Company Overview - Journey Medical Corporation is a commercial-stage pharmaceutical company focused on selling and marketing FDA-approved prescription products for dermatological conditions [3] - The company currently markets seven branded and two generic products aimed at treating common skin conditions [3] - Journey Medical was founded by Fortress Biotech, Inc. and is located in Scottsdale, Arizona [3] Upcoming Event - Claude Maraoui, Co-Founder, President and CEO of Journey Medical, will participate in a fireside chat at the Alliance Global Partners' Virtual Healthcare Company Showcase on May 21, 2024, at 1:00 p.m. ET [1] - A replay of the fireside chat will be available on the company's website for approximately 30 days after the event [2]

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The company reported increased Q1 2024 revenue but a wider net loss due to higher R&D expenses, raising going concern doubts [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets and stockholders' equity decreased as of March 31, 2024, primarily due to reduced cash and the net loss incurred Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $24,057 | $27,439 | | Total current assets | $47,013 | $56,455 | | Total assets | $66,571 | $76,849 | | **Liabilities & Equity** | | | | Total current liabilities | $38,936 | $41,868 | | Total liabilities | $53,620 | $56,499 | | Total stockholders' equity | $12,951 | $20,350 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2024 revenue increased 7% to $13.0 million, but a 288% surge in R&D expenses resulted in a net loss of $10.4 million Q1 2024 vs. Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total revenue | $13,030 | $12,213 | | Cost of goods sold | $6,816 | $6,449 | | Research and development | $7,884 | $2,033 | | Selling, general and administrative | $8,420 | $13,292 | | Loss from operations | $(10,090) | $(9,561) | | Net loss | $(10,442) | $(10,136) | | Net loss per share (Basic & Diluted) | $(0.53) | $(0.57) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to $5.0 million in Q1 2024, leading to an overall $3.4 million decrease in cash Q1 2024 vs. Q1 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,019) | $(956) | | Net cash provided by (used in) investing activities | $— | $(5,000) | | Net cash provided by financing activities | $1,637 | $52 | | **Net change in cash** | **$(3,382)** | **$(5,904)** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's dermatology focus, liquidity challenges, and accounting policies, including a going concern warning due to recurring losses - The company is a commercial-stage pharmaceutical firm focused on **dermatological treatments**, with a portfolio of seven branded and two authorized generic drugs[19](index=19&type=chunk) - As a result of recurring losses, **substantial doubt exists about the Company's ability to continue as a going concern** for at least twelve months from the financial statement issuance date[24](index=24&type=chunk) - The company is a **majority-owned subsidiary of Fortress Biotech, Inc.** as of March 31, 2024[20](index=20&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial results, noting a 7% revenue increase, a significant rise in R&D expenses, and ongoing liquidity challenges with a going concern warning - The company submitted a New Drug Application (NDA) for DFD-29 to the FDA on January 4, 2024, with a **PDUFA goal date of November 4, 2024**[85](index=85&type=chunk) - The company's ability to continue as a going concern is subject to **substantial doubt due to recurring losses**[87](index=87&type=chunk)[103](index=103&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Total revenue increased 7% in Q1 2024, but a significant rise in R&D expenses led to a wider loss from operations and increased