Q3 2023 Journey Medical Corp Earnings Call
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Speaker 1: Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to Journey Medical's third quarter 2023 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Ladies and gentlemen, thank you for standing by.
Good afternoon, and welcome to journey Medical's third quarter, 2023 financial results and corporate update conference call.
At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Speaker 1: Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call for approximately 30 days. I would now like to turn the call over to Jacqueline Jaffe, the company's Senior Director of Corporate Operations. Please go ahead, Jacqueline.
It just depends on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.
Cast replay of the call will be available approximately one hour. After the end of the call for approximately 30 days I would now like to turn the call over to Jack Glenn Jaffe, The company's senior director of corporate operations. Please go ahead Jacqueline.
Speaker 3: Good afternoon, and thank you for participating in today's conference call. Joining me from Journey Medical Corporation's leadership team are Claude Murawi, co-founder, president, and chief executive officer, Joseph Binesh, interim chief financial officer, Dr. Srini Sidgiti, vice president of research and development, and Ramzi Alloosh, general counsel and corporate secretary, who will be joining for the Q&A portion of the call.
Good afternoon, and thank you for participating in today's conference call. Joining me from journey Medical Corporation's leadership team, our quad morale. He co founder President and Chief Executive Officer, Joseph Panache Interim Chief Financial Officer, Doctor Sweeney said, Getty, Vice President of research and development and Randy Lewis General.
Counsel and corporate Secretary, who will be joining for the Q&A portion of the call.
Speaker 3: During this call, management will be making forward-looking statements, including statements that address, among other things, journey medical's expectations for 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.
During this call management will be making forward looking statements, including statements that address among other things journey medical's expectations for 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 there.
Those statements for more information about these risks please refer to the risk factors described in journey Medicals. Most recently filed periodic reports on Form 10-K and Form 10-Q, the form 8-K filed with the SEC today in the company's press release that accompanies this call, particularly the cautionary statements in it.
Speaker 3: For more information about these risks, please refer to the risk factors described in Journey Medical's most recently filed periodic report on Form 10-K and Form 10-Q , the Form 8-K filed with the SEC today, and the company's press release that accompanies this call, particularly the cautionary statements in it.
Speaker 3: Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance.
Today's conference call includes non-GAAP financial measures that journey medical believes can be useful in evaluating its performance.
Speaker 3: You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAP.
You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP.
Speaker 3: For a reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in the company's earnings press release.
For a reconciliation of this non-GAAP financial measure to net loss its most directly comparable GAAP financial measure. Please see the reconciliation table located in the company's earnings press release the.
Speaker 3: The content of this call contains time-sensitive information that is accurate only as of today, November 7th, 2023. 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 Mirawi, co-founder, president, and chief executive officer of Journey Medical.
The content of this call contains time sensitive information that is accurate only as of today November seven 2023, 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's now my pleasure to turn the.
The call over to Quad Murali co founder President and Chief Executive Officer of journey myself.
Speaker 4: Thanks, Jacqueline. Good afternoon and thanks to everyone for joining our third quarter 2023 conference call and corporate update
Thanks, Jacqueline good afternoon, and thanks to everyone for joining our third quarter 'twenty, two 'twenty three conference call and corporate update.
Speaker 4: Let me begin by saying that Q3 2023 continues to be a very positive and evolving time for journey medical.
Let me begin by saying that Q3 2023 continues to be a very positive and evolving time for journey medical.
Speaker 4: Our focus during our second year as a public company is to achieve profitability from our commercial operation.
Our focus during our second year as a public company is to achieve profitability from our commercial operations.
Speaker 4: To achieve this, we've been working with three critical factors. The first is driving net revenue for our four core brands, Hubrexa, Accutane, Amzik, and Zoltan.
To achieve this we've been working with three critical factors. The first is driving net revenue for our four core brands. She breck shampoo Accutane M Zeke and his old sheet.
Speaker 4: The second is optimizing and reducing our SGNA.
The second is optimizing and reducing our SG&A.
Speaker 4: and the third is building out our portfolio through licensing and acquisition while advancing our DFD 29 product candidate for rosacea.
And the third is building out our portfolio through licensing and acquisition, while advancing our D. F. D 29 product candidate for rosacea.
Speaker 4: In the third quarter of 2023, our total net revenues, which included the Meruho Outlicensing Upfront Payment, was $34.5 million, which is an increase of 101% from $17.2 million in the second quarter, and an increase of 114% from $16.1 million in the third quarter of 2022.
In the third quarter of 2023, our total net revenues, which included the Meru hole out licensing upfront payment was 34 and a half million dollars, which is an increase of 101% from 17 2 million in the second.
