Good day. Welcome to the Foamix Pharmaceuticals first quarter 2018 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Wood of LifeSci Advisors. Please go ahead, sir.
Thank you. Good morning, everyone. Yesterday, Foamix issued a press release of earning results and corporate updates for the quarter ending March 31, 2018. The press release is available on the investor relations page on the Foamix website at foamixpharma.com. This call is being recorded in a webcast. A replay will be available on the company website for the next two weeks. Before we begin the formal remarks, let me remind you that some of the information in the news release and on the conference call contain forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words that express and reflect optimism, satisfaction with current progress, prospects or projections, as well as words such as believe, intend, expect, plan, anticipate, or similar variations identify forward-looking statements, but their absence does not 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 to 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 call are David Domzalski, Chief Executive Officer of Foamix, and Ilan Hadar, Chief Financial Officer. With that, I'll turn the call over to David Domzalski. Dave, please go ahead.
Thank you, Michael. Good morning, everyone. We have had a strong start to 2018 with considerable progress in the clinic for our two lead therapeutic candidates, as well as on operational and financial fronts. Let me begin with FMX101, which is our 4% topical minocycline foam that we are developing for moderate-to-severe acne. You hopefully have seen the news that earlier this week we announced that the final patient has been enrolled and dosed in the third phase III study for FMX101. This is called Study FX2017-22. This is another important milestone for us. A total of 1,507 patients have been enrolled in this study. As a reminder, we enrolled the first patient in August of last year. We're pleased with the pace of enrollments and the interest shown by patients and physicians.
Getting to full enrollment means that we remain on track to announce the top-line results in the third quarter of this year. On February 14th, we held a Type B pre-NDA meeting with the FDA. The purpose of the meeting was to discuss the submission of a 505(b)(2) application for FMX101. We received the final FDA meeting minutes on March 8th. During the meeting, we discussed various matters relating to the overall development program of FMX101, including CMC, nonclinical toxicology studies, formats, 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. Overall, we thought the meeting went well, and we were pleased with the outcome of the session together.
If the results for Study 22 meet our expectations, they will form part of our planned NDA for FMX101, which is targeted for regulatory submission to the FDA before the end of this year. To put our regulatory strategy for FMX101 in context, let me briefly review what we have accomplished in the past year or so with this program. You will recall that we announced top-line results from our two phase III clinical studies, Study 04 and Study 05, in 2017. In the intent-to-treat analysis, FMX101 demonstrated statistical significance compared to vehicle on both co-primary endpoints in Study 05. However, we did not demonstrate statistical significance on one of the two co-primary endpoints, IGA success, in Study 04.
We discussed these data with the FDA, and the agency confirmed with us that statistically significant findings from a third study would constitute replication of the results from Study 05 and would be sufficient to establish an efficacy claim for FMX101. This is the purpose of this third phase III study, Study 22, which is now ongoing and now fully enrolled. We reached concurrence with the FDA on the design of this third study, which is very similar in design to the prior 04 and 05 studies. It is double-blind, vehicle-controlled, and patients have been randomized one-to-one to receive either FMX101 or vehicle with once-daily treatments for 12 weeks. Co-primary endpoints for Study 22 are the same as Studies 04 and 05. They are, first, the proportion of patients achieving success at week 12 based on an investigator's global assessment.
Success is defined as a score of clear or almost clear, which is a score of zero or one, and at least a 2-category improvement from baseline. The second co-primary endpoint is the mean change from baseline in inflammatory lesion counts in each treatment group at week 12. Safety evaluation will also include reported adverse events, assessments of tolerability, clinical lab tests, and vital signs. Our final patient enrollment for Study 22, which is 1,507 patients, as I mentioned previously. This is more than three times the sample size of each of the previous phase III studies. The other news on FMX101 this quarter was that we announced in January positive safety data for our phase III open-label safety extension study, evaluating FMX101 in moderate to severe acne for a treatment period of up to one year.
