Full Press Release Details
Journey Medical Corporation Reports Second Quarter
2023 Financial Results and Recent Corporate Highlights
The Company generated
total net revenues of $17.2 million in the second quarter of 2023, a 41% increase from $12.2 million in the first quarter of 2023
topline results from two Phase 3 clinical trials evaluating DFD-29 (minocycline hydrochloride modified release capsules, 40mg); both trials
achieved the co-primary and all secondary endpoints over placebo and the current standard of care Oracea (doxycycline, 40mg) with
no significant safety issues
The Company plans to
submit a New Drug Application to FDA for DFD-29 in the second half of 2023
Company to hold conference
call today at 4:30 p.m. ET
Scottsdale, AZ - August 8, 2023
- 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 second quarter ended June 30, 2023.
Claude Maraoui, Journey Medical's Co-Founder,
President and Chief Executive Officer, said, "In the second quarter of 2023, our total net revenues were $17.2 million, a 41% increase
from $12.2 million in the first quarter. We are also extremely pleased with the positive topline results from our two Phase 3 clinical
trials evaluating DFD-29 for the treatment of papulopustular rosacea ("PPR"). We expect to submit a New Drug Application ("NDA")
to the FDA for DFD-29 in the second half of 2023 and look forward to continued revenue growth during the remainder of this year."
Neal Bhatia, M.D., Director
of Clinical Dermatology at Therapeutics Clinical Research, San Diego, CA and investigator from the DFD-29 Phase 3 clinical trials, stated,
"DFD-29, a low dose oral minocycline, has demonstrated superior efficacy to Oracea
40 mg, in the Phase 3 clinical trials in patients with papulopustular rosacea. If approved, these results are likely to position DFD-29
as a well-differentiated therapeutic in the dermatologist's armamentarium for this indication. Patients with rosacea feel the need
for a safe and highly effective oral treatment to avoid the local irritation from topical treatments. Dermatologists will be at ease
using the lowest dose minocycline available, for the longer term given its potential for improved safety and the sub antimicrobial
Vice President of R&D, Srinivas Sidgiddi, M.D., who has led this development program from inception, added, "Both Phase 3 trials
achieved their co-primary and all secondary endpoints, and DFD-29 demonstrated statistical superiority over both placebo and the current
standard of care, Oracea 40 mg. These results demonstrate the potential for DFD-29, if approved, to be the best-in-class systemic therapy
in the treatment of rosacea. DFD-29 has the potential to address the large unmet need for safe and efficacious therapies that address
the inflammatory lesions and the redness of rosacea."
| - | Selling, general and administrative expenses ("SG&A") decreased by $3.0 million, or 20%, to $12.1 million for the second quarter 2023, from $15.2 million for the second quarter 2022. The decrease is mainly attributable to the Company's expense reduction efforts, primarily in sales and marketing and other SG&A areas. During Q4 2022, the Company implemented a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs. The initiative is intended to reduce SG&A expenses to better align costs with revenues being generated. In connection with the cost reduction initiative, the Company pivoted to focus on its four core products, allowing it to minimize overall headcount including its sales force along with implemented marketing and other cost cuts. The impact of the cost reduction initiatives is expected to result in a reduction of greater than $12.0 million of annual SG&A expenses. | |
| - | Research and Development ("R&D") expenses decreased by $0.8 million, or 32%, to $1.8 million for the second quarter 2023, from $2.6 million for second quarter 2022. The decrease is related to lower clinical trial expenses, as the two Phase 3 studies have concluded. | |
| - | The Company recorded a non-cash loss on the impairment of the Ximino intangible asset of $3.1 million in the second quarter 2023. During the six months ended June 30, 2023, the Company experienced lower net product revenues and gross profit levels for its Ximino product. | |
