M&A Announcement

Mar 12, 2020

Press Release

Greetings, and welcome to the Menlo Therapeutics and Foamix Post Merger Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael Wood of LifeSci Advisors. Thank you, Michael. You may now begin. Thanks. Good morning, everyone, and thank you for joining us this morning. Before we begin the formal remarks, I 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 and similar variations identify forward looking statements, but their absence does not necessarily mean that a statement is not forward looking. Such forward looking statements are not a guarantee of performance and 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 the Menlo Therapeutics and Foamix filings with the SEC. These statements speak only as 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. So at this time, I'd like to turn the call over to Dave Domzalski, Chief Executive Officer of Menlo Therapeutics. David, please go ahead. Thanks, Mike. Good morning, everyone, and welcome to our conference call. This is our first investor call since we announced the closing of the merger transaction involving Menlo Therapeutics and Foamix. Purpose of this call today, we Menlo Therapeutics and Foamix. Purpose of this call today will be to give you an update on the immediate priorities for the combined company. I want to discuss the progress we have made with the Amzik launch and the early indications are that it is going quite well. And then I will give you an update on our pipeline. I will refer you to the press release we issued on Monday, March 9, which deals with the consummation of the merger as well as the year end financial results for Foamix and for Menlo, which were recently filed on Form 10 ks. We filed our Foamix subsidiary 10 ks this morning and Menlo filed its 10 ks on March 3. Joining me on the call this morning are several Menlo officers: Doctor. Ian Stewart, our Chief Scientific Officer Matt Wiley, our Chief Commercial Officer and Alain Hadar, our Chief Financial Officer, all of which who will be available to answer questions during the Q and A session. Let me start off by saying how thrilled we all are to have closed this merger. This is a transformational deal that has created a scaled dermatology company with the potential to become a market leader in therapeutic dermatology. We now have a broader portfolio that includes an approved product as well as attractive late stage dermatology assets. I've discussed the rationale behind this transaction previously, but I think it would be worthwhile to reiterate the main drivers here. 1st, our combined company is expected to drive greater future earnings momentum with the potential for 2 additional product launches over the next 20 months in addition to Amzik that we just launched this January. We believe that each of these products has the potential to contribute significant annual revenue independently. We expect the combined entity to have greater profitability in each of the 2 companies on a standalone basis. 2nd, assuming that the clinical results for the Puriigonodularis trials are positive, we see clear operational synergies in this merger with the opportunity to leverage our commercial infrastructure across multiple product launches. There is greater than an 80% overlap within our sales force alignment for healthcare providers treating acne, rosacea and prurigo nodularis. 3rd, we expect significant cost synergies and an improved balance sheet with extending cash runway. The pro form a total cash for the 2 companies was $150,000,000 as of December 31 this past year. We anticipate savings of over $50,000,000 for the Gabine Company beginning in 2021 through elimination of duplicate functions and infrastructure. Very importantly, this merger now positions us to take a leadership position in the dermatology sector. As we consider the derm landscape, subscale companies with limited product offerings and pipeline have struggled and the sector will likely face increased consolidation. Following the merger, we now have 1 differentiated commercial stage product in acne and again the opportunity to launch 2 additional drugs potentially later this year and next year, therefore creating increased operational leverage for the company. There are further details of the transaction outlined in the press release we issued on Monday. We are of course planning for success. However, one item I wanted to highlight is that Foamix shareholders, in addition to receiving shares of Menlo, received contingent stock rates that potentially allow them to receive additional shares of Menlo common stock if the results of the Phase III trials of srolopinib for the treatment of pruritus associated with PN are not successful. These terms are more fully described in the company's joint proxy statement perspectives on Form S-four. One of our immediate priorities is to complete the integration of the 2 companies. Our combined company is being managed by Foamix's former management team, and I will remain as the CEO as well as a member of the Board of Directors of the combined company. Menlo's headquarters now will be Bridgewater, New Jersey, and we anticipate that operations at the Menlo facility in California will close by the end of the year. Steve Boste, Menlo's former CEO, will remain on the new company's Board. Select colleagues from pre closing Menlo will remain with the company through various timelines and milestones for the balance of 2020. These will predominantly be in clinical operations, regulatory affairs and CMC to help facilitate, 1, the Phase III studies for solopodent 2, the ongoing long term safety study for solopinib, which should be completed by mid year and 3, the NDA submission should the Phase 3 studies be successful. Let me switch gears now and talk about the ongoing launch of Amzik. I have to say we are very pleased with the early progress we have seen. Our sales team comprised of 51 representatives was trained and certified at our launch meeting held the 1st full week of January and began selling on January 13. Through