The data was presented in a poster session at the Winter Clinical Dermatology Conference in Hawaii. The open label safety extension enrolled a total of 657 patients, all of whom had completed 12 weeks of FMX101 or vehicle treatment in the preceding double blind phases of Study 04 or Study 05. Patients continued for up to an additional 40 weeks of open label treatment with FMX101. A total of 291 patients completed a total of 52 weeks of FMX101 therapy, which is in excess of the subject sample size requirements specified in the regulatory guidance for this type of safety evaluation. No serious drug-related adverse events were reported during the open label safety extension, validating earlier data demonstrating that FMX101 appears to be well-tolerated with an acceptable safety profile.
Non-dermal adverse events were comparable in type or frequency with those reported during the double-blinded portion of the two phase III studies. Application site adverse events occurred in less than 2% of patients during the 40 weeks of open label treatment, with only four patients discontinuing the study for an application site adverse event. Efficacy was also measured as a secondary endpoint in the open label study for FMX101. The data provided some evidence that the beneficial effect of FMX101 appeared to persist out to 12 months, as measured by improvements in the patient's IGA scores, as well as reductions in both inflammatory and non-inflammatory lesions. This data was from observed cases based on summary statistics, and it is important to note that we are not making any claim of statistical difference between any treatment arms in this open label study.
We went into quite a lot of detail on these efficacy results on our last call, so I will refer you back to our press release from February 28th for further details. Turning now to FMX103, our 1.5% minocycline foam, which is in development for moderate to severe papulopustular rosacea. FMX103 is being investigated in two identical double-blinded studies, which are studies FX2016-11 and FX2016-12, measuring efficacy with once-daily dosing over a 12-week period. We announced the enrollment of the first patient in these phase III studies last June, and we expect to have top-line results from the blinded portion of both trials by the end of the third quarter or in the beginning of the fourth quarter of this year. Similar to the acne studies, patients in the FMX103 studies have the option to enter into an open label safety extension, which we refer to as Study 13.
The purpose of this study, again, is to provide long-term safety data as part of a planned NDA submission. I'm pleased to note that this open label extension study has now enrolled the required number of patients, and we are no longer rolling patients over from either of the two ongoing double-blind efficacy studies. The entire phase III program for FMX103, including Safety Study 13, is expected to be complete next year in 2019. So those are our recent clinical developments. On corporate developments, we announced in April that we entered into a securities purchase agreement with OrbiMed for a registered direct share offering. We agreed to sell OrbiMed approximately 2.9 million of our ordinary shares at a purchase price equivalent to roughly $5.50 per share, which represented a premium to our share price at the time. Gross proceeds from this transaction were $16.2 million.
OrbiMed, as you likely know, is one of the leading institutional healthcare investors worldwide. We are grateful to have their support as a new shareholder. With that, I will now turn the call over to Ilan to discuss our financial results.
Thank you, Dave. Good morning, everyone. Revenues for the first quarter ended March 31st, 2018 were $906,000, compared with $927,000 in the same period of 2017. The decrease is mainly due to a decrease in royalty payments in the amount of $83,000 from Bayer for sales of Finacea Foam. Research and development expenses for the first quarter of 2018 were $22.8 million compared to $12.7 million in the first quarter of 2017. The increase in research and development expenses resulted primarily from an increase of $9.1 million in costs relating primarily to FMX101 and FMX103 clinical trials, as well as increase in payroll and payroll-related expenses, including share-based compensation due to a change in the measurement of the share-based compensation expenses of a consultant and an increase in headcount and salary raises.
Selling general and administrative expenses for the first quarter of 2018 were $3.5 million, compared to $2.8 million in the first quarter of 2017. The increase in selling, general, and administrative expenses resulted primarily from an increase in payroll and other payroll-related expenses, including share-based compensation, mostly due to an increase in headcount, salary raises, and an accounting modification relating to the share-based compensation of a consultant. The company recorded a net loss for the quarter ended March 31st, 2018, of $25.7 million, or $0.69 per share, basic and diluted, compared to a net loss of $14.4 million or $0.39 per share, basic and diluted in the quarter ended March 31st, 2017. Net cash used in operating activities was $23.2 million in the three months ended March 31st, 2018, compared to $12.1 million in the three months ended March 31st, 2017.
