specifically on the mild to moderate area with 114. Most a lot of the work that's being done is in your moderate to severe area. And we believe from a commercial perspective that it's more prudent to address the mild to moderate arena where there's not a lot of optionality or other than steroids or products that are relatively have minimal effectiveness. So we're encouraged certainly by our preclinical animal data that we shared earlier in this year. We're excited to get this program off the ground as Phase 2a. We are first in human study and assuming that the results if they're anywhere in the range of what we showed in our preclinical data, I think that will that could be highly beneficial obviously for patients and providers and for the payer arena. So that's our view on it. And hopefully that provides you some color and some context. That's helpful. Thanks. And I guess just one more, perhaps if you could just provide details around the Pateges Pharma ANDA filing, your take into the likelihood of marketing approval and timeframe and any impact as it relates to the successful licensing or sale of the minocycline portfolio? It's Mucha Harsh. So with respect to the Paragraph 4 litigation, we obviously expected that there would be ANDA filings to ANZYK. This is something that's not new to the therapeutic class. In particular, we knew that it was likely to come. We obviously can't comment on the specifics of the litigation, but we're well prepared to deal with this litigation. As you know, we've filed an infringement action earlier this week. We have 12 patents listed in the orange book and have had experience dealing with Perrigo in the past with regard to the Venetia Foam litigation that we worked with, with Leo Pharma. With respect to the sale and the Paragraph IV litigation, I mean, I don't think that any partner or potential partner would be surprised if there is a Paragraph IV litigation already outstanding. There's going to be a stay until December 2023. And we'll deal with it as matters progress. And obviously, we have strong confidence in the strength of our patents and we're going to vigorously defend them. Great. Thank you. You're welcome. Thanks, Badri. The next question comes from the line of Horne Livnat with H. C. Wainwright. Please proceed. Hey, don't mean to beat a dead horse, but I do want to follow-up a little bit on David's questions regarding the decision to exit the commercial business. Can you just talk about your view of that landscape evolution in general? If the pandemic was over, you think we're still in a new normal and that it's just not really viable with realistic resources for a small company, one molecule to launch into the space now given the pair landscape, really just a question of scale and breadth of the portfolio? Or is it molecule specific? Do you think topicals or in the acne space in particular are uniquely challenging? And then I do have some other pipeline question. Yes. Thanks, Oren. So I'm not one to speculate, but the reality is that we've been in a pandemic for 18 months and we've had to deal with that. And I'll just reiterate again, it's challenging to launch a product for any company, especially a company of our scale. We demonstrated out of the gates the potential of VanSiek going all the way back to the 1st few months of 2020. But then the world changed. COVID changed and we've been wrestling with this ever since. As you recall, we had a period of 4 months or so where we're basically shut down and try and pivoted to a digital process. That's tough for small companies. Larger companies certainly have more resources. We certainly again believe in the potential of the franchise. But when we balance the current environment in commercialization with COVID and as I'm and challenges with the payer arena, balance that with the opportunity we have to advance our pipeline. Ideally you'd like to be able to do both. But for a company our scale, we don't have that ability. And we believe again that the opportunity to maximize shareholder value is to transition and focus our efforts on advancing our very unique and proprietary pipeline. We're obviously excited about that. Coming back again to just the overall environment, these are really good products. This is a really good franchise. And patients have spoken very well of AmZinc and Silksy as have providers. We've got a franchise. We've got a Phase 3 ready asset with FCD105. The results in the Phase 2 study were potentially best in class. But ultimately, we can't predict the future. We've been dealing with this for over a year and a half. There's still we all know right now what's going on in the environment, the additional issues with the COVID variant. I have no idea how long this is going to go, but we believe that it was clearly the prudent, responsible decision to make this change now because if it doesn't change or not ratably change, we could be in a different situation as we move into next year. And so that's the rationale behind it. We believe again a partner that's got the appropriate resources and structure to maximize potential of this and we look forward to having those discussions. Yes, I don't doubt the I think it's pretty obvious from an optionality perspective. There's a lot more exciting to take your ladder strategy with the pipeline. With another company's transition from commercial to R and D and it's worked out pretty well. To that effect in the Bay platform, you mentioned there's some exciting science there, in vitro and preclinical or all in vitro that you're basing your decision on right now. Is there a specific topical, I guess, proof of concept in your mind with regards to this platform? I assume the oral targeting of these inflammatory pathways is not necessarily the same as the topical. Do you have a unique technology in mind to marry with this? Or is this just spread it and forget it, so to speak, and it should you hopefully mimic what you're seeing in the test tube? Okay. I like that Oren, spread and forget. Yes, there is. So as I said in my comments a little bit earlier, it's one of Louise's questions. The VYN-two zero one is a pan bromodomain BET inhibitor. I also mentioned the fact that bromodecine 1 may potentially impact on the overall benefit risk of the product. So we're really addressing that three ways and this is what makes VYN201 quite unique. One is to go topical. Obviously, inherently, that's the potential to reduce overall systemic exposure to these active ingredients. 