Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 29, 2023 | Jun. 30, 2022 | |
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity File Number | 001-41063 | ||
Entity Registrant Name | JOURNEY MEDICAL CORPORATION | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 47-1879539 | ||
Entity Address, Address Line One | 9237 E Via de Ventura Blvd | ||
Entity Address, Address Line Two | Suite 105 | ||
Entity Address, City or Town | Scottsdale | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85258 | ||
City Area Code | 480 | ||
Local Phone Number | 434-6670 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | DERM | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 26,440,139 | ||
Entity Central Index Key | 0001867066 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | Short Hills, New Jersey | ||
Common Stock Class A | |||
Entity Common Stock, Shares Outstanding | 6,000,000 | ||
Common Stock | |||
Entity Common Stock, Shares Outstanding | 11,834,362 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 32,003 | $ 49,081 |
Accounts receivable, net of reserves | 28,208 | 23,112 |
Inventory | 14,159 | 9,862 |
Prepaid expenses and other current assets | 3,309 | 2,438 |
Total current assets | 77,679 | 84,493 |
Intangible assets, net | 27,197 | 12,552 |
Operating lease right-of-use asset, net | 189 | 89 |
Other assets | 95 | 150 |
Total assets | 105,160 | 97,284 |
Current liabilities | ||
Accounts payable | 36,570 | 22,812 |
Due to related party | 413 | 641 |
Accrued expenses | 19,388 | 22,733 |
Accrued interest | 160 | |
Income taxes payable | 35 | 8 |
Line of credit | 2,948 | 812 |
Deferred cash payment (net of discount of $9) | 4,991 | |
Installment payments - licenses, short-term | 2,244 | 4,510 |
Operating lease liability, short-term | 83 | 98 |
Total current liabilities | 66,832 | 51,614 |
Term loan (net of debt discount of $180) | 19,826 | |
Installment payments - licenses, long-term | 1,412 | 3,627 |
Operating lease liability, long-term | 108 | |
Total liabilities | 88,178 | 55,241 |
Commitments and contingencies | ||
Stockholders' equity | ||
Additional paid-in capital | 85,482 | 80,915 |
Accumulated deficit | (68,502) | (38,874) |
Total stockholders' equity | 16,982 | 42,043 |
Total liabilities and stockholders' equity | 105,160 | 97,284 |
Common Stock | ||
Stockholders' equity | ||
Common stock | 1 | 1 |
Common Class A [Member] | ||
Stockholders' equity | ||
Common stock | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred cash payment, Discount | $ 9 | $ 9 |
Term loan, Discount | $ 180 | $ 180 |
Par value | $ 0.0001 | |
Common stock authorized | 50,000,000 | 50,000,000 |
Common Stock | ||
Par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 50,000,000 | 50,000,000 |
Common stock issued | 11,765,700 | 11,316,344 |
Common stock outstanding | 11,765,700 | 11,316,344 |
Common Class A | ||
Par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 6,000,000 | |
Common stock issued | 6,000,000 | 6,000,000 |
Common stock outstanding | 6,000,000 | 6,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue: | ||
Product revenue, net | $ 70,995 | $ 63,134 |
Other revenue | 2,674 | |
Total revenue | 73,669 | 63,134 |
Operating expenses | ||
Cost of goods sold - product revenue | 30,775 | 32,084 |
Research and development | 10,943 | 2,739 |
Research and development - licenses acquired | 13,819 | |
Selling, general and administrative | 59,468 | 39,833 |
Wire transfer fraud loss | 9,540 | |
Total operating expenses | 101,186 | 98,015 |
Loss from operations | (27,517) | (34,881) |
Other expense (income) | ||
Interest income | (60) | (2) |
Interest expense | 2,019 | 7,034 |
Foreign exchange transaction losses | 89 | |
Change in fair value of derivative liability | 447 | |
Total other expense (income) | 2,048 | 7,479 |
Loss before income taxes | (29,565) | (42,360) |
Income tax expense | 63 | 1,634 |
Net Loss | $ (29,628) | $ (43,994) |
Net loss per common share: | ||
Basic | $ (1.69) | $ (4.32) |
Diluted | $ (1.69) | $ (4.32) |
Weighted average number of common shares: | ||
Basic | 17,531,274 | 10,189,844 |
Diluted | 17,531,274 | 10,189,844 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock Common Class A Placement Agent Warrants | Common Stock Common Class A Contingent Payment Warrant | Common Stock Common Class A | Common Stock Placement Agent Warrants | Common Stock Contingent Payment Warrant | Common Stock | Additional Paid-in Capital Placement Agent Warrants | Additional Paid-in Capital Contingent Payment Warrant | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Placement Agent Warrants | Contingent Payment Warrant | Total |
Balance at Beginning at Dec. 31, 2020 | $ 1,000 | $ 5,171,000 | $ 5,120,000 | $ 10,292,000 | |||||||||
Balance at Beginning (in shares) at Dec. 31, 2020 | 6,000,000 | 3,151,333 | |||||||||||
Condensed Consolidated Statement of Changes in Stockholders' Equity | |||||||||||||
Share-based compensation | 2,466,000 | 2,466,000 | |||||||||||
Exercise of stock options for cash | 7,000 | 7,000 | |||||||||||
Exercise of stock options for cash (In shares) | 0 | 10,000 | |||||||||||
Contribution (distribution) of capital - extinguishment of related party payable | $ 0 | 112,000 | 112,000 | ||||||||||
Issuance of common stock related to equity plans (in shares) | 0 | 136,500 | |||||||||||
Issuance of common shares upon initial public offering, net of issuance costs of $1,921 million (in shares) | 0 | 3,520,000 | |||||||||||
Conversion of class A preferred stock settled note to common stock | 21,812,000 | 21,812,000 | |||||||||||
Conversion of class A preferred stock settled note to common stock (in shares) | 0 | 2,231,346 | |||||||||||
Stock Issued During Period, Shares, Conversion Of Debt | 0 | 1,610,467 | |||||||||||
Stock Issued During Period, Value, Conversion Of Debt | 16,105,000 | 16,105,000 | |||||||||||
Stock Issued During Period, Value, New Issues | $ 1,000 | 30,614,000 | 30,615,000 | ||||||||||
Conversion of contingent payment warrants to common stock (in shares) | 0 | 0 | 111,567 | 545,131 | |||||||||