net loss Comparison of Three-Month Periods Ended March 31, 2024 and 2023 (in thousands) | Metric | 2024 | 2023 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $13,030 | $12,213 | $817 | 7% | | Research and development | $7,884 | $2,033 | $5,851 | 288% | | Selling, general and administrative | $8,420 | $13,292 | $(4,872) | -37% | | Loss from operations | $(10,090) | $(9,561) | $(529) | 6% | | Net loss | $(10,442) | $(10,136) | $(306) | 3% | - Net product revenues increased by **$0.9 million (7%)**, primarily due to increased sales of Qbrexza (up **23%**) and Accutane (up **25%**) from focused marketing efforts[93](index=93&type=chunk) - R&D expenses increased by **$5.9 million**, driven by a **$4.0 million FDA filing fee** for DFD-29 and a **$3.0 million contractual milestone payment** to DRL[97](index=97&type=chunk) - SG&A expenses decreased by **$4.9 million (37%)** due to continued expense management efforts[98](index=98&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company held $24.1 million in cash, supported by a $20.0 million SWK term loan and ATM proceeds, despite ongoing going concern doubts - The company had **$24.1 million in cash and cash equivalents** at March 31, 2024[100](index=100&type=chunk) - The company has a term loan facility with SWK for up to **$20.0 million**, with **$15.0 million drawn** and an additional **$5.0 million available**[101](index=101&type=chunk) - During Q1 2024, the company sold **289,744 shares** under its ATM program, generating net proceeds of **$1.5 million**[102](index=102&type=chunk) [Material Cash Requirements](index=30&type=section&id=Material%20Cash%20Requirements) The company faces significant future cash requirements, including SWK term loan payments, potential DFD-29 milestones up to $155.0 million, and ongoing royalty obligations Future Payments for SWK Credit Facility (in thousands) | Period | Total | Interest | Principal | Exit Fee | | :--- | :--- | :--- | :--- | :--- | | Remainder of 2024 | $1,501 | $1,501 | $— | $— | | 2025 | $1,993 | $1,993 | $— | $— | | 2026 | $6,193 | $1,693 | $4,500 | $— | | 2027 | $12,336 | $1,086 | $10,500 | $750 | | **Total** | **$22,023** | **$6,273** | **$15,000** | **$750** | - The company faces up to **$155.0 million** in additional contingent regulatory and commercial milestone payments for DFD-29[110](index=110&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Journey Medical Corporation is **not required to provide quantitative and qualitative disclosures about market risk**[110](index=110&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The company's principal executive and financial officers concluded that **disclosure controls and procedures were effective** as of March 31, 2024[111](index=111&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[112](index=112&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending legal proceedings expected to have a material adverse effect on its financial condition or operations - To the company's knowledge, there are **no material legal proceedings pending** against it[114](index=114&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section refers investors to the detailed risk factors in the 2023 Form 10-K, with no new or materially changed risks presented - The company directs readers to the **"Risk Factors" section in its 2023 Form 10-K** for a discussion of risks[115](index=115&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company confirms no unregistered sales of equity securities occurred during the reporting period - The company did not sell any equity securities in **unregistered transactions** during the reporting period[116](index=116&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, officer certifications, and Inline XBRL financial statements

