Company generated total net revenues of
GAAP net income increased to
Received an upfront payment of
New Drug Application for DFD-29 expected to be submitted to FDA around the end of 2023
Company to hold conference call today at
Financial Results:
- Total net revenues in the third quarter of 2023 were
$34.5 million , an increase of$18.4 million , or 114%, compared to the third quarter of 2022. The increase is due to the Company’s entry into a new license agreement withMaruho resulting in$19.0 million of revenue during the third quarter. - Cost of goods sold decreased by
$0.8 million , or 11%, to$6.4 million for the three-month period endedSeptember 30, 2023 , from$7.2 million for the three-month period endedSeptember 30, 2022 . The decrease is primarily due to the contractual reduction in our Qbrexza® royalty from period-to-period. - Selling, general and administrative expenses (“SG&A”) decreased by
$7.0 million , or 45%, to$8.6 million for the third quarter of 2023, from$15.6 million for the third quarter 2022. The decrease is mainly attributable to the Company’s expense reduction efforts, primarily in sales and marketing and other SG&A areas. The impact of the cost reduction initiatives is expected to result in a reduction of greater than$17.0 million of annual SG&A expenses in 2023, surpassing our earlier target of$12.0 million . - Research and Development (“R&D”) expenses decreased by
$0.6 million , or 21%, to$2.2 million for the third quarter of 2023, from$2.8 million for the third quarter 2022. The decrease is related to lower clinical trial expenses to develop our DFD-29 product, as the two Phase 3 studies have concluded. - GAAP net income was
$16.8 million , or$0.91 per share basic and$0.80 per share diluted, for the third quarter of 2023, compared to GAAP net loss of$(10.1) million , or$(0.57) per share basic and diluted, for the third quarter of 2022. - The Company’s non-GAAP results in the table below reflect Adjusted EBITDA of
$20.8 million , or$1.13 per share basic and$0.99 per share diluted, for the third quarter of 2023, compared to Adjusted EBITDA of$(4.0 million) , or$(0.23) per share basic and diluted for the third quarter of 2022. Adjusted EBITDA and 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
September 30, 2023 , the Company had$24.8 million in cash and cash equivalents, compared to$32.0 million in cash and cash equivalents as ofDecember 31, 2022 . - In
July 2023 , the Company voluntarily repaid the entire$10.0 million outstanding term loan. The repayment satisfied all of the Company’s outstanding debt obligations under its debt facility. The Company therefore has no further debt obligations.
Recent Corporate Highlights:
- The Company is pleased to announce results from the Phase 3 studies (MVOR-1 & MVOR-2) for DFD-29 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 MVOR-1 and MVOR-2 clinical trials. Srinivas Sidgiddi, M.D., Vice President, Research & Development of
Journey Medical , said, “Erythema is an important sign of rosacea severity and the beneficial effect of DFD-29 on erythema is very relevant to rosacea treatment. Also, erythema improvement is likely to be a significant differentiator for DFD-29 over the current standard of care.”
CEA Results from MVOR-1 and MVOR-2
Proportion of Subjects with at Least a 2-Grade Reduction in CEA | ||||
STUDY | DFD-29 (40 mg) | Placebo | Difference (95% CI) | P-values |
MVOR-1 | 39/122 (31.7%) | 11/80 (13.8%) | 18.1% (7.32%, 28.96%) | 0.006 |
MVOR-2 | 30/123 (24.5%) | 10/82 (12%) | 13.9% (3.71%, 23.99%) | 0.023 |
- In
October 2023 ,Journey Medical had a productive pre-NDA meeting with the FDA for DFD-29 (Minocycline Hydrochloride Modified Release Capsules, 40 mg) to treat rosacea in adults. The Company expects to provide an update following receipt of the meeting minutes. - In
October 2023 ,Journey Medical announced data from a comparative bioavailability (bridging) study of DFD-29 (40 mg) vs. Solodyn® (Minocycline Hydrochloride Extended-Release Tablets, 105 mg), which were presented at the 43rd AnnualFall Clinical Dermatology Conference . The data demonstrated systemic exposure of DFD-29 was significantly lower than that of Solodyn (105 mg), and no significant safety issues were noted for DFD-29. - In
September 2023 ,Journey Medical entered into an exclusive license agreement withMaruho , a Japanese company specializing in dermatology as well as Journey Medical’s exclusive licensing partner that developed and is commercializing Qbrexza® (Rapifort®) inJapan . Under the terms of the Agreement,Journey Medical received a$19.0 million nonrefundable upfront payment and grantedMaruho an exclusive license to develop and commercialize Qbrexza (Rapifort / DRM04 / glycopyrronium tosylate hydrate) for the treatment of hyperhidrosis inSouth Korea ,Taiwan ,Hong Kong ,Macau ,Thailand ,Indonesia ,Malaysia ,Philippines ,Singapore ,Vietnam ,Brunei ,Cambodia ,Myanmar andLaos (the “Territory”).Maruho is responsible for all development and commercialization costs for the program throughout the Territory. - In
July 2023 ,Journey Medical announced positive topline data from its two DFD-29 Phase 3 clinical trials for the treatment of rosacea. The Phase 3 clinical trials achieved the co-primary and all secondary endpoints and subjects completed the 16-week treatment with no significant safety issues. DFD-29 demonstrated statistical superiority over both the standard of care Oracea® and placebo for Investigator’s Global Assessment treatment success and the reduction in the total inflammatory lesion count in both studies.Journey Medical plans to file an NDA to the FDA for DFD-29 around the end of 2023 and anticipates potential approval from the FDA in the fourth quarter of 2024.
