Veradermics, Incorporated (MANE) Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to Veradermics Study 304 Phase III Top Line Results Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would like to turn the conference over to your host, Dominic Carrano, Chief Financial Officer of Veradermics. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining us to discuss Veradermic's positive top line results from Part A of Study 304, our second Phase III trial of VDPHL01 in males of mild to moderate pattern hair loss. This morning's press release is available on the Investors section of our website where we will also post the slides used today following the conclusion of this call. Joining us on the call today are Dr. Reid Waldman, our Chief Executive Officer; Mark Newman, our Chief Commercial and Strategy Officer, and we're also joined by Dr. Michael Payette, Founder of Central Connecticut Dermatology, who will provide his clinical perspective later in this call. Reed will begin with opening remarks and present the results from Part A of Study 304. We will then hear from Dr. Payette about his experience treating pattern hair loss in clinical practice and what today's results could mean for patients in this practice as well as other physicians. Mark will then provide commentary on the commercial opportunity of VDPHL01, and we'll close the call with remarks from Reid followed by Q&A. Before we begin, I would like to remind everyone that today's discussion, including the question-and-answer portion, will contain forward-looking statements. Any statement that relates to expectations or predictions of future events, results or performance is a forward-looking statement. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Please refer to the forward-looking statements section in today's press release and our most recent SEC filings for a discussion of these risks. And with that, I'll turn the call over to Dr. Reid Waldman.