Conversion of placement agent warrants to common stock | $ 948,000 | $ 3,680,000 | $ 948,000 | $ 3,680,000 | |||||||||
Net loss | $ 0 | (43,994,000) | (43,994,000) | ||||||||||
Balance at Ending at Dec. 31, 2021 | $ 1,000 | $ 1,000 | 80,915,000 | (38,874,000) | 42,043,000 | ||||||||
Balance at Ending (in shares) at Dec. 31, 2021 | 6,000,000 | 11,316,344 | |||||||||||
Condensed Consolidated Statement of Changes in Stockholders' Equity | |||||||||||||
Share-based compensation | $ 0 | 4,425,000 | 4,425,000 | ||||||||||
Exercise of stock options for cash | 142,000 | 142,000 | |||||||||||
Exercise of stock options for cash (In shares) | 0 | 155,649 | |||||||||||
Issuance of common stock for vested restricted stock units (in shares) | 0 | 293,707 | |||||||||||
Issuance of common shares upon initial public offering, net of issuance costs of $1,921 million (in shares) | 4,900,000 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 150,000,000 | ||||||||||||
Conversion of contingent payment warrants to common stock (in shares) | 111,567 | ||||||||||||
Net loss | $ 0 | (29,628,000) | (29,628,000) | ||||||||||
Balance at Ending at Dec. 31, 2022 | $ 1,000 | $ 1,000 | $ 85,482,000 | $ (68,502,000) | $ 16,982,000 | ||||||||
Balance at Ending (in shares) at Dec. 31, 2022 | 6,000,000 | 11,765,700 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |
Stock issuance costs | $ 1,921 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (29,628) | $ (43,994) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 284 | 48 |
Non-cash interest expense | 770 | 781 |
Amortization of debt discount | 63 | 2,572 |
Accretion of convertible preferred shares | 0 | 2,845 |
Amortization of acquired intangible assets | 4,277 | 2,474 |
Amortization of operating lease right-of-use assets | 88 | 86 |
Share-based compensation | 4,425 | 2,466 |
Deferred taxes | 1,566 | |
Change in fair value of derivative liability | 447 | |
Research and development-licenses acquired, expense | 13,819 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,380) | 768 |
Inventory | 1,744 | (8,458) |
Prepaid expenses and other current assets | (871) | (774) |
Other assets | 55 | (144) |
Accounts payable | 14,343 | 20,388 |
Related party expenses | (228) | 1,869 |
Accrued expenses | (3,568) | 1,235 |
Accrued interest | 160 | |
Income tax payable | 27 | (91) |
Lease liabilities | (95) | (84) |
Net cash used in operating activities | (13,534) | (2,181) |
Cash flows from investing activities | ||
Purchase of research and development licenses | (10,000) | |
Acquired assets | (20,000) | |
Net cash used in investing activities | (20,000) | (10,000) |
Cash flows from financing activities | ||
Proceeds from the exercise of stock options | 142 | 7 |
Proceeds from Fortress note | 9,540 | |
Payment of license installment note payable | (5,000) | (5,300) |
Proceeds from convertible preferred shares | 18,967 | |
Payment of debt issuance costs associated with convertible preferred shares | (214) | (1,996) |
Proceeds from line of credit | 5,000 | 7,000 |
Repayment of line of credit | (2,864) | (6,188) |
Proceeds from issuance of common stock - initial public offering | 32,536 | |
Proceeds from EWB term-loan, net of discount | 19,763 | |
Offering costs for the issuance of common stock - initial public offering | (371) | (1,550) |
Net cash provided by financing activities | 16,456 | 53,016 |
Net change in cash | (17,078) | 40,835 |
Cash at the beginning of the period | 49,081 | 8,246 |
Cash at the end of the period | 32,003 | 49,081 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 993 | |
Cash paid for income taxes | 168 | 158 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Deferred payment for asset acquisition | 4,740 | |
ROU assets obtained in exchange for lease liabilities | $ 188 | |
Unpaid debt offering cost | 214 | |
Unpaid initial public offering cost | 371 | |
Derivative warrant liability associated with convertible preferred shares | 362 | |
Conversion of class A preferred stock settled note to common stock | 21,812 | |
Conversion of related party payables to common stock | 16,105 | |
Conversion of placement agent warrants to common stock | 948 | |
Conversion of contingent payment warrants to common stock | 3,680 | |
Extinguishment of related party payable relates to deferred tax assets | $ 43 |
ORGANIZATION AND PLAN OF BUSINE
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | NOTE 1. ORGANIZATION AND PLAN OF BUSINESS OPERATIONS Journey Medical Corporation (collectively “Journey” or the “Company”) is a commercial-stage pharmaceutical company that focuses on the development and commercialization of pharmaceutical products for the treatment of dermatological conditions. The Company’s current product portfolio includes eight branded and three authorized generic prescription drugs for dermatological conditions that are marketed in the U.S. The Company acquires 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 its exclusive field sales organization. At of December 31, 2022 and 2021, the Company is a majority-owned subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”). Liquidity and Capital Resources At December 31, 2022, the Company had $32.0 million in cash and cash equivalents as compared to $49.1 million at December 31, 2021. On December 30, 2022, the Company filed a shelf registration statement on Form S-3 (File No. 333-269079), which was declared effective by the Securities and Exchange Commission (“SEC”) 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 (the “2022 Shelf”). At December 31, 2022, $150.0 million remains available under the 2022 Shelf. In connection with the 2022 shelf, the Company has entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”), relating to shares of the Company’s common stock. In accordance with the terms of the Sales Agreement, the Company may offer and sell up to 4,900,000 shares of its common stock, par value $0.0001 per share, from time to time through or to B. Riley acting as the Company’s agent or principal. On January 12, 2022, the Company entered into a third amendment of the loan and security agreement with EWB (the “Amendment”), which increased the borrowing capacity of the Company’s revolving line of credit to $10.0 million, of which $2.9 million was outstanding at December 31, 2022, and added a term loan not to exceed $20.0 million. Both the revolving line of credit and the term loan mature on January 12, 2026. In January 2022 and August 2022, the Company borrowed $15.0 million and $5.0 million, respectively, against the term loan. The term loans bear interest at a floating rate equal to 1.73% above the prime rate and are payable monthly. The term loans contain an interest-only payment period through January 12, 2024, with an extension through July 12, 2024, if certain covenants are met, after which the outstanding balance of each term loan is payable in equal monthly installments of principal, plus all accrued interest, through the term loan maturity date. The Company may elect to prepay all or any part of the term loan without penalty or premium, but the Company may not re-borrow any amount, once repaid. Any outstanding borrowing against the revolving line of credit bears interest at a floating rate equal to 0.70% above the prime rate. The Amendment includes customary financial covenants such as collateral ratios and minimum liquidity provisions. At December 31, 2022, the Company was in compliance with all applicable financial covenants under the Amendment. The remaining $7.1 million revolving line of credit is fully available to the Company without any restrictions, other than certain customary and ordinary closing conditions. The Company expects that expenses will increase substantially for the foreseeable future as it pursues business development opportunities, commercializes and markets new products and incurs additional costs associated with operating as a public company. To date, the Company has not been materially impacted by COVID-19; however, depending on the extent of the ongoing pandemic, it is possible that the Company, financial condition and results of operations could be materially and adversely affected by COVID-19 in the future. Additionally, the Federal Reserve has raised and is expected to continue to raise the federal funds interest rate throughout 2023 in its effort to take action against domestic inflation. Because the Company’s borrowings under the facility with EWB bear interest at a floating rate, rising interest rates affect the amount of the regular payments the Company is required to make to EWB. Accordingly, the Company may experience materially higher borrowing costs in future fiscal quarters than it historically has to date. The Company may require additional financing to pursue both development stage and commercial opportunities. In addition, The Company anticipates increased commercialization expenses related to the launch of newly acquired products, as well as increased costs related to development and regulatory approval of potential development stage product acquisitions, including DFD-29. As the Company continues to expand its product portfolio, it may need to fund possible future operating losses, and, if deemed appropriate, establish or secure through additional third-party manufacturing for the Company’s products, and expanded sales and marketing capabilities related to recent product acquisitions. For the next twelve months from the issuance of these financial statements, the Company will be able to fund our operations through a combination of existing cash and cash equivalents generated from operations, and the EWB borrowing facility. In addition, the Company may seek to raise capital through additional debt or equity financing, which may include sales of securities under the 2022 Shelf or under a new registration statement. If such funding is not available or not available on terms acceptable to the Company, the current plans for expansion of the product portfolio may be scaled back, limited or curtailed. The Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance the Company’s capital structure. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated. Emerging Growth Company From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited interim condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company meets the definition of an emerging growth company and elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates made by management include provisions for coupons, chargebacks, wholesaler fees, prompt-pay discounts, specialty pharmacy discounts, managed care rebates, product returns, government rebates and other allowances customary to the pharmaceutical industry. Significant estimates made by management also include inventory realization, valuation of intangible assets, useful lives of amortizable intangible assets and share-based compensation. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, which reflects products for the treatment of dermatological conditions. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on these deposits. The Company’s accounts receivable primarily represent amounts due from drug wholesalers and specialty pharmacies in the United States. The Company performs periodic credit evaluations of customers and does not require collateral. An allowance for doubtful accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and the customer’s current ability to pay its obligations to the Company. Accounts receivables balances are written off against the allowance when it is probable that the receivable will not be collected. See Note 17 for significant customers. Cash and Cash Equivalents The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at December 31, 2022 and 2021 consisted entirely of cash and cash equivalents in institutions within the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation insured limits. Accounts Receivable, Net The Company’s accounts receivable consists of amounts due from customers related to product sales and have standard payment terms. For certain customers, the accounts receivable for the customer is net of prompt payment or specialty pharmacy discounts. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile. The Company reserves against accounts receivable for estimated losses that may arise from a customer’s inability to pay, and any amounts determined to be uncollectible are written off against the reserve when it is probable that the receivable will not be collected. The Company has historically not experienced significant credit losses. The allowance for doubtful accounts was $0.4 million and $0.1 million at December 31, 2022 and 2021, respectively. Inventories Inventories are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company periodically reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized. The Company’s inventory reserves were $0.4 million and zero at December 31, 2022 and 2021, respectively. Property and Equipment Computer equipment, furniture and fixtures and machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the estimated useful lives or the term of the respective leases. Leases Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved. Research and development costs primarily consist of personnel related expenses, payments made to third parties for license and milestone costs related to in-licensed products and technology, and payments made to third party contract research organizations. In accordance with Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development Contingencies The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Fair Value Measurement The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1 Level 2 Level 3 The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities. Intangible Assets Intangible assets are reported at cost, less accumulated amortization and impairments. Intangible assets with finite lives are amortized over their estimated useful lives, which represents the estimated life of the product. Amortization is calculated using the straight-line method. During the ordinary course of business, the Company has entered into certain licenses and asset purchase agreements. Potential milestone payments for achieving sales targets or regulatory development milestones are recorded when it is probable of achievement. Upon a milestone payment being achieved, the milestone payment will be capitalized and amortized over the remaining useful life for approved products and expensed for milestones prior to FDA approval. Royalty payments are recorded as cost of goods sold as sales are recognized. Impairment of Long-Lived Assets The Company reviews long-lived assets, including intangible assets with finite useful lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable (a “triggering event”). Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the long-lived asset in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. The Company has not recorded any impairment losses on long-lived assets for the years ended December 31, 2022 and 2021. Share-based Compensation The Company has a share-based compensation plan in place and records the associated share-based compensation expense over the requisite service period. The share-based compensation plan and related compensation expense are discussed more fully in Note 16 to the Company’s consolidated financial statements. Compensation expense for service-based stock options is charged against operations on a straight-line basis over the vesting period, which is generally four years. Forfeitures are recorded as they occur. Share-based compensation costs are recorded in both research and development and selling, general and administrative expense in the Company’s consolidated statements of operations. Options granted have a term of 10 years from the grant date. The Company estimates the fair value of all service-based stock option awards as of the grant date by applying the Black-Scholes option pricing valuation model. The application of this valuation model involves assumptions, including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends and the expected term of the option. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The following inputs are used in the Black-Scholes calculation. Expected term—The Company has elected to use the “simplified method” for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years). Expected volatility— Historical information is the primary basis for the selection of the expected volatility of options granted. However, as the Company has limited trading history for its common shares, the expected volatility was estimated based on the average volatility for comparable guideline publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty. Risk-free interest rate— The risk-free interest rate is selected based upon yields of United States Treasury issues with a term equal to the expected life of the option being valued. Expected dividend yield—The Company has not issued any dividends in our history and do not expect to issue dividends over the life of the options; therefore, the Company has estimated the dividend yield to be zero. Restricted stock units (“RSU’s”) that are service based are recorded as deferred compensation and amortized into compensation expense on a straight-line basis over the vesting period, which ranges from three Prior to the Company’s IPO, which closed on November 16, 2021, the fair value of the Company’s common stock underlying stock options was an input to the Black-Scholes option pricing model. The Company engaged an independent third-party valuation firm to provide an estimate of the fair value of its common stock annually, utilizing input from management. The fair value of the Company’s common stock was determined considering a number of objective and subjective factors, including valuations of guideline public companies, transactions of guideline public companies, discounts for lack of control transactions, lack of liquidity of the Company’s common stock, and the general and industry-specific economic outlook. Net Loss (Income) Per Share Basic net (loss) income per share of common stock is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the reporting period after giving effect to dilutive potential common shares for stock options and restricted stock units, determined using the treasury stock method. See Note 19 below. Revenue Recognition The Company records and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company’s revenues primarily result from contracts with customers, which are generally short-term and have a single performance obligation – the delivery of product. The Company’s performance obligation to deliver products is satisfied at the point in time that the goods are received by the customer, which is when the customer obtains title to and has the risks and rewards of ownership of the products. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Many of the Company’s products sold are subject to a variety of deductions. Revenues are recorded net of provisions for variable consideration, including coupons, chargebacks, wholesaler fees, prompt pay discounts, specialty pharmacy discounts, managed care rebates, product returns, government rebates and other deductions customary to the pharmaceutical industry. Accruals for these provisions are presented in the consolidated financial statements as reductions to gross sales in determining net sales and as a contra asset within accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated: Coupons redemption rates, and the cost per coupon claim that the Company expects to receive. The estimate of product remaining in the distribution channel is comprised of estimated inventory at the wholesaler as well as an estimate of inventory on the shelves at the specialty pharmacies, which the Company estimates based upon historical ordering patterns. The estimated redemption rate is based on historical redemptions as a percentage of units sold. The cost per coupon is based on the coupon rate. Chargebacks and Government Chargebacks Wholesaler fees – Prompt-Pay Discounts Specialty Pharmacy Discounts Managed Care Rebates Product Returns Income Taxes As of December 31, 2022, the Company was 57.34% owned by Fortress Biotech, Inc. (“Fortress”) and was filing consolidated federal tax returns and consolidated or combined state tax returns in multiple jurisdictions with Fortress for tax years prior to 2021. As the Company completed its initial public offering on November 12, 2021, it deconsolidated from the Fortress consolidated group for federal income tax purpose. The financial statements recognize the current and deferred income tax consequences that result from the activities during the current and preceding periods, as if the Company were a separate taxpayer rather than a member of the Fortress consolidated income tax return group. Fortress has agreed that the Company does not have to make payments to Fortress for the use of net operating losses (“NOLs”) of Fortress (including other Fortress group members). Since Fortress does not require the Company to pay in any form for the utilization of the consolidated group’s NOLs, the tax benefit realized have been recorded as a capital contribution. The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if it believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. The Company has considered its history of cumulative tax and book income/loss incurred since inception, and the other positive and negative evidence, and has concluded that it is not more likely than not that it will realize the benefits of the net deferred tax assets as of December 31, 2022 and 2021 and therefore a full valuation allowance on all of the deferred tax assets is required. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. For the years ended December 31, 2022 and 2021, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company classifies interest and penalties related to uncertain tax positions as income tax expense, if applicable. There was no interest expense or penalties related to unrecognized tax benefits recorded through December 31, 2022 and 2021. Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. Recently Adopted Accounting Pronouncements There are no recent accounting pronouncements that are expected to have a material impact on the Company’s consolidated financial statements or related disclosures. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
INVENTORY | NOTE 3. INVENTORY The Company’s inventory consisted of the following at December 31, 2022 and 2021: December 31, December 31, ($’s in thousands) 2022 2021 Raw materials $ 6,454 $ 5,572 Work-in-process 395 — Finished goods 7,739 4,290 Inventory at cost 14,588 9,862 Inventory reserves (429) — Total Inventories $ 14,159 $ 9,862 |
ASSET ACQUISITION
ASSET ACQUISITION | 12 Months Ended |
Dec. 31, 2022 | |
ASSET ACQUISITION | |
ASSET ACQUISITION | NOTE 4. ASSET ACQUISITION On January 12, 2022, the Company entered into an agreement with Vyne Therapeutics Inc. (“Vyne”) to acquire two United States Food and Drug Administration (“FDA”) approved topical minocycline products, Amzeeq® (minocycline) topical foam, 4%, and Zilxi® (minocycline) topical foam, 1.5%, and a Molecule Stabilizing Technology™ proprietary platform from Vyne for an upfront payment of $20.0 million and an additional $5.0 million payment on the one year anniversary of the closing (the “Vyne Product Acquisition Agreement”). This expanded the Company’s product portfolio to eight marketed branded dermatology products. The Company also acquired the associated inventory related to the products. The Vyne Product Acquisition Agreement also provides for contingent net sales milestone payments, on a product-by-product basis. In the first calendar year in which annual net sales reach each of $100 million, $200 million, $300 million, $400 million and $500 million, the Company is required to make a one-time payment of $10 million, $20 million, $30 million, $40 million and $50 million, respectively, in that year only, per product, totaling up to $450 million. In addition, the