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What changed in Journey Medical Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Journey Medical Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+350 added−356 removedSource: 10-K (2026-03-26) vs 10-K (2025-03-27)

Top changes in Journey Medical Corp's 2025 10-K

350 paragraphs added · 356 removed · 280 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

101 edited+13 added−15 removed151 unchanged
Biggest changeAdditional Intellectual Property and Proprietary Right Protection We also use other forms of protection, such as trademark, copyright, and trade secret protection, to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.
Biggest changeThe issued U.S. and foreign patents relating to Zilxi will expire between 2030 and 2037 and the pending U.S. and foreign patent applications relating to Zilxi will expire between 2030 and 2037. ● The other patents related to molecular stabilizing platform but not products directly are 13 issued U.S. patents, two pending U.S. patent applications, three issued foreign patents (Canada, Israel, and Mexico), and one pending foreign application (Europe). 16 Table of Contents Additional Intellectual Property and Proprietary Right Protection We also use other forms of protection, such as trademark, copyright, and trade secret protection, to protect our intellectual property, particularly where we do not believe patent protection is appropriate or obtainable.
The exact cause of PAH is not known, and the disorder affects males and females equally. When excessive sweating occurs as part of some other disorder, it is said to be secondary hyperhidrosis, which is a more commonly encountered condition than is primary hyperhidrosis.
The exact cause of PAH is not known, and the disorder affects males and females equally. When excessive sweating occurs as part of some other disorder, it is said to be secondary hyperhidrosis, which is a more commonly encountered condition than primary hyperhidrosis.
Qbrexza Agreement On March 31, 2021, we executed an asset purchase agreement for Qbrexza® (the “Qbrexza APA”) with Dermira Inc. (“Dermira”), pursuant to which we acquired global ownership to Qbrexza (glycopyrronium), a prescription cloth towelette approved to treat primary axillary hyperhidrosis in people nine years of age and older.
Qbrexza On March 31, 2021, we executed an asset purchase agreement for Qbrexza (the “Qbrexza APA”) with Dermira Inc. (“Dermira”), pursuant to which we acquired global ownership to Qbrexza (glycopyrronium), a prescription cloth towelette approved to treat primary axillary hyperhidrosis in people nine years of age and older.
Each party may also terminate the Accutane Agreement for material breach by the other party or for certain bankruptcy or insolvency related events and we may terminate for upon 180 days written notice to the other party. We commenced sales of this product in April 2021.
Each party may also terminate the Accutane Agreement for material breach by the other party or for certain bankruptcy or insolvency related events and we may terminate the Accutane Agreement upon 180 days written notice to the other party. We commenced sales of this product in April 2021.
Anti-Itch Product Agreement On December 18, 2020, we entered into an asset purchase agreement for our Anti-itch Product (the “Anti-itch APA”) with Sun Pharmaceutical Industries, Inc. (“Sun”). Pursuant to the Anti-itch APA, total consideration is $4.0 million, comprised of an upfront payment of $2.0 million, payable upon execution.
Anti-Itch Product On December 18, 2020, we entered into an asset purchase agreement for our Anti-itch Product (the “Anti-itch APA”) with Sun Pharmaceutical Industries, Inc. (“Sun”). Pursuant to the Anti-itch APA, total consideration is $4.0 million, comprised of an upfront payment of $2.0 million, payable upon execution.
Exelderm Agreement On August 31, 2018, we entered into an asset purchase agreement for Exelderm® (the “Exelderm APA”) with Sun. Pursuant to the Exelderm APA, total consideration is $1.6 million, comprised of an upfront payment of $1.2 million, which was payable within 60 days after execution on October 31, 2018.
Exelderm On August 31, 2018, we entered into an asset purchase agreement for Exelderm (the “Exelderm APA”) with Sun. Pursuant to the Exelderm APA, total consideration is $1.6 million, comprised of an upfront payment of $1.2 million, which was payable within 60 days after execution on October 31, 2018.
Thus approval of a Section 505(b)(2) NDA can be stalled until all the listed patents claiming the referenced product have expired; until any non-patent exclusivity, such as exclusivity for obtaining approval of a New Chemical Entity (“NCE”), listed in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book,” for the referenced product has expired; and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Thus approval of a Section 505(b)(2) NDA can be stalled until all the listed patents claiming the referenced product have expired; until any non-patent exclusivity, such as exclusivity for obtaining approval of a New Chemical Entity, listed in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book,” for the referenced product has expired; and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Department of Health and Human Services that would require manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.
Department of Health and Human Services (“HHS”) that would require manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.
As the first topical minocycline to be approved by the FDA for any condition, we believe that Amzeeq may provide a new treatment alternative for patients and healthcare providers who are unsatisfied with their current therapies. Amzeeq has Orange Book-listed patents that extend through September of 2037.
As the first topical minocycline to be approved by the FDA for any condition, we believe that Amzeeq may provide a new treatment alternative for patients and healthcare providers who are unsatisfied with their current therapies. Amzeeq has 12 Orange Book-listed patents that extend through September of 2037.
Moreover, our breach of an existing license or failure to obtain a license to technology required to commercialize our products may seriously harm our business. We also may need to commence litigation to enforce any patents issued to us or to determine the scope and validity of third-party proprietary rights. Litigation could involve substantial costs.
Moreover, our breach of an existing license or failure to obtain a license for technology required to commercialize our products may seriously harm our business. We also may need to commence litigation to enforce any patents issued to us or to determine the scope and validity of third-party proprietary rights. Litigation could involve substantial costs.
Subject to earlier termination, the license agreement remains in effect until 15 years following the first commercial sale of a licensed product have elapsed or, if later, the date that the last patent or patent application in the licensed patent rights has expired or been revoked, invalidated or abandoned.
Subject to earlier termination, the license agreement remains in effect until 15 years following the first commercial sale of a licensed product has elapsed or, if later, the date that the last patent or patent application in the licensed patent rights has expired or been revoked, invalidated or abandoned.
The issued Qbrexza patents contain claims directed to individually packaged wipes for the treatment of hyperhidrosis where the wipes contain a composition comprising Qbrexza or other related compounds, and methods of alleviating hyperhidrosis using such compositions and contain claims directed to compositions comprising Qbrexza or other related compounds, individually packaged wipes comprising such compositions, absorbent pads comprising Qbrexza pharmaceutical compositions and methods of treating hyperhidrosis with topical administration of Qbrexza or other related compounds.
The issued Qbrexza patents contain claims directed to individually packaged wipes for the treatment of hyperhidrosis where the wipes contain a composition comprising Qbrexza or other related compounds, and methods of alleviating hyperhidrosis using such compositions and contain claims directed to compositions comprising Qbrexza or other related compounds, individually packaged wipes comprising such compositions, absorbent pads comprising Qbrexza pharmaceutical compositions and methods of treating hyperhidrosis with topical administration of Qbrexza or other related formulations.
Additional factors that can cause delay or termination in future clinical trials, or that may increase the costs of these trials, include: ● slow patient enrollment due to the nature of the clinical trial plan, the proximity of patients to clinical sites, the eligibility criteria for participation in the study or other factors; ● inadequately trained or insufficient personnel at the study site to assist in overseeing and monitoring clinical trials or delays in approvals from a study site’s review board; ● longer treatment time required to demonstrate efficacy or determine the appropriate product dose; ● insufficient supply of the drug candidates; ● adverse medical events or side effects in treated patients; and ● ineffectiveness of the drug candidates.
Additional factors that can cause delay or termination in future clinical trials, or that may increase the costs of these trials, include: ● slow patient enrollment due to the nature of the clinical trial plan, the proximity of patients to clinical sites, the eligibility criteria for participation in the study or other factors; ● inadequately trained or insufficient personnel at the study site to assist in overseeing and monitoring clinical trials or delays in approvals from a study site’s review board; ● longer treatment time required to demonstrate efficacy or determine the appropriate product dose; ● insufficient supply of the drug candidates; ● adverse events in treated patients; and ● ineffectiveness of the drug candidates.
Emrosi TM (formerly DFD-29) On June 29, 2021, we entered into a license, collaboration, and assignment agreement with DRL to obtain the global rights for the development and commercialization of Emrosi TM (“Emrosi”), a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”).
Emrosi (formerly DFD-29) On June 29, 2021, we entered into a license, collaboration, and assignment agreement with DRL to obtain the global rights for the development and commercialization of Emrosi, a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”).
Through December 31, 2024, we have paid $4.0 million and have no additional payment obligations. The Anti-itch APA contains customary representations, warranties, and indemnities. There are no subsequent milestone payments or royalties beyond the aforementioned payments. We intend to launch this product during the second half of 2025 or first half of 2026.
Through December 31, 2025, we have paid $4.0 million and have no additional payment obligations. The Anti-itch APA contains customary representations, warranties, and indemnities. There are no subsequent milestone payments or royalties beyond the aforementioned payments. We intend to launch this product during the first half of 2026.
As of December 31, 2024, the last-to-expire issued patent relating to Qbrexza that we license under the license agreement with Rose U expires in 2029. Accutane Agreement On July 29, 2020, we entered into a license and supply agreement for Accutane® (the “Accutane Agreement”) with DRL.
As of December 31, 2025, the last-to-expire issued patent relating to Qbrexza that we license under the license agreement with Rose U expires in 2029. Accutane On July 29, 2020, we entered into a license and supply agreement for Accutane (the “Accutane Agreement”) with DRL.
Successful development and commercialization of any future in-licensed development stage or commercial drugs will require us to navigate the many laws and regulations of governmental authorities and regulatory agencies around the world, including the FDA, relating to the manufacture, development, approval and commercialization of investigational drugs.
Successful development and commercialization of any future in-licensed development stage or commercial drugs will require us to navigate the many laws and regulations of governmental authorities and regulatory agencies around the world, including the FDA, relating to the manufacture, development, approval and commercialization of investigational drugs, if approved.
In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 21 Table of Contents (the “Affordable Care Act”) was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”) was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
PHRMA Code and April 3, 2003 Department of Health and Human Services Office of Inspector General, OIG Compliance Program for Pharmaceutical Manufacturers We have established and implemented a corporate compliance program designed to prevent, detect and correct violations of state and federal healthcare laws, including laws related to advertising and promotion of our products that are in compliance with the PHRMA 22 Table of Contents Code and the Health and Human Services Office of Inspector General (“OIG”) Compliance Program requirements for Pharmaceutical Manufacturers.
PHRMA Code and April 3, 2003 Department of Health and Human Services Office of Inspector General, OIG Compliance Program for Pharmaceutical Manufacturers We have established and implemented a corporate compliance program designed to prevent, detect and correct violations of state and federal healthcare laws, including laws related to advertising and promotion of our products that are in compliance with the PHRMA Code and the Health and Human Services Office of Inspector General (“OIG”) Compliance Program requirements for Pharmaceutical Manufacturers.
The tetracycline class, which includes minocycline, doxycycline, sarecycline and tetracycline, is particularly effective in treatment for more severe forms of acne due to its antibacterial and anti-inflammatory properties. Targadox is gluten-free, lactose-free, animal byproduct-free, and GMO-free. The oral doxycycline market had more than 28 million prescriptions in 2024 according to Symphony Health.
The tetracycline class, which includes minocycline, doxycycline, sarecycline and tetracycline, is particularly effective in treatment for more severe forms of acne due to its antibacterial and anti-inflammatory properties. Targadox is gluten-free, lactose-free, animal byproduct-free, and GMO-free. The oral doxycycline market had more than 28.5 million prescriptions in 2025 according to Symphony Health.
Another important part of our business development strategy is to continue to out-license our branded products, intellectual property and/or proprietary technologies in global markets. Major Customers We primarily sell our prescription products to specialty pharmacies, independent wholesalers, and distributors with limited sales through the traditional national wholesaler channels.
Another important part of our business development strategy is to continue to out-license our branded products, intellectual property and/or proprietary technologies in global markets. 11 Table of Contents Major Customers We primarily sell our prescription products to specialty pharmacies, independent wholesalers, and distributors with limited sales through the traditional national wholesaler channels.
OTC products typically include known antifungal ingredients such as clotrimazole, miconazole, terbinafine or ketoconazole. Prescription treatments are often reserved for more serious infection or for those in hard-to-treat areas.
OTC products typically include known antifungal ingredients such as clotrimazole, miconazole, terbinafine or ketoconazole. Prescription treatments are often reserved for more serious infections or for those in hard-to-treat areas.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for any product candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the U.S. and elsewhere in the world. 16 Table of Contents Patents and other proprietary rights are crucial to the development of our business.
Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible for any product candidates, proprietary information and proprietary technology through a combination of contractual arrangements and patents, both in the U.S. and elsewhere in the world. Patents and other proprietary rights are crucial to the development of our business.
Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory, Maruho paid $19.0 million as a non-refundable upfront payment.
Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in Japan, Maruho paid $19.0 million as a non-refundable upfront payment.
The current U.S. market size for treatment of acne is considerable and estimated at approximately $3 billion annually, according to the American Medical Association. Accutane® for the Treatment of Severe Recalcitrant Nodular Acne Accutane® (isotretinoin 10mg, 20mg, 30mg, and 40mg capsules USP) is indicated for the treatment of severe recalcitrant nodular acne.
The current U.S. market size for treatment of acne is considerable and estimated at approximately $3 billion annually, according to the American Medical Association. 8 Table of Contents Accutane for the Treatment of Severe Recalcitrant Nodular Acne Accutane (isotretinoin 10mg, 20mg, 30mg, and 40mg capsules USP) is indicated for the treatment of severe recalcitrant nodular acne.
Antihistamines are also effective in treating some types of itch, but they too have drawbacks with continued use. We plan on launching our Anti-itch Product through our field sales force during the second half of 2025 or first half of 2026.
Antihistamines are also effective in treating some types of itch, but they too have drawbacks with continued use. We plan on launching our Anti-itch Product through our field sales force during the first half of 2026.
Such actions may impact the development and commercialization of drug products. International Regulations In addition to regulations in the United States, there are a variety of foreign regulations governing clinical trials and commercial sales and distribution of any product candidates.
Such actions may impact the development and commercialization of drug products. 22 Table of Contents International Regulations In addition to regulations in the United States, there are a variety of foreign regulations governing clinical trials and commercial sales and distribution of any product candidates.
Acne and the Current Standard of Care Acne, also known as acne vulgaris, is a common skin disorder characterized by a blockage of hair follicles, which are clogged with oil and dead skin cells. According to the American Academy of Dermatology (“AAD”), acne is the most common skin condition in the US, affecting up to 50 million individuals annually.
Acne and the Current Standard of Care Acne, also known as acne vulgaris, is a common skin disorder characterized by a blockage of hair follicles, which are clogged with oil and dead skin cells. According to the American Academy of Dermatology, acne is the most common skin condition in the U.S., affecting up to 50 million individuals annually.
In addition, Journey will pay Vyne 10% of any upfront payment received by Journey from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the Vyne APA. There are no subsequent milestone payments or royalties beyond the aforementioned payments.
In addition, Journey will pay Vyne 10% of any upfront payment received by Journey from a licensee or sublicensee of the products in any territory outside of the U.S., subject to exceptions for certain jurisdictions as detailed in the Vyne APA. There are no subsequent milestone payments or royalties beyond the aforementioned payments.
Cutia License Agreement In January 2022, as a part of the Vyne APA, we assumed a license agreement with Cutia Therapeutics (HK) Limited, a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).
Cutia License Agreement In January 2022, as a part of the Vyne APA, we assumed a license agreement with Cutia, a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).
Unacceptable toxicity or side effects may occur at any dose level at any time in the course of studies in animals designed to identify unacceptable effects of a drug candidate, known as toxicological studies, or clinical trials of drug candidates.
Unacceptable toxicity or adverse events may occur at any dose level at any time in the course of studies in animals designed to identify unacceptable effects of a drug candidate, known as toxicological studies, or clinical trials of drug candidates.
The FDA may request a Risk Evaluation and Mitigation Strategy (“REMS”), as part of an NDA, ANDA, 510(K) or BLA. The REMS typically contains some combination of post-marketing obligations of the sponsor to train prescribing physicians, monitor drug use, including off-label use, and conduct sufficient Phase 4 follow-up studies and registries to ensure the continued safe use of the drug.
The FDA may request a REMS, as part of an NDA, ANDA, 510(K) or BLA. The REMS typically contains some combination of post-marketing obligations of the sponsor to train prescribing physicians, monitor drug use, including off-label use, and conduct sufficient Phase 4 follow-up studies and registries to ensure the continued safe use of the drug.
