Journey Medical Corporation Reports Full-Year 2023 Financial Results and Recent Corporate Highlights
Journey Medical (DERM) reports total revenues of $79.2 million for 2023, a 7% increase from 2022. Operating cost savings of $15.6 million exceeded guidance. New Drug Application for rosacea treatment candidate DFD-29 accepted by FDA with a PDUFA goal date of November 4, 2024.
Positive
Total revenues increased by 7% to $79.2 million in 2023 compared to $73.7 million in 2022.
Operating cost savings of $15.6 million in 2023 surpassed the initial guidance of $12.0 million.
New Drug Application for DFD-29 accepted by the FDA with a PDUFA goal date of November 4, 2024.
Entry into a license agreement with Maruho contributed $19.0 million of revenue in 2023.
Net loss decreased by $25.8 million from 2022 to 2023, driven by expense optimization efforts and the Maruho upfront payment.
Cash and cash equivalents totaled $27.4 million at the end of 2023, showing an increase from the previous quarter.
Entered into a $20.0 million credit facility with SWK Holdings in December 2023 to support corporate purposes, including the potential launch of DFD-29.
Negative
Total net product revenues decreased by 16% to $71.0 million in 2023 due to lower unit volumes from legacy products.
Net loss was $(3.9) million for 2023, compared to $(29.6) million in 2022.
Decrease in cash and cash equivalents from $32.0 million in 2022 to $27.4 million in 2023.
The reported 7% revenue growth and $15.6 million in operating cost savings for Journey Medical Corporation signify a strategic turning point for the company's financial health. The revenue increase, primarily from the licensing agreement with Maruho, indicates a successful expansion into new markets. However, this must be balanced against the 16% decrease in net product revenues, largely due to competitive pressures on legacy products. The company's ability to manage these pressures will be critical for sustaining growth.
The cost reduction initiative, resulting in a significant drop in SG&A expenses, reflects strong management's commitment to improving operational efficiency. Investors should note the potential for improved operating leverage, which could enhance profitability as revenues grow. The company's strategic financial maneuvers, including the new credit facility with SWK, provide flexible capital that could support the launch of DFD-29, should it gain FDA approval.
Lastly, the non-GAAP measure of Adjusted EBITDA turning positive is a notable improvement, but stakeholders should remain cautious and evaluate the sustainability of these measures and the company's long-term profitability prospects.
The acceptance of the New Drug Application for DFD-29 by the FDA is a pivotal milestone for Journey Medical, positioning the company to potentially address a significant unmet medical need in rosacea treatment. The clinical data suggesting DFD-29's potential as a best-in-class solution for inflammatory lesions and erythema could differentiate it in the competitive landscape of dermatological treatments.
Investors should consider the implications of the PDUFA goal date, as FDA approval could open a substantial market opportunity for Journey Medical. The anticipation of DFD-29 as the lowest-dose oral minocycline on the market could also be a unique selling point, potentially leading to favorable adoption rates post-launch.
However, the long-term success of DFD-29 will depend on the drug's efficacy, safety profile and the company's ability to effectively market the product against existing treatments. The positive Phase 3 trial results are promising, but the real test will come with market acceptance and physician prescribing habits.
The licensing agreement with Maruho not only contributed significantly to Journey Medical's revenue but also suggests a strong strategic move into the Asian market, recognizing the increasing demand for dermatological treatments in this region. The diversification of revenue streams through such partnerships is a prudent approach in mitigating risks associated with domestic market volatility and generic competition.
Despite the decline in net product revenues due to generic competition, the company's focus on developing and commercializing innovative treatments like DFD-29 could potentially revitalize its product portfolio. The market for rosacea treatments is evolving and the entry of a new oral systemic therapy could capture a sizeable share if it demonstrates a superior value proposition to patients and providers.
Long-term growth will likely hinge on the company's ability to maintain strategic partnerships, manage competition and successfully commercialize new products. The anticipated early 2025 launch of DFD-29, if approved, may serve as a catalyst for significant growth, but it is essential to monitor the execution of the launch strategy and market reception.
03/21/2024 - 04:01 PM
Company generated total revenues of $79.2 million for the full year ended December 31, 2023, a 7% increase from the $73.7 million reported in 2022
Achieved $15.6 million in operating cost savings in 2023, ahead of initial guidance of $12.0 million
New Drug Application for rosacea treatment candidate DFD-29 accepted for U.S. FDA review; PDUFA goal date of November 4, 2024
Company to hold conference call today at 4:30 p.m. ET to discuss the financial results and provide a business update
SCOTTSDALE, Ariz., March 21, 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 full year ended December 31, 2023.
