Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to Journey Medical's Third Quarter 2025 Financial Results and Corporate Update Conference Call. 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 1 hour after the call for approximately 30 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'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. 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, Wednesday, November 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 third quarter of 2025 was another period of solid execution for Journey Medical as we delivered 21% year-over-year revenue growth. I am pleased to report that EMROSI, 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 Qbrexza, Accutane, Amzeeq and Zilxi were essentially flat sequentially compared to the second quarter of 2025. On a year-over-year basis, revenue for this product group in the aggregate declined 16%, mainly due to the impact from Accutane generic competition. Overall, we grew our product revenues by more than 16% compared to the same period last year, while our operating expenses rose just 9%. This highlights the leverage that we are beginning to generate with the launch of EMROSI and our established dermatology commercial infrastructure. We believe that this leverage will continue to increase as EMROSI's sales ramp has significant growth potential and our operating expenses are expected to remain relatively consistent. EBITDA continues to improve, and we continue to expect that Journey will become sustainably EBITDA positive in the fourth quarter. EMROSI achieved third quarter total prescription growth of approximately 146%, with 18,198 prescriptions in Q3 compared to the second quarter of this year with 7,394 prescriptions in Q2 as we have shown strong execution on our commercial plan. As is typical with pharmaceutical product launches, contracts are initially negotiated broadly with the three major GPOs, Ascent, Emisar and Zinc, and we have been very successful in the first phase of our payer strategy. As we previously announced in July, over 100 million of the 187 million commercial lives currently have access to EMROSI. Our market access team has successfully contracted with two of the three largest GPOs. And as we continue to pursue our strategy to broaden access further, we believe that contracting with the remaining GPO for EMROSI will be completed early next year. We are very pleased with our GPO contracting progress so far. However, downstream health plan formulary adoption and implementation takes time, up to three quarters on average once contracts are secured, which is standard for most drug launches. While some plans have immediately begun covering EMROSI prescriptions, many will take time to implement coverage and formulary adoption. In the interim, our patient co-pay assistance program is bridging the gap. As time progresses and as drug coverage increases, we expect reliance on our co-pay assistance program to decrease. Physician feedback, which has been a key driver in EMROSI's strong initial launch, continues to be very positive, with prescribers noting that their patients are doing exceptionally well on treatment. The feedback emphasizes EMROSI's clinical benefits, notably that EMROSI's early onset of efficacy in as little as two weeks of therapy. In line with this feedback, initial refill rates for EMROSI have come in strong. During the third quarter, refills and new EMROSI prescriptions were tracking at a 1:1 ratio. We believe that this metric indicates both prescriber and patient willingness not only to try EMROSI but also to continue on therapy beyond an initial prescription. In addition to anticipated continued growth in new prescriptions, we expect that the ratio of refills to new prescriptions will also increase, which should help accelerate total prescription growth. Another key performance metric that we use to measure our launch traction is unique dermatology prescribers. On our last earnings call, we noted that approximately 1,800 prescribers had written a prescription for EMROSI out of the 3,200 oral rosacea treatment writers that we are targeting during the first phase of the launch. Today, I am pleased to report that the number has increased by approximately 50% to over 2,700 unique EMROSI prescribers, demonstrating substantial progress toward this objective and a key driver of initial product adoption. As our commercial team continues to recruit new EMROSI writers, we have now begun to focus on developing the base of prescribers that have already written an EMROSI prescription into consistent writers. In addition to our activities in the field, we remain active at key dermatology medical conferences across the United States to build awareness and momentum behind the EMROSI brand. To illustrate, we presented data from EMROSI's Phase III clinical trials at the SDPA 2025 Summer Dermatology Conference in June of this year. These data highlighted that EMROSI provides consistent relief of key rosacea symptoms with no adjustments needed for patients based on body weight. Additionally, EMROSI's proprietary formulation of a modified release 40-milligram dose, comprised of 10-milligram immediate release and 30-milligram extended release, which is the lowest strength oral minocycline approved by the FDA, contributes directly to the safety, efficacy, and tolerability, making EMROSI a best-in-class rosacea therapy. More recently, we presented pooled Phase III data in a podium presentation at the 2025 Fall Clinical Dermatology Conference in Las Vegas, showcasing EMROSI's favorable safety profile results and superior efficacy compared to Oracea, the most widely prescribed oral rosacea treatment. Our pooled results featured data from a robust study population of 653 patients, and our statistically significant superiority to Oracea was well received. The fall clinical meeting was well attended this year with over 1,800 prescribers at the conference. As key opinion leaders and dermatologists focused on what's new in dermatology treatment, we believe that EMROSI's podium presentation gained significant visibility at the conference. Reflecting on the year so far, EMROSI is off to a great start, and our focused dermatology commercial team is executing at the highest level. As a result, we believe that the ground is prepared for EMROSI to become a standard of care in the treatment of rosacea and for the product to generate significant revenue and cash flow for the company. And with that, I'll now turn the call over to our Chief Financial Officer, Joe Benesch, who will review the financial results of the third quarter.