Water and an increase of 114% from $16 1 million in the third quarter of 2022.
Speaker 4: As evidenced by our most recent transaction, we believe that Qbrexa, as well as our patented products, including DFD29,
As evidenced by our most recent transaction, we believe that Q Brexit as well as our patented products, including D. F. D 29.
Speaker 4: are extremely attractive near-term opportunities for those companies looking to exclusively and license our products in other countries.
[noise] are extremely attractive near term opportunities for those companies looking to exclusively in license our products in other countries.
Speaker 4: We previously gave guidance in March of this year that we expected our SG&A expense to be reduced by $12 million for 2023 compared to 2022.
We previously gave guidance in March of this year that we expected our SG&A expense to be reduced by $12 million for 2023 compared to 2022.
Speaker 4: Through our financially disciplined approach, we are raising our guidance to reduce SG&A expense by approximately 17 million dollars for 2023 compared to 2022.
We are financially disciplined approach, we are raising our guidance to reduce SG&A expense by approximately $17 million for 2023 compared to 2022.
Speaker 4: Regarding our clinical development asset that is being evaluated for the treatment of rosacea,
Regarding our clinical development asset that is being evaluated for the treatment of rosacea.
Speaker 4: DFD 29, we are encouraged by the recent positive POP line results demonstrating statistically superior efficacy over rosacea and placebo in the two phase three clinical trials.
D. F. D 29, we are encouraged by the recent positive top line results demonstrating statistically superior efficacy over rosacea and placebo and the two phase III clinical trial.
Speaker 4: We remain on track to submit a new drug application to the FDA for DFD 29 around the end of this year.
We remain on track to submit our new drug application to the <unk>.
D a per D. F D 29 around the end of this year.
Speaker 4: We believe that the opportunity to enhance patient care for those who suffer from rosacea with a potentially best-in-class therapy will be appealing to both patients as well as medical providers who treat this type of condition.
We believe that the opportunity to enhance patient care for those who suffer from rose show with a potentially best in class therapy will be appealing to both patients as well as medical providers, who treat this type of condition.
Speaker 4: In terms of prescription market size, there were approximately 4 million prescriptions written for Rosacea in 2022, according to Symphony Health prescription data.
In terms of prescription market size, there were approximately 4 million prescriptions written for rosacea in 2022 according to Symphony health prescription data.
If approved by the FDA, we believe that D. F. D 29 has annual peak net sales potential in excess of $300 million globally.
Speaker 4: With these clinically meaningful outcomes, DfD29 has the potential to become the new treatment paradigm for the millions of patients suffering from rosacea as well as the lowest dose oral minocycline on the market.
With these clinically meaningful outcomes D. F. D 29 has the potential to become the new treatment paradigm for the millions of patients suffering from rosacea as well as the lowest dose oral minocycline on the market.
Speaker 4: We believe that the potential approval and commercial launch of DFD 29 will be a transformational event for both journey and the broader dermatology community.
We believe that the potential approval and commercial launch of DFT 29 will be a transformational event for both journey and the broader dermatology community.
Speaker 4: At this point, I would like to turn the call over to Dr. Srini Subgidi to discuss our DFD29 clinical program in greater detail.
At this point I would like to turn the call over the Doctor Shiny said giddy to discuss our D. F. D 29 clinical program in greater detail.
Thank you Claude.
Hello, everyone.
Speaker 5: I would like to begin by reviewing the highlights from the Phase 3 studies for DFT29.
I would like to begin by reviewing the highlights from the phase three studies would be up to 29.
Speaker 5: I'd also like to refer investors to the investor presentation on our website which contains the slides supporting my remarks here in more detail.
I'd also like to put investors to the investor presentation.
Our website, which contains the slides.
In my remarks, you in more detail.
Speaker 5: Journey Medical, in collaboration with Dr. Reddy's, has recently conducted and completed two Pivotal Phase III studies for DFT29.
Germany medical in collaboration with Dr. Reddy has recently conducted and completed two b, what little phase III studies, well be up to 29.
Speaker 5: Both studies had the following key design.
Both studies had the following key design elements.
Speaker 5: Each study enrolled approximately 320 patients with moderate to severe rosacea in a 3 is to 3 is to 2 randomization to DFT29, oratia, or placebo.
Each study enrolled approximately 320 patients with moderate to severe rosacea and the threes to three to two randomization, the DFT twenty-nine horacio or placebo.
Speaker 5: The first study, MVOR1, enrolled patients solely in the U.S., while the second study, MVOR2, enrolled patients in a ratio of approximately 70 is to 30 in the U.S. and Germany.
