Greetings. Welcome to Foamix Pharmaceuticals' fourth quarter and full year 2018 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Michael Wood of LifeSci Advisors. Thank you. You may begin.
Thank you. Good morning, everyone. Thank you for joining us this morning on the call. Yesterday, after the market closed, Foamix issued a press release with earnings results and a corporate update for the year ended December 31, 2018. The press release is available on the investor relations page of the company's corporate website. This call is being recorded and webcast. A replay will be available on the company's website for the next two weeks. Before we begin the formal remarks this morning, let me remind you that some of the information in the news release and on this conference call will 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. Their absence does not necessarily mean that a statement is not forward-looking. Such forward-looking statements are not a guarantee of performance. The company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute such differences are described in detail in Foamix's filings with the SEC. These forward-looking statements speak only as of the date of today's press release and conference call. 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.
Participating in today's earnings call are David Domzalski, Chief Executive Officer of Foamix; Ilan Hadar, the company's Chief Financial Officer; Dr. Iain Stuart, Chief Scientific Officer; and Matt Wiley, Chief Commercial Officer. They'll be on the line and will be available to answer questions during the Q&A session. With that, I'll turn the call over to David Domzalski. Dave, please go ahead.
Thank you, Michael, and thanks to everyone for joining our call this morning. We're still early in 2019, but this is already shaping up to be another very exciting year for Foamix, with the potential for further transformation of the company and value creation. We reached another major milestone in December with the filing of our first NDA for our most advanced candidate, FMX101 for acne. We anticipate a PDUFA date sometime in the fourth quarter of this year, and if approved, a commercial launch of FMX101 shortly thereafter. We plan to file a second NDA for FMX103 for the treatment of rosacea by mid this year. We believe both of these products have the potential to address significant unmet needs of large global patient and healthcare provider populations.
As we transition to commercialization, we see a great opportunity to serve the dermatology community as well as create value for our shareholders. I want to focus my discussion this morning on three areas. These are, one, clinical and regulatory updates on our two lead candidates, FMX101 and FMX103. Second, the commercial opportunity for FMX101 and some detail on how we plan to capitalize on this market. Lastly, our pipeline activities for this year, specifically FCD105. Beginning with FMX101, which we are developing for moderate to severe acne, the NDA submission was made in December of last year under the 505(b)(2) regulatory pathway. We are in active dialogue with the Division of Dermatology and Dental Products at the FDA, and we are waiting on formal communication regarding the status of our NDA submission, which we believe will be an acceptance of our application filing.
We expect to provide an update on the progress of the review very shortly. The NDA is supported by a very comprehensive data package, including the previously communicated results from two phase III studies, FX2014-05 and FX2017-22. In these studies, FMX101 met both co-primary endpoints, demonstrating statistically significant improvements in inflammatory lesion counts and investigator global assessment treatment success. The safety profile of FMX101 was generally favorable and consistent throughout the clinical development program. The NDA submission also incorporates information on chemistry and manufacturing controls and data from nonclinical safety studies on FMX101. We held a Type B pre-NDA meeting with the agency in February of last year to discuss the submission of a 505(b)(2) application for FMX101. During the meeting, we discussed various matters relating to the overall development program of FMX101, including CMC, nonclinical tox studies, format, and other information required for the NDA submission.
There were no unexpected action items requested of the company during the pre-NDA meeting or in the meeting minutes that we received later. Turning to FMX103, our 1.5% minocycline foam candidates, which we are developing for papulopustular rosacea. The highlights of the phase II program were that in both studies, FX2016-11 and FX2016-12, we successfully demonstrated a statistically significant disease improvement of FMX103 versus vehicle for both co-primary endpoints of absolute reduction of inflammatory lesion count and proportion of subjects achieving IGA treatment success, which was defined as at least a 2-grade point improvement from baseline and a score of 0, which is clear, or 1, almost clear, at Week 12. In these studies, FMX103 was also shown to have a generally favorable safety profile. Treatment-emergent adverse events were few in type and frequency, most were mild in severity, and no treatment-related serious adverse events were reported.
