Journey Medical Corporation (NASDAQ: DERM) (“Journey Medical” or
the “Company”), a commercial-stage pharmaceutical company that
focuses on the development and commercialization of pharmaceutical
products for the treatment of dermatological conditions, today
announced financial results and recent corporate highlights for the
second quarter and six months ended June 30, 2022.
Claude Maraoui, Journey Medical’s Co-Founder,
President, and Chief Executive Officer said, “We generated net
revenues of $18.3 million in the second quarter of 2022, which
represents an increase of 20% from the same quarter last year.
Additionally, the settlement agreements executed with Padagis US
LLC (“Padagis”) earlier this quarter assisted in solidifying
Journey Medical’s exclusivity of our three newest products,
QBREXZA®, AMZEEQ® and ZILXI®, and provide a clear pathway that we
expect will allow us to grow the sales of these products for years
to come.”
“Enrollment in our two DFD-29 Phase 3 studies is
progressing well in the U.S. and we are currently enrolling
patients in Europe. Looking ahead, we expect to announce top-line
data from our DFD-29 program for the treatment of papulopustular
rosacea in the first half of 2023. A New Drug Application (“NDA”)
filing is subsequently expected in the second half of 2023. We also
anticipate launching an additional product in the second half of
2022, which will be Journey Medical’s tenth marketed dermatology
product,” concluded Mr. Maraoui.
Financial Results:
- Net revenues were $18.3 million for
the second quarter of 2022, compared to net revenues of $15.3
million for the second quarter of 2021, representing 20% growth
versus the second quarter of 2021. The 20% growth was limited due
to reduced revenue from Targadox® and its authorized generic as a
result of continued generic competition and supply chain delays
causing a backorder for the XIMINO® and EXELDERM® brands. The
supply chain delays have been resolved as of July and product
orders are now being fulfilled.
- Selling, general and administrative
expenses were $15.2 million for the second quarter of 2022,
compared to $7.8 million for the second quarter of 2021, with the
increase primarily resulting from the expansion of the salesforce
from 42 to 84 sales representatives, marketing expense related to
the expanded product portfolio of four products (ACCUTANE®,
QBREXZA, AMZEEQ and ZILXI) and public company costs.
- Research and development costs were
$2.6 million in the second quarter of 2022, compared to $29,000 in
the second quarter of 2021, reflecting ongoing clinical trial
expenses to develop DFD-29. These expenses will increase with the
ongoing enrollment of additional patients in the two Phase 3
trials.
- Net loss was $7.5 million, or $0.43
per share basic and diluted, for the second quarter of 2022,
compared to a net loss of $11.9 million, or $1.30 basic and diluted
per share, for the second quarter of 2021.
- Non-GAAP Adjusted EBITDA (Adjusted
Operating Net Income (loss)) was $(2.6) million, or $(0.15) per
share basic and diluted, for the second quarter of 2022, compared
to Non-GAAP Adjusted EBITDA (Adjusted Operating Net Income (loss))
of $(11.5) million, or $(1.25) per share basic and diluted, for the
second quarter of 2021. Non-GAAP Adjusted EBITDA (Adjusted
Operating Net Income (loss)) and Non-GAAP Adjusted EBITDA (Adjusted
Operating Net Income (loss)) 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 the heading “Reconciliation of
GAAP to Non-GAAP Adjusted EBITDA (Adjusted Operating Net Income
(loss)).”
- At June 30, 2022, cash and cash
equivalents totaled $38.1 million, compared to $49.1 million on
December 31, 2021.
Recent Corporate
Highlights:
- In March 2022, the first patient
was dosed in the Phase 3 clinical program of DFD-29 for the
treatment of papulopustular rosacea. Topline data are anticipated
in the first half of 2023 with an NDA filing expected in the second
half of 2023.
- In May 2022, Journey Medical
entered into three separate settlement agreements (the “Settlement
Agreements”) with Padagis for the patent infringement lawsuits that
we filed to enforce the patents covering QBREXZA, AMZEEQ, and
ZILXI. Pursuant to the terms of the Settlement Agreements, Padagis
is prohibited from launching generic versions of QBREXZA, AMZEEQ
and ZILXI until August 15, 2030, July 1, 2031, and April 1, 2027,
respectively.