2, we've actually programmed then a specific metabolic liability so that any drug that is systemically exposed is rapidly inactivated and cleared by the liver. So that obviously keeps systemic exposure low. And the other one is today's prepared remarks, we're targeting neutrophilis dermatoses where there is no indicated indication that these are potentially life threatening disorders and we see great utility to the clinical application for that. So that's the three elements where we see the uniqueness of VYN-two zero one as a topical. As I said, we are aware of one other bromodomain, an N terminal inhibitor that's been developed for topical psoriasis, but we believe and of course ours would also be equally applicable to psoriasis and more general dermatological indications. We see the biggest need is pretty catastrophic neutrophilic dermatology. Okay. And if just I may on the paragraph 4 situation, which I understand you can't comment that much. Can you just remind us, is there a draft guidance on that front for topical minocycline? Should we assume that any ANDA filer has to do actual clinical trials? And if they filed MANTA, should we assume they already did? That's a good question. There is no product specific guidance yet. It's out there for topical minocycline. But if you look at the reference other paragraph product specific guidances for topical complex products like fenatifolme, they had to do a clinical trial. Right. So I guess you can file it and hope it works out, but if that guidance comes out that you have to do a trial that end pretty much pre square one, right? I can't predict, but I think you're on the right track. Okay. Appreciate it. Thanks. Thanks, Alarm. Cheers, Alarm. The next question comes from the line of Balaji Prasad with Barclays. Please proceed. Hi, good morning and thanks for the questions. David, hi. While I can understand the commercial challenges currently, I wanted to understand this rationale behind the sale further, especially with the PIFO against it. I'm trying to get your thoughts on how can such a commercial agreement evolve with the risk of an IP? And from your own perspective, would it have been better for you to mitigate this IP risk and then explore a sale? On the same extension of that question, I also want to understand the value of the tech platform, which you're also planning to sell with the power ParaCore against the lead asset generated from this platform. Lastly, wouldn't retaining the tech platform as you continue to build a newer dump pipeline made more sense? Or do you see no synergies resolved with this platform now? Thanks. Yes. Thanks, Blaj. I'll take the last 2 and then I'll turn it to Mutu for your first one. In terms of the platform itself, just to be very clear, the platform is our molecule stabilizing technology specific for minocycline. It is not specific to the rest of our portfolio of products. As we've talked about over the course of the last several years, developing a topical tetracycline or topical minocycline is very unique. We have upwards of nearly a dozen different foam platforms within our library. The only one that works is specifically this MST platform for our minocycline franchise. It is as we've talked about in the past, it's our oil based or lipid based foam technology, which is very specific. If you took, say, these tetracyclines, in this case minocycline, and you try to use any one of our other platforms that we have, it would not work, it would degrade. And so I just want to again be clear and subsequently taking other compounds and dropping it into that platform would be very difficult. So when I say that it's the franchise including the platform, it's specific just to the minocycline product line that we have Amzeq, ZILCY and FCD105, which all have minocycline in it. So hopefully that helps. Yes. And with regard to the earlier questions, and I think I'm understanding what you're asking. I mean, we're obviously open to all different forms of deal structures, whether it's a license or whether it's a sale. And with regard to sale or license, while there's a Paragraph IV litigation outstanding, I mean, we know a number of deals that have occurred where there is a Paragraph 4 litigation outstanding. Obviously, the parties will need to factor that in with regard to what the deal terms might look like, but there's certainly precedent for deals that have occurred with the Paragraph IV outstanding. I don't actually think that that's going to be an issue, as I mentioned before, with regard to the strength of our litigation as folks get into due diligence on our patents, I think that they'll feel the same. Furthermore, I think that as you know, litigation Hatch Waxman litigation can go on for a long, long period of time. To wait until the resolution of such a litigation would not be prudent for us as we want be able to progress our strategic strategy as soon as we can. So again, I don't think that it's going to be an issue, and we've certainly seen other deals where there is P4 litigation outstanding in connection with a license for sale. Thank you. Sure. And there are degree to be no further questions. I'll turn the call back over for any closing remarks. Okay. Thank you, operator. Again, we cover a lot here today. It's a transformational time period for our company. We've got a lot of work to do. We look forward to providing you an update on our progress in the coming months and next quarter. So thank you again for taking time out of your days and we look forward to speaking with you soon. Thanks and have a great rest of the week and a great weekend. Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.