It was developed using Multiple Unit Pellet System technology, which combines Immediate Release (25%) and Extended Release (75%) Minocycline pellets for uniform drug release. Emrosi has shown superiority to Oracea and Placebo on the co-primary endpoints and all secondary endpoints in two phase 3 studies and was well-tolerated.
It was developed using Multiple Unit Pellet System technology, which combines Immediate Release (10mg) and Extended Release (30mg) Minocycline pellets for uniform drug release. Emrosi has shown statistical superiority to Oracea and Placebo on the co-primary endpoints and all secondary endpoints in two phase 3 studies and was well-tolerated.
Our Market, Products and Relevant Disease States Our major marketed products, which have been approved by the FDA for sale in the United States, include: ● Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg for the treatment of inflammatory lesions of rosacea in adults), approved by the FDA in November 2024, sales promotion beginning in April 2025. ● Qbrexza® (a medicated cloth towelette for the treatment of primary axillary hyperhidrosis in patients nine years of age and older), acquired and launched in May 2021; ● Accutane® (an oral isotretinoin drug for the treatment of severe recalcitrant nodular acne), licensed in July 2020 and launched in March 2021; ● Amzeeq® (minocycline) topical foam, 4% (a topical formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and children nine years and older), acquired and launched in January 2022; ● Zilxi® (minocycline) topical foam, 1.5% (a topical minocycline treatment for inflammatory lesions of rosacea in adults), acquired and launched in January 2022; 6 Table of Contents ● Exelderm® Cream and Solution (a broad-spectrum antifungal intended for topical use), acquired and launched in October 2018; ● Targadox® (an oral doxycycline drug for adjunctive therapy for severe acne), licensed in March 2015 and launched in October 2016; and ● Luxamend® (a water-based emulsion formulated to provide an optimally moist healing environment for superficial wounds; minor cuts or scrapes; dermal ulcers; donor sites; first- and second-degree burns, including sunburns; and radiation dermatitis), acquired in 2021 and launched in 2023.
Our Market, Products and Relevant Disease States Our major actively marketed products, which have been approved by the FDA for sale in the United States, include: ● Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg for the treatment of inflammatory lesions of rosacea in adults), approved by the FDA in November 2024, sales promotion began in April 2025. ● Qbrexza® (a medicated cloth towelette for the treatment of primary axillary hyperhidrosis in patients nine years of age and older), acquired and launched in May 2021; ● Accutane® (an oral isotretinoin drug for the treatment of severe recalcitrant nodular acne), licensed in July 2020 and launched in March 2021; ● Amzeeq® (minocycline) topical foam, 4% (a topical formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and children nine years and older), acquired and launched in January 2022; ● Zilxi® (minocycline) topical foam, 1.5% (a topical minocycline treatment for inflammatory lesions of rosacea in adults), acquired and launched in January 2022; 6 Table of Contents In addition to our actively marketed products, we also have a portfolio of legacy products that we continue to sell, including: Exelderm® Cream and Solution (a broad-spectrum antifungal intended for topical use), Targadox® (an oral doxycycline drug for adjunctive therapy for severe acne), and Luxamend® (a water-based emulsion formulated to provide an optimally moist healing environment for superficial wounds; minor cuts or scrapes; dermal ulcers; donor sites; first- and second-degree burns, including sunburns; and radiation dermatitis).
The appearance of any unacceptable toxicity or side effect could cause us or regulatory authorities to interrupt, limit, delay or abort the development of any of our drug candidates and could ultimately prevent approval by the FDA or foreign regulatory authorities for any or all targeted indications.
The appearance of any unacceptable toxicity or adverse event could cause us or regulatory authorities to interrupt, limit, delay or abort the development of any of our drug candidates and could ultimately prevent approval by the FDA or foreign regulatory authorities for any or all targeted indications.
We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
We make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the Securities and Exchange Commission (the “SEC”).
Of these patents and patent applications: ● There are 21 issued U.S. patents, fifteen issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), six pending U.S. patent applications and one pending foreign application (Canada), all relating to Amzeeq. The issued Amzeeq patents contain claims directed to compositions and use of the compositions (method claims).
Of these patents and patent applications: ● There are 14 issued U.S. patents, 14 issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), two pending U.S. patent applications and one pending foreign application (Canada), all relating to Amzeeq. The issued Amzeeq patents contain claims directed to compositions and use of the compositions (method claims).
Any drug is likely to produce some toxicity or undesirable side effects in animals and in humans when administered at sufficiently high doses and/or for a sufficiently long period of time.
Any drug is likely to produce some toxicity or undesirable adverse events in animals and in humans when administered at sufficiently high doses and/or for a sufficiently long period of time.
Qbrexza has Orange Book-listed patents that extend through February of 2033. The PAH market had approximately 485,000 prescriptions in 2024 according to Symphony Health, excluding over-the-counter (“OTC”) clinical strength anti-perspirants.
Qbrexza has eight Orange Book-listed patents that extend through February of 2033. The PAH market had approximately 560,000 prescriptions in 2025 according to Symphony Health, excluding over-the-counter (“OTC”) clinical strength anti-perspirants.
We were obligated to pay royalties in the low-double digits based on net sales of Exelderm until the end of 2023, and no additional licensing or milestone payments are required. We commenced sales of this product in August 2018.
We were obligated to pay royalties in the low-double digits based on net sales of Exelderm until the end of 2023, and no additional licensing or milestone payments are required.
The topical rosacea market had more than 4.3 million prescriptions in 2024 while the oral rosacea market had more than 700,000 according to Symphony Health. 7 Table of Contents Excessive Underarm Sweating and the Current Standard of Care Excessive underarm sweating, commonly referred to as primary axillary hyperhidrosis (“PAH”), is a disorder characterized by excessive sweating in the armpits.
The topical rosacea market had more than 4.7 million prescriptions in 2025 according to Symphony Health. 7 Table of Contents Excessive Underarm Sweating and the Current Standard of Care Excessive underarm sweating, commonly referred to as primary axillary hyperhidrosis (“PAH”), is a disorder characterized by excessive sweating in the armpits.
The issued U.S. and foreign patents relating to Amzeeq will expire between 2030 and 2037 and the pending U.S. and foreign patent applications relating to Amzeeq will expire between 2030 and 2037. ● There are 14 issued U.S. patents, fifteen issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), four pending U.S. patent applications and one pending foreign application (Canada), all relating to Zilxi.
The issued U.S. and foreign patents relating to Amzeeq will expire between 2030 and 2037 and the pending U.S. and foreign patent applications relating to Amzeeq will expire between 2030 and 2037. ● There are 11 issued U.S. patents, 14 issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), and two pending U.S. patent applications, all relating to Zilxi.
The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal liability and amends provisions on the reporting, investigation, enforcement, and penalizing of civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Failure to comply with reporting requirements under these laws could subject manufacturers and others to substantial civil money penalties. 23 Table of Contents The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes criminal liability and amends provisions on the reporting, investigation, enforcement, and penalizing of civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Drugs whose review was accelerated may carry additional restrictions on marketing activities, including the requirement that all promotional materials are pre-submitted to the FDA. Claims exceeding those contained in approved labeling will constitute a violation of the FDCA.
Drugs whose review was accelerated may carry additional restrictions on marketing activities, including the requirement that all promotional materials are pre-submitted to the FDA. Claims not consistent with approved labeling will constitute a violation of the FDCA.
We currently rely upon multiple contract manufacturers to produce our products and clinical supply of product candidates and will continue to rely upon contract manufacturers for any current or future product candidates under current Good Manufacturing Practice (“cGMP”) regulations for use in pre-clinical and clinical activities.
We currently rely upon multiple contract manufacturers to produce our products and clinical supply of product candidates, some of which are located outside of the U.S., and will continue to rely upon contract manufacturers for any current or future product candidates under current Good Manufacturing Practice (“cGMP”) regulations for use in pre-clinical and clinical activities.
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
A primary trend in the healthcare industry in the United States and elsewhere is cost containment. 21 Table of Contents The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
The topical acne market had more than 23.5 million prescriptions in 2024 according to Symphony Health, presenting significant unmet needs of patients and healthcare providers to be addressed.
The topical acne market had more than 24.8 million prescriptions in 2025 according to Symphony Health, presenting significant unmet needs of patients and healthcare providers to be addressed.
Similar to Amzeeq, Zilxi leverages MST™ technology and is the first minocycline product of any form to be approved by the FDA for use in rosacea. We believe the anti-inflammatory properties of minocycline delivered in our innovative foam technology make Zilxi a highly appealing treatment option for rosacea patients. Zilxi has Orange Book-listed patents that extend through October of 2030.
Similar to Amzeeq, Zilxi leverages MST™ technology and is the first minocycline product of any form to be approved by the FDA for use in rosacea. We believe the anti-inflammatory properties of minocycline delivered in our innovative foam technology make Zilxi a highly appealing treatment option for rosacea patients.
Our executive offices are located at 9237 E Via de Ventura Blvd. Suite 105, Scottsdale, AZ 85258. Our telephone number is 480-434-6670, and our e-mail address is info@jmcderm.com or ir@jmcderm.com. We maintain a website with the address www.jmcderm.com.
CORPORATE INFORMATION Journey Medical Corporation was incorporated in Delaware in 2014. Our executive offices are located at 9237 E Via de Ventura Blvd. Suite 105, Scottsdale, AZ 85258. Our telephone number is 480-434-6670, and our e-mail address is info@jmcderm.com or ir@jmcderm.com. We maintain a website with the address www.jmcderm.com.
Other Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions 23 Table of Contents of the United States Department of Health and Human Services, the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments.
Other Healthcare Laws and Compliance Requirements In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the HHS, the U.S. Department of Justice and individual U.S.
There can be no assurance that any of our patents, licenses or other intellectual property rights will afford us any protection from competition, that our confidentiality agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise gain access to our trade secrets and other intellectual property.
These agreements may not, however, provide protection for our trade secrets in the event of unauthorized disclosure of such information. 17 Table of Contents There can be no assurance that any of our patents, licenses or other intellectual property rights will afford us any protection from competition, that our confidentiality agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise gain access to our trade secrets and other intellectual property.
The term of the Targadox Agreement is ten years and automatically renews for three-year periods unless either party provides notice of its intent not to renew at least 180 days prior to the expiration of the applicable term.
The term of the Targadox Agreement is three years and automatically renews for two-year periods unless either party provides notice of its intent not to renew at least 120 days prior to the expiration of the applicable term. The Targadox Agreement contains customary representations, warranties, and indemnities.
Treatment for itch may include moisturizing daily, using gentle cleansers, and bathing with lukewarm water. Long-term relief requires identifying and treating the underlying cause of itchy skin. Common treatments are prescription medicated creams and lotions, moist dressings, and oral anti-itch medicines.
Repeated scratching can cause raised thick areas of skin that might bleed or become infected. Treatment for itch may include moisturizing daily, using gentle cleansers, and bathing with lukewarm water. Long-term relief requires identifying and treating the underlying cause of itchy skin. Common treatments are prescription medicated creams and lotions, moist dressings, and oral anti-itch medicines.
As part of the Qbrexza APA, we were assigned an exclusive license agreement with Rose University (“Rose U”) pursuant to which we obtained a worldwide exclusive license within a field of use including hyperhidrosis to practice, enforce and otherwise exploit certain patent rights, know-how and data related to Qbrexza.
Each party may also terminate the Qbrexza APA for material breach by the other party. 13 Table of Contents As part of the Qbrexza APA, we were assigned an exclusive license agreement with Rose University (“Rose U”) pursuant to which we obtained a worldwide exclusive license within a field of use including hyperhidrosis to practice, enforce and otherwise exploit certain patent rights, know-how and data related to Qbrexza.
Pursuant to these agreements with Rose U and the related agreement with Stiefel with respect to Qbrexza, we are obligated to pay Rose U low-to-mid single-digit royalties on net product sales and low double-digit royalties on sublicense fees and certain milestone, royalty and other contingent payments received from sublicensees, to the extent such amounts are in excess of the milestone and royalty payments we are obligated to pay Rose U directly upon the events or sales triggering such payments. 13 Table of Contents We are permitted to grant sublicenses to the licensed rights and may assign the agreements upon our acquisition or that of our assets that relate to the license agreement.
Pursuant to these agreements with Rose U and the related agreement with Stiefel with respect to Qbrexza, we are obligated to pay Rose U low-to-mid single-digit royalties on net product sales and low double-digit royalties on sublicense fees and certain milestone, royalty and other contingent payments received from sublicensees, to the extent such amounts are in excess of the milestone and royalty payments we are obligated to pay Rose U directly upon the events or sales triggering such payments.
Competitive factors vary by product line and geographic area in which our products are sold. The principal methods of competition for our products include quality, efficacy, market acceptance, price, and marketing and promotional efforts. Branded products often must compete with therapeutically similar branded or generic products or with generic equivalents. Such competition frequently increases over time.
The principal methods of competition for our products include quality, efficacy, market acceptance, price, and marketing and promotional efforts. Branded products often must compete with therapeutically similar branded or generic products or with generic equivalents. Such competition frequently increases over time.
(“Fortress” or “Parent”). 2024 Highlights and Events On November 1, 2024, the FDA approved Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg), formerly referred to as DFD-29 (“Emrosi”), for the treatment of inflammatory lesions of rosacea in adults. Emrosi was developed by Journey in collaboration with Dr. Reddy’s Laboratories, Ltd. (“DRL”). Our initial supply became available in March 2025.
(“Fortress” or “Parent”). 2025 Highlights and Events On November 1, 2024, the FDA approved Emrosi for the treatment of inflammatory lesions of rosacea in adults. Emrosi was developed by Journey in collaboration with Dr. Reddy’s Laboratories, Ltd. (“DRL”). Our initial supply became available in March 2025.
We own 14 of the issued U.S. patents, both of the pending U.S. patent applications, 20 of the issued foreign patents, and two of the pending foreign applications, and have exclusively licensed from Rose U worldwide rights to four of the issued U.S. patents, 17 issued foreign patents, and one pending foreign patent application.
We own 16 of the issued U.S. patents, the one pending U.S. patent application, 29 of the issued foreign patents, and the pending foreign application, and have exclusively licensed from Rose U worldwide rights to four of the issued U.S. patents, and nine issued foreign patents.
Accutane belongs to a class of drugs that affects all four major pathogenic processes in acne: increased sebum 8 Table of Contents production, irregular follicular desquamation, propionibacterium acnes proliferation and inflammation. Accutane has achieved a strong market position and is well known in the dermatology community.
Accutane belongs to a class of drugs that affects all four major pathogenic processes in acne: increased sebum production, irregular follicular desquamation, propionibacterium acnes proliferation and inflammation. Accutane has achieved a strong market position and is well known in the dermatology community. The oral isotretinoin market had just over 2.3 million prescriptions in 2025 according to Symphony Health.
To successfully compete for business with managed care and pharmacy benefits management organizations, we must often demonstrate that our products offer not only medical benefits, but also cost advantages as compared with other forms of care.
To successfully compete for business with managed care and pharmacy benefits management organizations, we must often demonstrate that our products offer not only medical benefits, but also cost advantages as compared with other forms of care. Generic products generally face intense competition from other generic equivalents (including authorized generics) and therapeutically similar branded or generic products.
Relationship with Fortress Fortress is a biopharmaceutical company dedicated to acquiring, developing and commercializing pharmaceutical and biotechnology products and product candidates at its majority-owned and majority-controlled subsidiaries and joint ventures, and at entities founded by Fortress and in which it maintains significant minority ownership positions.
There are no assurances that these historical trends will continue in the future. 12 Table of Contents Relationship with Fortress Fortress is a biopharmaceutical company dedicated to acquiring, developing and commercializing pharmaceutical and biotechnology products and product candidates at its majority-owned and majority-controlled subsidiaries and joint ventures, and at entities founded by Fortress and in which it maintains significant minority ownership positions.
Exelderm cream or solution is administered externally only, whereby a small amount of cream or solution is gently massaged into the affected and surrounding areas and only requires a convenient once or twice daily application.
Exelderm cream or solution is administered externally only, whereby a small amount of cream or solution is gently massaged into the affected and surrounding areas and only requires a convenient once or twice daily application. However, when used to treat tinea pedis, for which Exelderm cream is also indicated, twice daily application is required.