Thank you, Dom, and good morning, everyone. I'm extremely excited to walk you through the top line readout from Part A of Study 304, our second randomized double-blind, placebo-controlled Phase III study evaluating VDPHL01 in males with mild-to-moderate pattern hair loss, beyond the positive data that now reinforces VDPHL01's efficacy and tolerability in males through evaluation in over 1,000 subjects across 2 Phase III trials. Today marks a profound milestone at Veradermics. Study 304 Part A represents the completion of all planned placebo-controlled development of VDPHL01 in male pattern hair loss. And to be able to share these results with you today is a testament to our efforts at Veradermics and I am prouder than ever of what we've accomplished thus far and the direction we are headed as an organization. We went into this readout with high confidence that these data would support our findings from Study 302 and now more than ever believe that the magnitude, speed and consistency of response reinforce VDPHLO1's differentiated profile in male pattern hair loss. As we've shared before, Study 304 had 3 goals: one, to confirm efficacy in males with pattern hair loss, two, to expand the male safety database; and three, to test the reproducibility of the Phase III profile in a separate population at nonoverlapping sites. And we are pleased to say that VDPHL01 in Study 304 has achieved on all of these counts while maintaining the highly favorable tolerability profile demonstrated in trials to date with a complete absence of treatment-related SAEs and a complete absence of adverse events of special interest of cardiac agent. Study 304 results further demonstrated encouraging similarity to Study 302 across the clinical profile with statistically significant separation from placebo on both co-primary endpoints and on all 17 secondary endpoints. Additionally, we see statistical separation from placebo on the PRO, the hair count and the IGA as early as month do the earliest time point measured. Across studies 302 and 304, we believe that the totality of Phase III data in males now supports the potential for VDPHL01, if approved, to be the highest confidence therapeutic option for patients and providers seeking positive outcomes when treating their pattern hair loss. Now as you all know, pattern hair loss transcends being aesthetic. It's deeply personal. It's deeply psychological and it's essentially universal as it is the single most prevalent chronic dermatologic condition in America affecting 80 million people. That makes it 10x more prevalent than psoriasis, twice as prevalent as atopic dermatitis and psoriasis combined. That includes roughly 50 million men who haven't had a new oral treatment in 30 years and roughly 30 million women who have no oral prescription treatment options at all. And this is a market where the patients are motivated, yet they're frustrated with only about 9% of treatment-seeking patients reporting satisfaction with existing therapies. And really, this should come as no surprise. Today's treatments are slow, they're inconsistent and they force patients to choose between side effects like erectile dysfunction and decreased [ libido ] or messy topical application twice a day for the rest of their lives. Now for those of you who are newer to the story, we are developing VDPHL01 as an oral nonhormonal treatment for both males and females with pattern hair loss. VDPHL01 is an oral minoxidil extended-release tablet. Minoxidil?validated biology for the treatment of hairless as it's approved as a topical for both male and female pattern hair loss. It is also used off-label as an oral blood pressure medication. The problem with that blood pressure medication is that it does exactly what you would expect a drug that is intended to rapidly lower one's blood pressure to do. It spikes quickly in the plasma the majority has gone within 2 hours, almost all of it within 4 hours. And those spikes drive the cardiac effects of minoxidil, but they are not required nor are they conducive for hair growth as they do not provide consistent and durable exposures of [ menoxadorthopholicle ]. We initially set out with the goal of optimizing minoxidil for oral administration, maximization of hair growth and minimization of cardiac risks via the development of an extended-release tablet that can provide consistent and durable exposures of minoxidil to the hair follicle throughout the day, while blunting those peak plasma concentrations that drive cardiac effects. And in addition to enabling the delivery of more minoxidil for longer, we believe we can drive hair growth by driving the bio activation of minoxidil?to its active metabolite monoxides. Now as many of you may know, minoxidil?itself has no effect on the hair follical. It's sulfate metabolite does. And minoxidil?is activated to minoxidil sulfate in the outer roots -- of the hair via the SULT1A1?enzyme. Now that enzyme, like many enzymes is capacity limited, meaning that it can saturate and it's time dependent, meaning it takes time to sulfate them in minoxidil. So when you think about the PK profile of that immediate release of minoxidil?, it spikes quickly, overwhelming and saturating that sulfate transferase enzyme and it's gone quickly, resulting in limited exposure to the enzyme limited sulfation whereas with an extended release tablet, we can provide a consistent and durable exposure to the follicle in the attempts to drive bio activation to minoxidil sulfate and potentially to drive additional hair growth. Now before we get into the details of Study 304, I want to contextualize where it fits into our larger Phase III development program for VDPHL01. We have 3 registration-directed studies of VDPHL01 that are ongoing. Study 302, our first Phase II/III study evaluated VDPHL01 in 519 male subjects. That study announced positive Part A Top Line data in April, and we are anticipating extension data before the end of the year. Today's top line data from Study 304 in 536 males represents the completion of all planned placebo-controlled data generation from both male registration-directed studies. Rounding out our active clinical development program is a Phase II/III study, study 306 which is the first ever Phase III trial for an oral treatment for female pattern hair loss in the U.S. and it's evaluating VDPHL01 in 556 females. Study 306 is now fully enrolled and Part A data are anticipated in the first half of 2027. Now let's talk about the study design of Study 304. And Study 304 is our second Phase III trial in male pattern hair loss, and it was designed to be essentially identical to Study 302. It enrolled 536 subjects aged 18 to 65 that have mild to moderate pattern hair loss. These subjects were randomized to receive either VDPHL01a milligrams twice daily, VDPHL01, 8.5 milligrams once daily or placebo at 45 sites across the U.S. Importantly, enrollment in Study 304 was conducted at nonoverlapping sites with Study 302. Today, we're sharing data from the 6-month placebo-controlled period for both the once daily or QD and twice daily or BID regimens of VDPHL01 8.5 milligrams versus placebo. Now as a reminder, Study 304 utilizes identical