Thank you, Claude, and good afternoon to everyone. I'll now take you through our financial performance for the third quarter of 2025. Total revenues for the quarter were $17.6 million, representing a 21% increase compared to $14.9 million in the third quarter of 2024. This growth reflects incremental net product revenue related to the successful U.S. commercial launch of EMROSI, 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 EMROSI and Qbrexza, both higher-margin products, combined with lower overall inventory period costs. SG&A expenses totaled $12.1 million, up approximately 6% from $11.4 million in the third quarter of 2024. This increase reflects additional operating activities tied to the launch and commercialization of EMROSI. SG&A for the quarter also includes non-cash stock compensation expense of $1.9 million compared to $1.5 million in the prior year quarter. We reported a GAAP net loss of $2.3 million or $0.09 per share basic and diluted for the third quarter of 2025. This compares to a GAAP net loss of $2.4 million or $0.12 per share basic and diluted for the same period last year. On a non-GAAP basis, both EBITDA and adjusted EBITDA improved from the prior-year quarter. EBITDA improved by $500,000 from a loss of $1 million in the third quarter of 2024 to a loss of $500,000 in the current quarter. We achieved positive adjusted EBITDA of $1.7 million for the third quarter of 2025 compared to $300,000 for the third quarter of 2024. We ended the quarter with $24.9 million in cash and cash equivalents as compared to $20.3 million at December 31, 2024. Looking ahead, we remain focused on disciplined expense management and margin expansion as we continue to scale EMROSI's commercial footprint and strengthen our product portfolio. With this focus, we believe we are well positioned to deliver improved profitability and sustained revenue growth over the coming quarters. Thank you very much. I will now turn the call back over to Claude.

Thank you, Joe. We delivered strong results in the third quarter with EMROSI already making a positive impact on our business. Total prescriptions for EMROSI more than doubled from Q2 to Q3, and the fourth quarter is already off to a strong start. The number of EMROSI 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 EMROSI 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 EMROSI, as well as enlisting more of the downstream health plans to adopt formulary coverage for EMROSI in order to drive more covered prescriptions. All of these activities are key steps in developing EMROSI 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 EMROSI's launch, we are confident that EMROSI can reach its full potential in the rosacea treatment market. We continue to believe that EMROSI 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 we are well positioned to continue executing on our core objective to improve the lives of patients, offer dermatology health care 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.

And our first question for today will come from Brandon Folkes with H.C. Wainwright.

Congratulations on all the progress. I guess, can you just talk about how you view the usage of your patient assistance program on EMROSI 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 EMROSI launch?

Sure. 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 EMROSI in particular. Again, when you consider 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 on board. We certainly expect the last one to come on board in early 2026. So 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 become less critical as more reimbursements are processed over time. It takes about two to three quarters for that adjustment with each GPO and then the PBMs and the downstream health plans. So we are patiently waiting for that time to come. It's just the way the health care system has worked, and we see that continuing. More so, I would tell you that we think in 2026, you'll see some significant gains and less reliance on the co-pay program.

Great. And maybe one just follow-up. You touched on the growth of EMROSI, and breadth of prescribing has 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 EMROSI in the near term in terms of depth or breadth of prescribing?

Yes. Okay. 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, a 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 20-year habit of relying on Oracea. That was the only product that was indicated orally for inflammatory lesions. Now that EMROSI is here, I think our commercial team has done a great job building awareness that EMROSI is here, talking about the great benefits from the Phase III clinical trials. If I may just highlight two things. First, we're showing superiority in IGA success of over 60% compared to what Oracea demonstrated. Secondly, when you consider inflammatory lesions, EMROSI is showing approximately a 30% better reduction in inflammatory lesions. So I think that message is penetrating well. Physicians, dermatologists, and healthcare providers 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 those good results from Phase III in their practices and with their patients. That's going to help reinforce their prescribing patterns, transitioning those physicians who are currently writing one or two prescriptions to doubling and tripling that. 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 more confidence builds within the dermatology community, our sales and marketing organization will be initiating switches from Oracea over to EMROSI. And again, that takes time and just a little history to start to happen, but I think that will take place. There are about 14,000 dermatologists. We're only at 2,700 right now, and we're focused on a core. But naturally, we are reaching out to more than 5,000 in our universe as well. So you'll see that number expand, and we're aiming to get more out of those who have been trying it and are waiting to observe their patients. The new prescription to total prescription ratio will also benefit from this as well. Right now, it's about 1:1. In October, we are seeing about 1:1.2. We expect that to go up to hopefully 1:3 and maybe even more than that, Brandon. So there are a lot of variables here, which gives us great potential for fantastic success in becoming the standard of care over time.

The next question will come from Scott Henry with AGP.

Congratulations to the whole team on the EMROSI 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 in Q2, about $275 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 is 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. That's just part of the system. We need to give it a little bit of time. And that's why we aren't giving any particular guidance to gross to net at this point in time. Unfortunately, I cannot provide you any further precision than what you're coming up with right now. But again, it will vary with our co-pay assistance program, which will be used less as there's better reimbursement from managed care companies. Joe or Ramsey, would you like to add anything?

No, I think just in summary, the more reimbursement we get, like you said, the less reliance we'll have on the co-pay program. And we just can't give a number right now.

Okay. Fair enough. That's helpful. And then sort of a bigger picture launch question is we're 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 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 show that we're adding additional prescribers on board with 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 expand from that. So that's just one part of it. I think the ratio between one new prescription to one refill will expand as well. 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 for the EMROSI brand. If they continue getting those refills, and if we're able to expand 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 I 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 stabilize? Or is there 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, and it's looking like it's stabilized from our vantage point. It's got a great name to it, lots of recognition. This is a highly promotional sensitive area, and I think with our team speaking to dermatologists about this and keeping it in front of their minds, we feel we're in a good spot right now. So that's what I would say.

The next question will come from Thomas Flaten with Lake Street Capital Markets.

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 since launch? How many of them have continued to prescribe regularly since launch?

We didn't speak to retention of the 2,700 prescribers, I think you're saying. So we continue to gain, and we've got it split out, obviously, the ones that are writing one to five and then five to ten and so forth all the way up to twenty, thirty, forty, etc. 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. Over time, they get to move into the secondary and tertiary buckets. So we don't have any specific guidance on that yet.

I was trying to determine if there are any insights regarding doctors who tried our product a couple of months ago but haven’t returned to prescribe it. I'm interested in understanding why those doctors have not rewritten prescriptions for the same patients or for new ones, if you have any insights from their experiences.