The three issued U.S. patents will expire in 2039. 15 Table of Contents Qbrexza Patents We own or have an exclusive license to 22 issued U.S. patents and 41 issued foreign patents, which include granted European patent rights that have been validated in selected European Patent Organization (“EPO”) member states (Switzerland, Germany, Spain, France, Great Britain, Ireland, and Italy), Australia, Canada, Mexico, Israel, Japan, Hong Kong, Korea, and New Zealand, Singapore, and South Africa, and six pending U.S. patent applications, one pending Patent Cooperation Treaty application, and sixteen pending foreign patent applications.
Qbrexza Patents We own or have an exclusive license to 20 issued U.S. patents and 38 issued foreign patents, which include granted European patent rights that have been validated in selected European Patent Office (“EPO”) member states (Switzerland, Germany, Spain, France, Great Britain (UK), Ireland, Italy), Australia, Canada, Mexico, Israel, Japan, Hong Kong, Korea, New Zealand, Singapore, and South Africa, as well as two pending U.S. patent applications, and one pending foreign patent application, all relating to Qbrexza.
Itch can be caused by a number of conditions, including skin conditions such as dry skin, eczema, psoriasis, scabies, parasites, burns, scars, insect bites and hives. Depending on the cause of itchiness, skin may appear normal, red, rough or bumpy. Repeated scratching can cause raised thick areas of skin that might bleed or become infected.
Pruritus may be localized or generalized and can occur as an acute or chronic condition. Itch can be caused by a number of conditions, including skin conditions such as dry skin, eczema, psoriasis, scabies, parasites, burns, scars, insect bites and hives. Depending on the cause of itchiness, skin may appear normal, red, rough or bumpy.
Seasonality of Business Our business is affected by the standard annual insurance deductible resets, as well as the purchasing patterns and concentration of our customers; however, our business is not materially impacted by seasonality. There are no assurances that these historical trends will continue in the future.
Seasonality of Business Our business is affected by the standard annual insurance deductible resets, as well as the purchasing patterns and concentration of our customers; however, our business is not materially impacted by seasonality.
Orphan drugs that treat only one rare disease are exempt from the IRA’s drug negotiation program. Substantial penalties can be assessed for noncompliance with the drug pricing provisions in the IRA.
Orphan drugs that treat only one rare disease are exempt from the IRA’s drug negotiation program. Substantial penalties can be assessed for noncompliance with the drug pricing provisions in the IRA. In May 2025, President Trump issued an executive order implementing the concept of most-favored nation pricing.
Violations of the federal Anti-Kickback Statute can result in significant criminal fines, exclusion from participation in Medicare and Medicaid and follow-on civil litigation, among other things, for both entities and individuals. In October 2019, the OIG issued a proposed rule to, among other things, add new safe harbors for certain value-based arrangements.
Violations of the federal Anti-Kickback Statute can result in significant criminal fines, exclusion from participation in Medicare and Medicaid and follow-on civil litigation, among other things, for both entities and individuals.
Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the healthcare industry in the United States and elsewhere is cost containment.
Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.
These alliances and arrangements can take many forms, including licensing arrangements, co-development and co-marketing agreements, co-promotion arrangements, research collaborations and joint ventures. Such alliances and arrangements will potentially enable us to share the risk of incurring all research and development expenses that do not lead to revenue-generating products.
Such alliances and arrangements will potentially enable us to share the risk of incurring all research and development expenses that do not lead to revenue-generating products.
The oral isotretinoin market had just under 2.3 million prescriptions in 2024 according to Symphony Health. Targadox® for the Treatment of Severe Acne Targadox® (doxycycline hyclate immediate release 50mg tablets) is indicated as adjunctive therapy for severe acne, which is part of a class of oral antibiotics known as tetracyclines.
Targadox for the Treatment of Severe Acne Targadox (doxycycline hyclate immediate release 50mg tablets) is indicated as adjunctive therapy for severe acne, which is part of a class of oral antibiotics known as tetracyclines.
On November 11, 2024, Cutia received marketing approval for topical 4% minocycline foam from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China. The approval triggered a $1.0 million dollar milestone payment to us.
On November 11, 2024, Cutia received marketing approval for topical 4% minocycline foam from the National Medical Products Administration (the “NMPA”) of the PRC. The approval triggered a $1.0 million dollar milestone payment to us. Additionally, during 2025, we began supplying Amzeeq to Cutia and earning a royalty on net sales of Amzeeq made by Cutia.
This will consist of both commercial execution on our existing product portfolio, including lifecycle management, out-licensing of our current branded products, intellectual property and/or technologies in global markets, as well as investing in additional growth strategies through product and company acquisitions, licensing, or developing new products.
This will consist of both commercial execution on our existing product portfolio, including lifecycle management, out-licensing of our current branded products, intellectual property and/or technologies in global markets, as well as investing in additional growth strategies through product and company acquisitions, licensing, or developing new products. 10 Table of Contents An important part of our growth strategy is to identify new business development opportunities, including development stage and commercial drugs that we may acquire from other pharmaceutical companies.
These agreements are designed to protect our proprietary information and to grant us ownership of technologies that are developed in connection with their relationship with us. These agreements may not, however, provide protection for our trade secrets in the event of unauthorized disclosure of such information.
These agreements are designed to protect our proprietary information and to grant us ownership of technologies that are developed in connection with their relationship with us.
Emrosi Patents With regard to Emrosi, we own three issued U.S. patents and one U.S. continuation application, as well as one issued foreign patent (Mexico) and eight foreign pending patent applications (one in each of Australia, Canada, Europe, Japan, Korea, and South Africa; and two in New Zealand) covering methods of treating an inflammatory skin condition by selecting and administering an oral composition comprising reduced dose of minocycline and the relevant pharmacokinetic parameters, and we intend to pursue composition-of-matter patents, where possible, and dosage and formulation patents, as well as method-of-use patents on novel indications for known compounds.
Four of our FDA approved products, Emrosi, Qbrexza, Amzeeq, and Zilxi currently have patent protection with patents listed in the FDA Orange Book. 15 Table of Contents Emrosi Patents With regard to Emrosi, we own three issued U.S. patents, one allowed application, and one U.S. continuation application, as well as four issued foreign patents (one in each of Australia, Japan, Korea, and Mexico) and eight foreign pending patent applications (one in each of Australia, Canada, Europe, Japan, and South Africa; and two in New Zealand) covering methods and/or compositions for treating an inflammatory skin condition by selecting and administering an oral composition comprising reduced dose of minocycline and the relevant pharmacokinetic parameters.
For development stage drugs, we may require financial resources significantly in excess of our current cash on hand, and it may take many years for us to receive marketing approval, if ever, for any in-licensed or acquired product candidate. 10 Table of Contents Competitive Strengths To successfully execute our strategy, we must continue to capitalize on our following core strengths: ● Commercial leadership of our management team with a track record of commercial execution .
For development stage drugs, we may require financial resources significantly in excess of our current cash on hand, and it may take many years for us to receive marketing approval, if ever, for any in-licensed or acquired product candidate.
We commenced sales of this product in October 2016. 14 Table of Contents Out - licensing Agreements Qbrexza On August 31, 2023, we entered into the New License Agreement with Maruho, whereby we granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos.
(“Maruho”), whereby we granted an exclusive license to Maruho to develop and commercialize Qbrexza for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos.
We intend to enter into strategic alliances and collaborative 11 Table of Contents arrangements with third parties, which will give us rights to develop, manufacture, market and/or commercialize pharmaceutical products, the rights to which are primarily owned by these third parties.
We intend to enter into strategic alliances and collaborative arrangements with third parties, which will give us rights to develop, manufacture, market and/or commercialize pharmaceutical products, the rights to which are primarily owned by these third parties. These alliances and arrangements can take many forms, including licensing arrangements, co-development and co-marketing agreements, co-promotion arrangements, research collaborations and joint ventures.
We may terminate the license agreement if Rose U experiences certain insolvency events or if Rose U commits a material breach of the license agreement, subject to applicable cure provisions.
We are permitted to grant sublicenses to the licensed rights and may assign the agreements upon our acquisition or that of our assets that relate to the license agreement. We may terminate the license agreement if Rose U experiences certain insolvency events or if Rose U commits a material breach of the license agreement, subject to applicable cure provisions.
Oral doxycycline (40mg) has been approved for the treatment of only inflammatory lesions (papules and pustules) of rosacea and is available under the proprietary name Oracea ® (Galderma L.P.) in the US. Oracea is generally considered to be the current standard of care.
Oral doxycycline (40mg) has been approved for the treatment of only inflammatory lesions (papules and pustules) of rosacea and is available under the proprietary name Oracea ® (Galderma L.P.) in the U.S. Oracea was the most prescribed oral doxycycline brand for rosacea for the last 20 years.
The NDA was filed under Section 505(b)(2) of the Food Drug and Cosmetic Act (“FDCA”) in January 2024 and was approved in November 2024 by the FDA (NDA 219015). Emrosi has Orange Book-listed patents that extend through January of 2039.
The New Drug Application (the “NDA”) was filed under Section 505(b)(2) of the Food Drug and Cosmetic Act (“FDCA”) in January 2024 and was approved in November 2024 by the FDA. Emrosi has three Orange Book-listed patents that extend through January of 2039. The oral rosacea market had more than 1.5 million prescriptions in 2025 according to Symphony Health.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe degree of market acceptance of our products or any other potential product candidate we may develop, license or acquire will depend on a number of factors, including: ● the success of any potential clinical studies during the drug development process; ● limitations of use, contraindications, or warnings contained in the product’s FDA-approved labeling; ● changes in the standard of care for the targeted indications for any future product candidates, which could reduce the marketing impact of any superiority claims that we could make following FDA approval; ● ability to be listed on formularies (lists of recommended or approved medicines and other products) and reimbursement lists by demonstrating the qualities and treatment benefits of our products within their approved indications; and ● potential advantages over, and availability of, alternative treatments. 33 Table of Contents Our ability to effectively promote and sell our current products and any future product candidates for which we receive marketing authorization, we may develop, license or acquire in the marketplace will also depend on pricing and cost effectiveness, including our ability to produce a product at a competitive price and achieve acceptance of the product onto formularies, as well as our ability to obtain sufficient third-party coverage or reimbursement.
Biggest changeThe degree of market acceptance of our products or any other potential product candidate we may develop, license or acquire will depend on a number of factors, including: ● the success of any potential clinical studies during the drug development process; ● limitations of use, contraindications, or warnings contained in the product’s FDA-approved labeling; ● changes in the standard of care for the targeted indications for any future product candidates, which could reduce the marketing impact of any superiority claims that we could make following FDA approval; ● ability to be listed on formularies (lists of recommended or approved medicines and other products) and reimbursement lists by demonstrating the qualities and treatment benefits of our products within their approved indications; and ● potential advantages over, and availability of, alternative treatments.
If the FDA requires us to provide additional clinical or preclinical data following the approval of any potential future product candidate, the indications for which such product candidate is approved may be limited or there may be specific warnings or limitations on dosing, and our efforts to commercialize potential future product candidate may be otherwise adversely impacted.
If the FDA requires us to provide additional clinical or preclinical data following the approval of any potential future product candidate, the indications for which such product candidate is approved may be limited or there may be specific warnings or limitations on dosing, and our efforts to commercialize potential future product candidate, if approved, may be otherwise adversely impacted.
Any delay in obtaining, or inability to obtain, applicable regulatory approval for any of our product candidates would delay or prevent commercialization of any future product candidates and would harm our business, financial condition, operating results and prospects.
Any delay in obtaining, or inability to obtain, applicable regulatory approval for any future product candidates would delay or prevent commercialization of any future product candidates and would harm our business, financial condition, operating results and prospects.
The FDA and foreign regulatory bodies have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of product candidates for many reasons, including: ● the FDA or the applicable foreign regulatory body may disagree with the design, implementation, choice of dose, analysis plans or interpretation of the outcome of one or more clinical trials; ● the FDA or the applicable foreign regulatory body may not deem a product candidate safe and effective for its proposed indication, or may deem a product candidate’s safety or other perceived risks to out-weigh its clinical or other benefits; ● the FDA or the applicable foreign regulatory body may not find the data from preclinical studies and clinical trials, including the number of subjects in the safety database, sufficient to support approval, or the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or the applicable foreign regulatory body for approval; ● the FDA or the applicable foreign regulatory body may disagree with our interpretation of data from pre-clinical studies or clinical trials performed by us or third parties, or with the interpretation of any partner with which we may collaborate; ● the data collected from clinical trials may not be sufficient to support the submission and approval of an NDA, BLA or other applicable regulatory filing; ● the FDA or the applicable foreign regulatory body may require additional preclinical studies or clinical trials; ● the FDA or the applicable foreign regulatory agency may identify deficiencies in the formulation, manufacturing, quality control, labeling or specifications of any future product candidates; ● the FDA or the applicable foreign regulatory agency may require clinical trials in pediatric patients in order to establish pharmacokinetics or safety for this more drug-sensitive population; ● the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional post-approval clinical trials; ● the FDA or the applicable foreign regulatory agency may grant approval but impose substantial and costly post-approval requirements; ● the FDA or the applicable foreign regulatory agency may approve any future product candidates for a more limited indication or a narrower patient population than we originally requested; ● the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of any future product candidates; ● the FDA or the applicable foreign regulatory body may not approve of the manufacturing processes, controls or facilities of third-party manufacturers or testing labs with which we contract; or ● the FDA or the applicable foreign regulatory body may change its approval policies or adopt new regulations in a manner rendering our clinical data or regulatory filings insufficient for approval, including changes in policies and regulation in the United States as a result of the new presidential administration. 44 Table of Contents Of the large number of drugs and biologics in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized.
The FDA and foreign regulatory bodies have substantial discretion in the drug approval process, including the ability to delay, limit or deny approval of product candidates for many reasons, including: ● the FDA or the applicable foreign regulatory body may disagree with the design, implementation, choice of dose, analysis plans or interpretation of the outcome of one or more clinical trials; ● the FDA or the applicable foreign regulatory body may not deem a product candidate safe and effective for its proposed indication, or may deem a product candidate’s safety or other perceived risks to out-weigh its clinical or other benefits; ● the FDA or the applicable foreign regulatory body may not find the data from preclinical studies and clinical trials, including the number of subjects in the safety database, sufficient to support approval, or the results of clinical trials may not meet the level of statistical or clinical significance required by the FDA or the applicable foreign regulatory body for approval; ● the FDA or the applicable foreign regulatory body may disagree with our interpretation of data from pre-clinical studies or clinical trials performed by us or third parties, or with the interpretation of any partner with which we may collaborate; ● the data collected from clinical trials may not be sufficient to support the submission and approval of an NDA, BLA or other applicable regulatory filing; ● the FDA or the applicable foreign regulatory body may require additional preclinical studies or clinical trials; ● the FDA or the applicable foreign regulatory agency may identify deficiencies in the formulation, manufacturing, quality control, labeling or specifications of any future product candidates; ● the FDA or the applicable foreign regulatory agency may require clinical trials in pediatric patients in order to establish pharmacokinetics or safety for this more drug-sensitive population; ● the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional post-approval clinical trials; ● the FDA or the applicable foreign regulatory agency may grant approval but impose substantial and costly post-approval requirements; ● the FDA or the applicable foreign regulatory agency may approve any future product candidates for a more limited indication or a narrower patient population than we originally requested; ● the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of any future product candidates; ● the FDA or the applicable foreign regulatory body may not approve of the manufacturing processes, controls or facilities of third-party manufacturers or testing labs with which we contract; or ● the FDA or the applicable foreign regulatory body may change its approval policies or adopt new regulations in a manner rendering our clinical data or regulatory filings insufficient for approval, including changes in policies and regulation in the United States as a result of the new presidential administration. 45 Table of Contents Of the large number of drugs and biologics in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized.
Our future funding requirements will depend on many factors, including, but not limited to: ● the potential for delays in our efforts to seek regulatory approval for any current or future product candidates, and any costs associated with such delays; ● the costs of maintaining and/or establishing a commercial organization to sell, market and distribute our products and/or any future product candidates for which we receive marketing authorization; ● the rate of progress and costs of our efforts to prepare for the submission of NDA or BLA for any product candidates that we may in-license or acquire in the future, and the potential that we may need to conduct additional clinical trials to support applications for regulatory approval; 51 Table of Contents ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights associated with any future product candidates, including any such costs we may be required to expend if licensors are unwilling or unable to do so; ● the cost and timing of securing sufficient supplies of our products and future product candidates from our contract manufacturers in preparation for commercialization, manufacture, and/or sale; ● the effect of competing technological and market developments; ● the terms and timing of any collaborative, licensing, co-promotion or other arrangements that we may establish; ● the potential that we may be required to file a lawsuit to defend our patent rights or regulatory exclusivities from challenges by companies seeking to market generic versions of our branded products; and ● the success of sales efforts of our current products and/or the commercialization of any future product candidates for which we receive marketing authorization.
