DERM - NASDAQ

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to Journey Medical Corporation's Third Quarter 2025 Financial Results and Corporate Update Conference Call. At this time, all participants will be in a listen-only mode. Participants of this call are advised that the audio of this 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 call for approximately thirty days. I would now like to turn the call over to Ms. Jaclyn Jaffe, the company's Senior Director of Corporate Operations. Please go ahead, Jaclyn.

Good afternoon, and thank you for participating in today's conference call. Joining me from Journey Medical Corporation's leadership team are Claude Maraoui, Co-Founder, President, and Chief Executive Officer, and Joseph M. Benesch, Chief Financial Officer. Joining for the Q&A portion of the call will be Ramsey Alloush, Chief Operating Officer and General Counsel. During this call, management will be making forward-looking statements including statements that address, among other things, Journey Medical Corporation'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 Corporation's most recently filed periodic reports on Form 10-Ks and Form 10-Q. The Form 8-Ks 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 Corporation 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 a reconciliation of this non-GAAP financial measure to net loss, 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, Wednesday, November 12, 2025. Except as required by law, Journey Medical Corporation 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 Corporation.

Thank you, Jaclyn, and good afternoon to everyone on the call today. The 2025 was another period of solid execution for Journey Medical Corporation as we delivered 21% year-over-year revenue growth. I am pleased to report that Amrozi, our best-in-class oral treatment for the inflammatory lesions of rosacea, contributed $4.9 million to our top line in Q3, an increase of 75% compared to Q2. Our legacy and core products including QBREX

Thank you, Claude. And good afternoon to everyone. Now, I will take you through our financial performance for 2025. Total revenues for the quarter were $17.6 million, representing a 21% increase compared to $14.9 million in 2024. This growth reflects incremental net product revenue related to the successful U.S. commercial launch of Amrozi, which has continued to meet our expectations since its introduction. Turning to margins, gross margin was 67.4% in the third quarter, compared to 69.4% in the same period last year. The decrease from quarter to quarter primarily reflects the favorable non-operational adjustments and product mix that benefited Q3 2024. More importantly, we continue to see steady quarter-over-quarter gross margin improvement in 2025, from 63.5% in Q1 to 67.1% in Q2, and now 67.4% in Q3. This ongoing improvement is driven by higher revenues from Amrozi and QBREX

Thank you, Joe. We delivered strong results in the third quarter, with Amrozi already making a positive impact on our business. Total prescriptions for Amrozi more than doubled from Q2 to Q3, and the fourth quarter is already off to a strong start. The number of Amrozi prescription writers is now at its highest level to date, and we expect to develop the current prescriber base into consistent writers over the next several months. With the positive physician feedback that we have received so far, we believe that Amrozi is starting to gain brand recognition as the preferred oral solution for the treatment of rosacea. We have executed well in terms of our early payer strategy, and the focus remains on increasing access to Amrozi, as well as enlisting more of the downstream health plans to adopt formulary coverage for Amrozi in order to drive more covered prescriptions. All of these activities are key steps in developing Amrozi into the standard of care treatment for inflammatory lesions of rosacea, and we believe that we are on track to accomplish this. Based on the initial strong momentum we are seeing with Amrozi's launch, we are confident that Amrozi can reach its full potential in the rosacea treatment market. We continue to believe that Amrozi can achieve peak annual net sales of over $200 million in the United States and over $300 million globally. Meanwhile, financially, EBITDA for the company continues to improve from quarter to quarter, and we expect to become sustainably EBITDA positive in the fourth quarter of this year. We set out to make 2025 a transformational year, setting up the company for potential strong growth and cash generation, and our progress indicates that we are delivering on that promise. As such, I believe that we are well-positioned to continue executing on our core objectives: to improve the lives of patients, offer dermatology healthcare providers innovative treatment options, and create long-term value for our shareholders. Thank you. Operator, we are now ready to open the lines for Q&A.

Thank you. We will now begin the question and answer session. To ask a question, if you are using a speakerphone, and you would like to withdraw your question, and our first question for today will come from Brandon Folkes with H.C. Wainwright. Please go ahead.

