 Conference Call Today at 8:30am Eastern TimeBRIDGEWATER, N.J., Aug. 06, 2020 GLOBE NEWSWIRE -- Menlo Therapeutics Inc. Nasdaq: MNLO Menlo or the Company, a specialty pharmaceutical company focused on developing and commercializing proprietary therapies to address unmet needs in dermatology, today announced financial results for the second quarter ended June 30, 2020 and provided a corporate update.The launch of AMZEEQ earlier in 2020, together with the recent FDA approval for ZILXITM underscore the value of our technology platform and serve to consolidate our position as a fully integrated company with strong commercial capabilities in the dermatology space, said Dave Domzalski, Chief Executive Officer of Menlo. We are encouraged by the most recent trends in the AMZEEQ launch. Although we experienced some disruption as a result of the pandemic, our field force remains engaged, and based on the most recent prescription trends we believe we are well positioned to grow the brand as the market recovers. Other metrics that we follow including call volume, sample volume, number of unique prescribers as well as number of covered lives have all continued to improve.The rosacea market remains an area of significant unmet medical need and we believe that ZILXI will receive broad market acceptance upon launch, continued Mr. Domzalski. We continue to invest in our pipeline, and the recent positive Phase 2 data on FCD105 suggest this product has the potential to be a best-in-class treatment for patients with acne. We have also strengthened our balance sheet with our recent successful equity offering.Second Quarter and Recent highlights: ZILXITM minocycline topical foam, 1.5, formerly FMX103 was approved by the FDA for the treatment of inflammatory lesions of rosacea in adults. First minocycline product of any kind to be approved by the FDA for use in rosacea. Company plans to launch ZILXI in the fourth quarter of 2020. Announced positive results from Phase 2 trial of FCD105 for the potential treatment of moderate-to-severe acne vulgaris. FCD105 showed a highly statistically significant improvement compared to vehicle for the endpoints of 1 Investigators Global Assessment IGA treatment success and 2 absolute change from baseline in mean inflammatory counts at Week 12. The Company plans to present the trial data along with a proposed Phase 3 development program in an End of Phase 2 meeting with the FDA before the end of 2020. Entered into an exclusive licensing agreement with an affiliate of Cutia Therapeutics Cutia, a specialty pharmaceutical company based in mainland China, for the sale of AMZEEQ, ZILXI and FCD105, once approved, in Greater China. Raised approximately 54 million in a public offering of common stock. Amended the Companys existing credit agreement with affiliates of Perceptive Advisors and OrbiMed revising the minimum net revenue covenants of the agreement.Financial Results for the Second Quarter Ended June 30, 2020Revenues Revenues totaled 11.7 million for the three months ended June 30, 2020. There were no revenues for the three months ended June 30, 2019. For the three months ended June 30, 2020, 1.5 million revenues were generated from product sales of AMZEEQ, which was launched in January 2020, 10.0 million came from the upfront payment associated with the Cutia license agreement disclosed earlier this year, and 0.2 million came from royalty revenue for Finacea Foam, or Finacea.The lack of supply of Finacea resulted in no royalty revenues from the sale of Finacea for the three months ended March 31, 2020. In April 2020, LEO Pharma AS, or LEO, informed us that it had reestablished the supply of Finacea and resumed commercial sales in the United States. For the three months ended June 30, 2020 we recognized royalty revenue of 0.2 million, compared to 0.3 million for three months ended June 30, 2019.Cost of Goods Sold Cost of goods sold was 0.2 million for the three months ended June 30, 2020. There was no cost of goods sold in the three months ended June 30, 2019 because the revenues in that period consisted solely of royalties, which do not bear related cost of goods sold.Our gross margin percentage of 85 was favorably impacted during the three months ended June 30, 2020 by product sales with certain materials produced prior to FDA approval and therefore expensed in prior periods. If inventory sold during the three months ended June 30, 2020 was valued at cost, our gross margin for the period then ended would have been 80.Research and Development Expenses Our research and development expenses for the three months ended June 30, 2020 were 13.1 million, representing an increase of 0.6 million, or 4, compared to 12.6 million for the three months ended June 30, 2019. Employee-related expenses increased by 4.5 million, of which 3.0 million related to stock-based compensation. In addition, clinical and manufacturing costs related to serlopitant increased by 4.1 million which was acquired in the merger with Foamix Pharmaceuticals Ltd. Foamix, offset by a decrease of 8.0 million related to clinical and manufacturing expenses for AMZEEQ and ZILXI.Selling, General and Administrative Expenses Our selling, general and administrative expenses for the three months ended June 30, 2020 were 26.5 million, representing an increase of 19.7 million, or 289, compared to 6.8 million for the three months ended June 30, 2019. Employee-related expenses increased by 11.9 million, consisting of 3.7 million primarily due to the expansion of our employee base, including sales force, to support the growth of our operations and 7.7 million of stock-based compensation. We incurred 3.4 million expenses relating to the merger, included in selling, general and administrative expenses. Sales and marketing expenses increased by 4.4 million related to the commercialization of AMZEEQ.Goodwill and In-process Research and Development Impairments Goodwill and in-process research and development impairments for the three months ended June 30, 2020 were 54.3 million. There were no impairments for the three months ended June 30, 2019. In the three months ended June 30, 2020, we recorded impairments of 4.0 million for goodwill and 50.3 million for in process research and development due to the failed clinical trials for serlopitant for the treatment of prurigo nodularis.Contingent Stock Right CSR Remeasurement CSR remeasurement for the three months ended June 30, 2020 was 84.7 million. For the three months ended June 30, 2020 we incurred 84.7 million of expenses due to the remeasurement of the CSR to fair value which was driven by the result of the failed serlopitant trials. At the time of the merger with Foamix, Foamix and Menlo entered into a contingent stock right agreement that called for the issuance of additional Menlo common stock to legacy Foamix shareholders upon negative data from both Phase III serlopitant trials. Since the trials did not meet the milestones outlined per the agreement, the contingent stock rights were remeasured during the three months ended June 30, 2020, resulting in an expense of 84.7 million.Total Expenses Adjusted for Non-recurring Non-cash Expenses Set forth below is a presentation of our total operating expenses for the three months ended June 30, 2020, adjusted to exclude certain one-time non-cash expenses incurred during the period. The adjustments below reflect non-recurring non-cash expenses that we incurred during the period, mainly as a result of the merger and the failed Phase 3 trials for serlopitant. Non-recurring non-cash expenses for the quarter ended June 30, 2020 were 148.3 million, which included 84.7 million of contingent stock right remeasurement expense, 54.3 million goodwill and in-process research and development impairments, and 9.3 million of incremental share-based compensation expense related to the modification of outstanding options and restricted stock units granted to Foamix employees prior to the merger as a result of the conversion of the CSRs. We believe that the adjusted operating expenses are important measures as they better reflect the ongoing operations of the Company and exclude certain non-cash expenses that we do not expect to incur in future periods.in thousandsReported for the three months ended June 30, 2020 Adjustments Adjusted for the three months ended June 30, 2020 Cost of goods sold216 216 Research and development113,119 2,629 10,490 Selling, general and administrative126,459 6,622 19,837 Goodwill and in-process research development54,345 54,345 CSR remeasurement84,726 84,726 Total expenses178,865 148,322 30,543 1 Represents incremental compensation expense related to the modification of outstanding options and restricted stock units granted to legacy Foamix employees prior to the merger as a result of the conversion of the CSRs.Finance Income and Expenses Financial expenses net for the three months ended June 30, 2020 was 0.5 million, compared with 0.4 million of financial income net in the three months ended June 30, 2019.Income Taxes Our tax benefit for the three months ended June 30, 2020 was 0.3 million. During the three months ended June 30, 2019 we had no tax expenses.Net Loss Our net loss for the three months ended June 30, 2020 was 167.4 million, as compared to 19.0 million for the three months ended June 30, 2019, representing an increase of 148.4 million, or 782. The increase was primarily due to goodwill impairment, in-process research and development impairment, and CSR remeasurement resulting from the failed clinical trials for serlopitant.Cash Cash Equivalents As of June 30, 2020, Menlo had cash, cash equivalents and investments of 100.4 million. 