The first study and the old one enrolled patients so only in the U S. While the second study in the U R O N.
All patients in a ratio of approximately 70 to therapy in the U S and Germany.
Speaker 5: All subjects had moderate to severe rosacea at study end.
All subjects had moderate to severe rosacea at study entry.
Speaker 5: Subjects were adequately washed out of any previous medication they were taking before starting the study treatment.
Subjects with adequately washed out of any previous medication. They were taking before starting this study treatments.
Speaker 5: Thus, the efficacy seen in these studies can be attributed to the study medication and not to any confounding or previous medication.
It does the efficacy.
Because we've seen in these studies can be attributed to the study medication and not do any confounding or previous medication.
Speaker 5: The study treatments were assessed on two co-primary endpoints.
The study treatments with assessed on two co primary endpoints.
Speaker 5: The first, proportion of subjects with IGA treatment success. The second, reduction in total inflammatory lesion count.
The first proportion of subjects with Iga treatment success.
Second reduction in total inflammatory lesion count.
Speaker 5: In addition, the study had five secondary endpoints that were adjusted for multiplicity, meaning that there is a possibility of being included in the label upon FDA approval if the results are statistically superior to placebo.
In addition, the study had secondary endpoints that were adjusted core multiplicity, meaning that there is a possibility of being included in the label upon FDA approval, if the results outside of particularly superior to placebo.
Speaker 5: The results for the co-primary and all five secondary endpoints demonstrated that DFT29 was statistically significantly superior to both placebo and oratia with 16 weeks treatment duration.
The results for the co primary and all secondary endpoints demonstrated that DFT 29, what status, particularly significantly superior to both placebo and what is she up with 16 week treatment duration.
Speaker 5: The proportion of subjects that showed IgA treatment success was 65% for DFT29, 46.1% for Koratia, and 31.2% for placebo in MVOR1.
The proportion of subjects that showed Iga treatment success was 65% for the up to 29.
The six 1% for this year and 31, 2% for placebo in N V. R. One.
Speaker 5: The p-value for the difference between DFT29 and Oratia was 0.014, while it was less than 0.001 against placebo.
The P value for the difference between 29 and or ratio was 0.014.
While it was less than point zeros, it'll one against placebo.
Speaker 5: In MVOR-2, the proportion of subjects that showed IgA treatment success was 60.1% for DFT29, 31.4% for Coratia, and 26.8% for placebo.
And then we are to the proportion of subjects that showed Iga treatment success was 61% for the up to 29, that'd be 1.4% political this year and 26, 8% for placebo.
The P values were less than point digital one for DLP 20, Nike against both our Asia and placebo.
Speaker 5: In MVOR1, the reduction in total inflammatory lesion count was minus 21.3 for DFT29, minus 15.9 for Auretia, and minus 12.2 for placebo.
And then the odd one the reduction in total inflammatory lesion count was minus 21.34 to be up to 29.
Minus 15.94 or is she up and minus $12 two for placebo.
Speaker 5: The p-values were less than 0.001 for DFT29 against both Oratia and Placebo.
The P values were less than 0.001, or BMT twenty-nine against both <unk> and placebo.
Speaker 5: In MVOR2, the reduction in total inflammatory lesion count was minus 18.4 for DFT29, minus 14.9 for Koratia, and minus 11.1 for placebo.
And then B R to the reduction in total inflammatory lesion count was minus 18 point for the up to 29 minus $14 nine for Patricia and minus 11.1 for placebo.
Speaker 5: The p-values were less than 0.001 for DFT29 against both Oratia and Placebo.
The P values were less than point as it is it'll one four BMT go in line against both Patricia and placebo.
As can be seen from the data.
Speaker 5: DFT29 consistently outperformed both Oratia and Kosebo on the two co-primary endpoints in both studies.
Do you have the 29 consistently outperformed both what Asia and placebo on the two co primary endpoints in both studies.
Speaker 5: One of the important secondary endpoints was erythema reduction.
One of the important secondary endpoints was editing them a reduction because anything that is redness happens to be one of the important signs, but I live in the both providers and their patients.
Speaker 5: because erythema, that is redness, happens to be one of the important signs relevant to both providers and their patients.
Speaker 5: The proportion of subjects that showed CEA success, that is erythema success, was 31.7% for DFT29 and 13.8% for placebo in MVOR1.
The proportion of subjects that showed he says that is anything more success was 31, 7% for the up to 29 and 13, 8% for placebo in M. B all at once.
Speaker 5: The p-value for the difference between DFT29 and placebo was 0.006.
