Summary of Journey Medical Corp (DERM) Conference Call - August 20, 2025 Company Overview - **Company Name**: Journey Medical Corporation - **Ticker Symbol**: DERM - **Industry**: Pharmaceutical, specifically focused on dermatology - **Founded**: Approximately 10 years ago, went public in November 2021 - **Average Daily Volume**: About 150,000 shares - **Outstanding Shares**: Approximately 23 million shares [6][5] Key Products and Market Focus - **Market Size**: The dermatology market is valued at nearly $6 billion [7] - **Primary Disease States**: Rosacea, hyperhidrosis, and acne [7] - **Key Product**: Imrozi, launched in April 2025, is the first product developed by Journey Medical and approved by the FDA in November 2024 [8][7] - **Core Business Revenue**: Approximately $55 million in net revenue for 2024 without Imrozi [8] Product Details - **Imrozi**: - Indicated for the treatment of inflammatory lesions, papules, and pustules of rosacea in adults - Lowest strength of minocycline available at 40 mg, with a once-daily dosage [15][16] - Demonstrated superior efficacy compared to Oratia, the only other oral treatment for rosacea [17][19] - Safety profile similar to placebo, with minimal adverse events [27][28] Clinical Trial Results - **Efficacy**: - Over 60% greater IgA success compared to Oratia and over 120% compared to placebo [20] - Approximately 30% greater inflammatory lesion reduction compared to Oratia and over 65% compared to placebo [21] - Fast-acting results observed as early as two weeks [24] Market Access and Growth Strategy - **Market Access**: - Approximately 100 million lives have access to Imrozi, with expectations for growth as payer acceptance increases [35][54] - **Prescription Growth**: - Rapid increase in prescriptions from 1,200 in April to over 5,200 in July 2025 [32] - Unique prescribers increased from 600 to over 1,800 [34][48] - **Sales Territories**: 35 sales territories covering 80 of the top 50 MSAs in the U.S., accessing about 70% of dermatology prescriptions [11][12] Financial Outlook - **Current Run Rate**: Approximately $60 million annually, nearing breakeven [49] - **EBITDA Positive**: Expected to achieve EBITDA positivity later in 2025 due to contributions from Imrozi [38][48] - **Out-Licensing Strategy**: Successful past deals, including a $20 million non-dilutive capital deal for QBREXZA [41][52] Long-Term Strategy - **Focus Areas**: - Continued growth of Imrozi, QBREXZA, and Accutane - Out-licensing opportunities to generate additional capital - Building a strong presence in dermatology with a robust product portfolio [57][40] Conclusion - Journey Medical is positioned for significant growth in the dermatology market with the launch of Imrozi and a strong sales strategy. The company aims to leverage its existing products and expand its market presence while focusing on achieving profitability and sustainable growth in the coming years [42][57].

Financial Data and Key Metrics Changes - The total net revenue for Q2 2025 was $15 million, compared to $14.9 million for Q2 2024, with $2.8 million attributed to the U.S. commercial launch of Amrozi [15][18] - Gross margin increased to 67% in Q2 2025 from 61% in the prior year [15] - Net loss for common shareholders was $3.8 million or $0.16 per share in Q2 2025, compared to a net loss of $3.4 million or $0.17 per share in Q2 2024 [18] Business Line Data and Key Metrics Changes - Amrozi sales contributed approximately $2.8 million to the total net product revenue, marking a significant improvement in gross profit margins [6][15] - Accutane sales declined by $2.3 million due to generic competition, but growth brands like Amrozi and QBREXZA offset this decline [7][15] - QBREXZA revenue for the quarter was reported at $6.9 million [38] Market Data and Key Metrics Changes - Amrozi achieved over 12,800 prescriptions by July, with a consistent increase in weekly prescriptions since its launch [9][11] - The product captured more than 10% of new prescription demand among dermatology writers within three months of promotion [10] - Payer access for Amrozi increased from 30% of commercial lives in May to approximately 65% by July [10] Company Strategy and Development Direction - The company aims to become sustainably EBITDA positive later in 2025 through strategic initiatives focused on optimizing operations and controlling expenses [6] - The focus remains on expanding the base of Amrozi prescribers, growing prescription volume, and increasing payer access [21] - The company is committed to leveraging its established dermatology commercial organization to enhance product sales and profitability [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing momentum of Amrozi's launch and its potential to become the standard of care for rosacea treatment [21] - The company is optimistic about achieving its core objectives, which include improving patient lives and creating long-term shareholder value [22] - Management noted that while there is some seasonality in the dermatology market, the current growth trajectory of Amrozi is expected to continue [35] Other Important Information - Journey Medical's common stock was added to the small-cap Russell 2000 and broad market Russell 3000 indexes, enhancing public awareness and institutional investor ownership [13] - The product was featured in a segment on Lifetime TV, increasing visibility [12] Q&A Session Summary Question: What is the goal for coverage by the end of the year? - Management indicated that while they have not publicly disclosed a specific target, they are focused on increasing both the quantity and quality of coverage for Amrozi [24][25] Question: How do you see gross margins evolving over the year? - Management expects incremental improvements in gross margins as Amrozi becomes a larger part of the sales mix, given its low cost [27][28] Question: When will guidance for the year be provided? - Management stated that it is too early in the launch to provide hard guidance and will wait a few more quarters [29] Question: What is the expected net revenue per prescription for Amrozi? - Management refrained from providing specific guidance on average selling price due to the complexities involved in early quarters [33][34] Question: How does seasonality affect the rosacea market? - Management acknowledged some seasonality but believes the current growth pace will not be significantly impacted [35] Question: What is the market share goal for Amrozi? - Management noted that the 10% market share among high-volume dermatologists is a strong start, with expectations for continued growth [48][50]