Patient discontinuations due to treatment-related adverse events were low in both studies. Earlier this week, we announced results from our long-term open-label safety study, known as Study FX2016-13. This was to evaluate the safety of FMX103 therapy for up to an additional nine months of treatment. The study enrolled a total of 505 patients who had participated in either of the preceding double-blind studies. 410 subjects completed participation in the study, with 272 subjects having received FMX103 therapy up to one full year. This is significantly in excess of the regulatory minimum requirement defined with ICH E1A guidance for the safety evaluation for this type of product. Similar to the preceding double-blinded studies, treatment-emergent adverse events were few in this open-label study, with most being mild in severity.
Subject discontinuation rate due to an adverse event was low, and there were no treatment-related serious adverse events. Treatment area tolerability was comparable to the previous double-blind studies and remained high. This latter point is a particularly important factor for patients with rosacea that struggle every day with very sensitive, inflamed skin, where tolerability challenges with topically applied agents are quite common. Efficacy was also assessed in this open-label study. Since all patients were provided active product during this study, there were no comparative statistics performed. We are encouraged to see that efficacy for both co-primary endpoints defined in the double-blinded studies continued to develop over the course of the additional nine-month treatment duration.
On average, participating subjects who had FMX103 therapy for up to one year experienced more than an 80% reduction in inflammatory lesion counts at that time point when compared to their baseline values of the preceding double-blind study. In addition, more than 80% of subjects had an IGA score of either clear or almost clear at the end of the study. We're obviously very pleased with the results of this open-label safety study for FMX103, and now our attention moves to NDA submission preparations, which are progressing as expected. On behalf of Foamix, I wish to thank all the patients and healthcare providers who have participated in our various clinical studies for our rosacea program. Operationally, our clinical development team, led by Dr. Iain Stuart, and our CRO partners, have done an excellent job progressing FMX103 to this point.
As we previously announced in January, we have been able to bring forward our anticipated NDA submission timing to mid this year, which will be our second NDA filing within a year. On the organizational front, we are continuing to build out our senior leadership team. We were very excited to announce this past November the appointment of Matt Wiley as our Chief Commercial Officer.
Matt has an exceptional commercial record in the pharmaceutical industry and brings valuable experience and depth of knowledge in marketing, market access, and product launches. He is responsible for the development and execution of commercial strategies of the company's product portfolio, including the planned launches of FMX101 in acne and FMX103 in rosacea. FMX101 will be launching into a sizable and durable market opportunity.
Over the last five years, there have been over 7.5 million unique acne patients diagnosed and treated by healthcare providers. In the branded acne market alone in 2018, there were over 5 million prescriptions written in the U.S., which generated over $3.5 billion in revenue. Peak net sales of leading brands in the category have historically ranged between $200 million and $500 million. Monthly prescription levels of the most recent new product entries have averaged approximately 25,000 per month exiting the first year of launch. We believe, based on surrogate launches in acne, that the environment for novel branded entrants into the market is quite favorable. We also understand that as an emerging specialty pharmaceutical company, that our market entry strategy needs to be innovative, fiscally responsible, and highly effective.
Key tenets of the strategy are: first, to ensure patients get good access through payers and other means. Next, to deploy a unique and differentiated value proposition to healthcare providers and payers. Third, leverage patient-level data and predictive analytics to build a smart targeting approach. Lastly, use digital marketing efforts to drive active consumer engagement and product request. The payer landscape has changed in the last few years. Patient benefit and value, along with price, are the key elements for sponsors to have their products accessible to patients. In market research that we conducted late last year with 10 payers that manage over 230 million lives, the reaction to the FMX101 product profile was positive, scoring an average of 5 out of 7 on a favorability scale, 1 being very unfavorable and 7 being extremely favorable.
They also indicated they would expect to pay between $200-$400 net to plan, which suggests there is perceived value within this audience. We will continue to refine our market access and pricing strategy during the next two quarters, but we are certainly encouraged by this early signal. Our patient claims analysis from payer data reflects a highly concentrated number of healthcare providers that we would target our commercial efforts against. We expect that we can reach over half of the diagnosed acne patients in the U.S. alone by focusing on only 5,000 healthcare providers. As such, we anticipate a relatively small sales force of approximately 50 representatives would be appropriate to fully support FMX101 at launch. Finally, we believe there are very efficient and largely underutilized channels to reach acne consumers and patients versus traditional marketing tactics that can be expensive with limited productivity.