Claude Maraoui, Journey Medical’s Co-Founder, President and Chief Executive Officer, said, “2023 was a year of growth and development for Journey Medical. Our full-year revenue reflected a record high for the Company, attributed primarily to our efforts to expand the reach of Qbrexza® in additional territories in Asia through a licensing agreement with Maruho Co., Ltd. (“Maruho”), as well as continued sales of our four core dermatology branded products. We also significantly streamlined our cost infrastructure, positioning the Company to realize improved operating leverage from our future sales and anticipated growth. Another key highlight of the year was the progress that we made in advancing DFD-29 (Minocycline Hydrochloride Modified Release Capsules, 40 mg) through late-stage clinical development. Based on the results of our two Phase 3 trials, DFD-29 has the potential to become the only oral, systemic therapy to address inflammatory lesions and erythema (redness) from rosacea, differentiating it as a potential best-in-class solution. Based on the positive results, we submitted a New Drug Application (“NDA”) to the U.S. Food and Drug Administration in January 2024 for the potential approval of DFD-29. The FDA accepted the NDA this month and has set a Prescription Drug User Fee Act (“PDUFA”) goal date of November 4, 2024. Given our portfolio of recognized dermatology brands, our proven sales force and streamlined cost infrastructure, and the potential to launch DFD-29 in early 2025, we believe Journey is well-positioned for growth and to bring significant value to patients, our physician customers, and our shareholders.”
Financial Results:
Total revenues were $79.2 million for the full year 2023, representing 7% growth compared to total revenues of $73.7 million for the full year of 2022. The increase is primarily due to the Company’s entry into a license agreement with Maruho resulting in $19.0 million of revenue in 2023. Total net product revenues decreased $11.3 million , or 16% , compared to $71.0 million for 2022, mainly due to lower unit volumes from our legacy products, Targadox® , Ximino® and Exelderm® specifically due to continued generic competition for Targadox and the discontinuation of Ximino during the third quarter of 2023. Cost of goods sold decreased by $4.1 million , or 13% , to $26.7 million for the full year 2023, from $30.8 million for the full year 2022. The decrease is mainly due to lower-than-prior-year product royalties driven by lower sales of products from period-to-period, and a permanent contractual decrease in the Qbrexza royalty percentage from the prior-year period. Selling, general and administrative expenses were $43.9 million for the full year 2023, compared to $59.5 million for 2022. The decrease is mainly due to our expense reduction efforts primarily in sales and marketing and other SG&A areas. During the fourth quarter of 2022, we began the implementation of a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs. Research and development costs were $7.5 million for the full year 2023, compared to $10.9 million for the full year 2022. The decrease is due to lower clinical trial expenses for DFD-29 given the completion of the Phase 3 clinical trial program. Net loss was $(3.9) million , or $(0.21) per share basic and diluted for the full year 2023, compared to net loss of $(29.6) million or $(1.69) per share basic and diluted for the full year 2022. The $25.8 million decrease in net loss from period-to-period was driven by our expense optimization efforts and the Maruho upfront payment. The Company’s non-GAAP results in the table below reflect Adjusted EBITDA of $15.6 million , or $0.85 per share basic and $0.75 per share diluted for the full year 2023. This compares to Adjusted EBITDA of $(7.3 million ), or $(0.42) per share basic and diluted for the full year 2022. Adjusted EBITDA, Adjusted EBITDA per share basic and Adjusted EBITDA per share 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 December 31, 2023, Journey Medical’s cash and cash equivalents totaled $27.4 million , compared to $24.8 million on September 30, 2023, and $32.0 million on December 31, 2022, an increase of $2.6 million for the quarter and a decrease of $4.6 million from the prior-year period. In December 2023, Journey Medical entered into a $20.0 million credit facility with SWK Holdings Corporation (“SWK”), a specialized finance company with a focus on the global healthcare sector. The credit facility provides for an initial term loan of $15.0 million that the Company intends to use for general corporate purposes, including to support the potential launch of DFD-29. The Company also has the option to draw an additional tranche of $5.0 million under the credit facility within one year. FY 2023 and Recent Corporate Highlights:
In March 2024, the FDA accepted the NDA for DFD-29 (Minocycline Hydrochloride Modified Release Capsules, 40 mg) and set a PDUFA goal date of November 4, 2024. If approved, DFD-29 will be the lowest-dose oral minocycline on the market and has the potential to be the new treatment paradigm for the millions of patients suffering from rosacea. The Company had submitted the NDA to the FDA seeking approval for DFD-29 for the treatment of inflammatory lesions and erythema of rosacea in adults in January 2024. In October 2023, Journey Medical announced data from a comparative bioavailability (bridging) study of DFD-29 vs. Solodyn® (Minocycline Hydrochloride Extended-Release Tablets, 105 mg), which were presented at the 43rd Annual Fall Clinical Dermatology Conference. The data demonstrated that systemic exposure of DFD-29 was significantly lower than that of Solodyn and that DFD-29 was safe and well tolerated throughout the study. In September 2023, Journey Medical entered into an exclusive license agreement with Maruho. Under the terms of the Agreement, Journey Medical received a $19.0 million non-refundable upfront payment and granted Maruho an exclusive license to develop and commercialize Qbrexza (glycopyrronium tosylate hydrate) for the treatment of hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”). Maruho is responsible for all development and commercialization costs for the product throughout the Territory. In July 2023, Journey Medical announced positive topline results from the two DFD-29 Phase 3 clinical trials (MVOR-1 & MVOR-2) for the treatment of rosacea. Both randomized controlled trials achieved their co-primary and all secondary endpoints with subjects completing the 16-week treatment with no significant safety issues. DFD-29 demonstrated statistical superiority compared to both Oracea capsules and placebo for Investigator’s Global Assessment (IGA) treatment success and the reduction in the total inflammatory lesion count in both clinical trials. The Company also announced results from the DFD-29 Phase 3 studies on a secondary endpoint related to erythema (redness) assessment. DFD-29 showed significantly superior reduction in Clinicians Erythema Assessment (CEA) compared to placebo in both of the Phase 3 clinical trials. In June 2023, Journey Medical announced positive topline results from the Phase 1 clinical trial assessing the impact of DFD-29 on the microbial flora of healthy adults and also evaluated the safety and tolerability of DFD-29. The study achieved all primary objectives and no significant safety issues were noted during the study. The results indicate that DFD-29 can be safely used for up to 16 weeks with no significant risk of microbiota suppression or development of resistance. Conference Call and Webcast Information
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/10186538/fb9ff440e2
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 www.journeymedicalcorp.com
Forward-Looking Statements
Company Contact: ir@jmcderm.com
Media Relations Contact: tplohoros@6degreespr.com
JOURNEY MEDICAL CORPORATION Unaudited Consolidated Balance Sheets December 31, 2023 2022 ASSETS Current assets Cash and cash equivalents $ 27,439 $ 32,003 Accounts receivable, net of reserves 15,222 28,208 Inventory 10,206 14,159 Prepaid expenses and other current assets 3,588 3,309 Total current assets 56,455 - 77,679 Intangible assets, net 20,287 27,197 Operating lease right-of-use asset, net 101 189 Other assets 6 95 Total assets $ 76,849 $ 105,160 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 18,149 $ 36,570 Due to related party 195 413 Accrued expenses 20,350 19,388 Accrued interest 22 160 Income taxes payable 53 35 Line of credit - 2,948 Deferred cash payment, net of discount - 4,991 Installment payments – licenses, short-term 3,000 2,244 Operating lease liability, short-term 99 83 Total current liabilities 41,868 66,832 Term loan, net of discount 14,622 19,826 Installment payments – licenses, long-term - 1,412 Operating lease liability, long-term 9 108 Total liabilities 56,499 88,178 Stockholders' equity Common stock, $.0001 par value, 50,000,000 shares authorized, 13,323,952 and 11,765,700 shares issued and outstanding as of December 31, 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 December 31, 2023 and December 31, 2022 1 1 Additional paid-in capital 92,703 85,482 Accumulated deficit (72,355 ) (68,502 ) Total stockholders' equity 20,350 16,982 Total liabilities and stockholders' equity $ 76,849 $ 105,160
JOURNEY MEDICAL CORPORATION Unaudited Consolidated Statements of Operations Years Ended December 31, 2023 2022 Revenue: Product revenue, net $ 59,662 $ 70,995 Other revenue 19,519 2,674 Total revenue 79,181 73,669 Operating expenses Cost of goods sold – product revenue 26,660 30,775 Research and development 7,541 10,943 Selling, general and administrative 43,910 59,468 Loss on impairment of intangible assets 3,143 - Total operating expenses 81,254 101,186 Loss from operations (2,073 ) (27,517 ) Other expense (income) Interest income (322 ) (60 ) Interest expense 1,698 2,019 Foreign exchange transaction losses 183 89 Total other expense (income) 1,559 2,048 Loss before income taxes (3,632 ) (29,565 ) Income tax expense 221 63 Net Loss $ (3,853 ) $ (29,628 ) Net loss per common share: Basic and diluted $ (0.21 ) $ (1.69 ) Weighted average number of common shares: Basic and diluted 18,232,422 17,531,274
Use of Non-GAAP Measures:
In addition to the GAAP financial measures as presented in our Form 10-K that will be filed with the Securities and Exchange Commission (“SEC”), the Company has, in this press release, included certain non-GAAP measurements, including Adjusted EBITDA, Adjusted EBITDA per share basic and Adjusted EBITDA per share diluted. We define Adjusted EBITDA as net income (loss) excluding interest, taxes and depreciation, less certain other non-cash and infrequent items not considered to be normal, recurring operating expenses, including, share-based compensation expense, amortization and impairments of acquired intangible assets, inventory step-ups from the purchases of intangibles assets and products, severance and foreign exchange transaction losses. In particular, we exclude the following matters for the reasons more fully described below:
Share-Based Compensation Expense : We exclude share-based compensation from our adjusted financial results because share-based compensation expense, which is non-cash, fluctuates from period to period based on factors that are not within our control, such as our stock price on the dates share-based grants are issued.Non-core and Short-term Research and Development Expense : We exclude research and development costs incurred in connection with our DFD-29 product candidate, which is the only product in our portfolio not currently approved for marketing and sale, because we do not consider such costs to be normal, recurring operating expenses that are core to our long-term strategy. Instead, our long-term strategy is focused on the marketing and sale of our core FDA-approved dermatological products and the out licensing our intellectual property and related technologies.Amortization and impairments of Acquired Intangible assets : We exclude the impact of certain amounts recorded in connection with the acquisitions of intangible assets that are either non-cash or not normal, recurring operating expenses due to their nature, variability of amounts, and lack of predictability as to occurrence and/or timing. These amounts may include non-cash items such as the amortization impairments of acquired intangible assets and amortization of step-ups of acquisition accounting adjustments to inventories.Adjusted EBITDA per share basic and Adjusted EBITDA per share diluted are determined by dividing the resulting Adjusted EBITDA by the number of shares outstanding on an actual and fully diluted basis.
Management believes the use of these non-GAAP measures provide meaningful supplemental information regarding the Company’s performance because (i) it allows for greater transparency with respect to key measures used by management in its financial and operational decision-making, (ii) it excludes the impact of non-cash or, when specified, non-recurring items that are not directly attributable to the Company’s core operating performance and that may obscure trends in the Company’s core operating performance and (iii) it is used by institutional investors and the analyst community to help analyze the Company's results. However, Adjusted EBITDA, Adjusted EBITDA per share basic, Adjusted EBITDA per share diluted and any other non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Further, non-GAAP financial measures used by the Company and the manner in which they are calculated may differ from the non-GAAP financial measures or the calculations of the same non-GAAP financial measures used by other companies, including the Company’s competitors.
The table below provides a reconciliation from GAAP to non-GAAP measures:
JOURNEY MEDICAL CORPORATION Reconciliation of GAAP to Non-GAAP Adjusted EBITDA Years Ended December 31, 2023 2022 GAAP Net Loss $ (3,853 ) $ (29,628 ) EBITDA: Interest 1,376 1,959 Taxes 221 63 Depreciation - - Amortization of acquired intangible assets 3,767 4,277 EBITDA 1,511 (23,329 ) Non-GAAP Adjusted EBITDA: Share-based compensation 2,606 4,425 Loss on impairment of intangible assets 3,143 - Inventory step-up expense - 635 Non-core & short-term R&D 7,433 10,870 Foreign exchange transaction losses 183 89 Severance 711 27 Non-GAAP Adjusted EBITDA $ 15,587 $ (7,283 ) Net income (loss) & Non-GAAP Adjusted EBITDA per common share: Basic GAAP Net Income (Loss) $ (0.21 ) $ (1.69 ) Non-GAAP Adjusted EBITDA $ 0.85 $ (0.42 ) Diluted GAAP Net Income (Loss) $ (0.21 ) $ (1.69 ) Non-GAAP Adjusted EBITDA $ 0.75 $ (0.42 ) Weighted average number of common shares: GAAP - Basic and Diluted 18,232,422 17,531,274 Non-GAAP - Basic 18,232,422 17,531,274 Non-GAAP - Diluted 20,884,538 17,531,274
What was the total revenue for Journey Medical in 2023?
Total revenues were $79.2 million in 2023, a 7% increase from 2022.
What was the operating cost savings achieved by Journey Medical in 2023?
Journey Medical achieved $15.6 million in operating cost savings in 2023, exceeding the initial guidance.
What is the New Drug Application status for DFD-29?
The NDA for rosacea treatment candidate DFD-29 has been accepted by the FDA with a PDUFA goal date of November 4, 2024.
What contributed to the revenue increase in 2023?
Entry into a license agreement with Maruho resulted in $19.0 million of revenue in 2023.
How did the net loss change from 2022 to 2023?
Net loss decreased by $25.8 million from 2022 to 2023 due to expense optimization efforts and the Maruho upfront payment.
What was the cash and cash equivalents total at the end of 2023?
Cash and cash equivalents totaled $27.4 million at the end of 2023, showing an increase from the previous quarter.
When did Journey Medical enter into a credit facility with SWK Holdings ?
Journey Medical entered into a $20.0 million credit facility with SWK Holdings in December 2023 to support corporate purposes, including the potential launch of DFD-29.