Hi, thanks for taking my questions and congratulations on all the progress. Can you just talk about how you view the usage of your patient assistance program on Amrozi at this stage of the launch? And when you talked about it improving, do you see an improvement in Q4 or sort of in 2026? How should we think about that aspect of the Amrozi launch?

Sure. Hi, Brandon, it's Claude. So first of all, I think it's important to take a look at the progress we're making here commercially with Amrozi in particular. Again, you take a look at revenues from Q2 to Q3, we've increased that by 75%. So we certainly like how things are being directed. Additionally, when you take a look at the strength of the commercial organization being able to create demand, we've gone from approximately 7,400 prescriptions in Q2 all the way up to about 18,200 prescriptions in Q3. So our focus is really to drive demand as quickly and continue to grow that month over month, quarter over quarter, and we're successfully doing that. Now where the co-pay assistance program comes into play, we've talked about the three major GPOs. We now have two of these GPOs onboard. We certainly expect the last one to come on board in early 2026. I think you're going to see additional value for that in terms of payers reimbursing for the claims as they come in. Our co-pay assistance program will have less balance in terms of more reimbursements will come as time continues. It takes about two to three quarters for that to adjust with each GPO. Then the PBMs and the downstream health plan. So we are patiently waiting for that time to go. It's just the way the healthcare system has worked it works out and we see that continuing. More so I would tell you in 2026 where I think you'll see some significant gains in less reliance on the co-pay program.

Great. Thanks very much. And maybe one just follow-up. You touched on the growth of Amrozi and breadth of prescribing obviously grown with the unique prescribers. It looks like depth of prescribing is growing quite nicely as well. So can you just talk about sort of the focus between breadth and depth of prescribers in Q4 and maybe in 2026 as well? What's going to be the focus? Where do you see the most significant growth for Amrozi near term in terms of depth or breadth of prescribing?

Well, I'll tell you, I think it's a combination of what you're mentioning here. We focused in on 3,200 physicians at the beginning of our launch. Again, brand new launch only two quarters deep into it so far. As I mentioned, we're up to 2,700 plus unique prescribers. And those are brand new physicians breaking a twenty-year habit of being reliant on Oratia. That was the only product that was indicated orally for inflammatory lesions. Now that Amrozi is here, I think our commercial team has done a great job building awareness that Amrozi is here. Talking about the great benefits from the Phase III clinical trials. If I may, just highlight two things. One, we're showing a superiority in IGA success over a sixty percent greater than what Oratia demonstrated. And then when you take a look at inflammatory lesions, Amrozi is showing approximately a thirty percent better inflammatory lesion reduction. So I think that message is penetrating well. Physicians, dermatologists, HCPs, and so forth are trying it on new patients right now. And as those patients come back in for their second visit to the dermatology community, they're seeing that those results from Phase III are actually happening in their own practices with their own patients. That's going to help build reinforcement, take those physicians that are writing maybe one or two prescriptions to doubling that and tripling that and so forth. So I think you'll see a snowball effect taking place there. And those are really new patients. I think you're going to see the fact that as there's more confidence that's built with the dermatology community, our sales organization, marketing organization will be asking for switches as well from Oratia over to Amrozi. And again, that takes time and just a little history to start to happen and I think that will take place. There's about 14,000 dermatologists. We're only at 2,700 right now. We're focused on a core. But naturally, we are calling altogether in our universe more than 5,000. So you'll see that number expand as well. And we're going to get more out of the ones that have been trying it. And waiting to observe their patients coming back in. So the NRx to TRX ratio is going to benefit from this as well. So right now, it's about one to one. In October, we're seeing about one to 1.2. And we expect that to go up to hopefully one to three and maybe even more than that, Brandon. So there's a lot of variables in play here. Which really gives us great potential for fantastic success and becoming the standard of care in time.

Great. Thanks very much, Claude, and congrats on all the progress.

Thank you.

The next question will come from Scott Henry with AGP. Please go ahead.

