VYNE THERAPEUTICS INC. You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with the unaudited condensed
consolidated financial statements and the notes thereto included elsewhere in
this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the
year ended
Beginning in the second quarter of 2021, we conducted a review of our commercial
and research and development portfolio to determine how to optimally deploy
capital and drive shareholder value. During the course of this review, we
carefully considered the revenues received from the commercialization of AMZEEQ
and ZILXI and the associated costs to drive those revenues, the protracted
negative impact of the COVID-19 pandemic during the commercial launches of both
AMZEEQ and ZILXI, the current payor landscape, as well as the costs to develop
each of our pipeline products. During this process, we evaluated several
strategic options, including the acquisition of marketed assets, out-licensing
our approved products outside of
By leveraging our drug development and clinical development capabilities and
strong network of discovery and preclinical science partners, we are
transitioning our strategic focus to develop therapies for the treatment of
immuno-inflammatory conditions and rare skin diseases of high unmet medical
need. We expect to continue to invest in FMX114 for the treatment of mild to
moderate atopic dermatitis and enrolled the first patient in our Phase 1b/2a
proof-of-concept study in
The initial
The second candidate, VYN202, is an orally-delivered, first-in-class
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Table of contents
with an improved benefit/risk profile. Upon the selection of a lead candidate,
VYNE intends to exercise its exclusive option with
As we continue to transition from a commercial organization to one focused on research and development, we expect to further streamline operations by continuing to eliminate the vast majority of planned expenditures supporting our commercial operations. Furthermore, we are in the process of reducing our workforce by terminating approximately 70 employees, which we expect to be completed byDecember 31, 2021 . We incurred a one-time charge of$1.0 million in the three months endedSeptember 30, 2021 in connection with this restructuring plan, consisting of$0.9 million of employee termination costs, including severance and other benefits, and retention payments of$0.1 million . We anticipate incurring an additional charge of$0.3 million related to employee termination costs, including severance and other benefits during the fourth quarter of 2021. These charges will be substantially paid out byDecember 31, 2021 . Additional charges of$0.4 million related to retention payments are anticipated throughJune 30, 2022 . Key Developments Below is a summary of selected key developments affecting our business that have occurred sinceDecember 31, 2020 : •FromJanuary 1, 2021 throughJanuary 25, 2021 , the Company issued and sold 2,778,012 shares of common stock at a weighted average price per share of$9.76 for$26.3 million in net proceeds pursuant to a Sales Agreement (the "2019 Sales Agreement") withCantor Fitzgerald & Co. ("Cantor Fitzgerald") through an at-the-market equity offering program under whichCantor Fitzgerald acted as our sales agent. Effective as ofJanuary 25, 2021 , the Company terminated the 2019 Sales Agreement. •OnJanuary 21, 2021 , the Company announced the execution of a contract with CVS Caremark ("Caremark"), one of the largest pharmacy benefit managers in theU.S. , with respect to AMZEEQ and ZILXI. In lateMarch 2021 , Caremark informed the Company that it decided to not include these products, and other new branded comparator drugs, on its national formulary for 2021. Certain custom plans under the Caremark umbrella have decided to add the Company's drugs to their respective formularies. •OnJanuary 28, 2021 , the Company completed a registered direct offering of 5,274,261 shares of common stock at a price of$9.48 per share. The net proceeds of the offering were approximately$46.8 million , after deducting placement agent fees and other offering expenses. •OnFebruary 1, 2021 , we announced that the FDA approved a label update for AMZEEQ, including new information indicating the low propensity of Propionibacterium acnes (more commonly known as P. acnes) to develop resistance to minocycline. •OnFebruary 10, 2021 , our Board of Directors approved a one-for-four reverse stock split of our outstanding shares of common stock. The reverse stock split was effected onFebruary 12, 2021 at5:00 p.m. Eastern time . At the effective time, every four issued and outstanding shares of our common stock were converted into one share of common stock. No fractional shares were issued in connection with the reverse stock split, and in lieu thereof, each stockholder holding fractional shares was entitled to receive a cash payment (without interest or deduction) from the Company's transfer agent in an amount equal to such stockholder's respective pro rata share of the total net proceeds from the Company's transfer agent sale of all fractional shares