Journey Medical Corporation Price & Performance (DERM)

And thank you for participating in today's conference call. Joining me from Journey Medical's leadership team are Claude Morawi, Co Founder, President and Chief Executive Officer and Joseph Binesh, Chief Financial Officer. Joining for the Q and A portion of the call will be Ramzi Alouch, General Counsel and Corporate Secretary Doctor. Srini Sidgiti, Vice President of Research and Development and Luis Donati, Director of Market Access. During this call, management will be making forward looking statements. Including statements that address, among other things, Journey Medical's expectations future performance, operational results, financial condition and the receipt of regulatory approvals. Forward looking statements involve risks and other factors, that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Journey Medical's most recently filed periodic reports on Form 10 and Form 10 Q the Form eight ks filed with the SEC today the company's press release that accompanies this call. Particularly the cautionary statements in it. Today's conference call includes non GAAP financial measures that Journey Medical believes can be useful in evaluating its performance, You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.

For a reconciliation of this non GAAP financial measure to net loss, it most directly comparable GAAP financial measure, please see the table located in the company's earnings press release. The content of this call contains time sensitive information that is accurate only as of today, Wednesday, March 26, 2025. Except as required by law, Journey Medical disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Claude Morawi, Co Founder, President and Chief Executive Officer of Journey Medical.

Thank you, Jacqueline, and good afternoon to everyone on the call today. 2024 was a pivotal year for Journey Medical as we delivered on all of our guidance ranges for the year. And position the company to launch Amrosi our best in class oral treatment for rosacea. We reported annual revenue of $56,000,000 in 2024. And the fourth quarter marked the sixth consecutive quarter that the company achieved positive non GAAP adjusted EBITDA. Additionally, we submitted our new drug application for Amrozi in early twenty twenty four. And received an on time first cycle approval from the FDA in November 2024, we also paid out a total of $22,000,000 in FDA filing fees and milestone payments to Doctor. Reddy Labs. These one time payments completed our financial obligations associated with Amrosi's regulatory fees and development milestones in The United States for the rosacea indication. As a result, this clears the way from ROSI's commercial debut and our ability to increase our product revenues and operating cash flow as the product gains traction in the market. Despite these payments, our balance sheet remains strong ahead of the Ambrosi launch with 20,300,000.0 in cash as of December 31. We believe that Journey is well positioned ahead of the AMROCI launch.

Given that our current commercial organization is already targeting the same dermatology prescribers that treat the vast majority of rosacea patients. This means that AMROCI sales have potential to generate significant operating leverage for the business. Given the market opportunity for Amrosi, is entering a $1,000,000,000 plus treatment category, with superior Phase III clinical results against the current oral standard of care. We believe that the product can be transformational to our business. Other accomplishments in 2024 include presentations of AMROSAI clinical data at key medical congresses, such as the American Academy of Dermatology Annual Conference in March, the Dermatologic Education Foundation, Nurse Practitioner and Physician Assistant Conference in July, and the fall Clinical Dermatology Conference in October. And in November 2024, our license [indiscernible] received regulatory approval to market Amzeeq in China. Which triggered a $1,000,000 milestone payment to Journey. Continuing the business momentum from last year, 2025 is off to a strong start. Earlier this month, we hosted an exhibit booth at the twenty twenty five AAD Conference in Orlando, Florida. The AAD meeting attracts more than 20,000 attendees including top dermatology KOLs high prescribing physicians, nurse practitioners and physician assistants. Our exhibit booth at the conference was very productive in terms of foot traffic and the time that attendees spent in our exhibit to learn about Amrose's recent FDA approval and our superior head to head Phase three results against Doracia.