- Additionally in May 2022, Journey
Medical received notice from its exclusive out-licensing partner in
Japan, Maruho Ltd. (“Maruho”), that its commercial launch of
Rapifort (Japanese equivalent of QBREXZA), which was recently
approved in Japan, was initiated in the second quarter of this
year. Journey Medical began receiving royalty payments from Maruho
of 10% of net sales of Rapifort in Japan in the second
quarter.
- In August 2022, $5.0 million was
drawn from the Company’s term loan facility with East West Bank.
The additional $5.0 million is part of the Company’s operating plan
supporting the DFD-29 clinical program and additional working
capital.
- Regarding the previously disclosed
cybersecurity breach, which resulted in losses of $9.5 million, the
Company has received some encouraging news from the FBI, who along
with the Department of Homeland Security, has been conducting the
investigation. They have alerted Journey Medical that they have
been able to seize a significant amount of cryptocurrency
associated with the breach and will soon begin the liquidation
process of the funds for their eventual return to Journey Medical.
The Company is not yet able to estimate the exact amounts it may
receive. Under the current timetable it will take some time
to complete this process.
Conference Call and Webcast
InformationJourney Medical management will conduct a
conference call and audio webcast at 4:30 p.m. ET on August 9,
2022.
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/10169666/f3cc96d568. 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
CorporationJourney Medical Corporation (NASDAQ: DERM)
(“Journey Medical”) is focused on identifying, acquiring,
developing and strategically commercializing innovative,
differentiated dermatology products through its efficient sales and
marketing model. The company currently markets nine products that
help treat and heal common skin conditions. The Journey Medical
team is comprised of industry experts with extensive experience
commercializing some of the most successful prescription
dermatology 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 StatementsThis
press release may contain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as amended. As used
below and throughout this press release, the words “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”
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: risks relating to our growth
strategy; our ability to obtain, perform under and maintain
financing and strategic agreements and relationships; risks
relating to the results of research and development activities;
uncertainties relating to preclinical and clinical testing; risks
relating to the timing of starting and completing clinical trials,
including disruptions that may result from hostilities in Europe;
our dependence on third-party suppliers; risks relating to the
COVID-19 outbreak and its potential impact on our employees’ and
consultants’ ability to complete work in a timely manner and on our
ability to obtain additional financing on favorable terms or at
all; our ability to attract, integrate and retain key personnel;
the early stage of products under development; our need for
substantial additional funds; government regulation; patent and
intellectual property matters; competition; potential recovery of
funds lost from previously disclosed cyber security breaches; as
well as other risks described in Part I, Item 1A, “Risk Factors,”
in our Annual Report on Form 10-K filed on March 28, 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.
Company Contacts:Jaclyn Jaffe
and Bill Begien(781) 652-4500ir@jmcderm.com
Media Relations Contact:Tony
Plohoros6 Degrees(908)
591-2839tplohoros@6degreespr.com
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Balance
Sheets(Dollars in thousands except for share and per share
amounts)
|
|
|
|
|
|
|
|
|
June
30, |
|
December
31, |
|
2022 |
|
2021 |
ASSETS |
|
|
|
Current
assets |
|
|
|
Cash and cash equivalents |
$ |
38,142 |
|
|
$ |
49,081 |
|
Accounts receivable, net of reserves |
|
28,671 |
|
|
|
23,112 |
|
Inventory |
|
16,053 |
|
|
|
9,862 |
|
Prepaid expenses and other current assets |
|
1,035 |
|
|
|
2,438 |
|
Total
current assets |
|
83,901 |
|
|
|
84,493 |
|
|
|
|
|
Intangible assets, net |
|
29,440 |
|
|
|
12,552 |
|
Operating lease right-of-use asset, net |
|
45 |
|
|
|
89 |
|
