UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission File Number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |
☒ | Smaller Reporting Company | |||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class of Common Stock |
| Outstanding Shares as of November 11, 2024 |
Common Stock Class A, $0.0001 par value | ||
Common Stock, $0.0001 par value |
JOURNEY MEDICAL CORPORATION
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | ||
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i
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands except for share and per share amounts)
| September 30, |
| December 31, | |||
2024 | 2023 | |||||
ASSETS |
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Current assets |
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Cash and cash equivalents |
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Accounts receivable, net of reserves |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Intangible assets, net |
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Operating lease right-of-use asset, net |
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Other assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable | $ | | $ | | ||
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Accrued expenses |
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Accrued interest | | | ||||
Income taxes payable |
| — |
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Installment payments – licenses, short-term |
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Operating lease liability, short-term |
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Total current liabilities |
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Term loan, long-term, net of debt discount | | | ||||
Operating lease liability, long-term |
| — |
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Total liabilities |
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Commitments and contingencies (Note 13) |
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Stockholders’ equity |
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Common stock, $ |
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Common stock - Class A, $ |
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Additional paid-in capital |
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Accumulated deficit |
| ( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
1
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Operations
(Dollars in thousands except for share and per share amounts)
| Three-Month Periods Ended |
| Nine-Month Periods Ended | |||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenue: | ||||||||||||
Product revenue, net | $ | | $ | | $ | | $ | | ||||
Other revenue | — | | — | | ||||||||
Total revenue | | | | | ||||||||
Operating expenses |
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Cost of goods sold – product revenue |
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Research and development |
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Selling, general and administrative |
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Loss on impairment of intangible assets | — | — | — | | ||||||||
Total operating expenses |
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Income (loss) from operations |
| ( |
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Other expense (income) |
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Interest income |
| ( |
| ( |
| ( |
| ( | ||||
Interest expense | | | | | ||||||||
Foreign exchange transaction losses | | | | | ||||||||
Gain on extinguishment of debt | ( | — | ( | — | ||||||||
Total other expense (income) |
| ( |
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Income (loss) before income taxes | ( | | ( | ( | ||||||||
Income tax expense |
| — |
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| — |
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Net income (loss) | $ | ( | $ | | $ | ( | $ | ( | ||||
Net income (loss) per common share: | ||||||||||||
Basic | $ | ( | $ | | $ | ( | $ | ( | ||||
Diluted | $ | ( | $ | | $ | ( | $ | ( | ||||
Weighted average number of common shares: |
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Basic | | | | | ||||||||
Diluted | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
2
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Dollars in thousands except for share and per share amounts)
Nine-Month Period Ended September 30, 2024
Total | |||||||||||||||||||
| Common Stock |
| Common Stock A | Additional | Accumulated | Shareholders’ | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | ||||||
Balance as of December 31, 2023 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Share-based compensation | — |
| — | — |
| — |
| |
| — |
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Exercise of stock options for cash | | — | — | — | | — | | ||||||||||||
Issuance of common stock for vested restricted stock units | | — | — | — | — | — | — | ||||||||||||
Issuance of common stock under ESPP | | — | — | — | | — | | ||||||||||||
Issuance of common stock, ATM offering, net of issuance costs of $ | | — | — | — | | — | | ||||||||||||
Net loss | — |
| — | — |
| — |
| — |
| ( |
| ( | |||||||
Balance as of September 30, 2024 | | $ | | | $ | | $ | | $ | ( | $ | |
Three-Month Period Ended September 30, 2024
Total | |||||||||||||||||||
| Common Stock |
| Common Stock A | Additional | Accumulated | Shareholders’ | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | ||||||
Balance as of June 30, 2024 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Share-based compensation | — |
| — |
| — |
| — |
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| — |
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Exercise of stock options for cash | |
| — | — |
| — |
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| — |
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Issuance of common stock for vested restricted stock units | |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
Issuance of common stock under ESPP | | — | — | — | | — | | ||||||||||||
