Journey Medical Corporation
08/12/2025 | Press release | Distributed by Public on 08/12/2025 14:36
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements
Certain matters discussed in this report may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words "anticipate," "believe," "estimate," "may," "expect," "will," "could," "project," "should," "intend" and similar expressions are generally intended to identify forward-looking statements. Our actual results may differ materially from the results anticipated in or implied by these forward-looking statements due to a variety of factors, including, without limitation:
| ● | the fact that our products and product candidates are subject to time and cost intensive regulation and clinical testing and as a result, may never be successfully developed or commercialized; |
| ● | a substantial portion of our sales derive from products that are without patent protection and/or are or may become subject to third-party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse impact on our operating income; |
| ● | we operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations; |
| ● | our revenue is dependent mainly upon sales of our dermatology products and any setback relating to the sale of such products could impair our operating results; |
| ● | competition could limit our products' commercial opportunity and profitability, including competition from manufacturers of generic versions of our products; |
| ● | the risk that our products do not achieve broad market acceptance, including by government and third-party payors; |
| ● | our reliance on third parties for several aspects of our operations; |
| ● | our dependence on our ability to identify, develop, and acquire or in-license products and integrate them into our operations, at which we may be unsuccessful; |
| ● | the dependence of the success of our business, including our ability to finance our company and generate additional revenue, on the successful commercialization of EmrosiTM and the successful development, regulatory approval and commercialization of any future product candidates that we may develop, in-license or acquire; |
| ● | clinical drug development is very expensive, time consuming, and uncertain and our clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates; |
| ● | our competitors could develop and commercialize products similar or identical to ours; |
| ● | risks related to the protection of our intellectual property and our potential inability to maintain sufficient patent protection for our technology and products; |
| ● | our business and operations would suffer in the event of computer system failures, cyber-attacks, or deficiencies in our or our third parties' cybersecurity; |
| ● | the effects of major public health issues, epidemics or pandemics on our product revenues and any future clinical trials; |
| ● | our potential need to raise additional capital; |
| ● | the substantial doubt expressed about our ability to continue as a going concern; |
| ● | Fortress controls a voting majority of our common stock, which could be detrimental to our other shareholders; and |
| ● | the risks described under the section titled "Risk Factors" in Item 1A below and in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). |
The forward-looking statements contained in this report reflect our views and assumptions as of the effective date of this report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Except as required by law, we assume no responsibility for updating any forward-looking statements.
We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Overview
We are a commercial-stage pharmaceutical company founded in October 2014 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. Our current portfolio includes eight FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S. We are managed by experienced life science executives with a track record of creating value for their stakeholders and bringing novel medicines to the market, enabling patients to experience increased quality of life and physicians and other licensed medical professionals to provide better care for their patients. We acquire rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through our field sales organization. We are a controlled subsidiary of Fortress Biotech, Inc. ("Fortress" or "Parent").
Recent Corporate Highlights
Effective after the close of U.S equity markets on June 27, 2025, we joined the small cap Russell 2000® Index and the broad-market Russell 3000® Index as a result of the 2025 annual Russell Index reconstitution.
On November 1, 2024, the FDA approved EmrosiTM(Minocycline Hydrochloride Extended Release Capsules, 40 mg), formerly referred to as DFD-29 ("Emrosi"), for the treatment of inflammatory lesions of rosacea in adults. Emrosi was developed by Journey in collaboration with Dr. Reddy's Laboratories, Ltd. ("DRL"). Our initial supply became available in March 2025. In addition, the initial distribution of Emrosi to pharmacies is ongoing and the first Emrosi prescriptions have been filled. We began sales promotion of Emrosi in April 2025, and are commercializing Emrosi in the U.S. with our existing commercial team.
Critical Accounting Polices and Uses of Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. Applying these principles requires our judgment in determining the appropriateness of acceptable accounting principles and methods of application in diverse and complex economic activities. The preparation of the accompanying financial statements requires us to make estimates and judgments that affect the reported amounts of revenues, expenses, assets and liabilities, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For a discussion of our critical accounting estimates, see the section of the 2024 Form 10-K titled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Use of Estimates." There were no material changes in our critical accounting estimates or accounting policies from December 31, 2024.