Conference Call and Webcast Information
To listen to the conference call, interested parties within the
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
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
Company Contact:
(781) 652-4500
ir@jmcderm.com
Media Relations Contact:
Tony Plohoros
6 Degrees
(908) 591-2839
tplohoros@6degreespr.com
Unaudited Condensed Consolidated Balance Sheets | |||||||
(Dollars in thousands except for share and per share amounts) | |||||||
2023 | 2022 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 24,749 | $ | 32,003 | |||
Accounts receivable, net of reserves | 7,989 | 28,208 | |||||
Inventory | 11,024 | 14,159 | |||||
Prepaid expenses and other current assets | 924 | 3,309 | |||||
Total current assets | 44,686 | 77,679 | |||||
Intangible assets, net | 21,102 | 27,197 | |||||
Operating lease right-of-use asset, net | 124 | 189 | |||||
Other assets | 6 | 95 | |||||
Total assets | $ | 65,918 | $ | 105,160 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 28,164 | $ | 36,570 | |||
Due to related party | 1,093 | 413 | |||||
Accrued expenses | 16,026 | 19,388 | |||||
Accrued interest | - | 160 | |||||
Income taxes payable | 130 | 35 | |||||
Line of credit | - | 2,948 | |||||
Deferred cash payment (net of discount of | - | 4,991 | |||||
Installment payments – licenses, short-term | 3,000 | 2,244 | |||||
Operating lease liability, short-term | 97 | 83 | |||||
Total current liabilities | 48,510 | 66,832 | |||||
Term loan, long-term (net of debt discount of | - | 19,826 | |||||
Installment payments – licenses, long-term | - | 1,412 | |||||
Operating lease liability, long-term | 34 | 108 | |||||
Total liabilities | 48,544 | 88,178 | |||||
Stockholders' equity | |||||||
Common stock, | 1 | 1 | |||||
Common stock - Class A, | 1 | 1 | |||||
Additional paid-in capital | 87,584 | 85,482 | |||||
Accumulated deficit | (70,212 | ) | (68,502 | ) | |||
Total stockholders' equity | 17,374 | 16,982 | |||||
Total liabilities and stockholders' equity | $ | 65,918 | $ | 105,160 | |||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||
(Dollars in thousands except for share and per share amounts) | |||||||||||||||
Three-Month Periods Ended | Nine-Month Periods Ended | ||||||||||||||
| |||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Revenue: | | | | | | | | | | | |||||
Product revenue, net | $ | 15,279 | | $ | 16,043 | $ | 44,405 | | $ | 55,074 | |||||
Other revenue | 19,260 | 73 | 19,519 | 2,629 | |||||||||||
Total revenue | 34,539 | 16,116 | 63,924 | 57,703 | |||||||||||
Operating expenses | | | | | | | | | | | |||||
Cost of goods sold – product revenue | | 6,429 | | | 7,221 | | 20,645 | | | 23,057 | |||||
Research and development | | 2,229 | | | 2,812 | | 6,036 | | | 6,687 | |||||
Selling, general and administrative | | 8,636 | | | 15,575 | | 34,069 | | | 45,481 | |||||
Loss on impairment of intangible assets | - | - | 3,143 | - | |||||||||||
Total operating expenses | | 17,294 | | | 25,608 | 63,893 | | | 75,225 | ||||||
Income (loss) from operations | | 17,245 | | | (9,492 | ) | | 31 | | | (17,522 | ) | |||
Other expense (income) | |||||||||||||||
Interest income | (8 | ) | | | (3 | ) | (209 | ) | (10 | ) | |||||
Interest expense | | 268 | | | 559 | 1,674 | 1,402 | ||||||||
Foreign exchange transaction losses | 101 | 22 | 181 | 22 | |||||||||||
Total other expense (income) | | 361 | | | 578 | | 1,646 | | | 1,414 | |||||
Income (loss) before income taxes | | 16,884 | | | (10,070 | ) | | (1,615 | ) | | | (18,936 | ) | ||
Income tax expense | 95 | 10 | 95 | 50 | |||||||||||
Net income (loss) | $ | 16,789 | | $ | (10,080 | ) | $ | (1,710 | ) | | $ | (18,986 | ) | ||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | 0.91 | | $ | (0.57 | ) | $ | (0.09 | ) | | $ | (1.09 | ) | ||
Diluted | 0.80 | (0.57 | ) | (0.09 | ) | (1.09 | ) | ||||||||
Weighted average number of common shares: | |||||||||||||||
Basic | 18,416,368 | 17,618,064 | 18,078,437 | 17,464,561 | |||||||||||
Diluted | 21,034,758 | 17,618,064 | 18,078,437 | 17,464,561 | |||||||||||
The weighted average number of common shares Basic in the above table is used to calculate both basic and diluted loss per share for the three and nine-month periods ended
Use of Non-GAAP Measures:
In addition to the GAAP financial measures, 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 impairment of acquired intangible assets, inventory step-ups from the purchases of intangibles assets and products, severance, non-core research and development expense 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 acquired and/or licensed FDA-approved dermatological products.- 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 of acquired intangible assets, impairments 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 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 | ||||||||||||||||||
($ in thousands except for share and per share amounts) | ||||||||||||||||||
Three-month periods ended | Nine-month periods ended | |||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP Net Income (Loss) | $ | 16,789 | $ | (10,080 | ) | $ | (1,710 | ) | $ | (18,986 | ) | |||||||
EBITDA: | ||||||||||||||||||
Interest | 260 | 556 | 1,465 | 1,392 | ||||||||||||||
Taxes | 95 | 10 | 95 | 50 | ||||||||||||||
Depreciation | - | - | - | |||||||||||||||
Amortization of acquired intangible assets | 814 | 1,016 | 2,952 | 3,050 | ||||||||||||||
EBITDA | 17,958 | (8,498 | ) | 2,802 | (14,494 | ) | ||||||||||||
Non-GAAP Adjusted EBITDA: | ||||||||||||||||||
Share-based compensation | 558 | 1,438 | 2,077 | 2,985 | ||||||||||||||
Loss on impairment of intangible assets | - | - | 3,143 | - | ||||||||||||||
Inventory step-up expense | - | 214 | - | 525 | ||||||||||||||
Non-core & short-term R&D | 2,206 | 2,778 | 5,949 | 6,653 | ||||||||||||||
Foreign exchange transaction losses | 100 | 22 | 181 | 22 | ||||||||||||||
Severance | - | 27 | 711 | 27 | ||||||||||||||
Non-GAAP Adjusted EBITDA | $ | 20,822 | $ | (4,019 | ) | $ | 14,863 | $ | (4,282 | ) | ||||||||
Net income (loss) per common share: | ||||||||||||||||||
Basic | ||||||||||||||||||
GAAP Net Income (Loss) | $ | 0.91 | $ | (0.57 | ) | $ | (0.09 | ) | $ | (1.09 | ) | |||||||
Non-GAAP Net Income (Loss) | $ | 1.13 | $ | (0.23 | ) | $ | 0.82 | $ | (0.25 | ) | ||||||||
Diluted | ||||||||||||||||||
GAAP Net Income (Loss) | $ | 0.80 | $ | (0.57 | ) | $ | (0.09 | ) | $ | (1.09 | ) | |||||||
Non-GAAP Net Income (Loss) | $ | 0.99 | $ | (0.23 | ) | $ | 0.72 | $ | (0.25 | ) | ||||||||
Weighted average number of common shares: | ||||||||||||||||||
Basic | 18,416,368 | 17,618,064 | 18,078,437 | 17,464,561 | ||||||||||||||
Diluted | 21,034,758 | 17,618,064 | 20,588,661 | 17,464,561 | ||||||||||||||
The weighted average number of common shares Basic in the above table is used to calculate both GAAP and Non-GAAP basic and diluted loss per share for the three and nine-month periods ended
Source:
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