February, the team has made nearly 16,000 calls, averaging over 9 calls per day. Our total prescription volume through February has eclipsed 11,000 prescriptions, and we have been able to achieve that in just 7 weeks post launch, underscoring the positive early signs of physician and market interest. We made good progress on our market access strategy, securing a contract with Express Scripts in January for preferred status with no restrictions. To date, approximately 44 percent of commercial lives, which equates to about 80,000,000 lives, have listed Amzik as covered or better, which again was aided in part by our pricing strategy. We continue to have good dialogue with the major payers and remain optimistic we can achieve broad access for patients over the coming months. In February, we also hosted a national satellite broadcast where we simultaneously educated almost 350 healthcare providers on the clinical Amzik story. And we have also trained about 40 speakers so far to educate other healthcare providers about Amzik. Since launching, we have had significant publication and promotional presence at key dermatology congresses. The AAV conference scheduled for the end of this month in Denver was unfortunately canceled due to the coronavirus outbreak. However, the team has developed a comprehensive medical communication and promotional plan supporting our products at the key remaining congresses and conventions for the rest of the year. Just a quick word about the coronavirus relative to our business. We have been in close contact with our primary suppliers, including our API and contract manufacturer, ASM in Switzerland and our packaging facility in New Jersey. They have not been affected by the outbreak to our knowledge and we have more than sufficient amount of product in the trade and safety stock of raw materials at ASM to support the current demand for our product. We do not foresee any interruptions to our supply chain at this time. We are, of course, also being diligent in our own safety precautions, including by discontinuing unnecessary travel. None of our colleagues in New Jersey, California or Israel have been affected by the virus. Going back to Amzik, these early results and efforts are certainly encouraging and we continue to execute our strategic plan. We look forward to providing additional performance metrics to you in our Q1 earnings call in May. Let's turn now to the pipeline. I'll begin with solopodin, which we are developing for pruritus associated with prurigo nodularis, also known as PN. We are conducting 2 Phase 3 clinical trials, 1 in the United States and 1 in Europe. Enrollment was complete in both these trials in October of last year with 285 patients and 295 patients respectively enrolled in the U. S. And Europe trials. These trials are intended to evaluate if treatment with solopinib administered at 5 milligrams once daily for 10 weeks can reduce pruritus associated with PN compared with placebo. The primary efficacy analysis for both trials is a 4 point responder rate in the worst itch numeric rating scale at 10 weeks. Results are expected in a relatively near future either at the end of this month or in early April. If successful, our plan is to submit an NDA for solopinib in this indication in the second half of this year. We look forward to announcing top line results as soon as they're available. By the way, these are the two trials that will determine whether Foamix shareholders would get additional shares of Menlo common stock through the contingent stock price. In parallel, with these 2 Phase 3 clinical trials, there is also an open label long term safety trial in which patients are receiving daily treatment doses of 5 milligrams solopodin for 1 year. To date, 90% of patients in the pivotal studies have elected to roll into the 52 week long term open label study. Dragonodularis is a severely pruritic chronic skin disorder affecting primarily older adults and is characterized by multiple firm itchy nodules typically found on a patient's arms, legs and trunk. We estimate that there could be as many as 1,000,000 people with this condition in the United States, of which approximately 200,000 to 250,000 are treated. No current treatment has been approved in the U. S. Or EU and symptoms are commonly managed with various agents such as steroids, calcinephrine inhibitors, antihistamines, cyclosporum, methotrexate and others, but all with limited effectiveness. Solapodin is a highly potent oral small molecule NK1 receptor antagonist. The mechanistic rationale for pursuing this indication is that prevention of substance P binding to the NK1 receptor is advantageous in reducing both itch related nerve signaling and neurosensitization to itch that develops as a result of an unchecked itch scratch reflex. The impact from solopidin on mitigating these phenomena has already been observed in our earlier Phase 2 study in PN. The product has been granted breakthrough therapy designation for pruritus associated with PN, which reflects a significant unmet need for treatment in this indication. Given the high disease burden of PN and the lack of existing treatments, the market is immediately accessible and attractive for the first drug to be approved in this condition. Of important note, over 80% of patients seeking treatment for PN are covered with our existing sales force currently supporting the launch of AmSEEK. Now to FMX103, which is our 1.5% minocycline foam for the treatment of moderate to severe papulopustular rosacea. In October of last year, we announced that the FDA accepted the NDA we had filed earlier in the year and set a target PDUFA action date of June 2 of this year. The NDA includes what we believe to be a very strong clinical package, both of our Phase III clinical trials that support Also included in the NDA are the results from the 40 week open label safety extension. We continue to work with the FDA through the review process and look forward to making an announcement at or around the PDUFA date. We're developing a pipeline of other innovative