The P value for the difference between <unk> 29, and placebo was 0.006.
Speaker 5: In MVOR2, the proportion of subjects that showed CEA success was 24.5% for DFT29 and 12% for placebo.
And then we are cool the proportion of subjects that show. The success was 24, 5% for the epic 29, and 12% for placebo.
The P value was 0.0 to three for the difference between <unk> 29 and placebo.
If approved the significant impact on editing reduction is expected to result in a unique differentiator on the label and DFT 29 is likely to be the first oral therapy with an indication for the treatment of inflammatory lesions.
Speaker 5: The significant impact on erythema reduction is expected to result in a unique differentiator on the label, and DFT29 is likely to be the first oral therapy with an indication for the treatment of inflammatory lesions and erythema of rosacea, while most other therapies approved for rosacea have either treatment of inflammatory lesions or treatment of erythema on their labels, but not both.
And it would be mothballed this year, while most other therapies.
So far this year have either treatment of inflammatory lesions or treatment of edema on their labels, but not booked.
Speaker 5: DFT29 has also demonstrated statistically significant improvement in quality of life against placebo with regards to both DLQI and Rosacol, two widely accepted tools for quality of life assessment in dermatology.
DFT 29 has also demonstrated a statistically significant improvement in quality of life against placebo with regards to both <unk> and Roes are called.
Ooh widely accepted pools, but quality of life assessment in dermatology.
Speaker 5: We are encouraged by DFT29's safety profile that was demonstrated in both of the studies with the adverse event rates being close to placebo.
Yeah, and encouraged by the FDA 29th safety profile that was demonstrated in both of the studies with the adverse event rates being close to a placebo.
Speaker 5: These results indicate the possibility of TFT29 being the new standard of care in Rosacea and also being the best-in-class therapy with head-to-head superiority over the current standard of care.
These results indicate the possibility of DFT 29, being the new standard of care in Rosacea and also being the best in class therapy with head to head superiority over the current standard of care.
Speaker 5: Additionally, it is likely to be perceived as a potentially safer minocycline compared to other oral minocycline therapies because of the low and
Additionally, it is likely to be perceived as a potentially safer minocycline compared to other oral minocycline therapies.
Because of the law and fixed daily dose.
Speaker 5: we anticipate DFT29 to capture significant market share upon its launch based on the significant differentiators demonstrated in the phase three study.
We anticipate DMT twenty-nine to capture significant market share upon launch based on the significant differentiator was demonstrated in the phase three studies.
Speaker 5: The most recent update on DFT29 is from October 2023, where we had a productive pre-NDA meeting with the FDA for DFT29.
The most recent update on DFT twenty-nine ease from October 2023.
Where we had a product you pre NDA meeting with the FDA for the up to 29.
Speaker 5: We expect to provide an update following receipt of the FDA meeting minutes.
We expect to provide an update following the receipt of the FDA meeting minutes.
Speaker 5: Thank you very much, and now I'll hand it to Joe to discuss our third quarter financial results in greater detail.
Thank you very much and now I'll hand, it to Joe to discuss our third quarter financial results in greater detail.
Speaker 6: Thank you, Dr. Sidghetti. And hello, everyone. I will now review the third quarter financial results for 2023.
Thank you Doctor said Getty.
Hello, everyone I will now review the third quarter financial results for 2023.
Speaker 6: Total net revenues for the third quarter were $34.5 million.
Total net revenues for the third quarter were $34 $5 million.
Speaker 6: a 101% increase from $17.2 million in the second quarter.
101% increase from $17 $2 million in the second quarter.
Speaker 6: an $18.4 million or 114% increase from the prior year quarter.
The $18 $4 million or 114% increase from the prior year quarter.
Speaker 6: due to our most recent out-licensing agreement with Marujo.
Due to our most recent licensing agreement with Meru Ho.
Speaker 6: Net product sales were $15.3 million for the third quarter.
Net product sales were $15 $3 million for the third quarter.
Speaker 6: slight decrease of $800,000 and $16 million in the third quarter of 2022.
Slight decrease of $800000 and $16 million in the third quarter of 2022.
Speaker 6: Decrease is primarily due to lower net revenue from the minimum.
The decrease is primarily due to lower net revenue from the Minto.
Resulting from lower unit volumes due to the winding down of the product during the third quarter.
Speaker 6: We discontinued selling Zimino on September 29, 2023.
We discontinued selling the Minto on September 29, 2023.
Speaker 6: Decrease was partially offset by an increase in net product revenues from Accutane, Amzik, and Zilti due to our continued sales and marketing emphasis on these products.