The acne patient population is largely between the ages of 12-24 and spend significant time engaging with and seeking health information on digital platforms. We feel this is an opportunity to connect with this population in a meaningful and cost-efficient way and are developing our consumer strategy to capitalize on it. Regarding our pipeline, our most advanced follow-on product in development after FMX101 and FMX103 is our product FCD105, which is our combination foam product of minocycline and adapalene for the treatment of acne. Adapalene is one of the most widely used retinoids for comedonal acne and is found in the leading acne brands available in the market. We believe combining adapalene with minocycline could present another significant advancement in topical therapy for acne patients.
We have completed initial non-clinical toxicity evaluations and have submitted a pre-IND meeting request to the FDA, along with our proposed phase II clinical study protocol this past December. We plan to initiate this phase II study in the U.S. sometime in the second quarter. One of our objectives in building shareholder value is creating durability around our acne rosacea franchises. We believe the development of a product like FCD105 behind our flagship products, FMX101 and FMX103, plus the earlier-stage programs we discussed at our R&D day, can establish a substantial, profitable, and sustainable business in this therapeutic area alone. At this point, I'd like to turn the call over now to Ilan Hadar for review of our financial results. Ilan?
Thank you, Dave, and good morning, everyone. Total revenues for the year ended December 31, 2018 were $3.6 million, slightly lower than the $3.7 million reported in the prior year. The revenues for 2018 consisted of royalty payments in the amount of $3.5 million and $62,000 from contingent payments. Our research and development expenses for the year ended December 31, 2018 were $64.5 million compared to $67.8 million for the year ended December 31, 2017. The increase year-over-year resulted primarily from an increase in cost relating predominantly to FMX101 and FMX103 clinical trials, an increase in consultant expenses, an increase in payroll and payroll-related expenses, mostly due to increase in headcount, bonuses, and share-based compensation expenses.
Our general and administrative expenses for the year ended December 31, 2018 were $14 million, compared with $11.5 million for the year ended December 31, 2017. The increase in SG&A expenses was primarily due to an increase in consultant expenses, mostly relating to pre-commercialization activities and an increase in payroll and other payroll-related expenses, mostly due to increase in headcount, bonuses, and share-based compensation expenses. Our net loss for the year ended December 31, 2018 was $74.2 million, or $1.70 per diluted share, compared to $65.7 million, or $1.76 per diluted share for the year ended December 31, 2017. At December 31, 2018, we had $99.4 million in cash and investments, compared to $76.4 million at December 31, 2017.
We anticipate that this existing cash and investment will be sufficient to fund planned operating expenses and capital expenditure requirements through mid-2020. For further details on our financials, please refer to the Form 10-K and the financial statements filed with the SEC. I will now hand the call back to Dave for closing remarks.
Thanks, Ilan. Before I open the call to questions, I want to mention that we will be at the American Academy of Dermatology annual meeting, which kicks off today in Washington, D.C. We'll have a booth in the exhibition hall where our medical affairs staff will be on-site to discuss our clinical data as well as our proprietary foam technology with the medical community. In addition, a number of leading dermatologists who have acted as investigators in our trials, including Dr. Linda Stein Gold and Dr. Hilary Baldwin, will be delivering oral presentations on the latest products, and we expect that our clinical data will be featured in some of these discussions. For more details, please refer to the press release we issued on February 26th or to the AAD program that's posted on the Academy's website.
With that, I will now return the call back to the operator and open the call for any questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Jason Gerberry with Bank of America. Please proceed with your question.
Hey, good morning. Thanks for taking my question. First, just question for Dave. Just curious, your thoughts on, I'm not sure if you heard, Bausch's recent comments about moving to a cash pay model in dermatology, the company specifically flagged acne as an area where they'll deploy this model. The argument is, I guess, to improve predictability of payment and get around the uncertainty of prior authorization. So, just kind of curious your thoughts regarding this type of model in the acne space. Does this make sense for a company like Foamix?