co-primary endpoints to Study 302. The first is targeted area hair count or TAHC. This is a quantitative and objective metric, and it's the only measurement methodology that's been used to support FDA approvals in the U.S. in pattern hair loss since 1997. And it measures the number of hairs that are greater than 30 microns or what we call non-vellus hairs that are in a given square centimeter on the scalp. And the way we measure it is very specific. We tattoo a small area on the scalp to ensure we're in the exact same spot every time. We then clip the hairs so we can visualize every hair in the area and take a close-up, high-resolution standardized photograph. That image has been analyzed with a validated digital image analysis algorithm that aligns the image to ensure we're in the exact same spot that measures the width of the hairs and then counts those hairs that are greater than 30 microns. Those accounts then undergoing an independent review by 2 separate technicians. Our second co-primary endpoint is the patient reported outcome. Here, patients compare standardized photographs of their scale baseline to standardize photographs of their scalp of follow-up, and they rate their hair coverage on a 7-point scale for much worse to much improved. And this is a responder analysis where we're looking at the percentage of subjects who rate themselves as improved or much improved. VDPHL01 has now achieved highly statistically significant and highly clinically meaningful benefit on both co-primary endpoints in every trial to date. Now let's look at baseline characteristics. These are largely similar to what we saw in Study 302. First, like Study 302, Study 304 enrolled subjects up to the age of 65, which makes these the oldest population of subjects that have been evaluated in a Phase III trial for pattern hair loss with Propecia having studied up to age 41, [indiscernible] at age 49. However, Study 304 subjects are directionally slightly older than what we saw in Study 302. Additionally, this is a racially diverse population with good representation across groups in the U.S., and from a severity perspective, this is very similar to what we've seen in prior trials in pattern hair loss, with about half of all subjects in the Norwood Hamilton 3 V bucket and about half being 4s or 5s. Baseline non-vellus hair counts in this study are slightly lower than those observed in Study 302, 140s in this study, 150s in Study 302. But both numbers reflecting adequate placement within the transition zone. And then similar to Study 302, this is not a population that was cherry-picked for safety. More than half of all subjects here were hypertensive at baseline. Now let's get into the data. We're going to start with our first co-primary endpoint of non-vellus hair count, which as mentioned, is an objective, quantifiable endpoint that evaluates the absolute change in non-vellus hair count over baseline. That means that if someone's baseline hair count is 140 and it increases to 170 then the change is 30. And the reason that we present data this way is because that's how it statistically analyzed as a co-primary endpoint. In the QD arm, we saw an increase of 28.6% in the BID arm, an increase of 36.4%. That BID change is the largest 6-month change observed in the placebo-controlled study conducted to date. When we compare these results to what we saw in Study 302, the changes in non-vellus hair counts are very similar and if approved, position VDPHL01 to change the standard of care for the treatment of male pattern hair loss. Now to put these data in context in the overall treatment landscape, the totality of the Phase III data generated for VDPHL01 in males represents the leading results reported on this endpoint, while cross-trial comparisons have inherent limitations and are not based on head-to-head studies, and these agents have not been studied in head-to-head clinical trials, our data suggests a greater benefit than oral minoxidil 5 milligram, topical minoxidil?5% foam and [ finasteride ] 1 milligram. Importantly, our results are based on intention to treat analysis, whereas comparator studies used either last observation carried forward or as observed analyses, which may produce higher estimates of treatment effect. These improvements in [indiscernible] count translated directly into patient perception of improvements in their hair coverage. At month 6, more than half of all subjects in the once daily arm, nearly 70% of all subjects in the twice-daily arm rated themselves as improved or much improved on the patient reported outcome versus only 15% on placebo. This is a very high degree of visible improvement that is noted by the majority of subjects in QD and BID groups in the study. And as we begin to look across both studies, we see a high degree of significant visible benefit noted by patients that is generally consistent between the 2 studies. And when we look at any improvement on the patient-reported outcome, we see that nearly 8 out of 10 subjects in the QD group and more than 8 out of 10 subjects in the BID group report an improvement in their hair coverage. And I think 1 of the things that is most exciting to me about this data set is this high percentage of patients that are noting visible improvement. And the reason that this is so exciting is that when you think about the ability to transform the treatment landscape in pattern hair loss, this is driven by the potential to achieve outcomes that are meaningful to patients. And we've seen this in corollary markets like obesity, where the advent of treatments that are able to achieve a critical pounds per week lost have been able to really reinvigorate patients to enter the treatment landscape. Here, we similarly believe we're at a tipping point for pattern hair loss, delivering a treatment that has clinically meaningful benefit to many patients. And the reason I say that is that when we did work on the PRO, we defined 2 things: one, what matters to patients, and that's an increase in hair coverage. And then two, how much of an increase in hair coverage would be clinically meaningful, and more than 80% of patients to us that any improvement would be meaningful to them. And as a dermatologist, knowing that the majority of my patients can expect to see more hair based on this data is really important when thinking about treating this condition. Now this consistency is further supported by the Investigator Global Assessment. This is where investigators great improvement in hair coverage, similarly to how the patients did. And as you can see here, investigators are grading very similarly to patients, and this is meaningful because when you think about treatment of hair loss clinically, when the patient comes in, the conversation is going to start with how are you doing with your hair? In this study, right, more than 80% of subjects on a blinded basis, they're going to say, "I'm improving." The clinician has been going to take a look at the patient. And based on this data has a high likelihood of aligning with the patient. And that's really a recipe for success when treating this condition. So what does this hair growth actually look like, we're