| - | GAAP net loss was $8.4 million, or $0.46 per share basic and diluted, for the second quarter of 2023, compared to a GAAP net loss of $10.1 million, or $0.57 per share basic and diluted, for the first quarter of 2023 and $7.5 million, or $0.43 per share basic and diluted, for the second quarter of 2022. | |
| - | The Company's non-GAAP results in the table below reflect Adjusted EBITDA of $(0.6 million), or $(0.04) per share basic and diluted, for the second quarter of 2023, compared to Adjusted EBITDA of $(5.3 million), or $(0.30) per share basic and diluted, for the first quarter of 2023 and Adjusted EBITDA of $(2.6 million), or $(0.15) per share basic and diluted for the second quarter of 2022. Adjusted EBITDA, Adjusted EBITDA per share basic and diluted are non-GAAP financial measures, each of which are reconciled to the most directly comparable financial measures calculated in accordance with GAAP below under " Use of Non-GAAP Measures ." | |
| - | At June 30, 2023, the Company had $17.0 million in cash and cash equivalents including $8.75 million of restricted cash as compared to $26.1 million of cash and cash equivalents and $8.75 million of restricted cash at March 31, 2023 and $32.0 million in cash and cash equivalents as of December 31, 2022. The decrease in cash from the first quarter was primarily a result of $13.0 million in repayments on our EWB debt facility. Subsequently, in July 2023, the Company voluntarily paid-off the entire $10.0 million outstanding EWB term loan. The Company no longer has any outstanding bank debt. |
Recent Corporate Highlights:
Summary Topline Results from MVOR-1
| MVOR-1 | MVOR-2 | |||||||||||||||
| IGA Success at Week 16 | Inflammatory Lesion Change at Week 16 | IGA Success at Week 16 | Inflammatory Lesion Change at Week 16 | |||||||||||||
| DFD-29 (40 mg) | 65.0 | % | -21.3 | 60.1 | % | -18.4 | ||||||||||
| Oracea (40 mg) | 46.1 | % | -15.9 | 31.4 | % | -14.9 | ||||||||||
| Placebo | 31.2 | % | -12.2 | 26.8 | % | -11.1 | ||||||||||
| P-value: DFD-29 versus Oracea | P=0.014 | P<0.001 | P<0.001 | P<0.001 | ||||||||||||
| P-value: DFD-29 versus Placebo | P<0.001 | P<0.001 | P<0.001 | P<0.001 |
Conference Call and Webcast Information
Journey Medical management will conduct a conference
call and audio webcast on Tuesday, August 8, 2023, at 4:30 p.m. ET.
To listen to the conference call, interested
parties within the U.S. should dial 1-866-777-2509 (domestic) or 1-412-317-5413 (international). All callers should dial in approximately
10 minutes prior to the scheduled start time and ask to be joined into the Journey Medical conference call. Participants can register
for the conference here: https://dpregister.com/sreg/10181142/f9fee9e324.
Please note that registered participants will receive their dial-in number upon registration.
A live audio webcast can be accessed on the News
and Events page of the Investors section of Journey Medical's website, www.journeymedicalcorp.com, and will remain
available for replay for approximately 30 days after the meeting.
About Journey Medical Corporation
Journey Medical Corporation (Nasdaq: DERM) ("Journey
Medical") is a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug
Administration-approved prescription pharmaceutical products for the treatment of dermatological conditions through its efficient sales
and marketing model. The company currently markets eight branded and three generic products that help treat and heal common skin conditions.
The Journey Medical team comprises industry experts with extensive experience in developing and commercializing some of dermatology's
most successful prescription brands. Journey Medical is located in Scottsdale, Arizona and was founded by Fortress Biotech, Inc.
(Nasdaq: FBIO). Journey Medical's common stock is registered under the Securities Exchange Act of 1934, as amended, and it files
periodic reports with the U.S. Securities and Exchange Commission ("SEC"). For additional information about Journey Medical,
visit www.journeymedicalcorp.com.