Other assets |
|
110 |
|
|
|
150 |
|
Total assets |
$ |
113,496 |
|
|
$ |
97,284 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current
liabilities |
|
|
|
Accounts payable |
$ |
32,750 |
|
|
$ |
22,812 |
|
Due to related party |
|
357 |
|
|
|
641 |
|
Accrued expenses |
|
19,368 |
|
|
|
22,733 |
|
Accrued interest |
|
77 |
|
|
|
- |
|
Income taxes payable |
|
12 |
|
|
|
8 |
|
Line of credit |
|
- |
|
|
|
812 |
|
Deferred cash payment (net of discount of $141) |
|
4,859 |
|
|
|
- |
|
Installment payments – licenses, short-term |
|
2,628 |
|
|
|
4,510 |
|
Operating lease liabilities |
|
49 |
|
|
|
98 |
|
Total
current liabilities |
|
60,100 |
|
|
|
51,614 |
|
|
|
|
|
Term loan
(net of debt discount of $207) |
|
14,793 |
|
|
|
- |
|
Installment
payments – licenses, long-term |
|
3,808 |
|
|
|
3,627 |
|
Total liabilities |
|
78,701 |
|
|
|
55,241 |
|
|
|
|
|
Stockholders' equity |
|
|
|
Common stock, $.0001 par value, 50,000,000 shares authorized,
11,556,493 and 11,316,344 shares issued and outstanding as of June
30, 2022 and December 31, 2021, 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,
2022 and December 31, 2021 |
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
82,573 |
|
|
|
80,915 |
|
Accumulated deficit |
|
(47,780 |
) |
|
|
(38,874 |
) |
Total stockholders' equity |
|
34,795 |
|
|
|
42,043 |
|
Total liabilities and stockholders' equity |
$ |
113,496 |
|
|
$ |
97,284 |
|
JOURNEY MEDICAL
CORPORATIONUnaudited Condensed Consolidated
Statements of Operations(Dollars in thousands except for
share and per share amounts)
|
|
Three-Month
Periods Ended |
|
|
Six-Month
Periods Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Product revenue, net |
$ |
18,235 |
|
|
$ |
15,288 |
|
|
$ |
39,031 |
|
|
$ |
26,007 |
|
Other revenue |
|
56 |
|
|
|
- |
|
|
|
2,556 |
|
|
|
- |
|
Total
Revenue |
|
18,291 |
|
|
|
15,288 |
|
|
|
41,587 |
|
|
|
26,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold – product revenue |
|
7,633 |
|
|
|
7,484 |
|
|
|
15,836 |
|
|
|
11,392 |
|
Research and development |
|
2,609 |
|
|
|
29 |
|
|
|
3,875 |
|
|
|
29 |
|
Research and development - licenses acquired |
|
- |
|
|
|
13,743 |
|
|
|
- |
|
|
|
13,743 |
|
Selling, general and administrative |
|
15,191 |
|
|
|
7,795 |
|
|
|
29,906 |
|
|
|
14,021 |
|
Total
operating expenses |
|
25,433 |
|
|
|
29,051 |
|
|
|
49,617 |
|
|
|
39,185 |
|
Loss from
operations |
|
(7,142 |
) |
|
|
(13,763 |
) |
|
|
(8,030 |
) |
|
|
(13,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other expense |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(4 |
) |
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
Interest expense |
|
454 |
|
|
|
1,342 |
|
|
|
843 |
|
|
|
1,563 |
|
Change in fair value of derivative liability |
|
- |
|
|
|
182 |
|
|
|
- |
|
|
|
182 |
|
Total other
expense |
|
450 |
|
|
|
1,524 |
|
|
|
836 |
|
|
|
1,745 |
|
Loss
before income taxes |
|
(7,592 |
) |
|
|
(15,287 |
) |
|
|
(8,866 |
) |
|
|
(14,923 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit) expense |
|
(64 |
) |
|
|
(3,422 |
) |
|
|
40 |
|
|
|
(3,326 |
) |
Net
Loss |
$ |
(7,528 |
) |
|
$ |
(11,865 |
) |
|
$ |
(8,906 |
) |
|
$ |
(11,597 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.43 |
) |
|
$ |
(1.30 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.27 |
) |
Weighted
average number of common shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
17,455,894 |
|
|
|
9,161,333 |
|
|
|
17,386,538 |
|
|
|
9,159,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Measures:
In addition to the GAAP financial measures as
presented in our Form 10-Q 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 Operating Net Income (loss)), Adjusted Operating
Net Income (loss) per share basic and Adjusted Net Income (loss)
per share diluted. We define Adjusted EBITDA (Adjusted Operating
Net Income (loss)) as net income (loss) excluding interest, taxes
and depreciation, less certain other non-cash items, namely,
share-based compensation expense, amortization of acquired
intangible assets, inventory step-ups from the purchases of
intangibles assets and products, as more fully described as
follows:
- 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 costs associated with
non-core and short-term related research and development because we
do not consider such costs to be normal, recurring operating
expenses that are core to our long-term strategy.