Our future funding requirements will depend on many factors, including, but not limited to: ● the potential for delays in our efforts to seek regulatory approval for any future product candidates, and any costs associated with such delays; ● the costs of maintaining and/or establishing a commercial organization to sell, market and distribute our products and/or any future product candidates for which we receive marketing authorization; ● the rate of progress and costs of our efforts to prepare for the submission of NDA or BLA for any product candidates that we may in-license or acquire in the future, and the potential that we may need to conduct additional clinical trials to support applications for regulatory approval; ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights associated with any future product candidates, including any such costs we may be required to expend if licensors are unwilling or unable to do so; ● the cost and timing of securing sufficient supplies of our products and future product candidates from our contract manufacturers in preparation for commercialization, manufacture, and/or sale; ● the effect of competing technological and market developments; ● the terms and timing of any collaborative, licensing, co-promotion or other arrangements that we may establish; 53 Table of Contents ● the potential that we may be required to file a lawsuit to defend our patent rights or regulatory exclusivities from challenges by companies seeking to market generic versions of our branded products; and ● the success of sales efforts of our current products and/or the commercialization of any future product candidates for which we receive marketing authorization.
We anticipate that our expenses will increase substantially if: ● any future product candidates are approved for commercial sale, due to our ability to establish the necessary commercial infrastructure to launch this product candidate without substantial delays, including hiring sales and marketing personnel and contracting with third parties for warehousing, distribution, cash collection and related commercial activities; ● we acquire or in-license new products for development and/or sale; 50 Table of Contents ● we are required by the FDA, or foreign regulatory authorities, to perform studies in addition to those currently expected; ● there are any delays in completing our clinical trials or the development of any future product candidates; ● we execute other collaborative, licensing or similar arrangements that require us to make payments and/ or expend funds; ● there are variations in the level of expenses related to our future development programs; ● there are any product liability or intellectual property infringement lawsuits in which we may become involved; ● there are any regulatory developments affecting our products or future product candidates, or the product candidates of our competitors; or ● the level of underlying demand for our products and wholesalers’ buying patterns.
We anticipate that our expenses will increase substantially if: ● any future product candidates are approved for commercial sale, due to our ability to establish the necessary commercial infrastructure to launch this product candidate without substantial delays, including hiring sales and marketing personnel and contracting with third parties for warehousing, distribution, cash collection and related commercial activities; ● we acquire or in-license new products for development and/or sale; ● we are required by the FDA, or foreign regulatory authorities, to perform studies in addition to those currently expected; ● there are any delays in completing our clinical trials or the development of any future product candidates; ● we execute other collaborative, licensing or similar arrangements that require us to make payments and/ or expend funds; ● there are variations in the level of expenses related to our future development programs; ● there are any product liability or intellectual property infringement lawsuits in which we may become involved; ● there are any regulatory developments affecting our products or future product candidates, or the product candidates of our competitors; or 52 Table of Contents ● the level of underlying demand for our products and wholesalers’ buying patterns.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for any future product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize such product candidates.
If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our preclinical studies or clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for any future product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize such product candidates, if approved.
Risks Related to Our Reliance on Third Parties If we are unable to maintain sales, marketing, and distribution capabilities, or to enter into agreements with third parties to market and sell our current products or any future product candidates for which we receive marketing authorization, we may not be successful in generating revenues from selling and commercializing any such product candidates.
Risks Related to Our Reliance on Third Parties If we are unable to maintain sales, marketing, and distribution capabilities, or to enter into agreements with third parties to market and sell our current products or any future product candidates for which we receive marketing authorization, we may not be successful in generating revenues from selling and commercializing our current products and any future product candidates for which we receive marketing authorization.
We rely, and expect to continue to rely, on third parties to conduct any future preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including by failing to meet deadlines for the completion of such trials or to comply with applicable regulatory requirements.
We expect to rely on third parties to conduct any future preclinical studies and clinical trials, and those third parties may not perform satisfactorily, including by failing to meet deadlines for the completion of such trials or to comply with applicable regulatory requirements.
We cannot assure you that any such regulatory authority, upon inspection of any future clinical trial, will determine that such clinical trial complies with cGMP regulations. In addition, any future clinical trials must be conducted with product produced under cGMP regulations and subject to an IND.
We cannot assure you that any such regulatory authority, upon inspection of any future clinical trial, will determine that such clinical trial complies with GCP regulations. In addition, any future clinical trials must be conducted with product produced under cGMP regulations and subject to an IND.
We are also not permitted to market any of our products or any future product candidates in any foreign countries until we receive the requisite approval from the applicable regulatory authorities of such countries. 43 Table of Contents To gain approval to market a new drug, the FDA and foreign regulatory authorities must receive preclinical, clinical and chemistry, manufacturing and controls data that adequately demonstrate the safety, purity, potency, efficacy and compliant manufacturing of the product for the intended indication applied for in an NDA, BLA or other applicable regulatory filing.
We are also not permitted to market any of our products or any future product candidates in any foreign countries until we receive the requisite approval from the applicable regulatory authorities of such countries. 44 Table of Contents To gain approval to market a new drug, the FDA and foreign regulatory authorities must receive preclinical, clinical and chemistry, manufacturing and controls data that adequately demonstrate the safety, purity, potency, efficacy and compliant manufacturing of the product for the intended indication applied for in an NDA, BLA or other applicable regulatory filing.
If the FDA requires us to conduct additional preclinical studies or clinical trials prior to approving any other potential future product candidate, our ability to obtain of such product candidate will be delayed.
If the FDA requires us to conduct additional preclinical studies or clinical trials prior to approving any other potential future product candidate, our ability to obtain approval of such product candidate will be delayed.
For example: ● our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents; ● our licensors might not have been the first to file patent applications for these inventions; ● others may independently develop similar or alternative technologies or duplicate our products or any future product candidates’ technologies; ● it is possible that none of the pending patent applications licensed to us will result in issued patents; ● the issued patents covering our products or any future product candidates may not provide a basis for commercially viable active products, may not provide us with any competitive advantages, or may be challenged and defeated by third parties; ● we may not develop additional proprietary technologies that are patentable; or ● patent rights of others may have an adverse effect on our business.
For example: ● our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents; ● our licensors might not have been the first to file patent applications for these inventions; ● others may independently develop similar or alternative technologies or duplicate our products or any future product candidates’ technologies; ● it is possible that none of the pending patent applications licensed to us will result in issued patents; 48 Table of Contents ● the issued patents covering our products or any future product candidates may not provide a basis for commercially viable active products, may not provide us with any competitive advantages, or may be challenged and defeated by third parties; ● we may not develop additional proprietary technologies that are patentable; or ● patent rights of others may have an adverse effect on our business.
The majority of states also have statutes or regulations similar to these federal laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”), information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians and their immediate family members; ● U.S.
The majority of states also have statutes or regulations similar to these federal laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose obligations on covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”), information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, certified nurse-midwives and teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by the physicians and their immediate family members; 29 Table of Contents ● U.S.
Additionally, as a result of recurring losses from operations, we have concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of the financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2024.
Additionally, as a result of recurring losses from operations, we have concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months from the date of the issuance of the financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2025.
In addition, we, any partner with which we currently or may in the future collaborate, the FDA, an institutional review board (“IRB”) or other regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications to or terminate our clinical trials at any time, for various reasons, including: ● discovery of serious or unexpected adverse events, toxicities, or side effects experienced by study participants or other safety issues; ● lack of effectiveness of any product candidate during clinical trials or the failure of a product candidate to meet specified endpoints; ● slower than expected rates of subject recruitment and patient enrollment in clinical trials resulting from numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same indication, such as atopic dermatitis; ● difficulty in retaining subjects who have initiated participation in a clinical trial but may withdraw at any time due to adverse side effects from the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason; ● difficulty in obtaining IRB approval for studies to be conducted at each site; 41 Table of Contents ● delays in manufacturing or obtaining, or inability to manufacture or obtain, sufficient quantities of materials for use in clinical trials; ● inadequacy of or changes in our manufacturing process or the product formulation or method of delivery; ● changes in applicable laws, regulations and regulatory policies; ● delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective CROs, clinical trial sites and other third-party contractors; ● inability to add a sufficient number of clinical trial sites; ● uncertainty regarding proper dosing; ● failure of our contract research organizations (“CROs”) or other third-party contractors to comply with contractual and regulatory requirements or to perform their services in a timely or acceptable manner; ● failure by us, our employees, our CROs or their employees or any partner with which we may collaborate or their employees to comply with applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for drug and biologic products; ● scheduling conflicts with participating clinicians and clinical institutions; ● failure to design appropriate clinical trial protocols; ● inability or unwillingness of medical investigators to follow our clinical protocols; ● difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data; or ● insufficient data to support regulatory approval.
In addition, we, any partner with which we currently or may in the future collaborate, the FDA, an institutional review board (“IRB”) or other regulatory authorities, including state and local agencies and counterpart agencies in foreign countries, may suspend, delay, require modifications to or terminate our clinical trials at any time, for various reasons, including: ● discovery of serious or unexpected adverse events or toxicities experienced by study participants or other safety issues; ● lack of effectiveness of any product candidate during clinical trials or the failure of a product candidate to meet specified endpoints; ● slower than expected rates of subject recruitment and patient enrollment in clinical trials resulting from numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same indication, such as atopic dermatitis; ● difficulty in retaining subjects who have initiated participation in a clinical trial but may withdraw at any time due to adverse events during the therapy, insufficient efficacy, fatigue with the clinical trial process or for any other reason; ● difficulty in obtaining IRB approval for studies to be conducted at each site; ● delays in manufacturing or obtaining, or inability to manufacture or obtain, sufficient quantities of materials for use in clinical trials; ● inadequacy of or changes in our manufacturing process or the product formulation or method of delivery; ● changes in applicable laws, regulations and regulatory policies; ● delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective CROs, clinical trial sites and other third-party contractors; ● inability to add a sufficient number of clinical trial sites; 42 Table of Contents ● uncertainty regarding proper dosing; ● failure of our CROs or other third-party contractors to comply with contractual and regulatory requirements or to perform their services in a timely or acceptable manner; ● failure by us, our employees, our CROs or their employees or any partner with which we may collaborate or their employees to comply with applicable FDA or other regulatory requirements relating to the conduct of clinical trials or the handling, storage, security and recordkeeping for drug and biologic products; ● scheduling conflicts with participating clinicians and clinical institutions; ● failure to design appropriate clinical trial protocols; ● inability or unwillingness of medical investigators to follow our clinical protocols; ● difficulty in maintaining contact with subjects during or after treatment, which may result in incomplete data; or ● insufficient data to support regulatory approval.
Our Third Amended and Restated Certificate of Incorporation requires to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions must be brought in the Court of Chancery in the State of Delaware or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware.
Our Fourth Amended and Restated Certificate of Incorporation requires to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions must be brought in the Court of Chancery in the State of Delaware or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware.
Regardless of merit or eventual outcome, liability claims may result in: ● termination of clinical trial sites or entire trial programs or withdrawal of clinical trial participants; ● regulatory investigations by governmental authorities related to regulatory issues or alleged non-compliances; ● litigation costs and potential monetary awards to patients or other claimants; 36 Table of Contents ● harm to our reputation and/or decreased demand for our products and corresponding revenue loss; ● reduced resources of our management to pursue our business strategy; and ● the inability to commercialize our current products or any future product candidates for which we receive marketing authorization.
Regardless of merit or eventual outcome, liability claims may result in: ● termination of clinical trial sites or entire trial programs or withdrawal of clinical trial participants; ● regulatory investigations by governmental authorities related to regulatory issues or alleged non-compliances; ● litigation costs and potential monetary awards to patients or other claimants; ● harm to our reputation and/or decreased demand for our products and corresponding revenue loss; ● reduced resources of our management to pursue our business strategy; and ● the inability to commercialize our current products or any future product candidates for which we receive marketing authorization.
Alternatively, if a court were to find the choice of forum provision contained in our Third Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Fourth Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
The clinical success of any future product candidates will depend on a number of factors, including the following: ● our ability to raise additional capital on acceptable terms, or at all; ● timely completion of any clinical trials we undertake in the future in respect of any future product candidates, which may be significantly slower or cost more than we then anticipate and will depend substantially upon the performance of third-party contractors as well as our ability to timely recruit and enroll patients in our clinical trials, which may be delayed due to numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same or similar indications; ● whether we are required by the FDA or similar foreign regulatory agencies to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of our current products or any future product candidates; 40 Table of Contents ● acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of any future product candidates by the FDA and similar foreign regulatory authorities; ● our ability to demonstrate to the satisfaction of the FDA and similar foreign regulatory authorities the safety, efficacy and acceptable risk to benefit profile of any future product candidates; ● the prevalence, duration and severity of potential side effects experienced with our current products or any future product candidates; ● the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; ● achieving and maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to any future product candidates; ● our ability to successfully obtain the substances and materials used in any future product candidates from third parties and to have finished products manufactured by third parties in accordance with regulatory requirements and in sufficient quantities for preclinical and clinical testing; ● the ability of third parties with whom we contract to manufacture clinical trial supplies of any future product candidates, remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP; and ● a continued acceptable safety profile during clinical development of any future product candidates.
The clinical success of any future product candidates will depend on a number of factors, including the following: ● our ability to raise additional capital on acceptable terms, or at all; ● timely completion of any clinical trials we undertake in the future in respect of any future product candidates, which may be significantly slower or cost more than we then anticipate and will depend substantially upon the performance of third-party contractors as well as our ability to timely recruit and enroll patients in our clinical trials, which may be delayed due to numerous factors, including the prevalence of other companies’ clinical trials for their product candidates for the same or similar indications; ● whether we are required by the FDA or similar foreign regulatory agencies to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of any future product candidates; ● acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of any future product candidates by the FDA and similar foreign regulatory authorities; ● our ability to demonstrate to the satisfaction of the FDA and similar foreign regulatory authorities the safety, efficacy and acceptable risk to benefit profile of any future product candidates; ● the prevalence, duration and severity of potential adverse events experienced with any future product candidates; ● the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; 41 Table of Contents ● achieving and maintaining, and, where applicable, ensuring that our third-party contractors achieve and maintain, compliance with our contractual obligations and with all regulatory requirements applicable to any future product candidates; ● our ability to successfully obtain the substances and materials used in any future product candidates from third parties and to have finished products manufactured by third parties in accordance with regulatory requirements and in sufficient quantities for preclinical and clinical testing; ● the ability of third parties with whom we contract to manufacture clinical trial supplies of any future product candidates, remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP; and ● a continued acceptable safety profile during clinical development of any future product candidates.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include: ● AKS, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state 28 Table of Contents healthcare programs, such as Medicare and Medicaid.
The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include: ● AKS, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid.
Specifically, the anti- bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person; enforcement actions may be brought by the Department of Justice or the SEC; legislation has expanded the SEC’s power to seek disgorgement in all FCPA cases filed in federal court and extended the statute of limitations in SEC enforcement actions in intent-based claims, such as those under the FCPA, from five years to ten years; ● Increased OIG scrutiny on the sale of our products through specialty pharmacies by means of direct investigation or by issuance of unfavorable Opinion Letters which may curtail or hinder the sales of our products based on risk of enforcement upon our-selves or our buyers; ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; ● state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and ● state and foreign laws governing the privacy and security of health information in certain circum-stances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 29 Table of Contents Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs.
Specifically, the anti- bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person; enforcement actions may be brought by the Department of Justice or the SEC; legislation has expanded the SEC’s power to seek disgorgement in all FCPA cases filed in federal court and extended the statute of limitations in SEC enforcement actions in intent-based claims, such as those under the FCPA, from five years to ten years; ● Increased OIG scrutiny on the sale of our products through specialty pharmacies by means of direct investigation or by issuance of unfavorable Opinion Letters which may curtail or hinder the sales of our products based on risk of enforcement upon ourselves or our buyers; ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; ● state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and ● state and foreign laws governing the privacy and security of health information in certain circum-stances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and materially adversely affect our business, results of operations, financial condition or cash flows. We began marketing and promoting Accutane®, an isotretinoin product in the second quarter of 2021.