at the then-prevailing prices on the open market. In connection with the reverse stock split, the number of authorized shares of our common stock was also reduced on a one-for-four basis, from 300 million to 75 million. The par value of each share of common stock remained unchanged. A proportionate adjustment was also made to the maximum number of shares issuable under the Company's 2019 Equity Incentive Plan, 2018 Omnibus Incentive Plan and 2019 Employee Share Purchase Plan. •OnMarch 1, 2021 , we announced development plans for FMX114 for the potential treatment of mild-to-moderate atopic dermatitis. FMX114 is a fixed combination of tofacitinib, which is a pan-Janus kinase (JAK) inhibitor, and fingolimod, a sphingosine 1-phosphate receptor modulator. FMX114 attempts to address both the source and cause of inflammation in atopic dermatitis and support skin barrier recovery. •Tyler Zeronda was appointed as our interim Chief Financial Officer and Treasurer, effective as ofJune 18, 2021 , following the resignation ofAndrew Saik . •OnJuly 19, 2021 , the Company amended its Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 75,000,000 to 150,000,000 shares. The increase in the number of authorized shares was approved by the holders of a majority of the outstanding shares of common stock at the Company's annual meeting of stockholders held onJuly 19, 2021 . 33
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Table of contents •OnAugust 9, 2021 , we initiated a patent infringement suit againstPadagis Israel Pharmaceuticals Ltd. (f/k/aPerrigo Israel Pharmaceuticals Ltd. ("Padagis")) in theUnited States District Court for the District of Delaware arising from Padagis's ANDA filing with the FDA. The patent infringement suit asserts each of the patents related to AMZEEQ listed in the Orange Book (the "Listed Patents"). As a result, under applicable law, the FDA cannot grant final approval to Padagis's ANDA beforeDecember 30, 2023 , or a court decision in Padagis's favor. VYNE is seeking, among other relief, an order that the effective date of any FDA approval of Padagis's ANDA be no earlier than the expiration of the Listed Patents, the latest of which expires onSeptember 8, 2037 , and such further and other relief as the court may deem appropriate. •OnAugust 11, 2021 , the Company prepaid its outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest. Following the prepayment, the Amended and Restated Credit Agreement has been terminated and the security interests thereunder will be terminated. See "Part I-Item 1. Unaudited Condensed Consolidated Financial Statements-Note 8. Debt." •OnAugust 12, 2021 , we announced a licensing arrangement with In4Derm, giving us access to their library of novelBET inhibitor compounds. See "-Company Overview." •OnAugust 12, 2021 , we announced that we initiated a process to explore a sale or license of our topical minocycline franchise. In addition, we are refocusing our resources on our immuno-inflammatory development programs, including the compounds that we licensed from In4Derm. See "-Company Overview." •OnAugust 12, 2021 , we entered into a sales agreement withCantor Fitzgerald & Co. to sell shares of our common stock, from time to time, with aggregate gross sales proceeds of up to$50.0 million through an at-the-market equity offering program under whichCantor Fitzgerald will act as our sales agent. FromAugust 12, 2021 toSeptember 30, 2021 , we issued and sold 1,948,000 shares of common stock at a weighted average sales price per share of$1.57 for$2.9 million in net proceeds. See "Part I-Item 1. Unaudited Condensed Consolidated Financial Statements-Note 9. Share Capital." •OnOctober 5, 2021 , we announced that the first patient was enrolled in Cutia's Phase 3 study inChina evaluating AMZEEQ for the purposes of seeking regulatory approval inChina . •OnOctober 19, 2021 , we announced that the first patient was enrolled in our Phase 1b/2a clinical trial evaluating FMX114 for the treatment of mild-to-moderate atopic dermatitis. We expect topline results from the study early in the first quarter of 2022. •OnOctober 21, 2021 , we announced the formation of a scientific advisory board ("SAB") composed of leading scientists and academics specializing in immunological and inflammatory diseases. TheSAB will provide scientific expertise and guidance to the VYNE management team and Board, as the Company progresses its pipeline of innovative treatments for immuno-inflammatory conditions. •OnOctober 26, 2021 , we announced preclinical data showing that our pan-BET inhibitor, VYN201, significantly reduced the expression of several key pro-inflammatory cytokines relevant to Th17-mediated autoimmune diseases in an animal model and an ex vivo human tissue study. Financial Overview We have incurred net losses since our inception. Until the first quarter of 2020, when we commenced commercial operations, our business activities were primarily limited to developing product candidates, raising capital and performing research and development activities. As ofSeptember 30, 2021 , we had an accumulated deficit of$628.0 million . We