going to look through representative photos of patients at the 25th, 50th and 75th percentile response based on non-vellus hair count, and these are meant to be illustrated of the average type of response in the range of response that we reserve in the study and ultimately meant to be illustrative of the consistency of treatment effect that was observed in this study. We're starting with the 25th percentile. And I think you can note that both in the [ frontal ] and the [ tech ] scalp, we're seeing visible regrowth and that the full rate growth is especially important, and we'll get more on this later because no drugs today are FDA approved for the treatment of frontal hair loss. We'll now move to the selected 50th percentile example from the same blinded subset. We similarly see strong regrowth on both the frontal and vertex scalp. And here, we're seeing a patient with textured hair, which is a known unmet need in the treatment of pattern hair loss. Finally, we'll look at the 75th percentile and much of the same, we see strong improvement in both the vertex and the frontal scalp. And that strong consistency of response between the 25th and the 75th percentile, again, points to that highly consistent outcomes that are observed across the treatment spectrum, and that is consistent with what we saw on both the patient reported outcome and the Investigator Global Assessment. Before we turn to safety, I want to introduce a new concept that we haven't previously discussed. This is an additional secondary endpoint from the male Phase III program, and we're very excited about this. This has the potential to directly support VDPHL01's potential to improve frontal hair loss. And this benefit is something that's documented through what we call the IPR IFA or independent frontal photograph review. Now the IPR IFA is a different endpoint than Investigator's Global Assessment. And it's a more stringent endpoint than the Investigator Global Assessment. Because here, instead of this being a prospective assessment during the course of the trial by a trial investigator, this is a centrally red endpoint that is conducted by 3 independent unaffiliated reviewers. Now these reviewers are shown image pairs but they are blinded to the baseline visit, meaning they don't know before from after and they're blinded to treatment, meaning they don't know from placebo from either of the active groups. They are then asked to look at the frontal scalp and grade these patients on a 7-point scale after identifying the baseline. Now what makes this such a stringent endpoint is that to be considered a treatment success on the endpoint, 2 out of 3 of the independent reviewers must correctly identify the baseline image, and they must grade the change is a 2-plus or greater. The IPR IFA is different from an Investigator Global Assessment because instead of being conducted by the investigator during the course of the trial, this is centrally read by independent unaffiliated reviewers, and these reviewers are shown image pairs where they are blinded to the baseline visit, meaning they don't know which of the image pairs is baseline, which is follow-up and they're blinded to the treatment, meaning they don't know placebo from either the active groups. These independent reviewers then look at the photographs, try and identify the baseline and then grade change on a 7-point scale for much worse to much improved. And what makes this such a stringent endpoint is that to be considered a treatment success, 2 out of 3 of the independent reviewers must correctly identify the baseline image and they must grade the change is plus 2 or greater. Again, the reason we're so excited about this data is despite frontal hair growth being a major unmet need for males with pattern hair loss. There are currently no available treatment options that are labeled for the treatment of frontal pattern hair loss. And the reason that's so important is that clinically, when you think about what the patients are seeing in the mirror, they're looking at their frontal hairline. And when you think about what is often the earliest sign of hair loss, it's frontal loss. So we're highly encouraged by the outcomes of this independent frontal review, which supports a favorable benefit on frontal hair loss for the first time ever in a Phase III study of male pattern hair loss. At month 6, more than 1/3 of subjects in the once daily group and nearly half of subjects in the twice-daily group were responders on this endpoint versus only 5% on the placebo group. And again, when we think about how stringent this endpoint is you can see that the placebo response here is about 1/3 of what we see in the PRO. Now we're going to turn to safety. We are extremely pleased by the continued demonstration of VDPHL01's tolerability profile in Study 304 as it's consistent with our goal of minimizing cardiac risk. Specifically, we saw no observed drug-related SAEs, no AESIs of cardiac origin, [ synoparopardial ] iffusion, --, no heart failure, no angina. Furthermore, the overall rates of adverse events were similar to Study 302 with low rates of AE-related discontinuation and the AEs that did occur were primarily mild to moderate in nature and often self-resolving. Like in Study 302, we saw no clinically meaningful changes in heart rate, blood pressure or ECGs, and we continue to see a lack of reports of posttreatment initiation shedding or what's often called the dread shed, which is a common cause of discontinuation for both topical and immediate-release oral monoxide. This slide again highlights the safety profile, showing a low overall AE rate and low overall rates of AE-related discontinuation and again, no treatment-related SAEs. In fact, the only event that occurred in more than 5% of patients with an imbalance between active and placebo was hypertricosis. And when we look at events that occurred in greater than 5% in either study, we continue to see extremely low discontinuation rates. For peripheral edema, blended discontinuation rates were less than 1% in both the QD and BID groups with only 5 out of more than 700 subjects discontinuing. And for hypertricosis, only 1 patient out of that approximately 700 subjects treated with VDPHL01 across these studies discontinued. So the rates are extremely low. And I think to put this into context, more than 80% of subjects on a blended basis are getting visible improvement in their hair coverage. And then we have these very low discontinuation rates to match. In summary, Study 304 continued to build our conviction that VDPHL01 is positioned to be a potential new standard of care for the treatment of pattern hair-loss if approved. Specifically, we saw a fast onset of hair growth as early as 2 months, consistent treatment effect with more than 80% of subjects noticing visible improvement, intense objective hair growth on the target area hair count while maintaining tolerability, the convenience of oral administration and the potential for VDPHL01 to be the first FDA-approved oral treatment for both male and female pattern hair loss. Now I'd like to welcome Dr. Mike Payette, Co-Founder of Central Connecticut Dermatology in the call.