The increase was attributable primarily to increase in activity related mostly to clinical trials and payroll expenses. We expect the net cash used in operating activities to remain at this level in the near term due to ongoing phase III clinical trials for FMX101 and FMX103, and decrease towards the end of the year as we remain on track to announce the top-line results for FMX101 in the third quarter of 2018 and for FMX103 towards the end of the third quarter or the beginning of the fourth quarter of 2018. At March 31st, 2018, we had $53.1 million in cash and investments compared to $76.4 million at December 31st, 2017. As Dave mentioned, subsequent to the end of the quarter, we completed the financing transaction with OrbiMed, which raised a further $16.2 million in gross proceeds.
We believe, based on our current business plan, that our existing cash and investments will fund operating expenses and capital expenditures requirements through the completion of our third pivotal phase III clinical trial for FMX101 and our two pivotal phase III clinical trials for FMX103. For additional details on our financials, please refer to the Form 10-Q and financial statements filed with the SEC. I will now hand the call back to Dave for closing remarks.
Thanks, Ilan. I'm very happy with the progress made by the Foamix team so far in 2018. The remainder of the year is going to be busy with a number of potential value-enhancing milestones, including the confirmatory phase III data readout for FMX101 and the phase III data readout for FMX103. Thank you to everybody on this call for joining us today and for your continued support as we work to execute on our plans and deliver long-term value and sustainable growth. That concludes our prepared remarks, and we are happy to now open the call for questions. I'll turn it back to the operator.
Thank you. If you would like to ask a question at this time, please press the star or asterisk key followed by the digit 1 on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Again, please press star 1 to ask a question. We will pause for just a moment to allow everyone an opportunity to signal. We will now take a question from Ken Cacciatore of Cowen and Company. Please go ahead.
Good morning, congrats on all the progress. As we near the readout for the final pivotal acne trial, what mechanisms, if any, beyond the normal training of the sites, are available to you to ensure that sites continue to measure patients' response accurately and to make sure that nothing changes as the trial progresses? Have you had any access to any still blinded data that gives you a hint as to how the trial is progressing? Thanks.
Well, I'll take the second part of the question. Regarding data, obviously, the data is blinded. We will not be commenting on any data until final results are tallied, unblinded, and obviously, we'll communicate that to the entire investment community immediately as soon as we have that. Regarding the operational oversight question, this has been a major emphasis for our company since we received the results from the first two phase III studies last spring. I'm quite encouraged by the significance of work that our clinical operational team has deployed in working with our CRO. We have put in place several mechanisms to do the best we can to ensure that there's continuity amongst the investigators, especially when it comes to assessments of IGA rating scores, which as we've discussed in the past is one of the more subjective endpoints.
IGA success is the one endpoint that we missed on one of our two initial phase III studies. As a reminder, a couple of the initiatives that we've put in place is that, first of all, we have significantly increased our own internal manpower through employees as well as full-time consultants that have been deployed and that are literally out meeting with investigators on a daily basis. We have board-certified dermatologists on each coast that are working with our CRO and with the investigator sites. We have a dedicated clinical research associate team. We have a data monitor in-house that in real time is monitoring the enrollment of patients. We have colleagues that have run our past phase II studies, including our phase II study in Germany, from Israel, that literally come here on a weekly basis and that are working with sites.
We have roughly a half dozen or so internal colleagues that are out at the sites on a daily basis, both visiting the sites on their own and monitoring our clinical research organization on a daily and weekly basis. That's just the manpower component of the work that we've done. Additionally, we have put in place multiple refresher training assessments, if you will. From the beginning of this third phase III study, we had two investigator meetings to obviously train the investigators and to get them set up so they can begin seeing patients and enrolling them at this study. We have had six additional refresher trainings that have taken place, and we have a few more that are scheduled before we anticipate the study will come to a conclusion. We're doing this for both the acne program as well as the rosacea program.
