B. Riley analyst Kalpit Patel lowered the firm's price target on Journey Medical to $3 from $6 and keeps a Buy rating on the shares post the Q1 results. The quarter was headlined by a sharp revenue miss, stemming from higher than anticipated gross-to-net adjustments for various products and an unanticipated Qbrexza product return from a distribution channel, the analyst tells investors in a research note. The firm remains confident in DFD-29's pivotal readout for rosacea but halved its price target to reflect Journey's existing commercial assets and a reevaluation of the company's financial position.
Reports Q1 revenue $12.2M, consensus $16.18M.Claude Maraoui, Journey Medical's Co-Founder, President and Chief Executive Officer, said, "Since Journey Medical's inception, we have made significant investments and have committed to building out our commercial product portfolios and infrastructure to position ourselves for future revenue growth. Our total revenues for the first quarter of 2023 were $12.2M. Despite higher unit sales volumes from period-to-period for Accutane, Amzeeq, Zilx, and Exelderm, our net product revenues for the first quarter were unfavorably impacted by higher gross-to-net adjustments and lower unit sales volumes for Qbrexza, Targadox and Ximino. However, in April, we have already seen a bounce back in our product net revenues and lower gross-to-net adjustments from the isolated occurrences in the first quarter, particularly for Qbrexza. For the remainder of 2023, we look forward to a return to revenue growth, further reductions in selling, general and administrative expenses from our previous guidance of $5.0 - $7M to result in SG&A annual savings in excess of $12M when compared to 2022, as well as achieving clinical milestones in our Phase 3 clinical trials evaluating DFD-29 for the treatment of papulopustular rosacea . We expect a topline data read out from the DFD-29 Phase 3 clinical trials in June of 2023 and to file a New Drug Application in the second half of 2023."
Cantor Fitzgerald analyst Jennifer Kim lowered the firm's price target on Fortress Biotech (FBIO) to $5 from $6 and keeps an Overweight rating on the shares. Cantor expects Fortress to continue executing on its differentiated strategy of value-creation through asset monetizations, equity holdings/appreciation in subsidiaries and partner companies, annual equity dividends, and royalty revenues, and tells investors in a research note that the price target reduction is driven by lowered peak sales from the commercial dermatology business through partner company Journey Medical (DERM).
Journey Medical (DERM) announced completion of treatment in the Phase 1 clinical trial assessing the impact of DFD-29on the microbial flora of healthy adults. The clinical trial is also assessing the safety and tolerability of the treatment. DFD-29 is being developed for the treatment of papulopustular rosacea in collaboration with Dr. Reddy's Laboratories (RDY). Claude Maraoui, Co-Founder, President and Chief Executive Officer of Journey Medical, stated, "DFD-29 continues to make positive progress in the clinic, bringing us closer to potentially providing a new treatment option for the millions of patients suffering from rosacea. We expect to report topline results from the Phase 1 trial in the first half of 2023. In addition, we are pleased that the DFD-29 Phase 3 clinical trials have been fully enrolled as of January 2023. We anticipate topline data from the Phase 3 clinical trials in the first half of 2023, with a New Drug Application filing subsequently expected in the second half of 2023."
In a regulatory filing, the company announced that, On January 16, Ernest De Paolantonio, the CFO of Journey Medical provided notice to the company of his resignation, effective January 27. De Paolantonio will consult with and advise the company until March 31. In connection with such resignation, Joseph Benesch, the company's Corporate Controller, was appointed as the company's interim CFO, effective January 27. Benesch was hired as the company's Corporate Controller in November 2021.
Journey Medical Corporation announced that Ernest De Paolantonio has notified the Company that, effective January 27, 2023, he will step down as Chief Financial Officer of Journey Medical to pursue another opportunity. The Company also today announced the appointment of Joseph M. Benesch as Interim Chief Financial Officer, effective January 27, 2023. Claude Maraoui, Co-Founder, President and Chief Executive Officer of Journey Medical, said, "Joe has been an instrumental member of our finance and accounting team overseeing all functions as Corporate Controller for over a year now. With more than 25 years of experience in the industry, Joe is well-prepared to take the helm of the finance and accounting team during this exciting time for the Company. We anticipate many upcoming milestones, including the announcement of topline data from our DFD-29 Phase 3 clinical trials in the first half of this year with a subsequent NDA filing later this year." The company is conducting an internal and external search for a permanent Chief Financial Officer.
Journey Medical announced that it has fully enrolled and randomized all of the patients in its Phase 3 clinical program to assess the safety, efficacy and tolerability of DFD-29 for the treatment of papulopustular rosacea. The Phase 3 clinical trials are part of a collaboration with Dr. Reddy's Laboratories Ltd. for the ongoing development and commercialization of the DFD-29 program. The DFD-29 Phase 3 clinical program consists of two multicenter, randomized, double-blind, parallel-group, active-comparator and placebo-controlled clinical trials, MVOR-01 and MVOR-02, that are expected to support an NDA submission in the United States and potentially a Marketing Authorization Application in Europe. The combined enrollment target of 640 total adult patients with moderate to severe PPR was achieved in the trials; one trial was enrolling patients in the United States, and the other was enrolling patients in both the United States and Europe. The MVOR-01 and MVOR-02 clinical trials are randomized in a 3:3:2 ratio to DFD-29, Oracea or placebo once daily for 16 weeks. The primary objective is to evaluate the safety, efficacy and tolerability of DFD-29 compared to placebo for the treatment of PPR. The secondary objective is to evaluate the safety, efficacy and tolerability of DFD-29 compared to Oracea. To date, no major safety issues have been reported, and no drug-related serious adverse events have been observed. Data published in The Journal of Clinical and Aesthetic Dermatology determined DFD-29 40 mg demonstrated significantly greater efficacy than doxycycline 40 mg, placebo and DFD-29 20 mg for the treatment of PPR in a Phase 2 clinical study. DFD-29 40 mg demonstrated statistical significance compared to both placebo and doxycycline 40 mg on both co-primary endpoints-proportion of subjects with IGA treatment success and total inflammatory lesion count reduction from baseline to week 16.