Journey Medical Corporation (NASDAQ:DERM) Q1 2024 Earnings Conference Call May 14, 2024 4:30 PM ET Company Participants Jaclyn Jaffe - Senior Director, Corporate Operations Claude Maraoui - Co-Founder, President and CEO Joseph Benesch - Interim Chief Financial Officer Dr. Srinivas Sidgiddi - Vice President, Research and Development Ramsey Allous - General Counsel and Corporate Secretary Conference Call Participants Scott Henry - Alliance Global Partner Kalpit - B. Riley Securities Operator Ladies and gentle ...

Financial Performance - Total revenues for Q1 2024 were $13.0 million, a 7% increase from $12.2 million in Q1 2023[1] - The net loss for Q1 2024 was $10.4 million, or $(0.53) per share, compared to a net loss of $10.1 million, or $(0.57) per share, in Q1 2023[9] - GAAP net loss for the three-month period ended March 31, 2024, was $10,442,000, compared to a net loss of $10,136,000 for the same period in 2023[21] - GAAP net loss per share basic and diluted for Q1 2024 was $(0.53), consistent with $(0.57) in Q1 2023[21] Revenue Growth - Year-over-year revenue growth of flagship products Qbrexza® and Accutane® exceeded 20%[2] Expenses - Research and development costs rose to $7.9 million in Q1 2024 from $2.0 million in Q1 2023, driven by a $4.0 million FDA filing fee for DFD-29[9] - Selling, general and administrative expenses decreased by $4.9 million to $8.4 million in Q1 2024 from $13.3 million in Q1 2023[9] - Share-based compensation expense increased to $1,406,000 in Q1 2024 from $646,000 in Q1 2023[21] - Short-term research and development expenses, including one-time DFD-29 application fees and milestone payments, rose to $7,740,000 in Q1 2024 from $1,999,000 in Q1 2023[21] Cash and Assets - Cash and cash equivalents decreased to $24.1 million as of March 31, 2024, down from $27.4 million at December 31, 2023[9] - Total current assets decreased to $47.0 million as of March 31, 2024, from $56.5 million at December 31, 2023[13] - Total liabilities decreased to $53.6 million as of March 31, 2024, from $56.5 million at December 31, 2023[13] FDA and Product Development - The FDA accepted the NDA for DFD-29 in March 2024, with a PDUFA goal date set for November 4, 2024[4] - DFD-29, if approved, could be the only oral therapy for treating rosacea, representing a significant commercial opportunity[4] Non-GAAP Measures - Non-GAAP Adjusted EBITDA for the three-month period ended March 31, 2024, was $11,000, a significant improvement from a loss of $5,321,000 in the same period in 2023[21] - Non-GAAP Adjusted EBITDA per share basic and diluted for Q1 2024 was $0.00, compared to $(0.30) in Q1 2023[21] - The company emphasizes that non-GAAP measures provide meaningful supplemental information regarding performance and are used by institutional investors[18] - Management excludes non-cash and non-recurring items from Adjusted EBITDA to better reflect core operating performance[19] Long-term Strategy - The company’s long-term strategy focuses on marketing and selling FDA-approved dermatological products and out-licensing intellectual property[19]

SCOTTSDALE, Ariz., May 13, 2024 (GLOBE NEWSWIRE) -- Journey Medical Corporation (NASDAQ:DERM) ("Journey Medical" or "the Company"), a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration ("FDA")-approved prescription pharmaceutical products for the treatment of dermatological conditions, today announced financial results and recent corporate highlights for the first quarter ended March 31, 2024. Claude Maraoui, Journey Medical's Co- ...

SCOTTSDALE, Ariz., May 07, 2024 (GLOBE NEWSWIRE) -- Journey Medical Corporation ("Journey Medical" or the "Company") (NASDAQ:DERM), a commercial-stage pharmaceutical company that focuses on the selling and marketing of FDA-approved prescription pharmaceutical products for the treatment of dermatological conditions, today announced the Company will release its first quarter 2024 financial results after the U.S. financial markets close on Monday, May 13, 2024. Journey Medical management will conduct a confere ...

SCOTTSDALE, Ariz., May 01, 2024 (GLOBE NEWSWIRE) -- Journey Medical Corporation ("Journey Medical" or "the Company") (NASDAQ:DERM), a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration ("FDA")-approved prescription pharmaceutical products for the treatment of dermatological conditions, today announced the appointment of Joseph M. Benesch as Chief Financial Officer, effective April 26, 2024. Mr. Benesch had served as the Company's ...

SCOTTSDALE, Ariz., April 25, 2024 (GLOBE NEWSWIRE) -- Journey Medical Corporation ("Journey Medical" or "the Company") (NASDAQ:DERM), a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration ("FDA")-approved prescription pharmaceutical products for the treatment of dermatological conditions, announced today that Claude Maraoui, Co-Founder, President and Chief Executive Officer, will present a corporate overview at the Planet MicroCap ...