A successful product liability claim or series of claims brought against us could cause our stock price to fall and, if judgments exceed our insurance coverage, could decrease our cash and materially adversely affect our business, results of operations, financial condition or cash flows. 37 Table of Contents We began marketing and promoting Accutane, an isotretinoin product in the second quarter of 2021.
Pursuant to the terms of the Class A Common Stock held by Fortress, Fortress is entitled to cast, for each share of Class A Common Stock held by Fortress, the number of votes that is equal to 1.1 times a fraction, the numerator of which is the number of shares of our outstanding common stock and the denominator of which is the number of shares of outstanding Class A Common Stock (the “Class A Common Stock Ratio”).
Pursuant to the terms of the Class A Common Stock held by Fortress, Fortress is entitled to cast, for each share of Class A Common Stock held by Fortress, the number of votes that is equal to 1.1 times a fraction, the numerator of which is the number of shares of our outstanding common stock and the denominator of which is the number of shares of outstanding Class A Common Stock.
In addition, our failure to follow FDA requirements or guidelines relating to promotion and advertising may cause the FDA to suspend or withdraw an approved product from the market, require a recall or institute fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our business.
In addition, our failure to follow FDA 25 Table of Contents requirements or guidelines relating to promotion and advertising may cause the FDA to suspend or withdraw an approved product from the market, require a recall or institute fines, or could result in disgorgement of money, operating restrictions, injunctions or criminal prosecution, any of which could harm our business.
Any of these events could prevent us from achieving or maintaining market acceptance of any current or future product candidate or could substantially increase our development and commercialization costs and expenses, which could delay or prevent us from generating significant revenues. All of our current and future products will remain subject to substantial regulatory scrutiny even after receiving regulatory approval.
Any of these events could prevent us from achieving or maintaining market acceptance of any future product candidate or could substantially increase our development and commercialization costs and expenses, which could delay or prevent us from generating significant revenues. 27 Table of Contents All of our current and future products will remain subject to substantial regulatory scrutiny even after receiving regulatory approval.
When patents covering certain of our products expire or are successfully 24 Table of Contents challenged through litigation or in USPTO proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products expires or is otherwise lost, we may face generic competition as a result.
When patents covering certain of our products expire or are successfully challenged through litigation or in USPTO proceedings, if a generic company launches a competing product “at risk,” or when the regulatory or licensed exclusivity for our products expires or is otherwise lost, we may face generic competition as a result.
If one or more of our current products or any future product candidate receives marketing approval and we or others later identify undesirable adverse events or side effects caused by this product, or we fail to comply with post-market regulatory requirements, a number of potentially significant negative consequences could result, including: ● regulatory authorities may require the addition of unfavorable labeling statements, specific warnings or a contraindication; ● regulatory authorities may suspend or withdraw their approval of the product, or require it to be removed from the market; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; or ● our reputation may suffer.
If one or more of our current products or any future product candidate receives marketing approval and we or others later identify undesirable adverse events associated with this product or any future product candidate, or we fail to comply with post-market regulatory requirements, a number of potentially significant negative consequences could result, including: ● regulatory authorities may require the addition of unfavorable labeling statements, specific warnings or a contraindication; ● regulatory authorities may suspend or withdraw their approval of the product, or require it to be removed from the market; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; or ● our reputation may suffer.
In addition, our efforts to educate the medical community and third-party payors on the benefits of any future product candidates may require significant resources and may never be successful. Further, in both domestic and foreign markets, any future product sales will depend in part upon the availability of coverage and reimbursement from third-party payors.
In addition, our efforts to educate the medical community and third-party payors on the benefits of any future product candidates may require significant resources and may never be successful. 34 Table of Contents Further, in both domestic and foreign markets, any future product sales will depend in part upon the availability of coverage and reimbursement from third-party payors.
Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. The third parties with whom we may contract to help perform future preclinical studies or clinical trials may also have relationships with other entities, some of which may be our competitors.
Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. 36 Table of Contents The third parties with whom we may contract to help perform future preclinical studies or clinical trials may also have relationships with other entities, some of which may be our competitors.
These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. 37 Table of Contents The use of artificial intelligence in the healthcare industry and challenges with properly managing its use could adversely affect our business.
These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. The use of artificial intelligence in the healthcare industry and challenges with properly managing its use could adversely affect our business.
We will also need to demonstrate acceptable evidence of safety and efficacy, as well as relative convenience and ease of administration. Market acceptance could be further limited depending on the prevalence and severity of any expected or unexpected adverse side effects associated with any future product candidates.
We will also need to demonstrate acceptable evidence of safety and efficacy, as well as relative convenience and ease of administration. Market acceptance could be further limited depending on the prevalence and severity of any expected or unexpected adverse events associated with any future product candidates.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● significant volatility in the market price and trading volume of companies in our industry; ● announcements of new solutions or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● price and volume fluctuations in the overall stock market from time to time; ● changes in how customers perceive the benefits of our products and future offerings; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● fluctuations in the trading volume of our shares or the size of our public float; ● actual or anticipated changes or fluctuations in our results of operations or financial projections; ● changes in actual or future expectations of investors or securities analysts; ● litigation involving us, our industry, or both; ● governmental or regulatory actions or audits; ● regulatory developments applicable to our business, including those related to privacy in the United States or globally; ● general economic conditions and trends; ● major catastrophic events in our domestic and foreign markets; and ● departures of key employees. 55 Table of Contents Risks Related to our Relationship with Fortress Biotech, Inc.
Factors that could cause fluctuations in the trading price of our common stock include the following: ● significant volatility in the market price and trading volume of companies in our industry; ● announcements of new solutions or technologies, commercial relationships, acquisitions, or other events by us or our competitors; ● price and volume fluctuations in the overall stock market from time to time; ● changes in how customers perceive the benefits of our products and future offerings; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● fluctuations in the trading volume of our shares or the size of our public float; ● actual or anticipated changes or fluctuations in our results of operations or financial projections; ● changes in actual or future expectations of investors or securities analysts; ● litigation involving us, our industry, or both; ● governmental or regulatory actions or audits; ● regulatory developments applicable to our business, including those related to privacy in the United States or globally; ● general economic conditions and trends; ● major catastrophic events in our domestic and foreign markets; and ● departures of key employees.
If we need to enter into alternative arrangements, that could delay any future product development activities. 35 Table of Contents Our reliance on any third parties for research and development activities will reduce our own control over these activities but will not relieve us of our responsibilities.
If we need to enter into alternative arrangements, that could delay any future product development activities. Our reliance on any third parties for research and development activities will reduce our own control over these activities but will not relieve us of our responsibilities.
Section 505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to FDA to rely in part on data in the public domain or the FDA’s prior conclusions 25 Table of Contents regarding the safety and effectiveness of approved compounds, which could expedite the development program for our product candidates by potentially decreasing the amount of clinical data that we would need to generate in order to obtain FDA approval.
Section 505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development program for future product candidates by potentially decreasing the amount of clinical data that we would need to generate in order to obtain FDA approval.
If any future product candidates are associated with undesirable side effects, toxicities, or other negative characteristics, we may need to abandon such product candidates’ development or limit development to more narrow uses or subpopulations. Such side effects may affect patient recruitment or the ability of enrolled patients to complete the trial and could result in potential product liability claims.
If any future product candidates are associated with undesirable adverse events, toxicities, or other negative characteristics, we may need to abandon such product candidates’ development or limit development to more narrow uses or subpopulations. Such adverse events may affect patient recruitment or the ability of enrolled patients to complete the trial and could result in potential product liability claims.
Our current insurance coverage includes the sale of commercial products, but we may be unable to maintain or obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects.
Our current insurance coverage includes the sale of commercial products, but we may be unable to maintain or obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated adverse events.
As a result, any such sale could have a material adverse effect on our business, financial condition, results of operations and cash flows. 39 Table of Contents There is substantial doubt regarding our ability to continue as a going concern.
As a result, any such sale could have a material adverse effect on our business, financial condition, results of operations and cash flows. There is substantial doubt regarding our ability to continue as a going concern.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.
If our clinical trials reveal severe or prevalent side effects, our trials could be suspended or terminated, we may be unable to recruit patients and enrolled patients may be unable to complete the trials, and the FDA or comparable foreign regulatory authorities could order issue a clinical hold, or order us to cease further development or deny approval of the product candidate.
If our clinical trials reveal severe or prevalent adverse events, our trials could be suspended or terminated, we may be unable to recruit patients and enrolled patients may be unable to complete the trials, and the FDA or comparable foreign regulatory authorities could issue a clinical hold, or order us to cease further development or deny approval of the product candidate.
These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products, and the establishment of risk management programs. The increased attention to drug safety issues may result in a more cautious approach by the FDA in its review of data from our clinical trials.
These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products, and the establishment of risk management programs. The increased attention to drug safety issues may result in a more cautious approach by the FDA in its review of data from any clinical trials we may conduct.
We may also be unsuccessful in resolving any underlying issues with such suppliers, distributors and partners or replacing them within a reasonable time and on commercially reasonable terms. We do not expect to have the resources or capacity to commercially manufacture any future approved product candidates ourselves.
We may also be unsuccessful in resolving any underlying issues with such suppliers, distributors and partners or replacing them within a reasonable time and on commercially reasonable terms. 35 Table of Contents We do not expect to have the resources or capacity to commercially manufacture any future approved product candidates ourselves.
Our Third Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions that could delay or prevent a change in control of our Company.
Our Fourth Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain provisions that could delay or prevent a change in control of our Company.
Isotretinoin has a black box warning for use in pregnant women. Isotretinoin also has warnings for side effects related to psychiatric disorders and inflammatory bowel disease, among others. Historically, isotretinoin has been the subject of significant product liability claims, mainly related to irritable bowel disease. Currently, there is no significant isotretinoin product liability litigation.
Isotretinoin has a black box warning for use in pregnant women. Isotretinoin also has warnings for adverse events related to psychiatric disorders and inflammatory bowel disease, among others. Historically, isotretinoin has been the subject of significant product liability claims, mainly related to irritable bowel disease. Currently, there is no significant isotretinoin product liability litigation.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 48 Table of Contents We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
If a third party claims that we infringe on their products or technology, in addition to costly and time-consuming litigation, we could face a number of issues, including: ● diversion of management’s attention from our core business; ● substantial damages for past infringement; ● injunctions prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be required to do; ● requirements that we pay substantial royalties or grant cross licenses under our patents; ● redesigning our processes so they do not infringe, which may not be possible or could require substantial funds and time; and ● harm to our reputation and subsequent adverse effect on the valuation of our securities and revenue.
If a third party claims that we infringe on their products or technology, in addition to costly and time-consuming litigation, we could face a number of issues, including: ● diversion of management’s attention from our core business; ● substantial damages for past infringement; ● injunctions prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be required to do; ● requirements that we pay substantial royalties or grant cross licenses under our patents; ● redesigning our processes so they do not infringe, which may not be possible or could require substantial funds and time; and ● harm to our reputation and subsequent adverse effect on the valuation of our securities and revenue. 49 Table of Contents Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
The success of our business, including our ability to finance our company and generate additional revenue in the future, may depend on the successful development and marketing of Emrosi and any future product candidates that we may develop, in-license or acquire.
The success of our business, including our ability to finance our company and generate additional revenue in the future, may depend on the successful development and marketing of any future product candidates that we may develop, in-license or acquire and for which we receive marketing authorization.
As of December 31, 2024, our major marketed products that have been approved by the FDA for sale in the United States include Qbrexza®, Accutane®, Amzeeq®, Zilxi®, Exelderm®, Targadox® and Luxamend®. In addition, Emrosi was approved by the FDA on November 1, 2024. However, our business remains dependent on the successful development and regulatory approval of additional product candidates.
As of December 31, 2025, our major marketed products that have been approved by the FDA for sale in the United States include Emrosi TM , Qbrexza®, Accutane®, Amzeeq®, Zilxi®, Exelderm®, Targadox® and Luxamend®. However, our business remains dependent on the successful development and regulatory approval of additional product candidates.
Undesirable side effects caused by any future product candidates could also result in the inclusion of unfavorable information in our product labeling, if approved, denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications, and in turn prevent us from commercializing and generating revenues from the sale of such product candidate.
Undesirable adverse events associated with any future product candidates could also result in the inclusion of unfavorable information in our product labeling, if approved, denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications, and in turn prevent us from commercializing and generating revenues from the sale of such product candidate.
Transferring technology to a new manufacturer will require additional processes, technologies and validation studies, which are costly, may take considerable amounts of time, may not be successful and require review and approval by the FDA and applicable foreign regulatory bodies.
Transferring technology to this new manufacturer, or any other manufacturer in the future, will require additional processes, technologies and validation studies, which are costly, may take considerable amounts of time, may not be successful and require review and approval by the FDA and applicable foreign regulatory bodies.
Our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; the FDA or comparable foreign regulatory authorities may disagree with our development strategy; we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication or is suitable to identify appropriate patient populations; the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks.
Our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including: the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; the FDA or comparable foreign regulatory authorities may disagree with our development strategy; we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication or is suitable to identify appropriate patient populations; the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks. 32 Table of Contents Changes to marketing approval policies or the regulatory landscape during the development period may cause rejection of or delays in the approval of an application.
Pursuant to the terms of our agreement with DRL for the exclusive, worldwide rights to develop and commercialize Emrosi for the evaluation of treatment, among other potential indications, inflammatory lesions of rosacea (the “Emrosi Agreement”), DRL is responsible for the manufacture and supply to us of Emrosi drug product and we are completely reliant upon DRL to provide us with adequate supply for our use.
Pursuant to the terms of our agreement with DRL for the exclusive, worldwide rights to develop and commercialize Emrosi for the evaluation of treatment, among other potential indications, inflammatory lesions of rosacea (the “Emrosi Agreement”), DRL is responsible for the manufacture and supply to us of Emrosi drug product.
Future in-licenses or acquisitions may entail numerous operational and financial risks, including: ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention to develop acquired products or technologies; ● difficulty or inability to secure financing to fund development activities for such acquired or in-licensed technologies in the current economic environment; ● incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions; ● higher than expected acquisition and integration costs; ● increased amortization expenses; ● difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses. 38 Table of Contents We have limited resources to identify and execute the acquisition or in-licensing of third-party products, current or future product candidates, businesses, and technologies and to integrate them into our current infrastructure.
Future in-licenses or acquisitions may entail numerous operational and financial risks, including: ● exposure to unknown liabilities; ● disruption of our business and diversion of our management’s time and attention to develop acquired products or technologies; ● difficulty or inability to secure financing to fund development activities for such acquired or in-licensed technologies in the current economic environment; ● incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions; ● higher than expected acquisition and integration costs; ● increased amortization expenses; ● difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel; ● impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and ● inability to retain key employees of any acquired businesses.
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
A primary trend in the healthcare industry in the United States and elsewhere is cost containment. 30 Table of Contents The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.
In the United States, the Affordable Care Act was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Affordable Care Act”), was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
Our ability to successfully commercialize our products, or any future product candidate for which we receive marketing authorization, will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.
The ability to successfully commercialize any product candidate that receives marketing authorization depends in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.
If we or any of our future clinical research organizations fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
If we or any third party on which we rely fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
The effects of the IRA on the pharmaceutical industry in general are not yet known. 30 Table of Contents At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
We must also manage our employees, operations, finances and capital investments efficiently. Our efficiency, productivity and the quality of our products may be adversely impacted if we do not train our new personnel, particularly our sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization.
Our efficiency, productivity and the quality of our products may be adversely impacted if we do not train our new personnel, particularly our sales and support personnel, quickly and effectively, or if we fail to appropriately coordinate across our organization.
Risks Related to Intellectual Property, Generic Competition and Paragraph IV Litigation If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
Any of the foregoing could materially and adversely affect our business, financial condition, and results of operations. 46 Table of Contents Risks Related to Intellectual Property, Generic Competition and Paragraph IV Litigation If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.
There is added uncertainty with the new presidential administration that began in 2025. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.
It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
Factors that may inhibit our efforts to maintain our current products’ marketing and sales organizations and/or commercialize any future products on our own include: ● our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to physicians and other healthcare providers or persuade adequate numbers of physicians and other healthcare providers to prescribe any future products; ● the lack of complementary or other products to be offered by sales personnel, which may put us at a competitive disadvantage from the perspective of sales efficiency relative to companies with more extensive product lines; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization. 34 Table of Contents We are dependent on third parties to supply raw materials used in our products, to manufacture our products, and to provide services for certain core aspects of our business.
Factors that may inhibit our efforts to maintain our current products’ marketing and sales organizations and/or commercialize any future products on our own include: ● our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel; ● the inability of sales personnel to obtain access to physicians and other healthcare providers or persuade adequate numbers of physicians and other healthcare providers to prescribe any future products; ● the lack of complementary or other products to be offered by sales personnel, which may put us at a competitive disadvantage from the perspective of sales efficiency relative to companies with more extensive product lines; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
Any default or breach by Fortress under any current or future credit agreement or arrangements may have an adverse effect on our business. Fortress has pledged as collateral to certain of its creditors equity in the Company.
Fortress’ current or future financial obligations and arrangements, or an event of default thereon, may change the ownership dynamic of us by Fortress. Any default or breach by Fortress under any current or future credit agreement or arrangements may have an adverse effect on our business. Fortress has pledged as collateral to certain of its creditors equity in the Company.
We may experience an interruption in supply if, among other reasons, we incorrectly forecast our supply requirements, DRL allocates supply to its own development programs, DRL incorrectly plans its manufacturing production or DRL is unable to manufacture Emrosi drug product in a timely manner to match our commercial needs.
We may experience an interruption in supply if, among other reasons, we incorrectly forecast our supply requirements, DRL allocates supply to its own development programs, DRL incorrectly plans its manufacturing production, DRL is unable to manufacture Emrosi drug product in a timely manner to match our commercial needs or if we are unable to set up a second manufacturer of Emrosi on a timely or commercially reasonable basis, or at all.
Any of our future product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude us from obtaining marketing approval or prevent or limit 31 Table of Contents commercial use.
Any of our future product candidates may not be effective, may be only moderately effective or may prove to be associated with undesirable or unintended adverse events, toxicities or other characteristics that may preclude us from obtaining marketing approval or prevent or limit commercial use.
With the new presidential administration in the U.S., additional and higher tariffs and sanctions may be imposed on goods imported from China and other countries which could increase the cost of goods needed to commercialize our products and development of any future product candidates.
Additional and higher tariffs and sanctions may be imposed on goods imported from India (from which we import products), China and other countries which could increase the cost of goods needed to commercialize our products and development of any future product candidates.
Additionally, some of our products, including Accutane, Targadox and Exelderm, do not have patent protection because they are not eligible or qualify for such protection. This creates greater risk of competition with generic drug manufacturers and may otherwise adversely affect our business or result of operations. Further, we rely on trade secrets, including unpatented know-how, to maintain our competitive position.
Additionally, some of our products, including Accutane, Targadox, Exelderm and Luxamend, do not have patent protection because they are not eligible or qualify for such protection. This creates greater risk of competition with generic drug manufacturers and may otherwise adversely affect our business or result of operations.
The majority of our sales derive from products that are without patent protection and/or are or may become subject to third-party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse impact on our operating income.
A substantial portion of our sales derive from products that may become subject to third-party generic competition because their period of exclusivity has ended or they are without patent protection, subjecting them to the potential introduction of new competitor products and/or an increase in market share of existing competitor products, either of which could have a significant adverse impact on our operating income.
Fortress controls a voting majority of our common stock, which could be detrimental to our other shareholders.
Risks Related to our Relationship with Fortress Biotech, Inc. Fortress controls a voting majority of our common stock, which could be detrimental to our other shareholders.
We are a “controlled company” within the meaning of Nasdaq listing standards and, as a result, qualify for exemptions from certain corporate governance requirements. Although we do not presently intend to take advantage of these exemptions, we may do so in the future. We are a “controlled company” within the meaning of Nasdaq listing standards.
Although we do not presently intend to take advantage of these exemptions, we may do so in the future. We are a “controlled company” within the meaning of Nasdaq listing standards.
For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until eighteen (18) months after a first filing, if at all.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until eighteen (18) months after a first filing, if at all.
If the CMOs upon which we rely to manufacture any current products, and any potential product candidates we may in-license or acquire, fail to deliver the required commercial quantities on a timely basis at commercially reasonable prices, we would likely be unable to meet demand for our products and we would lose potential revenues. 26 Table of Contents If serious adverse or unacceptable side effects are identified during the development of any future product candidates, we may need to abandon or limit our development of these product candidates.
If the CMOs upon which we rely to manufacture any current products, and any potential product candidates we may in-license or acquire, fail to deliver the required commercial quantities on a timely basis at commercially reasonable prices, we would likely be unable to meet demand for our products and we would lose potential revenues.
This concentration of voting power may delay, prevent or deter a change in control of us even when such a change may be in the best interests of all stockholders, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale of Journey or our assets, and might affect the prevailing market price of our common stock.
This concentration of voting power may delay, prevent or deter a change in control of us even when such a change may be in the best interests of all stockholders, could deprive our stockholders of an opportunity to receive a premium for their shares of common stock as part of a sale of Journey or our assets, and might affect the prevailing market price of our common stock. 57 Table of Contents We are a “controlled company” within the meaning of Nasdaq listing standards and, as a result, qualify for exemptions from certain corporate governance requirements.
Such measures may become necessary whether or not we are able to raise additional capital. As a result, our business, financial condition, and results of operations could be materially affected.
Such measures may become necessary whether or not we are able to raise additional capital. As a result, our business, financial condition, and results of operations could be materially affected. Risks Related to Development and Regulatory Approval of Our Future Product Candidates Our business is dependent on the successful development and regulatory approval of future product candidates.
Further, such actions by the U.S. could result in retaliatory action by those countries which could impact our ability to profitably commercialize our products in those jurisdictions.
Further, such actions by the U.S. could result in retaliatory action by those countries which could impact our ability to profitably commercialize our products in those jurisdictions. As a result, our business, operations, and financial condition could be materially harmed.
Violations of the FDCA relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection laws. 27 Table of Contents In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: ● restrictions on such products or their manufacturers or manufacturing processes; ● restrictions on the labeling or marketing of a product; ● restrictions on product distribution or use; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters, untitled letters, or Form 483s; ● withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● recall of products; ● fines, restitution or disgorgement of profits; ● suspension or withdrawal of marketing or regulatory approvals; ● suspension of any ongoing clinical trials; ● denial of permits to import or export our products; ● product seizure; or ● injunctions or the imposition of civil or criminal penalties.
In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: ● restrictions on such products or their manufacturers or manufacturing processes; ● restrictions on the labeling or marketing of a product; ● restrictions on product distribution or use; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters, untitled letters, or Form 483s; ● withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● recall of products; ● fines, restitution or disgorgement of profits; ● suspension or withdrawal of marketing or regulatory approvals; ● suspension of any ongoing clinical trials; ● denial of permits to import or export our products; ● product seizure; or ● injunctions or the imposition of civil or criminal penalties. 28 Table of Contents The FDA’s policies may change, and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our future product candidates.
The United States Patent Office developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-inventor-to-file provisions, which became effective on March 16, 2013.
These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The USPTO developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-inventor-to-file provisions, which became effective on March 16, 2013.
Many compounds that show initial promise in early-stage testing are later found to cause side effects that prevent further development.
Many compounds that show initial promise in early-stage testing are later found to be associated with adverse events that prevent further development.
If the FDA or applicable foreign regulatory authority does not accept such data, it would likely result in the need for additional clinical trials, which would be costly and time-consuming and delay aspects of our business plan.
If the FDA or applicable foreign regulatory authority does not accept such data, it would likely result in the need for additional clinical trials, which would be costly and time-consuming and delay aspects of our business plan. Changes in U.S. government policy, regulation, enforcement priorities, and funding decisions could adversely affect our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have implemented a cybersecurity risk management program that leverages the National Institute of Standards and Technology (“NIST”) framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover. We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation.
Biggest changeWe regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation. Security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation.
This includes existing and new cybersecurity risks, status on how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents (if any) and status on key information security initiatives. Any urgent cybersecurity threats are immediately flagged and reported to the board of directors. ​ 59 Table of Contents
This includes existing and new cybersecurity risks, status on how management is addressing and/or mitigating those risks, cybersecurity and data privacy incidents (if any) and status on key information security initiatives. Any urgent cybersecurity threats are immediately flagged and reported to the board of directors. ​
Security events and data incidents are evaluated, ranked by severity and prioritized for response and remediation. Our cybersecurity team collaborates with stakeholders across our business units to further analyze the risk to the company, and form detection, mitigation and remediation strategies.
Our cybersecurity team collaborates with stakeholders across our business units to further analyze the risk to the company, and form detection, mitigation and remediation strategies.
This is done in a variety of manners including assessing the strength of outside vendors, suppliers and business partners that may have access to the Company’s data and systems, setting up strong access controls in the form of firewalls and encryption, continuous monitoring of data for suspicious activity and other threats, security audits and extensive training.
This is done in a variety of ways including assessing the strength of outside vendors, suppliers and business partners that may have access to the Company’s data and systems, setting up strong access controls in the form of firewalls and encryption, continuous monitoring of data for suspicious activity and other threats, security audits and extensive training. 60 Table of Contents We have implemented a cybersecurity risk management program that leverages the National Institute of Standards and Technology (“NIST”) framework, which organizes cybersecurity risks into five categories: identify, protect, detect, respond and recover.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn July 2024, we amended our lease and entered into a new 25 - month extension of the office space in Scottsdale, AZ at an average annual rent of $0.1 million. The term of this amended lease will commence on February 1, 2025 and will expire on February 28, 2027.
Biggest changeItem 2. Properties Our executive offices are located at 9237 E Via de Ventura Blvd. Suite 105, Scottsdale, AZ 85258. The term of the lease for this space commenced on February 2025 and will expire on February 28, 2027, and we pay an average annual rent of $0.1 million.
Item 2. Properties Our executive offices are located at 9237 E Via de Ventura Blvd. Suite 105, Scottsdale, AZ 85258. We believe that our existing facilities are adequate to meet our current requirements. We do not own any real property.
We believe that our existing facilities are adequate to meet our current requirements. We do not own any real property. ​ 61 Table of Contents
Removed
In September 2022, we amended our lease and entered into a new 25-month extension of the office space in Scottsdale, AZ at an average annual rent of $0.1 million. The term of this amended lease commenced on January 1, 2023 and expired on January 31, 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSuits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and seeking resulting alleged damages. ​ Item 4.
Biggest changeSuits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and seeking resulting alleged damages. ​ On February 25, 2026, the Company filed a patent infringement lawsuit in the U.S.
In the ordinary course of business, however, the Company may be subject to both insured and uninsured litigation.
In the ordinary course of business, the Company may be subject to both insured and uninsured litigation.
Removed
Mine Safety Disclosures Not applicable. ​ 60 Table of Contents PART II ​
Added
District Court for the District of Delaware (‘the Court”) against Lupin Limited, Lupin Inc., and Lupin Pharmaceuticals, Inc. (“Lupin”).
Added
This lawsuit was filed following receipt of a “paragraph IV certification” notice from Lupin regarding its respective filing of an ANDA with the FDA seeking approval to engage in the commercial manufacture, use or sale of a generic version of Emrosi in the U.S. prior to the expiration of certain of the Company’s U.S. patents.
Added
The notice alleged that certain of the Company’s patents related to Emrosi, with expiration dates through 2039 are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the proposed generic products. The Company intends to vigorously defend its intellectual property.
Added
The filing of each lawsuit within 45 days of receipt of each of the respective notices triggered stays of FDA approval of each of the respective ANDAs for up to 30 months in accordance with the Hatch-Waxman Act. ​ Item 4. Mine Safety Disclosures Not applicable. ​ 62 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe additional information required by this item will be incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A. Sales of Unregistered Securities None.
Biggest changeThe additional information required by this item will be incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A. Sales of Unregistered Securities None. Holders As of March 25, 2026, there were approximately 44 holders of record for our common stock and 1 holder of record for our Class A common stock.
Dividends We have never paid cash dividends on any of our capital stock and currently intend to retain our future earnings, if any, to fund the development and growth of our business. ​ ​ Item 6. [RESERVED.] ​ 61 Table of Contents
Dividends We have never paid cash dividends on any of our capital stock and currently intend to retain our future earnings, if any, to fund the development and growth of our business. ​ Item 6. [RESERVED.] ​
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Use of Proceeds from Sales of Registered Securities On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333 - 269079), which was declared effective by the SEC on January 26, 2023.
Removed
This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of the Company’s common stock, preferred stock, debt securities, warrants, and units (the “2022 Shelf”). In connection with the 2022 Shelf, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B.
Removed
Riley”), relating to shares of our common stock. In accordance with the terms of the Sales Agreement, we may offer and sell up to 4,900,000 shares of our common stock, par value $0.0001 per share, from time to time through or to B. Riley acting as our agent or principal.
Removed
From our entry into the Sales Agreement through December 31, 2024 , we issued and sold 2,313,013 shares of common stock under the 2022 Shelf, generating net proceeds of $12.8 million. At December 31, 2024, 2,586,987 shares remain available for issuance under the Sales Agreement.
Removed
We used and will continue to use the net proceeds from this offering for general corporate purposes, including working capital, research and development, payments for research and development — licenses acquired, sales and marketing activities, general administrative matters, operating expenses and capital expenditures.
