10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___ TO ___.

Commission file number 001-38356

VYNE THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

Delaware	45-3757789
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

520 U.S. Highway 22, Suite 204

Bridgewater, New Jersey 08807

(Address of principal executive offices including zip code)

(800) 775-7936

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	VYNE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐ No  ☒

As of November 3, 2021, there were 53,517,912 shares of the registrant’s Common Stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

		Page
Part I	Financial Information	6
Item 1.	Unaudited Financial Statements	6
	Unaudited Condensed Consolidated Balance Sheets	6
	Unaudited Condensed Consolidated Statements Of Operations	7
	Unaudited Condensed Consolidated Statements Of Comprehensive Loss	8
	Unaudited Condensed Consolidated Statements Of Changes In Stockholders' Equity	9
	Unaudited Condensed Consolidated Statements Of Cash Flows	11
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
Part II	Other Information	46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
SIGNATURES		50

We own or have rights to various copyrights, trademarks, and trade names used in our business in the U.S. and/or other countries, including VYNE™, AMZEEQ®, ZILXI®, Molecule Stabilizing Technology (MST)™ and MST™. This report also includes trademarks, service marks and trade names of other companies. Trademarks, service marks and trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

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Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are statements that could be deemed forward-looking statements reflecting the current beliefs and expectations of management with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These statements are often identified by the use of words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” “until,” “if” and similar expressions or variations.

The following factors, among others, including any described in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q, could cause our future results to differ materially from those expressed in the forward-looking information:

•our ability to successfully complete a sale or out-license of our minocycline franchise on terms acceptable to us in a timely manner or at all;

•our ability to successfully execute our business strategy, including our ability to successfully develop our BET inhibitor platform for immuno-inflammatory conditions and rare skin diseases;

•our ability to exercise our option with respect to an oral BET inhibitor under the terms of the Evaluation and Option Agreement with In4Derm Limited;

•our ability to raise substantial additional financing to fund our operations and continue as a going concern;

•the timing of commencement of future preclinical studies and clinical trials;

•our ability to successfully complete, and receive favorable results in, clinical trials for our product candidates;

•disruptions related to COVID-19 or another pandemic, epidemic or outbreak of a contagious disease on our ability to initiate and retain patients in our clinical trials, the ability of our suppliers to manufacture and provide materials for our products and product candidates, supply chain disruptions, distribution of our products and business sales execution, operating results, liquidity and financial condition;

•the regulatory approval process for our product candidates, including any delay or failure in obtaining requisite approvals;

•the potential market size of treatments for any diseases and market adoption of our products, if approved or cleared for commercial use, by physicians and patients;

•developments and projections relating to our competitors and the markets in which we compete, including competing drugs and therapies, particularly if we are unable to receive exclusivity;

•our intentions and our ability to establish collaborations;

•the timing or likelihood of regulatory filings and approvals or clearances for our product candidates;

•our ability to comply with various regulations applicable to our business;

•our ability to create intellectual property and the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;

•the timing, costs or results of litigation, including litigation to protect our intellectual property, including the matter with Padagis Israel Pharmaceuticals Ltd.;

•our ability to successfully challenge intellectual property claimed by others;

•estimates of our expenses, capital requirements, our needs for additional financing and our ability to obtain additional capital on acceptable terms or at all;

•our ability to attract and retain key scientific or management personnel;

•our defense of litigation that may be initiated against us;

•our expectations regarding licensing, business transactions and strategic operations; and

•our future financial performance and liquidity.

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We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in “Risk Factors” and elsewhere in our Annual Report on Form 10-K as well as our other filings made with the Securities and Exchange Commission ("SEC"). Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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PART I – FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except per share data)

(Unaudited)

	September 30		December 31
	2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	52,306	$	57,563
Restricted cash	605		855
Investment in marketable securities (Note 6)	—		1,027
Trade receivables, net of allowances	10,084		15,819
Prepaid and other assets	5,064		4,591
Inventory (Note 7)	8,070		7,404
Total Current Assets	76,129		87,259
Property and equipment, net	472		555
Operating lease right-of-use assets (Note 10)	1,036		1,583
Prepaid and other assets	3,678		4,345
Total Assets	$	81,315	$	93,742
Liabilities and shareholders’ equity
Current Liabilities:
Trade payables	$	7,621	$	4,780
Accrued expenses (Note 4)	9,613		11,452
Debt (Note 8)	—		—
Employee related obligations	3,382		4,360
Operating lease liabilities (Note 10)	277		757
Other	104		104
Total Current Liabilities	20,997		21,453
Liability for employee severance benefits	206		312
Operating lease liabilities (Note 10)	775		853
Long-term debt (Note 8)	—		33,174
Other liabilities	451		457
Total Liabilities	22,429		56,249
Commitments and Contingencies (Note 11)	—		—
Shareholders' Equity:
Preferred stock: $0.0001 par value; 20,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	—		—
Common stock: $0.0001 par value; 150,000,000 shares and 75,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 53,510,599 and 43,205,221 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	5		4
Additional paid-in capital	686,836		603,685
Accumulated deficit	(627,955)		(566,196)
Total Shareholders' Equity	58,886		37,493
Total Liabilities and Shareholders’ Equity	$	81,315	$	93,742

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data)

(Unaudited)

	Three months ended September 30				Nine months ended September 30
	2021		2020		2021		2020
Revenues (Note 4)
Product sales	$	3,953	$	2,863	$	11,805	$	6,096
License revenues	—		—		—		10,000
Royalty revenues	133		406		658		611
Total Revenues	4,086		3,269		12,463		16,707
Cost of goods sold	1,049		371		2,445		858
Operating Expenses:
Research and development	6,981		6,623		19,723		35,695
Selling, general and administrative	13,832		19,766		46,283		71,640
Goodwill and in-process research & development impairments	—		—		—		54,345
Contingent Stock Right Remeasurement	—		—		—		84,726
Total Operating Expenses	20,813		26,389		66,006		246,406
Operating Loss	17,776		23,491		55,988		230,557
Interest expense (Note 8)	3,474		1,092		5,610		3,229
Other expense (income), net	35		130		161		(1,141)
Loss Before Income Tax	21,285		24,713		61,759		232,645
Income tax expense (benefit)	—		1		—		(258)
Net Loss	$	21,285	$	24,714	$	61,759	$	232,387
Loss per share basic and diluted	$	0.41	$	0.59	$	1.22	$	7.98
Weighted average shares outstanding - basic and diluted	52,028		41,934		50,776		29,132

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(U.S. dollars in thousands)

(Unaudited)

	Three months ended September 30				Nine months ended September 30
	2021		2020		2021		2020
Net Loss	$	21,285	$	24,714	$	61,759	$	232,387
Other Comprehensive Loss:
Net unrealized (gains) losses from marketable securities	—		(2)		—		(1)
Losses on marketable securities reclassified into net loss	—		2		—		6
Total Other Comprehensive Loss	—		—		—		5
Total Comprehensive Loss	$	21,285	$	24,714	$	61,759	$	232,392

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(U.S. dollars in thousands, except share data)

(Unaudited)

	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive Income (loss)		Total
	Number of Shares	Amounts		Amounts
BALANCE AT JANUARY 1, 2020	9,120,078	$	1	$	328,156	$	(310,587)	$	5	$	17,575
CHANGES DURING THE PERIOD:
Comprehensive (loss) income	—	—		—		(232,387)		(5)		(232,392)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	301,913	—		342		—		—		342
Stock-based compensation	—	—		15,147		—		—		15,147
Deemed dividend to warrants holders due to warrant modifications	—	—		41		(41)		—		—
Classification of stock awards to derivative liability	—	—		(975)		—		—		(975)
Issuance of common stock through a public offering, net of $3,903 issuance costs	7,776,875	1		53,648		—		—		53,649
Issuance of stock related to merger	24,765,999	2		196,168		—		—		196,170
BALANCE AT SEPTEMBER 30, 2020	41,964,865	$	4	$	592,527	$	(543,015)	$	—	$	49,516
BALANCE AT JANUARY 1, 2021	43,205,221	$	4	$	603,685	$	(566,196)	$	—	$	37,493
CHANGES DURING THE PERIOD:
Comprehensive loss	—	—		—		(61,759)		—		(61,759)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	305,105	—		393		—		—		393
Stock-based compensation	—	—		6,748		—		—		6,748
Issuance of common stock under at-the-market offering, net of $998 issuance costs	4,726,012	—		29,187		—		—		29,187
Issuance of common stock through a registered direct offering, net of $3,177 issuance costs	5,274,261	1		46,823		—		—		46,824
BALANCE AT SEPTEMBER 30, 2021	53,510,599	$	5	$	686,836	$	(627,955)	$	—	$	58,886

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(U.S. dollars in thousands, except share data)

(Unaudited)

	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive Income (loss)		Total
	Number of Shares	Amounts		Amounts
BALANCE AT JULY 1, 2020	41,920,952	$	4	$	589,825	$	(518,301)	$	—	$	71,528
CHANGES DURING THE PERIOD:
Comprehensive (loss) income	—	—		—		(24,714)		—		(24,714)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	43,913	—		82		—		—		82
Stock-based compensation	—	—		2,620		—		—		2,620
BALANCE AT SEPTEMBER 30, 2020	41,964,865	$	4	$	592,527	$	(543,015)	$	—	$	49,516
BALANCE AT JULY 1, 2021	51,511,845	$	5	$	681,558	$	(606,670)	$	—	$	74,893
CHANGES DURING THE PERIOD:
Comprehensive loss	—	—		—		(21,285)		—		(21,285)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	50,754	—		(10)		—		—		(10)
Stock-based compensation	—	—		2,405		—		—		2,405
Issuance of common stock under at-the-market offering, net of $184 issuance costs	1,948,000	—		2,883		—		—		2,883
BALANCE AT SEPTEMBER 30, 2021	53,510,599	$	5	$	686,836	$	(627,955)	$	—	$	58,886

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9

VYNE THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

(Unaudited)

	Nine months ended September 30
	2021		2020
Cash Flows From Operating Activities:
Net Loss	$	61,759	$	232,387
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	83		254
Goodwill and in-process research & development impairments	—		54,345
Contingent stock right remeasurement	—		84,726
Changes in marketable securities and bank deposits, net	—		(142)
Changes in accrued liability for employee severance benefits, net of retirement fund profit	(108)		(15)
Stock-based compensation	6,748		15,147
Non-cash finance loss/(income), net	1,281		(727)
Debt prepayment premium	1,432		—
Changes in operating assets and liabilities, net of effects of businesses acquired:
Decrease (increase) in trade receivables, prepaid and other assets	5,262		(11,383)
Decrease (increase) in other non-current assets	1,217		(4,430)
Increase (decrease) in accounts payable and accruals	167		(11,801)
Increase in inventory	(666)		(5,294)
Increase in other liabilities	(6)		—
Net cash used in operating activities	(46,349)		(111,707)
Cash Flows From Investing Activities:
Purchase of fixed assets	—		(113)
Cash acquired through merger	—		38,641
Proceeds from sale and maturity of marketable securities	1,027		48,577
Net cash provided by investing activities	1,027		87,105
Cash Flows From Financing Activities:
Proceeds related to issuance of common shares through offerings, net of issuance costs	76,010		53,646
Debt repayment (see Note 8)	(36,432)		—
Proceeds related to issuance of stock for stock-based compensation arrangements, net	237		182
Net cash provided by financing activities	39,815		53,828
(Decrease)/Increase in cash, cash equivalents and restricted cash	(5,507)		29,226
Effect of exchange rate on cash, cash equivalents and restricted cash	—		1
Cash, cash equivalents and restricted cash at beginning of the period	58,418		44,584
Cash, cash equivalents and restricted cash at end of the period	$	52,911	$	73,811
Cash and cash equivalents	$	52,306	$	72,956
Restricted cash	605		855
Total cash, cash equivalents and restricted cash shown in statement of cash flows	$	52,911	$	73,811
Supplementary information on investing and financing activities not involving cash flows:
Cashless exercise of warrants and restricted stock units	*		*
Issuance of shares under employee stock purchase plan	$	144	$	163
Additions to operating lease right of use assets	$	—	$	1,120
Additions to operating lease liabilities	$	—	$	1,120
Supplemental disclosure of cash flow information:
Interest received	$	15	$	232
Interest paid	$	2,385	$	2,936
Fair value of assets acquired	$	—	$	117,270
Less liabilities assumed	—		5,827
Net acquired (See “Note 3- Business combination”)	—		111,443

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Less cash acquired	—		38,641
Merger net of cash acquired	$	—	$	72,802

*Represents an amount less than one thousand

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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VYNE Therapeutics Inc.

Notes to Unaudited Interim Condensed Consolidated Financial Statements

NOTE 1 - NATURE OF OPERATIONS

VYNE Therapeutics Inc. ("VYNE" or the "Company") is a biopharmaceutical company focused on developing proprietary, innovative and differentiated therapies for the treatment of immuno-inflammatory conditions and rare skin diseases of high unmet medical need. The Company is a Delaware corporation, has its principal executive offices in Bridgewater, New Jersey and operates as one business segment. The Company currently has two commercial products, AMZEEQ® (minocycline) topical foam, 4%, and ZILXI® (minocycline) topical foam, 1.5%. In August 2021, the Company initiated a process to explore a possible sale or license of its topical minocycline franchise, as discussed in greater detail below.

Strategic Business Review

Beginning in the second quarter of 2021, the Company conducted a review of its commercial and research and development portfolio to determine how to optimally deploy capital and drive shareholder value. During the course of this review, the Company 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 its pipeline products. During this process, the Company evaluated several strategic options including the acquisition of marketed assets, out-licensing its approved products outside of the United States, and possible partnering or co-development relationships with interested parties. Following its review, the Company determined to initiate a process to explore a possible sale or license of its topical minocycline franchise, including AMZEEQ, ZILXI, FCD105 (the Company’s Phase 3 proprietary novel topical combination foam formulation of minocycline and adapalene for the treatment of moderate-to-severe acne vulgaris) and the underlying Molecule Stabilizing Technology platform.

By leveraging its drug development and clinical development capabilities and strong network of discovery and preclinical science partners, the Company has transitioned its strategic focus to develop therapies for the treatment of immuno-inflammatory conditions and rare skin diseases of high unmet medical need. The Company expects to continue to invest in FMX114 for the treatment of mild to moderate atopic dermatitis and enrolled the first patient in its Phase 1b/2a proof-of-concept study in October 2021. The Company expects results from this study early in the first quarter of 2022. In addition, on August 12, 2021, the Company announced a transaction with In4Derm Limited, a company incorporated and registered in Scotland (“In4Derm”). In4Derm is a spin-out of the University of Dundee’s School of Life Sciences which has discovered and is developing proprietary Bromodomain and Extra-Terminal Domain ("BET") inhibitors for the treatment of immunology and oncology conditions. On April 30, 2021, the parties entered into an Evaluation and Option Agreement (the “Option Agreement”) pursuant to which In4Derm granted the Company an exclusive option to obtain exclusive worldwide rights to research, develop and commercialize products containing In4Derm’s BET inhibitor compounds, which are new chemical entities, in both topical (the “Topical BETi Option”) and oral (the “Oral BETi Option”) treatments in all fields for any disease, disorder or condition in humans. On August 6, 2021, the Company exercised the Topical BETi Option and the parties entered into a License Agreement granting the Company a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of In4Derm’s BET inhibitor compounds identified to be suitable for topical administration in all fields. The Company paid a $1.0 million cash payment to In4Derm upon the execution of the Option Agreement and $0.5 million in connection with the exercise of the Topical BETi Option. Pursuant to the License Agreement, the Company has agreed to make cash payments to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed topical product in the U.S. of up to $15.75 million for all indications. In addition, the Company currently expects to exercise the Oral BETi Option following the selection of a lead candidate for the program. Upon exercise of the exclusive Oral BETi Option, the parties will sign a license agreement (the “Oral License Agreement”), and the Company will be required to pay In4Derm a $4.0 million cash payment. The Oral License Agreement will include cash payments of up to $43.75 million payable to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed oral product in the U.S. for all indications. The license agreements also provide for tiered royalty payments of up to 10% of net annual sales across licensed BET inhibitor products by the Company. In4Derm is entitled to additional milestones upon the achievement of regulatory approvals in certain jurisdictions outside the U.S.

The initial BET inhibitor candidates that the Company plans to develop are VYN201 and VYN202. VYN201 is a pan-bromodomain or pan-BD BET inhibitor. It is a first-in-class “soft” pan-BD BET inhibitor that is designed to mitigate systemic drug exposure and will be developed for topical applications. The Company intends to progress VYN201 into rare dermatological indications where there is significant unmet need due to a lack of indicated treatment options. The Company

12

plans to communicate the initial indication it will be pursuing for VYN201 after the prerequisite non-clinical safety assessments have been completed and enter this program into the clinic in 2022.

The second candidate, VYN202, is an orally-delivered, first-in-class BET inhibitor that is highly selective for Bromodomain 2 (“BD2”). By selectively inhibiting BD2, the Company believes VYN202 could have a more targeted anti-inflammatory effect with an improved benefit/risk profile. Upon the selection of a lead candidate, VYNE intends to exercise its exclusive option with In4Derm Limited and commence an IND-enabling non-clinical safety program.

As the Company continues to transition from a commercial organization to one focused on research and development, the Company expects to further streamline operations by continuing to eliminate the vast majority of planned expenditures supporting its commercial operations. Furthermore, the Company is in the process of reducing its workforce by terminating approximately 70 employees, which the Company expects to be completed by December 31, 2021. The Company incurred a one-time charge of $1.0 million in the three months ended September 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. The Company anticipates 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 by December 31, 2021. Additional charges of $0.4 million related to retention payments are anticipated through June 30, 2022.

Reverse Merger

On November 10, 2019, Menlo, Foamix Pharmaceuticals Ltd. (“Foamix”) and Giants Merger Subsidiary Ltd. (“Merger Sub”), a wholly-owned subsidiary of Menlo, entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 4, 2019, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Foamix, with Foamix surviving as a wholly-owned subsidiary of Menlo (the “Merger”) on March 9, 2020 (the “Effective Date”).

For accounting purposes, the Merger is treated as a “reverse acquisition” under generally accepted accounting principles in the United States (“U.S. GAAP”) and Foamix is considered the accounting acquirer. Accordingly, upon consummation of the Merger, the historical financial statements of Foamix became the Company’s historical financial statements, and the historical financial statements of Foamix are included in the comparative prior periods. See “Note 3 – Business Combination” for more information on the Merger.

Reverse stock split and recasting of per-share amounts

On February 10, 2021, the Company's Board of Directors approved a one-for-four reverse stock split of its outstanding shares of common stock. The reverse stock split was effected on February 12, 2021, at 5:00 p.m. Eastern time. At the effective time, every four issued and outstanding shares of the Company's 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 shares 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 the Company's common stock was also reduced on a one-for-four basis, from 300 million shares to 75 million shares. 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.

Unless otherwise noted, all common shares and per share amounts contained in the unaudited interim condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split.

Topical Minocycline Franchise

In January 2020, the Company launched AMZEEQ®, a once-daily topical antibiotic for the treatment of inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in patients 9 years of age and older. On May 28, 2020, the U.S. Food and Drug Administration (the "FDA") approved ZILXI® for the treatment of inflammatory lesions of rosacea in adults. ZILXI became available in pharmacies nationwide in October 2020. AMZEEQ and ZILXI are the first topical minocycline products approved by the FDA for any condition.

AMZEEQ and ZILXI utilize the Company’s proprietary Molecule Stabilizing Technology (MST)™ that is also being used in the development of the Company’s product candidate FCD105, a topical foam comprising minocycline and adapalene for the treatment of acne vulgaris. On June 2, 2020, the Company announced positive results from a Phase II clinical trial evaluating the preliminary safety and efficacy of FCD105 (3% minocycline / 0.3% adapalene foam), the first ever topical minocycline-

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based combination product, for the treatment of moderate-to-severe acne vulgaris. The Company held an end-of-Phase II meeting with the FDA in the fourth quarter of 2020. See "Note 1 - Strategic Business Review" for more information.

Serlopitant

Additionally, the Company was developing serlopitant, a small molecule inhibitor of the neurokinin 1 receptor, or NK1-R, given as a once-daily, oral tablet, for the treatment of pruritus, or itch, associated with various conditions including prurigo nodularis, or PN. On April 6, 2020, the Company announced top line results from two Phase III clinical trials evaluating the safety and efficacy of once-daily oral serlopitant for the treatment of pruritus (itch) associated with PN, studies MTI-105 and MTI-106. Neither study met their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based on a 4-point improvement responder analysis. The Company does not currently intend to further pursue the development of serlopitant. As a result, in the second quarter of 2020, the Company recorded a full impairment charge related to the IPR&D and Goodwill assets in its unaudited condensed consolidated statement of operations and comprehensive loss. See "Note 3 - Business Combination" for more information.

Liquidity and Capital Resources

The Company launched AMZEEQ in the United States in January 2020 and commenced generating product revenues in the first quarter of 2020. The Company also launched ZILXI in the United States in October 2020 and commenced generating revenues in the fourth quarter of 2020. The Company’s activities prior to the commercial launches of AMZEEQ and ZILXI had primarily consisted of raising capital, developing product candidates, and performing research and development activities. Since inception, the Company has incurred recurring losses and negative cash flows from operations. For the nine months ended September 30, 2021, the Company incurred a net loss of $61.8 million and used $46.3 million of cash in operations. As of September 30, 2021, the Company had cash, cash equivalents and restricted cash of $52.9 million and an accumulated deficit of $628.0 million. On August 11, 2021, the Company prepaid the entirety of its outstanding indebtedness, including a prepayment premium and accrued but unpaid interest, for a total amount of approximately $36.5 million. The Company had no outstanding debt as of September 30, 2021.

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, which has negatively impacted sales and the Company's ability to execute its commercial strategy with respect to AMZEEQ and ZILXI. In addition, the commercial launches of both AMZEEQ and ZILXI have been negatively impacted by unfavorable payor decisions in March 2021 on product pricing. These conditions have impaired the Company's ability to generate revenue consistent with internal forecasts, which has had a negative impact on its financial condition and liquidity. Following discussions with the Company's lenders during the second quarter of 2021 regarding the revenue targets included in the Amended and Restated Credit Agreement, the revenue expected to be generated for the trailing twelve month period ended June 30, 2021 and the Company's strategic transition discussed above, the Company determined to prepay its outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest in the total amount of approximately $36.5 million on August 11, 2021. Following the prepayment, the Amended and Restated Credit Agreement and the security interests thereunder were terminated. As a result of the foregoing, the Company determined that its projected cash flows from operations, combined with its cash balance after the debt prepayment, would not provide sufficient resources to fund its existing operations, for at least the next twelve months from the issuance of these financial statements.

As discussed above, the Company completed a strategic review of its business and initiated a process to explore a sale or license of its minocycline franchise, including AMZEEQ, ZILXI, FCD105 and the underlying MST platform. The Company will refocus its resources on its immuno-inflammatory pipeline and intends to support the FMX114 and the BET inhibitor 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 its ability to successfully pivot to its research and development business strategy and develop commercially viable drug candidates and raise additional capital to finance its operations. The Company’s ability to continue as a going concern is contingent on its ability to sell or license its minocycline franchise, develop future commercially viable products and/or to raise sufficient working capital through either debt or equity financing. There is no assurance the Company will be able to achieve these objectives under acceptable terms or at all.

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), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that its unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern

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and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s 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 its minocycline franchise, positive results from clinical trials for FMX114, and the successful development and positive results from clinical trials for the BET inhibitor programs. Based on current plans and assumptions, the Company believes that absent sufficient proceeds received from a sale or license of the minocycline franchise, business development transactions or financing transactions, which are all beyond its control, it will not have sufficient cash and cash equivalents to fund its operations beyond one year from the issuance of these financial statements. Accordingly, the Company will, over the course of the next twelve months, require significant additional financing to continue its operations. Each of these factors are subject to uncertainty, and therefore, raise substantial doubt about the Company’s 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 the Company to delay, scale back or otherwise modify its business and its research and development activities and other operations. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

a.Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair statement of the Company’s unaudited condensed consolidated financial position, results of operations, cash flow and statement of stockholders' equity for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Certain prior period amounts have been reclassified to conform to current year presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in the Company's Current Report on Form 8-K dated August 12, 2021.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the year ending December 31, 2021.

b.Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

c.Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of income and expenses during the reporting periods. Significant items subject to such estimates and assumptions include accounting for business combinations, impairments of goodwill and intangible assets and revenue recognition. Actual results could differ from the Company’s estimates.

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, 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, the Company further assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, impairments of long-lived assets and revenue recognition. In 2020, the Company recorded impairments of goodwill and certain indefinite-lived intangible assets; however, these were unrelated to the impact of COVID-19 (See "Note 3 - Business Combination" for more information). The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods

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d.Business Acquisition

The Company’s unaudited interim condensed consolidated financial statements include the operations of an acquired business after the completion of the acquisition. The Company accounts for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of In-Process Research and Development and Goodwill be recorded on the balance sheet. Transaction costs are expensed as incurred.

Amounts recorded in connection with an acquisition can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

The Company is required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting.  For example, the Company uses fair value in the initial recognition of net assets acquired in a business combination and when measuring impairment losses.  The Company estimates fair value using an exit price approach, which requires, among other things, that Company determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques:

•Income approach, which is based on the present value of a future stream of net cash flows.

•Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

•Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.

Our fair value methodologies depend on the following types of inputs:

•Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

•Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

•Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

Asset Impairment

The Company reviews all of its long-lived assets for impairment indicators throughout the year. Impairment testing is performed for indefinite-lived intangible assets annually (or sooner if warranted) and for all other long-lived assets whenever impairment indicators are present. When necessary, the Company records charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets.

e.Revenue Recognition

The Company accounts for its revenue transactions under FASB ASC Topic 606, Revenue from Contracts with Customers. In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it

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transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when such performance obligation is satisfied.

The Company’s customers include a limited number of national and select regional wholesalers (the “distributors”) and certain independent and specialty pharmacies (together, the “customers”). These distributors subsequently resell the product, primarily to retail pharmacies that dispense the product to patients. Net product revenue is typically recognized when customers obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of product to the customers. The Company evaluates the creditworthiness of its customers to determine whether it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur. The Company does not assess whether a contract has a significant financing component if the expectation is such that the period between the transfer of the promised goods to the customer and the receipt of payment will be less than one year. Standard credit terms do not exceed 75 days. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that would have been recognized is one year or less or the amount is immaterial. Shipping and handling costs related to the Company’s product sales are included in selling, general and administrative expenses.

The Company’s net product revenues through September 30, 2021 were generated through sales of AMZEEQ, which was approved by the FDA in October 2019 and was commercially launched in the United States in January 2020, and ZILXI, which was approved by the FDA in May 2020 and was commercially launched in the United States in October 2020. Product revenue is recorded net of distribution fees, trade discounts, allowances, rebates, copay program coupons, chargebacks, estimated returns and other incentives. These reserves are classified as either reductions of accounts receivable or as current liabilities. The estimates of reserves established for variable consideration reflect current contractual and statutory requirements, known market events and trends, industry data and forecasted customer mix. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net product revenues only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from these estimates. If actual results vary, estimates may be adjusted in the period such change in estimate becomes known, which could have an impact on earnings in the period of adjustment. See “Note 4 – Revenue Recognition” for more information.

On April 23, 2020, the Company announced that it entered into a license agreement with Cutia for our minocycline products and product candidate, if approved, on an exclusive basis in Greater 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 the U.S., FCD105 in the Greater China territory. The Company will supply the finished licensed products to Cutia for clinical and commercial use. The Company received an upfront cash payment of $10.0 million in 2020 ($6.0 million received in the three months ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1.0 million payment upon the receipt of marketing approval in China of the first licensed product. The Company will also receive royalties on net sales of any licensed products. The license is determined to be a distinct performance obligation of the arrangement, therefore the Company recognized the revenues from the upfront license fee when the license was transferred to the licensee and the licensee was able to use and benefit from the license. See "Note 4 - Revenue Recognition" for more information.

f.Allowance for credit losses

An allowance for doubtful accounts is maintained for potential credit losses based on the aging of trade receivables, historical bad debts experience and changes in customer payment patterns. Trade receivable balances are written off against the allowance when it is deemed probable that the receivable will not be collected. Trade receivables, net are stated net of reserves for certain sales allowances and provisions for doubtful accounts. Provisions for doubtful accounts were not material for the three and nine months ended September 30, 2021 and September 30, 2020.

g.Fair value measurement

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1:    Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

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Level 2:    Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical assets or liabilities.

Level 3:    Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

h.Loss per share

Net loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common stock and of common stock equivalents outstanding when dilutive. Common stock equivalents include outstanding stock options and warrants which are included under the treasury share method when dilutive.

The calculation of the weighted-average number of common stock outstanding during the period in which the reverse merger occured was based on:

a.The number of common stock outstanding from the beginning of that period to the merge date was computed on the basis of the weighted-average number of common stock of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement

b.The number of common stock outstanding from the merge date to the end of that period was the actual number of common stock of the legal acquirer (the accounting acquiree) outstanding during that period.

The following weighted average stock options, restricted stock units (“RSUs”), warrants and incremental shares to be issued under the employee stock purchase plan (“ESPP”) were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (share data):

	Three months ended September 30		Nine months ended September 30
	2021	2020	2021	2020
Outstanding stock options, RSUs and shares under the ESPP	5,223,466	5,191,299	5,303,135	3,756,049
Warrants	495,165	495,165	495,165	377,542

In addition to the above, the CSR was excluded from the calculation of the 2020 diluted net loss per share because its effect would have been anti-dilutive for the periods presented. On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective exchange ratio (the "Exchange Ratio") in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The conversion of the CSR also affected the Exchange Ratio of the pre-Merger Foamix equity awards and warrants outstanding as of March 9, 2020. See "Note 3 - Business Combination" for more information.

j.Newly issued and recently adopted accounting pronouncements

Recent Accounting Guidance Issued:

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which clarifies and simplifies certain aspects of the accounting for income taxes. The standard is effective for years beginning after December 15, 2020, and interim periods beginning after December 15, 2020. This guidance became effective during the first quarter of 2021. The adoption of the new standard did not have a material impact to the Company's consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update No. 2020-4, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (ASU 2020-4), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU 2020-4 apply only to those transactions that reference LIBOR or another reference rate expected to be

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discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-4 are optional and are effective from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-4 on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13), which requires companies to measure credit losses of financial instruments, including customer accounts receivable, utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional Accounting Standard Updates to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. As a smaller reporting company, the Company will adopt ASU 2016-13 effective January 1, 2023 or at such time where it is no longer a smaller reporting company.

NOTE 3 – BUSINESS COMBINATION

On November 10, 2019, Menlo entered into the Merger Agreement with Foamix, and Merger Sub, a direct and wholly-owned Israeli subsidiary of Menlo. On March 9, 2020, the Merger was completed and Foamix is now a wholly-owned subsidiary of the Company.

On the Effective Date, each ordinary share of Foamix was exchanged for 0.5924 shares of common stock of Menlo. In addition, on the Effective Date, Foamix shareholders received one contingent stock right (a “CSR”) for each Foamix ordinary share held by them. The CSRs were issued pursuant to the Contingent Stock Rights Agreement (the “CSR Agreement”), dated as of March 9, 2020, by and between Menlo and American Stock Transfer & Trust Company, LLC, and represented the non-transferable contractual right to receive shares of common stock of Menlo depending on the results of Menlo’s phase III clinical trials evaluating the safety and efficacy of once daily oral serlopitant for the treatment of prurigo nodularis (the “Phase III PN Trials”).

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 additional shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The CSR conversion resulted in the issuance and delivery of 74,544,413 additional shares of Menlo common stock underlying the CSRs, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021. Following the conversion of the CSRs, pre-Merger Foamix shareholders and pre-Merger Menlo stockholders owned approximately 82% and 18% of post-Merger Menlo, respectively, each calculated on a fully diluted basis.

For accounting purposes, the Merger is treated as a “reverse acquisition” under U.S. GAAP and Foamix is considered the accounting acquirer. Accordingly, upon consummation of the Merger, the historical financial statements of Foamix became the Company’s historical financial statements, and the historical financial statements of Foamix are included in the comparative prior periods.

Under reverse acquisition accounting, the U.S. dollar amount for common stock in the financial statements is based on the value and number of shares issued by Menlo (reflecting the legal structure of Menlo as the legal acquirer) on the Merger date plus subsequent shares issued by the Company. The amounts in additional paid-in capital represent that of Foamix and include the fair value of shares deemed for accounting purposes to have been issued by Foamix on the merger date and the fair value of the Menlo equity awards included in the purchase price calculation. The Foamix additional paid-in capital was also adjusted for the difference between the number of common stock and the historical number of shares of Foamix’s ordinary shares.

During the nine months ended September 30, 2020, the Company incurred transaction costs of approximately $11.7 million, which are recorded in the unaudited condensed consolidated statements of operations and comprehensive income. This amount includes $8.1 million of severance benefits for employees terminated after the Effective Date.

Purchase Price

The following is the Merger Consideration (as defined in the Merger Agreement) was transferred to effect the Merger:

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(in thousands)	Total
Deemed (for accounting purposes only) issuance of Foamix shares to Menlo stockholders	$	123,757
Deemed (for accounting purposes only) conversion of Menlo equity awards	7,322
Total consideration*	$	131,079

* This amount reflects total consideration prior to reduction in respect of the CSRs (which had a fair value of $19.6 million as of the Merger Date) that were issued to Foamix shareholders and that reduced the Menlo stockholders’ relative ownership in the combined company. If the effect of the CSRs is included, the total consideration deemed paid by Foamix, as the accounting acquirer, to Menlo stockholders and equity award holders in the Merger would be reduced to approximately $111.4 million, as shown in the purchase price allocation table below.

Based on Foamix’s closing share price of $2.99 as of March 9, 2020, the Merger Consideration under reverse acquisition accounting was approximately $131.1 million, consisting of $123.8 million for the deemed (for accounting purposes only) issuance of 41.4 million Foamix shares assuming that no upwards adjustment was made to the Exchange Ratio relating to the CSR, and $7.3 million for the fair value of Menlo equity awards deemed (for accounting purposes only) to be converted into Foamix equity awards. The converted stock options represent the fair value of such options attributable to service prior to the Merger date using the Foamix closing share price of $2.99 as of March 9, 2020 as an input to the Black Scholes valuation model to determine the fair value of the options.

Purchase Price Allocation

The Company completed its analysis of the allocation of the purchase price to the fair values of assets acquired and liabilities assumed as follows:

(in thousands)	March 9, 2020
Cash and cash equivalents	$	38,641
Investment in marketable securities	22,703
Prepaid expenses and other current assets	1,581
In-process research and development	49,800
Goodwill	4,545
Total assets	117,270
Current liabilities	(5,827)
Total liabilities	(5,827)
Purchase price*	$	111,443

* Reflects reduction in the purchase price deemed paid to Menlo stockholders in the Merger on the assumption that the CSRs, in an aggregate value of $19.6 million, convert into additional shares of the combined company for the Foamix shareholders, thereby resulting in a lower percentage of the combined company’s outstanding shares being owned by Menlo stockholders following the Merger.

Goodwill

Goodwill is recorded with the acquisition of a business and is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at least annually. None of the goodwill recognized is expected to be deductible for income tax purposes. The purchase price of the transaction and the excess purchase price over the fair value of the identifiable net assets acquired, are calculated as follows:

(in thousands)	March 9, 2020
Purchase price	$	111,443
Less: fair value of net assets acquired, including other identifiable intangibles	(106,898)
Goodwill	$	4,545

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. The Company does not intend to further pursue the development of serlopitant. As such, the Company recorded a full impairment charge of $4.5 million related to

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goodwill in its unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020. There were no impairment charges in the three and nine months ended September 30, 2021.

In-Process Research and Development (“IPR&D")

The IPR&D recognized relates to Menlo’s once-daily oral serlopitant for the treatment of pruritus (itch) associated with PN that has not reached technological feasibility as follows:

(in thousands)
Intangible asset	Estimated Fair Value
Acquired indefinite life intangible assets*	$	49,800
Fair value of identified intangible assets	$	49,800

* Represents acquired IPR&D assets which are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the research and development period, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing.

The fair value of IPR&D has been estimated utilizing a multi-period excess earnings method under the income approach, which reflects the present value of the projected cash flows that are expected to be generated, less charges representing the contribution of other assets to those cash flows that use projected cash flows with and without the intangible asset in place. 

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. The Company does not intend to further pursue the development of serlopitant. As such, the Company recorded a full impairment charge of $49.8 million related to the IPR&D asset in its unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020. There were no impairment charges in the three and nine months ended September 30, 2021.

CSR

The CSR was issued pursuant to the CSR Agreement, dated as of March 9, 2020, by and between Menlo and American Stock Transfer & Trust Company, LLC, and represented the non-transferable contractual right to receive shares of common stock of Menlo depending on the results of Menlo’s Phase III PN Trials. The Company recognized a liability of $19.6 million in the unaudited condensed consolidated balance sheet as of March 9, 2020. The liability was measured at fair value and categorized as level 3 as of the acquisition date in accordance with ASC 805-31-25-5 and subsequently at each reporting date thereafter. The fair value of the CSR was estimated as the incremental value that Foamix would be able to achieve on a probability weighted basis assuming three different potential probabilities of the following scenarios: (a) serlopitant significance was achieved in both Phase III PN Trials (b) serlopitant significance was achieved in only one Phase III PN Trial and (c) serlopitant significance was not achieved or was not determined on or before May 31, 2020.

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 additional shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The CSR conversion resulted in the issuance and delivery of 74,544,413 additional shares of Menlo common stock underlying the CSRs, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021. Following the conversion of the CSRs, pre-Merger Foamix shareholders and pre-Merger Menlo stockholders own approximately 82% and 18% of post-Merger Menlo, respectively, each calculated on a fully diluted basis. The conversion of the CSR also affected the Exchange Ratio of the pre-Merger Foamix equity awards and warrants outstanding as of March 9, 2020 and increased the awards available for grant under the Company's equity plan.

The contingent consideration associated with the CSR was recognized and measured at fair value as of the acquisition date in accordance with ASC 805-30-25-5. An acquirer's obligation to pay contingent consideration should be classified as a liability or equity in accordance with ASC 480, Distinguishing Liabilities from Equity, ASC 815 Derivatives and Hedging, and other applicable U.S. GAAP. The contingent consideration associated with the CSR was initially measured at fair value and will subsequently be measured at fair value at each reporting date. The CSR was classified as a liability, as it is settled by issuing a variable number of the Company's common stock. On April 6, 2020, the Company recorded $84.7 million of expense in its

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unaudited condensed consolidated statements of operations and comprehensive loss to remeasure the CSR liability in its consolidated balance sheet to its fair value of $104.4 million (calculated based on 74,544,413 shares issued, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021, and a share price of $1.40 on April 6, 2020) and then settled in connection with the issuance of shares.

Pro Forma

The actual Menlo net loss included in the Company’s unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2020 (for the period from the March 9, 2020, the Effective Date, through September 30, 2020, which are not indicative of the results to be expected for a full year) and the supplemental unaudited pro forma revenue and net loss of the combined entity had the acquisition been completed on January 1, 2019 are as follows:

Actual Menlo results of operations included in the unaudited condensed consolidated statement of operation for the three and nine months ended September 30, 2020:

(in thousands)	Three months ended September 30, 2020		Nine months ended September 30, 2020
	(Unaudited)
Revenues	$	—	$	—
Loss attributable to Menlo	$	4,100	$	23,737

	Three months ended September 30, 2020		Nine months ended September 30, 2020
(in thousands, except per share data)	(Unaudited)		(Unaudited)
SUPPLEMENTAL PRO FORMA COMBINED RESULTS OF OPERATIONS:
Revenues	$	3,269	$	16,707
Net loss	$	24,912	$	229,994
Loss per share - basic and diluted	$	0.59	$	7.89
Adjustments to the supplemental pro forma combined results of operations, included in the above, are as follows:
Transaction costs	$	—	$	(14,931)
Acceleration of stock based compensation	—		(7,199)
Total Adjustments	$	—	$	(22,130)

These unaudited pro forma condensed consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first day of the earliest period presented, or of future results of the consolidated entities. The unaudited pro forma condensed consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the Merger.

NOTE 4 – REVENUE RECOGNITION

Product Sales

Product revenues for the three and nine months ended September 30, 2021 were generated from sales of AMZEEQ and ZILXI. The Company’s customers include a limited number of national and select regional distributors and certain independent and specialty pharmacies, together (the "customers"). The distributors subsequently resell the product, primarily to retail pharmacies that dispense the product to patients. Net product revenue is typically recognized when customers obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of product to the customers. For the three months ended September 30, 2021, there were three major customers that each accounted for more than 10% of total product revenues and, as a group, represented 52% of total product revenues. For the nine months ended September 30, 2021, there were four major customers that each accounted for more than 10% of total product revenues and, as a group, represented 66%

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of total product revenues. For the three months ended September 30, 2020, there were three major customers that each accounted for more than 10% of total product revenues and as a group, represented 100% of total product revenues. For the nine months ended September 30, 2020, there were three major customers that each accounted for more than 10% of total product revenues and as a group, represented 99% of total product revenues.