Accounting Pronouncements
During the six-month period ended June 30, 2025, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2024 Form 10-K that are expected to materially affect the Company's present or future financial statements.
Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in our annual reports on Form 10-K, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
We are also a "smaller reporting company," meaning that either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) the market value of our shares held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million. As a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K, we have reduced disclosure obligations regarding executive compensation, and smaller reporting companies are permitted to delay adoption of certain recent accounting pronouncements discussed in Note 2 to our consolidated financial statements in this report on Form 10-Q.
Results of Operations
The following table summarizes our results of operations for the three-month periods ended June 30, 2025 and 2024:
Comparison of the Three-Month Periods Ended June 30, 2025 and 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended June 30, |
|
Change |
|
|||||||
|
($ in thousands, except per share data) |
2025 |
2024 |
$ |
% |
|
|||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue, net |
$ |
15,009 |
$ |
14,855 |
|
$ |
154 |
|
1 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
||
|
Cost of goods sold - (excluding amortization of acquired intangible assets) |
|
4,939 |
|
5,727 |
|
|
(788) |
|
-14 |
% |
||
|
Amortization of acquired intangible assets |
|
|
1,064 |
|
|
814 |
|
|
250 |
|
31 |
% |
|
Research and development |
|
- |
|
913 |
|
|
(913) |
|
-100 |
% |
||
|
Selling, general and administrative |
|
11,882 |
|
10,328 |
|
|
1,554 |
|
15 |
% |
||
|
Total operating expenses |
|
17,885 |
|
17,782 |
|
|
103 |
|
1 |
% |
||
|
Loss from operations |
|
(2,876) |
|
(2,927) |
|
|
51 |
|
-2 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income) |
|
|
|
|
|
|
|
|
|
|
||
|
Interest income |
|
(138) |
|
(161) |
|
|
23 |
|
-14 |
% |
||
|
Interest expense |
|
|
937 |
|
|
563 |
|
|
374 |
|
66 |
% |
|
Foreign exchange transaction losses |
|
|
61 |
|
|
32 |
|
|
29 |
|
91 |
% |
|
Total other expense (income) |
|
860 |
|
434 |
|
|
426 |
|
98 |
% |
||
|
Loss before income taxes |
|
|
(3,736) |
|
|
(3,361) |
|
|
(375) |
|
11 |
% |
|
Income tax expense |
|
60 |
|
- |
|
|
60 |
|
100 |
% |
||
|
Net loss |
|
$ |
(3,796) |
|
$ |
(3,361) |
|
$ |
(435) |
|
13 |
% |
Revenues
The following table reflects our net product revenue for the three-month periods ended June 30, 2025 and 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month Periods Ended |
|
|
|
|
|
|||||
|
|
|
June 30, |
|
Change |
|
|||||||
|
($ in thousands) |
2025 |
2024 |
$ |
% |
|
|||||||
|
EmrosiTM |
|
$ |
2,795 |
|
$ |
- |
|
$ |
2,795 |
|
100 |
% |
|
Qbrexza® |
|
|
6,949 |
|
|
6,836 |
|
|
113 |
|
2 |
% |
|
Accutane® |
|
|
3,395 |
|
|
5,719 |
|
|
(2,324) |
|
-41 |
% |
|
Amzeeq® |
|
|
879 |
|
|
1,205 |
|
|
(326) |
|
-27 |
% |
|
Zilxi® |
|
|
256 |
|
|
369 |
|
|
(113) |
|
-31 |
% |
|
Other / legacy |
|
|
735 |
|
|
726 |
|
|
9 |
|
1 |
% |
|
Total net product revenue |
|
$ |
15,009 |
|
$ |
14,855 |
|
$ |
154 |
|
1 |
% |
Total net product revenues of $15.0 million for the second quarter of 2025 were consistent with $14.9 million of net product revenues for the second quarter of 2024. The second quarter of 2025 includes $2.8 million of incremental net product revenue related to the U.S. commercial launch of Emrosi™, offset by a decrease in Accutane, as a result of lower sales volume driven by recent market competition.
Gross-to-Net Sales Accruals
We record gross-to-net sales accruals for chargebacks, distributor service fees, prompt pay discounts, sales returns, coupons, managed care rebates, government rebates, and other allowances customary to the pharmaceutical industry.