recorded net losses of$21.3 million and$24.7 million for the three months endedSeptember 30, 2021 and 2020, respectively. Our capital resources and business efforts have largely been focused on activities relating to the commercialization of AMZEEQ and ZILXI and advancing our product candidates and pipeline. As discussed above, we completed a strategic review of our business and have determined to explore a possible sale or license of our minocycline franchise, including AMZEEQ, ZILXI, FCD105 and the underlying MST platform. We will refocus our resources on our immuno-inflammatory pipeline and expect to support the continued development of FMX114 and theBET inhibitor research and development programs. Research and development activities for these programs, including preclinical and clinical testing of the Company's drug candidates, will require significant additional financing. The future viability of the Company is dependent on our ability to successfully execute our business strategy and develop our drug candidates and raise additional capital to finance operations. Our failure to raise 34
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Table of contents capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies. Components of Operating Results Revenues Our revenue during the periods presented has been comprised of AMZEEQ and ZILXI product sales and collaboration revenue. We received FDA approval for AMZEEQ onOctober 18, 2019 and launched AMZEEQ inthe United States inJanuary 2020 . We commercially launched ZILXI onOctober 1, 2020 . We have generated product revenue of$11.8 million for the nine months endedSeptember 30, 2021 . We will not commercially launch our other product candidates inthe United States or generate any revenues from sales of any of our product candidates unless and until we obtain marketing approval. Our ability to generate revenues from sales will depend on the successful commercialization of our drug products AMZEEQ and ZILXI and any other product candidates that receive marketing approval. Historically, we have generated revenues under development and license agreements including royalty payments in relation to Finacea, the prescription foam product that we developed in collaboration with Bayer, which later assigned it toLeo Pharma A/S ("LEO"). In the three months endedMarch 31, 2020 , we did not receive or become entitled to any royalty payments due to the suspension of the manufacturing of Finacea by LEO, following inadequate supply of quality-compliant batches of the API used in such product. InApril 2020 , LEO informed us that it had reestablished the supply of Finacea foam and resumed commercial sale inthe United States . In the nine months endedSeptember 30, 2021 we received royalties of$0.7 million . We may become entitled to additional contingent payments in the future, subject to achievement of the applicable clinical results by our other licensees. However, in light of the current phase of development and associated milestone schedules under these agreements, we do not expect to receive significant payments in the near term, if at all. We are also entitled to additional royalties from net sales or net profits generated by other products to be developed under these agreements, if they are successfully commercialized. Additionally, onApril 23, 2020 , we entered into a licensing agreement with Cutia for AMZEEQ as well as certain of our other topical minocycline product candidates, once approved, on an exclusive basis inGreater China . Under the terms of the agreement, Cutia will have an exclusive license to obtain regulatory approval of and commercialize AMZEEQ, ZILXI and, if approved in theU.S. , FCD105 in theGreater China territory. We will supply the finished licensed products to Cutia for clinical and commercial use. We received an upfront cash payment of$10.0 million in 2020 ($6.0 million received in the three months endedJune 30, 2020 and$4.0 million received in the three months endedSeptember 30, 2020 ) and will be eligible to receive an additional$1 million payment upon the receipt of marketing approval inChina of the first licensed product. We will also receive royalties on net sales of any licensed products pursuant to the agreement. There was no license revenue for the nine months endedSeptember 30, 2021 . Cost of Goods Sold Cost of goods sold for the nine months endedSeptember 30, 2021 and 2020 were approximately$2.4 million and$0.9 million , respectively. Our gross margin percentage of 79% and 86% was favorably impacted during the nine months endedSeptember 30, 2021 andSeptember 30, 2020 , respectively, by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the nine months endedSeptember 30, 2021 andSeptember 30, 2020 was valued at cost, our gross margin for the period then ended would have been 78% and 82%, respectively. Cost of goods sold expenses consist primarily of: •third party expenses incurred in manufacturing product for sale; •transportation costs incurred in shipping manufacturing materials between third parties; and •other costs associated with delivery and manufacturing of product.