product candidates to enhance our minocycline platform, the most advanced of which is FCD105 for the treatment of moderate to severe acne. FCD105 is our first follow on product behind AmZek and FMX103 leveraging our molecule stabilizing technology. It is a topical combination foam, which comprises minocycline at a 3% concentration and adapalene at a 0.3% concentration. Adapalene, as you may know, is one of the most widely used topical retinoids to treat comedonal acne. We believe that if approved, our combination of foam product minocycline adapalene could provide a novel therapy to potentially address unmet needs of patients and health care providers. This past November, we announced completion of enrollment in our Phase II clinical study to evaluate the efficacy and safety of FCD105. We are expecting top line data from this trial in the Q2 of this year. Pending a successful development program, we intend to file an NDA for FCD105 Let's turn briefly to the financials. As I said, the combined pro form a cash position was $150,000,000 as of December 31, 2019. And based on our current operating plan, this is expected to cover operational expenses and capital expenditure into the Q2 of 2021. Our priorities for spend will be to continue to support the Amzic launch, completion of the Phase 2 program for solopinant as well as funding the pre launch and assuming approval launch activities for FMX103. Before I close, let me quickly go through our anticipated news flow as we expect to have a very busy calendar this year. The next major milestone will be the soloponin Phase 3 data in PN in late March or early April, followed by the Phase 2 data readout for FCD105 in the Q2 of this year and our PDUFA date again for FMX103 is set for June 2 this year. In the second half of the year, we anticipate the potential FMX103 launch in rosacea in the Q4 of 2020 as well as the potential NDA filing for solopodin. That concludes my prepared remarks. So we are now ready to open the call for any questions. So I'll turn it over to the operator. Thanks. Thank you. We will now be conducting a question and answer Your first question comes from Louise Chen from Cantor. Please go ahead. Hi, thanks for taking my questions here. So my first question for you is people often compare the launch trajectory of Amzik to that Seysara. Is that a good way to look at things or are orals and topicals not fully comparable? Second thing is, can you comment on the gross to net that you have for ANZYK versus that of your competitors, even if it's just broadly and not specific numbers? And then on parizomenodularis, what is the opportunity here? And is this a chronic treatment? Thank you. Thanks, Elyse. First of all, regarding the question on Seysara as a surrogate. So we've obviously have talked about Seysara in the past. And as you know, that drug was launched literally the same time as we're launching Amzik last year. So it launched in January of 2019. Had significant prescription volume, somewhere in the range of 200 and 40,000 or so prescriptions, I believe. So obviously, from a pure demand perspective, there was quite a bit of volume. One of the reasons we always talked about that is it really showed what our view was that there's a lot of demand for new products, new innovative products into the category. Patients and healthcare providers are looking for new options. This is a, say, SARS, a new oral antibiotic that was launched last year. And again, from our perspective, we viewed it as a positive signal that patients and healthcare providers were open to new products and new antibiotics. So we are obviously pleased with the initial uptake for Amzik relative to Seysara. I know sometimes people look at the prescription trends and through the first 7 or 8 weeks, we're tracking fairly closely, literally on top of the prescription lines that they had. I do provide a lot of caution though. There are certainly differences in the fill rates and refill rates for oral therapies, semit therapies versus topicals. As you know, for oral therapies, their unit is bottle of 30. So it's a very linear transition from a new prescription to a refill prescription. Whereas in topicals, we have a gram canister and there's variability around that. So it could be 30 days of product in a canister, it could be a little more, it could be a little less. So I'm cautious about trying to mirror or match the prescription trends of a topical versus any oral therapy. I said if we actually had a launch for a full year that was half the prescription volume as Seysara did, we have ourselves a pretty good launch. So again, I'll just come back to saying that we're very pleased with the initial uptake. The prescriptive trends look quite promising. But again, I'll caution everybody to try to marry it up against oral therapies. Now regarding the gross to nets, it's difficult for us to compare gross to nets of other products, some of which some of the leading products are not even published that are out there because of private companies. What we have said is that we'll look to provide more color on this in terms of what net revenue would look like as we move to the second half of the year. The first few quarters of this year, obviously, we're spending our time getting our product on contract with various managed care companies. We're off to a good start. As I highlighted, we were quite pleased to get our product on contract with ESI Express Scripts on their national plan in the Tier 2 preferred formulary status with no restrictions. That was not expected. We obviously were quite pleased with that. Our focus, as you know, for the 1st 2 quarters or so, sort of is to again get under contract. Our objective is to have most of the contracts wrapped up by the end of the second quarter, early in Q3. And we would anticipate that our gross net will improve as we move to the second half of the year and then certainly as we get into 2021 and beyond, especially when you think of all the synergies that we have in launching multiple products. Lastly, when it comes to