Notably, dermatologists dermatologists were interested in Amrozi's low dose modified release formulation comprised of ten milligram immediate release and thirty milligrams of extended release minocycline. As well as the product's favorable safety and tolerability profile. We also observed significant attendee interest in the before and after photos of patients in our Phase three clinical trial. Which were a focal point in our exhibit. Many dermatologists already know Journey our current products and the strong customer service that we provide including our co pay assistance and access programs. We believe that the AAD meeting was highly successful and generated significant customer interest heading into the Amrozi launch. Our national sales meeting kicks off next week. And with our launch quantities in place, we recently began shipping Amrosi inventory into the distribution channel and have already begun seeing prescriptions dispensed.

As a result, we are well prepared to execute on a robust launch in early April. On our pre commercial update call in February, noted approximately 12% commercial payer coverage for Amrozi at the time. Due to our initial market access efforts, which began immediately after Amrocy's FDA approval last November, As an update, we now have coverage of approximately 20% of the 188,000,000 commercial lives and 4% of the 58,000,000 Medicare lives enabling those patients access to Ambrosi through their health insurance plans. We expect the number of payers and covered lives to increase substantially throughout the remainder of this year and into 2026. So far, we believe that the early progress is promising, and we expect to report on the ramp up in payer coverage throughout the year. Earlier this month, our Phase three results from Ambrose were published in a peer reviewed article the Journal of the American Medical Association. Or JAMA. Dermatology, of the most well recognized journals in medicine. Notably, this journal has among the highest impact factors in the dermatology field. The paper focused on the head to head clinical superiority of Amrozi on both of our co primary endpoints against the Eurasia and placebo with very high statistical significance.

As well, the publication noted that Amrozi's Phase three results met all of the secondary endpoints, including a statistically significant benefit in reducing erythema or the redness associated with rosacea compared to placebo. The publication also noted the favorable safety profile of Amrozi. We believe that the JAMA publication is a significant positive that coincides well with our launch and can create additional awareness of Amorosi's benefits as we roll the drug out into the market. In addition to the JAMA article, we anticipate two more publications on Amrozi this year. With one focusing on the microbiology study that we conducted. Which demonstrates the drug's sub antimicrobial effects and the other on the quality of life improvement for patients taking Amrozi to treat their rosacea symptoms. As well, Journey is planning to attend exhibit and present at additional dermatology focused medical congresses throughout 2025. With that, I will now turn the call over to our CFO, Joe Binesh to review our financial results for 2024. Thank you, Claude.

And hello, everyone. I'd like to start by saying that we are pleased to have met all of our financial guidance ranges for 2024. As a reminder, for the full year, we anticipated product sales in the range of 55,000,000 to $60,000,000 SG and A expense in the range of 39,000,000 to $42,000,000 and R and D expense in the range of 9,000,000 to $10,000,000 For this year, given the upcoming launch of Ambrose, and the variability that goes along with any drug launch, we plan to offer 2025 financial guidance later in the year. After we assess initial and ROCE prescription demand, we have conducted additional payer contract negotiations. Moving to our financial results for 2024. Our total net product revenue in 2024 was $55,100,000 which compares to the $59,700,000 that we reported in 2023. The decrease was primarily due to overall higher rebate costs across our product portfolio and lower unit volumes mainly from our legacy products. Total revenues for 2024 were $56,100,000 This includes a $1,000,000 milestone payment that was triggered upon QDIA receiving market authorization for Amzeeq in China. Under the Cudia agreement, Journey is also entitled to royalties on sales of Amzeeq the licensed territory.