Sure. Thanks, Jason. I'll have Matt offer a few thoughts, but after my comments. I am aware that's an approach that Bausch is looking at. I think obviously this is going to be a decision that's company driven, but more so product driven. A lot of it's going to be based on payer reactions. When, as I mentioned earlier, the research that we've done for FMX101, we were quite pleased with. I think it comes down to, do you have a product that is novel, unique, and can address unmet needs for the patient population, healthcare providers, and also for payers. The payers in the research that we conducted viewed our product as certainly more than a formulation change. They viewed it as being novel, unique, and had the ability to address significant unmet needs in the category.
Obviously, if our product's approved, we would be the first topical, second generation tetracycline ever approved. Our safety profile, along with our efficacy data, we believe is quite impressive and meaningful, and it certainly appears to be the response we're seeing from payers. Although it may be an approach that certain companies will look at, such as Bausch, we believe that when it comes to our products, that the reimbursement landscape could be quite favorable for us. We intend to continue down this path for our product being a retail-based product that would be reimbursed by payers and distributed at the pharmacy level.
Matt, I'll turn it to you to see if you have any additional comments to offer.
Yeah, just a couple. Thanks, Jason, for the question. First of all, the Retin-A space is relatively satisfied as far as the payers are concerned, and that may be one of the reasons that the cash pay model is appropriate for that particular brand. I can tell you that based on the market access, market research that we did, that particular product in question was not analogous to FMX101. We believe, as Dave said, that we will have a value proposition that'll take the product to full P&T.
Got it. If I could just ask a couple follow-ups. Can you just remind us in terms of how you'll scale up to the 50 sales reps by time of launch? Where are you at in that process in terms of hiring reps on a contingency basis? When you do go to market, will the initial focus be on the topical segment or going after oral minocycline?
Thanks, Jason. I'll take the first piece on scale up. Matt, I'll turn it to you for segmentation discussions. Over the course of, I'll call it the upcoming 12 months or so, our activities will predominantly be around healthcare provider awareness, medical affairs, medical communications driven. This obviously gives us an ability to articulate the science behind our product, the data behind our product, create a lot of awareness. As I shared, we will have a significant presence at the Academy meeting this weekend. These are efforts that are not significantly cost intensive. We could be very smart, very judicious in the spend of our dollars. As we look to scale for the launch, that will not happen until we get closer to a PDUFA. There's no need for us to build out the salesforce infrastructure.
We're being selective in bringing certain important strategic positions in the organization around marketing and market access. As we've talked about in the past, obviously the largest component of an A&P spend often is the salesforce. I think two things. One is that we believe, again, this is an efficient place to launch products in. We can deploy a salesforce of around 50 sales colleagues, to address the large percentage of prescribers in the category. We can be very efficient in that regard. Secondly, we don't need to deploy those representatives until it's clear that we have an approved drug. We can certainly do a lot of background work. We can have, if you will, offers teed up. We would not actually bring people on board until we actually have an approved drug.
That puts us towards the back end of the year, assuming PDUFA for some time in the fourth quarter. Matt, I'll turn it to you for thoughts on targeting segmentation.
The way that we think about targeting is largely based on patient concentrations. We believe that because there's not another topical tetracycline in the market, that we are going to draw from a lot of different brands as we launch in this space. We have seen some of that in early market research as well. The way to think about our targeting approach is we're somewhat indifferent to the predilection for competitive products and focus more on the acne patients and where they reside, and we'll get sharper on that model, where we think we're going to displace products over time.
Yeah, I think, Jason, some additional color, obviously when you think through where are the opportunities, this is a topical version of a highly effective, widely used oral antibiotic minocycline, brands such as SOLODYN and the likes. We know it's a large space. There are roughly 1 million scripts alone that come from the oral antibiotics. If you think through where, as you often talk about, where's the low-hanging fruit, that's clearly a place that seems to make a lot of sense, is that we can encroach upon business that's in the oral antibiotics. It's a pretty large, low-hanging basket of fruit, if you will. Also because it's a topical therapy and our data, we believe, is quite compelling. Certainly not the efficacy, but our safety data, we believe, is quite compelling.