Operating Expenses
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Table of contents Research and Development Expenses Our research and development expenses to date relate primarily to the development of AMZEEQ, ZILXI, serlopitant, FCD105 and FMX114. Our total research and development expenses for the nine months endedSeptember 30, 2021 and 2020 were approximately$19.7 million and$35.7 million , respectively. We charge all research and development expenses to operations as they are incurred. Research and development expenses consist primarily of: •employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses; •expenses incurred under agreements with third parties, including subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies; •expenses incurred to acquire, develop and manufacture clinical trial materials; •facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other operating costs; •costs associated with the creation, development and protection of intellectual property; •other costs associated with preclinical and clinical activities and regulatory operations; and •materials and manufacturing costs related to commercial production prior to FDA approval. Selling, General and Administrative Expenses Our selling, general and administrative expenses for the nine months endedSeptember 30, 2021 and 2020 were approximately$46.3 million and$71.6 million , respectively. The decline in these costs is primarily associated with cost savings measures related to our shift from a commercial organization to a research and development organization and merger costs incurred during 2020. No merger related costs were incurred in 2021. Our selling, general and administrative expenses consist principally of: •employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses; •costs associated with selling, marketing and shipping and handling costs; •legal and professional fees for auditors and other consulting expenses; and •facility, information technology and depreciation expenses. Interest Expense Interest expense primarily consists of interest expense on our long-term debt. During the three months endedSeptember 30, 2021 , our interest expense also included prepayment penalties of$1.4 million and the write off of deferred financing costs of$1.6 million . Other Expense, net Other Expense, net primarily consists of gains from interest earned from our bank deposits, foreign exchange losses and financial income on our marketable securities and a revaluation of our derivative liability. Income Taxes and Net Operating Loss Carryforwards We have incurred significant net operating losses ("NOLs") since our inception. We expect to continue to incur NOLs until such a time when we generate adequate revenues for us to reach profitability. As ofDecember 31, 2020 , we had federal and state net operating loss carryforwards of$243.2 million and$66.3 million , respectively, of which$44.3 million and$66.3 million of these carryforwards will begin to expire in 2031 for federal and state purposes, respectively. As ofDecember 31, 2020 , we had federal and state research and development tax credit carryforwards of$6.2 million and$1.2 million , 36
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Table of contents respectively. The federal credits begin to expire in 2031 and theCalifornia research credits have no expiration dates. As ofDecember 31, 2020 , the company had$198.9 million in federal and state NOLs with no limited period of use. There are no significant updates throughSeptember 30, 2021 . NOLs and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders of a corporation over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. State NOLs and tax credit carryforwards may be subject to similar limitations under state laws. We believe that certain of our NOLs and tax credit carryforwards may be subject to limitation under Sections 382 or 383, and potentially, similar limitations under state law. As a result, even if we earn net taxable income, our ability to use the NOL and tax credit carryforwards may be materially limited, which could harm our future operating results by effectively increasing our future tax obligations. Results of Operations Comparison of the Three-Month Periods EndedSeptember 30, 2021 and 2020 Revenue Revenues totaled$4.1 million and$3.3 million for the three months endedSeptember 30, 2021 and 2020, respectively. For the three months endedSeptember 30, 2021 , our revenue consisted of$4.0 million of product sales and$0.1 million of royalty revenue. For the three months endedSeptember 30, 2020 , revenues consisted of$2.9 million of product sales and$0.4 million of royalty revenue. The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on our operations. Access to healthcare providers has been limited through the third quarter of 2021, which has negatively impacted sales and the Company's ability to execute its commercial strategy with respect to AMZEEQ and ZILXI. The length of time and extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition and liquidity will depend on future developments that are highly uncertain, subject to change and will continue to evolve with geographical re-openings, surges in cases, the emergence of new strains and the vaccination effort. In addition, onAugust 12, 2021 , we announced that we commenced a process to explore a possible sale or license of our topical minocycline franchise. In connection this announcement, we immediately began reducing expenditures supporting commercial operations, including terminating commercial employees, which is expected to be complete byDecember 31, 2021 . Cost of Goods Sold Cost of goods sold was$1.0 million and$0.4 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase in cost of goods sold is primarily due to an increase in sales volume. Our gross margin percentage was 73% for the three months endedSeptember 30, 2021 . Our gross margin percentage of 87% for the three months endedSeptember 30, 2020 was favorably impacted by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the three months endedSeptember 30, 2020 was valued at cost, our gross margin for the period then ended would have been 85%. The inventory sold during the third quarter of 2021 was valued at cost. Research and Development Expenses Our research and development expenses for the three months endedSeptember 30, 2021 were$7.0 million , representing an increase of$0.4 million , or 5.4%, compared to$6.6 million for the three months endedSeptember 30, 2020 . Employee-related expenses, including stock based compensation, increased by$1.0 million . Expenditures for FMX114 and ourBET inhibitor programs increased by$1.8 million , including fees due to In4Derm upon the execution of the Option Agreement and in connection with the exercise of the Topical BETi Option. The increases were offset by a decrease in clinical trial and manufacturing expenses due to the completion of FCD105 and serlopitant clinical trials and the product launches of AMZEEQ and ZILXI during 2020. Selling, General and Administrative Expenses Our selling, general and administrative expenses for the three months endedSeptember 30, 2021 were$13.8 million , representing a decrease of$5.9 million , or 30.0%, compared to$19.8 million for the three months endedSeptember 30, 2020 . Employee-related expenses decreased by$2.0 million primarily due to lower headcount in 2021. Commercial operations and 37
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Table of contents marketing expenditures decreased by$2.5 million as a result of the strategic shift of the business announced inAugust 2021 . The balance of the decrease is primarily due to corporate costs incurred during 2020 following the Merger that were eliminated or reduced in 2021. Interest Expense Interest expense for the three months endedSeptember 30, 2021 andSeptember 30, 2020 was$3.5 million and$1.1 million , respectively. The increase is primarily attributable to the prepayment penalty of$1.4 million associated with the prepayment of outstanding debt and the write off of deferred financing costs of$1.6 million , offset by the elimination of ongoing interest expense and deferred cost amortization after the debt was paid off onAugust 11, 2021 . Other Expense (Income), net Other expense (income), net for the three months endedSeptember 30, 2021 was$35.0 thousand of expense as compared with$0.1 million of income for the three months endedSeptember 30, 2020 . Income Taxes During the three months endedSeptember 30, 2021 there was no income tax expense. Income tax expense for the three months endedSeptember 30, 2020 was$1.0 thousand . Comparison of the Nine-Month Periods EndedSeptember 30, 2021 and 2020 Revenue Revenues totaled$12.5 million and$16.7 million for the nine months endedSeptember 30, 2021 and 2020, respectively. For the nine months endedSeptember 30, 2021 , our revenue consisted of$11.8 million of product sales and$0.7 million of royalty revenue. For the nine months endedSeptember 30, 2020 , revenues consisted of$6.1 million of product sales,$0.6 million of royalty revenue and$10.0 million of license revenue. The increase in product sales is due to the ZILXI product launch inOctober 2020 and an increase in demand for AMZEEQ. The decrease in license revenue for the nine months endedSeptember 30, 2021 as compared to license revenue for the nine months endedSeptember 30, 2020 is due to the upfront cash payment received in 2020 under the licensing agreement with Cutia for the sale and marketing of our topical minocycline products inChina . Cost of Goods Sold Cost of goods sold was$2.4 million and$0.9 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase in cost of goods sold is primarily due to an increase in sales volume. Our gross margin percentage of 79% and 86% for the nine months endedSeptember 30, 2021 andSeptember 30, 2020 , respectively, was favorably impacted by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the nine months endedSeptember 30, 2021 andSeptember 30, 2020 was valued at cost, our gross margin for the period then ended would have been 78% and 82%, respectively. Research and Development Expenses Our research and development expenses for the nine months endedSeptember 30, 2021 were$19.7 million , representing a decrease of$16.0 