Forward-Looking Statements
This press release may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. As used below and throughout this press release, the words "the Company", "we",
"us" and "our" may refer to Journey Medical. Such statements include, but are not limited to, any statements relating
to our growth strategy and product development programs and any other statements that are not historical facts. The words "anticipate,"
"believe," "estimate," "may," "expect," "will," "could," "project,"
"intend," "potential" and similar expressions are generally intended to identify forward-looking statements. Forward-looking
statements are based on management's current expectations and are subject to risks and uncertainties that could negatively affect
our business, operating results, financial condition and stock price. Factors that could cause actual results to differ materially from
those currently anticipated include: the fact that our products and product candidates are subject to time and cost intensive regulation
and clinical testing and as a result, may never be successfully developed or commercialized; a substantial portion of our sales derive
from products that may become subject to third-party generic competition, the introduction of new competitor products, or an increase
in market share of existing competitor products, any of which could have a significant adverse impact on our operating income; we operate
in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may
have on our operations; our revenue is dependent mainly upon sales of our dermatology products and any setback relating to the sale of
such products could impair our operating results; competition could limit our products' commercial opportunity and profitability,
including competition from manufacturers of generic versions of our products; the risk that our products do not achieve broad market acceptance,
including by government and third-party payors; our reliance third parties for several aspects of our operations; our dependence on our
ability to identify, develop, and acquire or in-license products and integrate them into our operations, at which we may be unsuccessful;
the dependence of the success of our business, including our ability to finance our company and generate additional revenue, on the successful
development and regulatory approval of the DFD-29 product candidate and any future product candidates that we may develop, in-license
or acquire; clinical drug development is very expensive, time consuming, and uncertain and our clinical trials may fail to adequately
demonstrate the safety and efficacy of our current or any future product candidates; our competitors could develop and commercialize products
similar or identical to ours; risks related to the protection of our intellectual property and our potential inability to maintain sufficient
patent protection for our technology and products; our business and operations would suffer in the event of computer system failures,
cyber-attacks, or deficiencies in our or our third parties' cybersecurity; the substantial doubt about our ability to continue as
a going concern; the effects of major public health issues, epidemics or pandemics on our product revenues and any future clinical trials;
our potential need to raise additional capital; Fortress controls a voting majority of our common stock, which could be detrimental to
our other shareholders; as well as other risks described in Part I, Item 1A, "Risk Factors," in our Annual Report
on Form 10-K for the year ended December 31, 2022, subsequent Reports on Form 10-Q, and our other filings we make with
the SEC. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement
is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995.
Media Relations Contact:
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Balance Sheets
($ in thousands except for share and per share
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 8,230 | $ | 32,003 | ||||
| Accounts receivable, net of reserves | 16,737 | 28,208 | ||||||
| Inventory | 12,166 | 14,159 | ||||||
| Prepaid expenses and other current assets | 1,796 | 3,309 | ||||||
| Restricted cash | 8,750 | - | ||||||
| Total current assets | 47,679 | 77,679 | ||||||
| Intangible assets, net | 21,916 | 27,197 | ||||||
| Operating lease right-of-use asset, net | 146 | 189 | ||||||
| Other assets | 6 | 95 | ||||||
| Total assets | $ | 69,747 | $ | 105,160 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 31,773 | $ | 36,570 | ||||
| Due to related party | 603 | 413 | ||||||
| Accrued expenses | 23,329 | 19,388 | ||||||
| Accrued interest | 83 | 160 | ||||||
| Income taxes payable | 35 | 35 | ||||||
| Line of credit | - | 2,948 | ||||||
| Term loan, short-term (net of discount of $58) | 9,942 | - | ||||||
| Deferred cash payment (net of discount of $9) | - | 4,991 | ||||||
| Installment payments - licenses, short-term | 2,333 | 2,244 | ||||||
| Operating lease liability, short-term | 95 | 83 | ||||||
| Total current liabilities | 68,193 | 66,832 | ||||||
| Term loan, long-term (net of debt discount of $174) | - | 19,826 | ||||||
| Installment payments - licenses, long-term | 1,490 | 1,412 | ||||||
| Operating lease liability, long-term | 59 | 108 | ||||||
| Total liabilities | 69,742 | 88,178 | ||||||
| Stockholders' equity | ||||||||
| Common stock, $.0001 par value, 50,000,000 shares authorized, 12,133,890 and 11,765,700 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 1 | 1 | ||||||
| Common stock - Class A, $.0001 par value, 50,000,000 shares authorized, 6,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | 1 | 1 | ||||||
| Additional paid-in capital | 87,004 | 85,482 | ||||||
| Accumulated deficit | (87,001 | ) | (68,502 | ) | ||||
| Total stockholders' equity | 5 | 16,982 | ||||||
| Total liabilities and stockholders' equity | $ | 69,747 | $ | 105,160 |
Condensed Consolidated Statements of Operations