Q2 2024 Journey Medical Corp Earnings Call

August 12, 2024

Speaker Change: Ladies and gentlemen, thank you for standing by. Good day and welcome to Journey Medical's second quarter 2024 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero.

Operator: Second Quarter, 2024 Financial Results, and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key, followed by zero.

Operator: Second Quarter 2024 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key, followed by zero. Please note 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 this call will be available approximately one hour after the end of the call for approximately 30 days. I would like to turn the conference over to Ms. Jaclyn Jaffe, the Company's Senior Director of Corporate Operations. Please go ahead, ma'am.

Operator: Second Quarter 2024 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode.

Operator: Should you need assistance, please signal conference specialists by pressing the star key followed by zero. Please note 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 this call will be available approximately one hour after the end of the call for approximately 30 days. I would like to turn the conference over to Ms. Jaclyn Jaffe, the Company's Senior Director of Corporate Operations. Please go ahead, ma'am.

Operator: Participants 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. A webcast replay of this call will be available approximately one hour after the end of the call for approximately 30 days.

Speaker Change: Participants 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. A webcast replay of this call will be available approximately one hour after the end of the call for approximately 30 days.

Jaclyn Jaffe: I would like to turn the conference over to Ms. Jaclyn Jaffe, the company Senior Director of Corporate Operations. Please go ahead, ma'am. Good afternoon, and thank you for participating in today's conference call.

Speaker Change: I would like to turn the conference over to Ms. Jaclyn Jaffe, the company senior director of corporate operations. Please go ahead, ma'am.

Jaclyn Jaffe: Good afternoon, and thank you for participating in today's conference call. Joining me from Journey Medical's leadership team are Claude Maraoui, co-founder, president, and chief executive officer; Joseph Benesch, chief financial officer; Dr. Srinivas Sidgiddi, vice president of research and development; and Ramsey Alloush, general counsel and corporate secretary, who will be joining for the Q&A portion of the call. 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.

Jaclyn Jaffe: Joining me from Journey Medical's leadership theme are Claude Maraoui, co-founder, president, and chief executive officer; Joseph Benesch, chief financial officer; Dr. Srinivas Sidgiddi, vice president of research and development; and Ramsey Alloush, general counsel and corporate secretary, who will be joining for the Q&A portion of the call. 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. 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-K and Form 10-Q, and 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.

Jaclyn Jaffe: Good afternoon and thank you for participating in today's conference call.

Speaker Change: joining me from Journey Medical's Leadership Team R.

Speaker Change: Claude Maraoui, co-founder, president, and chief executive officer.

Speaker Change: Joseph Benesch, Chief Financial Officer, Dr. Srinivas Sidgiddi, 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.

Jaclyn Jaffe: 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-K and Form 10-Q, and 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. 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 reconciliation of this non-GAAP financial measure to net loss, it's the most directly comparable GAAP financial measure.

Jaclyn Jaffe: 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. 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-K and Form 10-Q, and 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.

Jaclyn Jaffe: Please see the reconciliation 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, Monday, August 12th, 2024. 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 Maraoui, co-founder, president, and chief executive officer of Journey Medical.

Speaker Change: 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.

Claude Maraoui: Thank you, Jaclyn, and good afternoon to everyone on the call today. I am pleased to report on the ongoing progress that we are making at Journey Medical. Our second quarter results were solid, with $14.9 million in net product revenue. We believe that our second quarter performance demonstrates that we remain on track to meet our 2024 annual revenue guidance range of $55 to $60 million. We also believe that our second quarter results highlight the strength of our base business as we await the November 4th PDUFA date for DFD 29, our product candidate for rosacea. With our core portfolio of prescription dermatology brands generating operating cash, and our direct commercial organization already calling on physicians that generate greater than 90% of prescriptions written in our dermatology network, we believe we are well prepared to leverage the DFD-29 opportunity. Looking at the TRXs for our top brands.

Speaker Change: forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements.

Speaker Change: 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-K and Form 10-Q, and 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.

Jaclyn Jaffe: Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance. You should not consider the additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-GAAP financial measure to net loss, it's the most directly comparable GAAP financial measure. Please see the reconciliation table located in the company's earnings press release.

Jaclyn Jaffe: Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance. However, you should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-GAAP financial measure to net loss, it's the most directly comparable GAAP financial measure. Please see the reconciliation 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, Monday, August 12, 2024.

Speaker Change: Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance.

Speaker Change: You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-GAAP financial measure to net loss, it's the most directly comparable GAAP financial measure, please see the reconciliation table located in the company's earnings press release.

Jaclyn Jaffe: The content of this call contains time-sensitive information that is accurate only as of today, Monday, August 12, 2024. 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.

Speaker Change: The content of this call contains time-sensitive information that is accurate only as of today, Monday, August 12, 2024. 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 Maraoui, Co-Founder, President and Chief Executive Officer of Journey Medical.

Jaclyn Jaffe: 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 Maraoui, co-founder, president, and chief executive officer of Journey Medical.

Claude Maraoui: It is now my pleasure to turn the call over to Claude Morali, co-founder, president, and chief executive officer of Journey Medical. Thank you, Jacqueline, and good afternoon to everyone on the call today. I am pleased to report on the ongoing progress that we are making at Journey Medical. Our second quarter results were solid, with 14.9 million in net product revenue. We believe that our second quarter performance demonstrates that we remain on track to meet our 2024 annual revenue guidance range of $55 to $60 million. We also believe that our second quarter results highlight the strength of our base business as we await the November 4th pedophadate for DFD-29, our product candidate for rosacea.

Claude Maraoui: Qbrexa grew by approximately 4,000 prescriptions when compared to Q2 of 2023, and Accutane grew by 17,000 prescriptions during the same period. Qbrexa and Accutane together contributed $12.6 million in net product revenue for Q2 this year. Additionally, we are pleased to report that both Qbrexa and Accutane gained market share in their respective categories. This was achieved through a combination of efforts by our sales and marketing team and our trade and access groups.

Claude Maraoui: Thank you, Jaclyn, and good afternoon to everyone on the call today. I am pleased to report on the ongoing progress that we are making at Journey Medical. Our second quarter results were solid, with $14.9 million in net product revenue. We believe that our second quarter performance demonstrates that we remain on track to meet our 2024 annual revenue guidance range of $55 to $60 million. We also believe that our second quarter results highlight the strength of our base business as we await the November 4th PDUFA date for DFD 29, our product candidate for Rosacea. With our core portfolio of prescription dermatology brands generating operating cash, and our direct commercial organization already calling on physicians that generate greater than 90% of prescriptions written in our dermatology network, we believe we are well prepared to leverage the DFD29 opportunity. Looking at the TRXs for our top brands.

Claude Maraoui: Importantly, we generated a positive contribution from our core product portfolio with the support of our optimized commercial infrastructure. Simply put, the revenues generated from these products have surpassed our operating expenses, excluding one-time pre-launch expenses for DFD 29, such as the NDA filing fee of $4.1 million and the recent milestone payment that we made to Dr. Reddy's of $3 million for NDA acceptance. In addition to our solid top line results, we delivered non-gap adjusted EBITDA of $300,000 in the second quarter.

Claude Maraoui: I am very pleased to report that this is the fourth consecutive quarter that we achieved positive adjusted EBITDA results. Our strategic initiative to significantly reduce SG&A expenses, including the rationalization of our sales and marketing headcount, has been a key factor in improving our profitability while maintaining our product revenue base through 2023. Since the beginning of 2023, when this initiative began, we have reduced our total expenses by approximately $22 million, enabling us to contain our costs and retain more cash generated from our sales.

Claude Maraoui: Importantly, our financial discipline puts us in a strong position to leverage the anticipated launch of DFD 29, with the goal to become sustainably cashflow positive in the coming quarters and EBITDA positive in 2025. Given that, we remain focused on our two main objectives for the year. First, achieving our financial guidance and continuing to improve our profitability, and second, preparing for the anticipated approval and launch of DFD 29. With approximately 16.5 million people suffering from rosacea and more than 4 million prescriptions filled in the United States alone each year to treat this condition.

Claude Maraoui: We believe that our second quarter performance demonstrates that we remain on track to meet our 2024 annual revenue guidance range of $55 to $60 million.

Claude Maraoui: We also believe that our second quarter results highlight the strength of our base business as we await the November 4th PDUFA date for DFD 29, our product candidate for Rosacea.

Claude Maraoui: We believe that DFD 29 provides a significant growth opportunity for the company. As many of you recall, the clinical trial results for both our Phase 3 DFD29 studies were very positive and clinically compelling, with both co-primary endpoints, IGA success, and a reduction of inflammatory lesions associated with rosacea.

Claude Maraoui: DFD-29 demonstrated statistical superiority to both placebo and oratia, the current standard of care and market-leading oral treatment for rosacea. We believe that the head-to-head superiority demonstrated in our Phase III clinical trials will carry significant weight with prescribers and health plans as we initially positioned EFD29 against Oratia, which had over $300 million in annual TRX sales in 2023. Additionally, in our Phase III trials, DFD29 demonstrated the ability to significantly reduce erythema, or the skin redness associated with rosacea.

Claude Maraoui: With our core portfolio of prescription dermatology brands generating operating cash and our direct commercial organization already calling on physicians to generate greater than 90% of prescriptions written in our dermatology network. We believe we are well prepared to leverage the DFD-29 opportunity.

Claude Maraoui: with our core portfolio of prescription dermatology brands generating operating cash and our direct commercial organization already calling on physicians that generate greater than 90% of prescriptions written in our dermatology network.

Claude Maraoui: We believe this is a meaningful clinical result from our phase three program that can differentiate DFD29's product profile, if approved, and can help accelerate both prescriber and patient adoption. The market for rosacea treatments in the United States for both oral and topical products is approximately $1.2 billion annually.

Claude Maraoui: We believe we are well prepared to leverage the DFD 29 opportunity.

Claude Maraoui: Community. Looking at the TRXs for our top brands, Cubrexa grew by approximately 4,000 prescriptions when compared to Q2 of 2023, and Accutane grew by 17,000 prescriptions during the same period. Cubrexa and Accutane together contributed 12.6 million in net product revenue for Q2 this year. Additionally, we are pleased to report that both Cubrexa and Accutane gained market share in their respective categories. This was achieved through a combination of efforts by our sales and marketing team and our trade and access group. In particular, our reach has expanded with both prescriber adoption of our brands and the expansion of our pharmacy network.

Claude Maraoui: The sales of Hubrexa grew by approximately 4,000 prescriptions when compared to Q2 of 2023, and Accutane grew by 17,000 prescriptions during the same period. Qbrexa and Accutane together contributed $12.6 million in net product revenue for Q2 this year. Additionally, we are pleased to report that both Qbrexa and Accutane gained market share in their respective categories. This was achieved through a combination of efforts by our sales and marketing team and our trade and access group.

Claude Maraoui: Looking at the TRXs for our top brands, Qbrexa grew by approximately 4,000 prescriptions when compared to Q2 of 2023, and Accutane grew by 17,000 prescriptions during the same period.

Claude Maraoui: Qbrexa and Accutane together contributed $12.6 million in net product revenue for Q2 this year.