Product Sales Provisions

Product revenue is recorded net of distribution fees, trade discounts, allowances, rebates, chargebacks, estimated returns and other incentives, described below.   The Company calculates its net product revenue based on the wholesale acquisition cost that the Company charges its customers less provisions for (i) trade discounts and allowances, such as distributor fees and discounts for prompt payment, (ii) estimated rebates to third-party payers, patient co-pay assistance programs, chargebacks and other discount programs and (iii) reserves for expected product returns.

Provisions for distribution fees, trade discounts and chargebacks are reflected as a reduction to trade receivables, net on the unaudited condensed consolidated balance sheet. All other provisions, including rebates, other discounts and return provisions are reflected as a liability within accrued expenses on the unaudited condensed consolidated balance sheet. Provisions for revenue reserves described below reduced product revenues by $16.6 million and $11.0 million for the three months ended September 30, 2021 and September 30, 2020, respectively. Provisions for revenue reserves described below reduced product revenues by $48.4 million and $25.1 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. The revenue reserve accrual at September 30, 2021 and December 31, 2020 was $7.3 million and $5.8 million, respectively, reflected in accrued expense in the consolidated balance sheet.

Distribution Fees and Trade Discounts and Allowances: The Company pays fees for distribution services and for certain data that distributors provide to the Company and generally provides discounts on sales to its distributors for prompt payment. These fees and discounts are contractual in nature and the Company expects its distributors to earn these fees and discounts, and accordingly deducts the full amount of these fees and discounts from its gross product revenues at the time such revenues are recognized.

Rebates, Chargebacks and Other Discounts: Product sales made under managed-care and governmental pricing programs in the U.S. are subject to rebates. Managed Care rebates relate to contractual agreements to sell products to managed care organizations and pharmacy benefit managers at contractual rebate percentages in exchange for volume and/or market share. Chargebacks relate to contractual agreements to sell products to government agencies and other indirect customers at contractual prices that are lower than the list prices the Company charges wholesalers. When these government agencies or other indirect customers purchase products through wholesalers at these reduced prices, the wholesaler charges the Company for the difference between the prices they paid the Company and the prices at which they sold the products to the indirect customers. The Company estimates the rebates and chargebacks it expects to be obligated to provide and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. The Company estimates the rebates and chargebacks that it expects to be obligated to provide based upon (i) the Company's current contracts and negotiations, (ii) estimates regarding the payer mix based on third-party data and utilization, (iii) inventory held by distributors and (iv) estimates of inventory held at the retail channel. Other discounts include the Company’s co-pay assistance coupon programs for commercially-insured patients meeting certain eligibility requirements. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to pay associated with product that has been recognized as revenue.

Product Returns: Consistent with industry practice, customers are generally allowed to return products within a specified period of time before and after its expiration date. The Company estimates the amount of product that will be returned and deducts these estimated amounts from its gross revenue at the time the revenue is recognized. The information utilized to estimate the returns provision includes: (i) historical industry information regarding rates for comparable pharmaceutical products and product portfolios, (ii) external data with respect to inventory levels in the wholesale distribution channel, (iii) external data with respect to prescription demand for products and (iv) remaining shelf lives of products at the date of sale. The Company estimates that approximately 2% of product will be returned.

License Revenues

On April 23, 2020, the Company announced that it entered into a license agreement with Cutia for AMZEEQ as well as certain of the Company's other topical minocycline product candidates, once approved, on an exclusive basis in Greater 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 the U.S., FCD105 in the Greater China territory. The Company will supply the finished licensed products to Cutia for clinical and commercial use. Outside of the license transferred, the Company does not have any additional performance obligations under the arrangement. In exchange for the license, the Company received an upfront cash payment of

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$10.0 million in 2020 ($6.0 million received in the three months ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1.0 million payment upon the receipt of marketing approval in China of the first licensed product. The license is considered functional IP as the licensee is able to use and benefit from the license without the continued involvement of the Company. There was no license revenue in the three months ended September 30, 2021. The Company recorded $10.0 million of license revenue in the nine months ended September 30, 2020. The Company will also receive royalties on net sales of any licensed products, such royalties will be recognized in the period the sales or usage occurs under the royalties sales-and usage based exception. The Company has not recorded revenue related to the $1.0 million payment due upon receipt of marketing approval for the licensed product as such amount is constrained under the variable consideration guidance under ASC 606, Revenue from Contracts with Customers.

Contract Assets and Contract Liabilities 

The Company did not have any contract assets (unbilled receivables) related to product sales as of September 30, 2021 and December 31, 2020, as customer invoicing generally occurs before or at the time of revenue recognition. The Company did not have any contract assets (unbilled receivables) related to its license revenues as of September 30, 2021 and December 31, 2020.

The Company did not have any contract liabilities as of September 30, 2021 and December 31, 2020, as the Company did not receive payments in advance of fulfilling its performance obligations to its customers.

Sales Commissions

Sales commissions are generally attributed to periods shorter than one year and therefore are expensed when incurred. Sales commissions are included in selling, general and administrative expenses.

Financing Component

The Company has elected not to adjust consideration for the effects of a significant financing component when the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. Standard credit terms do not exceed 75 days.

Royalty Revenues 

The Company is entitled to royalty payments with respect to sales of a product developed by a customer in collaboration with the Company. Revenues in the amount of $0.1 million and $0.7 million were recorded during the three and nine months ended September 30, 2021, respectively. Revenues in the amount of $0.4 million and $0.6 million were recorded during the three and nine months ended September 30, 2020, respectively.

NOTE 5 - FAIR VALUE MEASUREMENT

The Company’s assets and liabilities that are measured at fair value as of December 31, 2020, are classified in the table below in one of the three categories described in Note 2 above:

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Marketable securities	$	1,027	$	—	$	—	$	1,027

The Company sold its marketable securities during the nine months ended September 30, 2021.

NOTE 6 - MARKETABLE SECURITIES

Marketable securities as of December 31, 2020 consist mainly of mutual funds securities. The debt securities are classified as available-for-sale and are recorded at fair value. Changes in fair value, net of taxes (if applicable), are reflected in other comprehensive loss. Realized gains and losses on sales of the securities, as well as premium or discount amortization, are included in the unaudited condensed consolidated statement of operations as other expense (income), net.

Equity securities with readily determinable fair value are measured at fair value. The changes in the fair value of equity investments are recognized through other expense (income), net in the unaudited condensed consolidated statements of operations.

The following table sets forth the Company’s marketable securities:

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	September 30		December 31
(in thousands)	2021		2020
Israeli mutual funds	$	—	$	1,027

As of September 30, 2021 and December 31, 2020 there were no available-for-sale debt securities.

The Company has considered factors regarding other than temporary impaired securities and determined that there are no securities with impairment that is other than temporary as of September 30, 2021 and December 31, 2020.

During the nine months ended September 30, 2021 and September 30, 2020 the Company received aggregate proceeds of $1.0 million and $36.4 million, respectively, upon sale and maturity of marketable securities.

As of September 30, 2021 and December 31, 2020, there were no restricted marketable securities.

NOTE 7 – INVENTORY

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis by product. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. The Company commenced capitalizing inventory for AMZEEQ and ZILXI upon FDA approval in October 2019 and May 2020, respectively. The Company periodically reviews its inventory levels and, if necessary, writes down inventory that is expected to expire prior to being sold, inventory in excess of expected sales requirements and inventory that fails to meet commercial sale specifications, with a corresponding charge to cost of goods sold. There were no material write-downs during the three and nine months ended September 30, 2021 and September 30, 2020.

The Company evaluated the realizability of inventory giving consideration to the strategic business review discussed in Note 1 and no impairment charges resulted from this review as of September 30, 2021. The Company will continue to evaluate the realizability of its inventory during the process to explore a possible sale or license of its topical minocycline franchise.

The following table sets forth the Company’s inventory:

	September 30		December 31
(in thousands)	2021		2020
Raw materials	$	3,247	$	4,042
Work-in-process	339		662
Finished goods	4,484		2,700
Total	$	8,070	$	7,404

NOTE 8 - DEBT

On July 29, 2019, Foamix entered into a Credit Agreement (the "Credit Agreement") to secure up to $50 million from two lenders, one of which is a significant stockholder of the Company and is considered a related party, and a Securities Purchase Agreement with one of the lenders for gross proceeds of approximately $14 million, before deducting offering expenses (see “Note 9- Share Capital” for more information). On March 9, 2020, the Company entered into an Amended and Restated Credit Agreement and Guaranty (as further amended on August 5, 2020, the “Amended and Restated Credit Agreement”), whereby the Company has guaranteed the indebtedness obligations of the borrower and granted a first priority security interest in substantially all of the Company's assets for the benefit of the lenders. As December 31, 2020, $35.0 million was drawn under the Amended and Restated Credit Agreement. The Company did not incur the remaining $15.0 million under the Amended and Restated Credit Agreement.

The term loans available under the Amended and Restated Credit Agreement were comprised as follows: (a) $15 million that was funded on July 29, 2019 (the “Tranche 1 Loan”), (b) $20 million that was funded on December 17, 2019 (the “Tranche 2 Loan”) and (c) up to $15 million that was available prior to September 30, 2020 (the “Tranche 3 Loan”). The Tranche 2 Loan was borrowed following the FDA’s approval of the NDA for AMZEEQ and listing of AMZEEQ in the FDA’s “Orange Book,” in addition to maintaining arrangements with a third party for the commercial supply and manufacture of AMZEEQ. The Company did not incur the Tranche 3 Loan. Interest on the loans was equal to the sum of (A) 8.25% (subject to increase in accordance with the terms of the Amended and Restated Credit Agreement) plus (B) the greater of (x) the one-month LIBOR as

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of the second business day immediately preceding the first day of the calendar month or the date of borrowing (if such loan is not outstanding as of the first day of the calendar month), as applicable, and (y) 2.75%.

The loans were scheduled to mature on July 29, 2024. However, following discussions with the Company's lenders regarding the revenue targets included in the Amended and Restated Credit Agreement, the revenue expected to be generated for the trailing twelve month period ended June 30, 2021 and the Company's strategic transition discussed in Note 1, the Company determined to prepay its outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest in the total amount of approximately $36.5 million on August 11, 2021. Following the prepayment, the Amended and Restated Credit Agreement and the security interests thereunder were terminated. As of September 30, 2021 there was no debt outstanding.

Perceptive Credit Holdings II, LP (“Perceptive”) was one of the lenders and the administrative agent under the Amended and Restated Credit Agreement. As of September 30, 2021 and August 11, 2021, the date of the prepayment, affiliates of Perceptive were holders of more than 5% of the Company's outstanding common stock. In connection with the prepayment of the Company's indebtedness, Perceptive received $18.3 million, representing their portion of the principal amount, interest and prepayment premium.

In addition, on July 29, 2019, the lenders under the Credit Agreement were issued warrants to purchase up to an aggregate of 1,100,000 of Foamix ordinary shares, at an exercise price of $2.09 per share (the “Warrants”), which represented the five-day volume weighted average price of the Foamix ordinary shares as of the trading day immediately prior to the issuance of the Warrants. In connection with the completion of the Merger, the exchange ratio was applied to the Warrants such that they became exercisable for 651,640 shares of the Company’s common stock, and the exercise price was adjusted to $3.53. Following the Phase 3 PN Trial results, the Warrants were further adjusted for the CSR and reverse stock split and they are currently exercisable for 495,165 shares of our common stock with an exercise price of $4.64 per share. Payment of the exercise price will be made, at the option of the holder, either in cash or as a reduction of common stock issuable upon exercise of the Warrant, with an aggregate fair value equal to the aggregate exercise price ("cashless exercise"), or any combination of the foregoing. The Warrants are exercisable pursuant to the terms, and subject to the conditions, thereof and expire on July 29, 2026. Any Warrants left outstanding will be cashless exercised on the Warrants' expiration date, if in the money. The Warrants issued were classified as equity in accordance with ASC 815-40. Proceeds received under the Tranche 1 Loan were allocated to the Warrants and the Tranche 1 Loan on a relative fair value basis.

The Company incurred offering expenses of $1.1 million in connection with transactions contemplated by the Credit Agreement and the Securities Purchase Agreement, which were allocated to the Warrants, shares and debt consistently with the allocation of proceeds. The Company incurred additional expenses in the amount of $0.3 million from the borrowing of Tranche 2 Loan, allocated only to the debt. Debt issuance costs are recorded on the consolidated balance sheet as a reduction of liabilities. Amounts allocated to the debt, net of issuance cost, were subsequently recognized at amortized cost using the effective interest method.

During the three months ended September 30, 2021, the Company recorded interest expense of $3.5 million, comprised of interest expense of $1.9 million and discount cost of $1.6 million. During the nine months ended September 30, 2021, the Company recorded interest expense of $5.6 million, comprised of interest expense of $3.8 million and discount cost of $1.8 million. For the three month and nine month periods ended September 30, 2021, interest expense includes a debt prepayment fee of $1.4 million and the write-off of discount costs of $1.6 million associated with the Company's prepayment of outstanding indebtedness resulting in a total loss on the extinguishment of debt of $3.0 million. During the three months ended September 30, 2020, the Company recorded interest expense of $1.0 million and discount cost of $0.1 million. During the nine months ended September 30, 2020, the Company recorded interest expense of $2.9 million and discount cost of $0.3 million.

NOTE 9 – SHARE CAPITAL

Preferred stock

As of September 30, 2021, the Company's Certificate of Incorporation, as amended, authorizes the Company to issue 20,000,000 shares of preferred stock, par value $0.0001 per share. There were no shares of preferred stock issued and outstanding as of September 30, 2021 and December 31, 2020.

Shares of preferred stock may be issued from time to time in one or more series. The voting powers (if any), preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of any series of preferred stock will be set forth in a Certificate of Designation filed pursuant to the Delaware General Corporation Law, as determined by the Company's Board of Directors.

Common stock

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The number of shares of common stock authorized under the Company's Amended and Restated Certificate of Incorporation was proportionately reduced in connection with the Company's one-for-four reverse stock split in February 2021. On July 19, 2021, the Company held its annual meeting of stockholders (the "Annual Meeting"). Following the approval by the holders of a majority of the outstanding shares of common stock at the Annual Meeting, the Company filed a Certificate of Amendment to 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, effective as of July 19, 2021. Accordingly, the Company is authorized to issue 150,000,000 shares of common stock, par value $0.0001 per share.

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of preferred stock outstanding. The Company has never declared any dividends on common stock.

Issuance of stock

On February 1, 2019, the Company entered into a Sales Agreement (the "2019 Sales Agreement") with Cantor Fitzgerald & Co., or Cantor Fitzgerald, to sell shares of the Company's 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 which Cantor Fitzgerald acted as the Company's sales agent. The issuance and sale of shares of common stock by us pursuant to the 2019 Sales Agreement were deemed an "at-the-market" offering under the Securities Act. Cantor Fitzgerald was entitled to compensation for its services equal to up to 3.0% of the gross proceeds of any shares of common stock sold under the 2019 Sales Agreement. From January 1, 2021 through January 25, 2021, the Company issued and sold 2,778,012 shares of common stock at a weighted average price per share of $9.76 pursuant to the 2019 Sales Agreement for $26.3 million in net proceeds. Effective as of January 25, 2021, the Company terminated the 2019 Sales Agreement.

On August 12, 2021, the Company entered into a new sales agreement with Cantor Fitzgerald to sell shares of the Company's 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 which Cantor Fitzgerald will act as the Company's sales agent. The issuance and sale of shares of common stock by us pursuant to the Sales Agreement are deemed an "at-the-market" offering under the Securities Act. Cantor Fitzgerald is entitled to compensation for its services equal to up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. During the three months ended September 30, 2021, the Company issued and sold 1,948,000 shares of common stock at a weighted average per share price of $1.57 pursuant to the Sales Agreement for $2.9 million in net proceeds.

On January 26, 2021, the Company entered into a Securities Purchase Agreement with certain institutional and accredited investors for the sale of an aggregate of 5,274,261 shares of common stock of the Company, at a purchase price of $9.48 per share in a registered direct offering. The offering was completed on January 28, 2021 and the Company received approximately $46.8 million in net proceeds, after deducting placement agent fees and other offering expenses.

On June 9, 2020, the Company completed an underwritten public offering of 7,776,875 shares of common stock at a price to the public of $7.40 per share. The net proceeds of the offering were approximately $53.6 million, after deducting underwriting discounts and commissions and other offering expenses.

Pursuant to the completion of the Merger, on March 9, 2020, the Company issued 36,550,335 shares to legacy Foamix shareholders. On April 6, 2020, pursuant to the terms of the CSR Agreement, the Company issued an additional 74,544,413 shares to legacy Foamix shareholders, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021.

Warrants

In connection with entering into the Credit Agreement on July 29, 2019, Foamix issued to the lenders Warrants to purchase up to an aggregate of 1,100,000 of its ordinary shares, later exchanged to Warrants to purchase up to 1,980,660 shares of Menlo’s common stock, adjusted retrospectively to 495,165 shares of common stock upon the reverse stock split effective February 12, 2021. Upon the closing of the Merger, each Warrant received one CSR as described in Note 3- Business Combinations. The Warrants were exercisable immediately following the closing of the Credit Agreement, subject to the terms of the warrant, and are due to expire on July 29, 2026. Any Warrants left outstanding will be cashless exercised on the Warrants’ expiration date, if in the money.

The exchange of Warrants from Foamix warrants to Menlo warrants and the additional CSR was accounted for as a modification, by analogy, from the modification’s guidance under ASC 260-10-S99-2. The Company assessed the significance of the modification of the Warrants by comparing the fair value of the Warrants immediately before and after the amendments.

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In its assessment, it also considered additional qualitative factors. The Company concluded that the change of terms was not significant. Therefore, the incremental fair value, in the amount of $41,000, of the modified Warrants over the original ones (as of modification date) was recognized in retained earnings as a deemed dividend to the Warrants holders in the nine months ended September 30, 2020.

Share-based compensation

Equity incentive plans:

Upon closing of the Merger, the Company adopted Foamix’s 2019 Equity incentive plan (the “2019 Plan”). As of September 30, 2021, 509,158 shares remain issuable under the 2019 Plan. In addition, the Company adopted the 2018 Omnibus Incentive Plan (the "2018 Plan") in January 2018. In January 2020, the number of shares reserved under the 2018 Plan automatically increased by 750,000 shares of common stock pursuant to the terms thereof. As of September 30, 2021, 81,925 shares remain issuable under the 2018 Plan.

Employee Share Purchase Plan:

Upon closing of the Merger, the Company adopted Foamix’s Employee Share Purchase Plan ("ESPP") pursuant to which qualified employees (as defined in the ESPP) may elect to purchase designated shares of the Company’s common stock at a price equal to 85% of the lesser of the fair market value of the common stock at the beginning or end of each semi-annual share purchase period (“Purchase Period”). Employees are permitted to purchase the number of shares purchasable with up to 15% of the earnings paid (as such term is defined in the ESPP) to each of the participating employees during the Purchase Period, subject to certain limitations under Section 423 of the U.S. Internal Revenue Code.

As of September 30, 2021, 2,261,108 shares remain available for grant under the ESPP.

During the nine months ended September 30, 2021, 42,989 shares were issued to employees pursuant to the ESPP. During the nine months ended September 30, 2020, 61,031 Foamix ordinary shares were purchased by Foamix employees pursuant to the ESPP prior to the Merger. Such shares were later exchanged for 36,155 shares of the Company's common stock and one CSR in the Merger, adjusted retrospectively to 9,038 shares of common stock and one CSR upon the reverse stock split effective February 12, 2021.

Options and RSUs granted to employees and directors:

In the nine months ended September 30, 2021 and 2020, the Company granted options and RSUs as follows:

	Nine months ended September 30, 2021
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,686,405	$1.68-$11.08	1 year - 4 years	10 years
RSUs	970,813	—	2 years - 4 years	—

	Nine months ended September 30, 2020
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,316,637	$5.84-$12.52	1 year - 4 years	10 years
RSUs	647,427	—	1 year - 4 years	—

* All amounts and exercise prices for pre-Merger grants are presented following the exchange to Menlo options and RSUs at the Exchange Ratio described in Note 3-Business Combination.

The fair value of options and RSUs granted to employees and directors during the nine months ended September 30, 2021 and the nine months ended September 30, 2020 was $9.4 million and $11.8 million, respectively.

The fair value of RSUs granted is based on the share price on the grant date.

The fair value of options granted was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:

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	Nine months ended September 30,
	2021		2020
Dividend yield	0	%	0	%
Expected volatility	68.38% - 69.38%		60.44% - 69.83%
Risk-free interest rate	0.5% - 1.29%		0.31% - 1.26%
Expected term	6 years		6 years

Pursuant to the Merger, all outstanding options and RSUs granted by Foamix were exchanged for stock options and RSUs of Menlo’s common stock according to the Exchange Ratio. In addition, for each option and RSU the holder received a CSR as described in Note 3- Business Combination. This transaction was considered by the company to be a modification under ASC 718, Compensation - Stock Compensation. The modification did not affect the remaining requisite service period. As a result of the modification, for outstanding options and RSUs granted to Foamix employees and consultants, the Company recorded immaterial incremental compensation expense for the three months ended March 31, 2020. As described in Note 3 - Business Combination, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The conversion was considered by the company to be a modification under ASC 718. As a result of the modification, for outstanding options and RSUs granted to Foamix employees and consultants, the Company recorded incremental compensation of $0.5 million and $1.8 million for the three and nine months ended September 30, 2021, respectively, and $1.1 million and $10.4 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021 there is $1.5 million of unrecognized incremental compensation expense related to the modification which will primarily be amortized using a graded vesting method over the next 2 years.

Awards granted to holders who are no longer employed or providing services to the Company are accounted for in accordance with ASC 815-40, Derivatives and Hedging. Under this guidance, the awards are classified as a derivative liability because the award no longer exchanges a fixed amount of cash for a fixed number of shares. Accordingly, as of March 9, 2020 the Company reclassified $1.6 million from additional paid-in capital to derivative liability on the unaudited condensed consolidated balance sheet. Prior to the reclassification of these awards as a liability instrument, the Company recorded an incremental compensation expense of $0.6 million due to the above mentioned modification in accordance with ASC 718. Subsequent to the reclassification of these awards as a liability instrument, the Company recorded incremental compensation expense of $1.0 million for the nine months ended September 30, 2020. There was no incremental compensation expense for the three and nine months ended September 30, 2021. As described in Note 3 - Business Combination, on April 6, 2020, the Company announced that study MTI-105 and study MTI-106 did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. On April 6, 2020, the awards are exchangeable for a fixed amount of cash for a fixed number of shares and were remeasured to fair value and reclassified from derivative liability to additional paid-in capital.

Prior to the Merger, Menlo recognized all expenses relating to awards outstanding as of the Effective Date. These awards were subject to acceleration upon the change of control per the previous Menlo stock option plan.

The following table illustrates the effect of share-based compensation on the statements of operations:

	Three months ended September 30				Nine months ended September 30
(in thousands)	2021		2020		2021		2020
Research and development expenses	$	435	$	361	$	1,335	$	3,927
Selling, general and administrative	1,970		2,259		5,413		11,220
Total	$	2,405	$	2,620	$	6,748	$	15,147

NOTE 10 – OPERATING LEASE

Operating lease agreements

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The Company has operating leases for corporate offices and vehicles. The properties primarily relate to the Company’s principal executive office in Bridgewater, New Jersey and office space in Israel.

On March 13, 2019, the Company signed an amendment to the original lease agreement for its principal executive office in Bridgewater, New Jersey (the “Lease Amendment”). The Lease Amendment includes an extension of the lease period of the 10,000 square feet previously leased under the original agreement (the “Original Space”) and an addition of 4,639 square feet (the “Additional Space”). The Company entered the Additional Space following a period of preparation by the lessor completed during September 2019 (the “Commencement Date”). The Lease Amendment is due to expire on August 31, 2022.

Pursuant to the Lease Amendment, the Company recognized an additional right of use asset and liability in the amount of $0.7 million. The Additional Space was considered a new lease agreement and was recognized as a right of use asset and liability, in the amount of $0.3 million, on the Commencement Date.

The lease agreement for the office space in Israel is a one year lease that expires in December 2021. Given the short-term nature of the lease term, the Company did not recognize a right-of-use asset and liability.

Additionally, the Company entered into operating lease agreements in connection with the leasing of vehicles. The lease periods are generally for three years.

Maturities of lease liabilities are as follows:

(in thousands)
2021	$	229
2022	761
2023	151
Total lease payments	1,141
Less imputed interest	89
Total lease liability	$	1,052

As of September 30, 2021, the Company had a lien in the amount of $0.6 million on the Company’s cash in respect of bank guarantees granted in order to secure the lease agreements.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

The Company may periodically become subject to legal proceedings and claims arising in connection with its business. As of September 30, 2021, no claims or actions are pending against the Company that, in the opinion of management, are likely to have a material adverse effect on the Company.

As previously disclosed, on June 30, 2021, the Company received a paragraph IV certification notice (the “Notice”) from Padagis Israel Pharmaceuticals Ltd. (f/k/a Perrigo Israel Pharmaceuticals Ltd. (“Padagis”)) advising that Padagis has submitted to the U.S. Food and Drug Administration (the “FDA”) an Abbreviated New Drug Application (“ANDA”) seeking approval to manufacture and sell a generic version of the Company’s product AMZEEQ® (minocycline) topical foam, 4% in the United States prior to the expiration of the Company’s U.S. patents Nos. 8,865,139, 8,945,516, 8,992,896, 9,675,700, 10,086,080, 10,137,200, 10,213,512, 10,265,404, 10,398,641, 10,517,882, 10,821,187, and 10,849,847 (the “Listed Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, otherwise known as the “Orange Book.” The Notice alleges that the Listed Patents are invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Padagis’s ANDA.

On August 9, 2021, the Company initiated a patent infringement suit against Padagis in the United 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 Listed Patents. As a result, under applicable law, the FDA cannot grant final approval to Padagis’s ANDA before December 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 on September 8, 2037, and such further and other relief as the court may deem appropriate. Padagis filed its response and counterclaim on October 1, 2021. The Company filed its response to such counterclaim on October 22, 2021.

The Company intends to vigorously defend its intellectual property rights, including the Listed Patents.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 December 31, 2020, as updated by our Current Report on Form 8-K filed on August 12, 2021. In this Quarterly Report on Form 10-Q, unless otherwise indicated, all references to the “Company,” “we,” “us” and “our” or similar terms refer to VYNE Therapeutics Inc. The disclosure set forth in this section reflects the Company's 1-for-4 reverse stock split, which was effected on February 12, 2021. Accordingly, all share amounts and per share amounts have been adjusted.

Company Overview

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 the United States, and possible partnering or co-development relationships with interested parties. Following our review, we determined to initiate a process to explore a possible sale or license of our topical minocycline franchise, including AMZEEQ, ZILXI, FCD105 (the Company’s Phase 3 proprietary novel topical combination foam formulation of minocycline and adapalene for the treatment of moderate-to-severe acne vulgaris) and the underlying Molecule Stabilizing Technology platform.

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 October 2021. We expect results from this study early in the first quarter of 2022. In addition, on August 12, 2021, we announced a transaction with In4Derm Limited, a company incorporated and registered in Scotland (“In4Derm”). In4Derm is a spin-out of the University of Dundee’s School of Life Sciences which has discovered and is developing proprietary Bromodomain and Extra-Terminal Domain (“BET”) inhibitors for the treatment of immunology and oncology conditions. On April 30, 2021, the parties entered into an Evaluation and Option Agreement (the “Option Agreement”) pursuant to which In4Derm granted us an exclusive option to obtain exclusive worldwide rights to research, develop and commercialize products containing In4Derm’s BET inhibitor compounds, which are new chemical entities, in both topical (the “Topical BETi Option”) and oral (the “Oral BETi Option”) treatments in all fields for any disease, disorder or condition in humans. On August 6, 2021, we exercised the Topical BETi Option and the parties entered into a License Agreement granting VYNE a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of In4Derm’s BET inhibitor compounds identified to be suitable for topical administration in all fields. We paid a $1.0 million cash payment to In4Derm upon the execution of the Option Agreement and $0.5 million in connection with the exercise of the Topical BETi Option. Pursuant to the License Agreement, we have agreed to make cash payments to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed topical product in the U.S. of up to $15.75 million for all indications. In addition, we currently expect to exercise the Oral BETi Option following the selection of a lead candidate for the program. Upon exercise of the exclusive Oral BETi Option, the parties will sign a license agreement (the “Oral License Agreement”), and we will pay In4Derm a $4.0 million cash payment. The Oral License Agreement will include cash payments of up to $43.75 million payable to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed oral product in the U.S. for all indications. The license agreements also provide for tiered royalty payments of up to 10% of net annual sales across licensed BET inhibitor products by VYNE. In4Derm is entitled to additional milestones upon the achievement of regulatory approvals in certain jurisdictions outside the U.S.

The initial BET inhibitor candidates that the Company plans to develop are VYN201 and VYN202. VYN201 is a pan-bromodomain or pan-BD BET inhibitor. It is a first-in-class “soft” pan-BD BET inhibitor that is designed to mitigate systemic drug exposure and will be developed for topical applications. The Company intends to progress VYN201 into rare dermatological indications where there is significant unmet need due to a lack of indicated treatment options. The Company plans to communicate the initial indication it will be pursuing for VYN201 after the prerequisite non-clinical safety assessments have been completed and enter this program into the clinic in 2022.

The second candidate, VYN202, is an orally-delivered, first-in-class BET inhibitor that is highly selective for Bromodomain 2 (“BD2”). By selectively inhibiting BD2, the Company believes VYN202 could have a more targeted anti-inflammatory effect

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with an improved benefit/risk profile. Upon the selection of a lead candidate, VYNE intends to exercise its exclusive option with In4Derm Limited and commence an IND-enabling non-clinical safety program.

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 by December 31, 2021. We incurred a one-time charge of $1.0 million in the three months ended September 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 by December 31, 2021. Additional charges of $0.4 million related to retention payments are anticipated through June 30, 2022.

Key Developments

Below is a summary of selected key developments affecting our business that have occurred since December 31, 2020:

•From January 1, 2021 through January 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") with Cantor Fitzgerald & Co. ("Cantor Fitzgerald") through an at-the-market equity offering program under which Cantor Fitzgerald acted as our sales agent. Effective as of January 25, 2021, the Company terminated the 2019 Sales Agreement.

•On January 21, 2021, the Company announced the execution of a contract with CVS Caremark ("Caremark"), one of the largest pharmacy benefit managers in the U.S., with respect to AMZEEQ and ZILXI. In late March 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.

•On January 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.

•On February 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.

•On February 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 on February 12, 2021 at 5:00 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.

•On March 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 of June 18, 2021, following the resignation of Andrew Saik.

•On July 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 on July 19, 2021.

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•On August 9, 2021, we initiated a patent infringement suit against Padagis Israel Pharmaceuticals Ltd. (f/k/a Perrigo Israel Pharmaceuticals Ltd. (“Padagis”)) in the United 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 before December 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 on September 8, 2037, and such further and other relief as the court may deem appropriate.

•On August 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."

•On August 12, 2021, we announced a licensing arrangement with In4Derm, giving us access to their library of novel BET inhibitor compounds. See "—Company Overview."

•On August 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.”

•On August 12, 2021, we entered into a sales agreement with Cantor 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 which Cantor Fitzgerald will act as our sales agent. From August 12, 2021 to September 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."

•On October 5, 2021, we announced that the first patient was enrolled in Cutia's Phase 3 study in China evaluating AMZEEQ for the purposes of seeking regulatory approval in China.

•On October 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.

•On October 21, 2021, we announced the formation of a scientific advisory board ("SAB") composed of leading scientists and academics specializing in immunological and inflammatory diseases. The SAB 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.

•On October 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 of September 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 ended September 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 the BET 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

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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 on October 18, 2019 and launched AMZEEQ in the United States in January 2020. We commercially launched ZILXI on October 1, 2020. We have generated product revenue of $11.8 million for the nine months ended September 30, 2021. We will not commercially launch our other product candidates in the 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 to Leo Pharma A/S ("LEO"). In the three months ended March 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. In April 2020, LEO informed us that it had reestablished the supply of Finacea foam and resumed commercial sale in the United States. In the nine months ended September 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, on April 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 in Greater 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 the U.S., FCD105 in the Greater 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 ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1 million payment upon the receipt of marketing approval in China 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 ended September 30, 2021.

Cost of Goods Sold

Cost of goods sold for the nine months ended September 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 ended September 30, 2021 and September 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 ended September 30, 2021 and September 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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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 ended September 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 ended September 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 ended September 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 of December 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 of December 31, 2020, we had federal and state research and development tax credit carryforwards of $6.2 million and $1.2 million,

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respectively. The federal credits begin to expire in 2031 and the California research credits have no expiration dates. As of December 31, 2020, the company had $198.9 million in federal and state NOLs with no limited period of use. There are no significant updates through September 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 Ended September 30, 2021 and 2020

Revenue 

Revenues totaled $4.1 million and $3.3 million for the three months ended September 30, 2021 and 2020, respectively. For the three months ended September 30, 2021, our revenue consisted of $4.0 million of product sales and $0.1 million of royalty revenue. For the three months ended September 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, on August 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 by December 31, 2021.

Cost of Goods Sold

Cost of goods sold was $1.0 million and $0.4 million for the three months ended September 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 ended September 30, 2021. Our gross margin percentage of 87% for the three months ended September 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 ended September 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 ended September 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 ended September 30, 2020. Employee-related expenses, including stock based compensation, increased by $1.0 million. Expenditures for FMX114 and our BET 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 ended September 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 ended September 30, 2020. Employee-related expenses decreased by $2.0 million primarily due to lower headcount in 2021. Commercial operations and

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marketing expenditures decreased by $2.5 million as a result of the strategic shift of the business announced in August 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 ended September 30, 2021 and September 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 on August 11, 2021.

Other Expense (Income), net

Other expense (income), net for the three months ended September 30, 2021 was $35.0 thousand of expense as compared with $0.1 million of income for the three months ended September 30, 2020.

Income Taxes

During the three months ended September 30, 2021 there was no income tax expense. Income tax expense for the three months ended September 30, 2020 was $1.0 thousand.

Comparison of the Nine-Month Periods Ended September 30, 2021 and 2020

Revenue 

Revenues totaled $12.5 million and $16.7 million for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021, our revenue consisted of $11.8 million of product sales and $0.7 million of royalty revenue. For the nine months ended September 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 in October 2020 and an increase in demand for AMZEEQ. The decrease in license revenue for the nine months ended September 30, 2021 as compared to license revenue for the nine months ended September 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 in China.

Cost of Goods Sold

Cost of goods sold was $2.4 million and $0.9 million for the nine months ended September 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 ended September 30, 2021 and September 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 ended September 30, 2021 and September 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 ended September 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 ended September 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 our BET 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 ended September 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 ended September 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

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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 ended September 30, 2021 and September 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 on August 11, 2021.

Other Expense (Income), net

Other expense (income), net for the nine months ended September 30, 2021 was $0.2 million of expense as compared with $1.1 million of income for the nine months ended September 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 ended September 30, 2021 there was no income tax expense. Income tax benefit for the nine months ended September 30, 2020 was $0.3 million.

Liquidity and Capital Resources

In January 2020, we launched AMZEEQ in the United States and commenced generating product revenues in the first quarter of 2020. We also launched ZILXI in the United States in October 2020 and commenced generating revenues in the fourth quarter of 2020. Our activities prior to the commercial launches of AMZEEQ and ZILXI primarily consisted of raising capital, developing product candidates, and performing research and development activities. Since inception, we have incurred recurring losses and negative cash flows from operations. As of September 30, 2021, we had cash, cash equivalents and restricted cash of $52.9 million and an accumulated deficit of $628.0 million. On August 11, 2021, we prepaid the entirety of our outstanding indebtedness, including a prepayment premium and accrued but unpaid interest, for a total amount of approximately $36.5 million. We had no outstanding debt as of September 30, 2021.

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, which has negatively impacted sales and our ability to execute our commercial strategy with respect to AMZEEQ and ZILXI. In addition, the commercial launches of both AMZEEQ and ZILXI have been negatively impacted by unfavorable payor decisions in March 2021 on product pricing. These conditions have impaired our ability to generate revenue consistent with internal forecasts, which has had a negative impact on our financial condition and liquidity. Following discussions with our lenders regarding the revenue targets included in the Amended and Restated Credit Agreement, the revenue expected to be generated for the trailing twelve month period ended June 30, 2021 and the strategic transition discussed above, we determined to prepay our outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest in the total amount of approximately $36.5 million on August 11, 2021. Following the prepayment, the Amended and Restated Credit Agreement and the security interests thereunder were terminated. See "Part I—Item 1. Unaudited Condensed Consolidated Financial Statements—Note 1. Nature of Operations—Liquidity and Capital Resources and —Note 8. Debt."

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 BET inhibitor development programs. Research and development activities for these programs, including preclinical and clinical testing of our drug candidates, will require significant additional financing. Our future viability is dependent on our ability to successfully pivot to a research and development business strategy and develop commercially viable drug candidates and raise additional capital to finance our operations. Our ability to continue as a going concern is contingent on our ability to sell or license the minocycline franchise, develop future commercially viable products and/or to raise sufficient working capital through either debt or equity financing. There is no assurance we will be able to achieve these objectives under acceptable terms or at all.

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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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 the BET inhibitor programs. We do not have sufficient cash and cash equivalents to fund our operations beyond one year from the issuance of our September 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 oral BET 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 ended September 30, 2021 and 2020:

	Nine months ended September 30
	2021		2020
	(in thousands of U.S. dollars)
Net cash (used in) / provided by:
Operating activities	$	(46,349)	$	(111,707)
Investing activities	1,027		87,105
Financing activities	$	39,815	$	53,828

Cash Used in Operating Activities

The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital. Adjustments to net income for non-cash items mainly include depreciation and amortization, share-based compensation, goodwill and in-process research and development impairment, and contingent stock right remeasurement.

Net cash used in operating activities was $46.3 million in the nine months ended September 30, 2021, compared to $111.7 million in the nine months ended September 30, 2020. The decrease was attributable primarily to increases in revenues with the launch of AMZEEQ and ZILXI in January 2020 and October 2020, respectively, as well as decreased costs associated with the Merger, which resulted in a decrease to net loss of $170.6 million. The decrease is offset by add backs in the nine months ended September 30, 2020 of which $54.3 million related to impairments and $84.7 million related to the remeasurement of a contingent stock right. The remaining decrease in cash used in operations was driven by working capital fluctuations.

Cash Used in (Provided by) Investing Activities

Net cash provided by investing activities was $1.0 million in the nine months ended September 30, 2021, compared to $87.1 million in the nine months ended September 30, 2020. The change was primarily attributable to the cash acquired through the Merger and a decrease in investments in bank deposits and marketable securities in the nine months ended September 30, 2020.

Cash Provided by Financing Activities

There was $39.8 million provided by financing activities in the nine months ended September 30, 2021, compared to $53.8 million in the nine months ended September 30, 2020. The increase was attributable to proceeds from the offering of common stock in January 2021 and August 2021, along with the exercise of options and issuance of shares under our equity incentive plan. This increase is offset by the prepayment of outstanding debt on August 11, 2021.

Cash and Funding Sources

Our sources of liquidity in the nine months ended September 30, 2021 consisted primarily of proceeds from the issuance of common stock in the at-the-market offering and the registered direct offering in January 2021 and sales of AMZEEQ and ZILXI.

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Our sources of liquidity in the nine months ended September 30, 2020 consisted primarily of cash and investments acquired in the Merger.

We have no ongoing material financial commitments (such as lines of credit) that may affect our liquidity over the next five years.

Funding Requirements

Our present and future funding requirements will depend on many factors, including, among other things:

•the amount of proceeds, if any, received from the possible sale or license of the minocycline franchise, other business transactions or financing activities;

•our ability to reduce selling, marketing and patent-related activities undertaken in connection with the commercialization of AMZEEQ, ZILXI, as well as costs involved to support an effective sales and marketing organization as we go through the divestiture process;

•the progress, timing and completion of preclinical testing and clinical trials for pipeline product candidates, including FMX114, VYN201 and VYN202;

•the time and costs involved in obtaining regulatory approval for our other pipeline product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these product candidates;

•the number of potential new products we identify and decide to develop;

•business development opportunities we may engage in; and

•the costs involved in filing and prosecuting patent applications and obtaining, maintaining and enforcing patents or defending against claims or infringements raised by third parties, and license royalties or other amounts we may be required to pay to obtain rights to third party intellectual property rights.

