Foamix and Menlo Therapeutics Combine to Form Single Dermatology Company

Foamix Pharmaceuticals, based in Rehovot, Israel and Bridgewater, New Jersey, is merging with Menlo Therapeutics, based in Redwood City, California. The two companies will join to become a biopharma company focusing on dermatology.

Foamix recently announced approval by the U.S. Food and Drug Administration (FDA) of Amzeeq (minocycline) topical foam, 4%, for inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in adults and children nine years of age and older. It is the first topical formulation of minocycline. It expects to launch in the U.S. in January 2020.

The company recently submitted a New Drug Application (NDA) to the FDA for FMX103 (minocycline) topical foam for moderate-to-severe papulopustular rosacea. It has a target action date with the FDA for June 2, 2020. If approved, it would be the first minocycline product for rosacea. It is also running a Phase II trial for FCD105, a topical combination foam of minocycline and adapalene for moderate-to-severe acne vulgaris.

Menlo Therapeutics’ lead program is serlopitant for itching (pruritis). There are two Phase III trials ongoing for pruritus associated with prurigo nodularis with expected readouts in March or April 2020. Serlopitant was granted Breakthrough Therapy Designation by the FDA for pruritus associated with prurigo nodularis (PN). The drug is also being studied for chronic pruritus of unknown original and is currently in Phase II clinical trials, and for pruritus associated with psoriasis, which had positive data from a Phase II trial.

Under the terms of the deal, every share of Foamix stock will be exchanged for 0.5924 of a share of Menlo common stock and a contingent stock right (CSR). This implies an 18% premium to Menlo shareholders based on the 10-day average volume weighted trading price for each company. Foamix shareholders will own about 59% of the combined company and Menlo shareholders about 41%. The CSR may provide additional shares of Menlo common stock to Foamix shareholders depending on the Phase III data for serlopitant for Pruritus in PN.

There are also more CSR changes dependent upon other milestones. The companies note that the adjustments were “designed with the intent of providing protection to Foamix shareholders in the event that either of these important serlopitant clinical trials were not successful.”

The merged company will be led by David Domzalski, current chief executive officer of Foamix. It will be headquartered in New Jersey. The board of directors will be made up of five members designated by Foamix, including Domzalski, and two members designated by Menlo, including its chief executive officer, Steve Basta.

“The combination of Menlo with Foamix accelerates our progression in becoming a leading dermatology-focused company with several late-stage assets that can leverage the commercialization infrastructure we are building to support the launch of Amzeeq,” Domzalski said. “Serlopitant for pruritus associated with PN represents a breakthrough therapy for a dermatologic condition with no currently approved treatment options. Further, Foamix’s drug development platform will continue to bring novel dermatology product candidates into the clinic, including FCD105, which recently began enrollment in its Phase II trial. The combined company will look to continue developing products that will leverage the existing infrastructure. We are excited about the momentum our company has now, and want to thank our employees and partners for their hard work and deep commitment as we enter this next phase.”