We've not seen significant dermal side effects that are associated with a lot of the currently available topical regimens. We believe that we've got the utility, if you will, to grab patient populations from both the oral antibiotic arena, but also the topical therapies. I think it gives us a lot of flexibility. If you take a look at some of the previous products that have been launched, whether it's been the retinoid/benzoyl peroxide combinations, the sulfone products, adapalene. If you take a look at the clindamycin marketplace, clindamycin plus benzoyl peroxide, these are still significantly large marketplaces. That's why we are quite bullish on the opportunity to draw prescription volumes and bring patients to our products if our drug's approved.
Got it. Thank you.
You got it.
Our next question is from Ken Cacciatore with Cowen and Company. Please proceed with your question.
Thank you. Good morning, guys. Just, Dave, you did a good job of outlining a very focused marketing effort. I wanted to drill down a little bit deeper. We have seen some companies go out a little bit broader and then have issues in terms of profitability per prescription in certain regions. Just maybe you could help us understand, when you talk about this focused strategy, is it a regional, is it predicated on timing of coverage? What have you learned over the last couple of years if you've seen these other launches, and how can you do it more efficiently? That's the first question. Second question is there's a little bit of confusion, ours included, about how compounders are impacting the derm space.
It's my understanding, and you can confirm, clearly the novelty of your product is in the formulation, and my assumption is clearly no one would ever be able to compound this product or your products the way that you formulated them that are so challenging. Can you just talk about what's going on in this dermatology space in general, maybe compounders implication, and just confirm that your product would avoid all of that? Thank you.
Sure, Ken. Thanks for the questions. Yeah, I'll take actually the second one first, and I'll turn it back to Matt to talk about our sequencing of events when we get ready to launch FMX101. You're already alluding, though, to, in large part, what our thinking is on how to be smart and cost-effective in launching FMX101. Before I turn it over to Matt to comment on that, regarding compounding, it's been prevalent in the arena for derm-based products for some time. For a product like ours, minocycline has not been available as a topical formulation ever. We believe if our product is approved, we would be the first 2nd-generation tetracycline that would be available topically. This is first and foremost not an easy thing to do.
As we talked about the genesis of this product, FMX101, goes back some time and took the company over three years to figure out how to develop this and hundreds of different excipients that were tested to ultimately come away with a physically stable, chemically stable, cosmetically appealing product. It's really a true credit and testament to the founders of Foamix and the work that was done from an R&D perspective in the past. If you think about the active itself, minocycline, it is a highly unstable molecule. Most topical products that are available on the market today, their base is water and/or ethanol alcohol. Active such as minocycline, if they're exposed any meaningful amount of water ethanol alcohol tends to degrade quite rapidly. This, as you can appreciate, makes it quite difficult to develop into a physically stable and cosmetically appealing product for consumers.
That alone plus is quite a significant challenge for anybody to be able to compound this. I would not venture that pharmacies at all would be able to do such. I think added to that is we have quite a robust intellectual property estate. As I've often shared, we have over a half a dozen patents that are directly associated with the topical tetracycline products in our platform. These are patents that go out to 2030, and we have several other patents that are currently pending.
Hopefully that addresses that question, Ken, and then I'll turn it back over to Matt to talk about the sequencing of the deployment of our commercial efforts. Matt?
Thanks, Dave, and thanks for the question, Ken. Traditionally, the way targeting has been fashioned is to define a market basket, look at the prescription concentrations, assign that to a specialty, and then define your targeting model. We think about it a little bit differently. We purchased patient claims data through Symphony Health. We identified where the patients are. This is a national, not a regional strategy, but we're going to where the concentration of the patients are. That helps us on a couple fronts. One is we're not trying to decide what the market basket looks like in total, and that can cause a relatively bloated deployment.
The other thing is that in the managed care environment that we live in today, if the Rx is written for something other than the stated indication, that can be problematic. We want to make sure that we're focusing on the patient population that we want to serve. What we've seen in our data so far is we can get to 60% or so of the acne patient population in a concentrated physician universe of about 5,000 docs. That's how we intend to do it. What we do see, too, with the rosacea concentration is we see about 60% of that population in 2,500 physician offices.