Thank you. Good afternoon and congratulations to the whole team on the Amrozi launch. It's been very impressive so far. Just a couple of questions. And I know I ask about this a lot. Revenue per script looked like it was about $380,000 in Q2. About $275,000 in the third quarter. Do you think the third quarter is probably a pretty good reflection? Or was there any stocking or destocking that could maybe move that number around? Just trying to get a sense of how we should think about that net revenue per script.

Sure. Always a good question. Always a fair question, Scott. Gross to net is going to continue to vary. As reimbursement for the product, it's just very early. We're only two quarters into it and it's just dynamic at this point. As I mentioned, we are going to be getting a third GPO into play here early in 2026. And I think we'll see some nice improvements with that once that takes place. And that's just part of the system. We have to give it a little bit of time. And that's really why we aren't giving any particular guidance to gross to net at this point in time. So I don't think I can give you any further precision on that than what you're coming up with right now. But again, it's going to vary from our co-pay assistance program. It will be used less as there's better reimbursement from managed care companies.

That's helpful. I appreciate that color. I don't know if any of the other team members want to did you want them to mention anything? Yeah. Was just going to ask Joe or Ramsey if you wanted to add anything to that.

Well, I think just in summary, the more reimbursement we get, like you said, the less on the co-pay program. And, you know, we'll just we just can't give a number right now.

Okay. Fair enough. That's that's helpful. And then sort of a bigger picture launch question is we're trying to always trying to get an idea of what the launch curve looks like. And from my perspective, it looks like at worst, it's a consistently growing launch curve, but probably more likely an accelerating launch curve. How do you view the launch curve based on the four or five months you've had? And any any thoughts on that? All indicators are pointing to a very positive launch.

We're meeting our internal expectations for sure. I like what the sales force is doing out there. Again, those key indicators adding additional prescribers on board our focus on 3,200 physicians to start. We're well on our way to attaining that. I would expect that we will get there. And then we'll expand from that. So that's just one part of it. And I think the ratio between one new prescription to one refill will expand as well. And in time, think about it, we're getting 700, 800, 900 new prescriptions on a monthly basis now. Those are new patients coming into the market each and every single month coming onto the Amrozi brand. And if they continue getting those refills and getting expanding more than that first refill to two or three, you can see that potential momentum really accelerate. So time will tell. We're definitely moving in the right direction here.

Okay, great. Final question just quickly. Among the other products, Accutane, you mentioned the generic competition. I think you just saw the Q come up. It looks like it did about $2.8 million in the quarter. Do you think that's starting to base out? Or is there some more another leg down? How should we think about that Accutane franchise?

Yes. I would tell you that Accutane is off to a good start here in Q4. I think that when we're looking at it, we're in a good position right now. We believe it's stable. You never know what the other generic competitors do if they really play with price again to drive that down. And potentially take more market share. But all indications, we just had a nice uptick. We received October numbers right now. It's looking like it's stabilized from our vantage point right here. It's got a great name to it, lots of recognition. And this is a highly promotional sensitive area here. And I think with our team speaking to dermatologists about this keeping it in front of their mind I think we're in a good spot right now. So that's what I would say.

Okay, great. Thank you for taking the questions.

Your next question will come from Thomas Flaten with Lake Street Capital Markets. Please go ahead.

Hey, good afternoon guys. Thanks for taking the questions. You may have mentioned it and I probably missed it, but did you mention at all, Claude, what your retention rate has been of those 2,700 prescribers I think. You're So we continue to gain and we've got it split out obviously for the ones that are writing one to five and then five to 10 and so forth. All the way up to 20, 30, 40 etcetera. Scott. So but we didn't break it down, but it's a wide array. And obviously, as we bring on new prescribers, they fall in the lower buckets and over time they get to move into the secondary and tertiary and so forth. So no no specific guidance on that yet. Yes. No, what I was trying to get at was you know, for if there are those that might have trialed it a couple months ago and not come back to it, I'm just curious if there are any learnings for why those doctors haven't rewritten prescriptions either for the same patient or for other new patients? I see. So far If you have any learnings from that from those docs. no real key learnings in that front of it. What we are seeing, I guess, to to my point of view is we're getting trial. For new patients, for for doctors that have not initially tried it. So they're starting to dip their toe in the water. And then I think you have a month or until they get to see those patients back. You have the representatives going in doing the regular call schedule, reminding the doctors, dropping off samples, talking about our co-pay program. Our managed care coverage and so forth. Like I said that number continues to evolve and we really see a lot of patient excuse me, HCPs that are writing more than one. But that takes about three months or so and then they start to catapult to the next level. Physician feedback has been exceptional. They really like the way the product is is working. They like the side effect profile. Again, it's really just habit breaking of Oratia that they've been used to for so long. Haven't gotten any critical feedback on the product. That's great. And then just one final one, if if I may. QBREX