Removed
Holders As of March 26, 2025, there were approximately 43 holders of record for our common stock and 1 holder of record for our Class A common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSee Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” in our consolidated financial statements, appearing under Part II, Item 8 and beginning at page F-1 of this Annual Report on Form 10-K. ​ 63 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2024 2023 ​ $ % ​ Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 55,134 ​ $ 59,662 ​ $ (4,528) ​ (8) % Other revenue ​ ​ 1,000 ​ ​ 19,519 ​ ​ (18,519) ​ (95) % Total Revenue ​ ​ 56,134 ​ ​ 79,181 ​ ​ (23,047) ​ (29) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold – (excluding amortization of acquired intangible assets) ​ ​ 20,879 ​ ​ 22,893 ​ ​ (2,014) ​ (9) % Amortization of acquired intangible assets ​ ​ 3,424 ​ ​ 3,767 ​ ​ (343) ​ (9) % Research and development ​ ​ 9,857 ​ ​ 7,541 ​ ​ 2,316 ​ 31 % Selling, general and administrative ​ ​ 40,204 ​ ​ 43,910 ​ ​ (3,706) ​ (8) % Loss on impairment of intangible assets ​ ​ — ​ ​ 3,143 ​ ​ (3,143) ​ (100) % Loss recovery ​ ​ (4,553) ​ ​ — ​ ​ (4,553) ​ 100 % Total operating expenses ​ ​ 69,811 ​ ​ 81,254 ​ ​ (11,443) ​ (14) % Loss from operations ​ ​ (13,677) ​ ​ (2,073) ​ ​ (11,604) ​ 560 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expense (income) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ (757) ​ ​ (322) ​ ​ (435) ​ 135 % Interest expense ​ ​ 2,700 ​ ​ 1,698 ​ ​ 1,002 ​ 59 % Gain on extinguishment of debt ​ ​ (1,125) ​ ​ — ​ ​ (1,125) ​ 100 % Foreign exchange transaction losses ​ ​ 116 ​ ​ 183 ​ ​ (67) ​ (37) % Total other expense ​ ​ 934 ​ ​ 1,559 ​ ​ (625) ​ (40) % Loss before income taxes ​ ​ (14,611) ​ ​ (3,632) ​ ​ (10,979) ​ 302 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ 61 ​ ​ 221 ​ ​ (160) ​ (72) % Net Loss ​ $ (14,672) ​ $ (3,853) ​ $ (10,819) ​ 281 % ​ Revenues The following table reflects our revenue by product for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ Change ($in thousands) 2024 2023 $ % ​ Qbrexza® ​ $ 25,114 ​ $ 25,410 ​ $ (296) ​ (1) % Accutane® ​ $ 19,407 ​ $ 20,168 ​ $ (761) ​ (4) % Amzeeq® ​ $ 5,009 ​ $ 6,201 ​ $ (1,192) ​ (19) % Zilxi® ​ $ 1,643 ​ $ 1,962 ​ $ (319) ​ (16) % Other / legacy ​ $ 3,961 ​ $ 5,921 ​ $ (1,960) ​ (33) % Total net product revenue ​ $ 55,134 ​ $ 59,662 ​ $ (4,528) ​ (8) % ​ Total net product revenues decreased by $4.5 million, or 8%, to $55.1 million for the year ended December 31, 2024, from $59.7 million for the year ended December 31, 2023.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ $ ​ ​ ​ % ​ Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 61,239 ​ $ 55,134 ​ $ 6,105 ​ 11 % Other revenue ​ ​ 619 ​ ​ 1,000 ​ ​ (381) ​ (38) % Total revenue ​ ​ 61,858 ​ ​ 56,134 ​ ​ 5,724 ​ 10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of goods sold – (excluding amortization of acquired intangible assets) ​ ​ 20,924 ​ ​ 20,879 ​ ​ 45 ​ — % Amortization of acquired intangible assets ​ ​ 4,258 ​ ​ 3,424 ​ ​ 834 ​ 24 % Research and development ​ ​ 480 ​ ​ 9,857 ​ ​ (9,377) ​ (95) % Selling, general and administrative ​ ​ 44,368 ​ ​ 40,204 ​ ​ 4,164 ​ 10 % Loss recovery ​ ​ — ​ ​ (4,553) ​ ​ 4,553 ​ 100 % Total operating expenses ​ ​ 70,030 ​ ​ 69,811 ​ ​ 219 ​ — % Loss from operations ​ ​ (8,172) ​ ​ (13,677) ​ ​ 5,505 ​ (40) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other expense (income) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ (589) ​ ​ (757) ​ ​ 168 ​ (22) % Interest expense ​ ​ 3,698 ​ ​ 2,700 ​ ​ 998 ​ 37 % Gain on extinguishment of debt ​ ​ — ​ ​ (1,125) ​ ​ 1,125 ​ 100 % Foreign exchange transaction losses ​ ​ 90 ​ ​ 116 ​ ​ (26) ​ (22) % Total other expense ​ ​ 3,199 ​ ​ 934 ​ ​ 2,265 ​ 243 % Loss before income taxes ​ ​ (11,371) ​ ​ (14,611) ​ ​ 3,240 ​ (22) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ 60 ​ ​ 61 ​ ​ (1) ​ (2) % Net loss ​ $ (11,431) ​ $ (14,672) ​ $ 3,241 ​ (22) % ​ 65 Table of Contents Revenues The following table reflects our revenue by product for the years ended December 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ Change ($ in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ $ ​ ​ ​ % ​ Emrosi TM ​ $ 14,745 ​ $ — ​ $ 14,745 ​ 100 % Qbrexza® ​ ​ 25,014 ​ ​ 25,114 ​ ​ (100) ​ — % Accutane® ​ ​ 12,882 ​ ​ 19,407 ​ ​ (6,525) ​ (34) % Foam franchise products (Amzeeq® & Zilxi®) ​ ​ 5,859 ​ ​ 6,652 ​ ​ (793) ​ (12) % Other / legacy ​ ​ 2,739 ​ ​ 3,961 ​ ​ (1,222) ​ (31) % Total net product revenue ​ $ 61,239 ​ $ 55,134 ​ $ 6,105 ​ 11 % ​ Revenues totaled $61.2 million for the year ended December 31, 2025, reflecting an 11% increase from $55.1 million for the year ended December 31, 2024.
Cash provided by financing activities for the year ended December 31, 2024 reflects the draw of an additional $10.0 million under the SWK Credit Facility, as well as the net proceeds from issuances of common stock under the Sales Agreement of $7.9 million.
Cash provided by financing activities for the year ended December 31, 2024 reflects the draw of an additional $10.0 million under the SWK Credit Facility, as well as the net proceeds from issuances of common stock under the 2022 Sales Agreement of $7.9 million.
We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively 64 Table of Contents and irrevocably opt out of the extended transition period provided in the JOBS Act.
These policies relate to the more significant areas involving management’s judgments and estimates. 62 Table of Contents Revenue Recognition Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, coupons, discounts, other sales allowances and sales returns.
These policies relate to the more significant areas involving management’s judgments and estimates. Revenue Recognition Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, coupons, discounts, other sales allowances and sales returns.
We may seek to raise capital through debt or equity financings, to expand our product portfolio, and for other strategic initiatives, which may include sales of securities under either our 2022 Shelf or a new registration statement.
We may seek to raise capital through debt or equity financings, which may include sales of securities under either our 2026 Shelf (as defined below) or a new registration statement, to expand our product portfolio and/or for other strategic initiatives.
On June 26, 2024, the Company drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly.
On June 26, 2024, we drew the remaining $5.0 million under the Credit Facility. Loans under the Credit Facility (the “Term Loans”) bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly.
Sources of Liquidity SWK Credit Facility On December 27, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with SWK. The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, the Company drew $15.0 million.
Sources of Liquidity SWK Credit Facility On December 27, 2023, we entered into the Credit Agreement with SWK. The Credit Agreement originally provided for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, we drew $15.0 million.
Financing Activities Net cash flows provided by financing activities for the year ended December 31, 2024 were $17.0 million compared to $4.8 million of net cash flows used in financing activities for the year ended December 31, 2024, reflecting a change of $21.8 million from period-to-period.
Financing Activities Net cash flows provided by financing activities for the year ended December 31, 2025 were $16.2 million compared to $17.0 million of net cash flows provided by financing activities for the year ended December 31, 2024, reflecting a change of $0.8 million from period-to-period.
The $5.0 million of additional principal added in the Amendment is contractually required to be drawn upon FDA approval of Emrosi, subject to the Company receiving approval on or before June 30, 2025. The FDA approved Emrosi on November 1, 2024, and we subsequently drew the remaining $5.0 million.
The $5.0 million of additional principal added in the First Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to us receiving approval on or before June 30, 2025. The FDA approved Emrosi on November 1, 2024, and we subsequently drew the remaining $5.0 million. On September 25, 2025, we entered into the Third Amendment.
We recorded no losses related to the impairment of assets in the year ended December 31, 2024. Loss Recovery We recorded a loss recovery benefit to income of $4.6 million in connection with the recovery of funds related to the previously disclosed September 2021 cybersecurity incident. We received the $4.6 million cash in December of 2024.
Loss Recovery We recorded a $4.6 million loss recovery benefit in connection with the recovery of funds related to the previously disclosed September 2021 cybersecurity incident. We received the $4.6 million in cash in December of 2024.
We acquire rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through our field sales organization. We are a controlled subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”).
We acquire rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through our field sales organization.
The year ended December 31, 2024 reflects a $15.0 million milestone payment made to DRL, which was triggered upon our receipt of FDA approval for Emrosi in November 2024. The year ended December 31, 2023 reflects the $5.0 million deferred cash payment paid in January 2023 related to the VYNE Product Acquisition.
The year ended December 31, 2024 reflects a $15.0 million milestone payment made to DRL, which was triggered upon our receipt of FDA approval for Emrosi in November 2024.
Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
Gain on Extinguishment of Debt We recorded a gain of $1.1 million in August 2024 upon the execution of a settlement agreement (the “Settlement Agreement”) to settle amounts owed by the Company to Sun Pharmaceutical Industries, Inc. (“Sun”) pursuant to the Ximino Asset Purchase Agreement.
Gain on Extinguishment of Debt We recorded a gain of $1.1 million in August 2024 upon the execution of a settlement agreement (the “Settlement Agreement”) to settle amounts owed by the Company to Sun pursuant to the Ximino Asset Purchase Agreement. See Note 9 to our consolidated financial statements for further details.
Additionally, as a result of recurring losses, primarily a result of the research and development of Emrosi, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
Additionally, as a result of recurring losses, substantial doubt exists about our ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements included in this Annual Report on Form 10-K.
In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” herein. As used below, the words “we,” “us” and “our” refer to Journey Medical Corporation and its consolidated subsidiaries. Overview We are a commercial-stage pharmaceutical company founded in October 2014 that primarily focuses on the selling and marketing of U.S.
In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” herein. As used below, the words “we,” “us” and “our” refer to Journey Medical Corporation and its consolidated subsidiaries.
Investing Activities Net cash flows used in investing activities for the year ended December 31, 2024 were $15.0 million compared to $5.0 million for the year ended December 31, 2023, reflecting a change of $10.0 million from period-to-period.
Net cash used in operating activities during 2025 was primarily driven by our net loss and changes in net working capital. Investing Activities Net cash flows used in investing activities for the year ended December 31, 2025 were $0 compared to $15.0 million for the year ended December 31, 2024, reflecting a change of $15.0 million from period-to-period.
Food and Drug Administration (“FDA”) approved prescription pharmaceutical products for the treatment of dermatological conditions. Our current portfolio includes eight FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S.
Our current portfolio includes eight FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S. and a majority of our revenues derive from our branded, patent protected products.
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 $20.0 million to $25.0 million.
Interest payments began in February 2024 and are paid quarterly. On July 9, 2024, we entered into an amendment (the “First Amendment”) to the Credit Agreement. The First Amendment increased the original principal amount of the Credit Facility from $20.0 million to $25.0 million.
At December 31, 2024, 2,586,987 shares remain available for issuance under the Sales Agreement. 67 Table of Contents Cash Flows for the Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended December 31, ​ Increase ($’s in thousands) 2024 2023 (Decrease) Net cash provided by (used in) operating activities ​ $ (9,127) ​ $ 5,240 ​ $ (14,367) Net cash used in investing activities ​ (15,000) ​ (5,000) ​ (10,000) Net cash provided by (used in) financing activities ​ 16,993 ​ (4,804) ​ 21,797 Net change in cash and cash equivalents ​ ​ (7,134) ​ ​ (4,564) ​ ​ 2,570 ​ Operating Activities Net cash flows used in operating activities for the year ended December 31, 2024 were $9.1 million compared to $5.2 million of net cash flows provided by operating activities for the year ended December 31, 2023, reflecting a change of $14.4 million from period-to-period.
Cash Flows for the Years Ended December 31, 2025 and 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years ended December 31, ​ Increase ($’s in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ (Decrease) Net cash (used in) operating activities ​ $ (12,441) ​ $ (9,127) ​ $ (3,314) Net cash (used in) investing activities ​ — ​ (15,000) ​ 15,000 Net cash provided by financing activities ​ 16,226 ​ 16,993 ​ (767) Net change in cash and cash equivalents ​ $ 3,785 ​ $ (7,134) ​ $ (10,919) ​ Operating Activities Net cash flows used in operating activities for the year ended December 31, 2025 were $12.4 million compared to $9.1 million of net cash flows used in operating activities for the year ended December 31, 2024, reflecting a change of $3.3 million from period-to-period.
Due to the contingent nature of these obligations, the amounts of these payments cannot be reasonably predicted as of the date of this Annual Report on Form 10-K. Item 7A.
Due to the contingent nature of these obligations, the amounts of these payments cannot be reasonably predicted. 69 Table of Contents Item 7A.
See Note 9 to our consolidated financial statements for further details. 66 Table of Contents Liquidity and Capital Resources At December 31, 2024, we had cash and cash equivalents on hand of approximately $20.3 million as compared to $27.4 million of cash and cash equivalents at December 31, 2023, and working capital of $13.0 million at December 31, 2024, compared to $14.6 million at December 31, 2023.
Liquidity and Capital Resources At December 31, 2025, we had cash and cash equivalents on hand of approximately $24.1 million as compared to $20.3 million of cash and cash equivalents at December 31, 2024, and working capital of $29.4 million at December 31, 2025, compared to $13.0 million at December 31, 2024.
Recent Corporate Highlights FDA Approval of Emrosi On November 1, 2024, the FDA approved Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg), formerly referred to as DFD-29 (“Emrosi”) for the treatment of inflammatory lesions of rosacea in adults. Emrosi was developed by Journey in collaboration with Dr. Reddy’s Laboratories, Ltd (“DRL”). Our initial supply became available in March 2025.
We are a controlled subsidiary of Fortress. 63 Table of Contents Recent Corporate Highlights On November 1, 2024, the FDA approved Emrosi, for the treatment of inflammatory lesions of rosacea in adults. Emrosi was developed by Journey in collaboration with DRL. Our initial supply became available in March 2025.
At-the-Market Offering On December 30, 2022, the Company filed the 2022 Shelf, which was declared effective by the Securities and Exchange Commission on January 26, 2023. This shelf registration statement covers the offering, issuance and sale by the Company of up to an aggregate of $150.0 million of the Company’s common stock, preferred stock, debt securities, warrants, and units.
This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. The 2026 Shelf replaces the 2022 Shelf. Sales under the 2025 Sales Agreement after the effective date will occur under the 2026 Shelf.
Selling, General and Administrative Expenses (“SG&A”) SG&A expenses decreased by $3.7 million, or 8%, to $40.2 million for the year ended December 31, 2024, from $43.9 million for the year ended December 31, 2023.
Selling, General and Administrative Expenses (“SG&A”) SG&A expenses increased by $4.2 million, or 10%, to $44.4 million for the year ended December 31, 2025, from $40.2 million for the year ended December 31, 2024. The increase is primarily due to the incremental operational activities related to the launch and commercialization of Emrosi.
During the fiscal year ended December 31, 2024, the Company issued and sold 1,564,310 shares of common stock under the 2022 Shelf, generating net proceeds of $7.9 million.
During the year ended December 31, 2025, we issued and sold 2,582,107 shares of common stock under the 2022 Shelf, generating net proceeds of $16.4 million under the At Market Issuance Agreement with B.
We rely primarily on cash on hand generated from the sales of our pharmaceutical products to our customers to fund our core operations. In addition, we have relied on the proceeds from our term loan Credit Facility (as defined below) with SWK and our at-the-market sales program with B.
We rely primarily on cash on hand generated from sales of our pharmaceutical products to customers to fund our core operations.
Based on the amount currently outstanding under the SWK facility and current interest rates, and assuming we do not make further draws under the SWK facility, we expect to make the following payments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments by Period ​ Total 2025 2026 2027 ​ ​ ($’s in thousands) Interest ​ $ 7,884 ​ $ 3,293 ​ $ 2,797 ​ $ 1,794 Principal ​ ​ 25,000 ​ ​ — ​ ​ 7,500 ​ ​ 17,500 Exit fee ​ 1,250 ​ — ​ — ​ 1,250 Total ​ $ 34,134 ​ $ 3,293 ​ $ 10,297 ​ $ 20,544 ​ 68 Table of Contents ● Pursuant to the Vyne Product Acquisition Agreement, upon the achievement of net sales milestones with respect to the products purchased in the Vyne Product Acquisition, we are required to pay contingent consideration consisting of a one-time payment, per product, of $10.0 million and $20.0 million upon each product reaching annual net sales of $100 million and $200 million, respectively.
Based on the amount currently outstanding under the SWK Facility and current interest rates, and assuming we do not make further draws under the SWK facility, we expect to make the following payments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments by Period ​ ​ ​ ​ Total ​ ​ ​ 2026 ​ ​ ​ 2027 ​ ​ ​ 2028 ​ ​ ($’s in thousands) Interest ​ $ 7,008 ​ $ 3,223 ​ $ 2,746 ​ $ 1,039 Principal ​ ​ 25,000 ​ ​ — ​ ​ 10,000 ​ ​ 15,000 Exit fee ​ 1,250 ​ — ​ — ​ 1,250 Total ​ $ 33,258 ​ $ 3,223 ​ $ 12,746 ​ $ 17,289 ​ ● We are contractually obligated to pay certain milestone and sales-based royalty payments to the counterparties of our license and product acquisition agreements.
Interest Expense Interest expense increased $1.0 million to $2.7 million for the year ended December 31, 2024, from $1.7 million for the year ended December 31, 2023 as a result of interest payments we made under the SWK Credit Facility.
Interest Expense, net Interest expense, net increased by $1.2 million to $3.1 million for the year ended December 31, 2025, from $1.9 million for the year ended December 31, 2024. The increase was primarily due to a higher principal balance outstanding under the Credit Agreement, dated as of December 27, 2023 (the “Credit Agreement”) with SWK throughout 2025.
In addition, the initial distribution of Emrosi to pharmacies is ongoing and the first Emrosi prescriptions have been filled. We anticipate sales promotion of Emrosi beginning in April 2025. We intend to commercialize Emrosi in the U.S. with our existing commercial team. Critical Accounting Policies and Uses of Estimates Our consolidated financial statements have been prepared in accordance with U.S.