Full year 2023 total revenues of $79,000,000 includes a $19,000,000 upfront licensing payment and $500,000 in royalties that we received from our partner Maruho Our cost of goods sold decreased by $2,000,000 or 9% to $20,900,000 for the full year 2024. The lower cost of goods was mainly due to decreased product royalty stemming from contractual royalty decreases in 2023, and the discontinuation of Zimino in 2023. Research and development expenses increased by $2,300,000 to $9,900,000 for the full year 2024. The increase was primarily driven by non recurring payments of $4,100,000 to the Imroci NDA filing fee in January 2024 and the $3,000,000 contractual milestone payment to Doctor. Reddy's which was triggered by the FDA's acceptance of our NDA application for Amrosi in March 2024. These increases were offset by lower clinical trial expenses as the AMROSA Phase three clinical program was concluded in 2023. Looking now to our SG and A expenses. SG and A decreased by $3,700,000 or 8% to $40,200,000 for the full year 2024. Year over year decrease was mainly due to the full realization of our expense optimization efforts were completed in 2023. Continuing to our net loss for the periods, Net loss to common shareholders was $14,700,000 or $0.72 per share basic and diluted for the full year 2024.

This compares to a net loss to common shareholders of $3,900,000 $0.21 per share basic and diluted for the full year of 2023, The net loss in 2023 includes the license fee revenue and product related royalties of $19,500,000 we received from Maruho. Turning now to our non GAAP results. The non GAAP adjusted EBITDA for the full year 2024 was a positive $800,000 or $04 per share basic and $03 per share diluted. This compares to positive adjusted EBITDA of $15,600,000 or $0.85 per share basic dollars $0.07 5 per share diluted for the full year of 2023. It includes the licensee revenue and product related royalties of $19,500,000 that we received from Maruho. At 12/31/2024, we had $20,300,000 in cash and cash equivalents, compared to the $27,400,000 at 12/31/2023. Thank you very much, I will now turn the call back over to Claude.

Thank you, Joe. We executed well in 2024. Ending the year on a high note and setting up our business for a transformational year in 2025. Imroci is now approved and ready for launch. And the entire company is energized as we prepare to go to market with a product that is clearly superior to the current standard of care and addresses an unmet need for improving the treatment of rosacea patients. As the first internally developed asset for the company, Amrozi fits directly into our current dermatology commercial model. With no need to add to our sales force to promote the product. As such, we have the financial and organizational resources in place to execute on a strong launch. We believe that AMROSAI will become a major growth driver for Journey Medical. Given its potential to achieve peak annual sales of an estimated 200,000,000 The United States and $100,000,000 internationally. Providing significant operating leverage to our business. An exciting year lies ahead with several potential catalysts to create value.

Including the launch of Amrozi and subsequent ramp in prescriptions for the product. Two additional peer reviewed publications and medical conference presentations anticipated during the year. An anticipated increase in covered lives gaining access to Amrozi during 2025. Financial progress as we drive the business towards sustainable positive EBITDA and profitability the potential for business development activity, which may include licensing the commercial rights to our products outside The U. S. To create additional shareholder value. We at Journey Medical are looking forward to a productive 2025. And we are laser focused on driving value for patients, our physician customers, and our shareholders.

Thank you.

Operator, we are now ready to open the lines for Q and A. We will now begin the question and answer session. Our first question comes from Thomas Flaten with Lake Street Capital Markets. Please go ahead. Thank you. Hey, good afternoon. Thanks for taking the questions. Claude, just a first on payer coverage, what do you think we should be expecting as you 2025? Know you said there'd be a nice ramp but relative to the 24 ish percent that you have now, you think we should be ending the year? Yes. Hi, Thomas. Our goal obviously is to obtain as many covered lives as possible.

The expectation to peak commercial coverage should take anywhere from twelve to say eighteen months. I do have our market access lead with us here, Louis Donati. I'm going to pass that to him and let him give you a little more detail.

I appreciate the question by the way. MarketAxess team is working actively obviously on commercial coverage as well as the Medicare line of business. So out of the 188,000,000 lives commercially across The U. S, the anticipation that is April 1, July 1, October 1 and so forth, we will have that ramp up period with peak coverage twelve to eighteen months out. The anticipation again is based on a lot of the high demand through the field because the more demand, the better coverage we will get. And the head to head studies will back up that demand also because the payers are very happy with the head to head study. So to give you a specific target right now, let's just wait a few months until we get more intel from the demand from the fields And I'm actively working with the GPOs and PBMs to obviously let them know of the head to head studies. Give us a few more months and we will report back. But again, peak coverage is twelve to eighteen months post launch.