Claude Maraoui: Additionally, we are pleased to report that both Qbrexa and Accutane gained market share in their respective categories. This was achieved through a combination of efforts by our sales and marketing team and our trade and access group.

Claude Maraoui: In particular, our reach has expanded with both prescriber adoption of our brands and the expansion of our pharmacy network. Looking at the quarterly performance of our four core commercial brands, Hubrexa, Accutane, Amzik, and Zilkci, during this quarter, these products accounted for more than 90% of our revenue. Importantly, we generated a positive contribution from our core product portfolio with the support of our optimized commercial infrastructure. Simply put, the revenues generated from these products have surpassed our operating expenses, excluding one-time pre-launch expenses for DFD 29, such as the NDA filing fee of $4.1 million and the recent milestone payment that we made to Dr. Reddy's of $3 million for NDA acceptance. In addition to our solid top-line results, we delivered non-gap adjusted EBITDA of $300,000 in the second quarter.

Claude Maraoui: In particular, our reach has expanded with both prescriber adoption of our brands and the expansion of our pharmacy network.

Claude Maraoui: Looking at the quarterly performance of our four core commercial brands, Cubrexa, Accutane, Amzik, and Zilksey during this quarter, these products accounted for more than 90% of our revenue. Importantly, we generated a positive contribution from our core product portfolio with the support of our optimized commercial infrastructure.

Claude Maraoui: Looking at the quarterly performance of our four core commercial brands, Hubrexa, Accutane, Amzik, and Zilkci during this quarter, these products accounted for more than 90% of our revenue.

Claude Maraoui: Importantly, we generated a positive contribution from our core product portfolio with the support of our optimized commercial infrastructure.

Claude Maraoui: Simply put, the revenues generated from these products have surpassed our operating expenses, excluding one-time pre-launch expenses for DFD-29, such as the NDA filing fee of $4.1 million and the recent milestone payment that we made to Dr. Reddy's of $3 million for NDA acceptance. In addition to our solid top-line results, we delivered non-GAAP-adjusted EBITDA of $300,000 in the second quarter. I am very pleased to report that this is the fourth consecutive quarter that we achieved positive-adjusted EBITDA results. Our strategic initiative to significantly reduce S-T-N-A expenses, including the rationalization of our sales and marketing headcount, has been the key factor in improving our profitability while maintaining our product revenue base from 2023.

Claude Maraoui: Simply put, the revenues generated from these products have surpassed our operating expenses, excluding one-time pre-launch expenses for DFD 29.

Claude Maraoui: such as the NDA filing fee of $4.1 million and the recent milestone payment that we made to Dr. Reddy's of $3 million for NDA acceptance.

Claude Maraoui: In addition to our solid top-line results, we delivered non-gap adjusted EBITDA of $300,000 in the second quarter.

Claude Maraoui: I am very pleased to report that this is the fourth consecutive quarter that we achieved positive adjusted EBITDA results.

Claude Maraoui: Our strategic initiative to significantly reduce SG&A expenses

Speaker Change: including the rationalization of our sales and marketing headcount has been a key factor in improving our profitability while maintaining our product revenue base from 2023.

Claude Maraoui: Since the beginning of 2023, when this initiative began, we have reduced our total expenses by approximately $22 million, enabling us to contain our costs and retain more cash generated from our sales. Importantly, our financial discipline puts us in a strong position to leverage the anticipated launch of DFD-29, with the goal to become sustainably cash flow positive in the coming quarters and EBITDA positive in 2025.

Speaker Change: Since the beginning of 2023, when this initiative began, we have reduced our total expenses by approximately 22 million dollars, enabling us to contain our costs and retain more cash generated from our sales.

Speaker Change: Importantly, our financial discipline puts us in a strong position to leverage the anticipated launch of DFD 29, with the goal to become sustainably cash flow positive in the coming quarters and EBITDA positive in 2025.

Claude Maraoui: Given that, we remain focused in our two main objectives for the year. First, achieving our financial guidance and continuing to improve our profitability. Second, preparing for the anticipated approval and launch of DFD-29. With approximately 16.5 million people suffering from rosacea and more than 4 million prescriptions filled in the United States alone each year to treat this condition, we believe that DFD-29 provides a significant growth opportunity for the company. As many of you recall, the clinical trial results for both our Phase III DFD-29 studies were very positive and clinically compelling. On both co-primary endpoints, IGA success and reduction of inflammatory lesions associated with rosacea, DFD-29 demonstrated statistical superiority to both placebo and Oratia, in current standard of care and market leading oral treatment for rosacea.

Claude Maraoui: First, achieving our financial guidance and continuing to improve our profitability, and second, preparing for the anticipated approval and launch of DFD 29. With approximately 16.5 million people suffering from rosacea and more than 4 million prescriptions filled in the United States alone each year to treat this condition. We believe that DFD 29 provides a significant growth opportunity for the company. As many of you recall, the clinical trial results for both our Phase 3 DFD29 studies were very positive and clinically compelling. On both co-primary endpoints, IGA success, and a reduction of inflammatory lesions associated with rosacea, DFD-29 demonstrated statistical superiority to both placebo and oratia. The current standard of care and market-leading oral treatment for rosacea.

Speaker Change: Given that, we remain focused in our two main objectives for the year. First, achieving our financial guidance and continuing to improve our profitability.

Speaker Change: and second, preparing for the anticipated approval and launch of DFD 29.

Claude Maraoui: With the anticipated indication of erythema in DFD-29's label, we believe DFD-29 will be positioned to take share of the broader rosacea treatment market. Our Phase 3 results also demonstrated a favorable safety and tolerability profile for DFD-29, with results that were similar to placebo. This gives us high confidence in DFD-29's clinical and regulatory package, as well as the potential for market approval later this year. As you may recall, earlier this year, we conducted market research in which we surveyed prescribers of rosacea treatment and Leading Commercial Insurance Plans to assess the adoption potential of DFD-29.

Speaker Change: With approximately 16.5 million people suffering from rosacea and more than 4 million prescriptions filled in the United States alone each year to treat this condition, we believe that DFD29 provides a significant growth opportunity for the company.

Claude Maraoui: The feedback was very positive for both sets of participants, given the statistically significant phase three results against placebo and eratia, as well as the positive erythema results. Healthcare prescribers expressed a strong willingness to prescribe DFD-29 for their rosacea patients, with an adoption rate of 79 percent.

Speaker Change: As many of you recall, the clinical trial results for both our Phase III DFD29 studies were very positive and clinically compelling.

Claude Maraoui: This was a compelling result that exceeded our own internal expectations. For our survey of payers, which collectively represented over 200 million covered lives, the interviews showed that most, if not all, PBMs, GPOs, and other managed care organizations are likely to contract with us to provide coverage for DFD 29. We believe that this market research demonstrates that DFD-29 will have high acceptance among prescribers, and the negotiations with payers for formulary inclusion and reimbursement will be favorable, assuming DFD-29 is approved.

Claude Maraoui: A key component of our value creation strategy has been to focus on building a portfolio of specialty dermatology products with strong intellectual property. As a result of our patent litigation settlements in 2022 and 2023, we have a strong runway of patent exclusivity for Qbrexa with current patent exclusivity to 2030, Amzik with current patent exclusivity to 2031, and Ziltsi with current patent exclusivity to 2027. Importantly, DFD 29 will also add to our portfolio, providing exclusivity until 2039. As a result, we anticipate having market exclusivity without generic intrusion for the foreseeable future.

Speaker Change: On both co-primary endpoints, IgA success and a reduction of inflammatory lesions associated with rosacea

Speaker Change: DFD 29 demonstrated statistical superiority to both placebo and oratia the current standard of care and market leading oral treatment for rosacea.

Claude Maraoui: We believe that the head-to-head superiority demonstrated in our Phase III clinical trials will carry significant weight with prescribers and health plans as we initially positioned DFD-29 against Oratia, which had over $300 million in annual TRX sales in 2023. Additionally, in our Phase III trials, DFD-29 demonstrated the ability to significantly reduce our erythema or the skin redness associated with rosacea. We believe this is a meaningful clinical result from our Phase III program that can differentiate DFD-29's product profile, if approved, and can help accelerate both for prescriber and patient adoption. The market for rosacea treatments in the United States for both oral and topical products is approximately $1.2 billion annually.

Claude Maraoui: We believe that the head-to-head superiority demonstrated in our Phase III clinical trials will carry significant weight with prescribers and health plans as we initially position EFD29 against Oratia, which had over $300 million in annual TRX sales in 2023. Additionally, in our Phase 3 trials, DFD29 demonstrated the ability to significantly reduce erythema, or the skin redness associated with rosacea. We believe this is a meaningful clinical result from our phase three program that can differentiate DFD29's product profile if approved and can help accelerate both prescriber and patient adoption.

Speaker Change: We believe that the head-to-head superiority demonstrated in our phase three clinical trials will carry significant weight with prescribers and health plans as we initially position.

Speaker Change: BFD 29 against Horatio, which had over $300 million in annual TRX sales in 2023.

Speaker Change: Additionally, in our phase 3 trials, EFD29 demonstrated the ability to significantly reduce erythema, or the skin redness associated with rosacea.

Speaker Change: We believe this is a meaningful clinical result from our Phase III program that can differentiate DFD29's product profile, if approved, and can help accelerate both prescriber and patient adoption.

Claude Maraoui: The market for rosacea treatments in the United States for both oral and topical products is approximately $1.2 billion annually. With the anticipated indication of erythema in DFD-29's label, we believe DFD-29 will be positioned to take share of the broader rosacea treatment market. Our Phase 3 results also demonstrated a favorable safety and tolerability profile for DFD-29, with results that were similar to placebo.

Speaker Change: The market for rosacea treatments in the United States for both oral and topical products is approximately $1.2 billion annually.

Claude Maraoui: With the anticipated indication of erythema and DFD-29's label, we believe DFD-29 will be positioned to take share of the broader rosacea treatment market. Our Phase III results also demonstrated a favorable safety and tolerability profile for DFD-29, with results that were similar to placebo. This gives us high confidence in the DFD-29's clinical and regulatory package, as well as the potential for market approval later this year.

Speaker Change: With the anticipated indication of erythema in DFD 29's label, we believe DFD 29 will be positioned to take share of the broader rosacea treatment market.

Speaker Change: Our phase 3 results also demonstrated a favorable safety and tolerability profile for DFD 29 with results that were similar to placebo.

Claude Maraoui: This gives us high confidence in DFD29's clinical and regulatory package, as well as the potential for market approval later this year. As you may recall, earlier this year, we conducted market research in which we surveyed prescribers of rosacea treatment and leading commercial insurance plans to assess the adoption potential of DFD-29. The feedback was very positive for both sets of participants, given the statistically significant phase three results against placebo and erasure, as well as the positive erythema results. Healthcare prescribers expressed a strong willingness to prescribe DFD-29 for their rosacea patients, with an adoption rate of 79 percent. This was a compelling result which exceeded our own internal expectations.

Speaker Change: This gives us high confidence in the DFD-29's clinical and regulatory package, as well as the potential for market approval later this year.

Claude Maraoui: As you may recall earlier this year, we conducted market research in which we surveyed prescribers of rosacea treatments and leading commercial insurance plans to assess the adoption potential of DFD-29. The feedback was very positive for both sets of participants, given the statistically significant Phase III results against placebo and erycia, as well as the positive erythema results. Healthcare prescribers expressed a strong willingness to prescribe DFD-29 for their rosacea patients, with an adoption rate of 79%. This was a compelling result, which exceeded our own internal expectations. For our survey of pairs, which collectively represented over 200 million covered lives, the interviews showed that most, if not all, PBMs, GPOs, and other managed care organizations are likely to contract with us to provide coverage for DFD-29.

Speaker Change: As you may recall, earlier this year we conducted market research in which we surveyed prescribers of rosacea treatments and leading commercial insurance plans to assess the adoption potential of DFD-29.

Speaker Change: The feedback was very positive for both sets of participants, given the statistical significant phase 3 results against placebo and oratia, as well as the positive erythema results.

Speaker Change: Healthcare prescribers expressed a strong willingness to prescribe DFD-29 for their rosacea patients with an adoption rate of 79%. This was a compelling result which exceeded our own internal expectations.

Claude Maraoui: For our survey of payers, which collectively represented over 200 million covered lives, the interviews showed that most, if not all, PBMs, GPOs, and other managed care organizations are likely to contract with us to provide coverage for DFD-29. We believe that this market research demonstrates that DFD-29 will have high acceptance among prescribers, and the negotiations with payers for formulary inclusion and reimbursement will be favorable, assuming DFD-29 A key component of our value creation strategy has been to focus on building a portfolio of specialty dermatology products with strong intellectual property.

Speaker Change: For our survey of payers, which collectively represented over 200 million covered lives, the interviews showed that most, if not all, PBMs

Speaker Change: GPOs, and other managed care organizations are likely to contract with us to provide coverage for DFD 29.

Claude Maraoui: Department. We believe that this market research demonstrates that DFD-29 will have high acceptance among prescribers, and the negotiations with payers for formulary inclusion and reimbursement will be favorable, assuming DFD-29 is approved.

Speaker Change: We believe that this market research demonstrates that DFD-29 will have high acceptance among prescribers and the negotiations with payers for formulary inclusion and reimbursement will be favorable, assuming DFD-29 is approved.

Claude Maraoui: A key component of our value creation strategy has been to focus on building a portfolio of specialty dermatology products with strong intellectual property. As a result of our patent litigation settlements in 2022 and 2023, we have a strong runway of patent exclusivity for CUBREXA with current patent exclusivity to 2030. MZ with current patent exclusivity to 2031 and ZILCY with current patent exclusivity to 2027. Importantly, DFD-29 will also add to our portfolio, providing exclusivity until 2039. As a result, we anticipate having market exclusivity without generic intrusion for the foreseeable future.

Speaker Change: A key component of our value creation strategy has been to focus on building a portfolio of specialty dermatology products with strong intellectual property.

Claude Maraoui: As a result of our patent litigation settlements in 2022 and 2023, we have a strong runway of patent exclusivity for Qbrexa with current patent exclusivity to 2030, Amzik with current patent exclusivity to 2031, and Ziltsi with current patent exclusivity to 2027. Importantly, DFD 29 will also add to our portfolio, providing exclusivity until 2039. As a result, we anticipate having market exclusivity without generic intrusion for the foreseeable future. With our focus on the prescription dermatology segment, we have a strong presence and track record in the business development community for dermatology products.

Speaker Change: As a result of our patent litigation settlements in 2022 and 2023,

Speaker Change: We have a strong runway of patent exclusivity for Qbrexa with current patent exclusivity to 2030, Amzik with current patent exclusivity to 2031, and Ziltsi with current patent exclusivity to 2027.

Speaker Change: Importantly, DFD 29 will also add to our portfolio, providing exclusivity until 2039. As a result, we anticipate having market exclusivity without generic intrusion for the foreseeable future.

Claude Maraoui: With our focus on the prescription dermatology segment, we have a strong presence and track record in the business development community for dermatology products. As a result, we have a robust effort for evaluating opportunities to enhance shareholder value. A primary focus for the company is to continue to out-license our intellectual property and related technologies to interested and capable companies outside of the United States. Similar to the Maruho transaction for the rights to CUBREXA in certain Asian countries. This out licensing transaction resulted in 19 million dollars of non-dilutive capital to the company last year. We will continue to explore to monetize our IP and technology technologies globally for CUBREXA, MZ, and ZILCY, as well as DFD-29 in the future.

Claude Maraoui: With our focus on the prescription dermatology segment, we have a strong presence and track record in the business development community for dermatology products. As a result, we have a robust effort for evaluating opportunities to enhance shareholder value. A primary focus for the company is to continue to outlicense our intellectual property and related technologies to interested and capable companies outside of the United States, similar to the Maruho transaction for the rights to Qbrexa in certain Asian countries. This outlicensing transaction resulted in $19 million of non-dilutive capital to the company last year.

Speaker Change: With our focus on the prescription dermatology segment, we have a strong presence and track record in the business development community for dermatology products. As a result, we have a robust effort for evaluating opportunities to enhance shareholder value.

Claude Maraoui: As a result, we have a robust process for evaluating opportunities to enhance shareholder value. A primary focus for the company is to continue to outlicense our intellectual property and related technologies to interested and capable companies outside of the United States, similar to the Maruho transaction for the rights to Qbrexa in certain Asian countries. This outlicensing transaction resulted in $19 million of non-dilutive capital to the company last year.

Speaker Change: A primary focus for the company is to continue to out-license our intellectual property and related technologies to interested and capable companies outside of the United States, similar to the Maruho transaction for the rights to Qbrexa in certain Asian countries.

Speaker Change: This out-licensing transaction resulted in $19 million of non-dilutive capital to the company last year.

Joseph Benesch: We will continue to explore monetizing our IP and technology technologies globally for Q-BREXA, AMZEQ, and Zilkci, as well as DFD29 in the future. Additionally, we will continue to survey the dermatology landscape for revenue-generating product opportunities that we can acquire or in-license to leverage our focused commercial infrastructure. And we will also continue to evaluate late-stage product candidates that have demonstrated strong clinical trial results in dermatology indications, where we can satisfy unmet market needs for our physician customers and their patients.

Claude Maraoui: We will continue to explore ways to monetize our IP and technology. Technologies globally for Q-BREXA, AMZEQ, and Zilkci, as well as DFD29 in the future. Additionally, we will continue to survey the dermatology landscape for revenue-generating product opportunities that we can acquire or in-license to leverage our focused commercial infrastructure. And we will also continue to evaluate late-stage product candidates that have demonstrated strong clinical trial results in dermatology indications, and where we can satisfy unmet market needs for our physician customers and their patients.

Speaker Change: We will continue to explore to monetize our IP and technologies globally for Qbrexa, AmZeek, and Zilkci, as well as DFD29 in the future.

Claude Maraoui: Additionally, we will continue to survey the dermatology landscape for revenue-generating product opportunities that we can acquire or in-license to leverage our focus commercial infrastructure. And we will also continue to evaluate late-stage product candidates that have demonstrated strong clinical trial results in dermatology indications and where we can satisfy unmet market needs for our physician customers and their patients. We believe that executing on one or more of these product opportunities would allow us to bring in additional revenue with minimal investment, adding to both our top and bottom ones.

Speaker Change: Additionally, we will continue to survey the dermatology landscape for revenue generating product opportunities that we can acquire or in-license to leverage our focus commercial infrastructure.

Speaker Change: And we will also continue to evaluate late-stage product candidates that have demonstrated strong clinical trial results in dermatology indications and where we can satisfy unmet market needs for our physician customers and their patients.

Joseph Benesch: We believe that executing on one or more of these product opportunities would allow us to bring in additional revenue with minimal investment, adding to both our top and bottom lines. And with that, I will now turn the call over to our CFO, Joe Benesch, to review our financial results for the second quarter.

Claude Maraoui: We believe that executing on one or more of these product opportunities would allow us to bring in additional revenue with minimal investment, adding to both our top and bottom lines. And with that, I will now turn the call over to our CFO, Joe Benesch, to review our financial results for the second quarter. Thank you, Clyde, and good afternoon to everyone on the call. Our net product revenue for the second quarter of 2024 was $14.9 million, compared to $17 million for the second quarter of 2023. The decrease from the prior year period was primarily due to the timing of custom orders through QBREXA.

Speaker Change: We believe that executing on one or more of these product opportunities would allow us to bring in additional revenue with minimal investment, adding to both our top and bottom lines.

Joseph Benesch: And with that, I will now turn the call over to our CFO, Joe Banesh, to review our financial results for the second quarter. Thank you, Clyde. Good afternoon to everyone on the call. Our net product revenue for the second quarter of 2024 was $14.9 million dollars compared to $17 million dollars for the second quarter of 2023. 13. The decrease from the prior year period was primarily due to the timing of customer order CQ Bruxa, continued generic competition for target ox, and our decision to discontinue is in the end of the third quarter of 2023. Keep in mind, we started 2023 with 70 sales territories.

Joe Benesch: And with that, I will now turn the call over to our CFO, Joe Benesch, to review our financial results for the second quarter.

Joseph Benesch: Thank you, Clyde, and good afternoon to everyone on the call. Our net product revenue for the second quarter of 2024 was $14.9 million, compared to $17 million in the second quarter of 2023. The decrease from the prior year period was primarily due to the timing of custom orders through QBREXA, continued generic competition for TargetOx, and our decision to discontinue Zimino at the end of the third quarter of 2023. Keep in mind, we started 2023 with 70 sales territories. That's our adjustments.

Joseph Benesch: Continued generic competition for Target Ops and our decision to discontinue Zimino at the end of the third quarter of 2023. Keep in mind, we started 2023 with 70 sales territories. Dr. R. Adjustments, we began 2024 with 35 sales, Terry. Sequentially, net product revenue for the second quarter increased by $1.8 million, compared to the first quarter of 2024, driven by higher volume 3-Fubrexa and continued growth of acne

Joe Benesch: Thank you, Claude, and good afternoon to everyone on the call.

Joe Benesch: Our net product revenue for the second quarter of 2024 was $14.9 million.

Speaker Change: and purchased $17 million in the second quarter of 2023.

Speaker Change: The decrease from the prior year period was primarily due to the timing of custom orders through QBREXA.

Speaker Change: continue generic competition for Target OX.

Speaker Change: And our decision to discontinue Zimino at the end of the third quarter of 2023.

Speaker Change: Keep in mind, we started 2023 with 70 sales territories.

Joseph Benesch: We began 2024 with 35 sales, Terry. Sequentially, net product revenue for the second quarter increased by $1.8 million compared to the first quarter of 2024, given by higher volume for Hubrexa and continued growth of acne. These results suggest that we remain on track to meet or exceed our revenue guidance for the year. Our gross profit margin increased slightly from the prior year quarter, driven primarily by product mix and the contractual royalty decreases to BRXA that occurred in May of 2023. R&D expense decreased by $900,000 from the prior year quarter due to lower DFD-29 clinical trial expenses since the clinical phase of the project has concluded.