- Amortization 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 and
amortization of step-ups of acquisition accounting adjustments to
inventories.
Adjusted Operating Net Income (loss) per share
basic and Adjusted Net Income (loss) per share diluted are
determined by dividing the resulting Adjusted EBITDA (Adjusted
Operating Net Income (loss)) 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 EBTIDA (Adjusted Operating Net Income
(loss)), Adjusted Operating Net Income (loss) per share basic,
Adjusted Net Income (loss) 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
(Adjusted Operating Net Income (loss))(Dollars in
thousands except for share and per share amounts)
|
|
Three-month periods ended |
|
Six-month periods ended |
|
|
June 30, |
|
June 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
GAAP Net Loss |
|
$ |
(7,528 |
) |
|
$ |
(11,865 |
) |
|
$ |
(8,906 |
) |
|
$ |
(11,597 |
) |
|
|
|
|
|
|
|
|
|
EBITDA: |
|
|
|
|
|
|
|
|
Interest |
|
|
450 |
|
|
|
1,342 |
|
|
|
836 |
|
|
|
1,563 |
|
Taxes |
|
|
(64 |
) |
|
|
(3,422 |
) |
|
|
40 |
|
|
|
(3,326 |
) |
Depreciation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Amortization of acquired intangible assets |
|
|
1,017 |
|
|
|
741 |
|
|
|
2,034 |
|
|
|
1,325 |
|
EBITDA |
|
|
(6,125 |
) |
|
|
(13,204 |
) |
|
|
(5,996 |
) |
|
|
(12,035 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA (Adjusted Operating Net
loss): |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
774 |
|
|
|
11 |
|
|
|
1,547 |
|
|
|
33 |
|
Change in
fair value of derivative liabilities |
|
|
- |
|
|
|
182 |
|
|
|
- |
|
|
|
182 |
|
Inventory
step-up expense |
|
|
171 |
|
|
|
1,238 |
|
|
|
311 |
|
|
|
1,238 |
|
R&D |
|
|
2,609 |
|
|
|
29 |
|
|
|
3,875 |
|
|
|
29 |
|
Severance |
|
|
- |
|
|
|
260 |
|
|
|
- |
|
|
|
260 |
|
Non-GAAP Adjusted EBITDA (Adjusted Operating Net
loss) |
|
$ |
(2,571 |
) |
|
$ |
(11,484 |
) |
|
$ |
(263 |
) |
|
$ |
(10,293 |
) |
|
|
|
|
|
|
|
|
|
Net
loss per common share: |
|
|
|
|
|
|
|
|
GAAP Net
loss |
|
$ |
(0.43 |
) |
|
$ |
(1.30 |
) |
|
$ |
(0.51 |
) |
|
$ |
(1.27 |
) |
Non-GAAP
Net loss |
|
$ |
(0.15 |
) |
|
$ |
(1.25 |
) |
|
$ |
(0.02 |
) |
|
$ |
(1.12 |
) |
Weighted
average number of common shares: |
|
|
|
|
|
|
|
|
Basic
and diluted |
|
|
17,455,894 |
|
|
|
9,161,333 |
|
|
|
17,386,538 |
|
|
|
9,159,841 |
|
|
|
|
|
|
|
|
|
|
Our Net loss for the three and six-month periods ended June 30,
2021, includes $13.7 million of expense related to our in-process
R&D acquired license, which includes the fair value related to
our R&D license non-cash contingent payment of $3.7
million.
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