We are a specialty pharmaceutical company focused on the development and commercialization of innovative therapies in dermatology. Utilizing our expertise in the development of topical minocycline, we are working to develop and commercialize topical drugs for dermatological therapy, including the first topical minocycline products in the United States. On October 18, 2019, the FDA approved our first drug product, AMZEEQ^TM (minocycline) topical foam, 4%, formerly known as FMX101 (“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. AMZEEQ is the first topical minocycline to be approved by the FDA for any condition. We expect AMZEEQ to be available for prescribing in the first quarter of 2020.

On November 10, 2019, we entered into an Agreement and Plan of Merger with Menlo Therapeutics, Inc. (“Menlo”) and Giants Merger Subsidiary Ltd. (“Merger Sub”), a direct and wholly-owned subsidiary of Menlo. Under the terms of the agreement, Merger Sub will merge with and into Foamix, with Foamix continuing as the surviving corporation and a wholly-owned subsidiary of Menlo.

The merger will take place via a share exchange, with each Foamix ordinary share exchanged for a number of shares of Menlo common stock. At the effective time of the Merger (the “Effective Time”), each ordinary share, par value NIS 0.16 per share, of Foamix (“Foamix Shares”) issued and outstanding immediately prior to the Effective Time will be deemed transferred under Israeli law to Menlo in exchange for the right to receive (i) 0.5924 shares (the “Exchange Ratio”) of common stock of Menlo (“Menlo Common Stock”) and (ii) one contingent stock right (a “CSR”; and collectively, the “CSRs”) which will be subject to the terms and conditions of a contingent stock rights agreement (the “CSR Agreement”), as further described below (collectively, the “Merger Consideration”).

The Merger Consideration will be subject to adjustment prior to the Effective Time as described in paragraphs (A), (B) and (C) immediately below, in the event (i) on or before May 31, 2020 Foamix and Menlo have received in the form specified in the Merger Agreement the top-line primary endpoint results of one or both the Phase III double-blinded, placebo-controlled trials for the treatment of pruritus associated with prurigo nodularis, referenced by Protocol Numbers MTI-105 (United States) and MTI-106 (Europe) (each, a “Phase III PN Trial”) (the “Efficacy Determination”) or (ii) if the Efficacy Determination is not delivered to Foamix and Menlo on or prior to May 31, 2020.

(A)

If the Efficacy Determination reports that Serlopitant Significance (as defined in the Merger Agreement) was achieved in both Phase III PN Trials on or before May 31, 2020, then there will be no adjustment to the Exchange Ratio;

(B)

If the Efficacy Determination reports that (1) Serlopitant Significance was achieved in only one Phase III PN Trial on or before May 31, 2020  and (2) Serlopitant Significance was not achieved or has not been determined in each case on or before May 31, 2020 in the other Phase III PN Trial, then the Exchange Ratio will instead be 1.2739 shares of Menlo Common Stock; and

(C)

If the Efficacy Determination reports that Serlopitant Significance was not achieved in both Phase III PN Trials or the Efficacy Determination has not been delivered on or before May 31, 2020, then in each case the Exchange Ratio will instead be 1.8006 shares of Menlo Common Stock.

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(A)

If the Efficacy Determination reports that Serlopitant Significance (as defined in the Merger Agreement) was achieved in both Phase III PN Trials on or before May 31, 2020, then each CSR will be entitled to no shares of Menlo Common Stock;

(B)

If the Efficacy Determination reports that (1) Serlopitant Significance was achieved in only one Phase III PN Trial on or before May 31, 2020  and (2) Serlopitant Significance was not achieved or has not been determined prior to May 31, 2020 in the other Phase III PN Trial, then each CSR will be converted into 0.6815 shares of Menlo Common Stock; and

There can be no assurance that Serlopitant Significance will be achieved or not in each of the Phase III PN Trials.