Great. I appreciate that. And then from your interactions with KOLs and other doctors at AAD, how how important did they view the Erythema data And depending on that, what are you doing to get that data into the hands of given that it didn't end up in the label? Yes. I guess a couple of things there. First of all, the AAD had significant interest from our providers and PAs as well. The erythema interesting enough was not the key subject at all. The head to head performance really is catching people and saying, okay, let me listen to more. Tell me about the safety. They did not hit the Erythema whatsoever. Outside of that, we also have held already today Thomas, we've done three ad boards. We've done a scientific ad board already. And overwhelmingly the response again the head to head is really what's capturing people's interest and why they want to prescribe MROCI moving forward. And that's really one of the reasons why we believe we anticipate this becoming the new standard of care. In terms of erythema to answer your question, we have our Head of Medical Affairs on as well. And that's Doctor. Sreeva Sidgiti and he can speak more about that.

Srini? Sure, Claude. Thank you so much.

I hope I'm audible. Thomas, thanks for the question.

First of all, we are very pleased with the JAMA publication and the date presented there. As Claude mentioned in his presentation, the JAMA publication covers the co primary endpoints as well as all the secondary endpoints. So and erythema was one of the secondary endpoints which showed success against placebo. And that data being in a journal like Derm is really very important and we are fortunate to get this out at the right time. With the high impact factor, the high credibility and the wide readership of JAMA Dermatology, there will be natural visibility of the Erythema data from the Phase three studies. And the medical affairs group is well trained to answer specific questions related to erythema from the dermatology prescribers about the Phase three results on erythema or any other clinical data related? To those studies. As a result, we expect that the JAMADERM publication will have a huge impact in disseminating the edema data.

One last thing I Yes, Tom. The other part, I would invite you if you haven't yet, as well as all the other listeners, the Amroci Web site really has phenomenal before and after photos And I would invite you to take a look and see the baseline versus the finished results of the patients at week sixteen. It's pretty dramatic and there's really great indication of how powerful it is to your question specifically.

Got it. Thanks for taking the questions. I appreciate it.

And the next question comes from Scott Henry with AGP. Please go ahead.

Thank you and good afternoon. I don't know if I missed it, but or if your plan is to do it later, but do you have any thoughts on 2025 guidance or a plan for initiating that?

Yes. Give us a few more months This is really mostly related to 2024 and us hitting all of our guidance that we gave. So we're going to let the launch of Amroshi really begin here. We've got our national sales meeting set up next week and then we'll have the full force of the commercial team out there. For physicians to hear their voice and learn about MRSI. So we're going to wait a little bit before we give guidance. So at this point, just please be patient with that.

Okay. Fair enough. And then as far as the early days because you have filled some prescriptions, Would you say that the reimbursement environment, has it been in line with expectations? Has it been better? Has it been worse? I know you have very few data points but I like to ask the question just to see if there's anything there to focus on.

Yes, definitely.

The distribution into the pharmacy channel is there. So we're glad to say that we've got that checked off and ready to go for the full launch here in the next couple of weeks. In terms of coverage and reading into that, It's just too early to tell. We're definitely seeing the prescriptions coming in. We certainly have some coverage happening. I would tell you that around the 20% mark right now in terms of getting adoption on formularies is probably on target and what I would utilize at this point as of today.

Okay. And should we expect reported revenues in Q1?

I know you'll fill some scripts, but sometimes there's a lag there. Should we look for just modest small amounts in Q1?

Yes.

That's correct, Scott. Just I would tell you that Q2 will have a meaningful revenue starting to begin with AMROCI in Q2. I wouldn't expect much in Q1.