trigonodularis and the opportunity, we view that there's obviously significant unmet need as we mapped out before. There's 250 1,000 patients seeking treatments that we know each year, 200,000 or so are walking away with some type of prescription there. They seem to be dissatisfied or looking for something that will address this the itch associated with PN. This is the worst itch that could be imaginable. It's a debilitating condition. We're quite enthused about the prospects if we're successful in the Phase 3 program with solopinavinib for pruritus associated with PN, that this would be the first product ever approved in the U. S. Or otherwise to address this condition. We think leveraging our commercial infrastructure, which we'll already have established relationships with the derm community, would allow for us to get a rapid uptake of this product, generate significant revenue and obviously meaningful earnings when you layer it on top of us launching Amzik and also the prospects of launching FMX103 for rosacea. So hopefully that addresses your question. Yes. Thank you. Got it. Thank you. Your next question comes from Ken Cacciatore from Cowen and Co. Please go ahead. Hey, good morning guys. Dave and team, you're doing a fantastic job, I think beating all reasonable expectations. But I wanted to ask about coverage, which you did surprise us by where you got so quickly. You're talking about maybe wrapping up the coverage by Q2 or Q3. Can you just talk about what you think you'll be ending the year at? Is 80% a reasonable target? And is that what you would consider full coverage if you received it? On pruritus nodularis, a similar type of question. I don't know if Menlo ever spoke about actual sales potential, just not understanding what you could get for pricing of this product in the market. So understanding the opportunity in terms of the need, but seeing if you can help frame if there was ever any thoughts on what the size could be? And then is this something a product that could be used in combination with the other treatments that are unapproved, but clearly are being used, just how the treatment paradigm would play out if we're successful? And then lastly, on 103, just wondering about pricing there. Is it going to be similar to Amzik or different? And I believe in the past you talked about a $200 to $2.50 net pricing for Amzeek. Just wondering if you'd give similar commentary or do you rather not try to frame where the pricing is settling out? Thank you. Sure, Ken. So I'll take a couple of these and work my way actually from your last question or back to the beginning. And then I'll ask Matt to talk, our Chief Commercial Officer, about coverage by the end of the year for AmZ. And perhaps Ian may offer some additional color on the Pragunadularis product. But first of all, regarding FMX103, assuming the product was approved, we would anticipate it to have the same price as what we have for What we have heard from the payers is the anticipation that they would the net price to plan what they're willing to pay for a unit to be somewhere between $200 $400 to be somewhere between $200 $400 per unit. It's a bit early to determine whether or not that would be the case for FMX103. But our anticipation would be in that range. Obviously, we're having very good dialogue with the payers right now for Amzik. In those discussions, we're talking with the payers about we have another product coming right behind it for rosacea. And the anticipation and the expectation from us would be that it would be a quicker uptake for the plans with FMX103, assuming it was approved, because we will have already completed the contract process for Amzik. And so in essence, this would be viewed almost as a line extension. It's not quite as quick as, okay, we're approved, flip the switch. But the payers are aware that we have another product that could potentially be approved by mid year. It is the same product. It's just a different concentration with a distinct indication. So hopefully that provides some color there. On the prurigo pruritus for prurigo nodularis opportunity, we view this as being a product that could generate significant revenue and earnings for the company. As I've shared before, there's significant unmet needs here. The drug has been granted, break the therapy by the FDA. If it gets through the Phase 3 program and is approved, again, we believe it will be the 1st product ever approved for this indication. I view solopinav for PN in the same vein as Amzeq and FMX103. I believe each of these products can generate significant revenue, certainly well north of $100,000,000 for each product. I've seen multiple estimates that are north of $200,000,000 and I would not say that that is a reach. Our expectation is each of these products, Amzeq, FMX 103 and sirlopinib for PNF approved can generate significant revenue. Obviously, when again, if it's leveraged under the same infrastructure, basically the same target audience that equates to meaningful earnings for this company. So from a pricing perspective, it's a bit early in the game. We know there's been some research that has been done. When we look at prurigo nodularis, although it's not an orphan indication, we view it as more orphan like. I think from that, there's some flexibility there. Ultimately, we're going to continue to do research with the payer base to get a sense for what that could be. Not anticipated would be the same pricing arena as what we have for AmSeq and 103. I think there's probably more flexibility around that. But it's a little early in the game. Ultimately, our objective is to ensure patients get access to the drug. No different than AmZealk and FMX103. We want to make sure patients get access to our products. Physicians can prescribe these products without a lot of burden. While in the same vein, our efforts are to work towards a reasonable gross to net for our portfolio. Regarding combination therapy, obviously we're studying this as a standalone product. We know that there are other products in development for the