8-K: Journey Medical Reports 7% Revenue Growth in Q1 2024, NDA for Rosacea Treatment Accepted by FDA

Journey Medical Corporation announced a 7% year-over-year revenue increase for the first quarter of 2024, driven by strong performance of key products and the acceptance of their New Drug Application for DFD-29 by the FDA.

Summary

• Journey Medical Corporation reported a 7% increase in total revenue for the first quarter of 2024, reaching $13.0 million compared to $12.2 million in the same period last year.
• The revenue growth was primarily driven by a greater than 20% year-over-year increase in sales of Qbrexza and Accutane.
• The company's New Drug Application (NDA) for DFD-29, a potential treatment for rosacea, was accepted by the FDA in March 2024, with a PDUFA goal date set for November 4, 2024.
• Research and development costs significantly increased to $7.9 million in Q1 2024, up from $2.0 million in Q1 2023, due to a $4.0 million FDA filing fee and a $3.0 million milestone payment related to DFD-29.
• Selling, general, and administrative expenses decreased by $4.9 million to $8.4 million in Q1 2024, reflecting the company's cost reduction efforts.
• The company's net loss was $10.4 million, or $(0.53) per share, for the first quarter of 2024, compared to a net loss of $10.1 million, or $(0.57) per share, for the first quarter of 2023.
• Adjusted EBITDA for Q1 2024 was $11,000, or $0.001 per share, compared to an Adjusted EBITDA loss of $(5.3 million), or $(0.30) per share, for Q1 2023.
• The company had $24.1 million in cash and cash equivalents as of March 31, 2024, down from $27.4 million at the end of 2023.

Sentiment

Score: 7

Explanation: The document presents a mixed picture with positive revenue growth and a key regulatory milestone, but also significant R&D expenses and a net loss. The improvement in Adjusted EBITDA is encouraging, but the potential need for additional capital and the risks associated with drug development temper the overall sentiment.

Positives

• The company achieved a 7% increase in total revenue year-over-year.
• Sales of flagship products Qbrexza and Accutane grew by more than 20% year-over-year.
• The FDA accepted the NDA for DFD-29, a potential treatment for rosacea, marking a significant milestone.
• The company successfully reduced selling, general, and administrative expenses by $4.9 million.
• Adjusted EBITDA improved from a loss of $(5.3 million) to a profit of $11,000 year-over-year.

Negatives

• The company reported a net loss of $10.4 million for the quarter.
• Research and development costs increased significantly due to DFD-29 related expenses.
• Cash and cash equivalents decreased from $27.4 million to $24.1 million during the quarter.
• Sales of Amzeeq, Zilxi, Targadox and Ximino decreased, with Ximino being discontinued at the end of Q3 2023.
• Targadox continues to experience erosion due to generic competition.

Risks

• The company's products and product candidates are subject to time and cost-intensive regulation and clinical testing.
• A substantial portion of sales derive from products that may face generic competition.
• The company operates in a heavily regulated industry, and future legislation could impact operations.
• The company's revenue is dependent on sales of dermatology products, and any setback could impair results.
• Competition could limit the commercial opportunity and profitability of the company's products.
• The company relies on third parties for several aspects of its operations.
• The company's success depends on the development and regulatory approval of DFD-29 and future product candidates.
• Clinical trials may fail to demonstrate the safety and efficacy of product candidates.
• The company faces risks related to intellectual property protection.
• The company's business could suffer from computer system failures or cyber-attacks.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company may need to raise additional capital.
• Fortress Biotech controls a voting majority of the company's common stock.

Future Outlook

The company is focused on driving growth and profitability from its current dermatology franchise and anticipates the potential launch of DFD-29 to benefit patients with rosacea, leveraging its existing commercial infrastructure.

Management Comments

• Claude Maraoui, Journey Medical's Co-Founder, President and Chief Executive Officer, said, 'We delivered solid first quarter results with year-over-year revenue growth of 7%.'
• Mr. Maraoui continued, 'Additionally, we made significant progress advancing our development program for DFD-29.'

Industry Context

The announcement reflects the ongoing demand for effective dermatological treatments and the competitive landscape within the pharmaceutical industry, particularly in the development of novel therapies for conditions like rosacea. The acceptance of the NDA for DFD-29 positions Journey Medical to potentially capture a significant share of the rosacea treatment market.

Comparison to Industry Standards

• Journey Medical's 7% revenue growth is a positive sign, but it is important to compare this to other dermatology-focused companies.
• For example, companies like Galderma and Almirall have shown varying growth rates in their dermatology segments, with some experiencing double-digit growth while others face challenges.
• The successful NDA acceptance for DFD-29 is a significant milestone, similar to other companies that have achieved regulatory approvals for new dermatological treatments.
• However, the high R&D costs and net loss highlight the challenges in the pharmaceutical industry, where significant investments are required for drug development and commercialization.
• The improvement in Adjusted EBITDA is a positive indicator, but it is still important to monitor the company's cash burn rate and overall financial health.

Stakeholder Impact

• Shareholders may be encouraged by the revenue growth and the progress of DFD-29, but concerned about the net loss and potential need for additional capital.
• Employees may be impacted by the company's cost reduction efforts.
• Customers may benefit from the potential launch of DFD-29, a new treatment option for rosacea.
• Suppliers may be affected by changes in the company's operations and product sales.
• Creditors may be concerned about the company's financial performance and potential need for additional financing.

Next Steps

• The company will hold a conference call on May 13, 2024, to discuss the financial results and provide a business update.
• The company will continue to focus on driving growth and profitability from its current dermatology franchise.
• The company is preparing for the potential launch of DFD-29, pending FDA approval, with a PDUFA goal date of November 4, 2024.

Key Dates

Keywords

dermatology, pharmaceutical, rosacea, DFD-29, FDA, Qbrexza, Accutane, revenue, EBITDA, clinical trials