Our operating plan may change as a result of many factors currently unknown to us, and any such change may affect our funding requirements. We may therefore need to seek additional capital sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations or additional license arrangements. Such financings may result in dilution to stockholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Our critical accounting policies are described in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 4, 2021, as updated by our Current Report on Form 8-K filed on August 12, 2021.

While our significant accounting policies are described in the Notes to our financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results. These policies relate to the more significant areas involving management’s judgments and estimates and they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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COVID-19

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, 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, the Company further assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, impairments of long-lived assets and revenue recognition. In 2020, the Company recorded impairments of goodwill and certain indefinite-lived intangibles; however, these impairments were unrelated to the impact of COVID-19 (See “Note 3 – Business Combination” for more information). The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Revenue Recognition

We record revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). For the Collaboration Agreement under ASC 606, we identify the performance obligations, determine the transaction price, allocate the contract transaction price to the performance obligations, and recognize the revenue when (or as) the performance obligation is satisfied.

We identify the performance obligations included within the agreement and evaluate which performance obligations are distinct. Upfront payments for licenses are evaluated to determine if the license is capable of being distinct from the obligations to participate on certain development and/or commercialization committees with the collaboration partners and supply manufactured drug product for clinical trials. For performance obligations that are satisfied over time, we utilize the input method and revenue is recognized by consistently applying a method of measuring progress toward complete satisfaction of that performance obligation. We periodically review our estimated periods of performance based on the progress under each arrangement and account for the impact of any changes in estimated periods of performance on a prospective basis.

Milestone payments are a form of variable consideration as the payments are contingent upon achievement of a substantive event. Milestone payments are estimated and included in the transaction price when we determine that it is probable that there will not be a significant reversal of cumulative revenue recognized in future periods.

Business Acquisition

Our financial statements include the operations of an acquired business after the completion of the acquisition. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of In-Process Research and Development and Goodwill be recorded on the balance sheet. Transaction costs are expensed as incurred.

Amounts recorded in connection with an acquisition can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

We are required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting.  For example, we use fair value in the initial recognition of net assets acquired in a business combination and when measuring impairment losses.  We estimate fair value using an exit price approach, which requires, among other things, that we determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, we may use one or all of the following techniques:

•Income approach, which is based on the present value of a future stream of net cash flows.

•Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

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•Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.

Our fair value methodologies depend on the following types of inputs:

•Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

•Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

•Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

Asset Impairment

We review all of our long-lived assets for impairment indicators throughout the year. We perform impairment testing for indefinite-lived intangible assets annually and for all other long-lived assets whenever impairment indicators are present. When necessary, we record charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets.

Off-Balance Sheet Arrangements

We are not party to any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Indemnification

As permitted under Delaware law and in accordance with our bylaws, we are required to indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity. We are also party to indemnification agreements with our directors. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of September 30, 2021 and December 31, 2020.

JOBS Act Accounting Election

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Recently Issued and Adopted Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 2, “Significant Accounting Policies” in the Notes to Unaudited Interim Condensed Consolidated Financial Statements for a discussion of recently adopted accounting pronouncements and accounting pronouncements not yet adopted, and their expected impact on our financial position and results of operations.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and Item 10 of Regulation S-K. As such, we are not required to provide the information set forth in this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive and financial officers, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2021 our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the three months ended September 30, 2021 identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

The Company may periodically become subject to legal proceedings and claims arising in connection with its business. As of September 30, 2021, no claims or actions are pending against the Company that, in the opinion in management, are likely to have a material adverse effect on the Company.

As previously disclosed, on June 30, 2021, the Company received a paragraph IV certification notice (the “Notice”) from Padagis Israel Pharmaceuticals Ltd. (f/k/a Perrigo Israel Pharmaceuticals Ltd. (“Padagis”)) advising that Padagis has submitted to the U.S. Food and Drug Administration (the “FDA”) an Abbreviated New Drug Application (“ANDA”) seeking approval to manufacture and sell a generic version of the Company’s product AMZEEQ® (minocycline) topical foam, 4% in the United States prior to the expiration of the Company’s U.S. patents Nos. 8,865,139, 8,945,516, 8,992,896, 9,675,700, 10,086,080, 10,137,200, 10,213,512, 10,265,404, 10,398,641, 10,517,882, 10,821,187, and 10,849,847 (the “Listed Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, otherwise known as the “Orange Book.” The Notice alleges that the Listed Patents are invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Padagis’s ANDA.

On August 9, 2021, the Company initiated a patent infringement suit against Padagis in the United 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 Listed Patents. As a result, under applicable law, the FDA cannot grant final approval to Padagis’s ANDA before December 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 on September 8, 2037, and such further and other relief as the court may deem appropriate. Padagis filed its response and counterclaim on October 1, 2021. The Company filed its response to such counterclaim on October 22, 2021.

The Company intends to vigorously defend its intellectual property rights, including the Listed Patents

1A. Risk Factors.

Information about our risk factors is contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 4, 2021, as well as subsequent reports. As of September 30, 2021, there have been no material changes in our risk factors from those disclosed in Item 1A of our Annual Report on Form 10-K and subsequent reports, except as set forth below.

Risks Related to our Liquidity

We will need substantial additional funding to fund our operations, and we may not be able to continue as a going concern if we are unable to do so. We could also be forced to delay, reduce or terminate our research and development activities which would have a material adverse effect on our financial condition.

Developing and commercializing biopharmaceutical products, including launching new products into the marketplace and conducting preclinical studies and clinical trials, is an expensive and highly uncertain process that takes years to complete. As of September 30, 2021, we had approximately $52.9 million in cash, cash equivalents and restricted cash as well as negative cash flows from operating activities. Following the prepayment of our indebtedness, we do not have sufficient cash and cash equivalents to fund our anticipated level of operations as they become due during the twelve months following the date of filing of this Quarterly Report on Form 10-Q. The aforementioned factors raise substantial doubt about our ability to continue as a going concern. See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for further discussion regarding our liquidity. We may not be able to raise adequate proceeds from the sale or license of our minocycline franchise or from other financing transactions. Accordingly, additional funds may not be obtained for our ongoing operations and we may not succeed in our future operations. Unless we are able to raise additional capital to finance our operations, our long-term business plans may not be accomplished, and we may be forced to cease, reduce, or delay operations. Furthermore, if the Company issues equity or debt securities to raise additional funds, its existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of its existing stockholders. If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its potential products or proprietary technologies, or grant licenses on terms that are not favorable to the Company.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6.  Exhibits.

The following documents are filed, or furnished as applicable, as part of this Quarterly Report on Form 10-Q:

Exhibit Index

Exhibit Number		Incorporated by Reference			Filed
	Exhibit Description	Form	Date	Number	Herewith
3.1(a)	Amended and Restated Certificate of Incorporation.	10-K	3/4/2021	3.1
3.1(b)	Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated as of July 19, 2021.	8-K	7/19/2021	3.1
3.2	Amended and Restated Bylaws.	8-K	9/08/2020	3.2
10.1#	License Agreement (Topical), dated as of August 9, 2021, by and between In4Derm Limited and VYNE Therapeutics Inc.				X
10.2#	Evaluation and Option Agreement, dated as of April 30, 2021, by and between In4Derm Limited and VYNE Therapeutics Inc.				X
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).				X
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).				X
32.1*	Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).				X
32.2*	Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).				X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	XBRL Taxonomy Extension Schema Document.				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.				X

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101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	X
104	The cover page of VYNE Therapeutics Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included within Exhibit 101 attachments).

_______________________________________________________

#    Certain schedules and attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

*    The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of VYNE Therapeutics Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 10, 2021

VYNE Therapeutics Inc.
By:	/s/ David Domzalski
	David Domzalski President and Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Tyler Zeronda
	Tyler Zeronda Chief Financial Officer and Treasurer
	(Principal Financial Officer and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

CERTAIN IDENTIFIED INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND HAS BEEN MARKED WITH “[***]” TO INDICATE WHERE OMISSIONS HAVE BEEN MADE.

LICENSE AGREEMENT (TOPICAL)

This License Agreement (the “Agreement”) is madeand entered into effective as of August 9, 2021 (the “Effective Date”) by and between, on the one hand, In4Derm Limited, a company incorporated and registered in Scotland with company number SC651132 with a place of business at 15 Luke Place, Broughty Ferry, Dundee, Scotland, DD5 3BN (“In4Derm”), and, on the other hand, VYNE Therapeutics Inc., a Delaware corporation with a principal place of business at 520 U.S. Highway 22, Suite 204, Bridgewater, NJ 08807 (“VYNE”). In4Derm and VYNE may be referred to herein individually as a “Party” and collectively as the “Parties”.

RECITALS

Whereas, In4Derm has discovered and is developing proprietary Bromodomain & Extra-Terminal Domain Inhibitors (“BETi”) for treatment of immunology and oncology conditions;

Whereas, VYNE is a pharmaceutical company focused on developing innovative therapies for skin conditions;

Whereas, In4Derm and VYNE entered into that certain Evaluation and Option Agreement dated as of April 30, 2021 (the “Option Agreement”) pursuant to which In4Derm granted to VYNE an exclusive option to obtain an exclusive license under certain of In4Derm’s technology to research, develop, manufacture, and commercialize products incorporating such technology, and VYNE has exercised its option to the Topical BETi Compounds (defined below) in accordance with the terms of the Option Agreement; and

Whereas, In4Derm wishes to grant, and VYNE wishes to accept, an exclusive license under certain of In4Derm’s technology to research, develop, manufacture, and commercialize products incorporating such technology, all on the terms and conditions set forth herein.

Now Therefore, in consideration of the foregoing premises and the mutual promises, covenants, and conditions set forth herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE 1
DEFINITIONS

Unless otherwise specifically provided herein, the following terms have the following meanings:

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1.1“Accounting Standards” means, with respect to a Party and its Affiliates, either (a) International Financial Reporting Standards or (b) United States generally accepted accounting principles, in either case ((a) or (b)) that are used at the applicable time, and as consistently applied, by such Party or any of its Affiliates.

1.2“Affiliate” means, with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, for so long as such control exists. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct the management or policies of such entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise; or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of such entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

1.3“Agreement” has the meaning set forth in the preamble.

1.4“Applicable Law” means federal, state, local, national, and supra-national laws, statutes, rules, and regulations, including any rules, regulations, guidelines, or other requirements enacted by a government authority, including Regulatory Authorities, major national securities exchanges or major securities listing organizations, that may be in effect from time to time during the Term and applicable to the performance by a Party of its obligations, or exercise of its rights, under this Agreement.

1.5“Bankruptcy Code” has the meaning set forth in Section 13.5.1.

1.6“BETi” has the meaning set forth in the recitals.

1.7“Business Day” means a day other than a Saturday, Sunday, or bank or other public holiday in New York, New York or London, England.

1.8“Calendar Quarter” means each successive period of three calendar months commencing on January 1, April 1, July 1, and October 1, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of January 1, April 1, July 1 or October 1 after the Effective Date, and the last Calendar Quarter shall end on the last day of the Term.

1.9“Calendar Year” means each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on January 1 of the year in which the Term ends and end on the last day of the Term.

1.10“Change of Control” means, with respect to a Party: (a) any transaction or series of related transactions pursuant to which a Third Party that does not, itself or together with its Affiliates, prior thereto, beneficially own at least fifty percent (50%) of the voting power of the

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outstanding securities of such Party, acquires or otherwise becomes the beneficial owner of securities of such Party representing at least fifty percent (50%) of the voting power of the then outstanding securities of such Party with respect to the election of directors; or (b) a merger (including a reverse triangular merger), reorganization, consolidation, share exchange or similar transaction involving such Party, in which the holders of voting securities of such Party outstanding immediately prior thereto and their Affiliates, cease to hold voting securities that represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger, reorganization, consolidation, share exchange or similar transaction.

1.11“Clinical Trial” means a Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial, Phase 4 Clinical Trial, or Pivotal Clinical Trial, or any combination thereof.

1.12“Combination Product” means (a) a single pharmaceutical formulation containing as its active ingredients both (i) a Compound and (ii) one or more other therapeutically or prophylactically active ingredients that are not Compounds (each such other therapeutically or prophylactically active ingredient, a “Non-Compound Active Agent”) or (b) a combination therapy comprised of (i) a Compound and (ii) one or more other therapeutically or prophylactically active products containing at least one Non-Compound Active Agent, whether priced and sold together in a single package containing such multiple products or packaged separately but sold together for a single price, in each case (a) and (b), including all dosage forms, formulations, presentations, line extensions, and package configurations.

1.13“Commercialization”means any and all activities directed to the preparation for sale of, offering for sale of, or sale of a pharmaceutical product, including activities related to marketing, promoting, selling, distributing, importing, and exporting such product, and interacting with Regulatory Authorities regarding any of the foregoing. When used as a verb, “to Commercialize” and “Commercializing” means to engage in Commercialization, and “Commercialized” has a corresponding meaning.

1.14“Commercially Reasonable Efforts” means, with respect to the performance of Development, Commercialization, or Manufacturing activities with respect to a Compound or a Product, the carrying out of such activities using efforts and resources comparable to the efforts and resources that a similarly situated biotechnology company would typically devote to a product of similar market potential at a similar stage of its product life, when utilizing sound and reasonable scientific, medical and business practice and judgment in order to develop the product in a timely manner and maximize the economic return to the Parties from its commercialization. Commercially reasonable efforts will be determined on a market-by-market basis without regard to any other product opportunities of VYNE or its Affiliates (including any competitive or potentially competitive programs of VYNE or its Affiliates).

1.15“Competing BETi Product” means any pharmaceutical product (other than a Product) containing a BETi compound as an active pharmaceutical ingredient.

1.16“Competing Program” has the meaning set forth in Section 2.5.2.

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1.17“Compound” means all Topical BETi Compounds including any modifications, substitutions, group replacements or derivatives thereof, and all prodrugs, metabolites, salts, esters, hydrates, solvates, isomers, regioisomers, enantiomers, free acid forms, free base forms, crystalline forms, co-crystalline forms, amorphous forms, racemates, polymorphs, chelates, stereoisomers, atropisomers, tautomers or optically active forms thereof.

1.18“Confidential Information” means any non-public information provided orally, visually, in writing or other form by or on behalf of one (1) Party (or an Affiliate or representative of such Party) to the other Party (or to an Affiliate or representative of such other Party) in connection with this Agreement, whether prior to, on, or after the Effective Date, including information relating to the terms of this Agreement, any Exploitation of any Product, any Know-How with respect thereto developed by or on behalf of the disclosing Party or its Affiliates, or the scientific, regulatory, or business affairs or other activities of either Party. Notwithstanding anything to the contrary, the Results and Inventions related to the Topical BETi Compounds under the Option Agreement are the Confidential Information of VYNE. In addition, all information disclosed by a Party to the other under the Option Agreement is deemed to be such Party’s Confidential Information disclosed under this Agreement.

1.19“Control”means, with respect to any Know-How, Patents, or other proprietary technology, the possession of the right, whether by ownership, license, or otherwise (other than by operation of the rights granted in Section 2.1) to grant a license or sublicense under such Know-How, Patents, or other proprietary technology as provided for herein without violating the terms of any agreement with any Third Party.

1.20“Country” means any generally recognized sovereign entity.

1.21“Cover” means, with respect to a particular subject matter at issue and a relevant Patent, that, in the absence of a license under or ownership of such Patent, the developing, making, using, offering for sale, promoting, selling, exporting, or importing of such subject matter would infringe one or more Valid Claims of such Patent (considering any pending claim included in such Patent as if such pending claim were to issue in an issued Patent).

1.22“Development” means all activities related to human clinical lead optimization, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control, IND-enabling toxicology studies, Clinical Trials, including Manufacturing in support thereof, statistical analysis and report writing, the preparation and submission of Drug Approval Applications, regulatory affairs with respect to the foregoing and all other activities necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory Approval. When used as a verb, “Develop” means to engage in Development. For purposes of clarity, Development includes any submissions and activities required in support thereof required by Applicable Laws or a Regulatory Authority as a condition or in support of obtaining a pricing or reimbursement approval for an approved Product.

1.23“Development Plan” has the meaning set forth in Section 4.2.

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1.24“Dollars” or “$” means United States Dollars.

1.25“Drug Approval Application” means an NDA and any corresponding foreign application in the Territory, including, with respect to the European Union, a Marketing Authorization Application (a “MAA”) filed with the EMA or with the applicable Regulatory Authority of a Country in Europe with respect to the mutual recognition or any other national approval procedure.

1.26“Effective Date”means the effective date as set forth in the preamble.

1.27“EMA” means the European Medicines Agency and any successor agency(ies) or authority having substantially the same function.

1.28“Existing Patents” has the meaning set forth in Section 11.2.1.

1.29“Exploit” or “Exploitation” means to research, identify, evaluate, Develop, use, make, have made, Manufacture, have Manufactured, sell, have sold, offer for sale, distribute, import, export and Commercialize.

1.30“FDA”means the United States Food and Drug Administration and any successor agency(ies) or authority having substantially the same function.

1.31“FFDCA”means the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).

1.32“Field” means any and all uses, including the treatment, palliation, diagnosis or prevention of any disease, disorder or condition in humans.

1.33“First Commercial Sale” means, with respect to a Product and a Country, the first sale for monetary value for use or consumption by the end user of such Product in such Country after Regulatory Approval for such Product has been obtained in such Country.

1.34“Generic Product” means, with respect to a particular Product that has received Regulatory Approval in a regulatory jurisdiction in the Territory and is being marketed and sold by VYNE or any of its Affiliates or Sublicensees in such jurisdiction, a pharmaceutical product that (a) is sold in such jurisdiction by a Third Party that is not an Affiliate or Sublicensee of VYNE, and did not purchase or acquire such product in a chain of distribution that included VYNE or any of its Affiliates or Sublicensees, and (b) has received Regulatory Approval in such jurisdiction for at least one of the same indications as such Product as a “generic drug”, “generic medicinal product”, “bioequivalent”, or similar designation of interchangeability by the applicable Regulatory Authority in such jurisdiction pursuant to an expedited, abbreviated, or bibliographic approval process in accordance with the then-current rules and regulations in such jurisdiction, where such approval referred to or relied on (i) an approved Drug Approval Application for such Product held by VYNE, its Affiliate, or a Sublicensee in such jurisdiction or

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(ii) the data contained or incorporated by reference in such approved Drug Approval Application for such Product in such jurisdiction.

1.35“GLP” means current good laboratory practice standards promulgated or endorsed by the FDA, as defined in U.S. 21 C.F.R. Part 58 (or such other comparable regulatory standards in jurisdictions outside the U.S.), as updated from time to time.

1.36“Head License” means that certain license agreement between In4Derm and the University of Dundee dated 24 July 2020.

1.37“In4Derm” has the meaning set forth in the preamble.

1.38“In4Derm Indemnitees” has the meaning set forth in Section 12.1.

1.39“In4Derm Technology” means the In4Derm Know-How, In4Derm Patents, and In4Derm’s interest in any Joint Inventions and Joint Patents.

1.40“In4Derm Know-How” means all Know-How that (a) is Controlled by In4Derm or any of its Affiliates on the Effective Date and (b) is necessary or reasonably useful for the Exploitation of Products in the Field, including the Know-How set forth in Exhibit 1.40.

1.41“In4Derm Patents” means all Patents that (a) are Controlled by In4Derm or any of its Affiliates on the Effective Date and Cover the Compounds or (b) are Controlled by In4Derm or any of its Affiliates during the Term and Cover the Compounds. The In4Derm Patents existing as of the Effective Date are set forth on Exhibit 1.41. Notwithstanding the foregoing, if any Third Party becomes an Affiliate of In4Derm after the Effective Date other than by direct or indirect acquisition of such Third Party by In4Derm or any of its Affiliates, In4Derm Patents shall exclude any Patent Controlled by such Third Party before such Third Party becomes In4Derm’s Affiliate except to the extent the relevant Patent was also Controlled by In4Derm or any of its Affiliates prior to the date such Third Party became an Affiliate of In4Derm.

1.42“IND” means an application filed with a Regulatory Authority for authorization to commence Clinical Trials, including (a) an Investigational New Drug Application as defined in the FFDCA or any successor application or procedure filed with the FDA, (b) any equivalent thereof in other Countries or regulatory jurisdictions, (e.g., a Clinical Trial Application (CTA) in the European Union), and (c) all supplements, amendments, variations, extensions, and renewals thereof that may be filed with respect to the foregoing.

1.43“Indemnification Claim Notice”has the meaning set forth in Section 12.3.

1.44“Indemnified Party”has the meaning set forth in Section 12.3.

1.45“Indemnitee” has the meaning set forth in Section 12.3.

1.46“Indication” means a separately defined, well-categorized class of human disease or condition for which a separate MAA (including any extensions or supplements) is required to be filed with a Regulatory Authority. For clarity, if an MAA is approved for a Product in a

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particular Indication and patient population, a label expansion for such Product to include such Indication in a different patient population is not considered a separate Indication.

1.47“Initiation” means, with respect to a Product and a Clinical Trial in human subjects (whether healthy volunteers or patients), the first dosing of the first subject with such Product in such Clinical Trial.

1.48“Intellectual Property” has the meaning set forth in Section 13.5.1.

1.49“Invention” means any invention, process, method, utility, formulation, composition of matter, article of manufacture, material, creation, discovery, development, or finding, or any improvement thereto, whether or not patentable, including all intellectual property rights therein.

1.50“JDC” has the meaning set forth in Section 3.1.1.

1.51“Joint Inventions” has the meaning set forth in Section 9.1.2(b).

1.52“Joint Patents” means all Patents that Cover Joint Inventions.

1.53“Know-How” means inventions, technical information, know-how and materials, including technology, data, compositions, formulae, biological materials, assays, reagents, constructs, compounds, discoveries, procedures, processes, practices, protocols, methods, techniques, results of experimentation or testing, knowledge, trade secrets, skill and experience, in each case whether or not the subject of a patent application, patentable, or copyrightable.

1.54“Losses” has the meaning set forth in Section 12.1.

1.55“MAA” has the meaning set forth in Section 1.25.

1.56“Manufacture”, “Manufactured”, and “Manufacturing” means all activities related to the synthesis, making, production, processing, analysis, purifying, formulating, filling, finishing, packaging, labeling, shipping, and holding of a pharmaceutical product, or any raw materials, intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial production and analytic development, product characterization, stability testing, quality assurance, and quality control, whether by a Party itself or through a Third Party.

1.57“MHRA”means the United Kingdom’s Medicines and Healthcare products Regulatory Agency and any successor agency(ies) or authority having substantially the same function.

1.58“NDA” means a New Drug Application, as defined in the FFDCA, as amended, and applicable regulations promulgated thereunder by the FDA and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any Regulatory Authority, including all documents, data, and other information concerning a pharmaceutical

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product, which are necessary for gaining Regulatory Approval to market and sell such pharmaceutical product in the relevant jurisdiction.

1.59“Net Sales” means, with respect to any Product, the gross amounts invoiced for sales or other dispositions of such Product by or on behalf of VYNE or its Affiliates or Sublicensees (each a “Selling Entity”) to Third Parties, less the following deductions to the extent included in the gross invoiced sales price for such Product and determined in accordance with Accounting Standards or otherwise directly paid or incurred by the applicable Selling Entity with respect to the sale or other disposition of such Product:

1.59.1normal and customary trade and quantity discounts actually allowed and properly taken directly with respect to sales of such Product;

1.59.2credits or allowances given or made for rejection, recall, wastage, replacement of or return of previously sold Products or for uncollectible amounts, retroactive price reductions and billing errors;

1.59.3rebates, retroactive price adjustments and chargeback payments granted to managed health care organizations, pharmacy benefit managers (or equivalents thereof), national, state/provincial, local, and other governments, their agencies and purchasers and reimbursers, or to trade customers;

1.59.4costs of freight, carrier insurance, custom fees and other transportation charges directly related to the distribution of such Product; and

1.59.5taxes, duties, or other governmental charges (including any tax such as a value added or similar tax, other than any taxes based on income) directly levied on or measured by the billing amount for such Product, as adjusted for rebates and refunds.

In no event will any particular amount identified above be deducted more than once in calculating Net Sales. Sales of a Product between VYNE and its Affiliates or Sublicensees for resale shall be excluded from the computation of Net Sales unless the transferee is the end-user, but the subsequent resale of such Product to a Third Party shall be included within the computation of Net Sales.

The supply of Product for no charge or at cost as samples for charitable or promotional purposes, for named patient use, for use in non-clinical or clinical trials or any test or other studies reasonably necessary to comply with Applicable Laws shall not be included in the computation of Net Sales.

If a Product is sold as part of a Combination Product in a Country, the Net Sales with respect to the Product in such Country shall be calculated and determined as follows:

(a)If the Selling Entity separately sells in such Country or other jurisdiction, (A) a product containing as its sole active ingredient a Compound contained in such Combination Product (the “Mono Product”) and (B) products containing as their sole active

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ingredients the Non-Compound Active Agents in such Combination Product, the Net Sales attributable to such Combination Product shall be calculated by multiplying actual Net Sales of such Combination Product by the fraction A/(A+B) where: “A” is the applicable Selling Entity’s average Net Sales price during the period to which the Net Sales calculation applies for the Mono Product in such Country or other jurisdiction and “B” is the applicable Selling Entity’s average Net Sales price during the period to which the Net Sales calculation applies in such Country or other jurisdiction, for products that contain as their sole active ingredients the Non-Compound Active Agents in such Combination Product.

(b)If the Selling Entity separately sells in such Country or other jurisdiction the Mono Product but does not separately sell in such Country or other jurisdiction products containing as their sole active ingredients the Non-Compound Active Agents in such Combination Product, the Net Sales attributable to such Combination Product shall be calculated by multiplying the Net Sales of such Combination Product by the fraction A/C where: “A” is the applicable Selling Entity’s average Net Sales price during the period to which the Net Sales calculation applies for the Mono Product in such Country or other jurisdiction, and “C” is the applicable Selling Entity’s average Net Sales price in such Country or other jurisdiction during the period to which the Net Sales calculation applies for such Combination Product.

(c)If Selling Entity does not separately sell in such Country or other jurisdiction the Mono Product but does separately sell products containing as their sole active ingredients the Non-Compound Active Agents contained in such Combination Product, the Net Sales attributable to such Combination Product shall be calculated by multiplying the Net Sales of such Combination Product by the fraction (D-E)/D where: “D” is the average Net Sales price during the period to which the Net Sales calculation applies for such Combination Product in such Country or other jurisdiction and “E” is the average Net Sales price in such Country or other jurisdiction during the period to which the Net Sales calculation applies for products that contain as their sole active ingredients the Non-Compound Active Agents in such Combination Product.

(d)If the Selling Entity does not separately sell in such Country or other jurisdiction both the Mono Product and the Non-Compound Active Agents in such Combination Product, the Net Sales attributable to such Combination Product shall be determined by the Parties in good faith based on the relative fair market value of such Mono Product and such Non-Compound Active Agents; provided, that if the Parties cannot agree on such value after ninety (90) days despite having used good faith efforts to do so, then the Parties shall resolve such dispute using the terms set forth in Exhibit 1.59.

1.60“Non-Compound Active Agent” has the meaning set forth in Section 1.12.

1.61“Option” has the meaning set forth in the Option Agreement.

1.62“Option Agreement” has the meaning set forth in the recitals.

1.63“Party”and“Parties”has the meaning set forth in the preamble.

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1.64“Patent” means (a) patents, patent applications and similar government-issued rights protecting inventions in any Country or jurisdiction however denominated, (b) all priority applications, divisionals, continuations, substitutions, continuations-in-part of and similar applications claiming priority to any of the foregoing, and (c) all patents and similar government-issued rights protecting inventions issuing on any of the foregoing applications, together with all registrations, reissues, renewals, re-examinations, confirmations, validations, supplementary protection certificates, and extensions of (a), (b) or (c).

1.65“Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department, or agency of a government.

1.66“Phase 1 Clinical Trial” means any human clinical trial of a Product conducted mainly to evaluate the safety of chemical or biologic agents or other types of interventions (e.g., a new radiation therapy technique) that would satisfy the requirements of 21 C.F.R. § 312.21(a) or its non-United States equivalents.

1.67“Phase 2 Clinical Trial” means any human clinical trial of a Product conducted mainly to test the effectiveness of chemical or biologic agents or other types of interventions for purposes of identifying the appropriate dose for a Phase 3 Clinical Trial for a particular Indication or Indications that would satisfy the requirements of 21 CFR § 312.21(b) or its non-United States equivalents.

1.68“Phase 3 Clinical Trial” means any human clinical trial of a Product designed to: (a) establish that such Product is safe and efficacious for its intended use; (b) define warnings, precautions and adverse reactions that are associated with the Product in the dosage range to be prescribed; and (c) support regulatory approval of such Product, that would satisfy the requirements of 21 CFR § 312.21(c) or its non-United States equivalents.

1.69“Phase 4 Clinical Trial” means any human clinical trial of a Product that is: (a) designed to satisfy a requirement of a Regulatory Authority in order to maintain a Regulatory Approval for such Product or (b) conducted after the first Regulatory Approval of a Product in the same Indication for which a Product received Regulatory Approval.

1.70“Pivotal Clinical Trial” means a pivotal clinical trial of a Product in human patients (whether or not designated a Phase 3 Clinical Trial) in any Country with a defined dose or a set of defined doses of a Product designed to ascertain efficacy and safety of such Product for the purpose of submitting applications for MAA approval to the competent Regulatory Authorities.

1.71“PMDA”means Japan’s Pharmaceuticals and Medical Devices Agency and any successor agency(ies) or authority having substantially the same function.

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1.72“Product” means a product that contains or incorporates a specific Compound, whether alone or in combination with other active ingredients, in any form, formulation, presentation, or dosage, and for any mode of administration. For clarity, Products include Combination Products.

1.73“Publishing Notice” has the meaning set forth in Section 10.6.

1.74“Publishing Party” has the meaning set forth in Section 10.6.

1.75“Redacted Agreement” has the meaning set forth in Section 10.3.2.

1.76“Regulatory Approval” means, with respect to a Country or other jurisdiction in the Territory, all approvals (including Drug Approval Applications), licenses, registrations, or authorizations of any Regulatory Authority necessary to Commercialize a Product in such Country or other jurisdiction, and including pricing or reimbursement approval in such Country or other jurisdiction where such pricing and reimbursement approval is legally required for the sale of such Product.

1.77“Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial, or local governmental or regulatory authority, agency, department, bureau, commission, council, or other entities (e.g., the FDA, EMA, MHRA, and PMDA) regulating or otherwise exercising authority with respect to activities contemplated in this Agreement, including the Exploitation of the Products in the Territory.

1.78“Regulatory Documentation” means all (a) applications (including all INDs and Drug Approval Applications), registrations, licenses, authorizations, and approvals (including Regulatory Approvals), (b) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents with respect thereto, including all regulatory drug lists, advertising and promotion documents, adverse event files, and complaint files, and (c) data contained or relied upon in any of the foregoing, in each case ((a), (b), and (c)) to the extent relating to a Compound or Product.

1.79“Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a Product other than Patents, such as reference product exclusivity for biological products, new chemical entity exclusivity, new use or indication exclusivity, new formulation exclusivity, orphan drug exclusivity, non-patent related pediatric exclusivity or any other applicable marketing or data exclusivity, including rights conferred in the U.S. under the Hatch-Waxman Act or the FDA Modernization Act of 1997 (including pediatric exclusivity), or rights similar thereto outside the U.S., such as Directive 2001/83/EC (as amended) in the EU.

1.80“Royalty Term” means, with respect to each Product and each Country in the Territory, the period beginning on the date of the First Commercial Sale of such Product in such Country and ending on the latest to occur of (a) the tenth (10th) anniversary of the First Commercial Sale of such Product in such Country, (b) the expiration date of the last-to-expire

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Valid Claim of any In4Derm Patent that Covers such Product in such Country, and (c) the expiration of all Regulatory Exclusivity for such Product in such Country.

1.81“Sublicensee”means a Person, other than an Affiliate, that is granted a sublicense by VYNE under the license grant in Section 2.1 as provided in Section 2.2.

1.82“Term” has the meaning set forth in Section 13.1.

1.83“Territory” means worldwide.

1.84“Third Party” means any Person other than In4Derm, VYNE, and their respective Affiliates.

1.85“Third Party Claims”has the meaning set forth in Section 12.1.

1.86“Topical BETi Compounds” means the BETi compounds listed in Exhibit 1.88.

1.87“United States” or “U.S.” means the United States of America and its territories and possessions (including the District of Columbia and Puerto Rico).

1.88“University of Dundee” or “Dundee” means The University of Dundee, established by Royal Charter dated 20 July 1967 and a registered Scottish charity (charity number SC015096) and having its principal office at 149 Nethergate, Dundee DD1 4HN.

1.89“Valid Claim” means (a) a claim of any issued and unexpired Patent that has not been revoked or held unenforceable, unpatentable, or invalid by a decision of a court or other governmental agency of competent jurisdiction that is not appealable or has not been appealed within the time allowed for appeal, and that has not been expressly abandoned, disclaimed, denied, or admitted to be invalid or unenforceable through reissue, re-examination, or disclaimer or otherwise and (b) a claim of a pending patent application that has not been cancelled, withdrawn, or abandoned or finally rejected by an administrative agency action from which no appeal can be taken and that has not been pending for more than seven (7) years.

1.90“VYNE” has the meaning set forth in the preamble.

1.91“VYNE Indemnitees” has the meaning set forth in Section 12.2.

ARTICLE 2GRANT OF RIGHTS

2.1Grant to VYNE. In4Derm (on behalf of itself and its Affiliates) hereby grants to VYNE an exclusive (including with regard to In4Derm and its Affiliates, except as provided in Section 2.3), sublicensable (through multiple tiers, subject to Section 2.2), royalty-bearing license under the In4Derm Technology to Exploit Products in the Field in the Territory. For clarity, VYNE may, subject to the terms of this Agreement, develop Compounds for topical or oral administration.

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1.2Sublicenses. VYNE may grant sublicenses, through multiple tiers, under the license granted in Section 2.1 to its Affiliates and to Third Parties; provided that [***].

1.3Retained Rights. [***].

1.4No Implied Licenses. Except as expressly provided herein, In4Derm grants no other right or license to VYNE hereunder, including any rights or licenses to the In4Derm Technology not expressly granted herein. VYNE grants no right or license to In4Derm hereunder.

2.5Exclusivity.

1.4.1Obligations on VYNE. During the Term, VYNE hereby covenants that it shall not, directly or indirectly, either by itself or with or through any of its Affiliates or any Third Party, Develop, Manufacture, or Commercialize any Competing BETi Product in the Field in the Territory.

2.5.2Acquisition of Competing Product. If a Third Party becomes an Affiliate of VYNE after the Effective Date through merger, acquisition, consolidation or other similar transaction, and as of the closing date of such transaction, such Third Party is engaged in the Development, Manufacture or Commercialization of any product containing or comprising a BETi that, if conducted by VYNE, would cause VYNE to be in breach of its exclusivity obligations set forth in Section 2.5 (a “Competing Program”), then:

(a)if such transaction results in a Change of Control of VYNE or any Affiliate that controls VYNE, then such new Affiliate may continue such Competing Program and such continuation will not constitute a breach of VYNE’s exclusivity obligations set forth above; provided that (i) such new Affiliate conducts such Competing Program independently of the activities of this Agreement, does not use any In4Derm Technology in the conduct of such Competing Program and does not have access to any non-public In4Derm Technology or Confidential Information of In4Derm; (ii) VYNE shall implement and maintain reasonable measures to segregate the In4Derm Technology in order to comply with this clause (including firewalls and screens (whether technical or physical) between VYNE and the Affiliate), and (iii) at In4Derm’s request, VYNE shall promptly provide In4Derm with reasonable details of such measures; and

(b)if such transaction does not result in a Change of Control of VYNE, then VYNE and its new Affiliate will have nine (9) months from the closing date of such transaction to either wind down and terminate such Competing Program or complete the Divestiture of such Competing Program, and VYNE’s new Affiliate’s conduct of such Competing Program during such nine (9)-month period will not be deemed to be a breach of VYNE’s exclusivity obligations set forth above; provided that (i) such new Affiliate conducts such Competing Program during such nine (9)-month period independently of the activities of this Agreement, does not use any In4Derm Technology in the conduct of such Competing Program and does not have access to any non-public In4Derm Technology or Confidential Information of In4Derm; (ii) VYNE shall implement and maintain reasonable measures to

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segregate the In4Derm Technology in order to comply with this clause (including firewalls and screens (whether technical or physical) between VYNE and the Affiliate) and (iii) at In4Derm’s request, VYNE shall promptly provide In4Derm with reasonable details of such measures. “Divestiture” means the sale and transfer of the Competing Program to a Third Party without VYNE (or its Affiliate) receiving a continuing share of profit, royalty payment, or other economic interest in the success of such Competing Program or being actively involved in, or having any decision-making authority with respect to, the development, manufacture or commercialization of products under such Competing Program.

2.6Technology Transfer and Assistance. As soon as reasonably practicable following the Effective Date, In4Derm shall, and shall cause its Affiliates to, without additional compensation, disclose and make available to VYNE (which obligation may include granting personnel designated by VYNE controlled access to an electronic data room), in such form as maintained by In4Derm in the ordinary course of business, a copy of the In4Derm Know-How listed at Exhibit 1.40. The Parties shall reasonably cooperate to provide a smooth and prompt provision of all such Know-How. At VYNE’s request, In4Derm shall reasonably assist VYNE and its designees in the use and understanding of the In4Derm Know-How and shall promptly provide reasonable assistance and cooperation, and make its personnel reasonably available to VYNE and its designees, as necessary or reasonably useful for VYNE to Exploit the Compounds and Products; provided that, unless otherwise agreed, VYNE shall reimburse In4Derm for all documented (a) external costs on a pass-through basis and (b) internal expenses at an hourly rate per FTE based on the relevant FTE’s standard, then-current industry standard rate per annum, in each case of (a) and (b), that are reasonably incurred by In4Derm in providing such assistance. As used herein, “FTE” means a full-time equivalent person year (consisting of a total of one thousand eight hundred twenty (1,820) hours per year) of activities undertaken by In4Derm.

ARTICLE 3COLLABORATION MANAGEMENT

3.1Joint Development Committee.

3.1.1Formation. Within thirty (30) days after the Effective Date, the Parties shall establish a joint development committee (the “JDC”). The JDC shall consist of two (2) representatives from each of the Parties. Each representative must have the requisite experience and seniority to enable such person to review and advise on behalf of the applicable Party with respect to the issues falling within the scope of review and advice of the JDC. From time to time, each Party may substitute one or more of its representatives to the JDC on written notice to the other Party. Each Party shall select from its representatives a representative who will chair the JDC jointly with the selected representative from the other Party. Each Party may replace its co-chairperson from time to time by informing the other Party in writing.

3.1.2Specific Responsibilities. The JDC shall oversee the performance of the Development Plan and serve as a consultative and information-exchange body for the Development of Compounds and Products. In particular, the JDC shall:

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(a)review and discuss the Development Plan, and review any amendments thereto;

(b)oversee the conduct and progress of the Development Plan and serve as a forum for discussion of results generated under the Development Plan;

(c)serve as a forum for discussion of Development activities with respect to Compounds and Products, including results arising from such activities;

(d)establish secure access methods (such as secure databases) for the exchange of Know-How and other information as contemplated under this Agreement;

(e)monitor and implement the technology transfer to VYNE pursuant to Section 4.4; and

(f)perform such other functions as are set forth herein or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.

3.2General Provisions Applicable to the JDC.

3.2.1Meetings and Minutes. The JDC shall meet quarterly, or at such frequency as otherwise agreed to by the Parties, either in person or by tele-/videoconference with the venue of the in-person meetings alternating between locations designated by In4Derm and locations designated by VYNE. The chairperson of the JDC shall be responsible for calling meetings on no less than thirty (30) days’ notice. Each Party shall make all proposals for agenda items and shall provide all appropriate information with respect to such proposed items at least ten (10) days in advance of the applicable meeting; provided that under exigent circumstances requiring input by the JDC, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting. The JDC may adopt such standing rules as necessary for its work, so long as such rules are not inconsistent with this Agreement. A quorum of the JDC exists whenever there is present at a meeting at least one (1) representative appointed by each Party. The chairpersons of the JDC (or their designee) shall prepare and circulate minutes of each meeting within thirty (30) days after the meeting for the Parties’ review and approval. The Parties shall agree on the minutes of each meeting promptly, but in no event later than within ten (10) days following circulation of the draft minutes. All JDC meetings, documents, and minutes are the Confidential Information of both Parties.

3.2.2Non-Member Attendance. Each Party may invite a reasonable number of participants, in addition to its representatives, to attend JDC meetings; provided that if either Party intends to have any Third Party (including any consultant) attend such a meeting, such Party shall provide reasonable prior written notice to the other Party and obtain the other Party’s written approval for such Third Party to attend such meeting, which approval shall not be unreasonably withheld, conditioned, or delayed. Such Party shall ensure that such Third Party is

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bound by written confidentiality and non-use obligations consistent with the terms of ARTICLE 10.