The consummation of the Merger is subject to customary closing conditions, including (i) the approval of the Merger Agreement by the affirmative vote of the holders of a majority of all outstanding Foamix Shares entitled to vote thereon, (ii) the approval of the issuance of Menlo Common Stock in the Merger and pursuant to the CSR Agreement by the affirmative vote of the holders of a majority of all outstanding Menlo Common Stock entitled to vote thereon, (iii) the absence of any adverse law or order promulgated, entered, enforced, enacted or issued by any governmental entity that prohibits, the consummation of the Merger or the transactions contemplated by the Merger Agreement, (iv) the shares of Menlo Common Stock to be issued in the Merger and in respect of the CSRs being approved for listing on the NASDAQ Global Select Market, (v) the expiration or termination of the waiting period under any applicable foreign antitrust, competition or similar law, (vi) the U.S. Securities and Exchange Commission (the “SEC”) having declared effective the Form S-4 Registration Statement of Menlo which will contain the joint proxy statement/prospectus of the parties in connection with the Merger, (vii) subject to certain materiality exceptions, the accuracy of certain representations and warranties of each of Menlo and Foamix contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement, (viii) the absence of a material adverse effect with respect to each of Menlo and Foamix, (ix) at least fifty days having elapsed after the filing of the merger proposal with the Israeli Registrar of Companies and expiration of the thirty-day waiting period following the approval of the Merger by Foamix shareholders as referenced in (ii) above and (x) a letter from the Israel Securities Authority (“ISA”) will have been received exempting Menlo from publishing a prospectus under Israeli law in respect of the Merger Consideration (or Menlo will have received a permit from the ISA for a registration statement with respect to the dual listing of the shares of Menlo Common stock at the Tel Aviv Stock Exchange and an exemption from the requirement to publish a prospectus under Israeli law in respect of the Merger Consideration) or Menlo will publish a prospectus under Israeli law in respect of the Merger Consideration. The parties expect the Merger to be completed by the end of the first quarter or early in the second quarter of 2020.

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On July 29, 2019, we entered into a Credit Agreement and Guaranty (the “Credit Agreement”) with Perceptive Credit Holdings II, LP (“Perceptive”), as administrative agent, and OrbiMed Royalty & Credit Opportunities III, LP (“OrbiMed”) that provides a senior secured delayed draw term loan facility in an aggregate principal amount of up to $50.0 million, or the Term Loan, for general corporate purposes. The Term Loan is comprised of three tranches: (a) $15.0 million which was available and drawn on the closing date, (b) up to $20.0 million available prior to February 29, 2020, or the Tranche 2 Loan, and (c) up to $15.0 million available prior to September 30, 2020, or the Tranche 3 Loan. We will be permitted to borrow the Tranche 2 Loan only following the FDA’s approval of AMZEEQ and listing of AMZEEQ in the FDA’s “Orange Book,” provided that, at such time, we or one of our subsidiaries has secured arrangements a third party for the commercial supply and manufacture of AMZEEQ. We will be permitted to borrow the Tranche 3 Loan only following the achievement of certain revenue targets as set forth in the Credit Agreement. Subject to any acceleration as provided in the Credit Agreement, including upon an event of default (as defined in the Credit Agreement), the credit facility will mature on July 29, 2024. As consideration for the Credit Agreement, we issued, on the closing date of the Term Loan, a warrant to purchase Ordinary Shares to each of Perceptive and OrbiMed Partners Master Fund Limited, LP, or the Warrants. The Warrants have an exercise price of $2.09 per share, which is equal to the trailing five-day volume weighted average price of our Ordinary Shares on the trading day immediately prior to the closing date.  The Warrants are exercisable for a total of 1,100,000 Ordinary Shares and have an expiration date of July 29, 2026.

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In connection with our entry into the Credit Agreement described above, on July 29, 2019, we entered into a Securities Purchase Agreement, or the Purchase Agreement, with Perceptive Life Sciences Master Fund Ltd., or Perceptive Life Sciences, an affiliate of Perceptive, pursuant to which we issued and sold to Perceptive Life Sciences, in a registered offering, an aggregate of 6,542,057 of our Ordinary Shares at a purchase price of $2.14 per share, representing the closing price of our Ordinary Shares on the last trading day prior to signing of the Purchase Agreement, for aggregate gross proceeds of approximately $14 million, before deducting offering expenses.

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On August 5, 2019, we announced that we submitted our NDA to the FDA seeking approval for FMX103 for the treatment of moderate-to-severe papulopustular rosacea in adults, which was accepted by the FDA on October 16, 2019, with a targeted PDUFA action date of June 2, 2020.

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On August 19, 2019, we entered into a Controlled Equity Offering Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., or Cantor, as sales agent. Under the terms of the Sales Agreement, we may offer, issue and sell through Cantor, from time to time, Ordinary Shares having an aggregate offering price of up to $30 million.  Under the Sales Agreement, Cantor may sell our Ordinary Shares by any method permitted by law and deemed to be an “at-the-market offering”, as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on the Nasdaq, in each case pursuant to our effective registration statement on Form S-3 (File No. 333-224084) and the related base prospectus included in such registration statement, as supplemented by the prospectus supplement dated August 19, 2019.  We are not obligated to make any sales of Ordinary Shares under the Sales Agreement, and if we elect to make any sales, we can set a minimum sale price from time to time and instruct Cantor not to sell Ordinary Shares if the sales cannot be effected at or above such designated price. The offering of Ordinary Shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement by Cantor or us, as permitted therein. We will pay Cantor a fixed commission rate of 3.0% of the aggregate gross proceeds from each sale of Ordinary Shares and have agreed to provide Cantor with customary indemnification and contribution rights, including for liabilities under the Securities Act.  As of November 4, 2019, we have not made any sales under the Sales Agreement.