Financial Data and Key Metrics Changes - Journey Medical reported net product sales of $13.1 million for Q1 2025, a slight increase from $13.0 million in Q1 2024, which included approximately $2.0 million from the initial revenue of AMROCI [6][12] - Gross margin improved to 64% in Q1 2025 from 54% in the prior year, attributed to lower product costs and a favorable sales mix [13] - R&D costs were nil in Q1 2025 compared to $7.9 million in Q1 2024, which included preapproval and milestone payments related to AMROCI [13] - SG&A expenses increased by $2.1 million to $10.6 million in Q1 2025, reflecting investments in commercial infrastructure for the AMROCI launch [13] - Net loss for Q1 2025 was $4.1 million, or $0.18 per share, compared to a net loss of $10.4 million, or $0.53 per share, in Q1 2024 [14][15] - Cash position at the end of Q1 2025 was $21.1 million, up from $20.3 million at the end of 2024 [15] Business Line Data and Key Metrics Changes - The launch of AMROCI is seen as a significant milestone, contributing to initial sales and expected to become the flagship product [6][16] - Legacy products experienced a decline of approximately 10% to 15%, attributed to generic competition [24] - QBREXZA showed strong performance with a 15% increase in prescriptions year-over-year, despite new competition [25][26] - Accutane prescriptions decreased from 93,000 in Q1 2024 to 66,000 in Q1 2025, impacted by new competitors, but showed a 10% growth compared to Q4 2024 [28][30] Market Data and Key Metrics Changes - Approximately 30% of covered commercial insured lives now have access to AMROCI, up from 20% previously [11] - The company actively calls on 83% of dermatology offices that prescribe oral rosacea treatments, leveraging existing brand equity [9] Company Strategy and Development Direction - The company aims to expand access and grow prescription volume for AMROCI while publishing additional peer-reviewed data to support its clinical value [17] - Focus on building brand awareness and ensuring payer coverage to translate prescription momentum into sales [10][11] - The management believes 2025 will be a transformational year for Journey Medical, with a commitment to long-term value creation for patients and shareholders [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive initial response to AMROCI and its potential to achieve sustainable EBITDA positivity later in the year [6] - The dermatology-focused sales force is fully trained and actively promoting AMROCI, with early indicators showing over 660 unique healthcare providers writing prescriptions [16][17] - The company is optimistic about the trajectory of AMROCI's launch and expects continued growth in the coming months [40][41] Other Important Information - The Phase III clinical trial results for AMROCI were published in JAMA Dermatology, highlighting its statistical superiority over competitors [8] - The National Rosacea Society updated its treatment algorithms to include AMROCI, signaling confidence from the dermatology community [9] Q&A Session Summary Question: Expectations for AMROCI revenues in Q2 - Management indicated that the initial $2 million in revenue was largely due to stocking and expects additional revenues in Q2 as the product gains traction [20][21] Question: Performance of legacy business - The legacy business is experiencing a decline due to generic competition, with specific products like QBREXZA performing well despite new entrants [24][25] Question: Inventory levels in distribution - Management estimated that inventory levels are typically between two to four weeks during a new product launch [34][36] Question: Early feedback from prescribers - Positive feedback has been received regarding AMROCI's efficacy and tolerability, with many prescribers expressing satisfaction with the product's performance [37][39] Question: Erythema reduction feedback - Anecdotal feedback from dermatologists indicates satisfaction with AMROCI's impact on erythema, although this is not the primary focus of the marketing message [50][51] Question: Repeat prescribers for AMROCI - There is a mix of prescribers, with some writing multiple prescriptions, indicating a positive reception in the market [57]

Financial Data and Key Metrics Changes - Journey Medical reported net product sales of $13.1 million for Q1 2025, a slight increase from $13.0 million in Q1 2024, which included $2.0 million from the initial launch of AMROCI [5][11] - Gross margin improved to 64% in Q1 2025 from 54% in the prior year, attributed to lower product costs and a favorable sales mix [12] - Net loss for Q1 2025 was $4.1 million, or $0.18 per share, compared to a net loss of $10.4 million, or $0.53 per share, in Q1 2024 [13] Business Line Data and Key Metrics Changes - The launch of AMROCI is seen as a significant milestone, contributing positively to the overall sales performance [5] - The legacy business, which includes older brands facing generic competition, experienced a decline of approximately 10% to 15% [22] - QBREXZA showed strong performance with a 15% increase in prescriptions year-over-year for March and April 2025 [24] Market Data and Key Metrics Changes - Approximately 30% of covered commercial insured lives now have access to AMROCI, up from 20% previously [10] - The