Financial Agreements and Investments - The company entered into a Credit Agreement with SWK Funding LLC, providing a term loan facility of up to $20.0 million, with an initial draw of $15.0 million[30]. - A license agreement was established with Maruho Co., Ltd., granting exclusive rights for Qbrexza® in several Asian markets, with a non-refundable upfront payment of $19.0 million[31]. - The company received a one-time upfront license payment of $19.0 million from Maruho in 2023[72]. - Fortress paid $19.0 million as a non-refundable upfront payment for the exclusive rights to Qbrexza in the Territory[75]. - The acquisition of Vyne's Molecule Stabilizing Technology™ franchise included an upfront payment of $20.0 million and potential milestone payments totaling up to $450.0 million based on annual sales[77]. - The DFD-29 Agreement includes an upfront payment of $10.0 million and potential milestone payments totaling up to $158.0 million, with royalties ranging from 10% to 20% on net sales[78]. - The Qbrexza APA requires payments of up to $144.0 million upon achieving certain milestones, with royalties on sales ranging from mid-thirty to mid-twenty percent for the first two years[80]. - The Anti-itch Product Agreement involved a total consideration of $4.0 million, with an upfront payment of $2.0 million, and the product is expected to launch in the second half of 2024 or first half of 2025[86]. - The Ximino APA included total consideration of $9.4 million, with an upfront payment of $2.4 million and remaining payments due on anniversaries[88]. - The Exelderm APA had total consideration of $1.6 million, with an upfront payment of $1.2 million and a milestone payment of $0.4 million upon reaching a sales threshold[89]. Clinical Trials and Regulatory Approvals - Positive topline data from two Phase 3 clinical trials for DFD-29 were announced, demonstrating statistical superiority over standard care and placebo, with an NDA submitted to the FDA[32]. - The company expects potential FDA approval for DFD-29 in the second half of 2024, with a Prescription Drug User Fee Act goal date set for November 4, 2024[32]. - The NDA for DFD-29 was filed in January 2024 and is under review by the FDA[61]. - The company is conducting Phase 2 studies on a larger patient population to assess product efficacy, dose tolerance, and safety data[120]. - Phase 3 studies are aimed at establishing safety and efficacy in an expanded patient population[121]. - The FDA may require Phase 4 post-marketing studies to evaluate long-term risks and benefits of the drug[122]. - The FDA's special protocol assessment (SPA) process provides guidance on clinical trial design, but final marketing approval depends on Phase 3 trial results[124]. - The company must demonstrate product safety and efficacy through an NDA submission, which may require additional information even after acceptance[125]. - Section 505(b)(2) NDAs allow for alternate paths to FDA approval, relying on existing clinical data from previously approved products[126]. - The FDA may request a Risk Evaluation and Mitigation Strategy (REMS) as part of the approval process to ensure safe drug use[128]. - Clinical trial completion times can vary significantly, with potential delays due to patient enrollment, site personnel, and adverse events[123]. - Regulatory approval processes for product candidates are time-consuming and expensive, with potential delays affecting commercialization[163]. - The company is responsible for ensuring compliance with good clinical practices (GCPs) and good laboratory practices (GLP) in all clinical trials, with non-compliance potentially leading to unreliable clinical data[219]. Market Opportunities and Product Demand - The PAH market had approximately 450,000 prescriptions in 2023, indicating a significant market opportunity for Qbrexza®[39]. - The oral isotretinoin market had over 2 million prescriptions in 2023, highlighting the demand for Accutane® in treating severe acne[44]. - The oral doxycycline market had more than 27 million prescriptions in 2023, showcasing the potential for Targadox® as an adjunctive therapy for severe acne[46]. - The topical acne market had almost 21 million prescriptions in 2023, presenting unmet needs that Amzeeq® aims to address[48]. - The topical antifungal market had over 11 million prescriptions in 2023[54]. - The rosacea market had 3.8 million prescriptions in 2023[58]. Intellectual Property and Patent Protection - Three marketed products, Qbrexza, Amzeeq, and Zilxi, currently have patent protection[94]. - The company holds 22 issued U.S. patents and 41 issued foreign patents related to Qbrexza, with expiration dates ranging from 2028 to 2033 for issued patents and 2028 to 2034 for pending applications[96]. - For Amzeeq, there are 21 issued U.S. patents and 15 issued foreign patents, expiring between 2030 and 2037, with 6 pending U.S. applications and 1 pending foreign application[97]. - Zilxi has 14 issued U.S. patents and 15 issued foreign patents, also expiring between 2030 and 2037, with 4 pending U.S. applications and 1 pending foreign application[97]. - The company has an exclusive license for DFD-29, which includes 3 issued U.S. patents and 1 issued foreign patent, with expiration