Thank you so much, Reed, for having me today. I'm really excited to be here to share my impressions of the data. First, I just want to quickly recap my experience in dermatology. So I spent 7 years in academics, after which I left with 6 of my colleagues to form a prior practice company, Central Connecticut Dermatology. So I've been in prior practice now for 7 years as well. We've grown our practice from the initial 7 partners to now a workforce of 18, 3 of whom are most surgeons and the other 15 are a combination of 10 MD dermatologists and 5 APPs, which composed of both APRNs and PAs. We're actually on the precipice of hiring our -- our sixth PA who will hopefully start in 2027. The problem currently is that hair loss is an incredibly common condition that unfortunately has a huge impact on patients' quality of life. It can affect their confidence, their relationships and even have impacts on their professional career. Unfortunately, we had really no good approved nonhormonal therapies to offer to these individuals that have been rigorously tested in a clinical trial setting. We're actually capitalizing on an adverse event of immediate release minoxidil which is a blood pressure medicine to encourage hair growth. Sometimes, we try to combine that with other hormonal therapies like finasteride or dutasteride but oftentimes patients, once they look these benefits up online, decide that it's not worth taking them because they're concerned about the potential for sexual side effects. So when we see folks come back at 3 or 6 months, oftentimes at 3 months, we're seeing minimal to no change. And by 6 months, which is often when immediate-release minoxidil peaks we're often not really impressed with the hair growth that we see. We do use clinical photos to compare baseline to a response. And I sometimes chuckle because I'll be looking at these photos with my patient and trying to convince myself that I might be saying something meaningful when evaluating that. Now this is compounded by the fact that patients are incredibly motivated to actually seek treatment. And so in some capacity, they've been disenfranchised with the health care system because we have not had much to offer them for their pattern hair loss. So these patients go on social media is probably the main source of their information. And you'd be surprised at the number of things that I've heard based on what patients do. I had a patient who used EMU oil because she read that, that would grow hair. So she was lathering her scalp with this thick oil hoping to grow hair. I had a patient say that if you [ valsalva ] which is when you kind of plug your nose and try to clear out your ears, that you could increase the pressure to push hairs out. And if you had somebody that was told that they could hang upside down to increase blood flow to their head to grow hair, I can guarantee you that somebody would try it. This has also made worse by the fact that these patients are spending exuberant amounts of money on things that have never been tested or have had data presented to them, but are just merely being spread by people marketing on social media. When I think about things like neutrophil or nutraceuticals or Biotin or even Red Light Therapy, which is now the big craze. Like if you put a baseball cap on with Red Light, it's going to grow your hair. From the clinician standpoint, we're also frustrated because we haven't had much to offer, and when you're in a busy practice setting where you only have 10 to 12 minutes to work with the patient, you're not apt to bring up hair loss. If a patient has that, if that's not their primary reason for being there. And if their primary complaint is hair loss, you're often frustrated because you're still stuck with the same therapies that we've had really forever. And there's not a lot of new research going into the space within the last 10 to 15 years. So that's where a product like VDPHL01 creates a lot of excitement for me as a clinician. This was a rigorously trial -- a clinically trialed molecule with a 6-month endpoint in over 1,000 patients. And they looked at 2 things, the quantitative amount of hair growth assessed by the total area hair count, and more importantly, the qualitative hair growth, which is the impression that patients have as well as the investigators looking at the amount of hair that was grown. So quantitatively, and although we don't do this regularly in a clinical practice setting, you're able to appreciate an absolute number of increased hairs in that total area hair count. But again, from my perspective, the patient-reported outcome, the qualitative aspect is most important because if patients perceive visible hairy regrowth there at to be very satisfied and the fact that they appreciated it, and that was also in concordance with the investigators' impression of hair growth. That's very exciting. And although the endpoint was at 6 months, many of these individuals actually perceived noticeable hair regrowth as early as 2 months. And that's important because in today's day and age, people are looking for immediate gratification. So the longer it takes to see benefit, the less apt patients are to use that therapy. What really separates out the medicine besides its actual efficacy is the novel MOA, the mechanism of action of VDPHL01 is that it exists in a steady state within a patient above the threshold required to grow hair, but below the threshold in which we would see cardiovascular side effects. And that's really reflected in their safety profile where of the adverse events that we did see, none of which were particularly concerning to me as a dermatologist, the number of occurrences was low. And probably the most important aspect of safety is that the discontinuation rate, even if an AD occurred was low. And discontinuation rate is a very important surrogate metric for efficacy and safety. If a patient is finding benefit and not having issues that are particularly worrisome, they're much less apt to discontinue that therapy. So what's the impact? Again, as I mentioned, I'm a busy private passing dermatologists seeing about 45 to 50 patients a day. If VDPHL01 were to be approved by the FDA and it would, for the first time, offer me a rigorously tested medicine to which I can speak to both safety and efficacy when talking to patients about pattern hair loss. Additionally, it would make me more apt to bring up this therapy in patients who presented for another reason because I now have a data set for which I can speak to in terms of a product potential benefit in patients with had hair loss. I think about another condition in which I specialized, which is hidradenitis suppurativa. And prior to 2015, this condition was considered an orphan disease, not because it was not prevalent, it was just because we had nothing to offer. In 2015, we had the first biologic that was approved for adult patients and then 3 years later for adolescent patients with HS. And from that day forward, patients were encouraged to come out and seek care because they were aware of this medicine. And as a clinician, I was more than happy to treat these folks because for the first time, I now had a therapy for which I could offer them. And the prevalence of that disease is now estimated to be between 0.1% to 4% of the population, which is somewhere between 1 in a 1,000 and 1 in 25 patients. And that's really a reflection of not increased existence of the disease, but because we had a therapy to offer them. If direct-to-consumer marketing is going to be an important aspect of this product, that's also going to be something that will drive patients into the office I think about -- if you have seen a commercial where people are jumping off a dock and into a [ Bright Blue Lake ] I have had many patients come in asking for that particular therapy because of that commercial despite the fact that they don't even have that underlying disease. And the last piece about the impact of something like VDPHL01, is that you don't need to be a hair expert to prescribe that. And that's important because there is a paucity of hair experts across the United States. And many of these patients aren't seeing those individuals nor are they seeing dermatologists. In many cases, they're actually going to their primary care physician or they're going to social media platforms. So really, anybody who has a contact point with somebody with [ paranapesia ] can theoretically prescribe this medicine, if it were to be approved. Lastly, as a dermatologist, I think about all the other diseases for which we don't have therapies. And in the hair loss space, we really divide those into 2 broad categories: scarring hair loss and nonscarring hair loss. And in all instances, despite whatever the underlying foundational therapy might be I'm still using immediate-release minoxidil as a combination in effort to grow any potential last hair follicle that's hanging on to produce that hair. So although this medicine is studied in pattern hair loss, I think about the other aspects of hair loss disorders, which I might consider using a medicine like VDPHL01, if it were to be approved for patent hair loss. So when I think about the takeaways from the data, I really kind of want to focus on 5 key things. So first, recognize that this is a huge problem in terms of the number of patients that have pattern hair loss and the fact that we have a paucity of options to offer them. And really not a lot of active research has gone on in this space in the recent decade or so. We're still capitalizing on an adverse event of a blood pressure medication as our main therapy, and if approved, we would have the first time a novel rigorously tested medicine that talks about both qualitative and quantitative data at 6 months with some patients seeing response as early as 2 months. It has ease of use as a one-daily medicine or twice daily, depending on the dose that is -- that would be utilized, and the applications for me as a clinician can extend beyond its indication for pattern hair loss. So thank you, Reed, again, for having me. I hope my insights here have been helpful for you, and I'm really looking forward to my continued participation and hopefully, having this therapy at some point as a tool my toolbox to offer to my patients.