The decrease was partially offset by an increase in net product revenues from Accutane and Zika guilty.
Due to our continued sales and marketing emphasis on these products.
Speaker 6: Our four core products, Qbrexa, Accutane, Amzik, and Zilkci, all acquired and launched since 2012.
Our four core products to Brexit Accutane and as you can see.
All acquired and launched into 'twenty to 'twenty two.
Represent approximately 90% or $13 $8 million of our total net product revenue for the third quarter of 2023.
Speaker 6: Cost of goods sold decreased by $800,000, or 11%.
Cost of goods sold decreased by $800000 or 11%.
Speaker 6: $6.4 million for the third quarter of 2023 and $7.2 million for the third quarter of 2022.
$6 $4 million for the third quarter of 2023.
And then $2 million for the third quarter of 2022.
Speaker 6: The decrease is substantially due to the contractual royalty percentage reduction on key Brexit net sales from period to period.
The decrease is substantially due to contractual royalty percentage reduction to Brexit net sales from period to period.
Speaker 6: Research and development expenses decreased by $600,000 compared to the prior quarter.
Research and development expenses decreased by $600000 compared to the prior year quarter due.
Speaker 6: to lower DFD-29 expenses as the clinical development activities continue to wind down.
Due to lower DFT twenty-nine expenses.
Clinical development activities continue to wind down.
Speaker 6: SG&A expenses decreased by $7 million or 45% from the prior year quarter.
SG&A expenses decreased by $7 million or 45% from the prior year quarter.
Speaker 6: The decrease is mainly due to our expense reduction efforts primarily in sales and markets.
The decrease was mainly due to our expense reduction efforts, primarily in sales and marketing.
Speaker 6: As we have discussed in prior quarter calls, during the last quarter of 2022.
As we have discussed in prior quarter calls during the last quarter of 2022.
Speaker 6: We implemented a cost reduction initiative designed to improve operational efficiencies, optimize expenses, and reduce costs.
We implemented a cost reduction initiative designed to improve operational efficiencies.
Optimize expenses and reduce overall costs.
Speaker 6: As demonstrated by SG&A expense in Q3, our efforts have proven to be effective.
As demonstrated by SG&A expense in Q3.
Our efforts have proven to be effective.
Our efforts have proven to be effective.
Speaker 6: The impact of these cost reduction initiatives is expected to result in a reduction of approximately $17 million of annual SG&A expenses, surpassing our earlier target of $12 million.
The impact of these cost reduction initiatives is expected to result in a reduction of approximately $17 million of annual SG&A expenses, surpassing our earlier target of $12 million.
Speaker 6: The company recorded gap net income of $16.8 million, or $0.91 per share basic and $0.80 per share diluted for the third quarter of 2023.
The company recorded GAAP net income of $16 $8 million or 91 cents per share basic and <unk> 80 per share diluted for the third quarter of 2023.
Speaker 6: Compared to a gap net loss of $8.4 million for 46 cents per share basic and diluted for the second quarter of 2023.
Parents to a GAAP net loss of $8 $4 million or 46 cents per share basic and diluted for the second quarter of 2023.
Speaker 7: and a gap net loss of $10.1 million, or $0.57 per share, basic and diluted, in the third quarter of 2022.
And the GAAP net loss of $10 $1 million or <unk> 57 per share basic and diluted in the third quarter of 2022.
Speaker 8: As you can see, the company has made significant strides and continues to improve its operating performance.
As you can see the company has made significant strides and continues to improve its operating performance.
Speaker 9: Companies non-GAAP adjusted EBITDA for the third quarter of 2023 resulted in income of $20.8 million.
Company's non-GAAP adjusted EBITDA for the third quarter of 2023 resulted in income of $28 million.
Speaker 10: $1.13 per share basic and $0.99 per share diluted.
Well $1 13 per share basic and 99 cents per share diluted.
Speaker 11: compared to an adjusted EBITDA net loss of $600,000, or 4 cents per share basic and diluted for the second quarter of 2023.
Compared to an adjusted EBITDA net loss of $600000 or <unk> per share basic and diluted for the second quarter of 2023.
Speaker 12: and an adjusted EBITDA net loss of $4 million, or 23 cents per share, basically diluted for the third quarter of 2022.
And then adjusted EBITDA net loss of $4 million or 23 per share basic and diluted for the third quarter of 2022.
Speaker 13: We expect that the company will be non-GAAP-adjusted EBITDA positive for the full year 2023.
We expect that the company will be non-GAAP adjusted EBITDA positive for the full year 2023.
Speaker 14: At September 30, 2023, we had $24.8 million in cash and cash equivalents.