condition. They are quite a bit behind us. There are biologics that are out there that are in development as well as other therapies. Not sure what physicians will do in terms of trying to use solopinavinib with other therapies. All we know is that we're studying it as a monotherapy. I don't know, Ian, if you have any additional comments. Yes. Hi, Kate. Just following on from Dave's comment there about concomitant use, We're not too sure exactly how this would be used concomitant. What I can say is that as Dave said during the prepared remarks is that we have a 52 week open label safety extension running right now for you to report in the mid year. As part of that protocol, concomitant use is allowed. Clearly, that's information we'll be collecting and safety we'll be evaluating over the treatment period. So once that reports, then we will obviously communicate that. And Matt, you want to talk about coverage for Amzik by the end of the year expectations and thoughts around that? Sure. Good morning, Ken. And as we've said before, our ambition is really to have broad coverage for patients. The way that we're targeting the payers is predicated on covered lives, of course, but also branded prescription volume. So we see that 90% of the branded prescription volume are really contained in about 6 or 7 of the top payers. Most notable of those are Express Scripts, CVS Caremark, UnitedHealth, Optum. And so we're in conversations with all of the top payers at this point. We feel good about our progress. We've gotten some good feedback on the utility of our product, the uniqueness of it. And so we're continuing to work towards that goal. Yes. So if you think about it, Ken, is if 90% of prescriptions are covered under, call it, half a dozen or so, our objective is to have that under contract as soon as possible. We're targeting into the second quarter into the early part of Q3, but certainly by the end of the year, we would end we would expect that we would be at that range. Great. Thanks so much. Got it. Thank you. Your next question comes from David Amsellem from Piper Sands. Please go ahead. Thanks. So I had a couple of questions. Wanted to talk about the 1.5% concentration for rosacea. And the question here is how we should think about comparators and where you're going to take the most share. Should we think about 103 is grabbing share from Oracea, in other words oral doxycycline? Or should we also think about potentially the product grabbing share from some of the agents that are particularly effective for redness such as a Mirvaso. So how should we think about where you're going to pull share and patients from in rosacea? And then secondly, I don't know if you addressed this, so I apologize, but with cerlopetin, there was a positive Phase 2 study for pruritus associated with psoriasis. To the extent that you have positive Phase 3 data in program nodularis, do you then go forward with a Phase 3 program in pruritus associated with psoriasis? How should we think about that? Thanks. Thanks, David. I'll start with your last question on sirloponib for pruritus associated with psoriasis. Obviously, positive Phase 2 data came from a trial that was done previously in this indication. Our focus obviously for immediate term is on the Phase 3 program for soloponin for pruritus in PN. Assuming that is successful, that obviously creates lots of opportunities for us with the molecule and looking at it for other potential indications. We obviously know that there's a Phase 2 study again that was positive for psoriasis and we'll certainly look at that as a potential place for us to go to as we move through 2020 but really into 2021 beyond. For this year, the focus is as outlined in my opening remarks will be on the PN program for solopidins, obviously, the launch of Amzeq and what we would hope to be an approval and launch for FMX103. I want our company to be very focused and very targeted in our efforts and our spend. And again, part of the thesis of combining Foamix and Menlo is synergies and accelerating revenue ramps and increasing earnings potential as a combined company versus each as a standalone. I think the more successful we are at that, the more opportunities we have then to explore other indications or development programs. So certainly, solopidins for pruritus and psoriasis is there. We obviously have other programs from the Foamix standalone organization that we can look to continue to develop. But I don't want to say get ahead of the skis. We want to make sure we're focused. Our efforts in the immediate term is on the launch of AMC, executing there, getting through the review process and hopefully launching FMX103 and obviously progressing solopidin in PM. Coming back to FMX103, I've often said that this is a real opportunity for the company. Foamix as a standalone, most of the focus historically has always been on Amzik and the ACI marketplace. The ACI marketplace is a big market. It's $5,000,000,000 as I've shared before. It's more of a share battle. There are other products that are in the category. It's a $5,000,000,000 market. You get a 10 share. You've got yourself a pretty decent sized book of business. And again, we're quite pleased with the initial uptake for Amzik. Rosacea, although it's a smaller marketplace, dollars 1,200,000,000 to $1,500,000,000 as we currently see it, There are much fewer competitors that are out there and even fewer products that are in development. So as we say, there's less mindshare to compete against. The most commonly used products in the category the most widely used product is actually metronidazole. There's over 1,000,000 prescriptions a year generated or written for metronidazole. It adds reasonable levels of effectiveness, but we believe there's certainly the potential for better products out there. Orresia, as you did mention, oral doxycycline is a widely used product. We view based on the safety and efficacy results that we've seen for FMX103 that we'd have the ability to take share from both the oral antibiotics, it's the same thesis as an