Issuance of common stock, ATM offering, net of issuance costs of $ | | — | — | — | | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance as of September 30, 2024 | | $ | |
| | $ | | $ | | $ | ( | $ | |
Nine-Month Period Ended September 30, 2023
Total | |||||||||||||||||||
| Common Stock |
| Common Stock A | Additional | Accumulated | Shareholders’ | |||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | ||||||
Balance as of December 31, 2022 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Share-based compensation | — |
| — | — |
| — |
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| — |
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Exercise of options for cash | | — | — | — | | — | | ||||||||||||
Issuance of common stock for vested restricted stock units | | — | — | — | — | — | — | ||||||||||||
Net loss | — |
| — | — |
| — |
| — |
| ( |
| ( | |||||||
Balance as of September 30, 2023 | | $ | | | $ | | $ | | $ | ( | $ | |
Three-Month Period Ended September 30, 2023
Total | |||||||||||||||||||
| Common Stock | Common Stock A | Additional | Accumulated | Shareholders’ | ||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Paid-in Capital |
| Deficit |
| Equity | ||||||
Balance as of June 30, 2023 | | $ | |
| | $ | | $ | | $ | ( | $ | | ||||||
Share-based compensation | — |
| — |
| — |
| — |
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| — |
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Exercise of options for cash | | — | — | — | | — | | ||||||||||||
Issuance of common stock for vested restricted stock units | |
| — | — |
| — |
| — |
| — |
| — | |||||||
Net loss | — |
| — |
| — |
| — |
| — |
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Balance as of September 30, 2023 | | $ | |
| | $ | | $ | | $ | ( | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
3
JOURNEY MEDICAL CORPORATION
Unaudited Condensed Consolidated Statements of Cash Flows
(Dollars in thousands except for share and per share amounts)
| Nine-Month Periods Ended | |||||
September 30, | ||||||
| 2024 |
| 2023 | |||
Cash flows from operating activities |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Bad debt expense |
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Non-cash interest expense |
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Amortization of debt discount |
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Amortization of acquired intangible assets |
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Amortization of operating lease right-of-use assets |
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Share-based compensation |
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Loss on impairment of intangible assets | — | | ||||
Gain on extinguishment of debt | ( | — | ||||
Changes in operating assets and liabilities: |
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Accounts receivable | | | ||||
Inventory |
| ( |
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Prepaid expenses and other current assets |
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Accounts payable |
| ( |
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Due to related party |
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Accrued expenses |
| ( |
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Accrued interest | | ( | ||||
Income tax payable |
| ( |
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Lease liabilities | ( | ( | ||||
Net cash (used in) provided by operating activities |
| ( |
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Cash flows from investing activities |
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Acquired intangible assets |
| — |
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Net cash used in investing activities | — | ( | ||||
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Cash flows from financing activities |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock, ATM offering, net of issuance costs |
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Issuance of common stock under ESPP | | — | ||||
Proceeds from term-loan, net of issuance costs | | — | ||||
Payment of license installment note payable | ( | ( | ||||
Proceeds from line of credit | — | | ||||
Repayments of line of credit | — | ( | ||||
Repayment of EWB term-loan | — | ( | ||||
Payment of issuance costs associated with EWB term-loan modification | — | ( | ||||
Net cash provided by (used in) financing activities |
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| ( | ||
Net change in cash |
| ( |
| ( | ||
Cash at the beginning of the period |
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Cash at the end of the period | $ | | $ | | ||
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Supplemental disclosure of cash flow information: | ||||||
Cash paid for interest | $ | | $ | | ||
Cash paid for income taxes | $ | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
JOURNEY MEDICAL CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. ORGANIZATION AND PLAN OF BUSINESS OPERATIONS
Journey Medical Corporation (“Journey” or the “Company”) is a commercial-stage pharmaceutical company 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. The Company’s current product portfolio includes
As of September 30, 2024 and December 31, 2023, the Company was a majority-owned subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).
Liquidity and Capital Resources
At September 30, 2024, the Company had $
On December 27, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $
On July 9, 2024, the Company entered into an amendment (the “Amendment”) to the Credit Agreement. The Amendment increased the original principal amount of the Credit Facility from $
On December 30, 2022, the Company filed a shelf registration statement on Form S-3 (File No. 333-269079), which was declared effective by the Securities and Exchange Commission (“SEC”) on January 26, 2023. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $
On September 19, 2024, the United Stated District Court Southern District of New York through the United States Marshalls notified the Company that it has recovered and will be returning to the Company a portion of the misappropriated cash in connection with the previously disclosed September 2021 cybersecurity incident.