The overlap there between acne and rosacea is about 40%-50%, which means that over time, we can appropriately scale up to service that opportunity as well. It also gives some time as we're working through access barriers within the first six months of launch.
Thank you.
Our next question is from Louise Chen with Cantor Fitzgerald. Please proceed with your question.
Yes, thanks. This is Sudan Loganathan in for Louise. Thanks for taking my question. I have two here. First, I wanted to ask, what are the other milestones and catalysts that you plan for the remainder of this year, then also going into early 2020 to kind of keep the momentum that has been developed in 2018 and also with the recent long-term safety extension data of FMX103? Secondly, how do you see pricing for a topical FMX101 to compare to other topicals in the space currently approved? Thanks.
Thanks, Sudan. I'll take the first question regarding milestones, then I'll turn to Matt to address the second question regarding pricing. Regarding milestones, what do we have coming up this year? One obviously is we are waiting what we anticipate to be an acceptance of filing for FMX101. We anticipate that timeline is imminent. That's one. Second, obviously, is we intend to commence our phase II study for FCD105 sometime in the second quarter. Third is that we anticipate filing our NDA for FMX103 somewhere around the midpoint of this year. Lastly, assuming that we receive an acceptance of filing, we anticipate a PDUFA for FMX101 sometime in the fourth quarter of this year. As we start moving into 2020, one obviously will be the launch of FMX101, which would be sometime in the early first quarter of 2020.
We also anticipate having the top-line readouts of our phase II for FCD105 in the second quarter or so of next year, and then a potential PDUFA for FMX103 sometime around the mid-year or so of 2020. We do have a significant number of additional milestones along the way. As I mentioned in the R&D day in January, we've got other earlier-stage products that we would anticipate would be ready to move into the clinic as we round into 2020, but it's a bit early for that yet. The milestones I've just outlined, those are the significant ones, and there are several over the course of the next 12 months.
Matt, I'll turn it to you regarding pricing.
Sure. Thanks, Dave. As I think we all know, the market access landscape continues to change. There are a number of pharmaceutical CEOs that were here in Washington on Capitol Hill this week testifying on pricing. We expect that we have to be conscious of the fact that it is changing and will continue to evaluate price through market research over the course of the year and make that decision much closer to launch. The key takeaway from my perspective from the market research that we have done that's encouraging is that the plans do see value, and they expect a net plan price of somewhere around $200-$400. That means that there is some value to be had here, and we'll make that pricing decision accordingly over time.
Okay, thanks.
Our next question is from Raghuram Selvaraju with H.C. Wainwright & Co. Please proceed with your question.
Good morning. This is Edward on for Raghuram. Just a quick clinical question. It looked like from the extension data from FMX103 that was put out recently that the data actually looks better if you move out into the 40 and the 52-week data.
Just wondering if you could expand a little bit on which proportion of patients achieving the IGA treatment success compare to some of the earlier double-blind data compared to placebo, and just whether it was reasonable to state that some of the efficacy that was seen in this extension of the FMX103 is improving markedly as the treatment course progresses.
Thanks, Edward. I'll turn that to Iain, who's our Chief Scientific Officer, on the phone, who ran the study. Iain, take it away.
Sure. Thanks, Edward. Thanks for the question. Yeah, we are encouraged that the efficacy continued to develop over the course of the treatment beyond 12 weeks. I think what's also quite interesting here is our discontinuation rate for any reason was very low. It can be a challenge, particularly to keep patients engaged for such a long treatment window of up to a year. The safety profile, again, is very similar to what we had in the double-blind. I wouldn't say there was any statistically relevant differences between them, the double-blind and the open label. As you're aware, this is a lower concentration relative to our FMX101 product, where we also reported top line open label data towards the end of 2017. Again, there had excellent tolerability profile. We are encouraged.
Albeit, this is open label data, so there's no comparator as part of this data in relation to efficacy. We are encouraged to see the efficacy continue to develop.
Okay. Thank you. In regard to Finacea, I was just wondering if the growth is likely to resume anytime in the foreseeable future. Will the royalty-based revenue from sales decline if we're going forward?