acne. If you have a product that has efficacy, that's acceptable with the safety of a topical. Is there so much is there reason to have an oral antibiotic prescribed, especially in today's environment? So it's the same thesis we applied for AMZYK in acne where we would apply for FMX103 in rosacea. That being said, again, because it's a topical therapy, we believe we have the ability to compete effectively against other topicals that are currently out there. Again, metronidazole, ivermectin, the brand name Cilantro, we like our chances with our product FMX103 if approved against those particular agents. Additionally, you mentioned products such as Mervazo and RHOFADE. These are products that are indicated just for erythema, the redness that's associated with patients that have rosacea. It's very common. Most patients that present with rosacea have redness that is associated with it. And that's one of the issues and one of the challenges of this condition and that you're looking for agents to address it. What we have seen with the data for FMX103 and our secondary one of our secondary endpoints is that our product FMX103 was quite successful in reducing erythema. So it's obviously not a primary endpoint, but it was a secondary endpoint that we talked about of over 1,000 patients that were prescribed active product FMX103, we saw that at baseline, about 5% or 6% of patients of that 1,000 or so had either no erythema or mild erythema. So the majority had moderate erythema or greater. At the end of 12 weeks, we saw that between our two studies, approximately 45% of the patients that were given FMX103 had either no erythema or mild erythema. So it's quite a significant reduction of erythema. So when we look at FMX103, we're quite pleased in the results of the drug and obviously clearing lesions, but we were also quite pleased in what we saw in its reduction of erythema. So we like our chances in that category. Thank you. Yes, Dave. Thank you. Your next question comes from Jason Gerberry from Bank of America. Please go ahead. Hey, good morning. Thanks for taking my questions. Dave, I just want to come back to the PN discussion, which the revenue ranges that we've kind of talked about or that you talked about, it seems like it's very driven by TAM and pricing. And so sort of the key questions in our mind as we try to model this indication seem to be, well, what percentage of this 200,000 patients are truly underserved with the existing option steroid and seemingly a generic antihistamine option? And then as we think about the upcoming Phase from a data perspective, what do you need to establish in terms of a treatment effect size to be competitive against the existing treatment options? And maybe what you'd expect from the competitive pipeline? Is an effect size that's in the same ballpark as Phase 2 sort of a good place to be thinking about what might be a clinically meaningful benefit that you can work with? Thanks. So I'll offer some initial thoughts on treatment effect and from a clinical perspective what makes sense and then perhaps Ian can offer some additional color and Mac can talk more about the market opportunity. But I think a good way to think about it, Jason, is that patients that are enrolled in this study have to have significant itch. So using a worst isomeric rating scale, they have to have a score of 7 or higher. So let's say a rating scale from 0 to 10, so 11 point scale, 0 meaning no age, 10 being the worst itch imaginable. So these patients have to have a score of at least a 7 or higher. So that's significant itch. So they're very itchy patients, obviously, it's directly tied to the condition of paragranodularis. To be successful, to be deemed a success, they have to have a 4 point reduction. That is a meaningful improvement for patients. So obviously, we're not looking for a cure here. We're looking to try to reduce these symptoms as much as possible. When you have this condition, I mean, the impact on one's daily life is dramatic. So it's sleep deprivation, significant psychosocial implications, depression that comes along with this, it's tough for these patients to function in a work environment, etcetera. So if you can take their score from a 7 to a 4 or better or an 8 excuse me, 7 to a 3 or an 8 to a 4 better, that is meaningful reduction and dermatologists, which who are the primary caregivers certainly would recognize this. So hopefully that provides some color. I'll turn it over to Ian to perhaps add a little bit more. Yes, just on that. Hey, James, it's Jason. Just on the scale itself, I mean, this 4 point improvement is also recognized by FDA as a validated instrument and as clinically meaningful. Actually, our European colleagues, they actually worked at 3 point scale. So we actually are working to a more robust, a more meaningful resolution of disease. And I think if you look at our Phase II results, we have 47% who are viewed as a treatment success. So we're nearly at the point of 1 in 2 patients being having clinically meaningful resolution of the rich, which is quite substantial. As it compares to other products and development just now, it's difficult to say. We haven't done obviously done any comparator studies, but we believe those results to be quite robust and that they're replicated in Phase 3 are quite promising. Yes. So, Jason, to your question about the unmet need and market opportunity, we spent a lot of time obviously in diligence on this exact question. We did some research that suggests that physicians do see a high unmet need in this patient population. Remember, first line options for these patients, topical corticosteroids, oral antihistamines, some topical antibiotics, but then roughly half to maybe 2 thirds of these patients move to a second line, which would be light therapy or intralesional corticosteroid injections. When we asked the physicians what percent of patients have greater than 20 nodules, roughly 40% of their PN patients present that way, roughly 60% present with greater than 10 nodules. Obviously, the more nodules, the