in 2039[97]. - The company emphasizes the importance of maintaining patent protection to safeguard its proprietary technologies and competitive position[100]. - The company has 39 issued U.S. patents and 20 issued foreign patents related to its molecular stabilizing technology platform, with 9 pending U.S. applications[97]. Manufacturing and Supply Chain Risks - The company relies on contract manufacturers for production, with no internal manufacturing capabilities, and faces risks associated with third-party manufacturing[113]. - If contract manufacturers fail to meet production requirements, the company may face delays in commercialization and potential revenue loss[170]. - Contract manufacturers must comply with federal, state, and foreign regulations, including cGMP requirements, to avoid manufacturing non-compliance and potential fines[171]. - Failure of contract manufacturers to deliver required commercial quantities on time could result in unmet product demand and lost revenues[172]. - The company relies on third parties for marketing approvals, which may introduce additional risks and complications[160]. - The company does not expect to have the resources to manufacture future approved products independently, remaining dependent on third-party manufacturers[214]. - The company relies on third-party manufacturers for raw materials necessary for production, with potential delays impacting clinical trials and regulatory approvals[216]. - The company may incur substantial liabilities from product liability claims, which could adversely affect its financial condition and stock price[223]. Regulatory and Compliance Challenges - The regulatory approval process for new drugs is lengthy and expensive, requiring extensive pre-clinical and clinical data submission to the FDA[117]. - The company faces significant uncertainty regarding third-party payor coverage and reimbursement for newly approved products[131]. - The majority of the company's operating income is expected to come from dermatology product sales, with potential setbacks from supply chain, demand, and competition impacting revenue[151]. - Generic versions of products are generally significantly less expensive, leading to intense price competition once market exclusivity is lost[156]. - Disruptions to the field sales force could significantly impact existing revenue streams and future product marketing capabilities[157]. - The company faces challenges from potential patent litigation and delays in the approval of new products under Section 505(b)(2) of the FDCA[168]. - Regulatory scrutiny continues post-approval, with potential consequences for non-compliance including unfavorable labeling and product withdrawal[176]. - The FDA may impose costly post-marketing studies or clinical trials to monitor product safety and efficacy[177]. - Legislative changes, such as the ACA, have increased Medicaid rebates from 15.1% to 23.1%, impacting profitability[190]. - The company faces risks from potential violations of healthcare laws, which could lead to significant civil and criminal penalties[188]. - Ongoing changes in healthcare regulations may adversely affect the ability to market products and raise capital[190]. - The American Rescue Plan Act of 2021 will eliminate the statutory cap on rebates drug manufacturers pay to Medicaid starting January 2024, potentially increasing costs for manufacturers[192]. - The Inflation Reduction Act of 2022 introduces a drug price negotiation program, requiring manufacturers to charge a negotiated "maximum fair price" for certain drugs or face excise taxes for noncompliance, which could adversely affect profitability[192]. - Future healthcare reforms may impose stricter coverage criteria and downward pressure on prices, impacting revenue generation and profitability[194]. - Increased scrutiny on drug safety may lead to delays in regulatory approvals and additional requirements for clinical trials, affecting the commercialization of future product candidates[195]. Management and Operational Insights - The company has made significant investments in building its commercial product portfolio, positioning itself for future growth[30]. - The company is a majority-owned subsidiary of Fortress, indicating strong backing for its strategic initiatives[29]. - The management team has over 135 years of collective sales and marketing experience in the pharmaceutical industry[66]. - The company covers over 80% of dermatologists in the top 50 U.S. metropolitan statistical areas[66]. - The company has a specialized access and distribution network of over 600 specialty pharmacies and wholesalers[66]. - The company is in various stages of discussion for new business development opportunities[64].

Journey Medical Corporation (NASDAQ:DERM) Q4 2023 Earnings Conference Call March 21, 2024 4:30 PM ET Company Participants Jaclyn Jaffe - Senior Director, Corporate Operations Claude Maraoui - Co-Founder, President and CEO Joseph Benesch - Interim Chief Financial Officer Dr. Srinivas Sidgiddi - Vice President, Research and Development Ramsey Allous - General Counsel and Corporate Secretary Conference Call Participants Scott Henry - Alliance Global Partners Operator Good afternoon ladies and gentlemen, and t ...