Journey Medical Corporation Reports Second Quarter 2023 Financial Results and Recent Corporate Highlights

The Company generated total net revenues of $17.2 million in the second quarter of 2023, a 41% increase from $12.2 million in the first quarter of 2023

Announced positive topline results from two Phase 3 clinical trials evaluating DFD-29 (minocycline hydrochloride modified release capsules, 40mg); both trials achieved the co-primary and all secondary endpoints over placebo and the current standard of care Oracea® (doxycycline, 40mg) with no significant safety issues

The Company plans to submit a New Drug Application to FDA for DFD-29 in the second half of 2023

Company to hold conference call today at 4:30 p.m. ET

SCOTTSDALE, Ariz., Aug. 08, 2023 (GLOBE NEWSWIRE) -- Journey Medical Corporation (Nasdaq: DERM) (“Journey Medical” or “the Company”), a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration (“FDA”) approved prescription pharmaceutical products for the treatment of dermatological conditions, today announced financial results and recent corporate highlights for the second quarter ended June 30, 2023.

Claude Maraoui, Journey Medical’s Co-Founder, President and Chief Executive Officer, said, “In the second quarter of 2023, our total net revenues were $17.2 million, a 41% increase from $12.2 million in the first quarter. We are also extremely pleased with the positive topline results from our two Phase 3 clinical trials evaluating DFD-29 for the treatment of papulopustular rosacea (“PPR”). We expect to submit a New Drug Application (“NDA”) to the FDA for DFD-29 in the second half of 2023 and look forward to continued revenue growth during the remainder of this year.”

Neal Bhatia, M.D., Director of Clinical Dermatology at Therapeutics Clinical Research, San Diego, CA and investigator from the DFD-29 Phase 3 clinical trials, stated, “DFD-29, a low dose oral minocycline, has demonstrated superior efficacy to Oracea® 40 mg, in the Phase 3 clinical trials in patients with papulopustular rosacea. If approved, these results are likely to position DFD-29 as a well-differentiated therapeutic in the dermatologist’s armamentarium for this indication. Patients with rosacea feel the need for a safe and highly effective oral treatment to avoid the local irritation from topical treatments. Dermatologists will be at ease using the lowest dose minocycline available, for the longer term given its potential for improved safety and the sub antimicrobial data.”

Journey Medical’s Vice President of R&D, Srinivas Sidgiddi, M.D., who has led this development program from inception, added, “Both Phase 3 trials achieved their co-primary and all secondary endpoints, and DFD-29 demonstrated statistical superiority over both placebo and the current standard of care, Oracea 40 mg. These results demonstrate the potential for DFD-29, if approved, to be the best-in-class systemic therapy in the treatment of rosacea. DFD-29 has the potential to address the large unmet need for safe and efficacious therapies that address the inflammatory lesions and the redness of rosacea.”

Financial Results:

• Total net revenues in the second quarter of 2023 were $17.2 million, a decrease of $1.1 million compared to the second quarter of 2022. The decrease is primarily due to lower unit volumes from the Company’s legacy products, Targadox®, Ximino® and Exelderm® substantially driven by continued generic competition for Targadox. The results were offset by an increase in net product revenues from the Company’s four core products, Qbrexza®, Accutane®, Amzeeq® and Zilxi® due to increased unit volumes as a result of the Company’s focused sales and marketing emphasis on these products, which lead to 19% growth year-over-year and now reflect approximately 92%, or $15.6 million, of the Company’s total net product revenue for second quarter of 2023.
• Selling, general and administrative expenses (“SG&A”) decreased by $3.0 million, or 20%, to $12.1 million for the second quarter 2023, from $15.2 million for the second quarter 2022. The decrease is mainly attributable to the Company’s expense reduction efforts, primarily in sales and marketing and other SG&A areas. During Q4 2022, the Company implemented a cost reduction initiative designed to improve operational efficiencies, optimize expenses and reduce overall costs. The initiative is intended to reduce SG&A expenses to better align costs with revenues being generated. In connection with the cost reduction initiative, the Company pivoted to focus on its four core products, allowing it to minimize overall headcount including its sales force along with implemented marketing and other cost cuts. The impact of the cost reduction initiatives is expected to result in a reduction of greater than $12.0 million of annual SG&A expenses.
• Research and Development (“R&D”) expenses decreased by $0.8 million, or 32%, to $1.8 million for the second quarter 2023, from $2.6 million for second quarter 2022. The decrease is related to lower clinical trial expenses, as the two Phase 3 studies have concluded.  
• The Company recorded a non-cash loss on the impairment of the Ximino intangible asset of $3.1 million in the second quarter 2023. During the six months ended June 30, 2023, the Company experienced lower net product revenues and gross profit levels for its Ximino product.
• GAAP net loss was $8.4 million, or $0.46 per share basic and diluted, for the second quarter of 2023, compared to a GAAP net loss of $10.1 million, or $0.57 per share basic and diluted, for the first quarter of 2023 and $7.5 million, or $0.43 per share basic and diluted, for the second quarter of 2022.
• The Company’s non-GAAP results in the table below reflect Adjusted EBITDA of $(0.6 million), or $(0.04) per share basic and diluted, for the second quarter of 2023, compared to Adjusted EBITDA of $(5.3 million), or $(0.30) per share basic and diluted, for the first quarter of 2023 and Adjusted EBITDA of $(2.6 million), or $(0.15) per share basic and diluted for the second quarter of 2022. Adjusted EBITDA, Adjusted EBITDA per share basic and diluted are non-GAAP financial measures, each of which are reconciled to the most directly comparable financial measures calculated in accordance with GAAP below under “Use of Non-GAAP Measures.”
• At June 30, 2023, the Company had $17.0 million in cash and cash equivalents including $8.75 million of restricted cash as compared to $26.1 million of cash and cash equivalents and $8.75 million of restricted cash at March 31, 2023 and $32.0 million in cash and cash equivalents as of December 31, 2022. The decrease in cash from the first quarter was primarily a result of $13.0 million in repayments on our EWB debt facility. Subsequently, in July 2023, the Company voluntarily paid-off the entire $10.0 million outstanding EWB term loan. The Company no longer has any outstanding bank debt.

Recent Corporate Highlights:

• In July 2023, Journey Medical announced positive topline data from its two DFD-29 Phase 3 clinical trials for the treatment of PPR. The Phase 3 clinical trials achieved the co-primary and all secondary endpoints and subjects completed the 16-week treatment with no significant safety issues. DFD-29 demonstrated statistical superiority over both the standard of care Oracea capsules and placebo for Investigator’s Global Assessment treatment success and the reduction in the total inflammatory lesion count in both studies. Journey Medical plans to file an NDA to the U.S. Food and Drug Administration for DFD-29 in the second half of 2023 and expects potential approval from the FDA in the second half of 2024.

Summary Topline Results from MVOR-1 and MVOR-2