Thank you, Dr. Payette. At this point, I'd like to ask Mark Newman, our Chief Commercial and Strategy Officer, to discuss our latest insights from research using our updated Phase III profile. Mark?

Thanks, Reed, and good morning, everyone. We are very excited by the latest Phase III clinical data and the resulting product profile for VDPHL01. Today, I'll share findings from market research conducted this past weekend using the VDPHL01 Study 304 Phase III data. Now unlike the research presented with the Study 302 top line results back in April. This work focused on clinicians who see meaningful numbers of men with pattern hair loss, but are more hesitant to prescribe today's treatments. Our objective with this research was straightforward, determine whether the VDPHL01 Phase III profile could substantially grow the PHL market by expanding the prescriber base and increasing the depth of prescribing for pattern hair loss. As a reminder, we previously tested the Study 302 profile with core hair loss prescribers, primarily high prescribing dermatology clinicians and the patients they treated in their practices. In that survey, more than 9 in 10 HCPs VDPHL01 as positively differentiated and expected it to become the first-line treatment for PHL. The reasons were clear, FDA approval, primary efficacy outcomes and the VDPHL01 safety profile. This perceived differentiation in favor of VDPHL01 translated into a very strong intent to prescribe with the vast majority of HCPs indicating they were highly likely to prescribe it and the vast majority of patients, including patients currently on prescription treatment on OTC products only or not actively treating we're likely to talk to their doctor about VDPHL01 when it became available on the market. Following the new 304 Study data, we reengaged a subset of these high-prescribing HCPs from last April's work to assess whether their enthusiasm remained as strong as in our 302 market research. We found the confidence in using VDPHL01 is trending even higher after reviewing data for both studies, 302 and 304 with most expecting it to become their go-to treatment for PHL. Most also believe it will encourage more patients to seek treatment, particularly those frustrated with current options. In the present survey, we also surveyed 198 dermatologists and PCPs who see meaningful volumes of PHL patients, yet who are hesitant to recommend treatment options today because they believe the options currently available are too limited. These HCPs see an average of 33 adults with PHL each month, and these clinicians generally treat PHL themselves referring only 1 in 4 patients to a specialist. As you'll see in the following slides of the detailed survey findings, these HCPs expressed high enthusiasm for VDPHL01. HCPs believed that our treatment will activate patients by convincing them that there is finally an option for treating hair loss that is worthwhile. Similarly, HCPs anticipate more proactively engaging with patients about treating hair loss as VDPHL01 would give them confidence in the outcomes they can achieve. And finally, several HCPs drew parallels to the GLP-1 category sharing the belief that VDPHL01 will activate the PHL market in similar ways to how the obesity market has evolved. Approximately 2/3 of these clinicians male PHL patients do not use prescription therapy. Instead, they received no treatment or rely solely on over-the-counter options to manage their hair loss. About half of their patients received topical minoxidil or Rogaine because the HCPs are most comfortable with it. When they do use prescription oral treatment in their male patients, they favor oral finasteride over oral iron minoxidil. Confidence is a central challenge, few clinicians believe that current treatment options can deliver the outcomes patients want and only about 1 in 6 believes lost hair can be regrown. Confidence is lowest for regrowth at the frontal hairline. When asked what factors could increase prescription used for PHL, these HCPs are very clear. They need more convincing evidence of visible improvement and FDA-approved treatment and greater confidence in long-term safety. In short, they need the risk-benefit equation to change before they are willing to increase their use of prescription therapy. We then presented the BD PHL Phase III profile to them, including results from Studies 302 and 304. And their response was highly enthusiastic. Nearly 9 in 10 clinicians rated VDPHL01 has positively differentiated overall and differentiated it from every existing option from OTC Rogaine to generic oral immediate-release minoxidil. Most importantly, VDPHL01 gives these clinicians confidence that treatment can deliver better results for more patients with a therapy they view as safe and proven, that is the reassurance and conviction that this group has been missing. That confidence translates into significantly increased prescribing intent. Nearly 90% of HCP surveyed would try VDPHL01 with 2 and 3 indicating they would prescribe it first line or make it their go-to treatment option. As these quotes highlight, VDPHL01 clearly demonstrates value-added benefit with acceptable risk and HCPs who have traditionally been more hesitant to prescribe now envision adopting treatment earlier. Now in our view, this next slide shows the most important findings from our market research. According to these clinicians, VDPHL01 could double the share of patients receiving prescription treatment in their practices and account for roughly 2/3 of prescription use. Growth will come from every patient segment, previously treated patients, those using only OTC treatments and those who have never received treatment at all. HCPs also expect their PHL patient population to grow by 22% during VDPHL01's first year of availability even in these already busy practices. They anticipate granting prescriptions to 8 in 10 patients who request VDPHL01 by name. Importantly, VDPHL01 also directly addresses why these clinicians avoid oral IR minoxidil?today. The light blue bars on this slide show the current barriers to using oral IR minoxidil. For a large majority, VDPHL01 resolves concerns about achieving consistent, meaningful and fast efficacy results while also delivering a safe treatment that avoids serious cardiac side effects. Now this all translates into a projected future landscape where VDPHL01 dominates in the minoxidil? category. They expect that 75% of future oral minoxidil candidates will receive VDPHL01 and only the remaining 25% will continue their use of oral IR minoxidil, half of VDPHL01 use will come from patients switching from IR minoxidil and half of that would come from new patients being prescribed VDPHL01 rather than IR minoxidil. Importantly, preference for VDPHL01 survives premium pricing over IR oral minoxidil as HCPs maintain that VDPHL01 offers superior value for the money due to its unique combination of proven efficacy, favorable safety and FDA approval. Overall, this present market research builds upon our favorable findings following the Study 302 top line and respondents indicate that the VDPHL01 profile may grow the prescription market by engaging more clinicians to actively treat hair loss, expanding the prescriber base and deepening their prescribing. The magnitude of this market growth is significant with HCP is expecting their use of prescription therapy for PHL to double from approximately 1/3 of their patients to 2/3 and due to the availability of VDPHL01. Almost 9 in 10 respondents said they would prescribe it in its first year, and they expect to treat 57% of their male patients with it. So we are highly encouraged to see how VDPHL01 may transform the treatment landscape for both HCPs that are currently high-volume treaters as well as those who are currently hesitant to treat hair loss as they are underwhelmed by the available options. Thank you for your time today, and I look forward to sharing further updates on our preparations for commercialization readiness for VDPHL01 in the coming months. And with that, I'll turn it back to you, Reed.

Thank you, Mark. Fundamentally, we believe that the more than 1,000 patients of placebo-controlled data supports that both the patients and physicians can be more comfortable treating pattern hair loss, and that there's finally an option that if approved, has the potential to give physicians confidence that they can achieve the outcomes that their patients are looking for, namely, they can achieve meaningful visible hair growth in a high percentage of subjects on a predictable time course with early onset and that with that efficacy profile, they can maintain strong tolerability with no treatment-related SAEs, no AESIs of cardiac origin and remarkably only 1 event hyper that occurred in more than 5% of all subjects within a balance between active and placebo. All in, the ability to grow the treatment landscape is driven by this being a treatment that is simple to manage, simple to prescribe and simple for patients to take that is supported by a robust set of clinical data in more than 1,000 patients and for the potential of VDPHL01 to be the first ever FDA-approved oral treatment for both male and female pattern hair loss. We remain very well capitalized with approximately $820 million on the balance sheet as of our last quarterly earnings as we move into our next 2 clinical readouts. Study 302 Part B extension data later this quarter and Study 306, the first ever Phase III trial for an oral treatment for female pattern hair loss in the U.S. which will read out in the first half of next year. Thank you so much for your time. We're now ready to take questions.

[Operator Instructions]Our first question comes from Roger Song with Jefferies.