Gross-to-net sales accruals and the balance in the related allowance accounts for the three-month periods ended June 30, 2025 and 2024, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Care |
|
|
|
|
|
||
|
($'s in thousands) |
Returns |
Coupons |
Rebates |
Other |
Total |
||||||||||
|
Balance as of March 31, 2025 |
|
$ |
2,601 |
|
$ |
8,668 |
|
$ |
3,440 |
|
$ |
761 |
|
$ |
15,470 |
|
Current provision related to sales in the current period |
|
|
222 |
|
|
28,735 |
|
|
6,239 |
|
|
1,401 |
|
|
36,597 |
|
Checks/credits issued to third parties |
|
|
(324) |
|
|
(30,623) |
|
|
(5,885) |
|
|
(1,343) |
|
|
(38,175) |
|
Balance as of June 30, 2025 |
|
$ |
2,499 |
|
$ |
6,780 |
|
$ |
3,794 |
|
$ |
819 |
|
$ |
13,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Care |
|
|
|
|
|
||
|
($'s in thousands) |
Returns |
Coupons |
Rebates |
Other |
Total |
||||||||||
|
Balance as of March 31, 2024 |
|
$ |
2,806 |
|
$ |
2,757 |
|
$ |
3,445 |
|
$ |
938 |
|
$ |
9,946 |
|
Current provision related to sales in the current period |
|
|
1,112 |
|
|
23,573 |
|
|
6,492 |
|
|
1,722 |
|
|
32,899 |
|
Checks/credits issued to third parties |
|
|
(704) |
|
|
(24,566) |
|
|
(6,134) |
|
|
(1,631) |
|
|
(33,035) |
|
Balance as of June 30, 2024 |
|
$ |
3,214 |
|
$ |
1,764 |
|
$ |
3,803 |
|
$ |
1,029 |
|
$ |
9,810 |
Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $13.9 million at June 30, 2025, compared to $9.8 million at June 30, 2024, an increase of $4.1 million. The increase is due to the coupon rebate allowance related to the launch and commercialization of Emrosi.
Cost of Goods Sold - (excluding amortization of acquired intangible assets)
Cost of goods sold - (excluding amortization of acquired intangible assets) decreased by $0.8 million, or 14%, to $4.9 million for the three-month period ended June 30, 2025, from $5.7 million for the three-month period ended June 30, 2024, due to lower overall product cost of goods related to product sales mix, driven mainly by the decrease in Accutane revenue, which has a higher cost to Journey than Emrosi.
Amortization of acquired intangible assets
Amortization of acquired intangible assets increased by $0.3 million, or 31%, to $1.1 million for the three-month period ended June 30, 2025, from $0.8 million for the three-month period ended June 30, 2024, driven by the addition of the Emrosi acquired intangible asset upon our payment to DRL of the milestone payment triggered by the FDA's approval of Emrosi in November 2024.
Research and Development
Research and development costs were nil in the second quarter of 2025, compared to $0.9 million in the second quarter of 2024. The second quarter of 2024 includes Emrosi pre-approval project expenses.
Selling, General and Administrative
Selling, general and administrative expenses increased by $1.6 million, or 15%, to $11.9 million for the three-month period ended June 30, 2025, from $10.3 million for the three-month period ended June 30, 2024. The increase is primarily due to the incremental operational activities related to the launch and commercialization of Emrosi.
Interest Expense, net
Interest expense, net increased by $0.4 million, to $0.8 million for the three-month period ended June 30, 2025, from $0.4 million for the three-month period ended June 30, 2024. The increase is primarily attributable to a higher principal balance outstanding under the Credit Agreement with SWK (each as defined below) during the three months ended June 30, 2025 of $25.0 million as compared to an average of approximately $15.0 million during the three months ended June 30, 2024.
