Journey Medical Corporation

Good afternoon and welcome to the Journey Medical fourth quarter and full year 2021 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call for approximately 30 days. I would now like to turn the call over to Jules Abraham of CoreIR, the company's investor relations firm. Please go ahead, sir.

Jules Abraham Thank you, Chuck. Good afternoon, and thank you, everyone, for participating in today's conference call. Joining me from Journey Medical Corporation's leadership team today are Claude Merawi, co-founder, president, and chief executive officer, Ernie DiPalantonio, chief financial officer, and Ram Vialouche, general counsel, who will be joining 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 doctors described in Journey Medical's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the FCC 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 or 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 content of this call contains time-sensitive information that is accurate only as of today, March 23, 2022. And 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. With that, it's my pleasure to turn the call over to Claude Morawi, co-founder, president, and chief executive officer of Journey Medical. Go ahead, Claude.

Thanks, Jules, and good afternoon to everyone on the call. As you know, this is our first investor update call since our initial public offering onto the NASDAQ exchange in November 2021. While the express purpose of these quarterly calls is to report our financial results to our shareholders, I think it is also important that we provide context to these numbers. Let me begin by reviewing the significant milestones achieved in 2021. In March 2021, we launched arguably the most iconic brand name in dermatology, Accutane, which has contributed to our revenue growth for the company since its launch, and by all measurements, has a tremendous launch. The isotretinoin market has well over 2 million prescriptions annually. Accutane has achieved over 11% market share as of February 2022 Symphony data with 18,641 prescriptions. Notably, each prescription is equivalent to approximately 1.8 units sold. In the fourth quarter of 2021, Accutane generated net revenue of $4.4 million. In May, we acquired Q-Brexa from Dermira, a wholly owned subsidiary of Eli Lilly and Company. Q-Brexa is the first and only cloth towelette approved to treat primary axillary hyperhidrosis in patients nine years and older. There are approximately 10 million patients who suffer from this condition in the US. The second half of 2021, During our initial launch, we had approximately a 14% prescription growth versus the second half of 2020 under Dermira's sales team, which was more than double the size of Journey's sales team. In June, our next acquisition was a Phase III clinical asset, which we acquired from Dr. Reddy's for the Collaborative development and commercialization of the DFD29 program. That is modified release minocycline capsules, 40 milligram strength, currently being evaluated for the treatment of papulopustular rosacea. We acquired global commercialization rights, including the U.S. and Europe. In the phase two study, DFD29 demonstrated nearly double the efficacy over oratia in IGA success and total reduction in inflammatory lesion count, while maintaining a similar safety profile. Sixteen million patients suffer from rosacea, which correlates to an estimated one billion in prescription sales, with oratia holding approximately 340 million in prescription sales. We are pleased that the first patient dose in our Phase III clinical program occurred earlier this month. Most recently, in January of this year, we entered into a definitive agreement with Vine Therapeutics to purchase its molecule stabilizing technology franchise. The franchise includes the first and only FDA-approved topical minocycline products, Amzeek and Zilxy, along with the MST proprietary platform. We estimate that total investment in these products from development to launch prior to our purchase was between $200 million and $300 million. As a reminder, Our initial investment was $20 million up front and an additional $5 million on the one-year anniversary with no related royalties. Our first priority is to flatten out the regression trend on both of these new assets. After Vine dismissed their sales force back in August of 2021, the prescription volume fell considerably. Amzeek was down approximately 33%, and Zilksie was down approximately 22% before we acquired them. In 2021, under Vine, Amzeek and Zilksie brought in $13.8 million in net product revenue. With a targeted marketing message, the right copay assistance program coupled with the reach and frequency by Journey's seasoned sales force, we anticipate flattening the line and beginning to increase both of these efficacious quality brands. Notably, in 2022, our exclusive licensing partner in Japan, Maruho, announced that Japan's Ministry of Health, Labor, and Welfare approved Rapafort Wipes 2.5 percent, the Japanese equivalent of Cubrexa, for the treatment of primary axillary hyperhidrosis. This approval triggered a milestone payment of $10 million to Journey Medical, $7.5 million of which was paid to Dermira pursuant to the terms of the asset purchase agreement between Journey Medical and Dermira with net proceeds of $2.5 million earned by Journey Medical. In 2021, Journey Medical entered into an agreement with EastWest Bank in which EastWest Bank provided a $7.5 million working capital line of credit. In January 2022, Journey Medical successfully expanded the EastWest Bank credit agreement to $30 million. In July 2021, Journey Medical completed final closings under the cumulative convertible Class A preferred stock offering, receiving approximately 17 million in net proceeds. These shares were converted into Journey Medical common stock upon the IPO. In November 2021, Journey Medical completed its initial public offering of common stock of 3.52 million shares at a public offering price of $10 per share for net proceeds of 30.6 million after deducting underwriting discounts and offering expenses. IPO funding is in support of the clinical development and launch of DFD29, the expansion of our sales force, and marketing support of our recent acquisitions and general working capital. So simply from a product perspective, we expanded our dermatologic footprint to include nine marketed dermatology products and have two pivotal phase three clinical trials underway for DFD29, which is being evaluated for the treatment of papulopustular rosacea. We plan to launch one additional prescription product in the first half of 2022. This will be an antipyretic topical product that is free of histamines and steroids. Additionally, we are pleased to have expanded our sales force from 42 sales representatives to our optimized 84-member team. As you can see, we wasted no time prior to nor since our entry into the NASDAQ to create future value for our shareholders by entering into accretive acquisitions. And as Ernie will delve more into shortly, we have been laser-focused on creating that shareholder value through the generation of $63.1 million in revenue for the entirety of 2021, a 42 percent increase over the prior year of $44.5 million. The fourth quarter results of $17.5 million is a 28 percent year-over-year increase over $13.7 million in the same period in 2020. Finally, with a post-IPO cash position of $49.1 million, a seasoned sales force averaging 11 years of dermatology pharmaceutical experience, a 10-year leadership team, and a strategic development pipeline, we believe that Journey Medical is well positioned for continued growth in 2022 and beyond. With that, I'll turn the call over to Ernie, who will review our financial results for the fourth quarter and the full year.