This is Nabil on for Roger. Congrats on the data. Maybe beyond the hair count headline news, curious how do you see the month 2 onset and the frontal responses in VDPHL01 setting it apart from off-label oral minoxidil. And it's formal language something you're planning to pursue in a label?

I think those are great questions, Nabil. Thank you so much. I think, first and foremost, when we think about the ability to have fast onset of hair growth. As Dr. Payette said, everyone wants everything done yesterday, right? This is an urgent society. So the faster that people can anticipate seeing a visible benefit, the more likely they are to start and continue with therapy. So we think that's very important. Similarly, as you mentioned, right, this is the first time that we've demonstrated benefit on the frontal hair growth endpoint. And this is the first Phase III trial ever in which there's been benefit on frontal hair loss for any hair loss therapeutic. And I think importantly, that's what people see when they look in the mirror. That's often the first thing that's lost when people are losing hair. And so the ability to have data that speaks to that, I think, is extremely meaningful in this category. And as you saw from Mark's slides, only 1 out of 8 HCPs today is comfortable with the fact that they may be able to regrow frontal hair growth with current therapies. So thanks, Nabil.

Our next question comes from Geoff Meacham with Citi.

This is Misha on for Jeff. And congratulations on the data. So you have highlighted strong results with both regimens across both the trials. Can you talk about your latest thought process on whether you plan to seek a approval for both QD --? Or do you expect to select the preferred regimen before filing? And maybe a question for Dr. Payette. Doctor, you mentioned or you described the patient reported results as more clinically important than the exact Ketan number. Does the study 3 or 4 core results meaningfully exceed what you see with the immediate release in oral minoxidil?, and is it enough to kind of support premium pricing.

Yes. So I'll start with the first question. I think yet again, we remain very, very excited about the once daily data we're seeing in this study, and we're going to wait to give a final dosing decision until after we see long-term data. But certainly, that once-daily data was extremely strong yet again from both an efficacy and a safety perspective. Maybe Dr. Payette, do you want to give a little bit of color on your patient reported outcome and then visible benefit? Maybe talk about, I think, your point earlier on looking at photos with patients in clinic today and what that looks like versus what it could look like in the future.

Yes. I think another important point is although we don't have head-to-head data against immediate release minoxidil, I think just the absolute changes that we see with the 304 program here in terms of its output is impressive. I think I've been writing immediate minoxidil?now for essentially any patient with hair loss. So that's going to include, of course, male and female pattern hair loss. And I will say that overall, is woefully disappointing in terms of its ability to generate patient satisfaction, probably because a lot of it is that because of the bad immediate release, it's stopped maintaining the steady state in the bloodstream and really to sort of how the desire for patients to generate here and generate hair quickly, the fact that they don't see that very often with this medicine even at 6 months when we're looking at their baseline photos compared to their photo that we take at that visit. That encourages patients to discontinue therapy and then go see things that they get from some influencer online. So right now, the standard of care, if you want to call it that, which is immediate release minoxidil, underperforms greatly the expectations that patients and clinicians like myself have for this space. It's just kind of interesting that we've really had not a lot of research into it. And now we have this potential therapy here, which seems to really create a lot of excitement in terms of shaping the landscape where we can offer patients with pattern hair loss.

Our next question comes from Prakhar Agrawal with Cantor Fitzgerald.

Congrats on the data. Maybe first 1 on pricing. After you have the data from both trials, how are you thinking about the pricing bands now. What's the upper limit on pricing when the consumers' willingness to pay for these drugs drop? And maybe secondly, given that you have seen the data from both made trials, what's your confidence level now in the female pattern hair loss data that's coming in first half of 2017?

Thanks, Prakhar. I'll answer the second part of that, which is we remain highly convicted as we move into Study 306 the first ever Phase III trial for an oral treatment in female pattern hair loss coming in the first half of next year. And I think that this data combined with Study 302 increases that conviction. Mark, do you want to talk a little bit about pricing? And maybe talk even about some of the research we generated over the weekend related to how really preference survives premium pricing.