Makes sense. And then for fourth quarter, if my math is correct, the revenue was down sequentially from Q3. Somewhat notably. I know you talked about some of the reasons My question is, when we think about the base business, is it more reflective of all the quarters in 2020? '4? Or is there a step down in fourth quarter twenty twenty four that we should think about continuing into 2025?

Yes. I'll start out and then I'm going hand this off to Joe. If you take a look at the last several years, think the base business has been relatively steady. We've got some legacy brands that continue to erode When we look at our base business, our core four it's been pretty consistent. Joe, if you wanted to add to that please.

Yes. And I think when we look at the first quarter, the first quarter is always going to be a little lower, right, because of rate resets. That go through our P and L. But I think you can look at the full year 2024 and that's more representative of the true business.

Okay. So none of the products you would say have kind of reset at lower levels. I mean, mostly I'm thinking QBREXZA and Accutane are the main drivers there.

Yes. QBREXZA continues to perform well for us. We continue to see script growth year over year. And it's holding very solid. It obviously has some new competition out there. But again, the prescriptions continue to show very good positive signs. Again, when you look year over year, we're growing that product.

With Accutane, as we've stated in the past, there were a couple of new entries towards the second and third quarter of twenty twenty four. We did see some slowdown with Accutane. We've stabilized that business relatively well. And we believe we're going to have good performance with Accutane.

Okay, great. And just one accounting quest I see the loss recovery of 4,553 Was that in fourth quarter? Is that related to the cyber attack?

And also on the accounting side, the $15,000,000 approval milestone, how should we think about that being I thought we may see it expensed in the fourth quarter, but it doesn't look like it. Should we account for that going forward?

Right. So to your first question, Scott, $4,600,000 crypto was the recovery. We received the cash in December So we're happy to put that through our our P and L. And for the second question, the $15,000,000 we were able to capitalize that as an intangible asset, and we will amortize that over the life of the patent, which is through 02/1939.

Okay. And will that be amortized through the acquired intangible assets line, which is now broken in out? Or it will be lower down?

No, it be right in that line.

Okay, great. Thank you for taking the questions.

You're welcome.

And the next question comes from Brandon Folkes with Rodman and Renshaw. Please go ahead.

Hi, thanks for taking my questions and congratulations on all the progress. Maybe just two for me. Firstly, how do you think about pricing across the portfolio? Obviously, talking about more the legacy portfolio here, in 2025, And then just kind of with the Amrocy launch, with the operating leverage you do have in your business, do you think about capital allocation and 2025 and maybe beyond that as well? Thank you.

Sure. Joe, would you like to take that?

Sure.

Calvin, as far as capital allocation, we're good with cash. We're very comfortable with our cash at this point. And can you talk can you speak to the other part of the question, please?

Pricing across the base business or portfolio in 2025. Just sort of what are you seeing? Obviously, there's compared interactions. So maybe just a whether you want to go product by product or just sort of holistically across the portfolio. Do we think about kind of net pricing in 2025? So in 2025 go ahead, Clive.

Yes. I mean, just generally, Brandon, with our legacy brands, when we look at Exilderm and Targetox, I think our pricing is going to be holding steady. We don't see much of a difference between one year to the next. The fact is those brands do have their competitive generics out there especially with Targetox. So there's some erosion in the volume of the scripts more so than it is a pricing game with that. The one benefit is too with Exo Derm is we no longer have the obligation of paying So our margins for that product have actually gotten better. And then in terms of our remainder, our core four as I've been calling it in 2024, we believe that net pricing should remain the same.

As you've seen?

Great. Thanks very much.

And the next question comes from Jason Witz with ROTH Capital. Please go ahead. Thanks for taking the questions.