Yeah. Thanks, Edward. Regarding Finacea foam, we're obviously proud of the collaboration that we have on this product. It's obviously changed hands towards the end of the third quarter, beginning of fourth quarter of last year. LEO Pharma is now our partner who is handling the marketing commercialization efforts of Finacea foam. That is obviously a primary product of focus for LEO. The gel product has since gone off patent.
The primary branded product that is being marketed and promoted is the foam product. We've had meaningful royalty revenues on a quarterly basis for the last year or two. We anticipate that should at least remain stable, if not increase over time, as the transition of business from Bayer to LEO settles in. We're encouraged by the relationship with LEO and certainly their commercial expertise in marketing products. Our view is that, again, it should remain stable or increase over time as that business gets underway.
Just one final clarifying question on FMX103. I think previous guidance said launch was going to be in 2021, it sounds like your PDUFA is in mid-year next year. I was just wondering if the launch would also be in 2020 or if you're still looking at 2021.
Again, we anticipate filing the NDA for FMX103 around the midpoint of this year. Assuming the file is accepted, that would put a PDUFA sometime 10 to 12 months post that. That would put a launch of the product towards, I would say the second half of 2020. As we have brought forward the filing, the potential introduction of that product also comes forward. Hopefully that answers your question.
Yes, it does. Thank you for the clarity, and thanks for taking the question.
You got it.
Our next question is from Patrick Dolezal with LifeSci Capital. Please proceed with your question.
Hi. Thanks for taking the question. In the long-term safety study for FMX103, can you just provide any additional detail on the dropout from week 26 - 52? Is there any indication as to whether efficacy played a role there, or is this just patient compliance? The second question is on FCD105. Just curious if you could speak to how a product containing minocycline and adapalene would fit into the acne treatment paradigm. Would this be used in a similar setting to FMX101, and how might this be differentiated from competing therapies? Thanks.
I'll take the second one, Patrick, then I'll turn it to Iain for your first question regarding the dropout rates for the long-term safety extension. When we look to develop our next product to, again, create sustainability and durability for our acne franchise, our focus is to try to develop better products for patients. We're obviously excited about the opportunity and the prospects for FMX101 for the treatment of mild to severe inflammatory acne.
We've seen what we believe to be impressive efficacy and safety data for that product.
When we take a look at the FCD105 product that we have in development, that combines both what we would anticipate to see from a minocycline-based product with the leading retinoid that's used primarily to treat comedonal acne, which are your non-inflammatory lesions. In layman's terms, whiteheads and blackheads.
For FMX101, our product will not have an indication for non-inflammatory lesion. Although obviously we have had statistically significant results in that when we look at it as a secondary endpoint. This really is a product, FCD105, that in our view combines the potential benefits of both. A product that significantly addresses comedonal acne, which is adapalene with minocycline. We believe that provides even broader possibilities for healthcare providers in treating acne of different disease severity levels. Our intention would be to have a broader acne vulgaris indication for this product and could give us even more latitude from a commercialization perspective.
Again, our focus is to bring innovative products that can be beneficial to patients, and we believe a product like FCD105 can do that. With that, I'll turn it back. I hope that answers your question, Patrick.
I'll turn it over to Iain to address your questions around the dropout rates for our long-term safety study from FMX103. Iain?
Sure. Thanks, Patrick. Thanks for the question. We had 505 subjects enrolled in the study. You can see from our press release, we've had 272 patients who had treatment for up to one year and 410 completers. If you look at those numbers, that's roughly a two to one ratio there. Obviously the balance being patients who were on vehicle in the double-blind studies. Clearly, they were not exposed up to a year. The 465 number includes patients who were on vehicle, because remember, they were treated for vehicle for 12 weeks, but then nine months potentially on active. That's where that number comes as well. The overall discontinuation rate is really looking at 505 and the 410. It's a roughly 11-ish % discontinuation rate, which is actually quite remarkable for such a long-term study, and it does speak to two things.
One, clearly patients would not continue in the study if they felt they weren't getting any clinical benefit from the therapy, and two, that again speaks to tolerability. If they felt there was tolerability challenges with our products, then clearly they would probably step out of the study. We're very encouraged that we managed to hold on to so many patients for such a long period of time.
That's helpful. Thank you so much.
As a reminder, star one from your telephone keypad if you would like to ask a question. Our next question is from Vamil Divan with Credit Suisse. Please proceed.
Hi, this is Anan on for Vamil. As you guys start the FCD105 study in the second quarter, how should we think about R&D spend in 2019, and then also going forward as you start the FMX109 and FMX110 studies, how should we think about the acceleration of R&D spend going forward?
Sure, Anan. FCD105, it's a phase II study, clearly not anywhere near the range of spend that you would see for a larger phase III. For products such as FMX109 and FMX110, again, these are in earlier development stages. FMX109, we're looking at a very small proof of principle study that Iain can provide some additional color on with relatively low patient number population to work with. FCD105, in terms of R&D spend for the year. Ilan, you want to comment on what our total run rates are for R&D spend this year going into 2020?
Our total cash burn expected for 2019 is approximately $75 million. From that, we didn't provide yet the guidance between SG&A and R&D, and let's leave it at that.
Yeah, I think a good way to think about it is the majority of our R&D spend is really winding down. The phase III studies for FMX101 obviously is done. For FMX103, it is now done, so we're just wrapping up spend in that regard. FCD105 is a phase II study. These are studies that are clearly sub-$10 million. Obviously, if we have a spend run, that'll run between 2019 and 2020. Again, FMX109, small proof of principle study, and FMX110, we're in development stage activity. These are low cost relative to phase III programs we've done previously. As we talked about burn, the majority of the capital for commercial use won't happen towards the back end of the year as well. I think we're doing a very good job of managing our burn rate.
We've got cash that takes us to mid-2020 that allows us to operate our business. Hopefully that addresses your question.
I don't know, Iain, if you want to provide a little bit of color on the design of the proof of principle for FMX109.
Sure, Dave. I can do that. FMX109, this is a small, as Dave says, proof of principle study where we're evaluating niacinamide with retinoids. These are low-cost studies. These are small pilot studies involving maybe a couple of dozen patients at most. Rather than committing to large phase II spends for these types of products, I'm trying to instigate a bit more of a risk-based approach here to evaluate new combinations in dermatology rather than committing large capital spend to large studies. These are in the kind of low hundreds of thousands of costs rather than the millions. Very small. These are bilateral studies, basically you can treat a couple of combinations on the same patient. Again, factors in relatively low cost in execution of the studies. I'll say there's very low numbers of patients involved as well.
These are short studies nowhere near the kind of one-year length like you have in a phase II or a phase III. Hope that answers your question.
Got it. Thank you. If I could just ask a follow-up on FCD105. I know you guys are trying to expand the label to just be for the full indication. If that should get approved, would you expect any cannibalization of FMX101, or are you sort of trying to target a slightly different patient population in the moderate-to-severe part of that indication?
Sure. Matt, you want to touch base on that from a commercial perspective?
I'm sorry, please if you don't mind, Anan, repeat the question.
Sure. I was just wondering, as you've said, FCD105, you're aiming for the full indication for acne. If that should get approved and you have both FMX101 and FCD105, would you expect any cannibalization in the moderate-to-severe acne population? How are you targeting it?
One of the things that I think about as the market has evolved over the last several years is as you look at, for instance, a slight decline in topical RXs over time, you see that other brands, like the branded isotretinoin, have picked up the slack and grown the market back. I think the more products in the category, more likely we're able to not just enjoy shares of specific patient populations, but also help to grow the market. I think that these products would work as other follow-on compounds have in acne, where they carve out their own niche and help to grow the market and expand it. We've seen that repeatedly in this market.
Great. Thank you. Appreciate it.
Ladies and gentlemen, this concludes our question and answer session. I would like to turn the call back over to management for closing remarks.
Thanks, operator. This was a robust call. We're very excited, obviously, about our initiatives that are ongoing for us in 2019. Last year was a great year for us. This year, we're looking forward to it to be even better. I want to thank everybody for participating on this call. Look forward to providing you with additional updates as they come along. Thanks. Look forward to speaking with you soon.
Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.