I see. So far, no real key learnings on that front of it. What we are seeing, I guess, from my point of view, is we're getting trials for new patients, for doctors that have not initially tried it. So they're starting to dip their toes into the water. Then I think you have a month or two until they see those patients come back. Our representatives are going in, doing the regular call schedule, reminding the doctors, dropping off samples, talking about our co-pay program or managed care coverage and so forth. Like I said, that number continues to evolve. And we really see a lot of patients and HCPs that are writing more than one, but that takes about three months or so before they start to catapult to the next level. Physician feedback has been exceptional. They really like the way the product is working, and they appreciate the side effect profile. Again, it's really just habit breaking of Oracea that they've been used to for so long. So we haven't gotten any critical feedback on the product.

That's great. And then just one final one, if I may. Qbrexza was down year-over-year, but up sequentially, but less than it was in Q3 '24. What impact has the launch of EMROSI had on how you manage around Qbrexza? Like what's the overlap of those 3,200 with Qbrexza writers? How are you trying to ensure that Qbrexza also maintains a good level of growth?

Yes, we are in a strong position concerning Qbrexza. We are seeing growth in prescriptions compared to last year, despite the new competition that emerged earlier this year. In terms of prescriptions, we are right on track and expect good single-digit growth year over year with Qbrexza. The overlap with EMROSI is working well since Qbrexza is currently in a secondary position, as EMROSI is being prioritized. Our sales team has been promoting Qbrexza since mid-2021, and Zilxi has effectively facilitated the introduction of EMROSI to the same group of doctors we are targeting. We are maintaining our outreach to these physicians consistently and strategically. Our sales force is incentivized significantly for Qbrexza, which is our top revenue generator for the quarter. While we anticipate that EMROSI will eventually become our second-largest revenue source, we feel confident about our current standings. The increased competition has amplified awareness of hyperhidrosis, which has positively impacted us.

The next question will come from Mayank with B. Riley Securities.

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 sequential revenue growth versus the TRx growth. It looks like in October, you are month-over-month on TRx 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. Ramsey, would you like to start that off?

Yes, certainly. Regarding covered claims, we're executing well with our market access plan and seeing solid month-over-month progress. Claude mentioned that early next year we'll finalize contracts with the last of the three major GPOs. This process takes a top-down approach, and there are various layers between GPOs, PBMs, and downstream health plans, each operating on its own timeline. However, everything we can control is proceeding as expected. Our market access team has strong relationships, the value proposition for EMROSI is resonating well, and we're receiving positive feedback from payers. Overall, we're satisfied with the development at this stage of the launch. As more plans and formularies adopt our product, we anticipate a noticeable shift in revenue generation.

Yes, I just want to add one thing here. Our focus right now is to continue generating prescriptions. We will continue to drive prescriptions, and with each passing day, we expect to make more incremental gains with the payers. Early next year, I think we will see larger access, which will lead to better reimbursement for the company. Time will be on our side over the coming quarters.

Yes, I completely understand your point. Regarding the duration of therapy you've observed, I know you mentioned the NRx 1:1 ratio for refills, but do you have any real-world data on how long patients are persisting with the treatment? We're interested in the idea of long-term responders, so I'm curious if you've gathered any insights about the trends in therapy duration in real-world settings.

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 from patients. The feedback from patients has been very good. In terms of getting refills, we're seeing that. I think in about five or six months, we'll be able to give you a more precise answer. But all trends are positive. We are hoping to see three to four refills at least over a 12-month period. Consider that with rosacea, we have a very quick effect as little as two weeks; patients are getting very good results with EMROSI. It varies though. Some people will take longer, while some patients will see results at two weeks. However, depending on how the flare-ups are and how long the rosacea stays calm until the next flare-up is another part of this that we're closely monitoring.

Understood. Lastly, Joe, regarding the financial aspect. Based on the current launch progress, you are tracking high single digits year-over-year this year for OpEx growth. Do you anticipate a similar trend for next year? I'm also considering operating leverage in this context.

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. With this focus, we believe we are well positioned to deliver improved profitability and sustained revenue growth over the coming quarters.

And this will conclude our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.