more severe the patient population, the itchier they are. So we believe that there's a significant unmet need. And certainly, when we asked preference for cerlopidin, although we're not going to share those numbers with you, there's a high preference. Got it. Thank you. Thank you. Your next question comes from Patrick Zolais from LifeSci Capital. Please go ahead. Hi, team. This is Valentina on for Patrick. Thanks for taking our questions and congrats on the continued progress. Maybe just 2 from us. With the FMX103 seducer date right around the corner, what are the right launch targets that we should be considering in the rosacea space? And as a follow on, could you walk us through any meaningful changes that have been made in terms of trial design or inclusionexclusion criteria from the Phase 2 PM study to the pivotal program? And that's all from us. Thanks. Thanks, Valentin. Matt, why don't you take the first one? Sure. So as you think about the market opportunity, I think what we've said in previous presentations, there are multiple surrogates that we've presented, the most recent of which I think, Cilantro's is a fairly good example of what great looks like. So I think that, that should give you some understanding of what the market size is. I'll go back to one of the earlier questions regarding the demand and perhaps the displacement of competitors in this space. And not dissimilar to what we saw with Amzik or FMX101 when we did our demand study, this is a very And so there is not a nice, neat surrogate necessarily for that phenomenon. But hopefully that gives you some additional insight into how to think about it. Yes. So just to follow-up on Matt's comments, we view it when we look at the demand study for rosacea, same as we saw for ANZYK is that if the sentiment is that the product could be that it's not just being niched for one particular agent to potentially replace. So if we're seeing FMX103 with the same type of general outlook and being disruptive to the category, that means we have the potential to get broad utilization. So that's what we're obviously hoping for and the initial sentiments we were quite pleased with. Tim, some comments on the Phase II versus Phase III before I begin? Sure. Yes. Hey, Valentin. So just differences between Phase II and Phase III, obviously, there's refinements like any protocol, but there's a couple of key areas that we feel certainly we believe would contribute potentially to improving probability of success. So just to remind, Phase II study was the planned enrollment was a what patients on a one to 1, it was actually 127 that were ultimately enrolled. Just to remind you on the Phase 3 studies as 280 patients would be enrolled, so practically doubled, again on a one to one. We have approximately 50 sites in the U. S. And 50 sites across Germany, Poland and Austria. I'm going to come on to where the 280 came from in a minute. But looking at the PN study in Phase II, looking at the treatment curves, response curves, we've actually increased the treatment period from 8 weeks, which was where the primary endpoint was based for Phase 2 to 10 weeks in Phase 3. And that's just a reflection of the perception that there's a potential for further development of efficacy beyond 8 weeks. So there's an extra 2 weeks that we've been adding on respect to therapy. Respect to inclusion and exclusion criteria, really looking across the entire Phase 2 program that Menlo has completed to date, not just the PN study, there were certainly some clear indications that any patients who co present with an inflammatory skin condition of varying severities has the potential to do less well with solopetin than if they didn't have this such as atopic dermatitis, psoriasis, etcetera. So, one of the key exclusion criteria as far as related to that particular point in Phase 3 is that we're excluding patients that have any active pruritic disease within 6 months of baseline. So that's quite a tough exclusion criteria to ensure that patients that come into the study do not have these underlying conditions that could potentially be confounding and at the edge that they're experiencing is directly related to the PN lesions. Other inclusion criteria relating to the severity and consistency of the etch of patients coming into the trial. In the Phase I remember the primary endpoint there was a visual analog scale, very similar to the NRS scale, but they had to have a score of 70, I. E, it's like 7 points on the NRS scale within 72 hours of baseline. In the Phase III, they have to have at least a 6.5 weekly average WNRS score for each of the 2 weeks coming into the baseline visit. So what does that mean? If their average was 8 and if you like baseline minus 2 weeks and a 6 baseline minus 1 week, they would actually be excluded from participation in the trial. We're trying to ensure that we're focusing very much on consistently high, consistently replicating itch related directly to the PN. One last thing on the sample size. If we were just to take the Phase II results as they were, just to remind you, 25.6 treatment effect on placebo percent placebo and 46.5% for sirlopidin. If we were to do a sample size calculation there, that would suggest a sample size of 200 on a 1:one and 90% power and an alpha of 5%. On a more robust potential outcome of 21% 39%, I. E. An 18% treatment effect delta comes to the 280 on a one to 1. So it's a more robust, more rigorous scenario that the sample for Phase 3 has been based upon. So I think those are probably the headline differences between the Phase 2 and Phase III. Great. Thanks a lot. Thank you. Your next question comes from Oren Livnat from H. C. Wainwright. Please go ahead. Thank you. And as an analyst coming from the Menlo side originally, I'm going to return to Amzik, if you don't mind. It's clear you guys want to give us a little more color later into the launch on these gross to nets and net values per script. But I'm just hoping to knock it out over my skis with revenue projections. And I'm wondering if you can give us any color