Critical Accounting Policies and Uses of Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP.
Gross-to-net sales accruals and the balance in the related allowance accounts for the years ended December 31, 2024, 2023 and 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Chargebacks ​ Distributor ​ Prompt ​ ​ ​ ​ ​ ​ Managed ​ ​ ​ ​ ​ ​ ​ ​ and other ​ Service Pay ​ ​ ​ ​ Care ​ Gov’t ​ ​ ​ ($’s in thousands) allowances Fees Discounts Returns Coupons Rebates Rebates Total Balance as of December 31, 2022 ​ $ 253 ​ $ 929 ​ $ 207 ​ $ 3,689 ​ $ 1,696 ​ $ 3,594 ​ $ 1,010 ​ $ 11,378 Current provision related to sales in the current period ​ 1,856 ​ 5,439 ​ 976 ​ 5,483 ​ 94,822 ​ 22,934 ​ 5,191 ​ 136,701 Checks/credits issued to third parties ​ (2,016) ​ (5,470) ​ (1,041) ​ (5,095) ​ (93,074) ​ (21,318) ​ (5,948) ​ (133,962) Balance as of December 31, 2023 ​ $ 93 ​ $ 898 ​ $ 142 ​ $ 4,077 ​ $ 3,444 ​ $ 5,210 ​ $ 253 ​ $ 14,117 Current provision related to sales in the current period ​ 996 ​ 4,009 ​ 664 ​ 1,787 ​ 79,451 ​ 23,627 ​ 643 ​ 111,177 Checks/credits issued to third parties ​ (1,004) ​ (4,504) ​ (714) ​ (2,740) ​ (81,145) ​ (25,120) ​ (743) ​ (115,970) Balance as of December 31, 2024 ​ $ 85 ​ $ 403 ​ $ 92 ​ $ 3,124 ​ $ 1,750 ​ $ 3,717 ​ $ 153 ​ $ 9,324 ​ Our reserves for gross-to-net sales allowances were $9.3 million at December 31, 2024, compared to $14.1 million at December 31, 2023, a decrease of $4.8 million.
Gross-to-net sales accruals and the balance in the related allowance accounts for the years ended December 31, 2025, 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Managed ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Care ​ ​ ​ ​ ​ ($’s in thousands) ​ ​ ​ Returns ​ ​ ​ Coupons ​ ​ ​ Rebates ​ ​ ​ Other ​ ​ ​ Total Balance as of December 31, 2023 ​ $ 4,077 ​ $ 3,444 ​ $ 5,210 ​ $ 1,386 ​ $ 14,117 Current provision related to sales in the current period ​ 1,787 ​ 79,451 ​ 23,627 ​ 6,312 ​ 111,177 Checks/credits issued to third parties ​ (2,740) ​ (81,145) ​ (25,120) ​ (6,965) ​ (115,970) Balance as of December 31, 2024 ​ $ 3,124 ​ $ 1,750 ​ $ 3,717 ​ $ 733 ​ $ 9,324 Current provision related to sales in the current period ​ 493 ​ 148,587 ​ 24,938 ​ 6,178 ​ 180,196 Checks/credits issued to third parties ​ (1,440) ​ (138,921) ​ (24,421) ​ (6,014) ​ (170,796) Balance as of December 31, 2025 ​ $ 2,177 ​ $ 11,416 ​ $ 4,234 ​ $ 897 ​ $ 18,724 ​ Gross-to-net sales accruals are primarily a function of product sales volume, mix of products sold, and contractual discounts or rebates.
Increases in unit sales volumes for Qbrexza, Accutane and Zilxi were offset by higher rebate costs compared to 2023. 64 Table of Contents Other revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ ​ December 31, ​ Change ($in thousands) ​ 2024 2023 ​ $ % Milestone payment from Cutia ​ $ 1,000 ​ $ — ​ $ 1,000 ​ 100 % Non-refundable upfront payment from Maruho ​ $ — ​ $ 19,000 ​ $ (19,000) ​ (100) % Royalties on sales of Rapifort® Wipes 2.5% ​ $ — ​ $ 519 ​ $ (519) ​ (100) % Total other revenue ​ $ 1,000 ​ $ 19,519 ​ $ (18,519) ​ (95) % ​ Other revenue for the year ended December 31, 2024 reflects a $1.0 million milestone payment from Cutia under the Cutia Agreement that became payable to us upon Cutia receiving marketing approval for topical 4% minocycline foam in the People’s Republic of China.
The Company began supplying Amzeeq to Cutia in August 2025 under the Cutia Agreement. Other revenue for the year ended December 31, 2024 reflects a $1.0 million milestone payment from Cutia under the Cutia Agreement that became payable to us upon Cutia receiving marketing approval for topical 4% minocycline foam in the PRC.
Amortization of acquired intangible assets Amortization of acquired intangible assets decreased by $0.4 million, or 9%, to $3.4 million for the year ended December 31, 2024, from $3.8 million for the year ended December 31, 2023 as the discontinuation of Ximino in 2023 has resulted in lower amortization. 65 Table of Contents Research and Development Research and development expense increased by $2.3 million, or 31%, to $9.9 million for the year ended December 31, 2024 from $7.5 million for the year ended December 31, 2023.
Amortization of acquired intangible assets Amortization of acquired intangible assets increased by $0.8 million, or 24%, to $4.3 million for the year ended December 31, 2025, from $3.4 million for the year ended December 31, 2024, driven by the addition of the Emrosi acquired intangible asset upon our payment to DRL of the milestone payment triggered by the FDA’s approval of Emrosi in November 2024.
In December 2024 we received additional cash of $4.6 million as a result of the recovery of funds from the previously disclosed cybersecurity incident that impacted us in September of 2021 prior to our IPO. We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure.
The Third Amendment, among other things, modifies our existing Credit Facility as described in further detail below. We regularly evaluate market conditions, our liquidity profile, and financing alternatives, including out-licensing arrangements for our products, to enhance our capital structure.
In connection with the 2022 Shelf, the Company entered into the Sales Agreement relating to shares of the Company’s common stock with B. Riley. The Company may offer and sell up to 4,900,000 shares of its common stock, from time to time, under the Sales Agreement.
In accordance with the terms of the 2025 Sales Agreement, we may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal. As of December 31, 2025, we have issued 750,000 shares under the 2025 Sales Agreement.
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Emerging Growth Company and Smaller Reporting Company Status We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).
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Overview We are a commercial-stage pharmaceutical company founded in October 2014 that primarily focuses on the selling and marketing of FDA approved prescription pharmaceutical products for the treatment of dermatological conditions.
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The decrease is primarily due to overall higher rebate costs across our product portfolio and lower unit volumes, mainly from our legacy products Targadox, Ximino and Exelderm, driven specifically by continued generic competition for Targadox. In addition, Amzeeq net product revenues decreased by approximately $1.2 million, due to both higher rebates and decreased unit sales volumes from 2023.
Added
We began sales promotion of Emrosi beginning in April 2025, and we are commercializing Emrosi in the U.S. with our existing commercial team. Effective after the close of U.S. equity markets on June 27, 2025, we joined the small cap Russell 2000® Index and the broad-market Russell 3000® Index as a result of the 2025 annual Russell Index reconstitution.
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Other revenue for the year ended December 31, 2023 reflects a $19.0 million non-refundable upfront payment from Maruho under the New License Agreement and $0.5 million in royalties on the sale of Rapifort Wipes 2.5%.
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The Company expects to cease qualifying as an emerging growth company as of the end of its fiscal year ending December 31, 2026.
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The decrease in the returns reserve reflects lower units on hand in the wholesaler channel. The decrease in the coupon and managed care reserves is primarily a result of the timing of credits and invoices received at the end of 2023.
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See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies” in our consolidated financial statements, appearing under Part II, Item 8 and beginning at page F-1 of this Annual Report on Form 10-K.
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Cost of Goods Sold Cost of goods sold decreased by $2.0 million, or 9%, to $20.9 million for the year ended December 31, 2024, from $22.9 million for the year ended December 31, 2023, mostly due to lower product royalty payments.
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The growth was primarily driven by incremental revenue from the launch and commercialization of Emrosi, partially offset by continued competitive pressures on Accutane, for which revenue declined by $6.5 million, as well as lower sales of our legacy products.
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Product royalties were lower by $1.7 million compared to the same period in 2023 due to the contractual expiration of our Exelderm product royalty in November 2023, the contractual decrease in our Qbrexza royalty in the second quarter of 2023, and the discontinuation of Ximino in September of 2023.
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Other revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ ​ Change ($ in thousands) ​ 2025 ​ ​ ​ 2024 ​ $ ​ ​ ​ % Milestone payment from Cutia ​ $ — ​ $ 1,000 ​ $ (1,000) ​ (100) % Cutia supply agreement ​ ​ 606 ​ ​ — ​ ​ 606 ​ 100 % Royalties on sales Amzeeq by Cutia ​ ​ 13 ​ ​ — ​ ​ 13 ​ 100 % Total other revenue ​ $ 619 ​ $ 1,000 ​ $ (381) ​ (38) % ​ Other revenue for the year ended December 31, 2025, reflects the supply to Cutia of Amzeeq for commercial use and sales-based royalties on Cutia’s net sales of Amzeeq, pursuant to the Cutia Agreement.
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In addition, the discontinuation of Ximino has resulted in lower drug-user fees of $0.8 million. These decreases were offset, in part, by an increase in product-related cost of goods sold of $0.5 million, as a result of product mix, mainly driven by the higher Accutane and Qbrexza unit volumes.
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Our reserves for gross-to-net sales allowances were $18.7 million as of December 31, 2025, compared to $9.3 million as of December 31, 2024, an increase of $9.4 million.
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The increase was driven by the $4.1 million filing fee payment to the FDA for Emrosi in January 2024 and a $3.0 million payment for the contractual milestone payment owed to DRL triggered by the FDA’s acceptance of the NDA application for Emrosi in March 2024, partially offset by lower clinical trial expenses to develop Emrosi compared to 2023, as the clinical phase of the project has concluded.
Added
The increase is due to the incremental allowances recorded related to the launch and commercialization of Emrosi, due substantially to the coupon rebate allowance. 66 Table of Contents Cost of Goods Sold – (excluding amortization of acquired intangible assets) Cost of goods sold – (excluding amortization of acquired intangible assets) was consistent year over year at $20.9 million for the years ended December 31, 2025 and 2024.
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The decrease is due to our continued expense management efforts, partially offset by non-cash share-based compensation, the commencement of our launch efforts for Emrosi, and the expansion of our access and coverage platforms. SG&A in the areas subject to our continued expense management efforts, primarily in sales and marketing and other SG&A areas, decreased by $8.7 million compared to 2023.
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Higher royalty expenses associated with incremental revenue from Emrosi in 2025 were offset by lower product costs resulting from a favorable product mix, primarily reflecting the increased sales of Emrosi in 2025. Emrosi carries a higher gross margin than our other products, contributing to the stable overall cost of goods sold despite the increased revenues.
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This decrease is partially offset by a $1.7 million increase in SG&A expenses from 2023 due to the commencement of our launch efforts for Emrosi related mainly to market research and access and to a lesser extent, the expansion of our access and coverage platforms for our current product portfolio.
Added
Research and Development Research and development expense decreased by $9.4 million, or 95%, to $0.5 million for the year ended December 31, 2025 from $9.9 million for the year ended December 31, 2024. Research and development expenses in 2024 included pre-approval project costs related to Emrosi, which concluded following the FDA’s approval of Emrosi in November 2024.
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In addition, non-cash share-based compensation expense increased by $3.1 million compared to 2023 as a result of an increase in outstanding equity awards from 2023.
Added
We drew an additional $10.0 million under the Credit Agreement during 2024, increasing the principal balance from $15.0 million to $25.0 million.
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Loss on impairment of intangible assets We recorded a loss on the impairment of intangible assets of $3.1 million during 2023, related to the impairment of the Ximino intangible asset, as a result of lower net product revenues and gross profit levels for the Ximino products. We discontinued selling Ximino on September 29, 2023.
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In addition, we have relied on the proceeds from our term loan Credit Facility with SWK, and our at-the-market sales program to meet additional capital and liquidity needs. 67 Table of Contents In August 2025, we executed a new At Market Issuance Sales Agreement (the “2025 Sales Agreement”) with B. Riley Securities, Inc (“B.
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See Note 17 to our consolidated financial statements for further details. Interest Income Interest income increased $0.5 million to $0.8 million for the year ended December 31, 2024, from $0.3 million for the year ended December 31, 2023. Interest income reflects the income earned on our high yield money market account.
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Riley”) and Lake Street Capital Markets, LLC (“Lake Street”) (each, an “Agent” and together, the “Agents”), replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B. Riley, as described in further detail below. On September 25, 2025, we entered into a Third Amendment to our Credit Agreement with SWK (the “Third Amendment”).
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The increase is due to a higher invested balance compared to the prior year resulting from cash received upon entering into the SWK Credit Facility in December 2023, and to a lesser extent, a slight increase in investment yield.
Added
The Third Amendment, among other things, extends the maturity date of the facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured on a trailing twelve-month basis, from $70.0 million to $60.0 million.
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In July 2023, we satisfied all of our outstanding debt obligations with East West Bank (“EWB”) by voluntarily repaying the outstanding balance on our term loan under the Loan and Security Agreement with EWB. As such, we had no additional debt or borrowing of funds until entering into the Credit Facility with SWK in December of 2023.
Added
Upon satisfaction of the revised revenue threshold, the interest-only period under the Credit Facility will be extended by one year, with scheduled principal repayments commencing in February 2027 rather than February 2026. We satisfied the $60.0 million revenue threshold as of December 31, 2025. Accordingly, principal payments under the Credit Facility will begin in February 2027.
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Riley to meet additional capital and liquidity needs, specifically to fund the research and development and commercialization of Emrosi, formerly referred to as DFD-29, which received marketing approval by the FDA on November 1, 2024. We also actively pursue licensing opportunities to raise non-dilutive capital.
Added
The Credit Agreement also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all of our assets. As of December 31, 2025, we were in compliance with the financial covenants under the Credit Agreement.
Removed
On August 31, 2023, we entered into the New License Agreement with Maruho, whereby we granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”).
Added
At-the-Market Offering On December 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “2022 Shelf”), which was declared effective by the SEC on January 26, 2023.
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Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza® in the Territory, Maruho paid us $19.0 million as a non-refundable upfront payment.
Added
This shelf registration statement covers the offering, issuance and sale by us of up to an aggregate of $150.0 million of our common stock, preferred stock, debt securities, warrants, and units. In August 2025, we entered into the 2025 Sales Agreement relating to shares of the Company’s common stock with B. Riley and Lake Street.
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Interest payments began in February 2024 and are paid quarterly. 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 7.5% of the principal amount of funded Term Loans.
Added
Riley entered into 2022 (the “2022 Sales Agreement”) and the 2025 Sales Agreement. 68 Table of Contents On January 15, 2026, we filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “2026 Shelf”), which was declared effective by the SEC on January 21, 2026.
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Cash provided by operating activities for the year ended December 31, 2023 includes cash received pursuant to the New License Agreement, where Maruho paid us $19.0 million as a non-refundable upfront payment.
Added
Cash provided by financing activities for the year ended December 31, 2025 reflects net proceeds from the issuance of common stock under the Sales Agreement of $16.4 million.
Removed
In 2024, we made cash payments of $4.1 million related to the filing fee paid to the FDA for Emrosi in January 2024, and $3.0 million for the contractual milestone payment owed to DRL triggered by the FDA’s acceptance of the NDA for Emrosi in March 2024.
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The remainder was driven primarily by the changes in net working capital, which includes a one-time loss recovery payment of $4.6 million from the previously disclosed September 2021 cybersecurity incident.
Removed
Net cash used in financing activities for the year ended December 31, 2023 reflects the voluntary repayment of the outstanding balance on our term loan under the Loan and Security Agreement with EWB.
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Each required payment must only be paid one time following the first achievement of the applicable annual net sales milestone amount. ● On June 29, 2021, we entered into the Emrosi Agreement to obtain the global rights for the development and commercialization of Emrosi with DRL.
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On November 1, 2024, we received FDA approval for Emrosi, which triggered a $15.0 million milestone payment to DRL in 2024. Based on the development and commercialization of Emrosi, additional contingent regulatory and commercial milestone payments totaling up to $150.0 million may become due.

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