3.3Limitations on Authority. The JDC is a consultative and information-exchange body for the Development of Compounds and Products and does not have the authority to make any decisions with respect to the Development of Compounds or Products or any other matter within the scope of this Agreement. Each Party retains the rights, powers, and discretion granted to it under this Agreement and no such rights, powers, or discretion are delegated to or vested in the JDC unless the Parties expressly so agree in writing. The JDC does not have the power to amend, modify, or waive compliance with this Agreement, which may only be amended or modified as provided in Section 14.4 or compliance with which may only be waived as provided in Section 14.6.

3.4Discontinuation of the JDC. The activities to be performed by the JDC shall solely relate to governance under this Agreement and are not intended to be or involve the delivery of services. Upon the date of First Commercial Sale of a Product in the Field in the Territory, or such earlier date agreed by the Parties in writing, the JDC will have no further responsibilities under this Agreement and, unless otherwise agreed by the Parties in writing, will be considered fully dissolved by the Parties. Thereafter, each Party shall designate, to the extent necessary, a contact person for the exchange of information under this Agreement or such exchange of information shall be made through the Parties.

3.5Expenses. Each Party is responsible for all travel and related costs and expenses of its members and other representatives to attend meetings of, and otherwise participate on, the JDC.

ARTICLE 4DEVELOPMENT

4.1Overview. Subject to the terms and conditions of this Agreement, VYNE is solely responsible for the Development of Compounds and Products in the Field in the Territory, at its own cost and expense, including all non-clinical and clinical studies, as necessary to obtain Regulatory Approval for Products in the Territory.

4.2Development Plan. VYNE shall conduct its Development activities under and in accordance with the Development Plan and is solely responsible for all decisions regarding the day-to-day conduct of Development of Compounds and Products. Promptly after the Effective Date, VYNE shall provide In4Derm with a written plan for Development of Compounds and Products in the Field in the Territory (the “Development Plan”). The Development Plan will describe the critical activities VYNE plans to undertake in the Development of Compounds and Products in the Field in the Territory, inducing all clinical studies, CMC information collection activities, and regulatory activities with respect to the Products to be conducted by or on behalf of VYNE or its Affiliates or their respective Sublicensees. Until the First Commercial Sale of a Product, VYNE shall prepare an update to the Development Plan on an annual basis and shall provide such updated Development Plan to In4Derm. Such Development Plan and the contents therein are Confidential Information of VYNE.

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4.3Diligence. VYNE shall use Commercially Reasonable Efforts to Develop Products in the Field in the Territory. VYNE may satisfy its diligence obligations under this Section 4.3 through its Affiliates and Sublicensees.

1.4Records. VYNE shall, and shall ensure that its Affiliates and subcontractors, maintain records in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, and in compliance with Applicable Law, which shall be complete and accurate and shall properly reflect all work done and results achieved in the performance of its Development activities hereunder, which shall record only such activities and shall not include or be commingled with records of activities outside the scope of this Agreement. Such records shall be retained by VYNE for at least three (3) years after the termination of this Agreement, or for such longer period as may be required by Applicable Law.

1.5Development Reports. VYNE shall update In4Derm on an annual basis regarding its significant Development activities with respect to Products in the Territory. Each such update shall summarize VYNE and its Affiliates’ and Sublicensees’ significant Development activities with respect to each such Product in the Territory and shall contain information at a level of detail reasonably required by In4Derm to determine VYNE’s compliance with its diligence obligations set forth herein, provided however that such updates and reports need not be specifically generated in compliance with this section and VYNE may rely on existing reports and internal communications to its executive management.

1.6Subcontractors. VYNE may engage subcontractors to conduct any activities necessary for Development of Compounds and Products, including non-clinical studies, clinical studies, CMC activities, and regulatory services for Compounds and Products, under this Agreement, provided that such subcontractors are bound by written obligations of confidentiality consistent with this Agreement and have agreed in writing to assign to VYNE all data, information, inventions or other intellectual property generated by such subcontractor in the course of performing such subcontracted work. VYNE remains responsible for any obligations that have been delegated or subcontracted to any subcontractor.

ARTICLE 5
REGULATORY MATTERS

5.1Regulatory Activities. As between the Parties, VYNE, at its sole expense, has the sole right to prepare, obtain, and maintain the Drug Approval Applications (including the setting of the overall regulatory strategy therefor), Regulatory Approvals, and other Regulatory Documentation, and to conduct communications with Regulatory Authorities, for Compounds and Products in the Territory. Upon VYNE’s request and without additional compensation, In4Derm shall provide VYNE with information within In4Derm’s control and reasonably required to obtain Regulatory Approvals for the Products, including providing necessary documents or other materials required by Applicable Law to obtain such Regulatory Approvals. VYNE will keep In4Derm reasonably informed with regard to any Regulatory Approvals proceedings for the Products.

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5.2Recalls. VYNE shall notify In4Derm promptly following its determination that any event, incident, or circumstance has occurred that may result in the need for a recall, market suspension, or market withdrawal of a Product in the Territory, and shall include in such notice the reasoning behind such determination and any supporting facts. VYNE (or its Sublicensee) may make the final determination whether to voluntarily implement any such recall, market suspension, or market withdrawal in the Territory. If a recall, market suspension, or market withdrawal is mandated by a Regulatory Authority in the Territory, VYNE (or its Sublicensee) shall initiate such a recall, market suspension, or market withdrawal in compliance with Applicable Law. For all recalls, market suspensions, or market withdrawals undertaken pursuant to this Section 5.2, VYNE (or its Affiliate or Sublicensee) shall be solely responsible for the execution thereof, and In4Derm shall reasonably cooperate in all such recall efforts, at VYNE’s request and expense.

5.3Regulatory or Third Party Action or Inspection. In4Derm shall immediately notify VYNE as soon as In4Derm becomes aware of any Regulatory Authority inspections relating to any Product. In4Derm shall permit VYNE to be present at any such inspections and provide VYNE the opportunity to provide, review and comment on any responses that may be required. If In4Derm does not receive prior notice of any such inspection, In4Derm shall notify VYNE as soon as practicable after such inspection and shall provide VYNE with copies of all materials, correspondence, statements, forms and records received or generated pursuant to any such inspection. In addition to such obligations with respect to Regulatory Authority inspections, In4Derm shall immediately notify VYNE of any information it receives regarding any threatened or pending action or communication by or from any Third Party, including a Regulatory Authority, that may materially affect the Exploitation or regulatory status of a Product. In4Derm shall only be required to comply with its obligations under this Section 5.3 to the extent that it is lawfully able to do so.

ARTICLE 6COMMERCIALIZATION

6.1In General. VYNE (itself or through its Affiliates or Sublicensees) has the sole right and responsibility to Commercialize Products in the Field in the Territory, at its own expense.

6.2Commercialization Diligence. VYNE shall use Commercially Reasonable Efforts to Commercialize each Product for which it has obtained Regulatory Approval. VYNE may satisfy its diligence obligations under this Section 6.2 through its Affiliates and Sublicensees.

6.3Commercial Updates. VYNE shall update In4Derm on an annual basis regarding its significant Commercialization activities with respect to Products in the Territory. Each such update shall summarize VYNE and its Affiliates’ and Sublicensees’ significant Commercialization activities with respect to each such Product in the Territory and shall contain information at a level of detail reasonably required by In4Derm to determine VYNE’s compliance with its diligence obligations set forth herein. Subject to the foregoing, In4Derm agrees that such updates and reports need not be specifically generated and VYNE may satisfy

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the requirements of this Section 6.3 through updates which comprise appropriate existing reports and internal communications to its executive management.

ARTICLE 7MANUFACTURE AND SUPPLY

7.1Supply of Compounds and Products. As between the Parties, VYNE has the sole right and responsibility, at its expense, to Manufacture (or have Manufactured) and supply Compounds and Products for clinical purposes and commercial sale in the Territory by VYNE and its Affiliates and Sublicensees. VYNE (itself or through its Affiliates or Sublicensees) shall use Commercially Reasonable Efforts to make available all necessary manufacturing and selling facilities (in such location or locations as VYNE and/or its Affiliates and/or Sub-Licensees shall determine in their sole discretion from time to time) to meet all reasonable demands for Products throughout the Territory.

7.2General Obligations. VYNE shall:

7.2.1procure that all Products manufactured and/or supplied by VYNE or its Affiliates or Sublicensees are of a satisfactory quality in accordance with best industry practice or other analogous guidelines;

7.2.2not sell or dispose of Products for non-monetary consideration (other than when issuing demonstration/evaluation/loan units of the Products to third parties, which includes use as samples for charitable or promotional purposes, for named patient use, for use in non-clinical or clinical trials or any test or other studies reasonably necessary to comply with Applicable Laws);

7.2.3not act as agent of In4Derm or Dundee and specifically not give any indication that it is acting otherwise than as principal and in advertising or selling Products nor make any representation or give any warranty on behalf of In4Derm or Dundee; and

7.2.4comply with all statutes and regulatory requirements of any government or other competent authority which relate to the Manufacture, Development and Commercialization (including markings) in relation to the Products.

ARTICLE 8PAYMENTS AND RECORDS

8.1Upfront Payment. Within five (5) Business Days after the Effective Date, VYNE shall pay to In4Derm a one-time, non-refundable, non-creditable payment in the amount of Five Hundred Thousand Dollars ($500,000).

8.2Development and Regulatory Milestones.

8.2.1Development and Regulatory Milestone Payments. In partial consideration of the rights granted by In4Derm to VYNE under this Agreement and subject to

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the terms and conditions set forth in the remainder of this Section 8.2, on a Product-by-Product basis, VYNE shall pay to In4Derm the non-refundable, non-creditable milestone payment set forth in the table below within [***] following the first achievement of the corresponding milestone event by a Product by or on behalf of VYNE or its Affiliates or Sublicensees:

Milestone Event		Milestone Payment Amount
1	[***]	[***]
2	[***]	[***]
3	[***]	[***]
4	[***]	[***]
5	[***]	[***]
6	[***]	[***]
7	[***]	[***]
8	[***]	[***]
9	[***]	[***]
10	[***]	[***]
11	[***]	[***]

For clarity: (i) there is no limit on the number of Products for which the above Milestone Payments Amounts may become due; (ii) milestones 9, 10 and 11 above will be due in respect of

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both a second Indication and a third Indication of a Product; and (iii) in respect of any particular Product, the same Milestone Event may occur (and the corresponding Milestone Payment Amount become due) for such Product as both for topical administration and for oral administration, as more particularly set forth in Section 8.2.2.

8.2.2New Administration. [***].

8.2.3Skipped Milestones. [***].

1.3Royalties.

8.2.1Royalty Rates. As further consideration for the rights granted to VYNE under this Agreement, subject to the remainder of this Section 8.3, during the Royalty Term, VYNE shall make quarterly, non-refundable, except as set forth in Section 8.8, non-creditable royalty payments to In4Derm on the annual Net Sales of all Products sold by or on behalf of VYNE, its Affiliates or Sublicensees in the Territory at the applicable rate set forth below:

Annual Net Sales in the Territory of Products in a Calendar Year	Royalty Rate
[***]	[***]
[***]	[***]
[***]	[***]

8.2.2Royalty Term. Royalties shall be paid on a Product-by-Product and Country-by-Country basis in the Territory from the First Commercial Sale of such Product in a Country by or on behalf of VYNE, its Affiliates, or Sublicensees, until the expiration of the Royalty Term for such Product in such Country.

8.2.3Permitted Reductions.

(a)Generic Competition. If, in a Country within the Territory during the Royalty Term for a Product, sales of all Generic Products to such Product in such Country in a Calendar Quarter have a market share of [***] in such country, then the royalty rate payable by VYNE to In4Derm with respect to Net Sales of the Product in such Country for such Calendar Quarter shall be reduced by [***]. If, in a Country within the Territory during the Royalty Term for a Product, sales of all Generic Products to such Product in such Country in a Calendar Quarter exceed [***] of the unit volume of all sales of such Product plus the unit volume of all sales of such Generic Products to such Product in such country (such percentage being the “Relevant Calendar Quarter Percentage”), then the royalty rate payable by VYNE to In4Derm with respect to Net Sales of the Product in such Country for such Calendar Quarter shall be reduced by a percentage equal to the Relevant Calendar Quarter Percentage, subject always to a maximum reduction of [***] of the otherwise applicable rate. All such determinations of the unit

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volume of sales shall be based upon a mutually acceptable calculation method using market share data provided by a reputable and mutually agreed upon provider, such as IQVIA.

(b)Third Party License. To the extent VYNE or its Affiliate obtains a right or license under Patents owned by a Third Party and such right or license is necessary to practice the rights purported to be granted to VYNE by In4Derm under issued In4Derm Patents in such Country (a “Third Party License”), the royalties payable by VYNE to In4Derm shall be [***].

(c)Floor. Notwithstanding the foregoing provisions of this Section 8.3.3, in no circumstances will the royalties payable to In4Derm under this Section 8.3 in any Calendar Quarter be reduced, as a result of this Section 8.3.3, below [***]. VYNE may carry forward to subsequent Calendar Quarters any deductions that it was not able to deduct as a result of the foregoing provision.

1.4Royalty Payments and Reports. VYNE shall calculate all amounts payable to In4Derm pursuant to Section 8.3 at the end of each Calendar Quarter, which amounts shall be converted to Dollars, in accordance with Section 8.5. VYNE shall pay to In4Derm the royalty amounts due with respect to a given Calendar Quarter within sixty (60) days after the end of each Calendar Quarter. Each payment of royalties due to In4Derm shall be accompanied by a report setting forth the Net Sales of the Products by VYNE and its Affiliates and Sublicensees in the Territory in sufficient detail to permit confirmation of the accuracy of the royalty payment made.

1.5Mode of Payment. All payments to In4Derm under this Agreement shall be made by deposit of Dollars in the requisite amount to such bank account as In4Derm may from time to time designate by written notice to VYNE. For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), a Party shall convert any amount expressed in a foreign currency into Dollar equivalents using its, its Affiliate’s, or Sublicensee’s standard conversion methodology consistent with Accounting Standards.

1.6Taxes.

1.6.1Taxes on Income. Each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the activities of the Parties under this Agreement.

1.6.2Withholding Amounts. If any sum due to be paid to In4Derm under this Agreement is subject to any withholding or similar tax, the Parties shall use their commercially reasonable efforts to do all such acts and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or treaty. Any tax paid or required to be withheld by VYNE for the benefit of In4Derm on account of any payments to In4Derm under this Agreement will be deducted from the amount of royalties or other payments otherwise due. VYNE will secure and send to In4Derm proof of any such taxes withheld and paid by VYNE for the benefit of In4Derm. If withholding or similar taxes are paid to a government authority, each

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Party shall provide the other such assistance as is reasonably required to obtain a refund of the withheld or similar taxes, or to obtain a credit with respect to such taxes paid.

1.6.3Tax Changing Decision. Notwithstanding the foregoing, to the extent VYNE or its Affiliates (a) assigns or otherwise transfers this Agreement or its obligations hereunder to an Affiliate or Third Party, (b) changes its location of incorporation from the United States to another location, (c) makes payments from an entity, or payments are deemed to be made from an entity, other than the United States entity originally entering into this Agreement, or (d) fails to comply with Applicable Laws or filing or record retention requirements to enjoy the benefit regarding withholding taxes under the Applicable Laws, in each case that results in a tax being required to be withheld under Applicable Laws that would not have been required to be withheld if such action had not been taken (each, a “Tax Changing Decision”) such that as a result of a Tax Changing Decision, VYNE is required by Applicable Laws to deduct or withhold taxes directly from any amount paid to In4Derm, then (i) notwithstanding anything to the contrary in this Agreement, VYNE shall increase the amount paid to In4Derm by the required amount such that the net amount actually received by In4Derm after such deduction or withholding equals the full amount originally invoiced or stated by In4Derm to be payable and (ii) VYNE shall timely pay the applicable taxes to the relevant governmental authority in accordance with Applicable Laws.

1.7Interest on Late Payments. If any undisputed payment due to either Party under this Agreement is not paid when due, then such paying Party shall pay interest thereon (before and after any judgment, but excluding the period during which termination is tolled pursuant to Section 13.3) at an annual rate (but with interest accruing on a daily basis) equal to LIBOR (or other such short term inter-bank interest rate as deemed suitable by the Parties), such interest to run from the date on which payment of such sum became due until payment thereof in full together with such interest.

1.8Audit. VYNE shall keep, and shall require its Affiliates and Sublicensees to keep, complete and accurate records and books of account (in an electronic format) pertaining to the sale or other disposition of Products in sufficient detail and containing all data necessary to permit In4Derm to confirm the accuracy of any payments due hereunder. VYNE shall keep such books and records necessary to permit In4Derm to conduct an audit under this section for a minimum of six (6) years following the Calendar Year to which they pertain, or such longer period of time as may be required by Applicable Law. Upon reasonable prior notice and during regular business hours at such place or places where such records are customarily kept, such records may be inspected on In4Derm’s and/or Dundee’s behalf by an independent certified public accountant (the “Auditor”) selected by In4Derm or Dundee (as applicable) and reasonably acceptable to VYNE for the sole purpose of verifying for In4Derm or Dundee (as applicable) the accuracy of any payments made, or required to be made, to In4Derm pursuant to this Agreement. Before beginning its audit, the Auditor shall execute an undertaking acceptable to each Party by which the Auditor agrees to keep confidential all information reviewed during the audit. Such audits shall be limited to once each Calendar Year and once with respect to records covering any specific period of time. Such auditor shall not disclose VYNE’s Confidential Information to In4Derm or Dundee except to the extent necessary to confirm the

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accuracy of the financial reports and payments furnished by VYNE under this Agreement and the amount of any discrepancies. If the final result of the inspection reveals an undisputed underpayment, the underpaid amount shall be paid within thirty (30) days after the Auditor’s report. If that the final result of the inspection reveals an undisputed overpayment, the overpaid amount shall be applied as a credit against future royalty payments by VYNE. In4Derm shall bear the full cost of such audit unless such audit reveals an underpayment owed by VYNE of more than five percent (5%) from the reported amounts, in which case VYNE shall reimburse In4Derm and/or Dundee (as appliable) for the Auditor’s services.From time to time In4Derm shall also have the right to request of VYNE and VYNE shall in receipt of such request provide to In4Derm such information as may reasonably be required for In4Derm to assess the conduct and performance of VYNE in carrying out its obligations under this Agreement.

ARTICLE 9INTELLECTUAL PROPERTY

9.1Ownership of Intellectual Property.

1.1.1United States Law. The determination of whether an Invention is discovered, made, conceived, or reduced to practice by a Party for the purpose of allocating proprietary rights (including Patent, copyright, or other intellectual property rights) therein, shall, for purposes of this Agreement, be made in accordance with Applicable Law in the United States.

9.1.2Inventions.

(a)Sole Ownership. As between the Parties, each Party solely owns any Inventions made solely by its and its Affiliates’ employees, agents, or independent contractors in the conduct of activities under this Agreement.

(b)Joint Inventions. VYNE shall own any Inventions that are made jointly by employees, agents, or independent contractors of VYNE and its Affiliates together with employees, agents, or independent contractors of In4Derm and its Affiliates related to the development of the Compound under this Agreement (“Joint Inventions”). In4Derm hereby assigns (and agrees to and shall assign if the present assignment of future rights is prohibited by Applicable Law) all right and interest in the Joint Inventions to VYNE.

9.1.3Assignment Obligation.

(a)Each Party shall cause all Persons who perform activities for such Party under this Agreement to be under an obligation to assign (or, if such Party is unable to cause such Person to agree to such assignment obligation despite such Party’s using commercially reasonable efforts to negotiate such assignment obligation, provide a license under) their rights in any Inventions resulting therefrom to such Party, except where Applicable Law requires otherwise and except in the case of governmental, not-for-profit, and public institutions which have standard policies against such an assignment (in which case a suitable license, or right to obtain such a license, shall be obtained).

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(b)Each Party shall promptly disclose to the other Party, in writing, the conception, discovery, development, generation, making or creation of (i) any Invention related to the composition of matter of a Compound or Product and (ii) any Joint Inventions, in each case, made by Persons who perform activities for it under this Agreement. Each Party shall execute and record assignments and other necessary documents consistent with such ownership promptly upon such other Party’s request.

9.2Patent Prosecution and Maintenance.

9.2.1In4Derm Patents and Joint Patents. VYNE has the first right, but not the obligation, through the use of internal counsel, or outside counsel reasonably acceptable to In4Derm, to prepare, file, prosecute, and maintain the In4Derm Patents (on behalf of and in the name of In4Derm) and the Joint Patents worldwide, at VYNE’s expense; but excluding all Patents licensed to In4Derm under the Head License (the “Head License Patents”), in relation to which the University of Dundee has retained responsibility for prosecution. In4Derm shall use best efforts to obtain an agreement from the University of Dundee within sixty (60) days of the Effective Date that the University of Dundee shall consult with and cooperate with VYNE or any of VYNE’s sublicensees in good faith regarding the prosecution and enforcement of the Head License Patents. To the extent, if any, there are one or more Compounds not Covered by an In4Derm or Joint Patent at the Effective Date, In4Derm shall promptly cooperate and assist VYNE in preparing and filing one or more patent applications claiming such Compounds and shall disclose the Compounds and related information in at least sufficient detail to permit an understanding of the nature of the inventions in relation to the Compounds by a practitioner reasonably skilled in the relevant technical or scientific area and to enable preparation and filing of said applications. VYNE shall keep In4Derm reasonably informed of all material steps with regard to the preparation, filing, prosecution, and maintenance of the In4Derm Patents and the Joint Patents, including by providing In4Derm with a copy of material communications to and from any patent authority regarding such Patents, and by providing In4Derm drafts of any material filings or responses to be made to such patent authorities sufficiently in advance of submitting such filings or responses so as to allow for a reasonable opportunity for In4Derm to review and comment thereon. VYNE shall consider in good faith the requests and suggestions of In4Derm with respect to such VYNE drafts and with respect to strategies for filing and prosecuting such Patents. If VYNE decides not to prepare, file, prosecute, or maintain any In4Derm Patent or Joint Patent in a Country and there are no other In4Derm Patents or Joint Patents in such Country, VYNE shall provide reasonable prior written notice to In4Derm of such intention (which notice shall, in any event, be given no later than sixty (60) days prior to the next deadline for any action that may be taken with respect to such Joint Patent in such Country), and In4Derm shall thereupon have the option, in its sole discretion, to assume the control and direction of the preparation, filing, prosecution, and maintenance of such Patent at its sole cost and expense in such Country. Upon In4Derm’s written acceptance of such option, In4Derm shall assume the responsibility and control for the preparation, filing, prosecution, and maintenance of such In4Derm Patent or Joint Patent, as applicable. In such event, VYNE shall reasonably cooperate with In4Derm with respect to such Patent in such Country as provided under Section 9.2.3.

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9.2.2VYNE Patents. VYNE has the sole right, but not the obligation, through the use of internal or outside counsel, to prepare, file, prosecute, and maintain the Patents claiming Inventions made solely by VYNE and its Affiliates’ employees, agents, or independent contractors (the “VYNE Patents”) worldwide, at VYNE’s expense.

9.2.3Cooperation. The Parties agree to cooperate fully in the preparation, filing, prosecution, and maintenance of the In4Derm Patents and the Joint Patents under this Agreement. Cooperation shall include:

(a)without limiting any other rights and obligations of the Parties under this Agreement, cooperating with respect to the timing, scope, and filing of such Patents to preserve and enhance the patent protection for Compounds and Products, including the manufacture and use thereof;

(b)executing all papers and instruments, or requiring its employees or contractors to execute such papers and instruments, so as to (i) effectuate the ownership of intellectual property set forth in Section 9.1.2; (ii) enable the other Party to apply for and to prosecute Patent applications; and (iii) obtain and maintain any Patent extensions, supplementary protection certificates, and the like with respect to the In4Derm Patents and the Joint Patents, in each case ((i), (ii), and (iii)) to the extent provided for in this Agreement;

(c)consistent with this Agreement, assisting in any license registration processes with applicable governmental authorities that may be available for the protection of a Party’s interests in this Agreement; and

(d)promptly informing the other Party of any matters coming to such Party’s attention that may materially affect the preparation, filing, prosecution, or maintenance of any such Patents.

9.2.4Patent Term Extension and Supplementary Protection Certificate. VYNE has authority and sole discretion for making decisions regarding patent term extensions, including supplementary protection certificates and any other extensions that are now or become available in the future, wherever applicable, for VYNE Patents, In4Derm Patents, and Joint Patents in any Country and for applying for any extension or supplementary protection certificate with respect to such Patents in the Territory. In4Derm shall provide prompt and reasonable assistance, as requested by VYNE, including by taking such action as patent holder as is required under any Applicable Law to obtain such patent extension or supplementary protection certificate. VYNE shall pay all expenses with respect to obtaining the extension or supplementary protection certificate in the Territory. If VYNE desires that a patent term extension should be applied for a In4Derm Patent, In4Derm and VYNE shall discuss in good faith such patent term extension, provided that such decision shall be at VYNE’s sole discretion.

9.2.5Patent Listings. VYNE will have the sole right to make all filings with Regulatory Authorities in the Territory with respect to VYNE Patents, and Joint Patents, including as required or allowed under Applicable Law, provided that with respect to Joint Patents such right shall be solely with respect to Products. VYNE shall notify In4Derm in

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writing of any In4Derm Patents that it intends to list with Regulatory Authorities related to the Products and, prior to filing any such listing, consult with and consider in good faith the requests and suggestions of In4Derm regarding the same.

9.3Patent Enforcement.

9.3.1Notice. Each Party shall promptly notify the other Party in writing of any alleged or threatened infringement of an In4Derm Patent, Joint Patent or VYNE Patent by a Third Party in the Territory of which such Party becomes aware (including alleged or threatened infringement based on the development or commercialization of, or an application to market a product containing, a Compound or Product in the Territory).

9.3.2In4Derm Patents and Joint Patents. VYNE has the first right, but not the obligation, to prosecute any such infringement of In4Derm Patents and Joint Patents at its sole expense, but excluding all Head License Patents, in relation to which the University of Dundee has the first right to bring infringement proceedings. In4Derm shall use best efforts to obtain an agreement from the University of Dundee within sixty (60) days of the Effective Date that the University of Dundee shall consult with and cooperate with VYNE or any of VYNE’s sublicensees in good faith regarding the prosecution of any such infringement of the Head License Patents. If VYNE prosecutes any such infringement, In4Derm has the right to join as a party to such claim, suit, or proceeding and participate with its own counsel at its own expense; provided that VYNE retains control of the prosecution of such claim, suit, or proceeding. If VYNE does not take commercially reasonable steps to prosecute the alleged or threatened infringement with respect to any such In4Derm Patent or Joint Patent (a) within six (6) months following the first notice provided above with respect to such alleged infringement, or (b) ten (10) Business Days before the time limit, if any, set forth in appropriate laws and regulations for filing of such actions, whichever comes first, then In4Derm may prosecute the alleged or threatened infringement at its own expense.

9.3.3VYNE Patents. VYNE has the sole right, but not the obligation, to prosecute any such infringement of VYNE Patents at its sole expense, and VYNE shall retain control of the prosecution of such claim, suit, or proceeding.

9.3.4Cooperation. The Parties shall cooperate in any infringement action pursuant to this Section 9.3. To the extent necessary for a Party to bring such an action, the other Party shall, where necessary, furnish a power of attorney solely for such purpose and shall join in, or be named as a necessary party to, such action. Unless otherwise set forth herein, the Party entitled to bring any patent infringement litigation in accordance with this Section 9.3 may settle such claim; provided that neither Party may settle any patent infringement litigation under this Section 9.3 in a manner that materially diminishes or has a material adverse effect on the rights or interest of the other Party, or in a manner that imposes any costs or liability on, or involves any admission by, the other Party, without the express written consent of such other Party. The Party commencing the litigation shall provide the other Party with copies of all pleadings and other documents filed with the court and shall consider reasonable input from the other Party during the course of the proceedings.

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9.3.5Recovery. Any recovery realized as a result of such litigation described in Section 9.3.1 or Section 9.3.2 (whether by way of settlement or otherwise) shall be first allocated to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses). Any remainder after such reimbursement is made shall be retained by the Party that has exercised its right to bring the enforcement action; provided, that to the extent that any award or settlement (whether by judgment or otherwise) is attributable to loss of sales with respect to a Product and retained by VYNE, such amounts shall be included as Net Sales hereunder with respect to such Product for the purposes of calculating amounts payable to In4Derm under Section 8.3.

9.4Infringement Claims by Third Parties. If the manufacture, sale, or use of a Product in the Territory pursuant to this Agreement results in, or may result in, any claim, suit, or proceeding by a Third Party alleging patent infringement by VYNE (or its Affiliates or Sublicensees), VYNE shall promptly notify In4Derm thereof in writing. VYNE has the first right, but not the obligation, to defend and control the defense of any such claim, suit, or proceeding at its own expense, using counsel of its own choice. In4Derm may participate in any such claim, suit, or proceeding with counsel of its choice at its own expense. Without limitation of the foregoing, if VYNE finds it necessary or desirable to join In4Derm as a party to any such action, In4Derm shall, at VYNE’s expense, execute all papers and perform such acts as reasonably required. If VYNE elects (in a written communication submitted to In4Derm within a reasonable amount of time after notice of the alleged patent infringement) not to defend or control the defense of, or otherwise fails to initiate and maintain the defense of, any such claim, suit, or proceeding, within such time periods so that In4Derm is not prejudiced by any delays, In4Derm may conduct and control the defense of any such claim, suit, or proceeding at its own expense. Each Party shall keep the other Party reasonably informed of all material developments in connection with any such claim, suit, or proceeding. Any recoveries by VYNE of any sanctions awarded to VYNE and against a party asserting a claim being defended under this Section 9.4 shall be applied first to reimburse each Party for its reasonable out-of-pocket costs of defending or participating in such claim, suit, or proceedings, on a pro rata basis. The balance of any such recoveries shall be retained by, or provided to, VYNE and included in the calculation of Net Sales for the relevant Product for the purposes of calculating amounts payable to In4Derm under Section 8.3.

9.5Invalidity or Unenforceability Defenses or Actions.

9.5.1Notice. Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of invalidity or unenforceability of any of the In4Derm Patents that Cover a Compound or Product, Joint Patents, or VYNE Patents by a Third Party, in each case in the Territory and of which such Party becomes aware.

9.5.2In4Derm Patents and Joint Patents. VYNE has the first right, but not the obligation, to defend and control the defense of the validity and enforceability of the In4Derm Patents and the Joint Patents at its own expense, but excluding all Head License Patents, in relation to which Dundee has the first right to defend and control the defense of validity and enforceability proceedings. In4Derm shall use best efforts to obtain an agreement from the University of Dundee within sixty (60) days of the Effective Date that the University of

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Dundee shall consult with and cooperate with VYNE or any of VYNE’s sublicensees in good faith regarding the defense of the validity and enforceability of the Head License Patents. In4Derm may participate in any such claim, suit, or proceeding related to the In4Derm Patents and the Joint Patents with counsel of its choice at its own expense; provided that VYNE shall retain control of the defense in such claim, suit, or proceeding. If VYNE elects not to defend or control the defense of the In4Derm Patents or the Joint Patents, or otherwise fails to initiate and maintain the defense of any such claim, suit, or proceeding, then In4Derm may conduct and control the defense of any such claim, suit, or proceeding, at its own expense; provided, that In4Derm shall obtain the written consent of VYNE prior to settling or compromising such defense, such consent not to be unreasonably withheld, conditioned, or delayed.

9.5.3VYNE Patents. VYNE has the sole right, but not the obligation, to defend and control the defense of the validity and enforceability of the VYNE Patents at its own expense.

9.5.4Cooperation. Each Party shall assist and cooperate with the other Party as such other Party may reasonably request from time to time in connection with its activities set forth in this Section 9.5, including by being joined as a party plaintiff in such action or proceeding, providing access to relevant documents and other evidence, and making its employees available at reasonable business hours. In connection with any such defense or claim or counterclaim, the controlling Party shall consider in good faith any comments from the other Party, shall keep the other Party reasonably informed of any steps taken, and shall provide copies of all documents filed, in connection with such defense, claim, or counterclaim. In connection with the activities set forth in this Section 9.5, each Party shall consult with the other as to the strategy for the defense of the In4Derm Patents, VYNE Patents, and Joint Patents.

9.6Inventor’s Remuneration. Each Party shall be solely responsible for any remuneration that may be due such Party’s inventors under any applicable inventor remuneration laws.

9.7Common Interest. All information exchanged between the Parties regarding the prosecution, maintenance, enforcement and defense of Patents under this ARTICLE 9 will be deemed to be Confidential Information of the disclosing Party. In addition, the Parties acknowledge and agree that, with regard to such prosecution, maintenance, enforcement, and defense, the interests of the Parties as collaborators are to, for their mutual benefit, obtain patent protection and plan patent defense against potential infringement activities by Third Parties, and as such, are aligned and are legal in nature. The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning Patents under this ARTICLE 9, including privilege under the common interest doctrine and similar or related doctrines. Notwithstanding anything to the contrary in this Agreement, to the extent a Party has a good faith belief that any information required to be disclosed by such Party to the other Party under this ARTICLE 9 is protected by attorney-client privilege or any other applicable legal privilege or immunity, such Party shall not be required to disclose such information and the Parties shall in good faith cooperate to agree upon a procedure (including entering into a specific common interest agreement or disclosing such information on a “for

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counsel eyes only” basis or similar procedure) under which such information may be disclosed without waiving or breaching such privilege or immunity.

ARTICLE 10CONFIDENTIALITY AND NON-DISCLOSURE

10.1Confidentiality Obligations. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, during the Term and for ten (10) years thereafter, the receiving Party shall keep confidential and shall not publish or otherwise disclose, and shall not use for any purpose other than as expressly provided for in this Agreement, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party, and each Party shall keep confidential and shall not publish or otherwise disclose the terms of this Agreement except as permitted herein. Each Party may use the other Party’s Confidential Information only to the extent required to accomplish the purposes of this Agreement, including exercising its rights and performing its obligations under this Agreement. Each Party shall use at least the same standard of care as it uses to protect its own proprietary or confidential information (but no less than reasonable care) to ensure that its employees, agents, consultants, contractors, and other representatives do not disclose or make any unauthorized use of the other Party’s Confidential Information. Each Party shall promptly notify the other upon discovery of any loss or unauthorized use or disclosure of the other Party’s Confidential Information.

10.2Exceptions. The obligations of confidentiality and non-use set forth in Section 10.1 above do not apply to any information that the receiving Party can demonstrate by written evidence:

10.2.1is already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the disclosing Party;

10.2.2is now, or hereafter becomes, generally available to the public or otherwise part of the public domain through no fault of the receiving Party;

10.2.3is disclosed to the receiving Party by a Third Party who had no obligation to the disclosing Party not to disclose such information to others; or

10.2.4was independently discovered or developed by the receiving Party without the use of Confidential Information belonging to the disclosing Party.

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.

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10.3Permitted Disclosures.

10.3.1Pursuant to Applicable Law. Each Party may disclose Confidential Information to the extent that such disclosure is, in the reasonable opinion of the receiving Party’s legal counsel, required to be disclosed pursuant to law, regulation, or a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial, or local governmental body of competent jurisdiction, provided that the receiving Party shall first have given prompt written notice (and to the extent possible, at least five (5) Business Days’ notice) to the disclosing Party and given the disclosing Party a reasonable opportunity to take whatever action it deems necessary to protect its Confidential Information. If no protective order or other remedy is obtained, or the disclosing Party waives compliance with the terms of this Agreement, the receiving Party shall furnish only that portion of Confidential Information which the receiving Party is advised by counsel is legally required to be disclosed; for clarity, disclosures required in the reasonable opinion of the receiving Party’s legal counsel to the U.S. Securities and Exchange Commission (or equivalent foreign agency) shall be subject to the following Section 10.3.2.

10.3.2Securities Exchange Filings. The Parties acknowledge that either or both Parties (or its Affiliates) may be obligated to make one or more filings (including to file a copy of this Agreement) with the U.S. Securities and Exchange Commission (or equivalent foreign agency) or a governmental authority. Each Party may make such a required filing, provided that if such filing includes a copy of this Agreement it will (a) submit in connection with such filing a copy of this Agreement in a form mutually agreed by the Parties in advance or, if, despite the reasonable efforts of the filing Party a form mutually agreed by the Parties cannot be agreed in advance, redacted to the extent permitted by Applicable Law, based on advice of filing Party’s counsel (the “Redacted Agreement”), (b) request, and use reasonable efforts consistent with Applicable Laws to obtain, confidential treatment of all terms redacted in the Redacted Agreement, for the Term of the Agreement and ten (10) years thereafter, and (c) unless otherwise agreed in writing by the other Party, request an appropriate extension of the term of the confidential treatment period if legally justifiable. For clarity, following a request from a governmental authority to change the redactions requested by a Party in the Redacted Agreement, a Party will not be in breach of this Section 10.3.2 for unredacting those redactions rejected by the applicable governmental authority, provided that such Party shall provide the other Party with a notice of the required changes and a copy of the revised redactions. Each Party is responsible for its own legal and other external costs in connection with any such filing, registration, or notification.

10.3.3Additional Permitted Disclosures. In addition to disclosures pursuant to Sections 10.3.1 and 10.3.2 and as otherwise expressly permitted by this Agreement, each Party may disclose Confidential Information belonging to the other Party if and to the extent such disclosure is reasonably necessary in the following instances:

(a)under appropriate conditions of confidentiality and on a need-to-know basis to its legal and financial advisors;

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(b)under appropriate conditions of confidentiality in connection with an actual or potential (i) permitted license or sublicense of its rights hereunder, (ii) debt, lease, or equity financing of such Party, (iii) merger, acquisition, consolidation, share exchange, or other similar transaction involving such Party and a Third Party, and (iv) co-funding or financing arrangement, provided that in each case ((i) to (iv)) the receiving Party takes reasonable and lawful actions to minimize the degree of such disclosure;

(c)under appropriate conditions of confidentiality to any Third Party that is or may be engaged to perform services in connection with the Development, Manufacturing, or Commercialization of the Products as necessary to enable such Third Party to perform such services;

(d)to any government agency or authority in connection with seeking government funding, support, or grants;

(e)filing, prosecuting, and maintaining Patents, and prosecuting and defending litigation, in each case as permitted by this Agreement; and

(f)obtaining and maintaining Regulatory Approvals for, and conducting preclinical studies or Clinical Trials of, Products that such Party has a license or right to Develop or Commercialize under this Agreement in a given Country or jurisdiction.

10.4Use of Name. Except as expressly provided herein, neither Party shall mention or otherwise use the name, logo, or trademark of the other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material, or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section 10.4 shall not prohibit either Party from making any disclosure identifying the other Party that, in the opinion of the disclosing Party’s counsel, is required by Applicable Law; provided that such Party shall submit the proposed disclosure identifying the other Party in writing to the other Party as far in advance as reasonably practicable (and in no event less than five (5) Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon.

10.5Press Releases. The Parties agree to issue a joint press release substantially in a form agreed by the Parties and attached to this Agreement as Schedule 10.5 announcing the signature of this Agreement at or shortly after the Effective Date within the time-period as required by relevant securities laws. It is understood that each Party may desire or be required to issue subsequent press releases relating to this Agreement or activities hereunder. The Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof. Notwithstanding the foregoing, neither Party may unreasonably withhold, condition, or delay consent to such releases by more than five (5) Business Days, and either Party may issue such press releases or make such disclosures to the U.S. Securities and Exchange Commission (or equivalent foreign agency) as it determines, based on advice of counsel, is reasonably necessary to comply with Applicable Laws or for appropriate market disclosure. Each Party shall provide the other Party with advance notice of legally required disclosures to the extent practicable, and to the extent possible, at least five (5) Business

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Days prior to such disclosure. Following the initial joint press release announcing this Agreement, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party, and those terms of the Agreement which have already been publicly disclosed in accordance with this Section 10.5.

1.6Publications. During the Term, the disclosure by either Party relating to any Compound or Product in any publication or presentation shall be in accordance with the procedure set forth in this Section 10.6. A Party (“Publishing Party”) shall provide the other Party with a copy of any proposed publication or presentation at least thirty (30) days prior to submission for publication so as to provide such other Party with an opportunity to recommend any changes to the Publishing Party that it reasonably believes are necessary to continue to maintain such Party’s Confidential Information in accordance with the requirements of this Agreement. The incorporation of such recommended changes shall not be unreasonably refused; and if such other Party notifies (“Publishing Notice”) the Publishing Party in writing, within thirty (30) days after receipt of the copy of the proposed publication or presentation, that such publication or presentation in its reasonable judgment (a) contains an Invention, solely or jointly conceived or reduced to practice by the other Party, for which the other Party reasonably desires to obtain patent protection or (b) could be expected to have a material adverse effect on the commercial value of any Confidential Information disclosed by the other Party to the Publishing Party, the Publishing Party shall prevent such publication or delay such publication for a mutually agreed period of time and at the other Party’s request shall remove the other Party’s Confidential Information from the proposed publication or presentation. In the case of Inventions, a delay shall be for a period reasonably sufficient to permit the timely preparation and filing of a patent applications on such Invention, and in no event less than ninety (90) days from the date of the Publishing Notice.

