On March 29, 2023 Journey Medical Corporation (Nasdaq: DERM) ("Journey Medical"), a commercial-stage pharmaceutical company that focuses on the development and commercialization of pharmaceutical products for the treatment of dermatological conditions, reported financial results and recent corporate highlights for the fourth quarter and full year ended December 31, 2022 (Press release, Fortress Biotech, MAR 29, 2023, View Source [SID1234629508]).
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Claude Maraoui, Journey Medical’s Co-Founder, President and Chief Executive Officer, said, "Our first year as a public company had many achievements and challenges, including the impact of generic competition on our Targadox brand and supply chain issues for Ximino and Exelderm, which were resolved in 2022. Looking beyond these challenges, and forward into 2023, we have accomplished a great deal over this past year, particularly revenue growth for Qbrexza and Accutane in addition to the revenue contribution of Amzeeq and Zilxi, acquired in January 2022. These four products accounted for approximately 77% of our total revenue for the year. In 2023, we look forward to continued revenue growth from these products and achieving clinical milestones in our Phase 3 clinical trials evaluating DFD-29 for the treatment of rosacea. We expect a top-line data read out from the DFD-29 Phase 3 clinical trials in the second quarter of 2023 and to file a New Drug Application ("NDA") in the second half of 2023."
Financial Results:
Total revenues were $73.7 million for the full year 2022, a record high for the Company, compared to total revenues of $63.1 million for the full year 2021, representing 17% growth. This includes total revenues of $16.0 million for the fourth quarter of 2022, compared to net revenues of $17.5 million generated in the fourth quarter of 2021, representing a 9% decline from period-to-period primarily due to generic competition for Targadox.
Selling, general and administrative expenses were $59.5 million for the full year 2022, compared to $39.8 million for 2021. The increase is primarily attributable to the expansion of our salesforce, marketing expenses related to the expanded product portfolio of four products, additional headcount costs, legal expenses associated with successful patent litigation and other professional fees associated with being a public company that we did not incur as a privately held company prior to our IPO in November 2021.
Selling, general and administrative expenses were $14.0 million for the fourth quarter of 2022, compared to $15.1 million for the fourth quarter of 2021. The decrease is primarily attributable to our expense optimization efforts as the Company continues to improve its operational efficiencies post IPO, while ensuring continued focus on the development and commercialization of DFD-29.
Research and development costs were $10.9 million for the full year 2022, compared to $16.6 million for the full year 2021. The full year 2021 included $13.8 million for the license acquisition of DFD-29.
Research and development costs were $4.3 million for the fourth quarter of 2022, compared to $2.0 million for the fourth quarter of 2021 due to clinical trial expenses related to the development of our DFD-29 product candidate, for which our Phase 3 clinical trials are 100% enrolled.
Net loss was $29.6 million, or $1.69 per share basic and diluted, for the full year 2022, compared to net loss of $44.0 million or $4.32 per share basic and diluted for the full year 2021, reflecting a decrease of $14.4 million from period-to-period. Net loss was $10.6 million, or $0.60 per share basic and diluted, for the fourth quarter of 2022, compared to net loss of $21.8 million or $1.64 per share basic and diluted for the fourth quarter of 2021, reflecting a decrease of $11.2 million from period-to-period.
The Company’s non-GAAP results in the table below reflect Adjusted EBITDA of $(7.3 million), or $(0.42) per share basic and diluted, for the full year 2022, compared to Adjusted EBITDA of $(10.9 million), or $(1.07) per share basic and diluted for the full year 2021. The Company’s non-GAAP results in the table below reflect Adjusted EBITDA of $(3.0 million), or $(0.17) per share basic and diluted, for the fourth quarter of 2022, compared to Adjusted EBITDA of $(1.7 million), or $(0.13) per share basic and diluted for the fourth quarter of 2021. Adjusted EBITDA, Adjusted EBITDA per share basic and Adjusted EBITDA per share 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 December 31, 2022, Journey Medical’s cash and cash equivalents totaled $32.0 million, compared to $34.9 million on September 30, 2022, and $49.1 million at December 31, 2021, a decrease of $2.9 million for the quarter and a decrease of $17.1 million year-over-year.
