FBIO - NASDAQ

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Journey Medical’s Second Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and it's also being recorded for playback purposes. Our webcast replay of the call will be available approximately one hour after the end of the call for approximately 30 days. I would like now to turn the call over to of , the Company's Investor Relations. Please go ahead, sir.

Thank you, Carolyn. Good afternoon, everyone. And thank you for participating in today's conference call. Joining me from Journey medical Corporation's leadership today are Claude Maraoui, Co-Founder President and Chief Executive Officer, Ernest De Paolantonio, Chief Financial Officer, Ramsey Alloush, General Counsel and Dr. Srinivas Sidgiddi, Vice President of Clinical Development and Medical Affairs, who will also be joining us for the question-and-answer session. During this call, management will be making forward-looking statements including statements that address Journey Medical's expectations for future performance or operational results. 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 Journey Medical's most recently filed periodic reports, on Form 10-K and Form 10-Q, Form 8-K filed with the SEC today, and the company's press release that accompanies this call, particularly the cautionary statements within. Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance. You should not consider this additional information in isolation, nor as a substitute for results prepared in accordance with GAAP. For reconciliation of this non GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in the company's earnings press release. The contents of this call contain time sensitive information that is accurate only as of today, August 9, 2022. Except as required by law, Journey Medical disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It's now my pleasure to turn the call over to Claude Maraoui Co-Founder President and Chief Executive Officer. Claude.

Thanks, Jules. Good afternoon, and thanks to everyone for joining or second quarter 2022 conference call. Journey continued to show solid growth in the second quarter of 2022, despite the challenge of supply chain delays during the quarter that reduced the availability of product for sale. However, this was a temporary setback as these delays were resolved in July, and we feel confident that we will recover a significant portion of these lost revenues over the remainder of the year. Our flagship products QBREX

Thanks, Claude, and hello, everyone. I will now review the second quarter financial results. Total net revenues increased 3 million or 20% to $18.3 million for the three months period ending June 30, 2022 from 15.3 million for the three month period ended June 30, 2021. Net revenue growth from period the period is primarily due to year-over-year revenue growth of QBREX

Thank you, Ernie. We are looking forward to achieving a day National milestone events in the second half of 2022 including the completion of second half of 2022, including the completion of enrollment for both Phase 3 clinical trials for DFD-29 and the launch of another prescription dermatology product to add to our portfolio. With a strong foundation and the continued momentum in our new products, we expect to achieve another year of record revenues in 2022. I will now turn the call over to the operator for questions. Thank you.

The first question comes with Brandon Folkes with Cantor Fitzgerald.

Maybe just for me starting off on DFD-29. What do we need to see in the data in order to differentiate the product from others? And then how does the enrollment at the stage compare to your initial expectation?

I'll just start I'm going to hand it over to our Vice President of Clinical Development, Dr. Srinivas Sidgiddi. But overall, in summary, we are on track regarding the clinical trials for DFD-29 and enrollment and going on track with our plan. I'm going to have Dr. Sidgiddi take it from here and give you some more details. Sidgiddi?

16.17 The enrollment for the two studies, the Phase 3 studies MVOR-1 and MVOR-2. So that's the acronym that we have given to the Phase 3 studies. MVOR essentially stands for minocycline versus arratia and rosacea. And the enrollment for the two studies is going on as planned, there is a slight delay on the European leg of the second study. And that is because of things that are out of our control, regulatory approvals, et cetera, have been delayed. But otherwise, the overall enrollment still within what we had anticipated, and within the buffers that we have had. So that's the first question or the second part of the question was about differentiation. In rosacea, we anticipate to see a significant improvement on the inflammatory lesions and the investigator global assessment, which are the two primary endpoints for this study. So we essentially would like to see a significant difference on the inflammatory lesion counts, as well as the erythema component of rosacea. Those are the two things that would differentiate us from the other products.

Next question comes with Mayank Mamtani with B. Riley FBR.

Just may be first on the QBREX

Regarding QBREX

Repeat versus new prescriptions?

Sure, sure. I think just as far as looking into the new prescriptions with Symphony data, and as of the most recent month, new prescriptions have been trending upward. In January, for example, we were at 3600 prescriptions for the month in new prescriptions. And in June, which is the most recent data, we’re all the way up to approximately 5400 prescriptions. And then when you take a look at that comparator and look at the ratio of total prescriptions, we've more than doubled that. So for example, again, NRx's in June at 5400 and TRx's in June, total prescriptions at approximately 12,000 prescriptions. So I think that's a good indicator and sign that we are getting, and increasing our refill rates as well.

Great. And then a second follow-up to the earlier question that Srini addressed, if you could comment on your assumptions on the placebo and the active comparator in the two studies that you're doing the MVOR-1 and MVOR-2 and sort of Srini could you just comment on the expectation for an effect size on the IGA and the influence that -- lesion count reduction endpoint?

Sure, Mike, thank you so much for the question. And it's a really good question. We have looked at the efficacy that we saw in the Phase 2 study that was conducted in Europe, in which we had DFD-29, as one of the arms, and we had Oracea, that is the European Oracea, as well as placebo. And we have used those estimates, in the calculation of the sample sizes for this Phase 3 program. To give you a brief about what kind of efficacy we have seen there, We had seen IGA treatment success of 66% for the DFD-29 40 mg, versus 33% for Oracea, and 11% for placebo. Those were the estimates that we use for calculation of sample sizes.

Very helpful. And my final question, just high-level, maybe for Claude and ErnIE, at what stage, you will feel comfortable talking about a little longer term projection and maybe talk about giving guidance. I understand you have some one-off supply chain dynamics and with certain products, competitive dynamics. So this just curious, at what point do you feel, you'd have a good command of thinking, I had like two, three quarters and maybe even thinking about the next year from a financial guidance standpoint?

Sure, first of all, I think we are getting closer to giving guidance in terms of getting the new assets on board that we acquired in January with AM

We're still getting our portfolio of products from normalize where we can make such estimates for our earnings. But as Claude said, I think in the upcoming quarters, you'll see us start to provide guidance.

Sri, if you don't mind, just a follow-up on the DFD-29. How many sites -- can you go over how many sites we have enrolled now for the study?

So we initially planned to have 29 sites in both the studies MVOR-1 and MVOR-2, which means that we would have 58 sites for the U.S. and Europe combined. And we plan to get 640 subjects from these 58 sites. Currently, we stand at 30 sites that are enrolled into the MVOR-01 study. Those are entirely in the United States. And then on MVOR-2, we have 15 sites in the U.S. that have been enrolling patients. And we have 14 sites that are coming up in Europe, of the 14 we have nine sites in Germany that are initiated or in the process of being initiated. We are awaiting approval from the Polish competent authority, after which we will be starting the four sites in Poland as well. So as of now we have 29 sites on DFD-29, 29 MVOR-01 study and the 15 sites in the U.S. for the MVOR-02 study plus additional five sites that have been initiated in Germany as of today.

Thank you very much gentleman and that concludes our question-and-answer session. I would like now to turn the call back over to Claude Maraoui. Please go ahead, sir.

Thank you very much. I want to thank all of you for participating on today's call and your interest in Journey Medical. We look forward to sharing our ongoing process when we report our third quarter results in November. Thank you and have a good day.