10.7Destruction of Confidential Information. Upon the effective date of the expiration or termination of this Agreement for any reason, the Parties shall, with respect to Confidential Information to which such other Party does not retain rights under the surviving provisions of this Agreement, as soon as reasonably practicable, return (at the written request of the disclosing Party) or destroy all copies of such Confidential Information in the possession of the other Party and confirm such destruction in writing to the other Party, provided that such other Party shall be permitted to retain one copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder, as required by Applicable Law, or for archival purposes. Notwithstanding the foregoing, such other Party also shall be permitted to retain such additional copies of or any computer records or files containing such Confidential Information that have been created solely by such Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such other Party’s standard archiving and back-up procedures, but not for any other use or purpose.

ARTICLE 11REPRESENTATIONS AND WARRANTIES

11.1Mutual Representations and Warranties. In4Derm and VYNE each represents and warrants to the other, as of the Effective Date, as follows:

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11.1.1Organization. It is a corporation duly incorporated, validly existing, and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power and authority, to execute, deliver, and perform this Agreement.

11.1.2Authorization. The execution and delivery of this Agreement and the performance by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action and do not violate (a) such Party’s charter documents, bylaws, or other organizational documents, (b) in any material respect, any agreement, instrument, or contractual obligation to which such Party is bound, (c) any requirement of any Applicable Law, or (d) any order, writ, judgment, injunction, decree, determination, or award of any court or governmental agency presently in effect applicable to such Party.

11.1.3Binding Agreement. This Agreement is a legal, valid, and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency, or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance, and general principles of equity (whether enforceability is considered a proceeding at law or equity).

11.1.4No Inconsistent Obligation. It is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations hereunder.

11.2Additional Warranties and Covenants of In4Derm. Subject to the exclusions set out in Exhibit 1.41, In4Derm further warrants to VYNE (or, in relation to 11.2.10 and 11.2.11 only, In4Derm covenants), as of the Effective Date, as follows:

11.2.1All existing In4Derm Patents that Cover a Compound as of the Effective Date are listed on Exhibit 1.41 (the “Existing Patents”). This Exhibit shall be updated and agreed by In4Derm from time to time as required to include other In4Derm Patents that Cover a Compound as they are identified.

11.2.2There are no judgments, or settlements against, or amounts with respect thereto, owed by In4Derm or any of its Affiliates relating to the Existing Patents. No claim or litigation has been brought or threatened in writing or, to In4Derm’s knowledge, in any other form by any Person alleging, and In4Derm has no knowledge of any claim (or facts that would give rise to such a claim), whether or not asserted, that the Existing Patents are invalid or unenforceable.

11.2.3To In4Derm’s knowledge (without having made any additional searches or enquiries), no Person is infringing or threatening to infringe or misappropriating or threatening to misappropriate the Existing Patents.

11.2.4In4Derm has not received an infringement allegation or Third Party Claim of infringement against any Compound, and to In4Derm’s knowledge, no prior art or other

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information exists that would materially and adversely affect the validity, enforceability, term or scope of any licensed Invention or Patent.

11.2.5In4Derm is the sole and exclusive legal and beneficial owner of the entire right, title, and interest in the Existing Patents, and is the record owner thereof and is the licensee of the University of Dundee Patents herein licensed to VYNE and In4Derm is entitled to grant the license granted to VYNE herein and has, and will retain the unconditional and irrevocable right, power and authority to grant the license hereunder.

11.2.6The In4Derm Technology and Existing Patents as of the Effective Date constitute all of the Intellectual Property, patent rights and Know-How Controlled by In4Derm as of the Effective Date that are necessary to Exploit Products in the Field. In4Derm has not previously assigned, transferred, conveyed, subjected to a lien or security interest or otherwise encumbered its right, title and interest in the In4Derm Technology in a manner that conflicts with any rights granted to VYNE hereunder with respect to Compounds and Products, and In4Derm shall not do so.

11.2.7To In4Derm’s knowledge (without having made any additional searches or enquiries), there are no Patents or any claims of a published patent application that, if issued in their current form (whether owned by In4Derm or a Third Party) that are necessary to Exploit Compounds and Products, except for the Patents that are licensed to VYNE under Section 2.1 of this Agreement.

11.2.8That (a) there is no fact or circumstance known by In4Derm that would cause In4Derm to reasonably conclude that any In4Derm Patent is invalid or un-enforceable, (b) there is no fact or circumstance known by In4Derm that would cause In4Derm to reasonably conclude the inventorship of each In4Derm Patent is not properly identified on each patent, and (c) all official fees, maintenance fees and annuities for the In4Derm Patents have been paid and all administrative procedures with governmental agencies with respect to the filing and maintenance of the Existing Patents have been completed.

11.2.9All employees and contractors of In4Derm performing activities under the Option Agreement or this Agreement on behalf of In4Derm (including for any Affiliate) will be obligated (or was obligated as the case may be) to assign all rights, title and interests in and to any inventions developed by them, whether or not patentable, to In4Derm or such Affiliate, respectively, as the sole owner thereof, prior to performing any such activities.

11.2.10 During the Term, In4Derm covenants that it will not enter into or amend any agreement, whether written or oral, that would conflict with or otherwise diminish the rights granted to VYNE hereunder.

11.2.11During the Term, In4Derm covenants that it shall use commercially reasonable efforts to maintain the Head License and to seek and obtain any consents or approvals required under the Head License to the extent necessary to carry out this Agreement as contemplated herein.

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11.2.12 In4Derm’s grant and its obligations, under this License Agreement does not and, to In4Derm’s knowledge, will not: (i) conflict with or violate any Applicable Law; (ii) require the consent, approval or authorization of any governmental or regulatory authority or other third party; or (iii) require the provision of any payment or other consideration to any third party.

11.2.13 In4Derm has not granted and will not grant any licenses or other contingent or non-contingent right, title or interest under or relating to the Compounds, In4Derm Technology, or Products, and is not or will not be under any obligation, that does or will conflict with this Agreement, including any of In4Derm’s representations, warranties or obligations or VYNE’s rights or licenses hereunder.

11.2.14 The Topical BETi Compounds set forth on Exhibit 1.88 are all BETi compounds owned or Controlled by In4Derm or its Affiliates as of the Effective Date that have been developed by In4Derm or its Affiliates for topical administration.

11.3DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

ARTICLE 12INDEMNIFICATION; INSURANCE

12.1Indemnification of In4Derm. VYNE shall indemnify, defend, and hold harmless In4Derm, its Affiliates, the University of Dundee and its and their respective directors, officers, employees, and agents (the “In4Derm Indemnitees”) from and against any and all losses, damages, liabilities, penalties, settlements, costs, taxes (including penalties and interest) and expenses (including reasonable attorneys’ fees and other expenses of litigation) (collectively, “Losses”) in connection with any and all suits, investigations, claims, or demands of Third Parties (collectively, “Third Party Claims”) incurred by or rendered against the In4Derm Indemnitees arising from or occurring as a result of: (a) the breach by VYNE or its Affiliates of this Agreement; (b) the negligence, recklessness, or willful misconduct on the part of VYNE or its Affiliates or their respective directors, officers, employees, and agents in performing any of its or their obligations under this Agreement; or (c) the Exploitation of any Compounds or Products by VYNE or its Affiliates or Sublicensees; except in each case ((a)–(c)) to the extent that In4Derm has an obligation to indemnify VYNE pursuant to Section 12.2; provided, in all cases, that (i) VYNE is not obligated to indemnify both In4Derm and the University of Dundee for the same claim and (ii) with respect to any indemnification of the University of Dundee, VYNE’s maximum aggregate liability shall not exceed the sum of five million pounds (£5,000,000) sterling per occurrence.

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12.2Indemnification of VYNE. In4Derm shall indemnify, defend, and hold harmless VYNE, its Affiliates and its and their respective directors, officers, employees, and agents (the “VYNE Indemnitees”) from and against any and all Losses in connection with any and all Third Party Claims incurred by or rendered against the VYNE Indemnitees arising from or occurring as a result of: (a) the breach by In4Derm or its Affiliates of this Agreement; or (b) the negligence, recklessness, or willful misconduct on the part of In4Derm or its Affiliates or its or their respective directors, officers, employees, and agents in performing its obligations under this Agreement; except in each case ((a)–(b)) to the extent that VYNE has an obligation to indemnify In4Derm pursuant to Section 12.1.

12.3Notice of Claim. All indemnification claims in respect of a Party, its Affiliates, or its or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “IndemnifiedParty”). The Indemnified Party shall give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “IndemnificationClaimNotice”) of any Losses or discovery of fact upon which such Indemnified Party intends to base a request for indemnification under this ARTICLE 12, but in no event shall the Indemnifying Party be liable for any Losses that result from any delay by the Indemnified Party in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the Indemnitee copies of all papers and official documents received in respect of any Losses and Third Party Claims.

12.4Control of Defense. The Indemnifying Party may conduct and control, through counsel of its choosing, any action for which indemnification is sought, and if the Indemnifying Party elects to assume the defense thereof, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses of other legal counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof. The Indemnifying Party may settle any action, claim, or suit for which the Indemnified Party is seeking indemnification; provided that the Indemnifying Party shall first give the Indemnified Party advance written notice of any proposed compromise or settlement and such Indemnified Party provides prior written approval, such approval not to be unreasonably conditioned, withheld or delayed. The Parties and their employees shall cooperate fully with each other and their legal representatives in the investigation, defense, prosecution, negotiation, or settlement of any such claim or suit. Each Party’s indemnification obligations under this ARTICLE 12 shall not apply to amounts paid by an Indemnified Party in settlement of any action with respect to a Third Party claim, if such settlement is effected without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned, or delayed. In no event shall the Indemnifying Party settle or abate any Third Party Claim in a manner that would diminish the rights or interests of the Indemnified Party, admit any liability, fault, or guilt by the Indemnified Party, or obligate the Indemnified Party to make any payment, take any action, or refrain from taking any action, without the prior written approval of the Indemnified Party.

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12.5Limitation of Liability. EXCEPT FOR DAMAGES PAYABLE FOR A PARTY’S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 10 OR REQUIRED TO BE PAID PURSUANT TO A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS ARTICLE 12, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS OR BUSINESS INTERRUPTION, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF ANY LICENSE GRANTED HEREUNDER, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL EXCLUDE OR LIMIT A PARTY’S LIABILITY TO THE EXTENT THAT IT MAY NOT BE SO EXCLUDED OR LIMITED UNDER APPLICABLE LAW, INCLUDING ANY SUCH LIABILITY FOR DEATH OR PERSONAL INJURY CAUSED BY THAT PARTY’S NEGLIGENCE OR LABILITY FOR FRAUD OR FRAUDULENT MISREPRESENTATION.

12.6Insurance. Each Party shall procure and maintain insurance, including product liability insurance, adequate to cover its obligations hereunder and consistent with normal business practices of prudent companies similarly situated. Such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under this ARTICLE 12. Each Party shall provide the other Party with written evidence of such insurance upon request. Each Party shall provide the other Party with written notice at least thirty (30) days prior to the cancellation, nonrenewal or material change in such insurance.

ARTICLE 13TERM AND TERMINATION

13.1Term. This Agreement shall commence on the Effective Date and, unless earlier terminated in accordance herewith, shall continue in force and effect on a Product-by-Product and Country-by-Country basis, until the expiration of the Royalty Term for such Product in such Country (such period, the “Term”). Upon the expiration (but not early termination) of this Agreement for all Products in a Country, the licenses granted by In4Derm to VYNE under Section 2.1 become non-exclusive, fully paid-up, royalty-free, and perpetual for such Country.

13.2Termination for Convenience. VYNE may terminate this Agreement in its entirety or on a Product-by-Product and Country-by-Country basis, for any or no reason, upon ninety (90) days’ prior written notice to In4Derm.

13.3Termination for Uncured Material Breach. Each Party may terminate this Agreement immediately upon written notice to the other Party if the other Party materially breaches its obligations under this Agreement and, after receiving written notice identifying such material breach in reasonable detail, fails to cure such material breach within sixty (60) days from the date of such notice (thirty (30) days for payment-related breaches); provided, that if any alleged breach by VYNE relates solely to a Product, then In4Derm may exercise its rights under this Section 13.3 solely with respect to such Product, as applicable; provided, further,that, such cure period shall be extended for up to an additional sixty (60) days upon the breaching Party

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providing a written plan that reasonably demonstrates the need for such additional time and continuing to use Commercially Reasonable Efforts to cure such breach. If either Party disputes (a) whether such material breach has occurred, or (b) whether the defaulting Party has cured such material breach, the Parties shall promptly resolve the dispute under Section 14.2. During the pendency of such a dispute, all of the terms and conditions of this Agreement remain in effect and the Parties shall continue to perform all of their respective obligations hereunder.

13.4Termination for Insolvency. If either Party (a) files for protection under bankruptcy or insolvency laws, (b) makes an assignment for the benefit of creditors, (c) appoints or suffers appointment of a receiver or trustee over substantially all of its property that is not discharged within ninety (90) days after such filing, (d) is a party to any dissolution or liquidation, (e) files a petition under any bankruptcy or insolvency act or has any such petition filed against it that is not discharged within ninety (90) days of the filing thereof, or (f) admits in writing its inability generally to meet its obligations as they fall due in the general course, then the other Party may terminate this Agreement in its entirety effective immediately upon written notice to such Party.

13.5Rights in Bankruptcy.

13.5.1Applicability of 11 U.S.C. § 365(n). All rights and licenses (collectively, the “Intellectual Property”) granted under or pursuant to this Agreement, including all rights and licenses to use improvements or enhancements developed during the Term, are intended to be, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”) or any analogous provisions in any other Country or jurisdiction, licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that the licensee of such Intellectual Property under this Agreement shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, including Section 365(n) of the Bankruptcy Code, or any analogous provisions in any other Country or jurisdiction. All of the rights granted to either Party under this Agreement shall be deemed to exist immediately before the occurrence of any bankruptcy case in which the other Party is the debtor.

13.5.2Rights of non-Debtor Party in Bankruptcy. If a bankruptcy proceeding is commenced by or against either Party under the Bankruptcy Code or any analogous provisions in any other Country or jurisdiction, the non-debtor Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) any Intellectual Property and all embodiments of such Intellectual Property, which, if not already in the non-debtor Party’s possession, shall be delivered to the non-debtor Party within five Business Days of such request; provided, that the debtor Party is excused from its obligation to deliver the Intellectual Property to the extent the debtor Party continues to perform all of its obligations under this Agreement and the Agreement has not been rejected pursuant to the Bankruptcy Code or any analogous provision in any other Country orjurisdiction.

13.6Termination of the Head Licence. In4Derm may terminate this Agreement immediately upon written notice to VYNE in the event that Dundee terminates the Head Licence pursuant to Section 5.1(e) of the Head Licence as a result of a merger, acquisition or corporate

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reorganization of VYNE, or sale of all or substantially all of VYNE assets, in each case with or to a party that is a tobacco company or weapons manufacturer and which is deemed by Dundee (acting reasonably) to breach Dundee’s ethical policy on research activities.

13.7Effects of Termination. Upon any termination of this Agreement with respect to a Product in a Country (the “Terminated Product”), the following terms will apply.

13.7.1Licenses. All licenses granted by In4Derm with respect to the Terminated Product will automatically terminate.

13.7.2Sublicenses. All Sublicenses granted pursuant to this Agreement shall terminate, except that at the request of any Sublicensee with respect to the Terminated Product In4Derm will, from the effective date of such termination, enter into a direct license with such Sublicensee, provided that (i) such Sublicensee is not then in default of its sublicense agreement and (ii) no direct license shall be granted where this Agreement is terminated by In4Derm pursuant to Section 13.6. Such direct license shall not obligate such Sublicensee to perform contractual obligations greater than those set forth in the applicable sublicense or In4Derm to perform contractual obligations greater than those set forth herein, the scope of such direct license shall be of the scope of the license sublicensed to such Sublicensee, and the amounts payable to In4Derm by such Sublicensee under such direct license shall be equivalent to the amounts In4Derm would have received from VYNE under this Agreement as a result of such Sublicensee’s activities had this Agreement remained in effect and such Sublicensee performed such activity under the sublicense agreement with VYNE.

13.7.3Wind-Down. VYNE shall (a) responsibly wind-down, in accordance with accepted pharmaceutical industry norms and ethical practices, any on-going clinical studies with respect to the Terminated Product in which patient dosing has commenced and (b) at In4Derm’s written election, (i) transfer to In4Derm or its designee any such clinical studies to the extent permitted under Applicable Laws and accepted pharmaceutical industry norms and ethical practices, or (ii) if reasonably practicable and not adverse to patient safety, complete such trials and In4Derm shall reimburse VYNE its internal costs and external expenses associated therewith.

13.7.4Confidential Information. Each Party shall immediately return or cause to be returned to the other Party or destroy if the other Party requests (and certify such destruction to such other Party) all Confidential Information with respect to the Terminated Product and all substances or compositions of the other Party or its Affiliates delivered or provided by or on behalf of such other Party in accordance with Section 10.7.

13.7.5Regulatory Documentation. Unless this Agreement is terminated by VYNE pursuant to Section 13.3, VYNE shall provide and assign to In4Derm or its designee all Regulatory Documentation, including Regulatory Approvals, for the Terminated Products to the extent possible under Applicable Law in the Territory.

13.7.6Transition Assistance. Upon In4Derm’s reasonable request, (a) VYNE shall provide such assistance as may be reasonably necessary or useful for In4Derm to continue

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the Exploitation of Terminated Products in the Territory, to the extent VYNE or its Affiliate is then performing or having performed such activities, and (b) VYNE shall provide In4Derm with copies of any promotional and marketing materials generated by or on behalf of VYNE with respect to Terminated Products prior to the effective date of termination. In4Derm shall reimburse VYNE’s internal costs and external expenses in connection with such transition assistance.

13.7.7Inventory. In4Derm may purchase any and all of the inventory of Terminated Products held by VYNE or its Affiliates or sublicensees as of the date of termination, at a price equal to the transfer price paid by VYNE to In4Derm for such inventory.

13.7.8Data. Unless this Agreement is terminated by VYNE pursuant to Section 13.3, VYNE shall (a) promptly provide to In4Derm all data, including clinical and pharmacovigilance data, generated by or on behalf of VYNE with respect to the Terminated Product (the “Terminated Product Data”), and (b) and hereby does grant to In4Derm as of the effective date of the termination, a worldwide, non-exclusive, perpetual, royalty-free license, with the right to sublicense through multiple tiers, under the Terminated Product Data to Exploit the Terminated Product.

13.7.9Intellectual Property.Unless this Agreement is terminated by VYNE pursuant to Section 13.3, VYNE hereby grants to In4Derm, effective upon the effective date of termination:

(a)a worldwide, exclusive, perpetual, license, with the right to sublicense through multiple tiers, under Know-How and Patents Controlled by VYNE that comprise or claim (i) Inventions made solely by VYNE and its Affiliates’ employees, agents, or independent contractors in the conduct of activities under this Agreement or (ii) any Joint Invention, in each case of (i) and (ii) to Exploit the Terminated Products;

(b)a worldwide, non-exclusive, perpetual, license, with the right to sublicense through multiple tiers, under all Know-How and Patents Controlled by VYNE that are necessary for the Exploitation of Terminated Products (other than Know-How relating to and Patents claiming the Manufacture of Terminated Products or those Patents set forth Section 13.6.9(a)) to Exploit the Terminated Products; and

(c)a right to negotiate in good faith for a license under Know-How and Patents Controlled by VYNE that are necessary or reasonably useful for the Manufacture of the Terminated Products on terms and conditions, and for economics value, to be negotiated in good faith by the Parties; provided, that if the Parties cannot agree on such terms, conditions, and economics after ninety (90) days despite having used good faith efforts to do so, then the Parties shall resolve such dispute using the same terms set forth in Exhibit 3.2 of the Option Agreement, applied mutatis mutandis.

13.7.10 Royalties. Unless this Agreement is terminated by In4Derm pursuant to Section 13.3 (Termination for Uncured Material Breach) or Section 13.6 (Termination of the Head Licence), in consideration for the rights granted to In4Derm under Section 13.7.9, during

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the remainder of the Royalty Term for the applicable Terminated Product, In4Derm shall make quarterly, non-refundable, non-creditable royalty payments to VYNE on the annual Net Sales of all Terminated Products Covered by Patents Controlled by VYNE that are sold by or on behalf of In4Derm, its Affiliates or sublicensees in the Territory at the same rate and on the same terms that would have been payable to In4Derm under Section 8.3; provided, however, that for the purposes of this Section 13.7.10 the applicable royalty rates set forth in Section 8.3.1 shall be deemed to be reduced by: (a) [***] of the otherwise applicable rate if the effective date of termination of the Agreement is prior to Initiation of a Phase 1 Clinical Trial of a Product, (b) [***] of the otherwise applicable rate if the effective date of termination of the Agreement is prior to Initiation of a Phase 2 Clinical Trial of a Product, or (c) [***] of the otherwise applicable rate if the effective date of termination of the Agreement is prior to Initiation of a Phase 3 Clinical Trial of a Product. For clarity, in the case of termination by In4Derm pursuant to Section 13.3 (Termination for Uncured Material Breach) or Section 13.6 (Termination of the Head Licence), In4Derm shall not be required to pay any additional consideration for the rights granted to In4Derm under Section 13.7.9.

13.8Accrued Rights; Surviving Obligations. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. Without limiting the foregoing, the following Articles and Sections of this Agreement shall survive the termination or expiration of this Agreement for any reason: Article 1 (to the extent such defined terms are used in other surviving sections), Section 4.4, Section 8.7, Section 8.8, Section 9.1, Article 10, Section 11.3, Section 12.1 (with respect to causes of action for which the cause of action arose prior to the effect of termination), Section 12.2 (with respect to causes of action for which the cause of action arose prior to the effect of termination), Section 12.3, Section 12.4, Section 12.5, Section 13.7, this Section 13.8, and Article 14.

ARTICLE 14MISCELLANEOUS

14.1Governing Law. This Agreement and all disputes arising out of or related to this Agreement or any breach hereof shall be governed by and construed under the laws of the England and Wales, without giving effect to any choice of law principles that would require the application of the laws of a different province or territory.

14.2Dispute Resolution. The Parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales; provided, however, that each Party may institute judicial proceedings in any other jurisdiction against the other party or anyone acting by, through or under such other party, in order to enforce the instituting party’s rights hereunder through reformation of contract, specific performance, injunction or similar equitable relief.

14.3Equitable Relief; Court Actions. Notwithstanding anything to the contrary in this Agreement, given the unique nature of the rights granted under the Option Agreement and this Agreement and the competitive damage that a Party may suffer upon a breach of ARTICLE

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10 by the other Party, the Parties agree that monetary damages may not be a sufficient remedy for any breach by a Party of ARTICLE 10. In addition to all other remedies, a Party shall be entitled to seek specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of ARTICLE 10 by the other Party.

14.4Entire Agreement; Amendments. This Agreement, including its exhibits, and the agreements entered into by the Parties pursuant to this Agreement, constitute the entire, final, and complete agreement and understanding between the Parties with respect to its subject matter and replaces and supersede all prior discussions and agreements between them with respect to the subject matter hereof. No modification of any terms or conditions hereof shall be effective unless made in writing and signed by a duly authorized representative of each Party.

14.5Severability. If any provision of this Agreement is, becomes, or is deemed invalid or unenforceable by any court or other competent authority having jurisdiction, the remainder of this Agreement shall remain unimpaired and the Parties shall promptly negotiate in good faith to amend such invalid or unenforceable provision to conform to applicable laws so as to be valid and enforceable and best accomplish the original intent of the Parties.

14.6Waiver and Non-Exclusion of Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless it is in writing and signed by the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach by such other Party whether of a similar nature or otherwise.

14.7Force Majeure. Each Party shall be excused from liability for the failure or delay in performance of any obligation under this Agreement by reason of any event beyond such Party’s reasonable control and which is not reasonably foreseeable, including acts of God, fire, flood, explosion, earthquake, pandemic, or other natural forces, war, civil unrest, acts of terrorism, accident, destruction, or other casualty, any lack or failure of transportation facilities, any lack or failure of supply of raw materials or supplies, or any other event similar to those enumerated above. Such excuse from liability shall be effective to the extent and duration of the events causing the failure or delay in performance and provided that the Party has not caused such events to occur. Notice of a Party’s failure or delay in performance due to force majeure must be given to the other Party as soon as reasonably practicable after its occurrence. All delivery dates under this Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure.

14.8Independent Contractors. The relationship of the Parties is that of independent contractors, and nothing in this Agreement shall be construed to create a partnership, joint venture, franchise, employment, or agency relationship between the Parties. Neither Party shall be considered the agent of the other Party for any purpose whatsoever and neither Party has any authority to enter into any contract or assume any obligation for the other Party or to make any warranty or representation on behalf of the other Party.

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14.9Assignment. This Agreement is binding upon and inure to the benefit of the respective successors and assigns of the Parties. Neither Party may assign its rights and obligations under this Agreement, in whole or in part, without the prior written consent of the other Party (such consent not to be unreasonably withheld, conditioned, or delayed), except that either Party may assign this Agreement without such consent to an Affiliate or to a successor in interest by way of merger, consolidation, or sale of all or substantially all of its business to which this Agreement relates; provided that, notwithstanding the foregoing, neither Party shall assign its rights and obligations under this Agreement to a Third Party that is a tobacco company or weapons manufacturer. Any purported assignment in violation of this Section 14.9 is null and void.

14.10Notices. Any notice required or permitted pursuant to this Agreement shall be in writing and delivered by personal delivery, overnight express courier service, electronic mail, or by certified or registered mail, return receipt requested, and shall be deemed given upon personal delivery, upon acknowledgement of receipt of electronic transmission, on the next Business Day after deposit if sent by overnight express courier service, or five days after deposit in the mail. Notices will be sent to the following addresses or such other address as either Party may specify in writing pursuant to this Section 14.10:

If to In4Derm, to:

In4Derm Limited

15 Luke Place

Broughty Ferry

Dundee

Scotland DD5 3BN

[***]

with a copy (which shall not constitute notice) to:

[***]

If to VYNE, to:     

VYNE Therapeutics Inc.

520 U.S. Highway 22

Suite 204

Bridgewater, NJ 08807

Attention: Chief Scientific Officer

[***]

with a copy (which shall not constitute notice) to:

VYNE Therapeutics Inc.

520 U.S. Highway 22

Suite 204

Bridgewater, NJ 08807

Attention: General Counsel

[***]

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14.11Performance by Affiliates. Each Party may use one (1) or more of its Affiliates to perform its obligations and duties hereunder and such Affiliates are expressly granted certain rights herein to perform such obligations and duties; provided that each such Affiliate shall be bound by the corresponding obligations of such Party; and provided further that such Party, subject to an assignment to such Affiliate pursuant to Section 14.9, shall remain liable hereunder for the prompt payment and performance of its obligations hereunder.

14.12Construction. The terms of this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms of this Agreement will be interpreted and construed in accordance with their usual and customary meanings, and each Party hereby waives the application in connection with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms contained in this Agreement will be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Agreement. Except as otherwise explicitly specified to the contrary, (a) references to a Section, exhibit, appendix or schedule means a Section of, or exhibit, appendix or schedule to this Agreement, unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) the words “will” and “shall” have the same meaning, (d) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (e) words in the singular or plural form include the plural and singular form, respectively, (f) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement, (g) unless otherwise specified, “$” is in reference to United States dollars, and “£” is in reference to British pounds sterling, (h) the headings contained in this Agreement, in any exhibit, appendix or schedule to this Agreement are for convenience only and will not in any way affect the construction of or be taken into consideration in interpreting this Agreement, (i) the word “or” is disjunctive but not necessarily exclusive, (j) he words “herein”, “hereof”, and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision, and (k) all references to days mean calendar days, unless otherwise specified.

14.13Further Actions; Expenses. Each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. Each Party shall bear its own expenses in connection with the negotiation and execution of this Agreement.

14.14No Benefit to Third Parties. Except as provided in ARTICLE 12, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.

14.15Counterparts. This Agreement may be executed in one or more counterparts in original, facsimile, PDF, or other electronic format, each of which shall be an original, and all of which together shall constitute one instrument.

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[SIGNATURE PAGE FOLLOWS]

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THIS LICENSE AGREEMENT is executed by the authorized representatives of the Parties as of the Effective Date.

In4Derm Limited    VYNE Therapeutics Inc.

By:/s/ Andrew WoodlandBy: /s/ Iain Stuart

Name: Andrew WoodlandName: Iain Stuart

Title: CSOTitle: CSO

VYNE Therapeutics Inc.

By: /s/ David Domzalski

Name: David Domzalski

Title:     CEO    

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Exhibit 1.40

In4Derm Know-How

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Exhibit 1.41

In4Derm Patents

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Exhibit 1.59

Expert Procedure

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Exhibit 1.88

Topical BETi Compounds

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Exhibit 8.2.3

Example of Skipped Milestones for New Administration Products

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Schedule 10.5

Press Release

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EX-10.2

Exhibit 10.2

CERTAIN IDENTIFIED INFORMATION HAS BEEN OMITTED FROM THIS DOCUMENT BECAUSE IT IS BOTH NOT MATERIAL AND WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND HAS BEEN MARKED WITH “[***]” TO INDICATE WHERE OMISSIONS HAVE BEEN MADE.

EVALUATION AND OPTION AGREEMENT

This Evaluation and Option Agreement (“Option Agreement”) is entered into as of April 30, 2021 (the “Effective Date”) by and between, on the one hand, In4Derm Limited, a company incorporated and registered in Scotland with company number SC651132 with a place of business at 15 Luke Place, Broughty Ferry, Dundee, Scotland, DD5 3BN (“In4Derm”), and, on the other hand, VYNE Therapeutics Inc., a Delaware corporation with a principal place of business at 520 U.S. Highway 22, Suite 204, Bridgewater, NJ 08807 (“VYNE”). In4Derm and VYNE may be referred to herein individually as a “Party”and collectively as the “Parties”.

Background

Whereas, In4Derm has discovered and is developing proprietary Bromodomain & Extra-Terminal Domain Inhibitors (“BETi”) for treatment of immunology and oncology conditions;

Whereas, VYNE is a specialty pharmaceutical company focused on developing innovative therapies for skin conditions;

Whereas, VYNE wishes to obtain from In4Derm, and In4Derm wishes to grant to VYNE, an exclusive option to obtain an exclusive license under certain of In4Derm’s technology to research, develop, manufacture, and commercialize products incorporating such technology, all on the terms and conditions set forth herein; and

Whereas, VYNE wishes to evaluate the use of such technology to determine whether it wishes to exercise its option and In4Derm wishes to grant VYNE the right to conduct such evaluation, all on the terms and conditions set forth herein.

Now Therefore, in consideration of the foregoing premises and the mutual promises, covenants, and conditions set forth herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

Agreement

1.Definitions

1.1“Affiliate” means, with respect to a Party, any individual or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Party, for so long as such control exists. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct the management or policies of such entity, whether through the ownership of voting securities, by contract relating to

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voting rights or corporate governance, or otherwise; or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of such entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

1.2“BETi” has the meaning set forth in the recitals.

1.3“Business Day” means a day other than a Saturday, Sunday, or bank or other public holiday in New York, New York or London, England.

1.4“Compound” means all BETi compounds that are Controlled by In4Derm as of the Effective Date and as of the Option Exercise Date (including those BETi compounds Controlled by In4Derm as of the Effective Date, as listed in Exhibit 1.4), including any modifications, substitutions, group replacements or derivatives thereof, and all prodrugs, metabolites, salts, esters, hydrates, solvates, isomers, enantiomers, free acid forms, free base forms, crystalline forms, co-crystalline forms, amorphous forms, racemates, polymorphs, chelates, stereoisomers, atropisomers, tautomers or optically active forms thereof.

1.5“Confidential Information” means all non-public information that is generated by or on behalf of a Party or its Affiliates or which one Party or any of its Affiliates has supplied or otherwise made available to the other Party or its Affiliates, whether made available orally, in writing, or in electronic form, including information comprising or relating to concepts, discoveries, inventions, and data in relation to this Option Agreement; provided that all Materials are deemed In4Derm’s Confidential Information, and all Results and other Inventions are deemed both Parties’ Confidential Information in accordance with the ownership terms of Section 5.4. The terms and conditions of this Option Agreement is the Confidential Information of each of the Parties.

1.6“Control” or “Controlled” means, with respect to any Know-How, Patent Rights, or other proprietary technology, the possession of the right, whether by ownership, license, or otherwise (other than by operation of the rights granted in Sections 3.1 and 5.1) to grant a license or sublicense under such Know-How, Patent Rights, or other proprietary technology as provided for herein without violating the terms of any agreement with any Third Party.

1.7“Data Package” has the meaning set forth in Section 2.2.

1.8“Effective Date” has the meaning set forth in the preamble.

1.9“Evaluation Studies” has the meaning set forth in Section 2.1.

1.10“Field” means any and all uses, including the treatment, palliation, diagnosis or prevention of any disease, disorder or condition in humans.

1.11“In4Derm” has the meaning set forth in the preamble.

1.12“In4Derm Background Technology” means all Know-How and Patent Rights that (a) are Controlled by In4Derm on the Effective Date or (b) are discovered, developed, invented or created solely by or on behalf of In4Derm or its Affiliates outside of this Option

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Agreement and without using or referencing VYNE’s Confidential Information, including those that are necessary or reasonably useful for the evaluation of the Materials pursuant to the Evaluation Studies.

1.13“Inventions” has the meaning set forth in Section 5.2.

1.14“Know-How” means inventions, technical information, know-how and materials, including technology, data, compositions, formulae, biological materials, assays, reagents, constructs, compounds, discoveries, procedures, processes, practices, protocols, methods, techniques, results of experimentation or testing, knowledge, trade secrets, skill and experience, in each case whether or not patentable or copyrightable.

1.15“License Agreement” has the meaning set forth in Section 3.3.

1.16“License Effective Date” means, with respect to a License Agreement, the date the License Agreement becomes effective by its terms.

1.17“License Terms” means the terms attached hereto as Exhibit 1.18.

1.18“Materials” means the Original Materials and: (a) all improvements and modifications to or derivatives of the Original Materials; and (b) all materials containing or incorporating any of the foregoing.

1.19“Negotiation Period” means the period of time commencing on the Effective Date and ending ninety (90) days after the Effective Date.

1.20“Option” has the meaning set forth in Section 3.1.

1.21“Option Fee” has the meaning set forth in Section 4.1.

1.22“Option Term” means the period of time commencing on the Effective Date and ending, subject to earlier expiry pursuant to Section 3.4:

(a)with respect to the Topical BETi Compounds and Products containing such Compounds, eighteen (18) months from the date In4Derm delivers the Trial Batch to VYNE; and

(b)with respect to the Oral BETi Compounds and Products containing such Compounds: the earlier of: (i) fourteen (14) Business Days from the later of delivery of the Data Package by In4Derm to VYNE and In4Derm notifying VYNE of the final selection by In4Derm of a lead candidate for the Oral BETi Compound program, and (ii) June 30, 2022; provided that in the event that clause (i) above is triggered before June 30, 2022, In4Derm shall notify VYNE and VYNE may within fourteen (14) Business Days of such notification either (x) decline or exercise its option to license the Oral BETi Compounds and Products containing such Compounds or (y) extend the period in which to exercise its option to license the Oral BETi Compounds and Products containing such Compounds to June 30, 2022 and make a payment of [***] to In4Derm, such funds to be used for further development of Oral BETi Compounds as In4Derm may determine in its sole discretion, in consideration of such extension. Where VYNE

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exercises its right to extend the period under (y) above, VYNE will have a period of fourteen (14) Business Days from June 30, 2022 to provide written notice to In4Derm to exercise its option to license the Oral BETi Compounds and Products containing such Compounds.

1.23“Oral BETi Compounds” means any Compound that may be suitable for delivery by oral administration. The Oral BETi Compounds Controlled by In4Derm as of the Effective Date are listed in Part A of Exhibit 1.4.

1.24“Oral BETi Compounds Activities” has the meaning set forth in Section 2.2

1.25“OriginalMaterials” has the meaning set forth in Section 2.1.

1.26“Party” and “Parties” have the meaning set forth in the preamble.

1.27“Patent Rights” means (a) patents, patent applications and similar government-issued rights protecting inventions in any country or jurisdiction however denominated, (b) all priority applications, divisionals, continuations, substitutions, continuations-in-part of and similar applications claiming priority to any of the foregoing, and (c) all patents and similar government-issued rights protecting inventions issuing on any of the foregoing applications, together with all registrations, reissues, renewals, re-examinations, confirmations, supplementary protection certificates, and extensions of (a), (b) or (c).

1.28“Product” means any pharmaceutical product, including all forms, presentations, strengths, doses and formulations containing one or more Compounds as an active ingredient. Products shall include combination products.

1.29“Results” has the meaning set forth in Section 5.3.

1.30“Territory” means all the countries of the world.

1.31“Term” has the meaning set forth in Section 8.1.

1.32“Third Party” means any entity other than In4Derm or VYNE or an Affiliate of In4Derm or VYNE.

1.33“Topical BETi Compounds” means the Compounds listed in Part B of Exhibit 1.4.

1.34“Trial Batch” has the meaning set forth in Exhibit 2.1.

1.35“VYNE” has the meaning set forth in the preamble.

1.36“VYNE Background Technology” means all Know-How and Patent Rights that (a) are Controlled by VYNE on the Effective Date or (b) are discovered, developed, invented or created solely by or on behalf of VYNE or its Affiliates outside of this Option Agreement and without using or referencing In4Derm’s Confidential Information.

2.Evaluation

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2.1Transfer of Materials; Evaluation Studies. In4Derm shall provide to VYNE, at VYNE’s sole expense, the Compounds as described in the attached Exhibit 2.1 and in the quantities specified therein (the “OriginalMaterials”). During the Option Term, VYNE shall use commercially reasonable efforts (without regard to any other topical products in development by VYNE) to stabilize, pre-clinically develop and manufacture Products containing the Materials as their active ingredient for purposes of determining the feasibility of administration of the Materials for topical delivery (the “Evaluation Studies”), at VYNE’s sole expense. VYNE shall use and may allow subcontractors to use the Materials solely for conducting the Evaluation Studies under this Option Agreement and shall not use or allow the use of the Materials for any other purpose, including any commercial purpose. VYNE may sub-contract performance of the the Evaluation Studies only to its Affiliates and reputable Third Party contract research organizations which have entered into legally binding obligations to VYNE on terms that are no less onerous than those set out in this Option Agreement, and which extend to the Materials. VYNE shall remain liable to In4Derm for the performance of VYNE’s obligations under this Option Agreement, and for any acts or omissions of any person to whom VYNE or its Affiliates or sub-contractors have provided the Materials, that would, if effected by VYNE, constitute a breach of this Option Agreement. Within a reasonable time after the expiration of the Option Term, but no later than thirty (30) days after the expiration of the Option Term, if VYNE has not exercised the Option, any remaining Materials will be returned by VYNE to In4Derm at VYNE’s sole expense, or otherwise disposed of as mutually agreed by the Parties with VYNE certifying such destruction in writing.

2.2Oral BETi Compounds Activities. As soon as reasonably practical after the Effective Date, In4Derm will use commercially reasonable efforts to conduct evaluation activities reasonably designed to generate an evaluation data package (the “Data Package”), such Data Package to be provided to VYNE promptly upon completion of such activities for VYNE’s review together with a proposed selection of a single Oral BETi Compound with reasonable justification for its selection based on evaluation data measured against the parameters of the Data Package. The initial Oral BETi Compounds activities and the parameters of the Data Package are described in Exhibit 2.2.

2.3Use of Materials. VYNE acknowledges and agrees that the Materials are provided ‘as is’ and may have unpredictable and unknown biological or chemical properties, that they are to be used with caution, and that they are not to be used for testing in or treatment of humans or in connection with any diagnostic service. Except as required for the performance of the Evaluation Studies or otherwise agreed by the Parties in writing, VYNE shall not (nor procure or enable any Third Party to) attempt to modify or reverse-engineer any of the Materials. Except as otherwise agreed by the Parties in writing: (i) VYNE shall keep the Materials secure at VYNE’s laboratory or the relevant laboratory of an applicable Affiliate or sub-contractor and ensure that the Materials are not removed from such location; (ii) VYNE shall not sell, offer for sale, gift or otherwise commercially supply the Materials to any Third Party nor use the Materials to provide any service; and (iii) VYNE shall not allow access to or use of the Materials by any person other than VYNE’s or its Affiliates’ or sub-contractors’ personnel who are directly involved in the performance of the Evaluation Studies. VYNE shall maintain reasonable security measures with respect to the Materials, no less strict than it maintains to protect its own valuable tangible property against loss, theft, and destruction.

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2.4Compliance. Each Party covenants that, in performing its obligations under this Option Agreement and in undertaking activities in connection with the Materials and Compounds pursuant to this Option Agreement: (a) it shall comply with all applicable laws and applicable regulations and regulatory standards and guidelines, including cGMP, cGLP, cGCP and other rules, regulations and requirements; and (b) it will not employ or knowingly use the services of any person that has been debarred under Section 306(a) or 306(b) of the FD&C Act or any comparable provision of any other applicable laws. Each Party shall notify the other Party immediately in the event that such Party becomes aware of such debarment or threatened debarment of any of its employees engaged in any activities in connection with this Option Agreement.

2.5Alliance Management. On or promptly after the Effective Date, each Party will designate, and notify the other Party of the identify of, an alliance manager to in good faith keep the other Party apprised of the status of development and evaluation under this Option Agreement (each an “Alliance Manager”). The Parties shall procure that their respective Alliance Managers will communicate with each other, by email or letter, telephone, videoconference or in person, as often as is reasonably necessary for each Party to update the other on the the status of development and evaluation under this Option Agreement. Each Party may change its Alliance Manager at any time by giving written notice to the other Party.

3.Option Grant

3.1Exclusive Option. In4Derm hereby grants to VYNE, during the applicable Option Term, an exclusive option to enter into an exclusive license agreement with In4Derm on the License Terms for:

(a)all Compounds comprising Oral BETi Compounds and all Products containing such Compounds; and/or

(b)all Compounds comprising Topical BETi Compounds and all Products containing such Compounds;

(each of (a) and (b), an “Option”). Each Option may be exercised in accordance with Section 3.3 independent of the other Option.

3.2Terms of License Agreement. In4Derm and VYNE shall exclusively negotiate in good faith, during the Negotiation Period, the terms of a definitive license agreement based on the License Terms to be entered into by the Parties upon VYNE’s exercise of an Option in accordance with Section 3.3. If despite such good faith negotiations In4Derm and VYNE cannot agree upon the terms of such license agreement by the expiration of the Negotiation Period, then either Party may within five (5) days of expiration of the Negotiation Period serve notice on the other Party (a “Referral Notice”) that it wishes to have any terms in the License Agreement not then agreed by In4Derm and VYNE finally determined by baseball-style arbitration carried out in accordance with the procedure set forth in Exhibit 3.2 (“Resolution Proceeding”). If a Resolution Proceeding is initiated by VYNE, VYNE shall pay In4Derm’s reasonable expenses associated with such proceeding. Upon written agreement by the Parties of the terms of the License Agreement (whether during the Negotiation Period or following completion of the Resolution Proceeding in accordance with the procedure set forth in Exhibit 3.2), the Parties

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shall incorporate the template license agreement as a new Exhibit F to this Option Agreement. Pending completion of the Resolution Proceeding and execution of the License Agreement, the terms and conditions set forth in this Option Agreement shall continue to apply, provided always that a Resolution Proceeding shall not operate to extend the Option Term unless agreed otherwise by the Parties.

3.3Exercise of Option. VYNE may exercise each Option at any time from the Effective Date until the end of the applicable Option Term by providing written notice thereof to In4Derm (the date such notice is given, the “Option Exercise Date”). Upon VYNE’s exercise of the Option during the Option Term applicable to the Oral BETi Compounds or Topical BETi Compounds, the Parties shall within seven (7) days of the applicable Option Exercise Date complete and execute a license agreement in the form of the template license agreement agreed by the Parties pursuant to Section 3.2 (such executed agreement, a “License Agreement”). For clarity, in the event that VYNE exercises both of the Options, the Parties intend that a separate License Agreement shall be entered into for each Option.

3.4Non-Exercise of Option. If VYNE does not exercise an Option during the respective Option Term or notifies In4Derm in writing prior to the expiration of the respective Option Term that VYNE will not exercise the Option, or if VYNE has exercised an Option but VYNE does not enter into the License Agreement within seven (7) days of the applicable Option Exercise Date, then the Option and Option Term for the applicable Compounds and Products containing such Compounds shall automatically be deemed expired without any further action on the part of any Party; provided, that if, during the ninety (90)-day period following the expiration of the relevant Option Term, In4Derm wishes to enter into a license agreement with a Third Party with respect to the applicable Compounds or Products containing such Compounds on terms more favorable to In4Derm than the terms set forth in the template license agreement agreed by the Parties pursuant to Section 3.2 (or if no template license agreement has been agreed, the Term Sheet set forth in Schedule 1.18), then In4Derm shall and hereby does grant to VYNE the right to match any offer to take a licence in respect of the relevant Compounds or Products that In4Derm receives from a Third Party during such ninety (90)-day period.

3.5Reasonable Assistance During Negotiation Period. During the Negotiation Period, In4Derm will promptly answer VYNE’s reasonable questions regarding In4Derm Background Technology and reasonably cooperate with VYNE to conduct a reasonable and customary due diligence.

3.6Third Party Rights. During the Option Term (and, if the Option is exercised, during the applicable License Execution Period), each Party shall promptly notify to the other Party upon becoming aware of any other intellectual property or other rights of any other person of which may be infringed or misappropriated by the development and commercialization of the Topical BETi Compounds or Oral BETi Compounds by VYNE pursuant to a License Agreement.

4.Payments

4.1Option Fee. In consideration of In4Derm’s grant to VYNE of the Option, VYNE shall pay to In4Derm a non-refundable option fee in the amount of seven hundred and twenty

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thousand British pound sterling (£720,000) (the “Option Fee”), which amount shall be paid by VYNE by wire transfer to an account designated by In4Derm within five (5) Business Days after the Effective Date. In4Derm intends to spend at least 50% of the Option Fee on the generation of the Data Package and research and development of the Oral BETi Compounds.

5.Research License, Results and Intellectual Property

5.1Research License. In4Derm hereby grants VYNE a non-exclusive, royalty-free, non sub-licensable (except to permitted subcontractors pursuant to Section 2.1), non-transferable (except as permitted pursuant to Section 9.9), worldwide license under the In4Derm Technology solely to conduct the Evaluation Studies during the Option Term and evaluate the Results during the Option Term. In4Derm retains all right, title and interest in the In4Derm Background Technology and does not grant In4Derm any rights hereunder in the foregoing except as expressly set out in this Option Agreement or a License Agreement.

5.2Inventions. All data, results, information, ideas, inventions, techniques, and other technology, whether or not patentable, and all intellectual property therein, that are generated, developed, or discovered by or on behalf of a Party in the performance of the activities hereunder relating to the Compounds shall be deemed “Inventions”. Inventions will not include any VYNE Background Technology or In4Derm Background Technology. VYNE retains all right, title and interest in the VYNE Background Technology and does not grant In4Derm any rights hereunder in the foregoing except as expressly set out in this Option Agreement.

5.3Results. Each Party shall keep complete and accurate records of the data and results of its activities hereunder (the “Results”) and all other Inventions and shall promptly and fully disclose to the other Party such Results and other Inventions. During the Option Term and, if the Option is exercised, during the period prior to the effective date of the applicable License Agreement, no Party shall publish or present to any Third Party any information related to the Materials, the Evaluation Studies, Results, or any Inventions without the prior written consent of the other Party and all Results and Inventions shall be deemed the Confidential Information of each of the Parties.

5.4Ownership. The Parties agree that all Inventions shall be owned by the inventor as determined in accordance with English patent law, subject to the terms of this Section 5.4. Notwithstanding the foregoing, VYNE shall own all right and interest in any Invention related to a topical Product containing a Topical BETi Compound (a “Topical Invention”) and In4Derm shall own all right and interest in any Invention related to an oral Product containing an Oral BETi Compound (an “Oral Invention”). In4Derm hereby assigns (and agrees to and shall assign if the present assignment of future rights is prohibited by applicable law) all right and interest in Topical Inventions to VYNE. VYNE hereby assigns (and agrees to and shall assign if the present assignment of future rights is prohibited by applicable law) all right and interest in Oral Inventions to In4Derm. To effectuate the foregoing assignments, each Party shall ensure that all entities and individuals that perform any activities on behalf of such Party under this Option Agreement are under a written or other legally enforceable obligation to assign all right, title, and interest in any intellectual property created pursuant to such activities directly to such Party. In4Derm shall assist VYNE, at VYNE’s reasonable expense, in securing for VYNE any patents, copyrights, or other proprietary rights in Topical Inventions, and to perform all acts that may be

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reasonably required to vest in VYNE all right, title, and interest in such Topical Inventions. VYNE shall assist In4Derm, at In4Derm’s reasonable expense, in securing for In4Derm any patents, copyrights, or other proprietary rights in Oral Inventions, and to perform all acts that may be reasonably required to vest in In4Derm all right, title, and interest in such Oral Inventions. During the Option Term, the Parties shall consult in good faith on patent related matters, patent strategy and the filing and content of patent applications.

6.Confidentiality

6.1Non-Disclosure. Except to the extent expressly authorized by this Option Agreement or otherwise agreed in writing by the Parties, the Parties agree that, during the Term and for ten years thereafter, the receiving Party shall keep confidential and shall not publish or otherwise disclose, and shall not use for any purpose other than as expressly provided for in this Option Agreement, any Confidential Information of the other Party, and each Party shall keep confidential and shall not publish or otherwise disclose the terms of this Option Agreement except as permitted herein. Each Party may use the other Party’s Confidential Information only to the extent required to accomplish the purposes of this Option Agreement, including exercising its rights and performing its obligations under this Option Agreement. Each Party will use at least the same standard of care as it uses to protect its own proprietary or confidential information (but no less than reasonable care) to ensure that its employees, agents, consultants, contractors, and other representatives do not disclose or make any unauthorized use of the other Party’s Confidential Information. Each Party will promptly notify the other upon discovery of any loss or unauthorized use or disclosure of the other Party’s Confidential Information.

6.2Exceptions. The obligations of confidentiality and non-use set forth in Section 6.1 shall not apply to any information that the receiving Party can demonstrate by written evidence:

(a)is already known to the receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the disclosing Party;

(b)is now, or hereafter becomes, generally available to the public or otherwise part of the public domain through no fault of the receiving Party;

(c)is disclosed to the receiving Party by a third party who had no obligation to the disclosing Party not to disclose such information to others; or

(d)was independently discovered or developed by the receiving Party without the use of Confidential Information belonging to the disclosing Party.

6.3Permitted Disclosures. Each Party may disclose Confidential Information belonging to the other Party as expressly permitted by this Option Agreement and in the following instances:

(a)to its and its Affiliate’s directors, officers, employees, consultants, and agents who have a need to know such information for the purposes of this Option Agreement and who are bound by obligations of confidentiality and non-use consistent with those set forth herein, and provided that the disclosing Party shall be liable to the receiving Party for any breach

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of such obligations by anyone to whom the disclosing Party discloses such Confidential Information;

(b)to potential and actual investors, acquirors, and other financial partners solely for the purpose of evaluating or carrying out an actual or potential investment or acquisition, in each case under written obligations of confidentiality and non-use consistent with those set forth herein;

(c)to the extent required by law, court order, or regulation of a governmental agency (including regulations promulgated by securities exchanges); provided that to the extent legally permissible the disclosing Party provides the other Party reasonable prior written notice of any such disclosure and reasonably assists the other Party in seeking to obtain a protective order or other confidential treatment of any Confidential Information required to be so disclosed.

6.4Publicity. Neither Party shall use the name of the other in connection with any promotional advertising, press releases, sales literature, or other promotional materials to be disseminated to the public or any portion thereof without the other Party’s prior written consent in each case. Each Party further agrees not to use the name of the other Party or any trademark, service mark, trade name, copyright, or symbol of the other Party, without the prior written consent of such other Party.

6.5Equitable Relief. Given the nature of the Confidential Information and the competitive damage that a Party may suffer upon unauthorized disclosure, use, or transfer of its Confidential Information to any Third Party, the Parties agree that monetary damages may not be a sufficient remedy for any breach of this Article 6. In addition to all other remedies, a Party shall be entitled to seek specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of this Article 6.

7.Representations and Warranties

7.1Mutual Representations and Warranties. Each Party hereby represents and warrants that, as of the Effective Date:

(a)such Party is a company or corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as contemplated in this Option Agreement;

(b)(i) it has the corporate power and authority and the legal right to enter into this Option Agreement and perform its obligations hereunder; (ii) it has taken all necessary corporate action on its part required to authorize the execution and delivery of this Option Agreement and the performance of its obligations hereunder; and (iii) this Option Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid, and binding obligation of such Party that is enforceable against it in accordance with its terms; and

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(c)it is not a party to any agreement that would materially prevent it from granting the rights granted to the other Party under this Option Agreement or performing its obligations under this Option Agreement.

7.2Additional In4Derm Warranties and Covenants. In4Derm hereby warrants and covenants that, as of the Effective Date:

(a)In4Derm has the right to grant the Option (and the licenses issuable to VYNE upon exercise of such Option) granted to VYNE under this Option Agreement;

(b)In4Derm has not granted to any Third Party any rights, option, or license that would conflict with the grant of the Option to VYNE.

7.3Additional VYNE Warranties. VYNE hereby warrants that, as of the Effective Date neither it nor any of its Affiliates own any Patent Rights covering or claiming any Topical BETi Compounds or Oral BETi Compounds, nor have any of them been granted any sub-licence or other rights under any such Patent Rights except as set forth herein.

7.4Covenants of In4Derm. During the Term, In4Derm covenants that it will not enter into any agreement, whether written or oral, that would conflict with the rights granted to VYNE hereunder.

7.5Disclaimer. OTHER THAN AS EXPRESSLY SET FORTH IN SECTION 7.1 AND SECTION 7.2, NO PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND EACH PARTY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

8.Term and Termination

8.1Term. The term of this Option Agreement shall commence upon the Effective Date and shall, unless earlier terminated as permitted under this Article 8, continue until the latest of (a) the expiration of both of the Option Terms, or (b) if VYNE exercises an Option prior to expiry of the Option Term, the date that is thirty (30) days after the applicable Option Exercise Date, (the “Term”).

1.2Termination for Material Breach. If a Party believes that the other Party has materially breached this Option Agreement, then the non-breaching Party may deliver notice of such breach to the breaching Party. If the breaching Party has not cured such breach to the reasonable satisfaction of the non-breaching Party within thirty (30) days after notice of such breach from the non-breaching Party, the non-breaching Party may terminate this Option Agreement upon written notice to the breaching Party. Notwithstanding the foregoing, if the Parties reasonably and in good faith disagree as to whether there has been a material breach of this Option Agreement, (i) the dispute will be resolved in accordance with Section 9.2, (ii) the

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cure period will be tolled from the date the breaching Party notifies the non-breaching Party of such dispute and through the resolution of such dispute in accordance with Section 9.2, (iii) during the pendency of such dispute, all of the terms and conditions of this Option Agreement will remain in effect, and (iv) if it is ultimately determined that the breaching Party committed such material breach, then the breaching Party will have thirty (30) days to cure such material breach from the date of such determination. If the breaching Party fails to cure such breach during such thirty (30)-day period, the non-breaching Party may elect to terminate the Option Agreement immediately upon the issuance of written notice to the breaching Party.

8.3Effects of Termination. Upon expiration of the Option Agreement or any termination of this Option Agreement in its entirety prior to Option exercise, the following terms will apply:

(a)The Options shall immediately terminate and VYNE will have no further rights with respect thereto.

(b)As provided in the last sentence of Section 2.1, VYNE shall promptly return any remaining Materials to In4Derm, or otherwise destroy such Materials as mutually agreed by the Parties and certify such destruction in writing.

(c)VYNE hereby grants, effective upon such expiration or termination (or if earlier, upon expiration of the Option Term with respect to the Topical BETi Compounds and Products containing such Compounds without VYNE exercising such Option), to In4Derm for no additional consideration: (i) a non-exclusive, worldwide, sublicensable (through multiple tiers), royalty free license under any Topical Invention that constitute any composition of matter or method of treatment claims for a Product and (ii) a non-exclusive, fully paid-up, sub-licensable (through multiple tiers) non-transferable license under the VYNE Background Technology solely to the limited extent necessary for In4Derm to exploit the Topical Invention in each case solely to exploit Products containing Compounds researched and developed by VYNE under this Agreement and to be used only in combination with such Products (and not independently practiced); provided that In4Derm agrees to enter into reciprocal commitments with respect to confidentiality, conditions on sublicensing and patent management in relation to the VYNE Background Technology and Topical Inventions licensed to In4Derm pursuant to this paragraph in the same manner and on the same terms agreed to by VYNE with respect to the In4Derm Technology pursuant to the License Terms (or if applicable, the template License Agreement) in Exhibit F.

(d)Each Party shall promptly return to the other Party, or delete or destroy, all relevant records and materials in such Party’s possession or control containing Confidential Information of the other Party; provided that a Party may keep one copy of such materials for legal archival purposes subject to continuing confidentiality obligations.

8.4Survival. Expiration or termination of this Option Agreement shall not relieve the Parties of any obligation or right accruing prior to such expiration or termination. Except as set forth below or elsewhere in this Option Agreement, the obligations and rights of the Parties under the following provisions of this Option Agreement shall survive expiration or termination

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of this Option Agreement: Section 1, Section 4.1, the last sentence of Section 5.1, Section 5.2, Section 5.4, Section 6, Section 7, Section 8.3, Section 8.4 and Section 9.

9.General

9.1Governing Law. This Option Agreement and all disputes arising out of or related to this Option Agreement or any breach hereof shall be governed by and construed under the laws of the England and Wales, without giving effect to any choice of law principles that would require the application of the laws of a different province or territory.

9.2Dispute Resolution. Except as provided in Section 3.2, the Parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales; provided, however, that each Party may institute judicial proceedings in any other jurisdiction against the other party or anyone acting by, through or under such other party, in order to enforce the instituting party’s rights hereunder through reformation of contract, specific performance, injunction or similar equitable relief.

9.3Equitable Relief; Court Actions. Notwithstanding anything to the contrary in this Option Agreement, given the unique nature of the rights granted under the Option and the competitive damage that a Party may suffer upon a breach of Article 3 by the other Party, the Parties agree that monetary damages may not be a sufficient remedy for any breach by a Party of Article 3. In addition to all other remedies, a Party shall be entitled to seek specific performance and injunctive and other equitable relief as a remedy for any breach or threatened breach of Article 3 by the other Party.

9.4Entire Agreement; Amendment. This Option Agreement, including its exhibits, and the agreements entered into by the Parties pursuant to this Option Agreement, constitute the entire, final, and complete agreement and understanding between the Parties with respect to its subject matter and replaces and supersede all prior discussions and agreements between them with respect to the subject matter hereof. No modification of any terms or conditions hereof shall be effective unless made in writing and signed by a duly authorized representative of each Party.

9.5Severability. If any provision of this Option Agreement is, becomes, or is deemed invalid or unenforceable by any court or other competent authority having jurisdiction, the remainder of this Option Agreement shall remain unimpaired and the Parties shall promptly negotiate in good faith to amend such invalid or unenforceable provision to conform to applicable laws so as to be valid and enforceable and best accomplish the original intent of the Parties.

9.6Waiver. Any term or condition of this Option Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless it is in writing and signed by the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach by such other Party whether of a similar nature or otherwise.

9.7Force Majeure. Each Party shall be excused from liability for the failure or delay in performance of any obligation under this Option Agreement by reason of any event beyond

13

ACTIVE/109604655.1

such Party’s reasonable control and which is not reasonably foreseeable, including acts of God, fire, flood, explosion, earthquake, pandemic, or other natural forces, war, civil unrest, acts of terrorism, accident, destruction, or other casualty, any lack or failure of transportation facilities, any lack or failure of supply of raw materials or supplies, or any other event similar to those enumerated above. Such excuse from liability shall be effective to the extent and duration of the events causing the failure or delay in performance and provided that the Party has not caused such events to occur. Notice of a Party’s failure or delay in performance due to force majeure must be given to the other Party as soon as reasonably practicable after its occurrence. All delivery dates under this Option Agreement that have been affected by force majeure shall be tolled for the duration of such force majeure.

9.8Independent Contractors. The relationship of the Parties is that of independent contractors, and nothing in this Option Agreement shall be construed to create a partnership, joint venture, franchise, employment, or agency relationship between the Parties. Neither Party shall be considered the agent of the other Party for any purpose whatsoever and neither Party has any authority to enter into any contract or assume any obligation for the other Party or to make any warranty or representation on behalf of the other Party.

9.9Assignment. This Option Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties. Neither Party may assign its rights and obligations under this Option Agreement without the prior written consent of the other Party, except that either Party may assign this Option Agreement without such consent to an Affiliate or to a successor in interest by way of merger, consolidation, or sale of all or substantially all of its business to which this Option Agreement relates. Any purported assignment in violation of this Section 9.9 shall be null and void.

9.10Notices. Any notice required or permitted pursuant to this Option Agreement shall be in writing and delivered by personal delivery, overnight express courier service, electronic mail, or by certified or registered mail, return receipt requested, and shall be deemed given upon personal delivery, upon acknowledgement of receipt of electronic transmission, on the next Business Day after deposit if sent by overnight express courier service, or five days after deposit in the mail. Notices will be sent to the following addresses or such other address as either Party may specify in writing pursuant to this Section 9.10:

If to In4Derm, to:

In4Derm Limited

15 Luke Place

Broughty Ferry

Dundee

Scotland DD5 3BN

[***]

with a copy (which shall not constitute notice) to:

[***]

If to VYNE, to:     

14

ACTIVE/109604655.1

VYNE Therapeutics Inc.
520 U.S. Highway 22
Suite 204
Bridgewater, NJ 08807

Attention: Chief Scientific Officer

With a copy (which shall not constitute notice) to:

VYNE Therapeutics Inc.
520 U.S. Highway 22
Suite 204
Bridgewater, NJ 08807

Attention: General Counsel

9.11Construction. The terms of this Option Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms of this Option Agreement will be interpreted and construed in accordance with their usual and customary meanings, and each Party hereby waives the application in connection with the interpretation and construction of this Option Agreement of any rule of law to the effect that ambiguous or conflicting terms contained in this Option Agreement will be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Option Agreement. Except as otherwise explicitly specified to the contrary, (a) references to a Section, exhibit, appendix or schedule means a Section of, or exhibit, appendix or schedule to this Option Agreement, unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) the words “will” and “shall” have the same meaning, (d) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (e) words in the singular or plural form include the plural and singular form, respectively, (f) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Option Agreement, (g) unless otherwise specified, “$” is in reference to United States dollars, and “£” is in reference to British pounds sterling, (h) the headings contained in this Option Agreement, in any exhibit, appendix or schedule to this Option Agreement are for convenience only and will not in any way affect the construction of or be taken into consideration in interpreting this Option Agreement, (i) the word “or” is disjunctive but not necessarily exclusive, (j) he words “herein”, “hereof”, and “hereunder” and other words of similar import refer to this Option Agreement as a whole and not to any particular Section or other subdivision, and (k) all references to days mean calendar days, unless otherwise specified.

9.12Further Actions; Expenses. Each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Option Agreement. Each Party shall bear its own expenses in connection with the negotiation and execution of this Option Agreement and the License Terms.

15

ACTIVE/109604655.1

9.13No Benefit to Third Parties. Covenants and agreements set forth in this Option Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other individuals or entities.

9.14Counterparts. This Option Agreement may be executed in one or more counterparts in original, facsimile, PDF, or other electronic format, each of which shall be an original, and all of which together shall constitute one instrument.

{Signature Page Follows}

16

ACTIVE/109604655.1

In Witness Whereof,the Parties have executed this Evaluation and Option Agreement by their respective duly authorized officers.

In4Derm Limited    VYNE Therapeutics Inc.

By:/s/ Andrew WoodlandBy: /s/ David Domzalski

Name: Andrew WoodlandName: David Domzalski

Title: Director and Chief Scientific OfficerTitle: CEO

VYNE Therapeutics Inc.

By: /s/ Iain Stuart

Name: Iain Stuart

Title: CSO

Exhibit 1.4

BETi Compounds

Exhibit 1.18

License Terms

Exhibit 2.1

Materials

Exhibit 2.2
Data Package

Exhibit 3.2
Dispute Resolution Procedure for the License Terms

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, David Domzalski, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of VYNE Therapeutics Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2021	By:	/s/ David Domzalski
		David Domzalski Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Tyler Zeronda, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of VYNE Therapeutics Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2021	By:	/s/ Tyler Zeronda
		Tyler Zeronda Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of VYNE Therapeutics Inc. (the “Company”), for the quarterly period ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, David Domzalski, President and Chief Executive Officer and principal executive officer, hereby certify as of the date hereof, solely for purposes of 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2021	By:	/s/ David Domzalski
		David Domzalski Principal Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of VYNE Therapeutics Inc. (the “Company”), for the quarterly period ended September 30, 2021 as filed with the Securities and Exchange Commission (the “Report”), I, Tyler Zeronda, Chief Financial Officer, Treasurer and principal financial officer, hereby certify as of the date hereof, solely for purposes of 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2021	By:	/s/ Tyler Zeronda
		Tyler Zeronda Principal Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2021	Nov. 03, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	001-38356
Entity Registrant Name	VYNE THERAPEUTICS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-3757789
Entity Address, Address Line One	520 U.S. Highway 22, Suite 204
Entity Address, City or Town	Bridgewater
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08807
City Area Code	800
Local Phone Number	775-7936
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	VYNE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		53,517,912
Entity Central Index Key	0001566044
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 52,306	$ 57,563
Restricted cash	605	855
Investment in marketable securities (Note 6)	0	1,027
Trade receivables, net of allowances	10,084	15,819
Prepaid and other assets	5,064	4,591
Inventory (Note 7)	8,070	7,404
Total Current Assets	76,129	87,259
Property and equipment, net	472	555
Operating lease right-of-use assets (Note 10)	1,036	1,583
Prepaid and other assets	3,678	4,345
Total Assets	81,315	93,742
Current Liabilities:
Trade payables	7,621	4,780
Accrued expenses (Note 4)	9,613	11,452
Debt (Note 8)	0	0
Employee related obligations	3,382	4,360
Operating lease liabilities (Note 10)	277	757
Other	104	104
Total Current Liabilities	20,997	21,453
Liability for employee severance benefits	206	312
Operating lease liabilities (Note 10)	775	853
Long-term debt (Note 8)	0	33,174
Other liabilities	451	457
Total Liabilities	22,429	56,249
Commitments and Contingencies (Note 11)	0	0
Shareholders' Equity:
Preferred stock: $0.0001 par value; 20,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	0	0
Common stock: $0.0001 par value; 150,000,000 shares and 75,000,000 shares authorized at September 30, 2021 and December 31, 2020, respectively; 53,510,599 and 43,205,221 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	5	4
Additional paid-in capital	686,836	603,685
Accumulated deficit	(627,955)	(566,196)
Total Shareholders' Equity	58,886	37,493
Total Liabilities and Shareholders’ Equity	$ 81,315	$ 93,742

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock shares authorized (in shares)	150,000,000	75,000,000
Common stock shares issued (in shares)	53,510,599	43,205,221
Common stock shares outstanding (in shares)	53,510,599	43,205,221

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total Revenues	$ 4,086	$ 3,269	$ 12,463	$ 16,707
Cost of goods sold	1,049	371	2,445	858
Operating Expenses:
Research and development	6,981	6,623	19,723	35,695
Selling, general and administrative	13,832	19,766	46,283	71,640
Goodwill and in-process research & development impairments	0	0	0	54,345
Contingent Stock Right Remeasurement	0	0	0	84,726
Total Operating Expenses	20,813	26,389	66,006	246,406
Operating Loss	17,776	23,491	55,988	230,557
Interest expense (Note 8)	3,474	1,092	5,610	3,229
Other expense (income), net	35	130	161	(1,141)
Loss Before Income Tax	21,285	24,713	61,759	232,645
Income tax expense (benefit)	0	1	0	(258)
Net Loss	$ 21,285	$ 24,714	$ 61,759	$ 232,387
Loss per share basic (in dollars per share)	$ 0.41	$ 0.59	$ 1.22	$ 7.98
Loss per share diluted (in dollars per share)	$ 0.41	$ 0.59	$ 1.22	$ 7.98
Weighted average shares outstanding - basic (in shares)	52,028	41,934	50,776	29,132
Weighted average shares outstanding - diluted (in shares)	52,028	41,934	50,776	29,132
Product sales
Total Revenues	$ 3,953	$ 2,863	$ 11,805	$ 6,096
License revenues
Total Revenues	0	0	0	10,000
Royalty revenues
Total Revenues	$ 133	$ 406	$ 658	$ 611

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net Loss	$ 21,285	$ 24,714	$ 61,759	$ 232,387
Other Comprehensive Loss:
Net unrealized (gains) losses from marketable securities	0	(2)	0	(1)
Losses on marketable securities reclassified into net loss	0	2	0	6
Total Other Comprehensive Loss	0	0	0	5
Total Comprehensive Loss	$ 21,285	$ 24,714	$ 61,759	$ 232,392

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	At-the-market Offering	Public Offering	Common stock	Common stock At-the-market Offering	Common stock Public Offering	Additional paid-in capital	Additional paid-in capital At-the-market Offering	Additional paid-in capital Public Offering	Accumulated deficit	Accumulated other comprehensive Income (loss)
Balance (shares) at Dec. 31, 2019				9,120,078
Balance at Dec. 31, 2019	$ 17,575			$ 1			$ 328,156			$ (310,587)	$ 5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive (loss) income	(232,392)									(232,387)	(5)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan (in shares)				301,913
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	342						342
Stock-based compensation	15,147						15,147
Deemed dividend to warrants holders due to warrant modifications	0						41			(41)
Classification of stock awards to derivative liability	(975)						(975)
Issuance of common stock, net of issuance costs (in shares)						7,776,875
Issuance of common stock, net of issuance costs			$ 53,649	$ 1					$ 53,648
Issuance of stock related to merger (in shares)				24,765,999
Issuance of stock related to merger	196,170			$ 2			196,168
Balance (shares) at Sep. 30, 2020				41,964,865
Balance at Sep. 30, 2020	49,516			$ 4			592,527			(543,015)	0
Balance (shares) at Jun. 30, 2020				41,920,952
Balance at Jun. 30, 2020	71,528			$ 4			589,825			(518,301)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive (loss) income	(24,714)									(24,714)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan (in shares)				43,913
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	82						82
Stock-based compensation	2,620						2,620
Balance (shares) at Sep. 30, 2020				41,964,865
Balance at Sep. 30, 2020	$ 49,516			$ 4			592,527			(543,015)	0
Balance (shares) at Dec. 31, 2020	43,205,221			43,205,221
Balance at Dec. 31, 2020	$ 37,493			$ 4			603,685			(566,196)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive (loss) income	(61,759)									(61,759)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan (in shares)				305,105
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	393						393
Stock-based compensation	$ 6,748						6,748
Issuance of common stock, net of issuance costs (in shares)					4,726,012	5,274,261
Issuance of common stock, net of issuance costs		$ 29,187	$ 46,824	$ 1				$ 29,187	$ 46,823
Balance (shares) at Sep. 30, 2021	53,510,599			53,510,599
Balance at Sep. 30, 2021	$ 58,886			$ 5			686,836			(627,955)	0
Balance (shares) at Jun. 30, 2021				51,511,845
Balance at Jun. 30, 2021	74,893			$ 5			681,558			(606,670)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive (loss) income	(21,285)									(21,285)
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan (in shares)				50,754
Exercise of options, vesting of restricted stock units and shares issued under employee stock purchase plan	(10)						(10)
Stock-based compensation	$ 2,405						2,405
Issuance of common stock, net of issuance costs (in shares)					1,948,000
Issuance of common stock, net of issuance costs		$ 2,883						$ 2,883
Balance (shares) at Sep. 30, 2021	53,510,599			53,510,599
Balance at Sep. 30, 2021	$ 58,886			$ 5			$ 686,836			$ (627,955)	$ 0

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020
At-the-market Offering
Payments of stock issuance costs	$ 184	$ 998
Public Offering
Payments of stock issuance costs		$ 3,177	$ 3,903

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows From Operating Activities:
Net Loss	$ 61,759	$ 232,387
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	83	254
Goodwill and in-process research & development impairments	0	54,345
Contingent stock right remeasurement	0	84,726
Changes in marketable securities and bank deposits, net	0	(142)
Changes in accrued liability for employee severance benefits, net of retirement fund profit	(108)	(15)
Stock-based compensation	6,748	15,147
Non-cash finance loss/(income), net	1,281	(727)
Debt prepayment premium	1,432	0
Changes in operating assets and liabilities, net of effects of businesses acquired:
Decrease (increase) in trade receivables, prepaid and other assets	5,262	(11,383)
Decrease (increase) in other non-current assets	1,217	(4,430)
Increase (decrease) in accounts payable and accruals	167	(11,801)
Increase in inventory	(666)	(5,294)
Increase in other liabilities	(6)	0
Net cash used in operating activities	(46,349)	(111,707)
Cash Flows From Investing Activities:
Purchase of fixed assets	0	(113)
Cash acquired through merger	0	38,641
Proceeds from sale and maturity of marketable securities	1,027	48,577
Net cash provided by investing activities	1,027	87,105
Cash Flows From Financing Activities:
Proceeds related to issuance of common shares through offerings, net of issuance costs	76,010	53,646
Debt repayment (see Note 8)	(36,432)	0
Proceeds related to issuance of stock for stock-based compensation arrangements, net	237	182
Net cash provided by financing activities	39,815	53,828
(Decrease)/Increase in cash, cash equivalents and restricted cash	(5,507)	29,226
Effect of exchange rate on cash, cash equivalents and restricted cash	0	1
Cash, cash equivalents and restricted cash at beginning of the period	58,418	44,584
Cash, cash equivalents and restricted cash at end of the period	52,911	73,811
Cash and cash equivalents	52,306	72,956
Restricted cash	605	855
Total cash, cash equivalents and restricted cash shown in statement of cash flows	52,911	73,811
Supplementary information on investing and financing activities not involving cash flows:
Issuance of shares under employee stock purchase plan	144	163
Additions to operating lease right of use assets	0	1,120
Additions to operating lease liabilities	0	1,120
Supplemental disclosure of cash flow information:
Interest received	15	232
Interest paid	2,385	2,936
Fair value of assets acquired	0	117,270
Less liabilities assumed	0	5,827
Net acquired (See “Note 3- Business combination”)	0	111,443
Less cash acquired	0	38,641
Merger net of cash acquired	$ 0	$ 72,802

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NATURE OF OPERATIONS

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF OPERATIONS

NATURE OF OPERATIONS

VYNE Therapeutics Inc. ("VYNE" or the "Company") is a biopharmaceutical company focused on developing proprietary, innovative and differentiated therapies for the treatment of immuno-inflammatory conditions and rare skin diseases of high unmet medical need. The Company is a Delaware corporation, has its principal executive offices in Bridgewater, New Jersey and operates as one business segment. The Company currently has two commercial products, AMZEEQ® (minocycline) topical foam, 4%, and ZILXI® (minocycline) topical foam, 1.5%. In August 2021, the Company initiated a process to explore a possible sale or license of its topical minocycline franchise, as discussed in greater detail below.

Strategic Business Review

Beginning in the second quarter of 2021, the Company conducted a review of its commercial and research and development portfolio to determine how to optimally deploy capital and drive shareholder value. During the course of this review, the Company 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 its pipeline products. During this process, the Company evaluated several strategic options including the acquisition of marketed assets, out-licensing its approved products outside of the United States, and possible partnering or co-development relationships with interested parties. Following its review, the Company determined to initiate a process to explore a possible sale or license of its topical minocycline franchise, including AMZEEQ, ZILXI, FCD105 (the Company’s Phase 3 proprietary novel topical combination foam formulation of minocycline and adapalene for the treatment of moderate-to-severe acne vulgaris) and the underlying Molecule Stabilizing Technology platform.

By leveraging its drug development and clinical development capabilities and strong network of discovery and preclinical science partners, the Company has transitioned its strategic focus to develop therapies for the treatment of immuno-inflammatory conditions and rare skin diseases of high unmet medical need. The Company expects to continue to invest in FMX114 for the treatment of mild to moderate atopic dermatitis and enrolled the first patient in its Phase 1b/2a proof-of-concept study in October 2021. The Company expects results from this study early in the first quarter of 2022. In addition, on August 12, 2021, the Company announced a transaction with In4Derm Limited, a company incorporated and registered in Scotland (“In4Derm”). In4Derm is a spin-out of the University of Dundee’s School of Life Sciences which has discovered and is developing proprietary Bromodomain and Extra-Terminal Domain ("BET") inhibitors for the treatment of immunology and oncology conditions. On April 30, 2021, the parties entered into an Evaluation and Option Agreement (the “Option Agreement”) pursuant to which In4Derm granted the Company an exclusive option to obtain exclusive worldwide rights to research, develop and commercialize products containing In4Derm’s BET inhibitor compounds, which are new chemical entities, in both topical (the “Topical BETi Option”) and oral (the “Oral BETi Option”) treatments in all fields for any disease, disorder or condition in humans. On August 6, 2021, the Company exercised the Topical BETi Option and the parties entered into a License Agreement granting the Company a worldwide, exclusive license that is sublicensable through multiple tiers to exploit certain of In4Derm’s BET inhibitor compounds identified to be suitable for topical administration in all fields. The Company paid a $1.0 million cash payment to In4Derm upon the execution of the Option Agreement and $0.5 million in connection with the exercise of the Topical BETi Option. Pursuant to the License Agreement, the Company has agreed to make cash payments to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed topical product in the U.S. of up to $15.75 million for all indications. In addition, the Company currently expects to exercise the Oral BETi Option following the selection of a lead candidate for the program. Upon exercise of the exclusive Oral BETi Option, the parties will sign a license agreement (the “Oral License Agreement”), and the Company will be required to pay In4Derm a $4.0 million cash payment. The Oral License Agreement will include cash payments of up to $43.75 million payable to In4Derm upon the achievement of specified clinical development and regulatory approval milestones with respect to each licensed oral product in the U.S. for all indications. The license agreements also provide for tiered royalty payments of up to 10% of net annual sales across licensed BET inhibitor products by the Company. In4Derm is entitled to additional milestones upon the achievement of regulatory approvals in certain jurisdictions outside the U.S.

The initial BET inhibitor candidates that the Company plans to develop are VYN201 and VYN202. VYN201 is a pan-bromodomain or pan-BD BET inhibitor. It is a first-in-class “soft” pan-BD BET inhibitor that is designed to mitigate systemic drug exposure and will be developed for topical applications. The Company intends to progress VYN201 into rare dermatological indications where there is significant unmet need due to a lack of indicated treatment options. The Company

plans to communicate the initial indication it will be pursuing for VYN201 after the prerequisite non-clinical safety assessments have been completed and enter this program into the clinic in 2022.

The second candidate, VYN202, is an orally-delivered, first-in-class BET inhibitor that is highly selective for Bromodomain 2 (“BD2”). By selectively inhibiting BD2, the Company believes VYN202 could have a more targeted anti-inflammatory effect with an improved benefit/risk profile. Upon the selection of a lead candidate, VYNE intends to exercise its exclusive option with In4Derm Limited and commence an IND-enabling non-clinical safety program.

As the Company continues to transition from a commercial organization to one focused on research and development, the Company expects to further streamline operations by continuing to eliminate the vast majority of planned expenditures supporting its commercial operations. Furthermore, the Company is in the process of reducing its workforce by terminating approximately 70 employees, which the Company expects to be completed by December 31, 2021. The Company incurred a one-time charge of $1.0 million in the three months ended September 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. The Company anticipates 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 by December 31, 2021. Additional charges of $0.4 million related to retention payments are anticipated through June 30, 2022.

Reverse Merger

On November 10, 2019, Menlo, Foamix Pharmaceuticals Ltd. (“Foamix”) and Giants Merger Subsidiary Ltd. (“Merger Sub”), a wholly-owned subsidiary of Menlo, entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated as of December 4, 2019, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Foamix, with Foamix surviving as a wholly-owned subsidiary of Menlo (the “Merger”) on March 9, 2020 (the “Effective Date”).

For accounting purposes, the Merger is treated as a “reverse acquisition” under generally accepted accounting principles in the United States (“U.S. GAAP”) and Foamix is considered the accounting acquirer. Accordingly, upon consummation of the Merger, the historical financial statements of Foamix became the Company’s historical financial statements, and the historical financial statements of Foamix are included in the comparative prior periods. See “Note 3 – Business Combination” for more information on the Merger.

Reverse stock split and recasting of per-share amounts

On February 10, 2021, the Company's Board of Directors approved a one-for-four reverse stock split of its outstanding shares of common stock. The reverse stock split was effected on February 12, 2021, at 5:00 p.m. Eastern time. At the effective time, every four issued and outstanding shares of the Company's 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 shares 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 the Company's common stock was also reduced on a one-for-four basis, from 300 million shares to 75 million shares. 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.

Unless otherwise noted, all common shares and per share amounts contained in the unaudited interim condensed consolidated financial statements have been retroactively adjusted to reflect the reverse stock split.

Topical Minocycline Franchise

In January 2020, the Company launched AMZEEQ®, a once-daily topical antibiotic for the treatment of inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in patients 9 years of age and older. On May 28, 2020, the U.S. Food and Drug Administration (the "FDA") approved ZILXI® for the treatment of inflammatory lesions of rosacea in adults. ZILXI became available in pharmacies nationwide in October 2020. AMZEEQ and ZILXI are the first topical minocycline products approved by the FDA for any condition.

AMZEEQ and ZILXI utilize the Company’s proprietary Molecule Stabilizing Technology (MST)™ that is also being used in the development of the Company’s product candidate FCD105, a topical foam comprising minocycline and adapalene for the treatment of acne vulgaris. On June 2, 2020, the Company announced positive results from a Phase II clinical trial evaluating the preliminary safety and efficacy of FCD105 (3% minocycline / 0.3% adapalene foam), the first ever topical minocycline-

based combination product, for the treatment of moderate-to-severe acne vulgaris. The Company held an end-of-Phase II meeting with the FDA in the fourth quarter of 2020. See "Note 1 - Strategic Business Review" for more information.

Serlopitant

Additionally, the Company was developing serlopitant, a small molecule inhibitor of the neurokinin 1 receptor, or NK1-R, given as a once-daily, oral tablet, for the treatment of pruritus, or itch, associated with various conditions including prurigo nodularis, or PN. On April 6, 2020, the Company announced top line results from two Phase III clinical trials evaluating the safety and efficacy of once-daily oral serlopitant for the treatment of pruritus (itch) associated with PN, studies MTI-105 and MTI-106. Neither study met their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based on a 4-point improvement responder analysis. The Company does not currently intend to further pursue the development of serlopitant. As a result, in the second quarter of 2020, the Company recorded a full impairment charge related to the IPR&D and Goodwill assets in its unaudited condensed consolidated statement of operations and comprehensive loss. See "Note 3 - Business Combination" for more information.

Liquidity and Capital Resources

The Company launched AMZEEQ in the United States in January 2020 and commenced generating product revenues in the first quarter of 2020. The Company also launched ZILXI in the United States in October 2020 and commenced generating revenues in the fourth quarter of 2020. The Company’s activities prior to the commercial launches of AMZEEQ and ZILXI had primarily consisted of raising capital, developing product candidates, and performing research and development activities. Since inception, the Company has incurred recurring losses and negative cash flows from operations. For the nine months ended September 30, 2021, the Company incurred a net loss of $61.8 million and used $46.3 million of cash in operations. As of September 30, 2021, the Company had cash, cash equivalents and restricted cash of $52.9 million and an accumulated deficit of $628.0 million. On August 11, 2021, the Company prepaid the entirety of its outstanding indebtedness, including a prepayment premium and accrued but unpaid interest, for a total amount of approximately $36.5 million. The Company had no outstanding debt as of September 30, 2021.

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, which has negatively impacted sales and the Company's ability to execute its commercial strategy with respect to AMZEEQ and ZILXI. In addition, the commercial launches of both AMZEEQ and ZILXI have been negatively impacted by unfavorable payor decisions in March 2021 on product pricing. These conditions have impaired the Company's ability to generate revenue consistent with internal forecasts, which has had a negative impact on its financial condition and liquidity. Following discussions with the Company's lenders during the second quarter of 2021 regarding the revenue targets included in the Amended and Restated Credit Agreement, the revenue expected to be generated for the trailing twelve month period ended June 30, 2021 and the Company's strategic transition discussed above, the Company determined to prepay its outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest in the total amount of approximately $36.5 million on August 11, 2021. Following the prepayment, the Amended and Restated Credit Agreement and the security interests thereunder were terminated. As a result of the foregoing, the Company determined that its projected cash flows from operations, combined with its cash balance after the debt prepayment, would not provide sufficient resources to fund its existing operations, for at least the next twelve months from the issuance of these financial statements.

As discussed above, the Company completed a strategic review of its business and initiated a process to explore a sale or license of its minocycline franchise, including AMZEEQ, ZILXI, FCD105 and the underlying MST platform. The Company will refocus its resources on its immuno-inflammatory pipeline and intends to support the FMX114 and the BET inhibitor 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 its ability to successfully pivot to its research and development business strategy and develop commercially viable drug candidates and raise additional capital to finance its operations. The Company’s ability to continue as a going concern is contingent on its ability to sell or license its minocycline franchise, develop future commercially viable products and/or to raise sufficient working capital through either debt or equity financing. There is no assurance the Company will be able to achieve these objectives under acceptable terms or at all.

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), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that its unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern

and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Company’s 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 its minocycline franchise, positive results from clinical trials for FMX114, and the successful development and positive results from clinical trials for the BET inhibitor programs. Based on current plans and assumptions, the Company believes that absent sufficient proceeds received from a sale or license of the minocycline franchise, business development transactions or financing transactions, which are all beyond its control, it will not have sufficient cash and cash equivalents to fund its operations beyond one year from the issuance of these financial statements. Accordingly, the Company will, over the course of the next twelve months, require significant additional financing to continue its operations. Each of these factors are subject to uncertainty, and therefore, raise substantial doubt about the Company’s 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 the Company to delay, scale back or otherwise modify its business and its research and development activities and other operations. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

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SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

a.Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair statement of the Company’s unaudited condensed consolidated financial position, results of operations, cash flow and statement of stockholders' equity for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Certain prior period amounts have been reclassified to conform to current year presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in the Company's Current Report on Form 8-K dated August 12, 2021.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the year ending December 31, 2021.

b.Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

c.Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of income and expenses during the reporting periods. Significant items subject to such estimates and assumptions include accounting for business combinations, impairments of goodwill and intangible assets and revenue recognition. Actual results could differ from the Company’s estimates.

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, 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, the Company further assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, impairments of long-lived assets and revenue recognition. In 2020, the Company recorded impairments of goodwill and certain indefinite-lived intangible assets; however, these were unrelated to the impact of COVID-19 (See "Note 3 - Business Combination" for more information). The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods

d.Business Acquisition

The Company’s unaudited interim condensed consolidated financial statements include the operations of an acquired business after the completion of the acquisition. The Company accounts for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of In-Process Research and Development and Goodwill be recorded on the balance sheet. Transaction costs are expensed as incurred.

Amounts recorded in connection with an acquisition can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

The Company is required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting.  For example, the Company uses fair value in the initial recognition of net assets acquired in a business combination and when measuring impairment losses.  The Company estimates fair value using an exit price approach, which requires, among other things, that Company determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques:

•Income approach, which is based on the present value of a future stream of net cash flows.

•Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

•Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.

Our fair value methodologies depend on the following types of inputs:

•Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

•Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

•Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

Asset Impairment

The Company reviews all of its long-lived assets for impairment indicators throughout the year. Impairment testing is performed for indefinite-lived intangible assets annually (or sooner if warranted) and for all other long-lived assets whenever impairment indicators are present. When necessary, the Company records charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets.

e.Revenue Recognition

The Company accounts for its revenue transactions under FASB ASC Topic 606, Revenue from Contracts with Customers. In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it

transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when such performance obligation is satisfied.

The Company’s customers include a limited number of national and select regional wholesalers (the “distributors”) and certain independent and specialty pharmacies (together, the “customers”). These distributors subsequently resell the product, primarily to retail pharmacies that dispense the product to patients. Net product revenue is typically recognized when customers obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of product to the customers. The Company evaluates the creditworthiness of its customers to determine whether it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur. The Company does not assess whether a contract has a significant financing component if the expectation is such that the period between the transfer of the promised goods to the customer and the receipt of payment will be less than one year. Standard credit terms do not exceed 75 days. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that would have been recognized is one year or less or the amount is immaterial. Shipping and handling costs related to the Company’s product sales are included in selling, general and administrative expenses.

The Company’s net product revenues through September 30, 2021 were generated through sales of AMZEEQ, which was approved by the FDA in October 2019 and was commercially launched in the United States in January 2020, and ZILXI, which was approved by the FDA in May 2020 and was commercially launched in the United States in October 2020. Product revenue is recorded net of distribution fees, trade discounts, allowances, rebates, copay program coupons, chargebacks, estimated returns and other incentives. These reserves are classified as either reductions of accounts receivable or as current liabilities. The estimates of reserves established for variable consideration reflect current contractual and statutory requirements, known market events and trends, industry data and forecasted customer mix. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net product revenues only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from these estimates. If actual results vary, estimates may be adjusted in the period such change in estimate becomes known, which could have an impact on earnings in the period of adjustment. See “Note 4 – Revenue Recognition” for more information.

On April 23, 2020, the Company announced that it entered into a license agreement with Cutia for our minocycline products and product candidate, if approved, on an exclusive basis in Greater 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 the U.S., FCD105 in the Greater China territory. The Company will supply the finished licensed products to Cutia for clinical and commercial use. The Company received an upfront cash payment of $10.0 million in 2020 ($6.0 million received in the three months ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1.0 million payment upon the receipt of marketing approval in China of the first licensed product. The Company will also receive royalties on net sales of any licensed products. The license is determined to be a distinct performance obligation of the arrangement, therefore the Company recognized the revenues from the upfront license fee when the license was transferred to the licensee and the licensee was able to use and benefit from the license. See "Note 4 - Revenue Recognition" for more information.

f.Allowance for credit losses

An allowance for doubtful accounts is maintained for potential credit losses based on the aging of trade receivables, historical bad debts experience and changes in customer payment patterns. Trade receivable balances are written off against the allowance when it is deemed probable that the receivable will not be collected. Trade receivables, net are stated net of reserves for certain sales allowances and provisions for doubtful accounts. Provisions for doubtful accounts were not material for the three and nine months ended September 30, 2021 and September 30, 2020.

g.Fair value measurement

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1:    Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:    Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical assets or liabilities.

Level 3:    Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

h.Loss per share

Net loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common stock and of common stock equivalents outstanding when dilutive. Common stock equivalents include outstanding stock options and warrants which are included under the treasury share method when dilutive.

The calculation of the weighted-average number of common stock outstanding during the period in which the reverse merger occured was based on:

a.The number of common stock outstanding from the beginning of that period to the merge date was computed on the basis of the weighted-average number of common stock of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement

b.The number of common stock outstanding from the merge date to the end of that period was the actual number of common stock of the legal acquirer (the accounting acquiree) outstanding during that period.

The following weighted average stock options, restricted stock units (“RSUs”), warrants and incremental shares to be issued under the employee stock purchase plan (“ESPP”) were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (share data):

	Three months ended September 30		Nine months ended September 30
	2021	2020	2021	2020
Outstanding stock options, RSUs and shares under the ESPP	5,223,466	5,191,299	5,303,135	3,756,049
Warrants	495,165	495,165	495,165	377,542

In addition to the above, the CSR was excluded from the calculation of the 2020 diluted net loss per share because its effect would have been anti-dilutive for the periods presented. On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective exchange ratio (the "Exchange Ratio") in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The conversion of the CSR also affected the Exchange Ratio of the pre-Merger Foamix equity awards and warrants outstanding as of March 9, 2020. See "Note 3 - Business Combination" for more information.

j.Newly issued and recently adopted accounting pronouncements

Recent Accounting Guidance Issued:

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which clarifies and simplifies certain aspects of the accounting for income taxes. The standard is effective for years beginning after December 15, 2020, and interim periods beginning after December 15, 2020. This guidance became effective during the first quarter of 2021. The adoption of the new standard did not have a material impact to the Company's consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update No. 2020-4, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (ASU 2020-4), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU 2020-4 apply only to those transactions that reference LIBOR or another reference rate expected to be

discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-4 are optional and are effective from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-4 on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13), which requires companies to measure credit losses of financial instruments, including customer accounts receivable, utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional Accounting Standard Updates to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. As a smaller reporting company, the Company will adopt ASU 2016-13 effective January 1, 2023 or at such time where it is no longer a smaller reporting company.

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BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATION

BUSINESS COMBINATION

On November 10, 2019, Menlo entered into the Merger Agreement with Foamix, and Merger Sub, a direct and wholly-owned Israeli subsidiary of Menlo. On March 9, 2020, the Merger was completed and Foamix is now a wholly-owned subsidiary of the Company.

On the Effective Date, each ordinary share of Foamix was exchanged for 0.5924 shares of common stock of Menlo. In addition, on the Effective Date, Foamix shareholders received one contingent stock right (a “CSR”) for each Foamix ordinary share held by them. The CSRs were issued pursuant to the Contingent Stock Rights Agreement (the “CSR Agreement”), dated as of March 9, 2020, by and between Menlo and American Stock Transfer & Trust Company, LLC, and represented the non-transferable contractual right to receive shares of common stock of Menlo depending on the results of Menlo’s phase III clinical trials evaluating the safety and efficacy of once daily oral serlopitant for the treatment of prurigo nodularis (the “Phase III PN Trials”).

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 additional shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The CSR conversion resulted in the issuance and delivery of 74,544,413 additional shares of Menlo common stock underlying the CSRs, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021. Following the conversion of the CSRs, pre-Merger Foamix shareholders and pre-Merger Menlo stockholders owned approximately 82% and 18% of post-Merger Menlo, respectively, each calculated on a fully diluted basis.

For accounting purposes, the Merger is treated as a “reverse acquisition” under U.S. GAAP and Foamix is considered the accounting acquirer. Accordingly, upon consummation of the Merger, the historical financial statements of Foamix became the Company’s historical financial statements, and the historical financial statements of Foamix are included in the comparative prior periods.

Under reverse acquisition accounting, the U.S. dollar amount for common stock in the financial statements is based on the value and number of shares issued by Menlo (reflecting the legal structure of Menlo as the legal acquirer) on the Merger date plus subsequent shares issued by the Company. The amounts in additional paid-in capital represent that of Foamix and include the fair value of shares deemed for accounting purposes to have been issued by Foamix on the merger date and the fair value of the Menlo equity awards included in the purchase price calculation. The Foamix additional paid-in capital was also adjusted for the difference between the number of common stock and the historical number of shares of Foamix’s ordinary shares.

During the nine months ended September 30, 2020, the Company incurred transaction costs of approximately $11.7 million, which are recorded in the unaudited condensed consolidated statements of operations and comprehensive income. This amount includes $8.1 million of severance benefits for employees terminated after the Effective Date.

Purchase Price

The following is the Merger Consideration (as defined in the Merger Agreement) was transferred to effect the Merger:

(in thousands)	Total
Deemed (for accounting purposes only) issuance of Foamix shares to Menlo stockholders	$	123,757
Deemed (for accounting purposes only) conversion of Menlo equity awards	7,322
Total consideration*	$	131,079

* This amount reflects total consideration prior to reduction in respect of the CSRs (which had a fair value of $19.6 million as of the Merger Date) that were issued to Foamix shareholders and that reduced the Menlo stockholders’ relative ownership in the combined company. If the effect of the CSRs is included, the total consideration deemed paid by Foamix, as the accounting acquirer, to Menlo stockholders and equity award holders in the Merger would be reduced to approximately $111.4 million, as shown in the purchase price allocation table below.

Based on Foamix’s closing share price of $2.99 as of March 9, 2020, the Merger Consideration under reverse acquisition accounting was approximately $131.1 million, consisting of $123.8 million for the deemed (for accounting purposes only) issuance of 41.4 million Foamix shares assuming that no upwards adjustment was made to the Exchange Ratio relating to the CSR, and $7.3 million for the fair value of Menlo equity awards deemed (for accounting purposes only) to be converted into Foamix equity awards. The converted stock options represent the fair value of such options attributable to service prior to the Merger date using the Foamix closing share price of $2.99 as of March 9, 2020 as an input to the Black Scholes valuation model to determine the fair value of the options.

Purchase Price Allocation

The Company completed its analysis of the allocation of the purchase price to the fair values of assets acquired and liabilities assumed as follows:

(in thousands)	March 9, 2020
Cash and cash equivalents	$	38,641
Investment in marketable securities	22,703
Prepaid expenses and other current assets	1,581
In-process research and development	49,800
Goodwill	4,545
Total assets	117,270
Current liabilities	(5,827)
Total liabilities	(5,827)
Purchase price*	$	111,443

* Reflects reduction in the purchase price deemed paid to Menlo stockholders in the Merger on the assumption that the CSRs, in an aggregate value of $19.6 million, convert into additional shares of the combined company for the Foamix shareholders, thereby resulting in a lower percentage of the combined company’s outstanding shares being owned by Menlo stockholders following the Merger.

Goodwill

Goodwill is recorded with the acquisition of a business and is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at least annually. None of the goodwill recognized is expected to be deductible for income tax purposes. The purchase price of the transaction and the excess purchase price over the fair value of the identifiable net assets acquired, are calculated as follows:

(in thousands)	March 9, 2020
Purchase price	$	111,443
Less: fair value of net assets acquired, including other identifiable intangibles	(106,898)
Goodwill	$	4,545

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. The Company does not intend to further pursue the development of serlopitant. As such, the Company recorded a full impairment charge of $4.5 million related to

goodwill in its unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020. There were no impairment charges in the three and nine months ended September 30, 2021.

In-Process Research and Development (“IPR&D")

The IPR&D recognized relates to Menlo’s once-daily oral serlopitant for the treatment of pruritus (itch) associated with PN that has not reached technological feasibility as follows:

(in thousands)
Intangible asset	Estimated Fair Value
Acquired indefinite life intangible assets*	$	49,800
Fair value of identified intangible assets	$	49,800

* Represents acquired IPR&D assets which are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the research and development period, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing.

The fair value of IPR&D has been estimated utilizing a multi-period excess earnings method under the income approach, which reflects the present value of the projected cash flows that are expected to be generated, less charges representing the contribution of other assets to those cash flows that use projected cash flows with and without the intangible asset in place. 

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. The Company does not intend to further pursue the development of serlopitant. As such, the Company recorded a full impairment charge of $49.8 million related to the IPR&D asset in its unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2020. There were no impairment charges in the three and nine months ended September 30, 2021.

CSR

The CSR was issued pursuant to the CSR Agreement, dated as of March 9, 2020, by and between Menlo and American Stock Transfer & Trust Company, LLC, and represented the non-transferable contractual right to receive shares of common stock of Menlo depending on the results of Menlo’s Phase III PN Trials. The Company recognized a liability of $19.6 million in the unaudited condensed consolidated balance sheet as of March 9, 2020. The liability was measured at fair value and categorized as level 3 as of the acquisition date in accordance with ASC 805-31-25-5 and subsequently at each reporting date thereafter. The fair value of the CSR was estimated as the incremental value that Foamix would be able to achieve on a probability weighted basis assuming three different potential probabilities of the following scenarios: (a) serlopitant significance was achieved in both Phase III PN Trials (b) serlopitant significance was achieved in only one Phase III PN Trial and (c) serlopitant significance was not achieved or was not determined on or before May 31, 2020.

On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 additional shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The CSR conversion resulted in the issuance and delivery of 74,544,413 additional shares of Menlo common stock underlying the CSRs, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021. Following the conversion of the CSRs, pre-Merger Foamix shareholders and pre-Merger Menlo stockholders own approximately 82% and 18% of post-Merger Menlo, respectively, each calculated on a fully diluted basis. The conversion of the CSR also affected the Exchange Ratio of the pre-Merger Foamix equity awards and warrants outstanding as of March 9, 2020 and increased the awards available for grant under the Company's equity plan.

The contingent consideration associated with the CSR was recognized and measured at fair value as of the acquisition date in accordance with ASC 805-30-25-5. An acquirer's obligation to pay contingent consideration should be classified as a liability or equity in accordance with ASC 480, Distinguishing Liabilities from Equity, ASC 815 Derivatives and Hedging, and other applicable U.S. GAAP. The contingent consideration associated with the CSR was initially measured at fair value and will subsequently be measured at fair value at each reporting date. The CSR was classified as a liability, as it is settled by issuing a variable number of the Company's common stock. On April 6, 2020, the Company recorded $84.7 million of expense in its

unaudited condensed consolidated statements of operations and comprehensive loss to remeasure the CSR liability in its consolidated balance sheet to its fair value of $104.4 million (calculated based on 74,544,413 shares issued, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021, and a share price of $1.40 on April 6, 2020) and then settled in connection with the issuance of shares.

Pro Forma

The actual Menlo net loss included in the Company’s unaudited condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2020 (for the period from the March 9, 2020, the Effective Date, through September 30, 2020, which are not indicative of the results to be expected for a full year) and the supplemental unaudited pro forma revenue and net loss of the combined entity had the acquisition been completed on January 1, 2019 are as follows:

Actual Menlo results of operations included in the unaudited condensed consolidated statement of operation for the three and nine months ended September 30, 2020:

(in thousands)	Three months ended September 30, 2020		Nine months ended September 30, 2020
	(Unaudited)
Revenues	$	—	$	—
Loss attributable to Menlo	$	4,100	$	23,737

	Three months ended September 30, 2020		Nine months ended September 30, 2020
(in thousands, except per share data)	(Unaudited)		(Unaudited)
SUPPLEMENTAL PRO FORMA COMBINED RESULTS OF OPERATIONS:
Revenues	$	3,269	$	16,707
Net loss	$	24,912	$	229,994
Loss per share - basic and diluted	$	0.59	$	7.89
Adjustments to the supplemental pro forma combined results of operations, included in the above, are as follows:
Transaction costs	$	—	$	(14,931)
Acceleration of stock based compensation	—		(7,199)
Total Adjustments	$	—	$	(22,130)

These unaudited pro forma condensed consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first day of the earliest period presented, or of future results of the consolidated entities. The unaudited pro forma condensed consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the Merger.

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REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Product Sales

Product revenues for the three and nine months ended September 30, 2021 were generated from sales of AMZEEQ and ZILXI. The Company’s customers include a limited number of national and select regional distributors and certain independent and specialty pharmacies, together (the "customers"). The distributors subsequently resell the product, primarily to retail pharmacies that dispense the product to patients. Net product revenue is typically recognized when customers obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of product to the customers. For the three months ended September 30, 2021, there were three major customers that each accounted for more than 10% of total product revenues and, as a group, represented 52% of total product revenues. For the nine months ended September 30, 2021, there were four major customers that each accounted for more than 10% of total product revenues and, as a group, represented 66%

of total product revenues. For the three months ended September 30, 2020, there were three major customers that each accounted for more than 10% of total product revenues and as a group, represented 100% of total product revenues. For the nine months ended September 30, 2020, there were three major customers that each accounted for more than 10% of total product revenues and as a group, represented 99% of total product revenues.

Product Sales Provisions

Product revenue is recorded net of distribution fees, trade discounts, allowances, rebates, chargebacks, estimated returns and other incentives, described below.   The Company calculates its net product revenue based on the wholesale acquisition cost that the Company charges its customers less provisions for (i) trade discounts and allowances, such as distributor fees and discounts for prompt payment, (ii) estimated rebates to third-party payers, patient co-pay assistance programs, chargebacks and other discount programs and (iii) reserves for expected product returns.

Provisions for distribution fees, trade discounts and chargebacks are reflected as a reduction to trade receivables, net on the unaudited condensed consolidated balance sheet. All other provisions, including rebates, other discounts and return provisions are reflected as a liability within accrued expenses on the unaudited condensed consolidated balance sheet. Provisions for revenue reserves described below reduced product revenues by $16.6 million and $11.0 million for the three months ended September 30, 2021 and September 30, 2020, respectively. Provisions for revenue reserves described below reduced product revenues by $48.4 million and $25.1 million for the nine months ended September 30, 2021 and September 30, 2020, respectively. The revenue reserve accrual at September 30, 2021 and December 31, 2020 was $7.3 million and $5.8 million, respectively, reflected in accrued expense in the consolidated balance sheet.

Distribution Fees and Trade Discounts and Allowances: The Company pays fees for distribution services and for certain data that distributors provide to the Company and generally provides discounts on sales to its distributors for prompt payment. These fees and discounts are contractual in nature and the Company expects its distributors to earn these fees and discounts, and accordingly deducts the full amount of these fees and discounts from its gross product revenues at the time such revenues are recognized.

Rebates, Chargebacks and Other Discounts: Product sales made under managed-care and governmental pricing programs in the U.S. are subject to rebates. Managed Care rebates relate to contractual agreements to sell products to managed care organizations and pharmacy benefit managers at contractual rebate percentages in exchange for volume and/or market share. Chargebacks relate to contractual agreements to sell products to government agencies and other indirect customers at contractual prices that are lower than the list prices the Company charges wholesalers. When these government agencies or other indirect customers purchase products through wholesalers at these reduced prices, the wholesaler charges the Company for the difference between the prices they paid the Company and the prices at which they sold the products to the indirect customers. The Company estimates the rebates and chargebacks it expects to be obligated to provide and deducts these estimated amounts from its gross product revenue at the time the revenue is recognized. The Company estimates the rebates and chargebacks that it expects to be obligated to provide based upon (i) the Company's current contracts and negotiations, (ii) estimates regarding the payer mix based on third-party data and utilization, (iii) inventory held by distributors and (iv) estimates of inventory held at the retail channel. Other discounts include the Company’s co-pay assistance coupon programs for commercially-insured patients meeting certain eligibility requirements. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to pay associated with product that has been recognized as revenue.

Product Returns: Consistent with industry practice, customers are generally allowed to return products within a specified period of time before and after its expiration date. The Company estimates the amount of product that will be returned and deducts these estimated amounts from its gross revenue at the time the revenue is recognized. The information utilized to estimate the returns provision includes: (i) historical industry information regarding rates for comparable pharmaceutical products and product portfolios, (ii) external data with respect to inventory levels in the wholesale distribution channel, (iii) external data with respect to prescription demand for products and (iv) remaining shelf lives of products at the date of sale. The Company estimates that approximately 2% of product will be returned.

License Revenues

On April 23, 2020, the Company announced that it entered into a license agreement with Cutia for AMZEEQ as well as certain of the Company's other topical minocycline product candidates, once approved, on an exclusive basis in Greater 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 the U.S., FCD105 in the Greater China territory. The Company will supply the finished licensed products to Cutia for clinical and commercial use. Outside of the license transferred, the Company does not have any additional performance obligations under the arrangement. In exchange for the license, the Company received an upfront cash payment of

$10.0 million in 2020 ($6.0 million received in the three months ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1.0 million payment upon the receipt of marketing approval in China of the first licensed product. The license is considered functional IP as the licensee is able to use and benefit from the license without the continued involvement of the Company. There was no license revenue in the three months ended September 30, 2021. The Company recorded $10.0 million of license revenue in the nine months ended September 30, 2020. The Company will also receive royalties on net sales of any licensed products, such royalties will be recognized in the period the sales or usage occurs under the royalties sales-and usage based exception. The Company has not recorded revenue related to the $1.0 million payment due upon receipt of marketing approval for the licensed product as such amount is constrained under the variable consideration guidance under ASC 606, Revenue from Contracts with Customers.

Contract Assets and Contract Liabilities 

The Company did not have any contract assets (unbilled receivables) related to product sales as of September 30, 2021 and December 31, 2020, as customer invoicing generally occurs before or at the time of revenue recognition. The Company did not have any contract assets (unbilled receivables) related to its license revenues as of September 30, 2021 and December 31, 2020.

The Company did not have any contract liabilities as of September 30, 2021 and December 31, 2020, as the Company did not receive payments in advance of fulfilling its performance obligations to its customers.

Sales Commissions

Sales commissions are generally attributed to periods shorter than one year and therefore are expensed when incurred. Sales commissions are included in selling, general and administrative expenses.

Financing Component

The Company has elected not to adjust consideration for the effects of a significant financing component when the period between the transfer of a promised good or service to the customer and when the customer pays for that good or service will be one year or less. Standard credit terms do not exceed 75 days.

Royalty Revenues 

The Company is entitled to royalty payments with respect to sales of a product developed by a customer in collaboration with the Company. Revenues in the amount of $0.1 million and $0.7 million were recorded during the three and nine months ended September 30, 2021, respectively. Revenues in the amount of $0.4 million and $0.6 million were recorded during the three and nine months ended September 30, 2020, respectively.

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FAIR VALUE MEASUREMENT

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

The Company’s assets and liabilities that are measured at fair value as of December 31, 2020, are classified in the table below in one of the three categories described in Note 2 above:

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Marketable securities	$	1,027	$	—	$	—	$	1,027

The Company sold its marketable securities during the nine months ended September 30, 2021.

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MARKETABLE SECURITIES

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

MARKETABLE SECURITIES

MARKETABLE SECURITIES

Marketable securities as of December 31, 2020 consist mainly of mutual funds securities. The debt securities are classified as available-for-sale and are recorded at fair value. Changes in fair value, net of taxes (if applicable), are reflected in other comprehensive loss. Realized gains and losses on sales of the securities, as well as premium or discount amortization, are included in the unaudited condensed consolidated statement of operations as other expense (income), net.

Equity securities with readily determinable fair value are measured at fair value. The changes in the fair value of equity investments are recognized through other expense (income), net in the unaudited condensed consolidated statements of operations.

The following table sets forth the Company’s marketable securities:

	September 30		December 31
(in thousands)	2021		2020
Israeli mutual funds	$	—	$	1,027

As of September 30, 2021 and December 31, 2020 there were no available-for-sale debt securities.

The Company has considered factors regarding other than temporary impaired securities and determined that there are no securities with impairment that is other than temporary as of September 30, 2021 and December 31, 2020.

During the nine months ended September 30, 2021 and September 30, 2020 the Company received aggregate proceeds of $1.0 million and $36.4 million, respectively, upon sale and maturity of marketable securities.

As of September 30, 2021 and December 31, 2020, there were no restricted marketable securities.

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INVENTORY

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

INVENTORY

INVENTORY

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis by product. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. The Company commenced capitalizing inventory for AMZEEQ and ZILXI upon FDA approval in October 2019 and May 2020, respectively. The Company periodically reviews its inventory levels and, if necessary, writes down inventory that is expected to expire prior to being sold, inventory in excess of expected sales requirements and inventory that fails to meet commercial sale specifications, with a corresponding charge to cost of goods sold. There were no material write-downs during the three and nine months ended September 30, 2021 and September 30, 2020.

The Company evaluated the realizability of inventory giving consideration to the strategic business review discussed in Note 1 and no impairment charges resulted from this review as of September 30, 2021. The Company will continue to evaluate the realizability of its inventory during the process to explore a possible sale or license of its topical minocycline franchise.

The following table sets forth the Company’s inventory:

	September 30		December 31
(in thousands)	2021		2020
Raw materials	$	3,247	$	4,042
Work-in-process	339		662
Finished goods	4,484		2,700
Total	$	8,070	$	7,404

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DEBT

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT

DEBT

On July 29, 2019, Foamix entered into a Credit Agreement (the "Credit Agreement") to secure up to $50 million from two lenders, one of which is a significant stockholder of the Company and is considered a related party, and a Securities Purchase Agreement with one of the lenders for gross proceeds of approximately $14 million, before deducting offering expenses (see “Note 9- Share Capital” for more information). On March 9, 2020, the Company entered into an Amended and Restated Credit Agreement and Guaranty (as further amended on August 5, 2020, the “Amended and Restated Credit Agreement”), whereby the Company has guaranteed the indebtedness obligations of the borrower and granted a first priority security interest in substantially all of the Company's assets for the benefit of the lenders. As December 31, 2020, $35.0 million was drawn under the Amended and Restated Credit Agreement. The Company did not incur the remaining $15.0 million under the Amended and Restated Credit Agreement.

The term loans available under the Amended and Restated Credit Agreement were comprised as follows: (a) $15 million that was funded on July 29, 2019 (the “Tranche 1 Loan”), (b) $20 million that was funded on December 17, 2019 (the “Tranche 2 Loan”) and (c) up to $15 million that was available prior to September 30, 2020 (the “Tranche 3 Loan”). The Tranche 2 Loan was borrowed following the FDA’s approval of the NDA for AMZEEQ and listing of AMZEEQ in the FDA’s “Orange Book,” in addition to maintaining arrangements with a third party for the commercial supply and manufacture of AMZEEQ. The Company did not incur the Tranche 3 Loan. Interest on the loans was equal to the sum of (A) 8.25% (subject to increase in accordance with the terms of the Amended and Restated Credit Agreement) plus (B) the greater of (x) the one-month LIBOR as

of the second business day immediately preceding the first day of the calendar month or the date of borrowing (if such loan is not outstanding as of the first day of the calendar month), as applicable, and (y) 2.75%.

The loans were scheduled to mature on July 29, 2024. However, following discussions with the Company's lenders regarding the revenue targets included in the Amended and Restated Credit Agreement, the revenue expected to be generated for the trailing twelve month period ended June 30, 2021 and the Company's strategic transition discussed in Note 1, the Company determined to prepay its outstanding indebtedness in addition to a 4% prepayment fee and accrued but unpaid interest in the total amount of approximately $36.5 million on August 11, 2021. Following the prepayment, the Amended and Restated Credit Agreement and the security interests thereunder were terminated. As of September 30, 2021 there was no debt outstanding.

Perceptive Credit Holdings II, LP (“Perceptive”) was one of the lenders and the administrative agent under the Amended and Restated Credit Agreement. As of September 30, 2021 and August 11, 2021, the date of the prepayment, affiliates of Perceptive were holders of more than 5% of the Company's outstanding common stock. In connection with the prepayment of the Company's indebtedness, Perceptive received $18.3 million, representing their portion of the principal amount, interest and prepayment premium.

In addition, on July 29, 2019, the lenders under the Credit Agreement were issued warrants to purchase up to an aggregate of 1,100,000 of Foamix ordinary shares, at an exercise price of $2.09 per share (the “Warrants”), which represented the five-day volume weighted average price of the Foamix ordinary shares as of the trading day immediately prior to the issuance of the Warrants. In connection with the completion of the Merger, the exchange ratio was applied to the Warrants such that they became exercisable for 651,640 shares of the Company’s common stock, and the exercise price was adjusted to $3.53. Following the Phase 3 PN Trial results, the Warrants were further adjusted for the CSR and reverse stock split and they are currently exercisable for 495,165 shares of our common stock with an exercise price of $4.64 per share. Payment of the exercise price will be made, at the option of the holder, either in cash or as a reduction of common stock issuable upon exercise of the Warrant, with an aggregate fair value equal to the aggregate exercise price ("cashless exercise"), or any combination of the foregoing. The Warrants are exercisable pursuant to the terms, and subject to the conditions, thereof and expire on July 29, 2026. Any Warrants left outstanding will be cashless exercised on the Warrants' expiration date, if in the money. The Warrants issued were classified as equity in accordance with ASC 815-40. Proceeds received under the Tranche 1 Loan were allocated to the Warrants and the Tranche 1 Loan on a relative fair value basis.

The Company incurred offering expenses of $1.1 million in connection with transactions contemplated by the Credit Agreement and the Securities Purchase Agreement, which were allocated to the Warrants, shares and debt consistently with the allocation of proceeds. The Company incurred additional expenses in the amount of $0.3 million from the borrowing of Tranche 2 Loan, allocated only to the debt. Debt issuance costs are recorded on the consolidated balance sheet as a reduction of liabilities. Amounts allocated to the debt, net of issuance cost, were subsequently recognized at amortized cost using the effective interest method.

During the three months ended September 30, 2021, the Company recorded interest expense of $3.5 million, comprised of interest expense of $1.9 million and discount cost of $1.6 million. During the nine months ended September 30, 2021, the Company recorded interest expense of $5.6 million, comprised of interest expense of $3.8 million and discount cost of $1.8 million. For the three month and nine month periods ended September 30, 2021, interest expense includes a debt prepayment fee of $1.4 million and the write-off of discount costs of $1.6 million associated with the Company's prepayment of outstanding indebtedness resulting in a total loss on the extinguishment of debt of $3.0 million. During the three months ended September 30, 2020, the Company recorded interest expense of $1.0 million and discount cost of $0.1 million. During the nine months ended September 30, 2020, the Company recorded interest expense of $2.9 million and discount cost of $0.3 million.

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SHARE CAPITAL

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

SHARE CAPITAL

SHARE CAPITAL

Preferred stock

As of September 30, 2021, the Company's Certificate of Incorporation, as amended, authorizes the Company to issue 20,000,000 shares of preferred stock, par value $0.0001 per share. There were no shares of preferred stock issued and outstanding as of September 30, 2021 and December 31, 2020.

Shares of preferred stock may be issued from time to time in one or more series. The voting powers (if any), preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions of any series of preferred stock will be set forth in a Certificate of Designation filed pursuant to the Delaware General Corporation Law, as determined by the Company's Board of Directors.

Common stock

The number of shares of common stock authorized under the Company's Amended and Restated Certificate of Incorporation was proportionately reduced in connection with the Company's one-for-four reverse stock split in February 2021. On July 19, 2021, the Company held its annual meeting of stockholders (the "Annual Meeting"). Following the approval by the holders of a majority of the outstanding shares of common stock at the Annual Meeting, the Company filed a Certificate of Amendment to 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, effective as of July 19, 2021. Accordingly, the Company is authorized to issue 150,000,000 shares of common stock, par value $0.0001 per share.

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of preferred stock outstanding. The Company has never declared any dividends on common stock.

Issuance of stock

On February 1, 2019, the Company entered into a Sales Agreement (the "2019 Sales Agreement") with Cantor Fitzgerald & Co., or Cantor Fitzgerald, to sell shares of the Company's 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 which Cantor Fitzgerald acted as the Company's sales agent. The issuance and sale of shares of common stock by us pursuant to the 2019 Sales Agreement were deemed an "at-the-market" offering under the Securities Act. Cantor Fitzgerald was entitled to compensation for its services equal to up to 3.0% of the gross proceeds of any shares of common stock sold under the 2019 Sales Agreement. From January 1, 2021 through January 25, 2021, the Company issued and sold 2,778,012 shares of common stock at a weighted average price per share of $9.76 pursuant to the 2019 Sales Agreement for $26.3 million in net proceeds. Effective as of January 25, 2021, the Company terminated the 2019 Sales Agreement.

On August 12, 2021, the Company entered into a new sales agreement with Cantor Fitzgerald to sell shares of the Company's 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 which Cantor Fitzgerald will act as the Company's sales agent. The issuance and sale of shares of common stock by us pursuant to the Sales Agreement are deemed an "at-the-market" offering under the Securities Act. Cantor Fitzgerald is entitled to compensation for its services equal to up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. During the three months ended September 30, 2021, the Company issued and sold 1,948,000 shares of common stock at a weighted average per share price of $1.57 pursuant to the Sales Agreement for $2.9 million in net proceeds.

On January 26, 2021, the Company entered into a Securities Purchase Agreement with certain institutional and accredited investors for the sale of an aggregate of 5,274,261 shares of common stock of the Company, at a purchase price of $9.48 per share in a registered direct offering. The offering was completed on January 28, 2021 and the Company received approximately $46.8 million in net proceeds, after deducting placement agent fees and other offering expenses.

On June 9, 2020, the Company completed an underwritten public offering of 7,776,875 shares of common stock at a price to the public of $7.40 per share. The net proceeds of the offering were approximately $53.6 million, after deducting underwriting discounts and commissions and other offering expenses.

Pursuant to the completion of the Merger, on March 9, 2020, the Company issued 36,550,335 shares to legacy Foamix shareholders. On April 6, 2020, pursuant to the terms of the CSR Agreement, the Company issued an additional 74,544,413 shares to legacy Foamix shareholders, adjusted retrospectively to 18,636,103 shares of common stock upon the reverse stock split effective February 12, 2021.

Warrants

In connection with entering into the Credit Agreement on July 29, 2019, Foamix issued to the lenders Warrants to purchase up to an aggregate of 1,100,000 of its ordinary shares, later exchanged to Warrants to purchase up to 1,980,660 shares of Menlo’s common stock, adjusted retrospectively to 495,165 shares of common stock upon the reverse stock split effective February 12, 2021. Upon the closing of the Merger, each Warrant received one CSR as described in Note 3- Business Combinations. The Warrants were exercisable immediately following the closing of the Credit Agreement, subject to the terms of the warrant, and are due to expire on July 29, 2026. Any Warrants left outstanding will be cashless exercised on the Warrants’ expiration date, if in the money.

The exchange of Warrants from Foamix warrants to Menlo warrants and the additional CSR was accounted for as a modification, by analogy, from the modification’s guidance under ASC 260-10-S99-2. The Company assessed the significance of the modification of the Warrants by comparing the fair value of the Warrants immediately before and after the amendments.

In its assessment, it also considered additional qualitative factors. The Company concluded that the change of terms was not significant. Therefore, the incremental fair value, in the amount of $41,000, of the modified Warrants over the original ones (as of modification date) was recognized in retained earnings as a deemed dividend to the Warrants holders in the nine months ended September 30, 2020.