Yes. So fortunately for us, in terms of QBREX

Got it. Appreciate it. Thanks guys.

The next question will come from Mayank Mamtani with B. Riley Securities. Please go ahead.

Yes. Good afternoon, team. Thanks for taking my questions and congrats on a strong quarter. So on this ratio of paid scripts, how do you expect this to evolve with some of the payer updates you shared today? And I'm obviously just trying to reconcile sequentially revenue growth versus the TRx growth. And it looks like in October, your month over month on TRx is about roughly 15%. So yes, if you could maybe just give us some color on how to think about sequential revenue growth versus sequential TRx growth? And then I have a follow-up.

Yes, sure. In terms of, as you're mentioning, of covered claims, look, we're executing well against our market access plan. We are seeing some solid progress month over month. Claude had mentioned that early next year, we'll have the third of the three large GPOs contracted with. And it very much is a top-down approach. And there are multiple layers between GPOs, PBMs, and the downstream health plans, right, and each one operates on its own schedule. From our side, everything we can control is on track. Our market access team does have the strong relationships. There is value proposition for Amrozi that's resonating in payer feedback has been positive. So overall, pleased how these things are developing. It's exactly what we'd expect at this stage of launch. And as more plans and formularies adopt, you'll start to see that revenue that shift in revenue. Generation as well.

Yes. Mayank, I just want to add just want to add one thing here. Our focus right now is to continue to generate. You were asking about the prescription and the payer relationship, if you will. We are going to continue to drive prescriptions and each and every passing day we expect to make more incremental gains on the payer front. And then early next year, I think we're going to see a larger access, which will mean better reimbursement for the company. So time is going to be our friend. Over time here over the next few quarters. But it does take a little while.

Yeah. No, I totally hear you. And then on the duration of therapy that you've seen so far, I know you gave this refill to NRX one to one ratio, but is there any real world data you have on persistence? And we have this concept of long term response Eurasia. So I was just curious if you have learned anything in the real world on how what the duration of therapy would trend?

It's a great question. It's a difficult question to give you anything with hardcore data. Anecdotally, what we continue to hear is that they are seeing and appreciating the results the patients have, the feedback from patients has been very good. In terms of getting refills, we're seeing that. I think in another five, six months we'll be able to give you a more precise answer. But every indication looks like refills are going in. We're able to capture refill data internally with in fact our co-pay program as well as just reading the prescription numbers from Symphony and IQVIA. So all trends are positive. But we're hoping to see three to four refills at least through a twelve-month period. You also have to take into effect rosacea. We have a very quick effect. As little as two weeks patients are seeing very good results with Amrozi. Obviously, it varies. Some people will take longer, some people will be at two weeks. But depending on how the flare-ups are, how long the rosacea stays calm until the next flare-up is another part of this that we're learning and keeping a close eye on.

Understood. And lastly for Joe on the financial piece, your expectation for OpEx growth next year based on how launch is progressing and it does seem you're tracking high single-digit year over year this year. Is that a similar trend expect next year? Just thinking about operating leverage also. Thanks for taking my question.

All right. Thanks. Yes. So really, the key is leveraging our current infrastructure. The increase in expenses, any incremental expense should be more than offset by increases in revenue. Like we said in our prepared remarks, we expect to remain relatively consistent from period to period and into 2026. So as revenue grows, we think the leverage in our operating results will continue to come through. And any increase in revenue should support a higher revenue base also. Thanks.