At September.
32023, we had $24 $8 million in cash and cash equivalents.
Speaker 15: compared to $32 million of cash and cash equivalents at December 31, 2022.
Compared to $32 million of cash and cash equivalents at December 31, 2022.
Speaker 16: As a result of our recent payoff of the EWB debt facility, the company no longer has any debt obligations.
As a result of our recent pay off of the E. W. B debt facility the company no longer has any debt obligations.
Speaker 17: Thank you very much, and now we'll turn it back to Clive.
Thank you very much.
And now I will turn it back to Claude.
Speaker 18: Thank you Joe. The positive momentum is evident and is expected to continue into the final quarter of 2023. We believe that this momentum is further reflected by our stock price performance which as of yesterday is up approximately 70 percent year to date.
Thank you Joe.
Positive momentum is evident and is expected to continue into the final quarter of 2023, we believe that this momentum is further reflected by our stock price performance, which as of yesterday is up approximately 70% year to date.
Speaker 19: I'd like to close the call by reminding everyone that November is Hyperhidrosis Awareness Month. A key initiative at Journey is to continue to build disease state awareness, education, and the treatment option that Qbrexa offers for patients suffering from this condition. Thank you and have a good day. I will now
I'd like to close the call by reminding everyone that November is hyperhidrosis awareness month.
A key initiative at journey is to continue to build disease state awareness education, and the treatment option that cube Brooks offers for patients suffering from this condition.
Thank you and have a good day.
I will now turn the call back over to the operator.
Speaker 20: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Thank you.
We will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone.
Youre using a speakerphone please pick up your handset before pressing the keys.
Speaker 21: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble a roster.
Yeah.
Speaker 22: Our first question comes from Scott Henry with Roth Capital. Please go ahead.
Our first question comes from Scott Henry with Roth Capital. Please go ahead.
Speaker 23: Thank you. Good afternoon and congratulations. A lot of progress on the income statement. A lot of progress in the pipeline.
Thank you a good afternoon and congratulations lot of progress on the income statement a lot of progress in the pipeline.
Speaker 24: So great job there. A couple of questions.
So great job there a couple of questions.
Speaker 25: uh... when we think about Q4 Q3 uh... trying to get a sense of of how we should think about that uh... both from a a revenue standpoint and as well that f g a do you think you can cut it that it was a point six and Q3 uh... is is there more is it going lower than that or or we cut out of steady state at this point
When we think about Q4 to Q3 I'm just trying to get a sense of of how we should think about that both from a revenue standpoint.
And as well that SG&A do you think you can cut it was 8.6 in Q3.
Is there more is it going lower than that or or are we kind of at a steady state at this point.
Speaker 26: Hey, Scott. Good to hear your voice. I'll take part of this question. In terms of Q4 and how that's going to reflect comparing it to Q3 here, you know, we're one month into the fourth and final quarter of the year. We've got good momentum. The prescriptions look
Hey, Scott good to hear your voice I'll take I'll take part of this question in terms of our Q4 and how that's going to reflect comparing it to Q3 here.
We're one month into the fourth.
Fourth and final quarter of the year. We've got good momentum are the prescriptions look solid and I would expect a very strong quarter are similar to what you see in our Q3 so far.
Speaker 27: solid and I would expect a very strong quarter similar to what you see in Q3 so far.
Speaker 28: And then in terms of our SG&A efforts and operating efficiencies, I'm going to have Joe jump in here and give you his take.
And then in terms of our SG&A efforts and operating efficiencies, we're going to have Joe jump in here and give you his take.
Speaker 29: Sure. Thanks, Claude. And how are you doing, Scott?
Sure.
Thanks, Colin how are you doing Scott.
Speaker 30: So from an SCNA standpoint, Scott, we should be pretty even with the third quarter. There's a chance we could be a little bit better, but from an expectations point, I would definitely keep it at, you know, even with the third quarter.
So from an SG&A standpoint, Scott.
We should be pretty even with what the third quarter.
There's a chance we could be a little bit better but from an expectations point.
We're definitely keep it at a even with the third quarter.
Speaker 31: But our guidance sticks, you know, with our $17 million.
Okay great.
Our our guidance sticks.
You know that with our that $17 million.
Speaker 32: okay uh... fantastic in then any color on acutane and cubrexa i know you mentioned if you combine them all together uh... but any surprises there or did they i mean i would guess they look kind of similar to last year but uh... just any color on those two
Okay Fantastic and then any color on Accutane in Q Brexit I know you had mentioned if you combine them all together, but any surprises there or did they I mean, I would've guessed they look kind of similar to last year, but just.