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On September 19, 2019, we announced that the first patient had been enrolled in our Phase II clinical trial (Study FX2016-40) to evaluate the efficacy and safety of FCD105, our topical combination foam for the treatment of moderate-to-severe acne vulgaris, comprised of minocycline 3% and adapalene 0.3%. FCD105 combines the bacteriostatic and anti-inflammatory properties of minocycline, which is a leading agent for treating inflammatory comedonal acne lesions, with the third-generation retinoid adapalene, which acts in regulating the differentiation of follicular epithelial cells and is a leading agent for treating non-inflammatory acne lesions.  Oral minocycline and other topical adapalene products are approved for use in the treatment of acne vulgaris in the United States, with the latter available in combination and as monotherapy. Our Phase II clinical trial will be conducted as a double-blind, vehicle-controlled trial at multiple sites throughout the United States and is expected to enroll approximately 400 patients aged 12 years and older with moderate-to-severe acne vulgaris. Patients will be randomized to one of four groups: FCD105 foam, 0.3% adapalene foam, 3% minocycline foam or vehicle foam, and will be asked to self-apply their assigned treatment once daily for 12 weeks. The trial design follows current regulatory standards in evaluating the safety and efficacy of combination products of this type. We expect topline data from this Phase II clinical trial to be available in mid-2020.

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On October 18, 2019, we received FDA approval of AMZEEQ (minocycline) topical foam, 4%, for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and pediatric patients 9 years of age and older. AMZEEQ, formerly known as FMX101, is the first topical minocycline to be approved by the FDA.

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On October 21, 2019, we entered into a Contract Manufacturing and Supply Agreement with ASM Aerosol-Service AG, or ASM, pursuant to which ASM will exclusively manufacture and supply AMZEEQ and FMX103 for a specified price per can of product. Pursuant to the agreement, ASM has agreed to manufacture and supply all of our commercial needs for AMZEEQ and, if approved, FMX103 on an exclusive basis for a period of four years. We are not required to purchase a minimum amount of the products under the ASM agreement. In addition, ASM will not be permitted to manufacture or supply to a third party any topical product containing minocycline or minocycline hydrochloride during the term of the ASM agreement and for two years after the termination or expiration of the ASM agreement.

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On October 21, 2019, we announced that, together with LEO Pharma A/S, or LEO, we entered into a settlement and license agreement with an affiliate of Teva Pharmaceuticals Industries Ltd. to resolve pending patent litigation involving Finacea® Foam (15% azelaic acid), or Finacea. Details of the settlement agreement are confidential, and the settlement agreement is subject to the review of the Federal Trade Commission and the U.S. Department of Justice.

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The suspension of the manufacturing of Finacea by our partner LEO continued during the three months ended September 30, 2019 as a result of the failure of LEO’s contract manufacturer to produce the API for Finacea in compliance with the required specifications and quality. As a result, we had no revenues in the three months ended September 30, 2019, compared to revenues of $0.9 million in the three months ended September 30, 2018. LEO has informed us that they are working diligently to address the manufacturing issue in order to be able to produce sufficient supply of the finished product to meet the demand for Finacea in the market. We do not know when the production of Finacea will resume, if at all. This supply chain issue for Finacea is unrelated to our manufacturing, production or supply of AMZEEQ, FMX103 or any of our other product candidates.

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employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses;

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expenses incurred under agreements with third parties, including subcontractors, suppliers and consultants that conduct regulatory activities, clinical trials and preclinical studies;

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expenses incurred to acquire, develop and manufacture clinical trial materials;

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facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other operating costs;

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other costs associated with preclinical and clinical activities and regulatory operations; and

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materials and manufacturing costs related to commercial production.

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the scope, rate of progress and expense of our research and development activities;

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preclinical results;

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clinical trial results;

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the terms and timing of regulatory approvals; and

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our ability to file, prosecute, obtain, maintain, defend and enforce patents and other intellectual property rights and the expense of filing, prosecuting, obtaining, maintaining, defending and enforcing patents and other intellectual property rights;

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employee-related expenses, including salaries, benefits and related expenses, including share-based compensation expenses;

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costs associated with market research and business development activities in preparation for future marketing and sales, including activities intended to select the most promising product candidates for further development and commercialization;

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legal and professional fees for auditors and other consulting expenses not related to research and development activities or to market research or business development activities;

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cost of office space, communication and office expenses;

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information technology expenses;

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depreciation of tangible fixed assets related to our general and administrative activities or to our market research and business development activities; and

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costs associated with filing, prosecuting, obtaining and maintaining patents and other intellectual property.

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