Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to Journey Medical's Second Quarter 2025 Financial Results and Corporate Update Conference Call. Participants of 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 this call will be available approximately 1 hour after the end of the call for approximately 30 days. I would now like to turn the call over to 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's leadership team are Claude Maraoui, Co-Founder, President and Chief Executive Officer; and Joseph Benesch, Chief Financial Officer. Joining for the Q&A portion of the call will be Ramsey Alloush, Chief Operating Officer and General Counsel; Dr. Srini Sidgiddi, Vice President of Research and Development; and Louis Donati, Director of Market Access. During this call, management will be making forward-looking statements, including statements that address, among other things, Journey Medical'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's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K 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 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, 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, Tuesday, August 12, 2025. 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 is now my pleasure to turn the call over to Claude Maraoui, Co-Founder, President, and Chief Executive Officer of Journey Medical.

Thank you, Jaclyn, and good afternoon to everyone on the call today. The second quarter of 2025 marks the first full quarter since we introduced EMROSI, our best-in-class oral rosacea treatment, into the market. Today, I am pleased to report that our second quarter net product revenue of $15 million included approximately $2.8 million of EMROSI sales, surpassing our prior year quarter sales and contributing to a notable improvement in the business's gross profit margins. Our strategic initiatives aimed at optimizing operations and controlling our overall operating expenses have further enhanced progress toward our goal of becoming sustainably EBITDA positive later this year. We continue to execute on the launch with EMROSI prescriptions increasing at an impressive pace as we gain additional traction with dermatology prescribers. Patients have positive experiences with the product, and we continue to expand the number of covered lives with health plan access to EMROSI. As anticipated, Accutane sales were pressured due to aggressive pricing from generic competition. Sales of the product declined compared to the prior year period. However, we were pleased to see our growth brands more than offsetting the decline. While we work to stabilize our Accutane business, we remain focused on the growth of EMROSI and QBREXZA, our #1 and #2 sales details, respectively. We believe that these products can drive significant revenue growth and earning power regardless of additional Accutane sales volatility if it continues. The awareness that we have created for EMROSI and the positive responses from physicians and patients thus far have become evident in the prescription trends for the product. Through the end of July, we have generated over 12,800 EMROSI prescriptions based on TRx data from Symphony Health. Each month since we've launched EMROSI, total prescriptions have reached a new high, and on a weekly basis, each successive week has come in higher than the prior week, with the exception of the Memorial Day and July 4 holidays. Additionally, I am pleased to report that in EMROSI's third month of promotion, the product has achieved more than 10% share of new prescription demand among dermatology writers, which is our initial prescriber target. Supporting these strong prescription trends is the significant increase in payer access for EMROSI from 30% of commercial lives in May of this year to approximately 65% of commercial lives as noted in our announcement in July. Our ability to obtain a strong base of plan access so early in the launch demonstrates the strength of our clinical package and the value proposition that EMROSI offers to patients and payers. Additionally, on our first quarter earnings call, we announced that there were approximately 660 unique prescribers of EMROSI at the time. Today, I am pleased to report that we have now seen over 1,800 unique prescribers for EMROSI to date. This is a testament to the effectiveness of our commercial team and the unmet need EMROSI is addressing. We are pleased with the progress that we have made in rapidly creating awareness for EMROSI and achieving the significant payer coverage, high unique prescriber count, and strong prescription ramp in a little over 1 quarter since the promotion of the product began. As a result, we expect to build on this momentum, and the traction so far reinforces our confidence that EMROSI will generate high contribution margins and provide significant leverage toward our overall profitability and growth. Importantly, our established dermatology commercial organization offers significant leverage as we grow our product sales. Our total operating expenses were mostly flat year-over-year, reflecting our higher gross profit margins and lower R&D costs. In addition, our cash management discipline resulted in minimal cash use in the quarter. As a result, we believe the company has the financial resources and is well-positioned to execute on our business plan through the end of 2025 and into the foreseeable future. During the second quarter, EMROSI gained additional visibility with the product being featured in a segment on The Balancing Act on Lifetime TV. Additionally, clinical data from our Phase III program evaluating EMROSI for the treatment of moderate to severe papulopustular rosacea in adults were presented at the Society of Dermatology Physician Associates or the SDPA Summer Dermatology Conference in June. The data showed that EMROSI provides consistent relief of key rosacea symptoms with no adjustments needed for patients based on body weight. Lastly, we were pleased to see Journey Medical's common stock added to the small-cap Russell 2000 and broad market Russell 3000 indexes, broadening public awareness and institutional investor ownership of our shares. And just yesterday, we were honored to be in New York City to participate in the ringing of the closing bell for the Nasdaq Exchange. We have achieved so much in recent months that it is hard to believe EMROSI has only been on the market a little over 1 quarter. Yet we believe the progress really speaks to the product's therapeutic value as the best-in-class oral rosacea treatment and its potential to become standard of care. Our dermatology-focused commercial team is committed to monetizing this important asset, and I believe that the execution on our launch progress so far is demonstrating our ability to take our company to new heights. I'll now turn the call over to our CFO, Joe Benesch, who will review the financial results for the second quarter.

Thank you, Claude, and good afternoon to everyone on the call. The total net revenue for the second quarter of 2025 was $15 million compared to $14.9 million 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. This was offset by a decrease in Accutane revenue of $2.3 million, driven by generic competition. Our gross margin increased to 67% for the second quarter of 2025 from 61% in the prior period. The lower overall product cost of goods mainly related to product sales mix, notably EMROSI and Accutane. R&D costs were nil in the second quarter of 2025 compared to $900,000 in the second quarter of 2024. The second quarter of 2024 included EMROSI pre-approval project expenses. Looking now to our SG&A expenses, SG&A increased by $1.6 million to $11.9 million for the second quarter of 2025 compared to $10.3 million for the second quarter of 2024. The increase is mainly due to the incremental operational activities related to the launch and commercialization of EMROSI. Continuing to our net loss for the period, the net loss to common shareholders was $3.8 million or $0.16 per share basic and diluted for the second quarter of 2025 compared to a net loss to common shareholders of $3.4 million or $0.17 per share basic and diluted for the second quarter of 2024. The second quarter of 2024 includes EMROSI pre-approval project expenses. We ended the second quarter of 2025 with $20.3 million in cash compared to the same $20.3 million at December 31, 2024, which reflects minimal cash burn for the year-to-date period. Thank you very much. I will now turn the call back over to Claude.

Thank you, Joe. We delivered solid performance in the second quarter with EMROSI leading the way. While it is still in the early days of the launch, prescription volumes have shown strong initial uptake and are expected to continue on this path. We continue to educate physicians on EMROSI's best-in-class product profile through our marketing efforts, conference attendance, and data presentations. We are also continuing to leverage the favorable peer-reviewed article in JAMA Dermatology, highlighting the positive Phase III clinical results of EMROSI, as well as the updated treatment algorithms from the National Rosacea Society, citing EMROSI's utility in the treatment of rosacea, both of which were published earlier this year. These efforts are showing tangible results, with the number of unique prescribers nearly tripling since May. Importantly, our strong early ramp in payer coverage, our patient assistance program, and the availability of EMROSI in the vast majority of dermatologists' preferred pharmacies also demonstrate our ability to execute on key launch tactics and ensure that patients receiving a prescription of EMROSI are able to get that prescription filled. Given our execution thus far and the initial traction we are seeing, we believe that we are on pace to achieve our launch objectives and facilitate EMROSI in becoming the standard of care in the treatment of rosacea. For the second half of the year, we remain focused on expanding the base of EMROSI prescribers, growing prescription volume, expanding payer access, and converting more of the prescription volume into revenue. We are confident that the prescription ramp for EMROSI will continue to build momentum and enable us to generate strong revenue growth going forward. This will enable us to further leverage our established dermatology infrastructure, increase our margins, and accelerate our path to profitability. In closing, I believe that we are well positioned to achieve our core objectives, which are to improve the lives of patients, offer 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.

The first question comes from Thomas Flaten with Lake Street Capital Markets.

Congrats on a solid EMROSI performance. Claude, you mentioned coverage being 65% or so. What is your goal for the end of the year?

So thanks, Thomas. Good to talk to you. The managed care and the payer percentage, I'm going to pass that along to Ramsey Alloush, our CEO, to answer that.

Thomas, thanks for the question. So in terms of coverage, yes, we did disclose that we're at 100-plus million lives, about that 65% or so. We haven't publicly disclosed what that target is going to be. We are continuing to grow that. What I can tell you is that's the quantity side. So we're building out the framework. It covers, again, over 100 million lives. So that's access to the EMROSI drug. We're also working on the quality. So that's getting it on formularies, getting that implementation. That takes a bit more time as well, right? So it's a two-pronged approach. They run parallel. So we'll continue to increase the quantity coverage as the year goes on, but it's also equally important to get the quality so we can convert that into revenue.

Awesome. And then maybe one for Joe. You had a nice step-up in gross margins. Can you just give us a sense of how you see that evolving over the course of the year? Should we assume incremental improvements in gross margin over the second half of the year?

Yes. Thanks, Thomas. So product mix is really the driver of the gross margin. EMROSI is a very low-cost product. So we expect this to continue. We believe it represents a reasonable baseline going forward. So as EMROSI gains a larger percent of our margins, with the sales mix, we expect the margins to improve.

Got it. And then just one quick final one for me. What do you need to see, or at what point do you think you'll be comfortable giving guidance for the year and then looking into next year, certainly?

Yes. Thomas, as you're aware, we just finished our first quarter right now, and it's really early in the start of a brand new launch. So we're going to wait a few more quarters before we give hard guidance in that. So it's real early, and it's going to just take a little bit more time.

Next question comes from the line of Scott Henry with AGP.

Congratulations on a great start for EMROSI. It's been impressive. I have a couple of questions. First, if we take the revenue for the quarter and divide it by the prescriptions, that gives us a revenue per script of around $375, depending on the exact numbers used. I believe the expectation might be around $300 net revenue per script. There’s a lot of variability in the earlier quarters, so I'm curious about your thoughts on what we might expect for net revenue per script based on the data you've observed over the past quarter.

Scott, I would tell you that I wouldn't recommend just doing that simple math on volume and the reported sales. We still have a significant proportion of scripts utilizing our patient assistance program and coupons, and there could be significant delays in reimbursement from payers. So at this point, we're not going to give guidance to that average selling price.

Okay, that makes sense. There will certainly be a lot of fluctuations in these initial quarters. I would like to hear your thoughts on the summer seasonality for the rosacea market. Typically, dermatologists see fewer patients in the summer because people are outdoors in the sun and their skin tends to be drier. Do you think that's accurate, and could it indicate a positive outlook heading into the fall months?

I think the market has been stable. There is some seasonality to consider, but overall, we are on a good trajectory. Our ramp is progressing well, and we are experiencing significant growth week-over-week and month-over-month due to the brand-new launch within EMROSI. I don’t anticipate seasonality having much of an impact at this point. As the product matures into years 2 and 3, I believe that seasonality may become more of a consideration.

Yes. I was thinking more that it could be a tailwind coming out of the summer, meaning you've got a good launch going in one of the tougher seasons. So that could be a nice tailwind when we get into the fall. But I appreciate your comments.

No, I agree with that.

Okay, great. For my final question, could you provide us with the number for QBREXZA? It appears to be around $6.3 million.

For the year or the quarter?

For the quarter.

Right. $6.9 million for the quarter.

Next question comes from the line of Mayank Mamtani with B. Riley Securities.

Congrats on the strong start to EMROSI launch. Also a follow-up to a prior question. The impressive NRx volume growth that we're seeing, trying to reconcile that with the sales you have here, $2.8 million and then the $2.1 million stocking you had in 1Q. Can you maybe just give a little bit more color on how the payer rebating and also maybe any stocking dynamics we should be aware of? And then I have a follow-up.

Yes. I mean I'll take one part of that. Early when we first got all of our inventory needed to launch the product successfully, we did do a stocking of the channel, if you will, in Q1, late March of this year. And now you're just seeing the ramp picking up and just moving along in its cycle and the internal expectations that we've expected. In terms of the payer and the co-pay assistance program, that dynamic is going to change over the next several quarters and evolve. We expect, as more managed care and the different plans sign up, we're going to have less utilization of the co-pay assistance program and more coming in through the managed care program. So that's evolving right now. And as we pick up volume with prescriptions, again, as we're seeing from month to month, that dynamic will change as well.

Yes. The current demand is really helping us in our negotiations with managed care. We announced in July that we partnered with one of the largest GPOs, and we are in advanced discussions with the other two. However, it takes time to implement with the plans and pharmacies before we start to see an increase in covered prescription volume. We are actively monitoring this and diligently working with all the plans, as there are many of them. Eventually, this effort will translate into revenue, but it does require time. We launched on April 7, and we are pleased with the progress we have made so far.

Great. Regarding the 10% market share reported among high-volume dermatologists in the target initial segments, do you have a year-end goal in mind? Also, can you share any early refill adherence trends for EMROSI and possibly compare them to what we observed with ORACEA at its launch?

Yes. So I'm going to speak in generalities here because we just haven't given guidance. And again, the launch is off to a great start, right? We're 3, 4 months into it now. So the 10% new prescriptions in June is fantastic. We see that continuing to grow. In terms of new prescriptions to total prescriptions refills, we're seeing a strong uptake. And again, that is growing as well from month to month. Not going to give specific ratios quite yet on that. And then the new prescriptions and total prescriptions expectations, if we continue going the way we are, we'll certainly meet all of our goals that we want and that EMROSI is delivering. I think the key is to take away, one, we went from 660 unique prescribers to well over 1,800 prescribers. These are prescribers that we targeted. There was about 3,200 that we've looked at and have gone after. So we've done a great job in getting access to them and getting them to give trial to the product. We're getting exceptional feedback in terms of how patients are responding when they come back in. I think another dynamic that's important is that right now, we are getting EMROSI filled for the most part with new patients coming in with rosacea. So that's really been what's been bringing this good strong uptake. I think once they get really comfortable with that, we're hoping and expect to start seeing conversion from ORACEA over to EMROSI. Lastly, Mayank, the launch of ORACEA was 20 years ago. So it's very difficult for us, especially with the whole landscape of payers and managed care, to really look at that on the same playing field. So we're not looking at that as a strong analog to consider.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.