Just any color on those two.
Yeah, in terms of Accutane, I think we're very pleased with how the product is performing. I think from a sales and marketing end, the message is getting out there, I think more and more.
Yeah.
In terms of a vacuum chain I think we're very pleased with how the product is performing.
From a sales and marketing and the message is getting out there I think more and more patients and physicians are turning to the brand accutane.
Patients and physicians are turning to the brand Accutane. So we like where we are. Right now we have approximately.
So we like where we are right now we have approximately.
14.5% market share. So in no ways have we come close to hitting our ceiling. And we've got a lot of emphasis with the sales force right now on that particular brand.
14.5% market share so no ways have we come close to hitting our.
Our ceiling.
And we've got a we've got a lot of emphasis with the sales force right now on that particular brand.
So, in terms of Qbrexa, you know, there is seasonality for this brand. We're heading into the winter right now, so there can be some offsets with that. But generally, I would anticipate a very similar solid quarter in Q4, as you've seen in Q3 here with Qbrexa.
So in terms of Q Brexit.
There is seasonality for this brand.
We're heading into the winter right now so there can be some offsets with that but generally I would anticipate a very similar solid quarter in Q4 as you've seen in Q3 here with <unk>.
Final question, just on DFD29, the rosacea data,
Okay. Great final question just on D. F. D 29 are the rosacea data.
It was pretty compelling.
uh... pretty big potential product particularly relative to the side of the company journey is today although a lot more today than three months ago uh... the question is you do you do you give me incoming calls on that asset uh... we did it possible if someone made you a
A pretty big potential product, particularly relative to the size of the company journey is today, although a lot more today than three months ago are the question is do you do you get any incoming calls on that asset I mean is it possible if someone made you a.
an offer you couldn't refuse, that you would look at partnering that in perhaps in bigger hands or do you even consider that? Thank you.
And offer you couldn't refuse they that you would look at partnering that and in perhaps the bigger hands or do you even consider that.
Sure, yes, Scott. Great question. You know, with the results that came out, the phase three results that came out in early July , it certainly has caught a lot of attention from the from the industry as well as a lot of interested parties and potentially licensing the asset from us outside of the country here in the US. In terms of of
<unk>.
Sure Yeah, Scott Great question, you know what the results that came out of the phase III results that came out in early July. It certainly has caught a lot of attention from the from the industry as well as a lot of interested parties.
<unk> licensing the asset from us outside of the country here in the U S.
In terms of of.
you know, would we ever entertain any sort of potential offer for the asset? You know, I think it's all in the in what the offers look like. We're always open. We're very opportunistic when it comes to business development. And we've always got an open ear. But right now, we are really focused on.
You know would we ever entertain.
Any sort of potential offer for the asset.
You know I think it's all in the in what the offers look like we're always open we're very opportunistic when it comes to business development and we've always got an open ear, but right now we are really focused on.
continuing to execute and make sure we have all the launch plans ready to really hit the door running once we get the approval, hopefully, in the later half of 2024. So all hands are on deck, and that's as much as I could say. Okay. Great. Thank you.
Continuing to execute and make sure we have all the launch plans ready to really hit the door running.
Once we get the approval hopefully in the later half of 2024, so all hands are on deck and that's as much as I could say.
Okay.
Great. Thank you for taking my questions.
Yeah.
Our next question comes from Andy. Plus there are with B Riley. Please go ahead.
Our next question comes from Andy plus they are with B Riley. Please go ahead.
Hey, good afternoon. Thank you for taking questions. A few from us, starting with DFD29. What market research may be emerging ahead of the NDA and the potential launch there? And have you sampled prescribers to get a better understanding of the drug's potential positioning in the market?
Hey, good afternoon, and thank you for taking questions a few from US starting with 29, what market research, maybe emerging had a D N V and the potential launch there and have you sample prescribers to get a better understanding of the drug's potential potential positioning in the market.
Sure, Andy. Thanks for the question. Yeah, previously, we've already conducted some market research specifically with payers to really examine the price sensitivity, for example, and potential contracting requirements that would be needed. Now we want to revalidate that, and we've got additional research that's being conducted as we speak.
Sure Andy Thanks for the question.
Previously we've already conducted some market research, specifically with payers to really examine.
The price sensitivity for example, and potential contracting requirements that would be needed now we want to re validate that and we've got additional research that's being conducted as we speak so I mean some of the areas are.
So, I mean, some of the areas are in terms of looking at a ratio where it's contracted potential generics to a ratio and what that means to the marketplace.