Share-based compensation

Equity incentive plans:

Upon closing of the Merger, the Company adopted Foamix’s 2019 Equity incentive plan (the “2019 Plan”). As of September 30, 2021, 509,158 shares remain issuable under the 2019 Plan. In addition, the Company adopted the 2018 Omnibus Incentive Plan (the "2018 Plan") in January 2018. In January 2020, the number of shares reserved under the 2018 Plan automatically increased by 750,000 shares of common stock pursuant to the terms thereof. As of September 30, 2021, 81,925 shares remain issuable under the 2018 Plan.

Employee Share Purchase Plan:

Upon closing of the Merger, the Company adopted Foamix’s Employee Share Purchase Plan ("ESPP") pursuant to which qualified employees (as defined in the ESPP) may elect to purchase designated shares of the Company’s common stock at a price equal to 85% of the lesser of the fair market value of the common stock at the beginning or end of each semi-annual share purchase period (“Purchase Period”). Employees are permitted to purchase the number of shares purchasable with up to 15% of the earnings paid (as such term is defined in the ESPP) to each of the participating employees during the Purchase Period, subject to certain limitations under Section 423 of the U.S. Internal Revenue Code.

As of September 30, 2021, 2,261,108 shares remain available for grant under the ESPP.

During the nine months ended September 30, 2021, 42,989 shares were issued to employees pursuant to the ESPP. During the nine months ended September 30, 2020, 61,031 Foamix ordinary shares were purchased by Foamix employees pursuant to the ESPP prior to the Merger. Such shares were later exchanged for 36,155 shares of the Company's common stock and one CSR in the Merger, adjusted retrospectively to 9,038 shares of common stock and one CSR upon the reverse stock split effective February 12, 2021.

Options and RSUs granted to employees and directors:

In the nine months ended September 30, 2021 and 2020, the Company granted options and RSUs as follows:

	Nine months ended September 30, 2021
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,686,405	$1.68-$11.08	1 year - 4 years	10 years
RSUs	970,813	—	2 years - 4 years	—

	Nine months ended September 30, 2020
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,316,637	$5.84-$12.52	1 year - 4 years	10 years
RSUs	647,427	—	1 year - 4 years	—

* All amounts and exercise prices for pre-Merger grants are presented following the exchange to Menlo options and RSUs at the Exchange Ratio described in Note 3-Business Combination.

The fair value of options and RSUs granted to employees and directors during the nine months ended September 30, 2021 and the nine months ended September 30, 2020 was $9.4 million and $11.8 million, respectively.

The fair value of RSUs granted is based on the share price on the grant date.

The fair value of options granted was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:

	Nine months ended September 30,
	2021		2020
Dividend yield	0	%	0	%
Expected volatility	68.38% - 69.38%		60.44% - 69.83%
Risk-free interest rate	0.5% - 1.29%		0.31% - 1.26%
Expected term	6 years		6 years

Pursuant to the Merger, all outstanding options and RSUs granted by Foamix were exchanged for stock options and RSUs of Menlo’s common stock according to the Exchange Ratio. In addition, for each option and RSU the holder received a CSR as described in Note 3- Business Combination. This transaction was considered by the company to be a modification under ASC 718, Compensation - Stock Compensation. The modification did not affect the remaining requisite service period. As a result of the modification, for outstanding options and RSUs granted to Foamix employees and consultants, the Company recorded immaterial incremental compensation expense for the three months ended March 31, 2020. As described in Note 3 - Business Combination, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The conversion was considered by the company to be a modification under ASC 718. As a result of the modification, for outstanding options and RSUs granted to Foamix employees and consultants, the Company recorded incremental compensation of $0.5 million and $1.8 million for the three and nine months ended September 30, 2021, respectively, and $1.1 million and $10.4 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021 there is $1.5 million of unrecognized incremental compensation expense related to the modification which will primarily be amortized using a graded vesting method over the next 2 years.

Awards granted to holders who are no longer employed or providing services to the Company are accounted for in accordance with ASC 815-40, Derivatives and Hedging. Under this guidance, the awards are classified as a derivative liability because the award no longer exchanges a fixed amount of cash for a fixed number of shares. Accordingly, as of March 9, 2020 the Company reclassified $1.6 million from additional paid-in capital to derivative liability on the unaudited condensed consolidated balance sheet. Prior to the reclassification of these awards as a liability instrument, the Company recorded an incremental compensation expense of $0.6 million due to the above mentioned modification in accordance with ASC 718. Subsequent to the reclassification of these awards as a liability instrument, the Company recorded incremental compensation expense of $1.0 million for the nine months ended September 30, 2020. There was no incremental compensation expense for the three and nine months ended September 30, 2021. As described in Note 3 - Business Combination, on April 6, 2020, the Company announced that study MTI-105 and study MTI-106 did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Accordingly, on April 6, 2020, pursuant to the terms of the CSR Agreement, each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective Exchange Ratio in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. On April 6, 2020, the awards are exchangeable for a fixed amount of cash for a fixed number of shares and were remeasured to fair value and reclassified from derivative liability to additional paid-in capital.

Prior to the Merger, Menlo recognized all expenses relating to awards outstanding as of the Effective Date. These awards were subject to acceleration upon the change of control per the previous Menlo stock option plan.

The following table illustrates the effect of share-based compensation on the statements of operations:

	Three months ended September 30				Nine months ended September 30
(in thousands)	2021		2020		2021		2020
Research and development expenses	$	435	$	361	$	1,335	$	3,927
Selling, general and administrative	1,970		2,259		5,413		11,220
Total	$	2,405	$	2,620	$	6,748	$	15,147

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OPERATING LEASE

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

OPERATING LEASE

OPERATING LEASEOperating lease agreements

The Company has operating leases for corporate offices and vehicles. The properties primarily relate to the Company’s principal executive office in Bridgewater, New Jersey and office space in Israel.

On March 13, 2019, the Company signed an amendment to the original lease agreement for its principal executive office in Bridgewater, New Jersey (the “Lease Amendment”). The Lease Amendment includes an extension of the lease period of the 10,000 square feet previously leased under the original agreement (the “Original Space”) and an addition of 4,639 square feet (the “Additional Space”). The Company entered the Additional Space following a period of preparation by the lessor completed during September 2019 (the “Commencement Date”). The Lease Amendment is due to expire on August 31, 2022.

Pursuant to the Lease Amendment, the Company recognized an additional right of use asset and liability in the amount of $0.7 million. The Additional Space was considered a new lease agreement and was recognized as a right of use asset and liability, in the amount of $0.3 million, on the Commencement Date.

The lease agreement for the office space in Israel is a one year lease that expires in December 2021. Given the short-term nature of the lease term, the Company did not recognize a right-of-use asset and liability.

Additionally, the Company entered into operating lease agreements in connection with the leasing of vehicles. The lease periods are generally for three years.

Maturities of lease liabilities are as follows:

(in thousands)
2021	$	229
2022	761
2023	151
Total lease payments	1,141
Less imputed interest	89
Total lease liability	$	1,052

As of September 30, 2021, the Company had a lien in the amount of $0.6 million on the Company’s cash in respect of bank guarantees granted in order to secure the lease agreements.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The Company may periodically become subject to legal proceedings and claims arising in connection with its business. As of September 30, 2021, no claims or actions are pending against the Company that, in the opinion of management, are likely to have a material adverse effect on the Company.

As previously disclosed, on June 30, 2021, the Company received a paragraph IV certification notice (the “Notice”) from Padagis Israel Pharmaceuticals Ltd. (f/k/a Perrigo Israel Pharmaceuticals Ltd. (“Padagis”)) advising that Padagis has submitted to the U.S. Food and Drug Administration (the “FDA”) an Abbreviated New Drug Application (“ANDA”) seeking approval to manufacture and sell a generic version of the Company’s product AMZEEQ® (minocycline) topical foam, 4% in the United States prior to the expiration of the Company’s U.S. patents Nos. 8,865,139, 8,945,516, 8,992,896, 9,675,700, 10,086,080, 10,137,200, 10,213,512, 10,265,404, 10,398,641, 10,517,882, 10,821,187, and 10,849,847 (the “Listed Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, otherwise known as the “Orange Book.” The Notice alleges that the Listed Patents are invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Padagis’s ANDA.

On August 9, 2021, the Company initiated a patent infringement suit against Padagis in the United 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 Listed Patents. As a result, under applicable law, the FDA cannot grant final approval to Padagis’s ANDA before December 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 on September 8, 2037, and such further and other relief as the court may deem appropriate. Padagis filed its response and counterclaim on October 1, 2021. The Company filed its response to such counterclaim on October 22, 2021.

The Company intends to vigorously defend its intellectual property rights, including the Listed Patents.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial statements. In the opinion of management, the Company has made all necessary adjustments, which include normal recurring adjustments necessary for a fair statement of the Company’s unaudited condensed consolidated financial position, results of operations, cash flow and statement of stockholders' equity for the interim periods presented. Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Certain prior period amounts have been reclassified to conform to current year presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in the Company's Current Report on Form 8-K dated August 12, 2021.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the year ending December 31, 2021.

Principles of Consolidation

Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of income and expenses during the reporting periods. Significant items subject to such estimates and assumptions include accounting for business combinations, impairments of goodwill and intangible assets and revenue recognition. Actual results could differ from the Company’s estimates.

The COVID-19 pandemic and government measures taken in response to the pandemic have had a negative impact on the Company's operations. Access to healthcare providers has been limited, 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, the Company further assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for doubtful accounts and credit losses, inventory and related reserves, impairments of long-lived assets and revenue recognition. In 2020, the Company recorded impairments of goodwill and certain indefinite-lived intangible assets; however, these were unrelated to the impact of COVID-19 (See "Note 3 - Business Combination" for more information). The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods

Business Acquisition

Business Acquisition

The Company’s unaudited interim condensed consolidated financial statements include the operations of an acquired business after the completion of the acquisition. The Company accounts for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of In-Process Research and Development and Goodwill be recorded on the balance sheet. Transaction costs are expensed as incurred.

Amounts recorded in connection with an acquisition can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

The Company is required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting.  For example, the Company uses fair value in the initial recognition of net assets acquired in a business combination and when measuring impairment losses.  The Company estimates fair value using an exit price approach, which requires, among other things, that Company determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques:

•Income approach, which is based on the present value of a future stream of net cash flows.

•Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

•Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.

Our fair value methodologies depend on the following types of inputs:

•Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

•Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

•Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

Asset Impairment

The Company reviews all of its long-lived assets for impairment indicators throughout the year. Impairment testing is performed for indefinite-lived intangible assets annually (or sooner if warranted) and for all other long-lived assets whenever impairment indicators are present. When necessary, the Company records charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets.

Revenue Recognition

Revenue RecognitionThe Company accounts for its revenue transactions under FASB ASC Topic 606, Revenue from Contracts with Customers. In accordance with ASC Topic 606, the Company recognizes revenues when its customers obtain control of its product for an amount that reflects the consideration it expects to receive from its customers in exchange for that product. To determine revenue recognition for contracts that are determined to be in scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it

transfers to the customer. Once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when such performance obligation is satisfied.

The Company’s customers include a limited number of national and select regional wholesalers (the “distributors”) and certain independent and specialty pharmacies (together, the “customers”). These distributors subsequently resell the product, primarily to retail pharmacies that dispense the product to patients. Net product revenue is typically recognized when customers obtain control of the Company’s products, which occurs at a point in time, typically upon delivery of product to the customers. The Company evaluates the creditworthiness of its customers to determine whether it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur. The Company does not assess whether a contract has a significant financing component if the expectation is such that the period between the transfer of the promised goods to the customer and the receipt of payment will be less than one year. Standard credit terms do not exceed 75 days. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that would have been recognized is one year or less or the amount is immaterial. Shipping and handling costs related to the Company’s product sales are included in selling, general and administrative expenses.

The Company’s net product revenues through September 30, 2021 were generated through sales of AMZEEQ, which was approved by the FDA in October 2019 and was commercially launched in the United States in January 2020, and ZILXI, which was approved by the FDA in May 2020 and was commercially launched in the United States in October 2020. Product revenue is recorded net of distribution fees, trade discounts, allowances, rebates, copay program coupons, chargebacks, estimated returns and other incentives. These reserves are classified as either reductions of accounts receivable or as current liabilities. The estimates of reserves established for variable consideration reflect current contractual and statutory requirements, known market events and trends, industry data and forecasted customer mix. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net product revenues only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from these estimates. If actual results vary, estimates may be adjusted in the period such change in estimate becomes known, which could have an impact on earnings in the period of adjustment. See “Note 4 – Revenue Recognition” for more information.

On April 23, 2020, the Company announced that it entered into a license agreement with Cutia for our minocycline products and product candidate, if approved, on an exclusive basis in Greater 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 the U.S., FCD105 in the Greater China territory. The Company will supply the finished licensed products to Cutia for clinical and commercial use. The Company received an upfront cash payment of $10.0 million in 2020 ($6.0 million received in the three months ended June 30, 2020 and $4.0 million received in the three months ended September 30, 2020) and will be eligible to receive an additional $1.0 million payment upon the receipt of marketing approval in China of the first licensed product. The Company will also receive royalties on net sales of any licensed products. The license is determined to be a distinct performance obligation of the arrangement, therefore the Company recognized the revenues from the upfront license fee when the license was transferred to the licensee and the licensee was able to use and benefit from the license. See "Note 4 - Revenue Recognition" for more information.

Allowance for credit losses

Allowance for credit lossesAn allowance for doubtful accounts is maintained for potential credit losses based on the aging of trade receivables, historical bad debts experience and changes in customer payment patterns. Trade receivable balances are written off against the allowance when it is deemed probable that the receivable will not be collected. Trade receivables, net are stated net of reserves for certain sales allowances and provisions for doubtful accounts. Provisions for doubtful accounts were not material for the three and nine months ended September 30, 2021 and September 30, 2020.

Fair value measurement

Fair value measurement

Fair value is based on the price that would be received from the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described as follows:

Level 1:    Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2:    Observable prices that are based on inputs not quoted on active markets, but corroborated by market data or active market data of similar or identical assets or liabilities.

Level 3:    Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

Loss per share

Loss per share

Net loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common stock and of common stock equivalents outstanding when dilutive. Common stock equivalents include outstanding stock options and warrants which are included under the treasury share method when dilutive.

The calculation of the weighted-average number of common stock outstanding during the period in which the reverse merger occured was based on:

a.The number of common stock outstanding from the beginning of that period to the merge date was computed on the basis of the weighted-average number of common stock of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement

b.The number of common stock outstanding from the merge date to the end of that period was the actual number of common stock of the legal acquirer (the accounting acquiree) outstanding during that period.

The following weighted average stock options, restricted stock units (“RSUs”), warrants and incremental shares to be issued under the employee stock purchase plan (“ESPP”) were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (share data):

	Three months ended September 30		Nine months ended September 30
	2021	2020	2021	2020
Outstanding stock options, RSUs and shares under the ESPP	5,223,466	5,191,299	5,303,135	3,756,049
Warrants	495,165	495,165	495,165	377,542

In addition to the above, the CSR was excluded from the calculation of the 2020 diluted net loss per share because its effect would have been anti-dilutive for the periods presented. On April 6, 2020, the Company announced that each of Menlo’s Phase III PN Trials (study MTI-105 and study MTI-106) did not meet their respective primary endpoint of demonstrating statistically significant reduction in pruritus in patients treated with serlopitant compared to placebo based upon a 4-point improvement responder analysis. Each CSR was converted into 1.2082 shares of Menlo common stock, resulting in an effective exchange ratio (the "Exchange Ratio") in the Merger of 1.8006 shares of Menlo common stock for each Foamix ordinary share. The conversion of the CSR also affected the Exchange Ratio of the pre-Merger Foamix equity awards and warrants outstanding as of March 9, 2020. See "Note 3 - Business Combination" for more information.

Newly issued and recently adopted accounting pronouncements

Newly issued and recently adopted accounting pronouncements

Recent Accounting Guidance Issued:

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which clarifies and simplifies certain aspects of the accounting for income taxes. The standard is effective for years beginning after December 15, 2020, and interim periods beginning after December 15, 2020. This guidance became effective during the first quarter of 2021. The adoption of the new standard did not have a material impact to the Company's consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update No. 2020-4, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (ASU 2020-4), which provides guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying generally accepted accounting principles to contracts, hedging relationships, and other transactions impacted by reference rate reform. The provisions of ASU 2020-4 apply only to those transactions that reference LIBOR or another reference rate expected to be

discontinued due to reference rate reform. Adoption of the provisions of ASU 2020-4 are optional and are effective from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-4 on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13), which requires companies to measure credit losses of financial instruments, including customer accounts receivable, utilizing a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional Accounting Standard Updates to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. As a smaller reporting company, the Company will adopt ASU 2016-13 effective January 1, 2023 or at such time where it is no longer a smaller reporting company.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following weighted average stock options, restricted stock units (“RSUs”), warrants and incremental shares to be issued under the employee stock purchase plan (“ESPP”) were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (share data):

	Three months ended September 30		Nine months ended September 30
	2021	2020	2021	2020
Outstanding stock options, RSUs and shares under the ESPP	5,223,466	5,191,299	5,303,135	3,756,049
Warrants	495,165	495,165	495,165	377,542

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BUSINESS COMBINATION (Tables)

9 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Merger Consideration to be Transferred

The following is the Merger Consideration (as defined in the Merger Agreement) was transferred to effect the Merger:

(in thousands)	Total
Deemed (for accounting purposes only) issuance of Foamix shares to Menlo stockholders	$	123,757
Deemed (for accounting purposes only) conversion of Menlo equity awards	7,322
Total consideration*	$	131,079

* This amount reflects total consideration prior to reduction in respect of the CSRs (which had a fair value of $19.6 million as of the Merger Date) that were issued to Foamix shareholders and that reduced the Menlo stockholders’ relative ownership in the combined company. If the effect of the CSRs is included, the total consideration deemed paid by Foamix, as the accounting acquirer, to Menlo stockholders and equity award holders in the Merger would be reduced to approximately $111.4 million, as shown in the purchase price allocation table below.

Schedule of Allocation of the Purchase Price to the Fair Values of Assets Acquired and Liabilities Assumed

The Company completed its analysis of the allocation of the purchase price to the fair values of assets acquired and liabilities assumed as follows:

(in thousands)	March 9, 2020
Cash and cash equivalents	$	38,641
Investment in marketable securities	22,703
Prepaid expenses and other current assets	1,581
In-process research and development	49,800
Goodwill	4,545
Total assets	117,270
Current liabilities	(5,827)
Total liabilities	(5,827)
Purchase price*	$	111,443

* Reflects reduction in the purchase price deemed paid to Menlo stockholders in the Merger on the assumption that the CSRs, in an aggregate value of $19.6 million, convert into additional shares of the combined company for the Foamix shareholders, thereby resulting in a lower percentage of the combined company’s outstanding shares being owned by Menlo stockholders following the Merger.

Schedule of the Calculation for Goodwill of Merger

The purchase price of the transaction and the excess purchase price over the fair value of the identifiable net assets acquired, are calculated as follows:

(in thousands)	March 9, 2020
Purchase price	$	111,443
Less: fair value of net assets acquired, including other identifiable intangibles	(106,898)
Goodwill	$	4,545

Schedule of In Process Research and Development Assets Acquired Through Business Combination

The IPR&D recognized relates to Menlo’s once-daily oral serlopitant for the treatment of pruritus (itch) associated with PN that has not reached technological feasibility as follows:

(in thousands)
Intangible asset	Estimated Fair Value
Acquired indefinite life intangible assets*	$	49,800
Fair value of identified intangible assets	$	49,800

* Represents acquired IPR&D assets which are initially recognized at fair value and are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the research and development period, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing.

Schedule of Pro Forma Information

Actual Menlo results of operations included in the unaudited condensed consolidated statement of operation for the three and nine months ended September 30, 2020:

(in thousands)	Three months ended September 30, 2020		Nine months ended September 30, 2020
	(Unaudited)
Revenues	$	—	$	—
Loss attributable to Menlo	$	4,100	$	23,737

	Three months ended September 30, 2020		Nine months ended September 30, 2020
(in thousands, except per share data)	(Unaudited)		(Unaudited)
SUPPLEMENTAL PRO FORMA COMBINED RESULTS OF OPERATIONS:
Revenues	$	3,269	$	16,707
Net loss	$	24,912	$	229,994
Loss per share - basic and diluted	$	0.59	$	7.89
Adjustments to the supplemental pro forma combined results of operations, included in the above, are as follows:
Transaction costs	$	—	$	(14,931)
Acceleration of stock based compensation	—		(7,199)
Total Adjustments	$	—	$	(22,130)

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FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

The Company’s assets and liabilities that are measured at fair value as of December 31, 2020, are classified in the table below in one of the three categories described in Note 2 above:

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Marketable securities	$	1,027	$	—	$	—	$	1,027

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MARKETABLE SECURITIES (Tables)

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

The following table sets forth the Company’s marketable securities:

	September 30		December 31
(in thousands)	2021		2020
Israeli mutual funds	$	—	$	1,027

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INVENTORY (Tables)

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Schedule of Inventories

The following table sets forth the Company’s inventory:

	September 30		December 31
(in thousands)	2021		2020
Raw materials	$	3,247	$	4,042
Work-in-process	339		662
Finished goods	4,484		2,700
Total	$	8,070	$	7,404

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SHARE CAPITAL (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Schedule of Share Based Compensation by Share Based Payment Award Grants in Period

In the nine months ended September 30, 2021 and 2020, the Company granted options and RSUs as follows:

	Nine months ended September 30, 2021
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,686,405	$1.68-$11.08	1 year - 4 years	10 years
RSUs	970,813	—	2 years - 4 years	—

	Nine months ended September 30, 2020
	Award amount*	Exercise price range*	Vesting period	Expiration
Employees and Directors:
Options	1,316,637	$5.84-$12.52	1 year - 4 years	10 years
RSUs	647,427	—	1 year - 4 years	—

* All amounts and exercise prices for pre-Merger grants are presented following the exchange to Menlo options and RSUs at the Exchange Ratio described in Note 3-Business Combination.

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of options granted was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:

	Nine months ended September 30,
	2021		2020
Dividend yield	0	%	0	%
Expected volatility	68.38% - 69.38%		60.44% - 69.83%
Risk-free interest rate	0.5% - 1.29%		0.31% - 1.26%
Expected term	6 years		6 years

Share-based Payment Arrangement, Expensed and Capitalized, Amount

The following table illustrates the effect of share-based compensation on the statements of operations:

	Three months ended September 30				Nine months ended September 30
(in thousands)	2021		2020		2021		2020
Research and development expenses	$	435	$	361	$	1,335	$	3,927
Selling, general and administrative	1,970		2,259		5,413		11,220
Total	$	2,405	$	2,620	$	6,748	$	15,147

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OPERATING LEASE (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Lessee, Operating Lease, Liability, Maturity

Maturities of lease liabilities are as follows:

(in thousands)
2021	$	229
2022	761
2023	151
Total lease payments	1,141
Less imputed interest	89
Total lease liability	$	1,052

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NATURE OF OPERATIONS (Details)				3 Months Ended		9 Months Ended
	Aug. 11, 2021 USD ($)	Aug. 06, 2021 USD ($)	Feb. 12, 2021 shares	Sep. 30, 2021 USD ($) shares	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) employee segment shares	Sep. 30, 2020 USD ($)	Jul. 19, 2021 shares	Feb. 11, 2021 shares	Dec. 31, 2020 USD ($) shares
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Number of segments | segment						1
Number of employees expected to be terminated | employee						70
Restructuring charges				$ 1,000,000
Reverse stock split, conversion ratio (share/share)			0.25
Common stock shares authorized (in shares) | shares			75,000,000	150,000,000		150,000,000		150,000,000		75,000,000
Net Loss				$ 21,285,000	$ 24,714,000	$ 61,759,000	$ 232,387,000
Cash used in operations						(46,349,000)	(111,707,000)
Cash and investments				52,900,000		52,900,000
Accumulated deficit				(627,955,000)		(627,955,000)				$ (566,196,000)
Debt repayment	$ 36,500,000					36,432,000	$ 0
Outstanding debt				0		0
Prepayment fee, percentage	4.00%
Menlo - Premerger
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Common stock shares authorized (in shares) | shares									300,000,000
Employee Severance
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Restructuring charges				900,000
Additional charges				300,000		300,000
Retention Payments
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Restructuring charges				100,000
Expected cost remaining				$ 400,000		$ 400,000
Licensing Agreements
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Payments for licensing agreements		$ 1,000,000
Royalty percent, maximum		10.00%
Topical BETi Option Agreement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Payments for licensing agreements		$ 500,000
Milestone payments upon achieving certain criteria, maximum		15,750,000
Oral BETi Option Agreement
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Payments for licensing agreements		4,000,000
Milestone payments upon achieving certain criteria, maximum		$ 43,750,000

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SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions	3 Months Ended		6 Months Ended
	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Apr. 06, 2020
Loss per share
Number of common stock shares issued per CSR (in shares)					1.2082
Effective exchange ratio of Foamix ordinary shares into Menlo common stock (share/share)					1.8006
Foamix
Loss per share
Proceeds from royalties	$ 4.0	$ 6.0	$ 10.0
Additional royalty upon receipt of marketing approval in China				$ 1.0

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SIGNIFICANT ACCOUNTING POLICIES - Schedule of AntiDilutive Equity Awards Not Included in the Calculation of EPS (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Outstanding stock options, RSUs and shares under the ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	5,223,466	5,191,299	5,303,135	3,756,049
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	495,165	495,165	495,165	377,542

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BUSINESS COMBINATION - Narrative (Details)					3 Months Ended		9 Months Ended
	Feb. 12, 2021 shares	Apr. 07, 2020	Apr. 06, 2020 USD ($) $ / shares shares	Mar. 09, 2020 USD ($) contingentStockRight $ / shares shares	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Business Acquisition [Line Items]
Number of common stock shares issued per CSR (in shares)			1.2082
Effective exchange ratio (CSR per share)			1.8006
Share issued and delivered upon CSR conversion (in shares) | shares	18,636,103		74,544,413
Ownership percentage of parent by subsidiary stockholders		82.00%
Ownership percentage of parent by parent stockholders		18.00%
Closing share price (in usd per share) | $ / shares			$ 1.40
Goodwill impairment loss					$ 0	$ 4,500,000	$ 0	$ 4,500,000
Value of CSR converted into additional shares of the combined company				$ 19,600,000
Contingent Stock Right Remeasurement			$ 84,700,000		0	$ 0	0	84,726,000
Contingent consideration, fair value of liability			$ 104,400,000
In Process Research and Development
Business Acquisition [Line Items]
In process research and development impairment					$ 0		$ 0	49,800,000
Foamix
Business Acquisition [Line Items]
Number of contingent stock rights issued (in CSR) | contingentStockRight				1
Closing share price (in usd per share) | $ / shares				$ 2.99
Consideration transferred				$ 131,079,000
Deemed (for accounting purposes only) issuance of Foamix shares to Menlo stockholders				$ 123,757,000
Number of shares deemed (for accounting purposes only) issued (in shares) | shares				41,400,000
Deemed (for accounting purposes only) conversion of Menlo equity awards				$ 7,322,000
Goodwill deductible for income tax purposes				0
Value of CSR converted into additional shares of the combined company				19,600,000
Contingent consideration, fair value of liability				$ 19,600,000
Foamix | Employee benefits
Business Acquisition [Line Items]
Acquisition related costs								8,100,000
Foamix | Selling, general and administrative
Business Acquisition [Line Items]
Acquisition related costs								$ 11,700,000
Common stock | Foamix
Business Acquisition [Line Items]
Exchange ratio per ordinary share for common stock (share per share)				0.5924

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BUSINESS COMBINATION - Consideration Transferred in Merger (Details) - USD ($) $ in Thousands	Mar. 09, 2020	Apr. 06, 2020
Business Acquisition [Line Items]
Contingent consideration, fair value of liability		$ 104,400
Foamix
Business Acquisition [Line Items]
Deemed (for accounting purposes only) issuance of Foamix shares to Menlo stockholders	$ 123,757
Deemed (for accounting purposes only) conversion of Menlo equity awards	7,322
Total consideration	131,079
Contingent consideration, fair value of liability	19,600
Consideration net of the effect of CSRs	$ 111,400

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BUSINESS COMBINATION - Purchase Price Allocation (Details) $ in Thousands	Mar. 09, 2020 USD ($)
Allocations of purchase price
Value of CSR converted into additional shares of the combined company	$ 19,600
Foamix
Allocations of purchase price
Cash and cash equivalents	38,641
Investment in marketable securities	22,703
Prepaid expenses and other current assets	1,581
In-process research and development	49,800
Goodwill	4,545
Total assets	117,270
Current liabilities	(5,827)
Total liabilities	(5,827)
Purchase price	111,443
Value of CSR converted into additional shares of the combined company	$ 19,600

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BUSINESS COMBINATION - Goodwill (Details) - Foamix $ in Thousands	Mar. 09, 2020 USD ($)
Business Combination, Goodwill [Abstract]
Purchase price	$ 111,443
Less: fair value of net assets acquired, including other identifiable intangibles	(106,898)
Goodwill	$ 4,545

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BUSINESS COMBINATION - IPRD and CSR (Details) - Foamix $ in Thousands	Mar. 09, 2020 USD ($)
Intangible asset
Acquired indefinite life intangible assets	$ 49,800
Fair value of identified intangible assets	$ 49,800

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BUSINESS COMBINATION - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Business Combination and Asset Acquisition [Abstract]
Revenues	$ 0	$ 0
Loss attributable to Menlo	4,100	23,737
SUPPLEMENTAL PRO FORMA COMBINED RESULTS OF OPERATIONS:
Revenues	3,269	16,707
Net loss	$ 24,912	$ 229,994
Loss per share - basic (in USD per share)	$ 0.59	$ 7.89
Loss per share - diluted (in dollars per share)	$ 0.59	$ 7.89
Adjustments to the supplemental pro forma combined results of operations, included in the above, are as follows:
Transaction costs	$ 0	$ (14,931)
Acceleration of stock based compensation	0	(7,199)
Total Adjustments	$ 0	$ (22,130)

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REVENUE RECOGNITION (Details) - USD ($)	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Concentration Risk [Line Items]
Product sales provisions	$ 16,600,000	$ 11,000,000			$ 48,400,000	$ 25,100,000
Estimate of product return rate	2.00%				2.00%
Revenues	$ 4,086,000	3,269,000			$ 12,463,000	16,707,000
Foamix
Concentration Risk [Line Items]
Proceeds from royalties		4,000,000	$ 6,000,000	$ 10,000,000
Additional royalty upon receipt of marketing approval in China	1,000,000				1,000,000
Upfront royalty receipt	0					10,000,000
Allowance For Sales Returns
Concentration Risk [Line Items]
Revenue reserve accrual	7,300,000				7,300,000		$ 5,800,000
Royalty revenues
Concentration Risk [Line Items]
Revenues	$ 133,000	$ 406,000			$ 658,000	$ 611,000
Customers | Revenue from Contract with Customer, Product and Service Benchmark | Three Customers
Concentration Risk [Line Items]
Concentration risk, percentage	52.00%	100.00%				99.00%
Customers | Revenue from Contract with Customer, Product and Service Benchmark | Four Customers
Concentration Risk [Line Items]
Concentration risk, percentage					66.00%

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FAIR VALUE MEASUREMENT - Assets and Liabilities Measured at Fair Value (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 1,027
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	1,027
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 0

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MARKETABLE SECURITIES - Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Israeli mutual funds
Debt Securities, Available-for-sale [Line Items]
Marketable securities	$ 0	$ 1,027

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MARKETABLE SECURITIES - Narrative (Details) - USD ($)	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Debt securities, available-for-sale	$ 0		$ 0
Permanent impairment loss, debt securities, available for sale	0		0
Proceeds from sale and maturity of marketable securities	1,000,000	$ 36,400,000
Restricted Investments	$ 0		$ 0

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INVENTORY - Schedule of Inventory Components (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 3,247	$ 4,042
Work-in-process	339	662
Finished goods	4,484	2,700
Total	$ 8,070	$ 7,404

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DEBT - Narrative (Details)			3 Months Ended		9 Months Ended
	Aug. 11, 2021 USD ($)	Jul. 29, 2019 USD ($) lender $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)	Mar. 09, 2020 $ / shares shares	Dec. 17, 2019 USD ($)
Debt instrument information
Prepayment fee, percentage	4.00%
Debt repayment	$ 36,500,000				$ 36,432,000	$ 0
Principal amount, interest and prepayment premium					18,300,000
Debt offering expenses
Incurred expenses related to Credit Agreement and Securities Purchase Agreement		$ 1,100,000
Interest expense (Note 8)			$ 3,474,000	$ 1,092,000	5,610,000	3,229,000
Interest expense debt			1,900,000	1,000,000	3,800,000	2,900,000
Discount cost			1,600,000	100,000	1,800,000	300,000
Loss on debt extinguishment			1,400,000		1,432,000	0
Write off of deferred financing cost			1,600,000		1,600,000
Loss on extinguishment of debt			$ 3,000,000		$ 3,000,000
Amended And Restated Credit Agreement
Debt instrument information
Long-term debt, gross							$ 35,000,000
Remaining borrowing capacity							$ 15,000,000
Base interest rate			8.25%		8.25%
Amended And Restated Credit Agreement | One-month LIBOR
Debt instrument information
Basis spread on variable rate					2.75%
Amended and Restated Credit Agreement, Trench 1 Loan
Debt instrument information
Debt instrument, face amount		15,000,000
Amended and Restated Credit Agreement, Trench 2 Loan
Debt instrument information
Debt instrument, face amount									$ 20,000,000
Debt offering expenses
Incurred expenses related to Credit Agreement and Securities Purchase Agreement		$ 300,000
Amended and Restated Credit Agreement, Trench 3 Loan
Debt instrument information
Borrowing capacity				$ 15,000,000		$ 15,000,000
Shareholder Lender | Foamix
Warrants issued
Number of ordinary shares that may be purchased by exercise of warrants (in shares) | shares		1,100,000	495,165		495,165			651,640
Warrant exercise price (in dollars per share) | $ / shares		$ 2.09	$ 4.64		$ 4.64			$ 3.53
Shareholder Lender | Credit Agreement
Debt instrument information
Borrowing capacity		$ 50,000,000
Shareholder Lender | Registered offering per securities purchase agreement
Debt instrument information
Number of lenders involved | lender		1
Gross proceeds from issuance of common stock		$ 14,000,000

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SHARE CAPITAL - Common Stock, Preferred Stock, and Warrants Narrative (Details) $ / shares in Units, $ in Thousands									1 Months Ended	3 Months Ended	9 Months Ended
	Aug. 12, 2021 USD ($)	Feb. 12, 2021 shares	Jan. 26, 2021 USD ($) $ / shares shares	Jun. 09, 2020 USD ($) $ / shares shares	Apr. 06, 2020 shares	Mar. 09, 2020 USD ($) contingentStockRight shares	Jul. 29, 2019 USD ($) shares	Feb. 01, 2019 USD ($)	Jan. 25, 2021 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) vote $ / shares shares	Sep. 30, 2020 USD ($)	Jul. 19, 2021 $ / shares shares	Dec. 31, 2020 $ / shares shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)										20,000,000			20,000,000
Preferred stock, par value (in dollars per share) | $ / shares										$ 0.0001			$ 0.0001
Preferred stock, shares issued (in shares)										0			0
Preferred stock, shares outstanding (in shares)										0			0
Reverse stock split, conversion ratio (share/share)		0.25
Common stock shares authorized (in shares)		75,000,000								150,000,000		150,000,000	75,000,000
Common stock par value (in dollars per share) | $ / shares										$ 0.0001		$ 0.0001	$ 0.0001
Payments of financing and stock issuance costs | $							$ 1,100
Share issued and delivered upon CSR conversion (in shares)		18,636,103			74,544,413
Deemed dividend to warrants holders due to warrant modifications | $											$ 0
Foamix
Class of Stock [Line Items]
Number of shares issued pursuant to the merger (in shares)					74,544,413	36,550,335
Number of contingent stock rights issued (in CSR) | contingentStockRight						1
Deemed dividend to warrants holders due to warrant modifications | $						$ 41
Cantor Sales Agreement
Class of Stock [Line Items]
Payments of financing and stock issuance costs | $	$ 50,000							$ 50,000
Commission from gross proceeds from issuance of common stock	3000.00%							3000.00%
Number of shares issued in transaction (in shares)									2,778,012	1,948,000
Sale of stock (USD/share) | $ / shares									$ 9.76	$ 1.57
Consideration received in a transaction | $									$ 26,300	$ 2,900
Registered Direct Offering
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)			5,274,261
Sale of stock (USD/share) | $ / shares			$ 9.48
Consideration received in a transaction | $			$ 46,800
Initial Public Offering
Class of Stock [Line Items]
Number of shares issued in transaction (in shares)				7,776,875
Sale of stock (USD/share) | $ / shares				$ 7.40
Consideration received in a transaction | $				$ 53,600
Common stock
Class of Stock [Line Items]
Number of votes entitled to each ordinary share | vote										1
Warrants | Foamix | Maximum
Class of Stock [Line Items]
Number of ordinary shares that may be purchased by exercise of warrants (in shares)							1,100,000
Number of shares issued for warrants exercised		495,165					1,980,660

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SHARE CAPITAL - Share-based Compensation Narrative (Details)				3 Months Ended		9 Months Ended
	Feb. 12, 2021 contingentStockRight shares	Apr. 06, 2020	Mar. 09, 2020 USD ($) contingentStockRight	Sep. 30, 2021 USD ($) shares	Sep. 30, 2020 USD ($) contingentStockRight	Sep. 30, 2021 USD ($) shares	Sep. 30, 2020 USD ($) contingentStockRight shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of options and RSUs granted						$ 9,400,000	$ 11,800,000
Number of common stock shares issued per CSR (in shares)		1.2082
Effective exchange ratio (CSR per share)		1.8006
Additional paid in capital reclassified to derivate liabilities							975,000
Foamix
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of contingent stock rights issued (in CSR) | contingentStockRight			1
Foamix | Employees and consultants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental compensation costs incurred				$ 500,000	$ 1,100,000	1,800,000	10,400,000
Incremental compensation costs incurred						$ 1,500,000
Incremental compensation costs, recognition period						2 years
Foamix | No longer employed or providing services
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental compensation costs incurred				$ 0		$ 0	$ 1,000,000
Additional paid in capital reclassified to derivate liabilities			$ 1,600,000
Incremental compensation cost			$ 600,000
Common stock | Foamix
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during the period (in shares) | shares						42,989	61,031
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares) | shares				509,158		509,158
2018 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares) | shares				81,925		81,925
Increase in shares reserved for future issuance (in shares) | shares				750,000		750,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares) | shares				2,261,108		2,261,108
Percentage of fair market value used as purchase price						85.00%
Percent of annual earnings that may be used to purchase shares				15.00%		15.00%
ESPP | Common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued during period, conversion of units (in shares) | shares	9,038						36,155
ESPP | Common stock | Foamix
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of contingent stock rights issued (in CSR) | contingentStockRight	1				1		1

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SHARE CAPITAL - Options and RSU Grants (Details) - $ / shares	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option, award amount (in shares)	1,686,405	1,316,637
Exercise price range, minimum (in usd per share)	$ 1.68	$ 5.84
Exercise price range, maximum (in usd per share)	$ 11.08	$ 12.52
Expiration	10 years	10 years
Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year	1 year
Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years	4 years
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSU, award amount (in shares)	970,813	647,427
RSUs | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	2 years	1 year
RSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years	4 years

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SHARE CAPITAL - Fair value assumptions (Details) - Options	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Share-based payment assumptions for computing fair value
Dividend yield	0.00%	0.00%
Expected volatility, minimum	68.38%	60.44%
Expected volatility, maximum	69.38%	69.83%
Risk-free interest rate, minimum	0.50%	0.31%
Risk-free interest rate, maximum	1.29%	1.26%
Expected term	6 years	6 years

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SHARE CAPITAL - Schedule of Share-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Expense
Share-based compensation	$ 2,405	$ 2,620	$ 6,748	$ 15,147
Research and development expenses
Expense
Share-based compensation	435	361	1,335	3,927
Selling, general and administrative
Expense
Share-based compensation	$ 1,970	$ 2,259	$ 5,413	$ 11,220

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OPERATING LEASE - Narrative (Details) $ in Thousands	Mar. 13, 2019 USD ($) ft²	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Operating Lease
Operating lease right-of-use assets		$ 1,036	$ 1,583
Operating lease terms		3 years
Lien on marketable securities to secure lease agreements		$ 600
ISRAEL
Operating Lease
Operating lease terms		1 year
Original Space | Bridgewater, New Jersey
Operating Lease
Facility space leased | ft²	10,000
Operating lease right-of-use assets	$ 700
Additional Space | Bridgewater, New Jersey
Operating Lease
Facility space leased | ft²	4,639
Operating lease right-of-use assets	$ 300

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OPERATING LEASE - Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Leases [Abstract]
2021	$ 229
2022	761
2023	151
Total lease payments	1,141
Less imputed interest	89
Total lease liability	$ 1,052