In terms of sort of the milestones for the Amaurosu launch that you guys are looking for internally, at least the things that I guess the bottlenecks. I mean, reimbursement and getting in the formularies, I would think would be sort of the main things to track. Obviously, at least from checks of physicians there seems to be a lot of interest in the drug from the physician side. But I assume just the logistics of those other two items are kind of what's going to determine the outlook for 2025. Is that the right way to think about Yes. I think you're tracking correctly. I think there were two areas that we need to focus in on. One was supply and glad to say that we've got ample supply and more supply on the way. So we feel real good with that. The distribution part has been taken care of. And the backup supplies again we're in a good position there. So I think you can put that one on the side. Secondly, in terms of getting more formulary coverage, we feel really good and the progress that we've done already I think shows a good indicator in where things are going.

We've had great conversations with all the major plans And I keep saying it, but it's so meaningful These small molecules there's not too many head to head comparisons. And when you're able to demonstrate statistical significance with a highly efficacious product The plans are certainly interested and we feel very good in terms of being able to get on these formularies. The one area is like Louis just said earlier, it takes anywhere between 12,000,000 to months and we will see good progress on a quarterly basis and better coverage as we go. So it's a have a little patience in this game. But on all accounts it looks very promising from that point as well.

Okay. That's helpful. Thank you. And I guess you put out hundred million dollars international opportunity for Amarosi. Is that something that you're going look to out license at some point? I assume that's kind of the goal here. How should we think about that?

Yes. In terms of finding the right partner to out license to is exactly what we're looking at. We certainly want to focus our efforts here in The United States. We've got a real good handle on that. And that's where our focus is going to be. But our business development strategy is to out license this and I think as we continue to see early success onward in 2025. Think it makes it even that much more tempting for partners outside to look at Nimrosia as a very viable product on an international basis.

Got it. Thanks. I'll jump back in queue.

And the next question comes from Calpitt Patel with B. Riley Securities. Please go ahead.

Yes. Hey, good afternoon and thank you Maybe a few on the market access and launch related questions. You mentioned that the peak coverage for AMROCI you would expect twelve to eighteen months from the day of the launch. I guess what exactly is the peak coverage percentage? That's question number one. And then the second question is, in terms of the covered lives you gave a new updated 204% number for for the different groups. What percentage of those are un versus single step edits? Thanks, Kel.

Lewis, would you like to take that one please? Sure. Hi, Calpate. It's Lew by the way. Thanks for the call and thanks for the the question. So peak coverage, trying to get ahead of it is maybe doing a disservice to what we're trying to do early because I don't want to give you a number right now, twelve to eighteen months down the road. All I can say is we've prepped the market early fall through today and right now about 20% commercial coverage is where the forecast should be actually ahead of forecast in my opinion. I expect them rosy because again, we keep on talking about head to head studies and demand. I really believe this will be a really good product of the market in rosacea and we will get the coverage that we anticipate But just give us a few months to get out there with the field force we can report back, number one. Number two, the 20% commercial coverage and that includes federal employees and health exchange.

Out of the one hundred and eighty eight million lives. There's a mixed bag of unrestricted access and restricted access. So the good news is the payer response has been very positive.

And there are some payers that are actually adopting Amrozi currently in an unrestricted position with no utilization management. And that is prior authorizations and no steps. So the response has been very well received. Again, give us time as the market access team may get out there. Once we get the demand from the field. Is definitely going to help our discussions long term. But just give us a few more months and we will report back, okay?

Okay, got it. And a couple of follow ups here. The step that it says being mandated by some of these payers should we assume that that's a generical ratio or it also include off label antibodies?

Primarily the payer response has been if to get to AMROSA, if there's going to be a step added, it's going to be through generic and generic or oral agent. It could be minocycline and or cycline. The drug policies will vary. But generic oral agents would be the step.

Got it. Okay. And then last question for me. After you guys announced your pricing and launched the drug here, has there been any pricing move by Galderma for their branding or ratio?

Actually, we have not seen any market movement in terms of pricing. [indiscernible] Since we've launched. Okay. Since we've announced.

Got it. Thank you very much for taking the question.

This concludes our question and answer session. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.