Company will pay Vyne 10% of any upfront payment received by the Company from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the Vyne Product Acquisition Agreement. The following table summarizes the aggregate consideration transferred for the assets acquired by the Company in connection with the Vyne Product Acquisition Agreement: Aggregate Consideration ($’s in thousands) Transferred Consideration transferred to Vyne at closing $ 20,000 Fair Value of deferred cash payment due January 2023 4,740 Transaction costs 223 Total consideration transferred at closing $ 24,963 The fair value of the deferred cash payment is being accreted to the $5.0 million January 2023 cash payment over a one-year period through interest expense. The deferred cash payment had a carrying value of $5.0 million in the Company’s consolidated balance sheets at December 31, 2022. The following table summarizes the assets acquired in the Vyne Product Acquisition Agreement: Assets ($’s in thousands) Recognized Inventory $ 6,041 Identifiable Intangibles: Amzeeq Intangible 15,162 Zilxi Intangible 3,760 Fair value of net identifiable assets acquired $ 24,963 The intangible assets were valued using an income approach, while the inventory was valued using a final sales value less cost to dispose approach. |
INTANGIBLES
INTANGIBLES | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLES | |
INTANGIBLES | NOTE 5. INTANGIBLES The Company executed the Vyne Product Acquisition Agreement on January 12, 2022. The Company recognized intangible assets of $15.2 million for Amzeeq and $3.8 million for Zilxi, the two FDA approved products acquired in the agreement. On March 31, 2021, the Company executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc., a subsidiary of Eli Lilly and Company (“Dermira”). Pursuant to the terms of the agreement, the Company acquired the rights to Qbrexza® (glycoprronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients nine years of age or older. The Company paid the upfront fee of $12.5 million to Dermira. In addition, the Company is obligated to pay Dermira up to $144 million in the aggregate upon the achievement of certain sales milestones. The royalty structure for the agreement is tiered with royalties for the first two years ranging from approximately 40% to 30%. Thereafter for a period of eight years royalties are approximately 12.0% to 19.0%. Royalty amounts are subject to 50% diminution in the event of loss of exclusivity due to the introduction of an authorized generic. Upon closing of the Qbrexza® purchase, the Company became substituted for Dermira as the plaintiff in U.S. patent litigation commenced by Dermira on October 21, 2020 in the U.S. District Court of Delaware (the “Patent Litigation”) against Perrigo Pharma International DAC (“Perrigo”) alleging infringement of certain patents covering Qbrexza® (the “Qbrexza® Patents”), which are included among the proprietary rights to Qbrexza®. The Patent Litigation was initiated following the submission by Perrigo, in accordance with the procedures set out in the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), of an Abbreviated New Drug Application (“ANDA”). The ANDA seeks approval to market a generic version of Qbrexza® prior to the expiration of the Qbrexza® Patents and alleges that the Qbrexza® Patents are invalid. Perrigo is subject to a 30-month stay preventing it from selling a generic version, but that stay is set to expire on March 9, 2023. As of December 31, 2022, the Patent Litigation was settled by and between the parties and case subsequently has been dismissed. The purchase price of $12.5 million included the asset, Qbrexza, as well as finished goods and raw material inventory. The Company also has the obligation to accept any product returns related to sales made by Dermira. The Company allocated the upfront payment to inventory since the fair value of the inventory and Qbrexza rights exceeded the purchase price. The future contingent milestone payments, if achieved, will be recorded to intangible asset and amortized over the seven-year life of the asset commencing on the closing date. The table below provides a summary of the Company’s intangible assets at December 31, 2022 and 2021, respectively: December 31, 2022 Estimated Useful Gross Lives Carrying Accumulated Intangible ($’s in thousands) (Years) Value Amortization Assets, Net Amortizable intangible assets: Ceracade® 3 $ 300 $ (300) $ — Luxamend® 3 50 (50) — Targadox® 3 1,250 (1,250) — Ximino® 7 7,134 (3,482) 3,652 Exelderm® 3 1,600 (1,600) — Accutane ® 5 4,727 (1,733) 2,994 Amzeeq® 9 15,162 (1,597) 13,565 Zilxi® 6 3,760 (716) 3,044 33,983 (10,728) 23,255 Non-amortizable intangible assets: Anti-itch product (1) 3 3,942 — 3,942 Total intangible assets $ 37,925 $ (10,728) $ 27,197 (1) As of December 31, 2022, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the year ended December 31, 2022. Commercial launch of this product is expected in 2023. December 31, 2021 Estimated Useful Gross Lives Carrying Accumulated Intangible ($’s in thousands) (Years) Value Amortization Assets, Net Amortizable intangible assets: Ceracade® 3 $ 300 $ (300) $ — Luxamend® 3 50 (50) — Targadox® 3 1,250 (1,250) — Ximino® 7 7,134 (2,463) 4,671 Exelderm® 3 1,600 (1,600) — Accutane® 5 4,727 (788) 3,939 15,061 (6,451) 8,610 Non-amortizable intangible assets: Anti-itch product (1) 3 3,942 — 3,942 Total intangible assets $ 19,003 $ (6,451) $ 12,552 (1) As of December 31, 2021, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the year ended December 31, 2021. The commercial launch of this product is expected in 2023. The table below provides a summary for the year ended December 31, 2022 and 2021, of the Company’s recognized intangible amortization expense related to its product licenses, which was recorded in costs of goods sold on the consolidated statement of operations: Intangible ($’s in thousands) Assets, Net Balance at December 31, 2020 $ 15,029 License acquisition adjustment (3) Amortization expense (2,474) Balance at December 31, 2021 $ 12,552 VYNE License agreement 18,922 Amortization expense (4,277) Balance at December 31, 2022 $ 27,197 The Company’s amortization expense for the years ended December 31, 2022 and 2021 was approximately $4.3 million and $2.5 million, respectively. Amortization expense is recorded as a component of cost of goods sold in the Company’s consolidated statements of operations. Future amortization of the Company’s intangible assets is as follows: Total For the years ended Amortization December 31, 2023 $ 4,277 December 31, 2024 4,277 December 31, 2025 4,277 December 31, 2026 3,064 Thereafter 7,360 Subtotal 23,255 Asset not yet placed in service 3,942 Total $ 27,197 |
LICENSES ACQUIRED
LICENSES ACQUIRED | 12 Months Ended |
Dec. 31, 2022 | |
LICENSES ACQUIRED | |
LICENSES/PRODUCTS ACQUIRED | NOTE 6. LICENSES ACQUIRED On June 29, 2021, the Company entered a license, collaboration, and assignment agreement (the “DFD-29 Agreement”) to obtain the global rights for the development and commercialization of a late-stage development modified release oral minocycline for the treatment of rosacea (“DFD-29”) with Dr. Reddy’s Laboratories, Ltd (“DRL”). Pursuant to the terms and conditions of the DFD-29 Agreement, the Company paid $10.0 million. Additional contingent regulatory and commercial milestone payments totaling up to $158.0 million may also payable. Royalties ranging from approximately 10% to approximately 15% are payable on net sales of the DFD-29 product. The product candidates acquired by the Company require substantial completion of research and development, and regulatory and marketing approval efforts in order to reach technological feasibility. As such, the $10.0 million for the year ended December 31, 2021 for the purchase price of licenses acquired were classified as research and development-licenses acquired in the consolidated statement of operations. Additionally, the DFD-29 Agreement contained contingent consideration payable by the Company upon either an IPO of the Company’s common stock or an acquisition of the Company. The Company recognized $3.8 million of expense classified as research and development-licenses acquired upon execution of the DFD-29 Agreement associated with the contingent consideration. In connection with the closing of the Company’s IPO on November 16, 2021, the Company issued 545,131 shares of its common stock to DRL in a transaction exempt from registration under the Securities Act calculated using a 15-day volume weighted average price (“VWAP”) of $9.1721 per share in full settlement of the contingent payment to DRL. The restrictions on the unregistered shares of common stock are governed by the terms set forth in the DFD-29 Agreement and applicable securities laws. See “Contingent Payment Derivative” in Note 7 for further details. The Company is required to fund and oversee the Phase 3 clinical trials. Either party may terminate the agreement prior to NDA approval in the event of bankruptcy or a material breach that remains uncured beyond the applicable cure period. Additionally, DRL may terminate the agreement if the Company: i.) ceases development of the product for 6 consecutive months (except if such cessation is caused by DRL, applicable laws, or action/inaction of any third party beyond Company’s control); ii.) files a patent challenge on any claim for a product patent or DRL background patent; or iii.) fails to initiate development of the product in the European Union (“EU”) (such termination solely relates to the rights granted in EU) within 24 months after product regulatory approval or cause first commercial sale in at least one country in the EU within 72 months after product regulatory approval. From inception to date the Company has incurred approximately $13.0 million associated with the development of DFD-29. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 7: FAIR VALUE MEASUREMENTS Financial assets and liabilities measured at fair value on a recurring basis are summarized below: December 31, 2022 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 32,003 $ — $ — $ 32,003 Total $ 32,003 $ — $ — $ 32,003 December 31, 2021 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 49,081 $ — $ — $ 49,081 Total $ 49,081 $ — $ — $ 49,081 Placement Agent Warrants Pursuant to the terms of the Company’s Class A Preferred Stock offering (see Note 15), the Company was required to issue upon a Qualified Financing (an external financing of $25.0 million or greater) warrants to the placement agent (“the Placement Agent Warrants”) to purchase 5% of the shares of common stock into which the Class A Preferred Stock converts. This condition was met by the Company’s IPO. The Placement Agent Warrants have a term of five years and are exercisable at a 15% discount to the Qualified Financing price. The Company valued the Placement Agent Warrants using a Monte Carlo simulation valuation methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring Journey’s warrant liability that are categorized within Level 3 of the fair value hierarchy before the conversion was as follows: Risk-free interest rate 0.98 % Expected dividend yield — Expected term in years 1.0 Expected volatility 50 % In connection with the Company’s IPO, the Company issued 111,567 shares of common stock related to the conversion of all of the Placement Agent Warrants. Contingent Payment Derivative In connection with the DFD-29 Agreement, the Company agreed to pay DRL additional consideration upon either an IPO of the Company’s common stock or an acquisition of the Company, the agreement further specifies that only one payment can be made. The contingent payment associated with an IPO of the Company’s common stock, is deemed to be achieved if upon the completion of an IPO the Company’s market capitalization on a fully diluted basis is $150 million or greater at the close of business on the date of such IPO. The payment due for the achievement of the IPO criteria is a follows: (a) issue to DRL a number of shares of the Company’s common stock