Comparison of the Six-Month Periods Ended June 30, 2025 and 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-Month Periods Ended June 30, |
Change |
|||||||||||
|
($in thousands, except per share data) |
2025 |
2024 |
$ |
|
% |
|
|||||||
|
Revenue: |
|
|
|
|
|
|
|||||||
|
Product revenue, net |
|
$ |
28,148 |
|
$ |
27,885 |
|
$ |
263 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|||||||
|
Cost of goods sold - (excluding amortization of acquired intangible assets) |
|
9,729 |
|
11,728 |
|
(1,999) |
|
|
-17 |
% |
|||
|
Amortization of acquired intangible assets |
|
2,129 |
|
1,629 |
|
500 |
|
|
31 |
% |
|||
|
Research and development |
|
39 |
|
8,797 |
|
(8,758) |
|
|
-100 |
% |
|||
|
Selling, general and administrative |
|
22,451 |
|
18,748 |
|
3,703 |
|
|
20 |
% |
|||
|
Total operating expenses |
|
34,348 |
|
40,902 |
|
(6,554) |
|
|
-16 |
% |
|||
|
Loss from operations |
|
(6,200) |
|
(13,017) |
|
6,817 |
|
|
-52 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income) |
|
|
|
|
|
|
|||||||
|
Interest income |
|
(287) |
|
(378) |
|
91 |
|
|
-24 |
% |
|||
|
Interest expense |
|
1,828 |
|
1,111 |
|
717 |
|
|
65 |
% |
|||
|
Foreign exchange transaction losses |
|
68 |
|
53 |
|
15 |
|
|
28 |
% |
|||
|
Total other expense (income) |
|
1,609 |
|
786 |
|
823 |
|
|
105 |
% |
|||
|
Loss before income taxes |
|
(7,809) |
|
(13,803) |
|
5,994 |
|
|
-43 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
60 |
|
- |
|
60 |
|
|
100 |
% |
|||
|
Net loss |
|
$ |
(7,869) |
|
$ |
(13,803) |
|
$ |
5,934 |
|
|
-43 |
% |
Revenues
The following table reflects our net product revenue for the six-month periods ended June 30, 2025 and 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-Month Periods Ended |
|
|||||||||||
|
|
|
June 30 |
|
Change |
|||||||||
|
($in thousands) |
2025 |
2024 |
$ |
% |
|||||||||
|
EmrosiTM |
|
$ |
4,865 |
|
$ |
- |
|
4,865 |
|
|
100 |
% |
|
|
Qbrexza® |
|
12,110 |
|
11,853 |
|
257 |
|
|
2 |
% |
|||
|
Accutane® |
|
7,050 |
|
11,538 |
|
(4,488) |
|
|
-39 |
% |
|||
|
Amzeeq® |
|
1,979 |
|
1,960 |
|
19 |
|
|
1 |
% |
|||
|
Zilxi® |
|
682 |
|
642 |
|
40 |
|
|
6 |
% |
|||
|
Other / legacy |
|
1,462 |
|
1,892 |
|
(430) |
|
|
-23 |
% |
|||
|
Total net product revenue |
|
$ |
28,148 |
|
$ |
27,885 |
|
$ |
263 |
|
|
1 |
% |
Total net product revenues increased by $0.3 million, to $28.2 million for the six months ended June 30, 2025 from $27.9 million for the six months ended June 30, 2024. The six months ended June 30, 2025 includes $4.9 million of incremental net product revenue related to the U.S. commercial launch of Emrosi™, offset by a decrease in Accutane, as a result of lower sales volume driven by recent market competition. Our Legacy products decreased by $0.4 million mainly due to continued generic competition for Targadox.
Gross-to-Net Sales Accruals
We record gross-to-net sales accruals for chargebacks, distributor service fees, prompt pay discounts, sales returns, coupons, managed care rebates, government rebates, and other allowances customary to the pharmaceutical industry.