million , or 44.7%, compared to$35.7 million for the nine months endedSeptember 30, 2020 . Employee-related expenses, including stock based compensation, decreased$9.2 million primarily due to severance costs incurred in 2020 related to the Merger. Clinical trial and manufacturing expenses decreased by$10.4 million with the completion of FCD105 and serlopitant clinical trials and the product launches of AMZEEQ and ZILXI during 2020. The decreases were offset by approximately$4.0 million of increased expenditures related to FMX114 and ourBET inhibitor programs, including fees due to In4Derm upon the execution of the Option Agreement and in connection with the exercise of the Topical BETi Option. Selling, General and Administrative Expenses Our selling, general and administrative expenses for the nine months endedSeptember 30, 2021 were$46.3 million , representing a decrease of$25.4 million , or 35.4%, compared to$71.6 million for the nine months endedSeptember 30, 2020 . Employee-related expenses, including stock based compensation, decreased by$16.2 million primarily due to severance costs incurred in 2020 due to the Merger. Professional service and corporate costs decreased by approximately$13.2 million as 38
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Table of contents certain of these expenses were eliminated or reduced in 2021 following the Merger. Commercial related expenditures associated with the launches of AMZEEQ and ZILXI increased by approximately$4.0 million . Interest Expense Interest expense for the nine months endedSeptember 30, 2021 andSeptember 30, 2020 was$5.6 million and$3.2 million , respectively. The increase is primarily attributable to the prepayment penalty of$1.4 million associated with the prepayment of outstanding debt and the write off of deferred financing costs of$1.6 million offset by the elimination of ongoing interest expense and deferred cost amortization after the debt was paid off onAugust 11, 2021 . Other Expense (Income), net Other expense (income), net for the nine months endedSeptember 30, 2021 was$0.2 million of expense as compared with$1.1 million of income for the nine months endedSeptember 30, 2020 . Other income decreased primarily due to gains on derivative liabilities and marketable securities in 2020. No such gains occurred in 2021. Income Taxes During the nine months endedSeptember 30, 2021 there was no income tax expense. Income tax benefit for the nine months endedSeptember 30, 2020 was$0.3 million . Liquidity and Capital Resources
In
As discussed above, we completed a strategic review of our business and
initiated a process to explore a sale or license of our minocycline franchise,
including AMZEEQ, ZILXI, FCD105 and the underlying MST platform. We are
refocusing our resources on our immuno-inflammatory pipeline and intend to
continue to support the FMX114 and the
In accordance with Accounting Standards Update ("ASU") 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that our unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate the realization of
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Table of contents assets and the satisfaction of liabilities in the normal course of business. Our ability to continue as a going concern is expected to be impacted by the outcome of the plans outlined above, including the successful sale or license of the minocycline franchise, positive results from clinical trials for FMX114, and the successful development and positive results from clinical trials for theBET inhibitor programs. We do not have sufficient cash and cash equivalents to fund our operations beyond one year from the issuance of ourSeptember 30, 2021 financial statements. Based on our plans to conduct a Phase 2b clinical trial for FMX114 (assuming positive results in the Phase 2a study) and progress both the topical and oralBET inhibitor programs into the clinic in 2022, we currently believe we has sufficient cash and cash equivalents to fund operations through the end of the second quarter of 2022. This assumes that operating expenses will be significantly reduced in connection with the disposition of the minocycline franchise and projected clinical trial costs. This excludes potential proceeds received from a sale or license of the minocycline franchise, business development transactions or financing transactions which are all beyond our control. As such, we will, over the course of the next twelve months, require significant additional financing to continue our operations. Each of these factors are subject to uncertainty, and therefore, raise substantial doubt about our ability to continue as a going concern. Failure to successfully complete a sale or license of the minocycline franchise, develop the above noted assets, and receive additional financing will require us to delay, scale back or otherwise modify our business and our research and development activities and other operations. Summary Statement of Cash Flows The following table summarizes our statement of cash flows for the nine months endedSeptember 30, 2021 and 2020:
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