5
The Company regularly evaluates market conditions, its liquidity profile, and financing alternatives, including out-licensing arrangements for its products, to enhance its capital structure. The Company may seek to raise capital through debt or equity financings to expand its product portfolio and for other strategic initiatives, which may include sales of securities under either the 2022 Shelf or a new registration statement. The Company cannot make any assurances that such additional financing will be available and, if available, the terms may negatively impact the Company’s business and operations. The Company’s expectations are based on current assumptions, projected commercial sales of products, clinical development plans and regulatory submission timelines, which may be uncertain and may not emerge as expected. As a result of recurring losses and the conditions described above, substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
NOTE 2. BASIS OF PRESENTATION
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated.
Emerging Growth Company
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s audited consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company meets the definition of an emerging growth company and elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates made by management include provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, and other allowances customary to the pharmaceutical industry. Significant estimates made by management also include inventory realization, valuation of intangible assets, useful lives of amortizable intangible assets and share-based compensation. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).
6
Accounting Standards Note Yet Adopted
In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of the new standard on its financial statement disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.
NOTE 4. INVENTORY
The Company’s inventory consists of the following for the periods ended:
| September 30, |
| December 31, | |||
($’s in thousands) | 2024 | 2023 | ||||
Raw materials | $ | | $ | | ||
Work-in-process |
| — |
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Finished goods |
| |
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Inventory at cost | | | ||||
Inventory reserves | ( | ( | ||||
Total inventories | $ | | $ | |
NOTE 5. INTANGIBLE ASSETS
The Company’s finite-lived intangible assets consist of acquired intangible assets. The Company’s intangible assets as of September 30, 2024 and December 31, 2023 are summarized as follows:
Estimated | |||||||||
Useful Lives | September 30, | December 31, | |||||||
($’s in thousands) |
| (Years) |
| 2024 |
| 2023 | |||
Intangible assets - product licenses |
| $ | | $ | | ||||
Accumulated amortization | ( | ( | |||||||
Accumulated impairment loss |
|
| ( |
| ( | ||||
Total intangible assets | $ | | $ | |
The Company’s amortization expense for the three-month periods ended September 30, 2024 and 2023 was $
7
Future amortization of the Company’s intangible assets is as follows:
For the years ended |
| Total Amortization | |
Remainder of 2024 | $ | | |
December 31, 2025 | | ||
December 31, 2026 |
| | |
December 31, 2027 |
| | |
December 31, 2028 |
| | |
Thereafter |
| | |
Subtotal | | ||
Asset not yet placed in service |
| | |
Total | $ | |
NOTE 6. LICENSES ACQUIRED
Emrosi
In June 2021, the Company entered a license, collaboration, and assignment agreement (the “DFD-29 Agreement”) to obtain global rights for the development and commercialization of Emrosi for the treatment of rosacea with DRL; provided, that DRL retained certain rights to the program in select markets including Brazil, Russia, India and China. Pursuant to the terms and conditions of the DFD-29 Agreement, the Company paid $
Qbrexza
In March 2021, the Company executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc., a subsidiary of Eli Lilly and Company (“Dermira”). Pursuant to the terms of the Qbrexza APA, the Company acquired the rights to Qbrexza® (glycopyrronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients
Accutane
In July 2020, the Company entered into an exclusive license and supply agreement for Accutane (the “Accutane Agreement”) with DRL. Pursuant to the Accutane Agreement, the Company paid $
8
NOTE 7. FAIR VALUE MEASUREMENTS
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities.
Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
| September 30, 2024 | |||||||||||
($’s in thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets |
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|
|
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Cash and cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Total | $ | | $ | — | $ | — | $ | |
| December 31, 2023 | |||||||||||
($’s in thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets |
|
|
|
| ||||||||
Cash and cash equivalents | $ | | $ | — | $ | — | $ | | ||||
Total | $ | | $ | — | $ | — | $ | |
The Company did not carry any level 2 or level 3 assets or liabilities at September 30, 2024 or December 31, 2023.