Gross-to-net sales accruals and the balance in the related allowance accounts for the six-month periods ended June 30, 2025 and 2024, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Managed |
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
Care |
|
|
|
|
|
|
|
|
($'s in thousands) |
Returns |
Coupons |
Rebates |
Other |
Total |
||||||||||
|
Balance as of December 31, 2024 |
|
$ |
3,124 |
|
$ |
1,750 |
|
$ |
3,717 |
|
$ |
733 |
|
$ |
9,324 |
|
Current provision related to sales in the current period |
|
(27) |
|
56,150 |
|
11,670 |
|
2,811 |
|
70,604 |
|||||
|
Checks/credits issued to third parties |
|
(598) |
|
(51,120) |
|
(11,593) |
|
(2,725) |
|
(66,036) |
|||||
|
Balance as of June 30, 2025 |
|
$ |
2,499 |
|
$ |
6,780 |
|
$ |
3,794 |
|
$ |
819 |
|
$ |
13,892 |
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
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|
|
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|
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Managed |
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|||||
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Care |
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|
|
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($'s in thousands) |
Returns |
Coupons |
Rebates |
Other |
Total |
||||||||||
|
Balance as of December 31, 2023 |
|
$ |
4,077 |
|
$ |
3,444 |
|
$ |
5,210 |
|
$ |
1,386 |
|
$ |
14,117 |
|
Current provision related to sales in the current period |
|
1,240 |
|
42,315 |
|
11,213 |
|
3,703 |
|
58,471 |
|||||
|
Checks/credits issued to third parties |
|
(2,103) |
|
(43,995) |
|
(12,620) |
|
(4,060) |
|
(62,778) |
|||||
|
Balance as of June 30, 2024 |
|
$ |
3,214 |
|
$ |
1,764 |
|
$ |
3,803 |
|
$ |
1,029 |
|
$ |
9,810 |
Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates. Our reserves for gross-to-net sales allowances were $13.9 million at June 30, 2025, compared to $9.3 million at December 31, 2024, an increase of $4.6 million. The increase is due to the coupon rebate allowance related to the launch and commercialization of Emrosi. This is offset, in part, by a decrease in the returns reserve primarily due to lower units on hand in the wholesaler channel.
Cost of Goods Sold -(excluding amortization of acquired intangible assets)
Cost of goods sold - (excluding amortization of acquired intangible assets) decreased by $2.0 million, or 17%, to $9.7 million for the six-month period ended June 30, 2025, from $11.7 million for the six-month period ended June 30, 2024, due to lower overall product cost of goods related to product sales mix, driven mainly by the decrease in Accutane revenue, as well as lower inventory obsolescence costs in the six-month period ended June 30, 2025 of $0.8 million.
Amortization of acquired intangible assets
Amortization of acquired intangible assets increased by $0.5 million, or 31%, to $2.1 million for the six-month period ended June 30, 2025, from $1.6 million for the six-month period ended June 30, 2024, driven by the addition of the Emrosi acquired intangible asset upon our payment to DRL of the milestone payment triggered by the FDA's approval of Emrosi in November 2024.
Research and Development
Research and development costs were nil for the six months ended June 30, 2025, compared to $8.8 million for the six months ended June 30, 2024. The six months ended June 30, 2024 includes Emrosi pre-approval project expenses, milestones and fees.
Selling, General and Administrative
Selling, general and administrative expenses increased by $3.7 million, or 20%, to $22.4 million for the six-month period ended June 30, 2025, from $18.7 million for the six-month period ended June 30, 2024. The increase is primarily due to the incremental operational activities related to the launch and commercialization of Emrosi.
Interest Expense, net
Interest expense, net increased by $0.8 million, to $1.5 million for the six-month period ended June 30, 2025, from $0.7 million for the six-month period ended June 30, 2024. The increase is primarily attributable to a higher principal balance outstanding under the Credit Agreement with SWK (each as defined below) during the six-months ended June 30, 2025 of $25.0 million as compared to an average balance of approximately $15.0 million during the six-months ended June 30, 2024.
Liquidity and Capital Resources
At June 30, 2025, we had $20.3 million in cash and cash equivalents as compared to $20.3 million of cash and cash equivalents at December 31, 2024, and working capital of $10.8 million at June 30, 2025, compared to $13.0 million at December 31, 2024.
We rely primarily on cash on hand generated from the sales of our pharmaceutical products to our customers to fund our core operations. In addition, we have relied on the proceeds from our term loan Credit Facility (as defined below) with SWK (as defined below) and our at-the-market sales program with B. Riley to meet additional capital and liquidity needs, specifically to fund the research and development and commercialization of Emrosi.
We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure. We may seek to raise capital through debt or equity financings, which may include sales of securities under either our 2022 Shelf (as defined below) or a new registration statement, to expand our product portfolio and/or for other strategic initiatives. Additionally, as a result of recurring losses, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
Sources of Liquidity
SWK Credit Facility
On December 27, 2023, we entered into a Credit Agreement (the "Credit Agreement") with SWK Funding LLC ("SWK"). The Credit Agreement originally provided for a term loan facility (the "Credit Facility") in the original principal amount of up to $20.0 million. On the closing date, we drew $15.0 million. On June 26, 2024, we drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the "Term Loans") mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate ("SOFR") (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Interest payments began in February 2024 and are paid quarterly. Beginning in February 2026, we are required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans.
On July 9, 2024, we entered into an amendment (the "Amendment") to the Credit Agreement. The Amendment increased the original principal amount of the Credit Facility from $20.0 million to $25.0 million. The $5.0 million of additional principal added in the Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to us receiving approval on or before June 30, 2025. The FDA approved Emrosi on November 1, 2024, and we subsequently drew the remaining $5.0 million. The Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all of our assets. As of June 30, 2025, we were in compliance with the financial covenants under the Credit Facility.
At-the-Market Offering
On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-269079) (the "2022 Shelf"), which was declared effective by the Securities and Exchange Commission on January 26, 2023. This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. In connection with the 2022 Shelf, we entered into an At Market Issuance Sales Agreement (the "Sales Agreement") relating to shares of the Company's common stock with B. Riley Securities, Inc. We may offer and sell up to 4,900,000 shares of our common stock, from time to time, under the Sales Agreement. During the six-months ended June 30, 2025, we issued and sold 834,722 shares of common stock under the 2022 Shelf, generating net proceeds of $4.1 million. At June 30, 2025, 1,752,265 shares remain available for issuance under the Sales Agreement.
Cash Flows for the Six-Month Periods Ended June 30, 2025 and 2024
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|
|
|
Six-Month Periods Ended June 30, |
|
Increase |
|||||
|
($'s in thousands) |
2025 |
2024 |
(Decrease) |
||||||
|
Net cash used in operating activities |
|
$ |
(3,774) |
|
$ |
(10,195) |
|
$ |
6,421 |
|
Net cash provided by (used in) investing activities |
|
- |
|
- |
|
- |
|||
|
Net cash provided by financing activities |
|
3,762 |
|
6,668 |
|
(2,906) |
|||
|
Net change in cash and cash equivalents |
|
$ |
(12) |
|
$ |
(3,527) |
|
$ |
3,515 |
Operating Activities
Net cash flows used in operating activities for the six-month period ended June 30, 2025 decreased by $6.4 million, to $3.8 million, from net cash flows used in operating activities of $10.2 million for the six-month period ended June 30, 2024. The decrease was driven primarily by the decrease in our net loss period-to-period, offset by changes in net working capital.
Financing Activities
Net cash flows provided by financing activities for the six-month period ended June 30, 2025 decreased by $2.9 million, to $3.8 million, from $6.7 million of cash flows provided by financing activities for the six-month period ended June 30, 2024. The Company received proceeds from the issuance of common stock under the ATM program of $4.0 million, offset by $0.6 million in payments on installment notes to Sun Pharmaceuticals Industries, Inc. during the six months ended June 30, 2025. The Company received $5.0 million from the SWK Credit Facility and $1.5 million from the issuance of common stock under the ATM program during the six months ended June 30, 2024.
Material Cash Requirements
In the normal course of business, we enter into contractual obligations that contain cash requirements of which the most significant currently include the following:
| ● | We are required to make regular payments under the SWK Credit Facility. Based on the amount currently outstanding under the SWK facility and current interest rates, and assuming we do not make further draws under the SWK facility, we expect to make the following payments: |
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Payments by Period |
|||||||||||
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|
|
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|
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Remainder of |
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|
|
|
|
|
|
|
|
Total |
2025 |
2026 |
2027 |
||||||||
|
|
|
($'s in thousands) |
||||||||||
|
Interest |
|
$ |
6,135 |
|
$ |
1,629 |
|
$ |
2,745 |
|
$ |
1,761 |
|
Principal |
|
25,000 |
|
- |
|
7,500 |
|
17,500 |
||||
|
Exit fee |
|
1,250 |
|
- |
|
- |
|
1,250 |
||||
|
Total |
|
$ |
32,385 |
|
$ |
1,629 |
|
$ |
10,245 |
|
$ |
20,511 |
| ● | We are contractually obligated to pay certain milestone and sales-based royalty payments to the counterparties of our license and product acquisition agreements. Due to the contingent nature of these obligations, the amounts of these payments cannot be reasonably predicted. |
Journey Medical Corporation published this content on August 12, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 12, 2025 at 20:37 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]