on this impressive early prescription launch, if we should maybe very conservatively assume that some material portion of those maybe aren't coming through ESI and maybe are, I don't know, free or highly subsidized with co pay assistance, just so we can get into a ballpark at least of potential revenue recognition on this early nice prescription launch? And then I have a follow-up question on cerlipidin. Thanks. Yes. No, it's certainly a fair question. So we've got about 80,000,000 lives that have access to the drug right now. That means that they have their insurance, that they're covered. So it's, call it, 44%. Get get more lives covered with each successive month as we move through the next quarter. So It's not I wouldn't say it's an exact science that 44% of the scripts are covered and the remaining 56% are not covered and we're buying it down. But obviously, where we are not covered, we're going to absorb those costs and we're going to buy that down while we continue to get our product on contract. And that's intentional. We obviously want to ensure that patients get access to the drug, physicians can prescribe without any burden. And so we're going to use what we refer to as synthetic access initiatives to offset where we're not yet on formulary. The aim is by the time we get these contracts wrapped up that we would shut off the synthetic access programs or in essence buying down the prescription. And our goal is to try to do that by the time we get to the back end of the second quarter, early part of the third quarter. Hence why at this stage we're not providing any guidance on net revenue or gross to net number because we want to get through that any guidance on net revenue or gross to net number because we want to get through that process. What I can share is that our intent unlike other companies is we're not going to let on let continue to run these synthetic access programs in perpetuity, because we believe that that does erode significantly into your gross to net. Our approach, our strategy is to collaborate and partner with the payers. We believe that's serving us well. So you can take a look at what estimates are that are out there. We feel good about our ability to obviously to hit our some of the estimates that are out there. Again, we're going to be cautious about providing any further guidance on net revenue and gross to that number until we get through another quarter or 2. Okay. I guess just then to follow-up on that. It's not a one to one obviously match of real world prescriptions to match your coverage obviously. But if we were to assume that it's reflective and that some meaningful portion of prescriptions are going through paid ESI, for example, that would not be too aggressive? Yes, I think that's fair. So we're obviously very pleased in the contract with ESI. And so obviously, we're getting a reasonable percentage of prescriptions that are going through that that are covered. But obviously, there is still a significant amount yet that is not yet covered. And our objective is shrink that number with each month as we get through this quarter and through the Q2 and try to have the majority of these contracts again tied up by the end of the second quarter or early part of Q3. So far, we seem to be on pace. I'm pleased with how we're tracking. I'm pleased with the negotiation process with the payers. We actually have some payers that have come to the table that are looking to potentially add Amzik on its formulary list that we did not even model into it when we did our own internal modeling. I think again that goes to what our overall goes to first that we believe we've got a product that's differentiated and seems to be well received from a clinical perspective and can be differentiated, but also goes to our overall pricing approach. All right, great. And then just quickly on sirlopetin, assuming that's positive, can you on both trials, can you remind us, are there any gating factors besides sort of midyear safety study wrapping up that would determine when this NDA is filed? And are you confident in our priority review? So assuming that the Phase 3 studies are successful, the primary gating item would be the completion of the long term safety extension, which we anticipate would wrap up around the middle of the year or so. Beyond that, obviously, we're working on the other components, CMC, non clinical, etcetera, all that work is being done in parallel. Again, our intent would be to file the NDA by the end of the year. Regarding priority review, Obviously, the drug has been granted breakthrough therapy designation. We would know whether or not definitively we would have that upon acceptance of the after we file the NDA and upon acceptance of the NDA. So we're certainly hopeful for that, but I'm always cautious about guaranteeing anything until we hear it specifically from the FDA. We believe there's a reasonable chance for that. But until we actually go ahead and submit the NDA, we won't know. Obviously, if it comes back as a priority review is granted, that would be a 6 month review process. If not, it would be a normal 10 month review. Hence, when we look at your guidance, assuming we file the NDA for sopinavinib by the end of the year, that would have put a potential approval and launch, as we said, second half of next year, giving us some flexibility to pull it up if we get a prior review. Otherwise, it would be towards the back end of next year if it went through a standard review. All right. Thanks. Appreciate the help. You're welcome. Thank you. There are no further questions at this time. I'll now hand back to management for closing remarks. Well, thank you, operator, and thanks to everyone for taking time out of your busy schedules to join the call today. Very much appreciate the robust question and answer session, and I look forward to keeping you updated on the progress of our business. Likely, the next update will be the results of the Phase III program for solopinib in PN. So we'll keep you posted. Thanks again. Enjoy the rest of your week.