company actively calls on about 83% of dermatology offices that prescribe oral rosacea treatments, enhancing market penetration [8] Company Strategy and Development Direction - Journey Medical aims to expand access and grow prescription volume for AMROCI while publishing additional peer-reviewed data to support its clinical value [17] - The company is focused on building brand awareness and ensuring payer coverage to translate prescription momentum into sales [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive initial response to AMROCI and its potential to become the flagship product, contributing to sustainable EBITDA positivity later in the year [5] - The company views 2025 as a transformational year, with expectations for continued growth and market adoption of AMROCI [17] Other Important Information - The Phase III clinical trial results for AMROCI were published in JAMA Dermatology, highlighting its superiority over competitors [7] - The National Rosacea Society updated its treatment algorithms to include AMROCI, signaling confidence from the dermatology community [8] Q&A Session Summary Question: Expectations for AMROCI revenues in Q2 - Management indicated that the initial $2 million in revenue was primarily from stocking and expects additional revenues in Q2 as the product gains traction [19][20] Question: Performance of the legacy business - The legacy business is expected to continue facing challenges due to generic competition, with QBREXZA performing well despite new competition [22][23] Question: Inventory levels in the distribution channel - Management estimated that inventory levels are typically between two to four weeks during a new product launch [31][32] Question: Feedback from prescribers - Positive feedback has been received regarding AMROCI's efficacy, with many prescribers impressed by its clinical results [34][35] Question: Patient demographics for AMROCI - Initial prescriptions are primarily from new patients, with potential for switching from existing treatments as prescribers gain confidence [40][41] Question: Erythema reduction feedback - Anecdotal feedback indicates that some prescribers have noted significant erythema reduction, which may be incorporated into future messaging [46][50]

Financial Data and Key Metrics Changes - Journey Medical reported annual revenue of $56 million in 2024, a decrease from $79 million in 2023, primarily due to higher rebate costs and lower unit volumes from legacy products [7][18] - Total net product revenue for 2024 was $55.1 million, down from $59.7 million in 2023 [18] - The net loss for common shareholders was $14.7 million or $0.72 per share for 2024, compared to a net loss of $3.9 million or $0.21 per share in 2023 [21] - Non-GAAP adjusted EBITDA for 2024 was positive $800,000 or $0.04 per share, down from $15.6 million or $0.85 per share in 2023 [22] Business Line Data and Key Metrics Changes - Research and development expenses increased by $2.3 million to $9.9 million in 2024, driven by non-recurring payments related to the IMROCI NDA filing [19] - Selling, general and administrative expenses decreased by $3.7 million to $40.2 million in 2024, reflecting expense optimization efforts [20] Market Data and Key Metrics Changes - As of early 2025, Journey Medical achieved approximately 20% commercial payer coverage for IMROCI, up from 12% at the time of FDA approval [13] - The company anticipates significant increases in payer coverage throughout 2025 and into 2026 [13] Company Strategy and Development Direction - The launch of IMROCI is positioned as a transformational opportunity for Journey Medical, with potential peak annual sales estimated at $200 million in the U.S. and $100 million internationally [24] - The company plans to focus on driving value for patients and shareholders while preparing for a robust launch of IMROCI [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the early progress of IMROCI and the potential for significant operating leverage as the product gains market traction [10][14] - The company is optimistic about the impact of upcoming peer-reviewed publications and medical conference presentations on IMROCI's market awareness [25] Other Important Information - Journey Medical paid $22 million in FDA filing fees and milestone payments related to IMROCI in 2024, completing its financial obligations for the product's regulatory fees [9] - The company had $20.3 million in cash as of December 31, 2024, down from $27.4 million at the end of 2023 [22] Q&A Session Summary Question: Expectations for payer coverage by the end of 2025 - Management expects peak commercial coverage to take 12 to 18 months post-launch, with ongoing efforts to increase coverage [28][30] Question: Importance of erythema data from KOL interactions - The head-to-head performance data was of significant interest to physicians, overshadowing the erythema data [32][34] Question: Thoughts on 2025 guidance - Management plans to provide 2025 financial guidance later in the year after assessing initial prescription demand [41][42] Question: Reimbursement environment in early days - Initial coverage is around 20%, which aligns with expectations, but it is too early to provide a comprehensive assessment [44][45] Question: Revenue expectations for Q1 - Modest revenue is expected in Q1, with meaningful revenue anticipated starting in Q2 [46] Question: Performance of legacy products - Legacy products have shown consistent performance, with QBREXZA continuing to grow, while Accutane has stabilized after facing new competition [50][51] Question: Pricing across the portfolio - Pricing for legacy brands is expected to remain steady, with improved margins for certain products due to the cessation of royalty payments [61][62] Question: International licensing opportunities for IMROCI - The company is exploring out-licensing opportunities for IMROCI in international markets while focusing on the U.S. launch [68]