Recent Corporate Highlights:
In March 2023, Journey Medical announced completion of treatment in the Phase 1 clinical trial assessing the impact of DFD-29 (Minocycline Modified Release Capsules 40 mg) on the microbial flora of healthy adults. No significant safety issues were noted during the study.
In January 2023, Journey Medical completed enrollment in its DFD-29 Phase 3 clinical program for the treatment of papulopustular rosacea. Topline data from the two DFD-29 Phase 3 clinical studies are expected to be announced in the first half of 2023. Journey Medical plans to submit the NDA for DFD-29 in the second half of 2023 and potential approval from the U.S Food and Drug Administration ("FDA") is anticipated in the second half of 2024. In the Phase 2 clinical trials, DFD-29 (40mg) demonstrated nearly double the efficacy when compared against Oraycea (European equivalent of Oracea) on both co-primary endpoints. For the first co-primary endpoint, Investigator’s Global Assessment ("IGA") treatment success, Oraycea only had a 33.33% IGA treatment success rate, while DFD-29 achieved a 66.04% IGA treatment success rate. For the second co-primary endpoint, the change in total inflammatory lesion count, Oraycea only had a 10.5 reduction in inflammatory lesions, while DFD-29 achieved a 19.2 reduction in inflammatory lesions.
In December 2022, Journey Medical announced positive PK comparability data of DFD-29. The study successfully demonstrated that the systemic exposure of DFD-29 (40 mg) was significantly lower than that of SOLODYN (105 mg). Additionally, the study showed that food did not have a significant effect on the pharmacokinetics of DFD-29.
In May 2022, Journey Medical entered into three separate settlement agreements (the "Settlement Agreements") with Padagis for the patent infringement lawsuits that the Company filed to enforce the patents covering Qbrexza, Amzeeq and Zilxi. Pursuant to the terms of the Settlement Agreements, Padagis is prohibited from launching generic versions of Qbrexza, Amzeeq and Zilxi until August 15, 2030, July 1, 2031, and April 1, 2027, respectively. Subsequently, in December 2022, Journey Medical entered into a settlement with Teva pharmaceuticals for a patent infringement lawsuit filed by the Company related to the patents covering Qbrexza.
In January 2022, Journey Medical received notice from its exclusive licensing partner in Japan, Maruho Co., Ltd. ("Maruho"), that Japan’s Ministry of Health, Labor and Welfare approved Rapifort Wipes 2.5% (glycopyrronium tosylate hydrate, Japanese equivalent of Qbrexza) for the treatment of primary axillary hyperhidrosis. This approval triggered a milestone payment of $10.0 million to Journey Medical, $7.5 million of which was paid to Dermira, Inc. ("Dermira") pursuant to the terms of the Asset Purchase Agreement between Journey Medical and Dermira, with net proceeds of $2.5 million paid to Journey Medical. Journey Medical is entitled to receive royalties and commercial milestones from Maruho’s sales of Rapifort, which was commercially launched in May 2022.
Also in January 2022, Journey Medical acquired two FDA-approved topical minocycline products, Amzeeq and Zilxi, and a Molecule Stabilizing Technology platform from Vyne Therapeutics Inc. for an upfront payment of $20.0 million and an additional $5.0 million, which were was paid on January 12, 2022 and on the one (1)-year anniversary of the closing, respectively.
Regarding the cybersecurity breach that resulted in losses of $9.5 million in September 2021, the federal government has been able to seize cryptocurrency assets associated with the breach. Once the cryptocurrency has been converted back into U.S. dollars, Journey Medical will receive a notification letter to initiate the return of the cash to the Company. The final amount and timing of return of funds is still uncertain and yet to be determined.
Conference Call and Webcast Information
Journey Medical management will conduct a conference call and audio webcast on March 29, 2023, at 4:30 p.m. ET.
To listen to the conference call, interested parties within the U.S. should dial 1-866-777-2509 (domestic) or 1-412-317-5413 (international). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the Journey Medical conference call. Participants can register for the conference here: View Source Please note that registered participants will receive their dial-in number upon registration.
A live audio webcast can be accessed on the News and Events page of the Investors section of Journey Medical’s website, www.journeymedicalcorp.com, and will remain available for replay for approximately 30 days after the meeting.