Joseph Benesch: After our adjustments, we began 2024 with 35 sales territories. Equentially, net product revenue for the second quarter increased by $1.8 million, compared to the first quarter of 2024, driven by higher volume for CQ Bruxa and continued growth of acting. These results suggest that we remain on track to meet or exceed our revenue guidance for the year. Our growth profit margin increased slightly from the prior year quarter, driven primarily by product mix and the contractual royalty decrease CQ Bruxa that occurred in May of 2023. R&D expense decreased by $900,000 from the prior year quarter due to lower DFC 29 clinical trial expenses as the clinical phase of the project has concluded.

Speaker Change: After our adjustments, we began 2024 with 35 sales territories.

Speaker Change: sequentially net product revenue for the second quarter increased by 1.8 million dollars

Speaker Change: compared to the first quarter of 2024.

Speaker Change: given by higher volume for Hubrexa and continued growth of Accutane.

Joseph Benesch: These results suggest that we remain on track to meet or exceed our revenue guidance for the year. Our gross profit margin increased slightly from the prior year quarter, driven primarily by product mix and the contractual royalty decreases to BRXA that occurred in May of 2023. R&D expense decreased by $900,000 from the prior year quarter due to lower DFD-29 clinical trial expenses.

Speaker Change: These results suggest that we remain on track to meet or exceed our revenue guidance for the year.

Speaker Change: Our gross profit margin increased slightly from the prior year quarter, driven primarily by product mix and the contractual royalty decrease due to BRXA that occurred in May of 2023.

Speaker Change: R&D expense decreased by $900,000 from the prior year quarter.

Joseph Benesch: The clinical phase of the project has concluded. Looking now at our SG&A. SG&A decreased by $1.8 million, or 15%, from the prior year quarter, as a result of our continued expense management efforts.

Speaker Change: due to lower DFD-29 clinical trial expenses.

Joseph Benesch: Looking now to our S&A expenses, S&A decreased by $1.8 million or 15% from the prior year quarter as a result of our continued expense management efforts. The decrease is in addition to the $4.7 million reduction in S&A expenses that were reported in Q1 of this year and the $15.6 million reduction that we realized in 2023. Continuing now to our gap net loss for the periods, gap net loss to common shareholders was $3.4 million, or $17 per share basic and diluted, for the second quarter of 2024. This compares to a gap net loss to common shareholders of $8.4 million or $46 per share basic and diluted for the second quarter of 2023.

Operator: Participants on this call are advised at the audio of this conference call as being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of this call will be available approximately one hour after the end of the call for approximately 30 days.

Claude Maraoui: Looking now to our SG&A, SG&A decreased by $1.8 million, or 15%, from the prior year quarter as a result of our continued expense management effort. The decrease is in addition to the $4.7 million reduction in SG&A expenses that were reported in Q1 of this year and the $15.6 million reduction that we realized in 2023. Now, continuing to our gap net loss for the period. Gap's net loss to common shareholders was $3.4 million.

Speaker Change: as the clinical phase of the project has concluded.

Speaker Change: Looking now to our SG&A expenses.

Speaker Change: SG&A decreased by 1.8 million dollars or 15% from the prior year quarter.

Joseph Benesch: The decrease is in addition to the $4.7 million reduction in SG&A expenses that were reported in Q1 of this year and the $15.6 million reduction that we realized in 2023. Continuing now to our Gap Net Loss for the period. Gap net loss to common shareholders was $3.4 million.

Speaker Change: as a result of our continued expense management efforts.

Jaclyn Jaffe: I would like to turn the conference over to Ms. Jaclyn Jaffe, the company senior director of Corporate Operations. Please go ahead, ma'am.

Speaker Change: Decrease is in addition to the 4.7 million dollar reduction in SG&A expenses that were reported in Q1 of this year and the 15.6 million dollar reduction that we realized in 2023.

Jaclyn Jaffe: Good afternoon, and thank you for participating in today's conference call.

Jaclyn Jaffe: Joining me from Journey Medical's leadership theme are Claude Maraoui, co-founder, president, and chief executive officer, Joseph Benesch, chief financial officer, Dr. Srinivas Sidgiddi, vice president of research and development, and Ramsey Alloush, general counsel and corporate secretary who will be joining for the Q&A portion of the call. 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.

Speaker Change: Continuing now to our gap net loss for the periods.

Speaker Change: The aggregate loss to common shareholders was 3.4 million dollars.

Claude Maraoui: $0.17 per share, basic and diluted, for the second quarter of 2024. This compares to a gap net loss to common shareholders of $8.4 million. $0.46 per share, basically diluted for the second quarter of 2023. Turning now to our non-GAAP results. Our non-GAAP-adjusted EBITDA for the second quarter of 2024 resulted in income of $300,000, reflecting our fourth consecutive quarter of positive non-gap adjusted EBITDA. This compares to a non-gap-adjusted EBITDA loss of $6 million for the second quarter of 2020.

Joseph Benesch: $0.17 per share, basic and diluted, for the second quarter of 2024. This compares to a gap net loss to common shareholders of $8.4 million. $0.46 per share, basically diluted, for the second quarter of 2022. Now, we turn now to our non-GAAP results. Our non-GAAP-adjusted EBITDA for the second quarter of 2024 resulted in income of $300,000. This was our fourth consecutive quarter of positive non-GAAP adjusted events. This compares to a non-gap-adjusted EBITDA loss of $6 million for the second quarter of 2021.

Speaker Change: for $0.17 per share, basic and diluted, for the second quarter of 2024.

Speaker Change: This compares to a gap net loss to common shareholders of $8.4 million or 46 cents per share basically diluted for the second quarter of 2023.

Joseph Benesch: Turning now to our non-gap results. Our non-GAAP adjusted EBITDA for the second quarter of 2024 resulted in income of $300,000, reflecting our fourth consecutive quarter of positive non-GAAP adjusted EBITDA. This compares to a non-GAAP adjusted EBITDA loss of $6 million for the second quarter of 2023. We ended the second quarter of 2024 with $23.9 million in cash compared to $24.1 million at March 31, 2024. Our cash balance includes the $30 million milestone payment that we made to Dr. Reddy's upon the FDA's acceptance of our DFE-29 NDA application, as well as the $5 million drawdown on our SWK credit facility, both of which took place in the second quarter.

Speaker Change: Turning now to our non-GAAP results.

Speaker Change: Our non-gap adjusted EBITDA for the second quarter of 2024 resulted in income of $300,000.

Jaclyn Jaffe: 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 10K and form 10Q, and the form 8K filed with the SEC today, and the company's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes non-gap financial measures that Journey Medical believes can be useful in evaluating its performance.

Speaker Change: reflecting our fourth consecutive quarter of positive non-gap adjusted EBITDA.

Speaker Change: This compares to a non-gap adjusted EBITDA loss of $6 million for the second quarter of 2023.

Claude Maraoui: We ended the second quarter of 2024 with $23.9 million in cash, compared to $24.1 million at March 31, 2020. Our cash balance includes the $3 million milestone payment that we made to Dr. Reddy upon the FDA's acceptance of our DFE 29 NDA application, as well as the $5 million drawdown on our SWK credit facility, both of which took place in the second quarter. Lastly, we are on track to meet and potentially exceed the financial guidance that we communicated at year-end, which is to achieve net product revenues in the range of $55 to $60 million, SG&A expense in the range of 39 to 42 million dollars, and R&D expense in the range of $9 to $10 million. Thank you very much. I will now turn the call back to Claude.

Joseph Benesch: We ended the second quarter of 2024 with $23.9 million in cash, compared to $24.1 million at March 31, 2020. Our cash balance includes the $3 million milestone payment that we made to Dr. Reddy's upon the FDA's acceptance of our DFE 29 NDA application, as well as the $5 million drawdown on our SWK credit facility, both of which took place in the second quarter. Lastly, we are on track to meet and potentially exceed the financial guidance that we communicated at year-end, which is to achieve net product revenues in the range of $55 to $60 million.

Speaker Change: We ended the second quarter of 2024 with $23.9 million in cash.

Speaker Change: compared to $24.1 million at March 31, 2024.

Jaclyn Jaffe: You should not consider the additional information in isolation or as a substitute for results prepared in accordance with GAP. For reconciliation of this non-gap financial measure to net loss, it's the most directly comparable GAP financial measure. Please see the reconciliation table located in the company's earnings press release.

Speaker Change: Our cash balance includes the $3 million milestone payment that we made to Dr. Reddy upon the FDA's acceptance of our DFC-29 NDA application.

Speaker Change: as well as the $5 million drawdown on our SWK credit facility, both of which took place in the second quarter.

Joseph Benesch: Lastly, we are on track to meet and potentially exceed the financial guidance that we communicated at your end, which is to achieve net product revenues in the range of $55.6 million. SENA expense in the range of $39 to $42 million and R&D expense in the range of $9 to $10 million. Thank you very much.

Speaker Change: Lastly, we are on track to meet and potentially exceed the financial guidance that we communicated at year end.

Jaclyn Jaffe: The content of this call contains time-sensitive information that is accurate only as of today, Monday, August 12, 2024, 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.

Speaker Change: which is to achieve net product revenues in the range of $55 to $60 million.

Joseph Benesch: SCNA expenses in the range of 39 to 42 million dollars, and R&D expenses in the range of $9 to $10 million. Thank you very much. I will now turn the call back to Claude. Thank you, Joe.

Speaker Change: SG&A expense in the range of $39 to $42 million.

Speaker Change: and R&D expense in the range of nine to ten million dollars.

Claude Maraoui: I will now turn the call back to Claude. Thank you, Joe. The second quarter results demonstrate the strength of our base business as we delivered revenue results on track with our annual guidance range and generated our fourth consecutive quarter of positive non-GAAP adjusted EBITDA.

Operator: Thank you, Joe. The second quarter results demonstrate the strength of our base business as we delivered revenue results on track with our annual guidance range and generated our fourth consecutive quarter of positive non-gap adjusted EBITDA. We've strengthened the IP position around our core dermatology portfolio, established a productive business development platform, and right-sized our operation, positioning us well strategically and financially in advance of an anticipated DFD 29 launch, which has transformative potential for our business. Thank you, operator. We are now ready to open the lines for Q&A. We will now begin the question and answer session.

Claude Maraoui: Thank you very much. I will now turn the call back to Claude.

Claude Maraoui: The second quarter results demonstrate the strength of our base business as we delivered revenue results on track with our annual guidance range and generated our fourth consecutive quarter of positive non-gap adjusted EBITDA. We've strengthened the IP position around our core dermatology portfolio, established a productive business development platform, and right-sized our operation, positioning us well strategically and financially in advance of an anticipated EFD29 launch, which has transformative potential for our business. Thank you, Operator.

Claude Maraoui: Thank you, Joe. The second quarter results demonstrate the strength of our base business as we delivered revenue results on track with our annual guidance range and generated our fourth consecutive quarter of positive non-gap adjusted EBITDA.

Speaker Change: We've strengthened the IP position around our core dermatology portfolio, established a productive business development platform, and rightsized our operations.

Speaker Change: positioning us well strategically and financially in advance of an anticipated EFD 29 launch which has transformative potential for our business.

Claude Maraoui: We also believe that our second quarter results highlight the strength of our base business as we await the November 4th pedophadate for DFD-29, our product candidate for rosacea. With our core portfolio of prescription dermatology brands generating operating cash and our direct commercial organization already calling on physicians to generate greater than 90% of prescriptions written in our dermatology network. We believe we are well prepared to leverage the DFD-29 opportunity.

Operator: We are now ready to open the lines for Q&A. 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're using a speakerphone, please pick up your handset before pressing the keys.

Operator: So, we will now begin the question and answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speaker phone, you may press star, then one on your touchstone phone.

Speaker Change: Thank you, operator. We are now ready to open the lines for Q&A.

Operator: To ask a question, you may press star and then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Kalpit Patel of B. Reilly Securities. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster.

Operator: Please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Kalpit Patel with B. Reilly Securities. Please go ahead.

Operator: And at this time, we'll pause momentarily to assemble a roster.

Speaker Change: Srinivas Sidgiddi, Joseph Benesch, Jaclyn Jaffe,

Kalpit Patel: And the first question will come from Kalpit Patel with B. Riley Securities. Please go ahead. Yeah, hey, good afternoon, and thanks for taking the questions. Maybe one for one related to BFB 29. It looks like for Oratia there was a generic entry, a little sooner than we had anticipated, and looks like there's a launch in April, May timeframe. So a question for you, is that in any sense impact your internal forward estimates for BFB 29 launch?

Speaker Change: And the first question will come from Kalpit Patel with B. Reilly Securities. Please go ahead.

Kalpit Patel: Yeah, hey, good afternoon, and thanks for taking the questions. Maybe one related to DFD 29. It looks like for Oratia, there was a generic entry a little sooner than we had anticipated, and it looks like there's a launch in the April, May timeframe. So, a question for you is, does that in any sense impact your internal forward estimates for DFD 29's launch?

Kalpit Patel: Yeah. Hey, good afternoon, and thanks for taking the questions. Maybe one related to DFD 29. It looks like for Oracia, there was a generic entry a little sooner than we had anticipated, and it looks like there was a launch in the April, May timeframe. So, a question for you is, does that in any sense impact your internal forward estimates for DFD 29's launch? Yeah, hi Kalpit, this is Claude.

Kalpit Patel: Yeah, hey, good afternoon, and thanks for taking the questions.

Kalpit Patel: maybe one for one related to DFD 29

Speaker Change: It looks like for Oratia, there was a generic entry

Speaker Change: a little sooner than we had anticipated and it looks like there's a launch in April-May time frame. So a question for you is does that in any sense impact your internal forward estimates for DFD 29's launch?

Claude Maraoui: Yeah, hi, Kalpit. This is Claude. So, yeah, Lupin came out in April of this year. They have a very similar, if not identical, price to the Oratia AG that's out there. And in terms of our moving forward and negotiations with the payers, we do not see this as a critical factor in any headway. Okay.

Claude Maraoui: Yeah, hi Kalpit, this is Claude. So yeah, Lupin came out in April of this year. They have a very similar, if not identical, price to the Oratia AG that's out there. And in terms of our moving forward and negotiations with the payers, we do not see this as a critical factor in any headway.

Claude Maraoui: So yeah, Lupin came out in April of this year, and they have a very similar, if not identical, price to the Auratia AG that's out there. And in terms of our moving forward and negotiations with the payers, we do not see this as a critical factor in any headway. Okay, okay. And then, you know, assuming you guys get FDA approval here in November, what early metrics would you recommend investors focus on in the first few quarters of launch that might be useful?

Claude Maraoui: In particular, our reach has expanded with both prescriber adoption of our brands and the expansion of our pharmacy network. Looking at the quarterly performance of our four core commercial brands, Cubrexa, Accutane, Amzik and Zilksey during this quarter, these products accounted for more than 90% of our revenue. Importantly, we generated a positive contribution from our core product portfolio with the support of our optimized commercial infrastructure. Simply put, the revenues generated from these products have surpassed our operating expenses, excluding one time pre-launch expenses for DFD-29, such as the NDA filing fee of $4.1 million and the recent milestone payment that we made to Dr. Reddy's of $3 million for NDA acceptance.

Speaker Change: Yeah, hi CalPIT, this is Claude. So yeah, Lupin came out in April of this year. They have a very similar, if not identical price.

Speaker Change: to the Oratia AG that's out there and in terms of our moving forward and Negotiations with the payers. We do not see this as a critical factor in any headway

Claude Maraoui: Okay, okay, and then, you know, assuming you guys get FDA approval here in November, what early metrics would you recommend investors focus on in the first few quarters of launch that might be useful?

Claude Maraoui: And then, you know, assuming you guys get FDA approval here in November, what early metrics would you recommend investors focus on in the first few quarters of launch, but that might be useful? Well, sure, just to sort of take one step back, we're anticipating an approval on November 4th, our pedophadate. At that time, you know, we're anticipating having product delivered and hopefully into our 3PL for product distribution. We are targeting some time in late Q1 for that to take place. If anything falls up from, you know, label printing, it could put us into April, but we are counting towards March right now.

Speaker Change: Okay. Okay, and then, you know, assuming you guys get FDA approval here in November, what early metrics would you recommend investors to focus on in the first few quarters of launch that might be useful?

Claude Maraoui: Well, sure. Just to sort of take one step back, we're anticipating an approval on November 4th, our PDUFA date. At that time, we're anticipating having product delivered and, hopefully, into our 3PL for product distribution. We are targeting sometime in late Q1 for that to take place. If anything fouls up from a label or printing, it could put us into April, but we are counting towards March right now.

Claude Maraoui: Well, sure. Just to sort of take one step back, we're anticipating an approval on November 4th, our PDUFA date. At that time, you know, we're anticipating having product delivered and, hopefully, into our 3PL for product distribution. We are targeting sometime in late Q1 for that to take place. If anything fouls up with, you know, the label, or printing, it could put us into April, but we are counting towards March right now.

Speaker Change: Well, sure. Just to...

Speaker Change: Sort of take one step back. We're anticipating an approval on November 4, our PDUFA date. At that time, we're anticipating having product.

Claude Maraoui: In addition to our solid top-line results, we delivered non-GAP-adjusted EBITDA of $300,000 in the second quarter. I am very pleased to report that this is the fourth consecutive quarter that we achieved positive-adjusted EBITDA results. Our strategic initiative to significantly reduce S-T-N-A expenses, including the rationalization of our sales and marketing headcount, has been the key factor in improving our profitability while maintaining our product revenue base from 2023. Since the beginning of 2023, when this initiative began, we have reduced our total expenses by approximately $22 million, enabling us to contain our costs and retain more cash generated from our sales. Importantly, our financial discipline puts us in a strong position to leverage the anticipated launch of DFD-29, with the goal to become sustainably cash flow positive in the coming quarters and EBITDA positive in 2025.

Speaker Change: delivered and hopefully into our 3PL for product distribution.

Speaker Change: We are targeting sometime in late...

Speaker Change: Q1 for that to take place.

Speaker Change: If anything...

Speaker Change: fowls up from a

Speaker Change: you know label printing it could it could put us into April but we are counting

Claude Maraoui: So we'll get distribution moving in March, and then the sales and marketing team will execute on the pull-through with the product beginning in Q2. Some of the metrics I would certainly look for if I were an investor are, you know, after the first full month, just where our prescriptions landed and what sort of volume we've created there. So one metric that one should follow is prescriptions. I think another metric that one should follow is to see an uptick in physician adoption.

Claude Maraoui: So we'll get distribution moving in March, and then the sales and marketing team will execute on the pull-through with the product beginning in Q2. Some of the metrics that I would certainly look for if I were an investor are, you know, after the first full month, just where our prescriptions landed and what sort of volume we've created there. So one would be prescriptions.

Claude Maraoui: So we'll get distribution moving in March, and then the sales and marketing team will execute on the pull through with the product beginning in Q2. Some of the metrics, you know, I would certainly look for if I was an investor is, you know, after the first full month, is just where our prescriptions landed and what sort of volume that we've created there. So one would be prescriptions. I think another metric that one should follow is to see the uptick in physician adoption. So how many unique prescribers begin to prescribe the FDA 29 and the market share that we start to share in the field with oration and the other generic that you just mentioned.

Speaker Change: towards March right now. So we'll get distribution moving in March, and then the sales and marketing team.

Speaker Change: will execute on the pull-through with the product, beginning in Q2.

Speaker Change: Some of the metrics you know I would certainly look for if I was an investor is you know after the first full month is just where our prescriptions landed and what sort of

Claude Maraoui: I think another metric that one should follow is to see the uptick in physician adoption. So, how many unique prescribers begin to prescribe DFD29 and the market share that we start to share in the field with Oratia and the other generic that you just mentioned. I think those are three basic areas that I would look at early on in a launch.

Speaker Change: volume that we've created there. So one would be prescriptions. I think another metric that one should follow is to see the uptick in physician adoption.

Claude Maraoui: So how many unique prescribers begin to prescribe DFD29 and the market share that we start to share in the field with Oratia and the other generic that you just mentioned. I think those are three basic areas that I would look at early on in a launch.

Speaker Change: So, how many unique prescribers begin to prescribe DFD-29 and the market share that we start to share in the field with Oratia and the other generic that you just mentioned?

Claude Maraoui: Given that, we remain focused in our two main objectives for the year. First, achieving our financial guidance and continuing to improve our profitability. Second, preparing for the anticipated approval and launch of DFD-29. With approximately 16.5 million people suffering from rosacea and more than 4 million prescriptions filled in the United States alone each year to treat this condition, we believe that DFD-29 provides a significant growth opportunity for the company, as many of you recall, the clinical trial results for both our Phase III DFD-29 studies were very positive and clinically compelling.

Kalpit Patel: I think those are three basic areas that I would look to early on in a launch. Okay, got it.

Speaker Change: I think those are three basic areas that I would look to early on in a launch.

Claude Maraoui: Okay, got it. And, you know, how should we think about the SG&A ramp for fiscal year 2025? And as a follow-up, do you expect to give forward guidance maybe starting next year when you're in your launch?

Claude Maraoui: And, you know, how should we think about the SG&A ramp for fiscal year 2025? And as a follow-up, do you expect to give forward guidance, maybe starting next year when you're in your launch? Sure. Yeah, we have been preparing for DFD and the marketing and everything that comes along with executing a flawless launch early next year in the first half of next year. So, in terms of marketing spend, SG&A spend, I think, you know, for pre-approval, you're seeing a few million dollars already put into play here in 2025.

Kalpit Patel: And, you know, how should we think about the S E N A ramp for fiscal year 2025? And as a follow-up, do you expect to, you know, give forward guidance maybe starting next year when you're in their launch phase? Sure. Yeah, we have been preparing for D F D in the marketing and everything that comes along with executing a flaw. All this launch early next year and the first half of next year. So, in terms of marketing spend, S G N A spend, I think, you know, for pre-approval, you're seeing a few million dollars already put into play here in 2025.

Speaker Change: Got it. How should we think about the SG&A ramp for fiscal year 2025? As a follow-up, do you expect to give forward guidance, maybe starting next year when you're in your launch phase?

Claude Maraoui: We'll certainly meet that and exceed that to execute our launch for DFD. The forecasts that we will give as we get closer to the launch next year, we'll plan on giving some sort of guidance as we did this year in 2024. I just think it's a bit early right now for us to come and comment on that, Kalpit.

Claude Maraoui: Sure. Yeah, we have been preparing for DFD and the marketing and everything that comes along with executing a flawless launch early next year in the first half of next year. So, in terms of marketing spend, SG&A spend, I think, you know, for pre-approval, you're seeing a few million dollars already put into play here in 2025. We'll certainly meet that and exceed that to execute our launch for DFD. The forecasts that we will give as we get closer to the launch next year. We'll plan on giving some sort of guidance as we did this year in 2024. I just think it's a bit early right now for us to come and comment on that, Kalpit.

Speaker Change: Sure, yeah, we have been preparing for GFD and the marketing and...

Speaker Change: everything that comes along with executing a flawless launch early next year in the first half of next year.

Speaker Change: So, in terms of marketing spend, SG&A spend, I think for

Claude Maraoui: On both co-primary endpoints, IGA success and reduction of inflammatory lesions associated with rosacea, DFD-29 demonstrated statistical superiority to both placebo and oratia, in current standard of care and market leading oral treatment for rosacea. We believe that the head-to-head superiority demonstrated in our Phase III clinical trials will carry significant weight with prescribers and health plans as we initially positioned DFD-29 against oratia, which had over $300 million in annual TRX sales in 2023.

Speaker Change: Pre-approval, you're seeing a few million dollars already put into play here in 2025. We'll certainly meet that and exceed that to execute our launch for DFD. In terms of

Kalpit Patel: We'll certainly meet that and exceed that to execute our launch for D F D. In terms of the forecast that we will give as we get closer to the launch next year, we'll plan on giving some sort of guidance as we had done this year in 2024. I just think it's a bit early right now for us to comment on that. Okay, okay, make sense. Thank you very much for taking the question. Sure.

Speaker Change: The...

Speaker Change: forecasts that we will give.

Speaker Change: as we get closer to the launch next year.

Speaker Change: will plan on giving some sort of guidance as we had done this year in 2024. I just think it's a bit early right now for us to come and comment on that, CalPIT.

Kalpit Patel: Okay, okay. It makes sense. Thank you very much for taking the question.

Kalpit Patel: Okay, okay, that makes sense. Thank you very much for taking the question. Sure. The next question will come from Scott Henry with Alliance Global Partners. Please go ahead. Thank you and good afternoon.

Claude Maraoui: Additionally, in our Phase III trials, DFD-29 demonstrated the ability to significantly reduce our erythema or the skin redness associated with rosacea. We believe this is a meaningful clinical result from our Phase III program that can differentiate DFD-29's product profile, if approved and can help accelerate both for prescriber and patient adoption. The market for rosacea treatments in the United States for both oral and topical products is approximately $1.2 billion annually. With the anticipated indication of erythema and DFD-29's label, we believe DFD-29 will be positioned to take share of the broader rosacea treatment market.

CalPIT: Okay, okay, makes sense. Thank you very much for taking the question.

Scott Henry: The next question will come from Scott Henry with Alliance Global Partners. Please go ahead. Thank you, and good afternoon. A couple questions for starters. Gross margins, as expected, picked up in two Q relative to first quarter.

Operator: The next question will come from Scott Henry with Alliance Global Partners. Please go ahead.

CalPIT: Sure.

Speaker Change: The next question will come from Scott Henry with Alliance Global Partners. Please go ahead.

Scott Henry: Thank you and good afternoon. A couple of questions. For starters, gross margins, as expected, picked up in 2Q relative to the first quarter. Would you expect a continued increase in growth in gross margins in the third quarter and fourth quarter of the year?

Scott Henry: A couple of questions. For starters, gross margins, as expected, picked up in 2Q relative to the first quarter. Would you expect a continued increase in gross margins in the third quarter and fourth quarter of the year? Joe, would you like to take that one, please?

Scott Henry: Thank you and good afternoon. A couple of questions. For starters, gross margins, as expected, picked up in 2Q relative to first quarter. Would you expect a continued increase in gross margins in the third quarter and fourth quarter of the year?

Joseph Benesch: Would you expect a continued increase in gross margins in the third quarter and fourth quarter of the year?

Joseph Benesch: Joe, would you like to take a look, please? Sure, Scott, our margins definitely will continue to grow. Right now we're at the lowest level of royalty for two Brexa. A lot of the one-time expenses are behind us, so you'll definitely see more growth in the margins going forward. Okay, and then on SGNA, it looked like about 8.4 million in the first quarter, 10.3 million in the second quarter. Which one of those numbers do you think is more reflective of what we should expect going forward? Scott, I think you're going to see your right in between and probably in the 9 million mark, and you know we're in line with our guidance and expectations for the total SGNA line for the year.

Joseph Benesch: Joe, would you like to take that one, please?

Joseph Benesch: Sure Scott, our margins definitely will continue to grow. Right now, we're at the lowest level of royalty for Tubrexa. A lot of the one-time expenses are behind us, so you'll definitely see more growth in the margins going forward.

Joseph Benesch: Sure, Scott, our margins definitely will continue to grow. Right now, we're at the lowest level of royalty for Tubrexa. A lot of the one-time expenses are behind us, so you'll definitely see more growth in the margins going forward. Okay, and then on SGNA, it looked like about... $8.4 million in the first quarter, $10.3 million in the second quarter. You know, which one of those numbers do you think is more reflective of what we should expect going forward?

Speaker Change: Joe, would you like to take that one, please?

Joe Benesch: Sure Scott, our margins definitely will continue to grow. Right now we're at the lowest level of royalty for Cubrexa. A lot of the one-time expenses are behind us, so you'll definitely see more growth in the margins going forward.

Joseph Benesch: Okay, and then on SGNA, it looked like about... $8.4 million in the first quarter, $10.3 million in the second quarter. You know, which one of those numbers do you think is more reflective of what we should expect going forward?

Claude Maraoui: Our Phase III results also demonstrated a favorable safety and tolerability profile for DFD-29 with results that were similar to placebo. This gives us high confidence in the DFD-29's clinical and regulatory package as well as the potential for market approval later this year.

Speaker Change: And then on SG&A, it looked like about...

Speaker Change: $8.4 million in first quarter, $10.3 million in second quarter. Which one of those numbers do you think is more reflective of what we should expect going forward?

Joseph Benesch: Scott, I think you're going to see a right in between, probably in the nine million mark, and we're in line with our guidance and expectations for the total SG&A line for the year.

Joseph Benesch: Scott, I think you're going to see a right in between and probably in the nine million mark, and you know we're in line with our guidance and expectations for the total SG&A line for the year. Okay, great. And then with regard to DFD-29, the erythema...

Speaker Change: Scott, I think you're going to see it right in between, probably in the nine million mark, and we're in line with our guidance and expectations for the total SG&A line for the year.

Scott Henry: Okay, great, and then with regard to DFD-29, the erythema... The data there is strong, and you want to get it in the label. But when we think about that in the label, should we think about the data being in the label, or could this potentially be a claim within the indication?

Srinivas Sidgiddi: Okay, great. And then, with regards to DFD-29, the erathema, the data there is strong, and you want to get it in the label. Well, when we think about that in the label, should we think about the data being in the label, or could this potentially be a claim within the indications?

Scott Henry: The data there is strong, and you want to get it in the label. But when we think about that in the label, should we think about the data being in the label, or could this potentially be a claim within the indication? Yeah, Dr. Sidgiddi, would you like to take that one, please? Sure, Claude, Claude, thank you. Hey Scott, so with the erythema, we have two things over here. One is the claim, the indication itself, which would be erythema in addition to inflammatory lesions.

Speaker Change: Okay, great. And then, with regards to DFD 29, the erythema...

Speaker Change: the data there is strong and you wanna get it in the label. When we think about that in the label, should we think about the data being in the label or could this potentially be a claim within the indications?

Claude Maraoui: Yeah, Dr. Sidgiddi, would you like to take this one, please?

Srinivas Sidgiddi: Dr. Sidgeti, would you like to take that one, please? Sure, Cloud, thank you. Hey Scott, so with the erathema, we have two things over there. One is the claim, the indication itself, which would be erathema in addition to inflammatory lesions. We also have data that we have in the proposed PI, and we expect data for erathema to be there in the label as well. Okay, great. Thank you for that color.

Speaker Change: Dr. Sidgiddi, would you like to take that one, please?

Srinivas Sidgiddi: Sure, Claude, Claude, thank you. Hey, Scott.

Claude Maraoui: This was a compelling result which exceeded our own internal expectations. For our survey of pairs, which collectively represented over 200 million covered lives, the interviews showed that most, if not all PBMs, GPOs, and other managed care organizations are likely to contract with us to provide coverage for DFD-29.

Speaker Change: Sure, Claude. Claude, thank you.

Claude Maraoui: So with erythema, we have two things here. One is the claim, the indication itself, which would be erythema in addition to inflammatory lesions. We also have data that we have in the proposed PI, and we expect data for erythema to be there in the label as well.

Scott Henry: Hey Scott So with the erythema, we have two things over there. One is the claim, the indication itself which would be erythema in addition to inflammatory lesions

Srinivas Sidgiddi: We also have data that we have in the proposed PI, and we expect data for erythema to be there in the label as well. Okay, great. Thank you for that color.

Speaker Change: We also have data that we have in the proposed PI and we expect data for Eridema to be there in the label as well.

Scott Henry: Okay, great. Thank you for that color. Amzik Zilkci, was there, how did they perform relative to the first quarter? Was there some growth there?

Scott Henry: Final question. Amzik Zilkci, how did they perform relative to the first quarter? Was there some growth there? Yes, Scott, there was some growth there with both of the brands combined. Absolutely. Okay. And I guess, even though that was supposed to be the last question, I guess Accutane. We'll see the numbers when we look at the filing, but it sounds like that was a new record quarter for revenues there. Is that an accurate statement?

Scott Henry: Final question. Amzy, Zilke, how did they perform relative to the first quarter? Was there some growth there? Yes, Scott. There was some growth there with both of the brands combined. Absolutely.

Claude Maraoui: Department. We believe that this market research demonstrates that DFD-29 will have high acceptance among prescribers and the negotiations with payers for formulary inclusion and reimbursement will be favorable, assuming DFD-29 is approved.

Speaker Change: Okay, great. Thank you for that color. The final question...

Speaker Change: Amzik Zilkci, how did they perform relative to the first quarter? Was there some growth there?

Joseph Benesch: Yes, Scott, there was some growth there with both of the brands combined. Absolutely.

Speaker Change: Yes, Scott. There was some growth there with both of the brands combined. Absolutely.

Claude Maraoui: A key component of our value creation strategy has been to focus on building a portfolio of specialty dermatology products with strong intellectual property. As a result of our patent litigation settlements in 2022 and 2023, we have a strong runway of patent exclusivity for CUBREXA with current patent exclusivity to 2030. MZ with current patent exclusivity to 2031 and ZILCY with current patent exclusivity to 2027. Importantly, DFD-29 will also add to our portfolio providing exclusivity until 2039. As a result, we anticipate having market exclusivity without generic intrusion for the foreseeable future.

Scott Henry: Okay, and I guess even though that was supposed to be the last question, I guess Accutane, we'll see the numbers when we look at the filing, but it sounds like that was a new record quarter for revenues there. Is that an accurate statement? Yeah, I think that probably Joe can give more specifics, but you'll see revenue for Q2 with Accutane match up relatively equal to what you saw in Q1 of this year, so maybe a little bit higher. Okay, thank you for taking the questions.

Scott Henry: And I guess, even though that was supposed to be the last question, I guess Accutane. We'll see the numbers when we look at the filing, but it sounds like that was a new record quarter for revenues there. Is that an accurate statement?

Speaker Change: Okay, and I guess even though that was supposed to be the last question I guess Accutane, we'll see the numbers when we look at the filing But it sounds like that was a new record quarter for revenues there. Is that an accurate statement?

Scott Henry: Yeah, I think that Joe can give more specifics, but you'll see revenue for Q2 with Accutane match up relatively equal to what you saw in Q1 of this year, so maybe a little bit higher. Okay.

Joseph Benesch: Yeah, I think that Joe can give more specifics, but you'll see revenue for Q2 with Accutane match up relatively equal to what you saw in Q1 of this year, so maybe a little bit higher.

Speaker Change: Yeah, I think that, you know, probably Joe can give more specifics, but you'll see revenue for Q2 with Accutane.

Matt Shelby: Matt Shelby

Joe Benesch: relatively equal to what you saw in in Q1 of this year so maybe a little bit higher.

Scott Henry: Okay. Thank you for taking the question.

Scott Henry: Thank you for taking the question. The next question will come from Jason Wittes with Roth. Please go ahead.

Speaker Change: Thank you for taking the questions.

Jason White: The next question will come from Jason White with Ross. Please go ahead. Hi, thanks for taking the questions. On DFT29, this excuse me, external poll, you took of purchasers and reimbursers. What kind of confidence I give you out of the gate in terms of where you'd like to be with the reimbursement and the purchasers, and in terms of how many years that you think it might take to get full penetration of the DFT29 opportunity?

Operator: The next question will come from Jason Wittes with Ross. Please go ahead. Hi.

Jason Wittes: Hi, thanks for taking the questions. On DFD 29, this external poll you took of purchasers and reimbursers, what kind of confidence does that give you out of the gate in terms of where you might be with the reimbursement and the purchasers, and in terms of how many years do you think it might take to get full penetration of the DFD 29 opportunity?

Jason Wittes: Hi. Thanks for taking the questions. On DFD 29, this external poll you took of purchasers and reimbursers, what kind of confidence does that give you out of the gate in terms of where you might be with the reimbursement and the purchasers, and in terms of how many years that you think it might take to get full penetration of the DFD 29 opportunity? Yeah, sure, Jason.

Speaker Change: The next question will come from Jason Weitz with Roth. Please go ahead. Hi, thanks for the questions. On DFT29, this external poll you took of purchasers,

Speaker Change: and reimbursers. What kind of confidence would that give you out of the gate in terms of where you might be with the reimbursement and the purchasers and in terms of how many years you think it might take to get full penetration of the DFD 29 opportunity?

Claude Maraoui: You know, first of all, the survey that we took was a third-party, independent from us, and looked at about 220 million lives in total. We feel that a benchmark for us to really go out there and shoot for could be close to that 200 million lives in coverage. So that's really what we're going to strive for once we get approval and once negotiations begin. In terms of uptake and when we would expect to have, you know, that full life in terms of our coverage, that could take anywhere from six months to 12 months, perhaps a little bit longer. But that's pretty much the guidance we're giving. Okay, that's very helpful.

Claude Maraoui: Yeah, sure Jason. You know, first of all, the survey that we took was a third party, independent of us, and looked at about 220 million lives in total. We feel like a benchmark for us to really go out there and shoot for could be close to that 200 million lives in coverage. So that's really what we're going to strive for once we get approval and once negotiations begin. In terms of uptake and when we would expect to have, you know, that full life in terms of our coverage, that could take anywhere from six months to 12 months, perhaps a little bit longer. But that's pretty much the guidance we're giving.

Claude Maraoui: Sure, Jason. First of all, the survey that we took was a third party independent from us, looked at about 220 million lives in total. We feel like a benchmark for us to really go out there and shoot for, could be close to that 200 million lives in coverage. So that's really what we're going to strive for once we get approval and once negotiations begin. In terms of the uptake and when we would expect to have that full lives in terms of our coverage, that could take anywhere from six months to 12 months, perhaps a little bit longer.

Speaker Change: Yeah, sure Jason, you know, first of all the the survey that we took was a third-party independent from us looked at about 220 million lives in total

Claude Maraoui: This out licensing transaction resulted in 19 million dollars of non-dilutive capital to the company last year. We will continue to explore to monetize our IP and technology technologies globally for CUBREXA, MZ and ZILCY as well as DFD-29 in the future. Additionally, we will continue to survey the dermatology landscape for revenue generating product opportunities that we can acquire or in license to leverage our focus commercial infrastructure. And we will also continue to evaluate late-stage product candidates that have demonstrated strong clinical trial results in dermatology indications and where we can satisfy unmet market needs for our physician customers and their patients. We believe that executing on one or more of these product opportunities would allow us to bring in additional revenue with minimal investment, adding to both our top and bottom ones.

Speaker Change: We feel like a benchmark for us to really go out there and shoot for could be close to that 200 million lives in coverage. So that's really what we're going to strive for once we get approval and once negotiations begin.

Speaker Change: in terms of the uptake and when we would expect to have

Speaker Change: You know, that full lives in terms of our coverage, that could take anywhere from 6 months to 12 months, perhaps a little bit longer. But that's pretty much the guidance we're giving here.

Claude Maraoui: But that's pretty much the guidance we're giving here. Okay, that's very helpful.

Jason Wittes: Okay, that's very helpful. And then, in terms of, there may have been a question about this before, but in terms of SG&A and specifically Salesforce Build, it sounds like roughly 9 million is the right SG&A number for this year. My understanding was there might be a little bit of growth in that next year with the launch of DFT 29, specifically you may add additional salespeople. Is that the right way to think about it, or is this rate, it's kind of the rate we should anticipate even going into next year?

Jason Wittes: And then in terms of, there may have been a question about this before, but in terms of SG&A and specifically Salesforce bills, it sounds like roughly 9 million is the right SG&A number for this year. My understanding was that there might be a little bit of growth in that next year with the launch of DFT 29, specifically, you may add additional salespeople. Is that the right way to think about it?

Jason White: And then in terms of, there may be a question about this before, but in terms of SGNA and specifically Salesforce bills, it sounds like roughly 9 million is the right SGNA number for this year. My understanding was there might be a little bit of growth in that next year with the launch of DFT29 specifically. You may add additional sales people. Is that the right way to think about it, or is sort of this rate kind of the rate we should anticipate even going into next year?

Speaker Change: Okay, that's very helpful.

Speaker Change: There may be a question about this before but in terms of

Speaker Change: SG&A, and specifically Salesforce Build.

Speaker Change: It sounds like roughly 9 million is the right SG number for this year. My understanding was there might be a little bit of growth in that next year with the launch of DFT 29 specifically.

Claude Maraoui: Or is sort of this rate the rate we should anticipate even going into next year? Yeah, in terms of looking at the sales force, you know, I think we're in a really solid place with our platform as is. If I give you a few points here, 92% of all of Oratia's prescriptions come from dermatology, and that's over 300,000 prescriptions a year. When we look at those physicians and profile them, we have 90% of those prescribers writing, products are ready. So we're calling on the right people. And then 93% of the coverage has written specifically about Oratia prescriptions as well.

Speaker Change: You may add additional salespeople. Is that the right way to think about it or is sort of this rate, it's kind of the rate we should anticipate even going into next year?

Claude Maraoui: Yeah, in terms of looking at the Salesforce, I think we're in a really solid place with our platform as is. If I give you a few points here, 92% of all of Oresha's prescriptions come from our mythology, and that's over 300,000 prescriptions in a year. Center. When we look at those physicians and profile them, we have 90% of those prescribers have been writing Journey Medical products already. So we're calling on the right people, and then 93% of the coverage has written specifically O'Ratia prescriptions as well. So stay at the same amount moving into launch depending on our hockey stick ramp up and what our needs are.

Claude Maraoui: Yeah, in terms of looking at the sales force, you know, I think we're in a really solid place with our platform as is. If I give you a few points here, 92% of all of Oratia's prescriptions come from dermatology, and that's over 300,000 prescriptions a year. When we look at those physicians and profile them, we have 90% of those prescribers writing products ready. So we're calling on the right people, and then 93% of the coverage has written specifically about Oracia prescriptions as well.

Claude Maraoui: And with that, I will now turn the call over to our CFO, Joe Banesh to review our financial results for the second quarter. Thank you, Clyde.

Speaker Change: Yeah, in terms of looking at the Salesforce, you know, I think we're in a really solid place with our platform as is.

Speaker Change: You know, if I give you a few points here, 92% of all of Oratia's prescriptions come from dermatology, and that's over 300,000 prescriptions in a year.

Joseph Benesch: Good afternoon to everyone on the call. Our net product revenue for the second quarter of 2024 was $14.9 million dollars compared to $17 million dollars for the second quarter of 2023. 13.

Joseph Benesch: The decrease from the prior year period was primarily due to the timing of customer order CQ Bruxa, continued generic competition for target ox, and our decision to discontinue is in the end of the third quarter of 2023. Keep in mind, we started 2023 with 70 sales territories. After our adjustments, we began 2024 with 35 sales territories. Equentially, net product revenue for the second quarter increased by $1.8 million, compared to the first quarter of 2024, driven by higher volume for CQ Bruxa and continued growth of acting.

Speaker Change: When we look at those physicians and profile them, we have 90% of those prescribers have been writing

Speaker Change: journey medical products are ready. So we're calling on the right people.

Speaker Change: and then 93% of the coverage has written.

Claude Maraoui: So with our current 35 sales configuration, I think you're going to see us stay at the same amount moving into launch. Depending on our hockey stick ramp-up and what our needs are, we will continue to analyze and see if we want to fill other territories if it makes sense. But we're going to wait and launch with this current configuration. So from a headcount, I think you'll see very few. If anything, you'll see perhaps maybe five sales additions towards the end of 2025. If that, and then in 2026 we'll reassess.

Claude Maraoui: So with our current 35 sales configuration, I think you're going to see us stay at the same amount moving into launch. Depending on our hockey stick ramp-up and what our needs are, we will continue to analyze and see if we want to fill other territories if it makes sense. But we're going to wait and launch with this current configuration. So from a head count, I think you'll see the very minimum. If anything, you'll see perhaps maybe five sales additions towards the end of 2025. If that, and then in 2026 we'll reassess.

Speaker Change: specifically, Oratia Page

Speaker Change: prescriptions as well.

Speaker Change: with our current 35...

Speaker Change: Sales Configuration. I think you're going to see us stay at the same amount moving into launch. Depending on our hockey stick ramp up and what our needs are, we will continue to analyze and see if we want to

Claude Maraoui: We will continue to analyze and see if we want to fill other territories if it makes sense, but we're going to wait and launch with this current configuration. So, from a head count, I think you'll see very minimum. If anything, you'll see perhaps maybe five sales additions towards the end of 2025, if that. And then in 2026, we'll reassess.

Joseph Benesch: These results suggest that we remain on track to meet or exceed our revenue guidance for the year. Our growth profit margin increased slightly from the prior year quarter, driven primarily by product mix and the contractual royalty decrease CQ Bruxa, that occurred in May of 2023. R&D expense decreased by $900,000 from the prior year quarter due to lower DFC 29 clinical trial expenses as the clinical phase of the project has concluded. Looking now to our S&A expenses, S&A decreased by $1.8 million or 15% from the prior year quarter as a result of our continued expense management efforts. The decrease is in addition to the $4.7 million reduction in S&A expenses that were reported in Q1 of this year and the $15.6 million reduction that we realized in 2023.

Speaker Change: fill other territories, if it makes sense. But we're going to wait and launch with this current configuration. So from a headcount, I think you'll see very minimum. If anything, you'll see perhaps maybe five sales additions towards the end of 2025.

Joseph Benesch: In terms of our marketing spend for its part in SGNA, I think we're well set with what we have already configured. So, Joe, I'll give you the mic over here on SGNA for anything else you want it to add on it. Sure, thanks, Claude. So, to ask your question, no, you're not going to see a huge ramp-up in SG&A from year over year. It's going to be pretty consistent. We will see some marketing expenses come through. We will see some inflationary costs increase, but we're not going to see anything enormous come through any kind of big swings.

Speaker Change: if that, and then in 2026 we'll reassess.

Claude Maraoui: In terms of our marketing spend for its part in SG&A, I think we're well set with what we have already configured. So Joe, I'll give you the mic over here in SG&A. Anything else you wanted to add? Sure, thanks Claude. So, to answer your question, though, you're not going to see a huge ramp up in SG&A from year over year. It's going to be pretty consistent. You will see some marketing expenses come through, you will see some inflationary costs increase, but you're not going to see anything enormous come through, any kind of big swings. Great, thank you for the clarifications and answers here. I'll jump back into you. This concludes our question and answer session, as well as our conference call for today. Thank you for...

Claude Maraoui: In terms of our marketing spend for its part in SG&A, I think we're well set with what we have already configured. So Joe, I'll give you the mic over here in SG&A for... Anything else you wanted to add?

Speaker Change: In terms of our marketing spend for its part in SG&A, I think we're well set with what we have already configured. So, Joe, I'll give you the mic over here on SG&A for...

Joseph Benesch: Sure, thanks Claude. So to answer your question, though, you're not going to see a huge ramp up in SG&A from year over year. It's going to be pretty consistent. You will see some marketing expenses come through, you will see some inflationary costs increase, but you're not going to see anything enormous come through, any kind of big swings. Great.

Jason Wittes: Great, thank you for the clarifications and answers here. I'll jump back into you.

Speaker Change: Anything else you wanted to add on it?

Joe Benesch: Sure, thanks Claude. So, to answer your question though, you're not going to see a huge ramp-up in SG&A from year over year. It's going to be pretty consistent. You will see some marketing expenses come through. You will see some inflationary costs increase, but you're not going to see anything enormous come through, any kind of big swings.

Jason White: Great. Thank you for the specifications and answers here. I'll jump back in here.

Joseph Benesch: Continuing now to our gap net loss for the periods, gap net loss to common shareholders was $3.4 million or $17 per share basic and diluted for the second quarter of 2024. This compares to a gap net loss to common shareholders of $8.4 million or $46 per share basic and diluted for the second quarter of 2023.

Speaker Change: Great, thank you for the clarifications and answers here. I'll jump back into you.

Operator: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now discuss.

Operator: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: [music]

Joseph Benesch: Turning now to our non-gap results. Our non-gap adjusted EBITDA for the second quarter of 2024 resulted in income of $300,000 reflecting our fourth consecutive quarter of positive non-gap adjusted EBITDA. This compares to a non-gap adjusted EBITDA loss of $6 million for the second quarter of 2023. We ended the second quarter of 2024 with $23.9 million in cash compared to $24.1 million at March 31, 2024. Our cash balance includes the $30 million milestone payment that we made to Dr. Reddy's upon the FDA's acceptance of our DFE-29 NDA application as well as the $5 million drawdown on our SWK credit facility, both of which took place in the second quarter.

Claude Maraoui: Thank you very much. I will now turn the call back to Claude. Thank you, Joe. The second quarter results demonstrate the strength of our base business as we delivered revenue results on track with our annual guidance range and generated our fourth consecutive quarter of positive non-GAP adjusted EBITDA.

Operator: So, we will now begin the question and answer session. To ask a question, you may press star than one on your touchstone phone. If you are using a speaker phone, you may press star then one on your touchstone phone. Please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble a roster.

Kalpit Patel: And the first question will come from Kalpit Patel with B. Riley Securities. Please go ahead. Yeah, hey, good afternoon, and thanks for taking the questions. Maybe one for one related to BFB 29. It looks like for oratia there was a generic entry, a little sooner than we had anticipated and looks like there's a launch in April, May timeframe. So a question for you, is that in any sense impact your internal forward estimates for BFB 29 launch?

Claude Maraoui: Yeah, hi, Kalpit. This is Claude.

Claude Maraoui: So, yeah, Lupin came out in April of this year. They have a very similar, if not identical, price to the oratia AG that's out there. And in terms of our moving forward and negotiations with the payers, we do not see this as a critical factor in any headway. Okay.

Claude Maraoui: And then, you know, assuming you guys get FDA approval here in November, what early metrics would you recommend investors who focus on in the first few quarters of launch, but that might be useful? Well, sure, just to sort of take one step back, we're anticipating an approval on November 4th, our pedophadate. At that time, you know, we're anticipating having product delivered and hopefully into our 3PL for product distribution. We are targeting some time and late Q1 for that to take place.

Claude Maraoui: If anything, falls up from, you know, label printing, it could put us into April, but we are counting towards March right now. So we'll get distribution moving in March, and then the sales and marketing team will execute on the pull through with the product beginning in Q2. Some of the metrics, you know, I would certainly look for if I was an investor is, you know, after the first full month is just where our prescriptions landed and what sort of volume that we've created there.

Claude Maraoui: So one would be prescriptions. I think another metric that one should follow is to see the the uptick in physician adoption. So how many unique prescribers begin to prescribe the FDA 29 and the market share that we start to share in the field with oration and the other generic that you just mentioned.

Kalpit Patel: I think those are three basic areas that I would look to early on in a launch. Okay, got it.

Kalpit Patel: So, in terms of marketing spend, S G N A spend, I think, you know, for pre approval, you're seeing a few million dollars already put into play here in 2025. We'll certainly meet that and exceed that to execute our launch for D F D. In terms of the forecast that we will give as we get closer to the launch next year, we'll plan on giving some sort of guidance as we had done this year in 2024. I just think it's a bit early right now for us to comment on that. Okay, okay, make sense. Thank you very much for taking the question. Sure.

Scott Henry: The next question will come from Scott Henry with Alliance Global Partners. Please go ahead.

Scott Henry: Thank you, and good afternoon, a couple questions for starters. Gross margins as expected picked up in two Q relative to first quarter. Would you expect a continued increase in gross margins in the third quarter and fourth quarter of the year?

Joseph Benesch: Joe, would you like to take a look please? Sure, Scott, our margins definitely will continue to grow. Right now we're at the lowest level of royalty for two brexa. A lot of the one time expenses are behind us, so you'll definitely see more growth in the margins going forward.

Joseph Benesch: Okay, and then on SGNA, it looked like about 8.4 million in first quarter, 10.3 million in second quarter. Which one of those numbers do you think is more reflective of what we should expect going forward? Scott, I think you're going to see your right in between and probably in the 9 million mark and you know we're in line with our guidance and expectations for the total SGNA line for the year.

Srinivas Sidgiddi: Okay, great. And then with regards to DFD-29, the erathema, the data there is strong and you want to get it in the label. Well, when we think about that in the label, should we think about the data being in the label or could this potentially be a claim within the indications?

Srinivas Sidgiddi: Dr. Sidgeti, would you like to take that one please? Sure, Cloud, thank you. Hey Scott, so with the erathema, we have two things over there. One is the claim, the indication itself, which would be erathema in addition to inflammatory lesions. We also have data that we have in the proposed PI and we expect data for erathema to be there in the label as well. Okay, great. Thank you for that color.

Scott Henry: Okay, and I guess even though that was supposed to be the last question, I guess Accutane, we'll see the numbers when we look at the filing, but it sounds like that was a new record quarter for revenues there, is that an accurate statement? Yeah, I think that probably Joe can give more specifics, but you'll see revenue for Q2 with Accutane match up relatively equal to what you saw in Q1 of this year, so maybe a little bit higher.

Scott Henry: Okay, thank you for taking the questions.

Jason White: The next question will come from Jason White with Ross. Please go ahead.

Jason White: Hi, thanks for taking the questions. On DFT29, this excuse me, external poll, you took of purchasers and reimbursers. What kind of confidence I give you out of the gate in terms of where you'd like to be with the reimbursement and the purchasers, and in terms of how many years that you think it might take to get full penetration of the DFT29 opportunity?

Claude Maraoui: And then in terms of, there may be a question about this before, but in terms of SGNA and specifically Salesforce bills, it sounds like roughly 9 million is the right SGNA number for this year. My understanding was there might be a little bit of growth in that next year with the launch of DFT29 specifically. You may add additional sales people. Is that the right way to think about it, or is sort of this rate kind of the rate we should anticipate even going into next year?

Claude Maraoui: Center. When we look at those physicians and profile them, we have 90% of those prescribers have been writing Journey Medical products already. So we're calling on the right people, and then 93% of the coverage has written specifically O'Ratia prescriptions as well. So stay at the same amount moving into launch depending on our hockey stick ramp up and what our needs are. We will continue to analyze and see if we want to fill other territories if it makes sense, but we're going to wait and launch with this current configuration.

Claude Maraoui: So from a head count, I think you'll see very minimum. If anything, you'll see perhaps maybe five sales additions towards the end of 2025, if that. And then in 2026, we'll reassess. In terms of our marketing spend for its part in SGNA, I think we're well set with what we have already configured. So Joe, I'll give you the mic over here on SGNA for anything else you want it to add on it.

Joseph Benesch: Sure, thanks, Claude. So to ask your question, no, you're not going to see a huge ramp up in SGNA from year over year. It's going to be pretty consistent. We will see some marketing expenses come through. We will see some inflationary costs increase, but we're not going to see anything enormous come through any kind of big swings. Great. Thank you for the specifications and answers here.

Speaker: I'll jump back in here.

Operator: This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation.

Speaker: You may now discuss.

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