NOTE 8. RELATED PARTY AGREEMENTS
Shared Services Agreement with Fortress
On November 12, 2021, the Company and Fortress entered into an arrangement to share the cost of certain employees (the “Shared Services Agreement”). Fortress’ Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Shared Services Agreement, the Company will reimburse Fortress for the salary and benefit costs associated with these employees based upon actual hours worked on Journey-related projects following the completion of the Company’s initial public offering, which occurred in November 2021. In addition, the Company reimburses Fortress for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of the Company.
For the three-month periods ended September 30, 2024 and 2023, the Company recorded related party expenses to Fortress of approximately $
9
expenses incurred by Fortress on behalf of the Company. The Company would have incurred these costs irrespective of the relationship with Fortress.
Fortress Income Tax
At September 30, 2024,
Additionally, see Note 17 below for a discussion of income taxes.
NOTE 9. ACCRUED EXPENSES
Accrued expenses consisted of the following:
| September 30, |
| December 31, | |||
($’s in thousands) | 2024 | 2023 | ||||
Accrued expenses: |
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Accrued coupons and rebates | $ | | $ | | ||
Return reserve | | | ||||
Accrued compensation |
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Accrued royalties payable | | | ||||
Accrued legal, accounting and tax |
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Accrued marketing and market access | | — | ||||
Accrued research and development |
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Accrued inventory |
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Accrued iPledge program | | | ||||
Other |
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Total accrued expenses | $ | | $ | |
NOTE 10. OPERATING LEASE OBLIGATIONS
The Company leases
The Company recorded lease expense as follows:
| Three-Month Periods Ended | Nine-Month Periods Ended | ||||||||||
September 30, | September 30, | |||||||||||
($’s in thousands) | 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Operating lease cost | $ | | $ | | $ | | $ | |||||
Variable lease cost |
| | | | ||||||||
Total lease cost | $ | | $ | | $ | | $ |
The following table summarizes quantitative information about the Company’s operating leases:
| Three-Month Periods Ended | Nine-Month Periods Ended | |||||||||||
September 30, | September 30, | ||||||||||||
($’s in thousands) |
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Cash paid for amounts included in the measurement of lease liabilities | $ | | $ | | $ | | $ | | |||||
Weighted-average remaining lease term - operating leases |
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Weighted-average discount rate - operating leases |
| | % |
| | % |
| | % |
| | % |
10
As of September 30, 2024, future minimum lease payments under lease agreements associated with the Company’s operations were as follows:
$’s in thousands |
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Remainder of 2024 | $ | | |
2025 |
| | |
Total lease payments |
| | |
Less: present value discount |
| — | |
Total operating lease liabilities | $ | |
NOTE 11. DEBT
The Company’s debt obligations at September 30, 2024 and December 31, 2023 were as follows:
September 30, | December 31, | |||||
($’s in thousands) |
| 2024 |
| 2023 | ||
Principal balance | $ | | $ | | ||
Plus: Exit fee |
| |
| | ||
Less: Debt discount and fees | ( | ( | ||||
Net carry amount (Long-term) | $ | | $ | |
SWK Long-Term Debt
On December 27, 2023 (the “Closing Date”), the Company entered into a Credit Agreement with SWK. The Credit Agreement provides for a term loan Credit Facility in the original principal amount of up to $
Term Loans under the Credit Facility mature on December 27, 2027. The Term Loans accrue interest which is payable quarterly in arrears. The Term Loans bear interest at a rate per annum equal to the three-month term SOFR (subject to a
Beginning in February 2026, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to
The Company may at any time prepay the outstanding principal balance of the Term Loans in whole or in part. Prepayment of the Term Loans is subject to payment of a prepayment premium equal to (i)
Upon repayment in full of the Term Loans, the Company will pay an exit fee equal to
The SWK Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of the Company. As of September 30, 2024, the Company was in compliance with the financial covenants under the SWK Credit Facility.
11
As of September 30, 2024, the contractual maturities of the long-term debt, including the payment of the exit fee, are as follows (dollars in thousands):
Years ending December 31, |
| Term Loan | |
Remainder of 2024 | $ | — | |
2025 |
| — | |
2026 |
| | |
2027 |
| | |
Total |
| | |
Debt discount |
| ( | |
Total, net |
| | |
Current portion |
| — | |
Term-loan (long-term) | $ | |
NOTE 12: INTEREST EXPENSE AND FINANCING FEES
Interest expense and financing fees for the three and nine-month periods ended September 30, 2024 and 2023 consisted of the following: