On May 9, 2017 Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) reported financial results for the three months ended March 31, 2017, and provided an operating forecast and program updates (Filing, Q1, Ligand, 2017, MAY 9, 2017, View Source [SID1234519019]). Ligand management will host a conference call today beginning at 4:30 p.m. Eastern time.

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"We are pleased to be reporting a substantial increase in first quarter royalty revenue led by Promacta, Kyprolis and EVOMELA, as well as strong cash flow from operations. In addition to achieving solid sales growth, our partners made important clinical, regulatory and commercial progress on a global basis," said John Higgins, Chief Executive Officer. "During the first quarter we completed enrollment in a Phase 2 clinical trial with our novel, small-molecule GRA program for the treatment of type 2 diabetes mellitus, and we look forward to reporting topline results this September. We also added to our Shots-on-Goal business model with new licensing agreements including those for OmniAb and Captisol."

First Quarter 2017 Financial Results

Total revenues for the first quarter of 2017 were $29.3 million, compared with $29.6 million for the same period in 2016. Royalties were $24.2 million, compared with $14.4 million for the same period in 2016, an increase of 68%, primarily due to higher royalties from Promacta and Kyprolis and new royalties from EVOMELA this period, compared to a year ago. Material sales were $1.1 million, compared with $5.3 million for the same period in 2016 due to timing of Captisol purchases for use in clinical trials and commercial products. License fees, milestones and other revenues were $3.9 million, compared with $9.9 million for the same period in 2016, which included receipt of a $6.0 million approval milestone for EVOMELA.

Cost of goods sold was $0.3 million for the first quarter of 2017, compared with $1.0 million for the same period in 2016 due to the timing and mix of Captisol sales. Amortization of intangibles was $2.7 million, compared with $2.5 million for the same period in 2016. Research and development expense was $8.7 million, compared with $4.0 million for the same period of 2016 due to enrollment costs of our Phase 2 GRA trial and non-cash stock-based compensation expense. General and administrative expense was $7.3 million, compared with $7.1 million for the same period in 2016.

Net income for the first quarter of 2017 was $5.1 million, or $0.22 per diluted share, compared with $6.6 million, or $0.30 per diluted share for the same period in 2016. Adjusted net income for the first quarter of 2017 was $12.6 million, or $0.57 per diluted share, compared with $13.6 million, or $0.63 per diluted share for the same period in 2016.


As of March 31, 2017, Ligand had cash, cash equivalents and short-term investments of $159.4 million. Cash generated from operations was $24.2 million for the 2017 first quarter.

2017 Financial Forecast

The Company expects 2017 revenues to consist of three components: royalties, material sales and contract (license and milestone) revenue. Ligand affirms previous guidance of 2017 core revenue to include royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $20 million. During 2017, Ligand estimates it could potentially receive up to an additional $24 million of contract payments; however, external events are out of Ligand’s control so the Company will provide more information about the timing and probability for additional contract revenue, if any, expected to be booked in 2017 as the year progresses. Ligand notes that with core revenue of $130 million, adjusted earnings per diluted share would be approximately $2.70. This amount is expected to be higher in the event additional contract revenue is received in 2017.

First Quarter 2017 and Recent Business Highlights

Portfolio Program Progress

Promacta/Revolade

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Novartis reported first quarter 2017 net sales of Promacta/Revolade (eltrombopag) of $175 million, a $44 million or 34% increase over the same period in 2016.
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Novartis reported Revolade (eltrombopag) was approved in Canada for the treatment of pediatric (≥1 years to <18 years) chronic immune thrombocytopenia purpura to increase platelet counts in patients who have had an insufficient response to corticosteroids or immunoglobulins.
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Novartis announced the publication of a study conducted by the National Institutes of Health demonstrating that 58% of patients with treatment-naïve severe aplastic anemia achieved complete response at six months when treated with eltrombopag at the initiation of and concurrent with standard immunosuppressive treatment. The data are published in the latest issue of The New England Journal of Medicine.

Kyprolis (carfilzomib), an Amgen Product Utilizing Captisol

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On April 26, 2017, Amgen reported first quarter 2017 net sales of Kyprolis (carfilzomib) of $190 million, a $36 million or 23% increase over the same period in 2016.
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On February 28, 2017, Amgen announced positive results from a planned overall survival (OS) interim analysis of the Phase 3 head-to-head ENDEAVOR trial. The study met the key secondary endpoint of OS, demonstrating that patients with relapsed or refractory multiple myeloma treated with Kyprolis (carfilzomib) and dexamethasone (Kd) lived 7.6 months longer than those treated with Velcade (bortezomib) and dexamethasone (Vd) (median OS 47.6 months for Kd versus 40.0 for Vd, HR = 0.79, 95 percent CI, 0.65 – 0.96).
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On March 1, 2017, Amgen announced that new data from the Kyprolis (carfilzomib) clinical development program would be presented at the 16th International Myeloma Workshop, March 1-4, 2017, in New Delhi.

Additional Pipeline and Partner Developments

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Melinta Therapeutics announced that the new drug applications (NDAs) for IV and oral Baxdela (delafloxacin) for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI) were accepted for filing by the Food and Drug Administration (FDA) and were granted a Prescription Drug User Fee Act (PDUFA) date of June 19, 2017. Additionally, Melinta announced that the FDA does not plan to hold an Advisory Committee meeting for the NDAs. If approved, Ligand is entitled to receive a 2.5% royalty on net sales of the IV formulation of Baxdela and a $1.5 million approval milestone payment.
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Melinta Therapeutics announced signing a development and commercialization agreement with Menarini Group, granting Menarini exclusive rights to commercialize delafloxacin under its own brands in 68 countries in Europe, Asia-Pacific including China, South Korea and Australia (excluding Japan), and the Commonwealth of Independent States including Russia.




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Retrophin announced plans to initiate a single Phase 3 clinical trial to enable an NDA filing for sparsentan for the treatment of focal segmental glomerulosclerosis. The trial will include an interim analysis of proteinuria as a surrogate endpoint to serve as the basis for an NDA filing for Subpart H accelerated approval of sparsentan. Retrophin expects to initiate the trial in the second half of 2017.
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Sage Therapeutics presented brexanolone data at the American Academy of Neurology 2017 annual meeting.
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Aldeyra provided an update on its Phase 3 clinical program of ADX-102 in noninfectious anterior uveitis and anticipates beginning the Phase 3 trial in the second quarter of 2017.
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Aldeyra announced the last patient had completed dosing in Aldeyra’s multicenter, double-blind, randomized Phase 2b clinical trial of ADX-102 in allergic conjunctivitis.
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Biocad announced receiving marketing authorization from the Ministry of Health of the Russian Federation for its interferon beta-1a biosimilar of Merck’s Rebif.
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Merck announced it stopped the Phase 2/3 EPOCH study evaluating verubecestat in people with mild-to-moderate Alzheimer’s disease due to the conclusion that the efficacy endpoint could not be achieved. No safety concerns were noted. Results from EPOCH will be analyzed and presented at an upcoming scientific meeting. The external Data Monitoring Committee recommended that the ongoing Phase 3 APECS study, which is evaluating verubecestat in people with prodromal Alzheimer’s disease, continue unchanged. Results from the APECS study are expected in February 2019.
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Novartis announced that it had exercised an option to in-license ECF843 (Lubricin) for ophthalmic indications from Lubris Biopharma. Ligand acquired economic rights to the Lubricin program from Selexis, SA in 2015.
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Opthea Limited announced positive results from its Phase 1/2a clinical trial of OPT-302 for wet age-related macular degeneration (wet AMD). Opthea is planning to initiate a Phase 2b trial in wet AMD and a Phase 2a trial in diabetic macular edema in the second half of 2017.
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Viking Therapeutics announced positive initial results from a proof-of-concept study of VK2809 in an in vivo model of glycogen storage disease 1a (GSD 1a) and announced funding of initial clinical development of VK2809 for treatment of GSD 1a with plans to file an investigational new drug (IND) application in the second half of 2017.
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Janssen filed an IND application for an antibody discovered using Ligand’s OmniAb technology. The IND filing resulted in a $1 million milestone payment to Ligand. Janssen has a royalty-free license to the OmniAb technology (entered into with OMT in October of 2013), but will potentially pay Ligand further development and commercial milestones upon clinical success and regulatory approval of any therapeutic developed using the OmniAb technology.
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Marinus Pharmaceuticals presented Phase 1 clinical data showing the safety and tolerability of ganaxolone IV at the 6th London-Innsbruck Colloquium on Status Epilepticus and Acute Seizures.
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Merck KGaA announced it licensed rights to develop Captisol-enabled VX-970 from Vertex Pharmaceuticals. Economic terms of the original agreement between Ligand and Vertex remained unchanged.
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XTL Biopharmaceuticals announced the receipt of additional preclinical data regarding the role of hCDR1 as a potential treatment for Sjögren’s syndrome from Prof. Edna Mozes of The Weizmann Institute of Science and the developer of hCDR1.

New Licensing Deals

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Ligand announced a worldwide platform license agreement with bluebird bio, Inc. Under the license, bluebird will be able to use the OmniRat, OmniMouse and OmniFlic platforms to discover fully human mono- and bispecific antibodies and antibody fragments. Ligand is eligible to receive annual platform access payments, development milestone payments and royalties for each product incorporating an OmniAb antibody. Bluebird will be responsible for all costs related to the programs. Ligand previously disclosed rights to a single-antibody partnership had been licensed to bluebird, but this new agreement gives bluebird full access to the OmniAb platform.
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Ligand announced an expansion of its license with Sermonix Pharmaceuticals to include worldwide rights to develop and commercialize oral lasofoxifene. Ligand originally licensed U.S. rights to oral lasofoxifene to Sermonix in February of 2015, and has now expanded the agreement to include the rest of the world. Ligand is entitled to commercial milestones and royalties on net sales ranging from 6-10% upon commercialization of oral lasofoxifene.

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Ligand announced a commercial license and supply agreement with Marinus Pharmaceuticals granting rights to use Captisol in the formulation of IV ganaxolone. Ligand is entitled to milestone payments, royalties and revenue from Captisol material sales related to IV ganaxolone.
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Ligand entered into a Captisol Clinical Use/Supply Agreement with Eisai.

Internal Glucagon Receptor Antagonist (GRA) Program

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Ligand announced the completion of enrollment in the Company’s Phase 2 clinical trial with its novel, small-molecule GRA program (LGD-6972) for the treatment of type 2 diabetes mellitus. The Company expects to report topline results in September 2017.

Adjusted Financial Measures

The Company reports adjusted net income and adjusted net income per diluted share, in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company’s financial measures under GAAP include stock-based compensation expense, amortization of debt-related costs, amortization related to acquisitions, changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustment for amounts owed to licensors, fair value adjustments to Viking Therapeutics convertible note receivable and warrants, unissued shares relating to the Senior Convertible Note, and others that are listed in the itemized reconciliations between GAAP and adjusted financial measures included in this press release. However, other than with respect to total revenue, the Company only provides guidance on an adjusted basis and does not provide reconciliations of such forward-looking adjusted measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for changes in contingent liabilities, net losses of Viking Therapeutics, mark-to-market adjustments for amounts owed to licensors, effects of any discrete income tax items and fair value adjustments to Viking Therapeutics convertible note receivable. Management has excluded the effects of these items in its adjusted measures to assist investors in analyzing and assessing the Company’s past and future core operating performance. Additionally, adjusted earnings per diluted share is a key component of the financial metrics utilized by the Company’s board of directors to measure, in part, management’s performance and determine significant elements of management’s compensation.

On May 9, 2017 Atossa Genetics, Inc. (NASDAQ: ATOS), a clinical-stage pharmaceutical company developing novel therapeutics and delivery methods for breast cancer and other breast conditions, reported that the Institutional Review Board associated with Montefiore Medical Center (Biomedical Research Alliance of New York IRB) has approved the Fulvestrant Microcatheter Phase 2 study that was recently transferred to Montefiore (Press release, Atossa Genetics, MAY 9, 2017, View Source [SID1234518985]).

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The Fulvestrant Microcatheter Phase 2 study includes women with ductal carcinoma in-situ (DCIS) or invasive breast cancer slated for mastectomy or lumpectomy. This study will assess the safety, tolerability and distribution of fulvestrant when delivered directly into breast milk ducts of these patients compared to those who receive the same product intramuscularly. The secondary objective of the study is to determine if there are changes in the expression of Ki67 as well as estrogen and progesterone receptors between a pre-fulvestrant biopsy and post-fulvestrant surgical specimen. Digital breast imaging before and after drug administration in both groups will also be performed to determine the effect of fulvestrant on any lesions as well as breast density of the participant. Six study participants will receive the standard intramuscular fulvestrant dose of 500 mg to establish the reference drug distribution, and 24 participants will receive fulvestrant by intraductal instillation utilizing Atossa’s microcatheter device.

"This study was initiated at The Columbia University Medical Center Breast Cancer Program and then transferred to Montefiore Medical Center at the beginning of 2017 when the principal investigator moved his practice to Montefiore," commented Steven Quay, CEO and President. "We are pleased that the study continues to move forward at Montefiore, which is a leading center for breast cancer treatment."

On May 9, 2017 Aeglea BioTherapeutics, Inc., (NASDAQ:AGLE) a biotechnology company committed to developing enzyme-based therapeutics in the field of amino acid metabolism to treat rare genetic diseases and cancer, reported a corporate update and reported financial results for the first quarter ended March 31, 2017 (Press release, Aeglea BioTherapeutics, MAY 9, 2017, View Source [SID1234518984]).

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"AEB1102 remains the primary focus of our clinical and preclinical work across rare genetic diseases and cancer," said David G. Lowe, Ph.D., chief executive officer of Aeglea. "We are especially pleased with recent preclinical data which demonstrated that AEB1102 was not immunosuppressive in combination with anti-PD-1 immune checkpoint inhibitors. We believe this opens a unique opportunity at the intersection of tumor metabolism and existing or emerging therapies in immuno-oncology."
Recent Highlights

Presented preclinical data at the 2017 American Association of Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting demonstrating that reducing systemic arginine with AEB1102 did not suppress the immune response induced by anti-PD-1 and anti-PD-L1, and exerted an additive anti-tumor and synergistic survival benefit.

Expanded research and development capabilities with the opening of an internal laboratory at Aeglea in Austin, TX.

Upcoming Events
David G. Lowe, Ph.D., chief executive officer of Aeglea, will present a corporate update at the UBS 2017 Global Healthcare Conference being held May 22 – 24, 2017 in New York City.

First Quarter 2017 Financial Results At March 31, 2017, Aeglea had available cash, cash equivalents and marketable securities of $57.9 million. Based on Aeglea’s current operating plan, management believes that it has sufficient capital resources to fund anticipated operations through March 31, 2019. Aeglea recognized grant revenues of $1.0 million in the first quarter of 2017, compared with $0.9 million in the first quarter of 2016. The grant revenues are the result of a $19.8 million research grant received from the Cancer Prevention and Research Institute of Texas (CPRIT). The increase was primarily due to higher qualifying expenditures associated with AEB1102 for grant-related clinical trials. Research and development expenses totaled $4.9 million for the first quarter of 2017, compared with $3.6 million for the first quarter of 2016. The increase was primarily associated with hiring additional personnel to expand Aeglea’s internal regulatory, laboratory, and clinical development capabilities. General and administrative expenses totaled $2.3 million for the first quarter of 2017, compared to $1.8 million in the first quarter of 2016. This increase was primarily due to additional compensation and personnel costs, and increased costs associated with operating as a public company. Net loss totaled $6.2 million and $4.5 million for the first quarter of 2017 and 2016, respectively.

On May 9, 2017 Fibrocell Science, Inc. (NASDAQ: FCSC), a gene therapy company focused on transformational autologous cell-based therapies for skin and connective tissue diseases, and Intrexon Corporation (NYSE: XON), a leader in synthetic biology, reported that two abstracts will be presented in oral sessions at the 20th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT) (Free ASGCT Whitepaper) from May 10-13, 2017 in Washington, D.C (Press release, Intrexon, MAY 9, 2017, View Source [SID1234518983]).

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The schedule for each presentation is as follows:

Session: Pharmacology, Toxicology and Assay Development
Presentation: Pre-Clinical Development of a Genetically-Modified Human Dermal Fibroblast (FCX-007) for the Treatment of Recessive Dystrophic Epidermolysis Bullosa (RDEB)
Presenter: Anna Malyala, PhD, Director, New Product Development, Fibrocell Science
Abstract ID: 301
Presentation on Thursday, May 11, 2017, 4:45 – 5:00 p.m. ET
Room: Maryland ABC Room

Session: Somatic Stem Cell Therapies
Presentation: Development of an Autologous Gene-Modified Cell Therapy for the Treatment of Linear Scleroderma
Presenter: Darby Thomas, PhD, Director, Rare Diseases, Human Therapeutics Division, Intrexon Corporation
Abstract ID: 740
Presentation on Saturday, May 13, 2017, 11:00 – 11:15 a.m. ET
Location: Delaware AB Room

About FCX-007

FCX-007 is Fibrocell’s clinical-stage, gene therapy product candidate for the treatment of RDEB, a congenital and progressive orphan skin disease caused by the deficiency of the protein type VII collagen (COL7). FCX-007 is a genetically-modified autologous fibroblast that encodes the gene for COL7 and is being developed in collaboration with Intrexon Corporation. By genetically modifying autologous fibroblasts ex vivo to produce COL7, culturing them and then treating wounds locally via injection, FCX-007 offers the potential to address the underlying cause of the disease by providing high levels of COL7 directly to the affected areas while avoiding systemic distribution. The FDA has granted Orphan Designation to FCX-007 for the treatment of Dystrophic Epidermolysis Bullosa, which includes RDEB. In addition, FCX-007 has been granted Rare Pediatric Disease Designation and Fast Track Designation by the FDA for treatment of RDEB.

About FCX-013

Fibrocell is in pre-clinical development of FCX-013, its gene therapy candidate for the treatment of linear scleroderma, a form of localized scleroderma. FCX-013 incorporates Intrexon’s proprietary RheoSwitch Therapeutic System, a biologic switch activated by an orally administered compound to control future protein expression once the initial fibrosis has been resolved. FCX-013 is designed to be injected under the skin at the location of the fibrosis where the genetically-modified fibroblast cells will produce a protein to break down excess collagen accumulation. The patient takes an oral compound to facilitate protein expression. Once the fibrosis is resolved, the patient will stop taking the oral compound which will stop further production of the subject protein by FCX-013. Fibrocell has received Orphan Drug Designation from the FDA for FCX-013 for the treatment of localized scleroderma.

On May 9, 2017 Foamix Pharmaceuticals Ltd. (NASDAQ: FOMX) ("Foamix Pharmaceuticals" or the "Company"), a clinical stage specialty pharmaceutical company focused on developing and commercializing proprietary topical foams to address unmet needs in dermatology, reported financial results for the three months ended March 31, 2017 (Press release, Foamix, MAY 9, 2017, View Source [SID1234518982]).

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Clinical, business and corporate developments for the three months ended March 31, 2017 and to date:
On March 27, 2017, we provided the top-line data from our two Phase 3 clinical trials (Trial 04 and 05) for FMX101 in the treatment of moderate-to-severe acne. In the intent-to-treat analysis, FMX101 demonstrated statistical significance compared to vehicle on both co-primary endpoints in Trial 05 (specifically the absolute reduction in inflammatory lesions at week 12, and investigator global assessment (IGA) treatment success at week 12 compared to baseline). In Trial 04, statistical significance was demonstrated for FMX101 compared to vehicle in the co-primary endpoint of absolute reduction in inflammatory lesions, however, statistical significance was not achieved in the co-primary endpoint of IGA treatment success.

On May 3, 2017, we provided new data from our two Phase 3 clinical trials for FMX101, including pooled analysis of our co-primary endpoints and certain secondary clinical endpoints (absolute reduction of non-inflammatory lesions at week 12; and percent change in inflammatory lesions at weeks 3, 6, 9 and 12). Highlights from our further analyses included:
Statistical significance was demonstrated for FMX101 compared to vehicle in the pooled analysis of both co-primary endpoints – absolute reduction of inflammatory lesions and Investigator’s Global Assessment (IGA)
% Change in inflammatory lesion count was statistically significant in both Trials 04 and 05 at all timepoints (beginning at Week 3)
Non-inflammatory lesion count reduction at Week 12 was statistically significant in both Trials 04 and 05
Overall high level of patient satisfaction with FMX101 (based on patient satisfaction questionnaires).
FMX101 was generally safe and tolerable. No serious adverse events drug-related systemic side effects were recorded.

Further to sharing the detailed analyses, we announced that based on the results of the first two pivotal trials (Trial 04 and 05), we intend to conduct a third U.S. Phase 3 trial in patients with moderate-to-severe acne. This double-blind, vehicle-controlled trial is planned to enroll 1,500 patients who will be randomized 1:1 (FMX101 vs vehicle) across an estimated 80 investigator sites. The trial is expected to commence mid-year. If the results are positive, this trial will form the basis for a New Drug Application (NDA) which the company plans to submit in the second half of 2018.

The two Phase 3 clinical trials for FMX103 in patients with moderate-to-severe papulopustular rosacea are expected to commence mid-2017. We also announced on May 3, 2017, that we plan to increase the sample size for each of the two Phase 3 trials from 600 to 750 patients (total of 1,500 patients) randomized 2:1 (FMX103 vs vehicle) across an estimated 80 investigator sites in the U.S. FMX103 demonstrated clinically and statistically significant efficacy in treating moderate-to-severe rosacea in a Phase 2 trial which enrolled 233 patients across 18 sites in Germany.
During the first quarter of 2017 we successfully manufactured three registration-quality batches for FMX101.
U.S. Sales of Finacea Foam, azelaic acid 15% for the treatment of rosacea, continue to grow.

Based on sales of Finacea Foam reported by Bayer HealthCare AG for Q1, 2017 Foamix is entitled to royalty payments of $927,000, up 26% from the fourth quarter of 2016.

Finacea Foam was developed through a research and development collaboration between Foamix and Bayer, utilizing Foamix’s proprietary foam technology platform. The drug was launched by Bayer in the USA in September 2015.

Financial highlights for the three months ended March 31, 2017:
Total revenues were $927,000 compared with $745,000 for the three months ended March 31, 2016. The increase is due to increase in sales of Finacea Foam by Bayer HealthCare AG.

Research and development expenses were $12.7 million, compared with $3.6 million in the three months ended March 31, 2016. This increase resulted primarily from an increase in costs relating to the FMX101 and FMX103 clinical trials as well as an increase in payroll and related expenses due to an increase in the number of R&D employees.

Selling, general and administrative expenses were $2.8 million, compared with $1.7 million in the three months ended March 31, 2016. The increase in selling, general and administrative expenses resulted primarily from increases in payroll and other payroll-related expenses, market research costs, advisors, maintenance and office expenses.

Operating expenses totaled $15.5 million, compared with $5.3 million in the three months ended March 31, 2016.
Net loss was $14.4 million or $0.39 per share, basic and diluted, compared with a loss of $4.5 million or $0.15 per share, basic and diluted, for the three months ended March 31, 2016.

Cash and investments as of March 31, 2017 totaled $118.7 million, compared with $131.0 million as of December 31, 2016.

Management overview
On March 27, 2017, we provided the top-line data from our two Phase 3 clinical trials (Trial 04 and 05) for FMX101 in the treatment of moderate-to-severe acne. In the intent-to-treat analysis, FMX101 demonstrated statistical significance compared to vehicle on both co-primary endpoints in Trial 05 (specifically the absolute reduction in inflammatory lesions at week 12, and investigator global assessment (IGA) treatment success at week 12 compared to baseline). In Trial 04, statistical significance was demonstrated for FMX101 compared to vehicle in the co-primary endpoint of absolute reduction in inflammatory lesions, however, statistical significance was not achieved in the co-primary endpoint of IGA treatment success. On May 3, 2017, we provided new data from our two Phase 3 clinical trials for FMX101, including pooled analysis of our co-primary endpoints and certain secondary clinical endpoints (absolute reduction of non-inflammatory lesions at week 12; and percent change in inflammatory lesions at weeks 3, 6, 9 and 12). Statistical significance was demonstrated for FMX101 compared to vehicle in the pooled analysis of the co-primary endpoints as well as the secondary endpoints presented.

Co-primary endpoint – Absolute change from baseline in inflammatory lesion count at week 12:
Trial 04: reduction of 14.16 lesions (or -14.16) for FMX101 and reduction of 11.17 lesions (or -11.17) for the vehicle (p<0.01)

Trial 05: -13.46 for FMX101 and -10.72 for vehicle (p<0.01)
Pooled Analysis: Absolute change in inflammatory lesion count was -13.79 for the FMX101, 4% treatment group and -10.94 for vehicle (p=0.0001)

Co-primary endpoint – Proportion of patients with Investigator’s Global Assessment (IGA) success at week 12:
Trial 04: IGA treatment success for FMX101, 4% treatment group was 8.09% versus 4.77% in vehicle (p=0.2178)
Trial 05: IGA treatment success for FMX101, 4% treatment group was 14.67% versus 7.89% in vehicle (p<0.05)
Pooled Analysis: IGA treatment success was 11.51% for FMX101, 4% treatment group and 6.34% for vehicle (p<0.05)

Secondary efficacy endpoint – Percent change from baseline in inflammatory lesion count at weeks 3, 6, 9 and 12:
Trial 04: reduction of 29% for FMX101 vs. reduction of 19% for vehicle, or -29% vs. -19%, at week 3 (p<.001); -37% vs. -26% at week 6 (p<.001); -42% vs. -28% at week 9 (p<.0001); and -44% vs. -34% at week 12 (p<0.01)

Trial 05: reduction of 34% for FMX101 vs. reduction of 21% for vehicle, or -34% vs. -21%, at week 3 (p<.0001); -39% vs. -27% at week 6 (p<.0001); -43% vs. -31% at week 9 (p<.001); and: -43% vs. -34% at week 12 (p<0.01)

Secondary efficacy endpoint – Absolute change from baseline in non-inflammatory lesion count at week 12:
Trial 04: reduction of 16.45 lesions (or -16.45) for the FMX101, 4% treatment group and reduction of 10.30 lesions (or -10.30) for the vehicle (p<0.01)

Trial 05: reduction of 13.20 (or -13.20) for the FMX101, 4% treatment group and reduction of 7.00 (or -7.00) for the vehicle (p<0.05)

Pooled Analysis: Absolute change in non-inflammatory lesion count was -14.76 for the FMX101, 4% treatment group and -8.64 for vehicle (p<0.01)

As we announced on May 3, 2017, based on the results of the first two pivotal trials (Studies 04 and 05), the company intends to conduct a third U.S. Phase 3 trial in patients with moderate-to-severe acne. If the results are positive, this trial will form the basis for an NDA which the company plans to submit in the second half of 2018. This planned clinical trial will be conducted at approximately 80 investigator sites in the U.S. In order to achieve the necessary statistical power compared with the prior Phase 3 trials, the target patient enrollment number has been increased to 1,500. Patients will be randomized 1:1 to receive either FMX101 (minocycline foam 4%) or vehicle foam once daily over 12 weeks. The co-primary efficacy endpoints will be identical to the prior Phase 3 trials: (1) mean change from baseline in the inflammatory lesion count, and (2) proportion of patients with IGA scores of "Clear" or "Almost Clear", with improvement of at least two grades from baseline. The inclusion criteria will be consistent with the prior Phase 3 trials.

We intend to meet with the FDA to review the results of our Phase 3 clinical trials for FMX101 (Trial 04 and 05) and our third Phase 3 trial, which we expect to commence mid-year.

Following the results of the first two pivotal trials for FMX101 in moderate-to-severe acne, we have also reviewed our Phase 3 program for FMX103 in papulopustular rosacea, which is expected to commence around mid-2017. Based on the outcome of the Phase 3 studies for FMX101, and the planned increase in the number of patients to be enrolled in the third Phase 3 trial in acne, we also intend to increase the sample size for the two planned Phase 3 studies for FMX103 in papulopustular rosacea. The sample size will be increased from 600 patients per trial to 750 patients per trial, for a total of 1,500 patients across the two studies.

Regarding manufacturing, we have successfully completed the scale-up process for FMX101 to a commercial batch size of one-ton. The production of three registration batches has been completed.

In addition to our internal drug development pipeline, we have development and license agreements relating to our proprietary foam technology with other pharmaceutical companies, including Bayer Healthcare and others, in various stages of development and commercialization. Our agreements with these licensees entitle us to development fees, contingent payments and royalties upon commercialization.

In September 2015, Bayer Healthcare began selling Finacea Foam (azelaic acid 15% for the treatment of rosacea) in the U.S. Finacea foam is a prescription foam product which was developed as part of a research and development collaboration between Foamix and Bayer, utilizing Foamix’s proprietary foam technology platform.

According to our license agreement with Bayer, we are entitled to royalties upon commercialization of Finacea Foam.

For the three months ended March 31, 2017, we were entitled to royalties from Bayer in an amount of $927,000, up 26% from the fourth quarter of 2016.

The Company is currently well-capitalized and has sufficient cash to fund our key development programs (FMX101 and FMX103) through NDA registration.
Financial results for the three months ended March 31, 2017

Revenues
Total revenues for the three-month ended March 31, 2017 were $927,000 compared with $745,000 for the three months ended March 31, 2016. The increase is due to increase in sales of Finacea Foam by Bayer HealthCare AG.

Operating Expenses
Our operating expenses for the three months ended March 31, 2017, and three months ended March 31, 2016, were as follows:

Research and Development Expenses
Research and development expenses increased by $9.1 million, or 255%, from $3.6 million in the three months ended March 31, 2016, to $12.7 million in the three months ended March 31, 2017. The increase in research and development expenses resulted primarily from an increase of $7.9 million in costs relating to the FMX101 and FMX103 clinical trials and an increase of $1.1 million in payroll and payroll related expenses (including bonuses and equity-based compensation) due to an increase in the number of R&D employees.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $1.1 million, or 65%, from $1.7 million in the three months ended March 31, 2016, to $2.8 million in the three months ended March 31, 2017. The increase in selling, general and administrative expenses resulted primarily from an increase of $300,000 in payroll and other payroll-related expenses (including bonuses and equity-based compensation), an increase of $250,000 in advisors, consultants and other professional services, $102,000 in market research costs and $122,000 in rent, maintenance and office expenses.

Finance Income, Net
For the three months ended March 31, 2017, we recorded financial income of $257,000 compared to financial income of $174,000 recorded for the three months ended March 31, 2016. The financial income for the three months ended March 31, 2017 and 2016 resulted mostly from interest and financial gains from our cash investments.

Net Loss
For the three months ended March 31, 2017, we recorded a loss of $14.4 million or $0.39 per share, basic and diluted, compared with a loss of $4.5 million or $0.15 per share, basic and diluted, for the three months ended March 31, 2016.

Liquidity and Capital Resources
As of March 31, 2017, we had cash and investments of $118.7 million, compared with $131.0 million as of December 31, 2016. The decrease was mostly due to operating expenses primarily relating to the clinical trials. During the three months ended March 31, 2017 we used $12.1 million in cash in our operations compared to $7.0 million used in operating activities in the three months ended March 31, 2016.