These are just some of the initiatives that we have in place. We're out there in the field with investigators. We've had multiple training sessions for the investigators. We use real-time data to provide this assessment. We've had multiple initial investigator meetings as well. Hopefully that provides a bit more detail on what we're doing to try to mitigate the inherent risks that are associated with this more subjective endpoint.
Absolutely. One more follow-up, if I may. For the rosacea enrollment, now that you're fully enrolled for the safety extension with enrollment for the efficacy still ongoing, did the safety extension enroll more quickly than expected, or is this just the case of having built-in margin on enrollment rates? Actually, yeah, that's the question.
Yeah, I'd say it's a bit of both. Obviously, we took a very similar approach in setting up what we anticipate to be the sample size and the enrollment pace for the safety extension rosacea, as we did with acne. We've seen very good enrollment for rosacea. We've seen low discontinuation rates for the study. We've obviously been able to roll patients into this long-term extension at a pretty rapid pace. I think that's an encouraging sign that patients obviously want to continue in the study. We've hit the number that we felt would be more than sufficient in making sure that we get the requisite number of patients completed per regulatory guidance. Again, it'll be the same, roughly around 100 subjects we'll need to complete one year of exposure to the drug.
We've hit the numbers that we anticipated or that we were shooting for at a pretty good pace. We no longer need to roll any more patients over into the safety extension.
All right. Thanks for taking the questions.
You're welcome.
Ladies and gentlemen, as a reminder, to ask a question, please press star one on your telephone keypad. Our next question comes from Rohit Vanjani of Guggenheim. Please go ahead.
Hi, Dave and Ilan. Thanks for taking the questions. The OrbiMed offering you mentioned was $6.2 million gross. What was the net cash on that offering after expenses and other costs?
We are still gathering the exact expenses, but you can expect it to be roughly around $16 million, $16.0.
Okay. OpEx came in a little higher for the quarter than maybe I was expecting. Are you still expecting around a $60 million burn for 2018, given that you already burned around $27 million for the quarter?
That's correct. As I explained in the script, First and second quarter, you can expect that we are still running the three phase III clinical trials, and of course, those trials are consuming cash. As we said, if we expect the top-line results in Q3, then rosacea will come at end of Q3 towards Q4, you can expect the cash burn to decrease.
Yeah, Rohit, to underscore that point, we're at a bit of a bolus in this first quarter because we just announced that the enrollment for the acne program just wrapped up. Obviously, we're looking at a top-line readout for that study in the third quarter. We continue to recruit at a good pace for the rosacea program. At some point in time, that will wrap up. These are kind of right in the peak points. Once the acne study is done, there's really no more work to be done on the clinical side because we've already completed the safety extension. I think for rosacea, as I shared for the previous question, we're moving at a really good pace for that.
You clearly will be able to see that as we move towards the back end of the year, certainly the second half, R&D costs associated with running these clinical trials will decrease quite meaningfully. We remain on target for the burn rate for the year.
Sorry, the cadence will be the spend in 2Q will be similar to 1Q, and then a big drop in the second half 2018.
You can expect the burn in the second Q to go down some and continue the trend into Q3 and Q4.
Great. The last question from me is I just want to confirm that you will announce the last patient enrolled for the combined phase III rosacea study. That's still the plan?
Yes, that's confirmed.
Okay, great. Thanks very much.
Thanks, Rohit.
Ladies and gentlemen, as there are no further questions at this point of time, I would like to turn the call back over to the management team for any additional or closing remarks.
Thanks, operator, again, for your assistance on the call today, to Michael Wood at LifeSci, and obviously to all attendees on this call. Again, our continued thanks to our shareholders for your support, and we look forward to keeping you updated on the progress of our business over the course of the coming months and the next quarter or so. Thank you very much. Have a great rest of the week. Bye-bye.
That will conclude today's conference call. Thank you for your participation. You may now disconnect.