In terms of looking at a ratio, where it's contracted potential generics to a ratio and what that means to the marketplace.
as well as considerations of the perceptions of our providers So, you know, how does DFD 29 this modified minocycline release once a day? That will have hopefully a very unique indication for anti-inflammatory and erythema associated to rosacea
As well as considerations of the perceptions of our providers. So you know how does D. F. D 29. This modified minutes cycle release once a day that we'll have hopefully a V.
Very unique indication for anti inflammatory and ever Sema associated Chew rosacea.
You know, and we want to get aided and unaided.
You know and we want to get aided and unaided qualifications from from our customers. So we want to look at all sorts of factors and and like I said.
qualifications from our customers. So we want to look at all sorts of factors. And like I said, we really want to understand and validate our adoption and our peak demand for this particular product.
You know, we really want to understand and validate our adoption and our peak demand for this particular product.
and then how long it will take for that peak to come. So we have great assumptions. We've already validated a lot of this with previous market research, but now with the studies conducted and complete, and now we're doing additional research.
And then how long it will take for that peak to come. So we have great assumptions, we've already validated a lot of this with previous market research, but now with the studies conducted in and complete.
And now we're doing additional research.
Okay, great. We'll look forward to some of the results there. And that's in your prepared remarks. It sounds like erythema may be included in the label. Can you elaborate on that at all?
Okay, Great. We'll look forward to some of the results there and ER and then from your prepared remarks, it sounds like Eric EMA may be included in the label can you elaborate on that at all.
Sure, I'm going to have Dr. Srinivas talk about that a little bit.
Sure I'm I'm Gonna have a doctor Srinivasan <unk> talk about that a little bit.
Thanks, Claude. And thanks, Andy, for that question. That's a very good question.
Thanks, Claude and thanks, Andy for the question that's a very good question.
Oh.
The thing that I would like to say about erythema is that erythema happens to be one of the secondary end points that we had on the phase three studies. And the secondary end points were adjusted for multiplicity, which means that.
The thing that I would like to say about editing is that edmar happens to be one of the secondary endpoints that we had on the phase III studies.
And are the secondary endpoints there.
Adjusted for multiplicity, which means that.
if there is statistical superiority to placebo, there is a very high chance of that endpoint ending up on the label. So since it was a multiplicity-adjusted secondary endpoint and it was agreed with the FDA in terms of where it would be placed in the hierarchy, we believe that we have a good chance of getting that on the label.
If there is that cycle superiority to placebo there is a very high chance of that endpoint ending up on the label. So since it was a multiplicity of just some secondary endpoint and it goes agreed with the FDA in terms of where it would be placed in the hierarchy.
We believe that we have a good chance of getting back on the labor.
Yeah.
Excellent. That's very helpful. And now, switching gears, one final question for me on Accutane. It sounds like you're having continued growth in market share at 14.5 percent, but I know that we had a bit of a slowdown in the iso-treatment market overall last year. Have things kind of returned to the expected long-term growth rate there and any additional color you can provide on the overall market?
Excellent that's very helpful and now are switching gears. One final question for me on Accutane. It sounds like you're having continued growth in market share in the half was bad but I know that we had a bit of a slowdown in either threatening market overall last year, I think kind of return to the X factor.
The long term growth rate, there and any additional color you can provide on the overall market.
Sure. Yeah, Andy, just to give you some market background on the isotretinoin market in 2021, and that's all isotretinoins included, there was about 2,075,000 prescriptions. And in 2022, about the same amount.
Sure Yeah, Andy just to give you some market background on the isotretinoin market in <unk> and 2021 and that's all I should truck Knowns included there was about 2.075 million prescriptions and in 2022 oh.
The same amount and now in 2023 through the first three quarters, we're at about 1.5 and change. So it looks like it is going to be close to that 2 million prescription market there.
And now in 2023, through the first three quarters, we're at about 1.5 and change. So it looks like it is going to be close to that 2 million prescription market. There was a touch of a slowdown, but I think we're starting to see that ramp back up.
There was a touch of a slowdown, but I think we're starting to see that ramp back up. So it's holding very strongly I think we saw some good single digits year over year, that's just backed off a bit but its very nominal.
So it's holding very strongly. I think we saw some good single digits year over year. That's just backed off a bit, but it's very nominal.
Great. Thanks for the additional color and thank you for taking the questions. Sure.
Great. That's it there's no color and thank you for taking my questions sure.
Absolutely.
Okay.
This concludes our question and answer session as well as our call for today. Thank you for attending today's presentation. You may now disconnect.
This concludes our question and answer session as well as our call for today. Thank you for attending today's presentation. You may now disconnect.