equal to $5.0 million as calculated using a fifteen (15) day volume weighted average price (“VWAP”) of the Company’s closing price, measured fifteen (15) days following the IPO; or (b) make a cash payment to DRL equal to $5.0 million. As a result of the IPO on November 16, 2021, calculated using a 15-day VWAP of $9.1721 per share, the Company issued 545,131 shares of Journey common stock to DRL in a transaction exempt from registration under the Securities Act. The restrictions on the shares of common stock issued in such transaction are governed by the terms set forth in the DFD-29 Agreement and applicable securities laws. The Company valued the contingent payment discussed above utilizing a Probability Weighted Expected Return Method (PWERM) model using a discount rate of 30% and expected term of 3 - 5 months. The table below provides a roll-forward of the changes in fair value of Level 3 financial instruments as of December 31, 2022 and 2021: Warrant ($in thousands) liabilities Fair value at December 31, 2020 $ — Additions: Contingent payment warrant 3,819 Placement agent warrant (see note 15) 362 Change in fair value of warrant liabilities: Contingent payment warrant (139) Placement agent warrant 586 Settlement of warrant liabilities in connection with IPO: Conversion of contingent payment warrants to common shares (3,680) Conversion of placement agent warrants to common shares (948) Fair value at December 31, 2021 $ — Fair value at December 31, 2022 $ — During the years ended December 31, 2022 and 2021 transfers Level Level |
RELATED PARTY AGREEMENTS
RELATED PARTY AGREEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY AGREEMENTS | |
RELATED PARTY AGREEMENTS | NOTE 8. RELATED PARTY AGREEMENTS Shared Services Agreement with Fortress On November 12, 2021, the Company and Fortress entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees. Fortress’s Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Agreement, the Company will reimburse Fortress for the salary and benefit costs associated with these employees based upon actual hours worked on Journey related projects following the completion of their IPO. For the years ended December 31, 2022 and 2021, the Company incurred expenses to Fortress employees totaling $0.1 million and $0.6 million, respectively. Upon completion of the Company’s IPO, the Company’s outstanding balance owed to Fortress of $0.5 million converted into 52,438 shares of Journey common stock at the IPO price of $10.00 per share. In the normal course of business, the Company reimburses Fortress for various payroll related costs and selling, general and administrative costs. As of December 31, 2022 and 2021, the Company had a balance of approximately $0.4 million and $0.6 million, respectively, recorded as due to related party on the consolidated balance sheets. Fortress Note From the Company’s inception in October 2014 until the IPO, Fortress funded the Company’s operations through the Fortress Note for a total of $5.2 million. On September 30, 2021, Fortress increased the Journey promissory note by $9.5 million in response to a cyber incident that occurred at Journey and resulted in $9.5 million of fraudulent payments being made by the Company. In lieu of repayment a $9.5 million contribution was approved by the boards of directors of both the Fortress and Journey and was made with the purpose of ensuring that Journey’s accounts payable function would continue to operate smoothly. This contribution, along with $5.2 million already outstanding under the Fortress Note, was converted into 1,476,044 shares of the Company’s common stock upon the closing of the Company’s IPO at the IPO price of $10.00 per share in full settlement of the amounts owed to Fortress. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 9. ACCRUED EXPENSES Accrued expenses for the years ended December 31, 2022 and 2021 consisted of the following: December 31, ($’s in thousands) 2022 2021 Accrued expenses and other short-term liabilities: Accrued coupons and rebates $ 7,604 $ 10,603 Accrued compensation 2,586 2,702 Accrued royalties payable 2,627 3,833 Return reserve 3,689 3,240 Accrued Inventory 112 253 Accrued research and development 1,404 870 Accrued legal, accounting and tax 334 512 Accrued iPledge program 447 41 Accrued marketing and advertising — 229 Other 585 450 Total accrued expenses $ 19,388 $ 22,733 |
INSTALLMENT PAYMENTS - LICENSES
INSTALLMENT PAYMENTS - LICENSES | 12 Months Ended |
Dec. 31, 2022 | |
INSTALLMENT PAYMENTS - LICENSES | |
INSTALLMENT PAYMENTS - LICENSES | NOTE 10. INSTALLMENT PAYMENTS — LICENSES The following tables show the details of the Company’s installment payments – licenses for the years ended December 31, 2022 and 2021: December 31, 2022 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 2,500 $ 1,500 $ 4,000 Less: imputed interest (256) (88) (344) Sub-total installment payments - licenses $ 2,244 $ 1,412 $ 3,656 December 31, 2021 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 5,000 $ 4,000 $ 9,000 Less: imputed interest (490) (373) (863) Sub-total installment payments - licenses $ 4,510 $ 3,627 $ 8,137 |
OPERATING LEASE OBLIGATIONS
OPERATING LEASE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2022 | |
OPERATING LEASE OBLIGATIONS | |
OPERATING LEASE OBLIGATIONS | NOTE 11. OPERATING LEASE OBLIGATIONS The Company leases 3,681 square feet of office space in Scottsdale, Arizona. The lease was set to expire on December 31, 2022. In September 2022, the Company amended the lease to extend the lease term for an additional 25 months at an annual rate of approximately $0.1 million. The amended lease will expire on January 31, 2025. The Company recorded rent expense as follows (dollars in thousands): For the Years Ended December 31, 2022 2021 Operating lease cost $ 93 $ 89 Variable lease cost 4 4 Total lease cost $ 97 $ 93 The following table summarizes quantitative information about the Company’s operating leases (dollars in thousands): For the Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities $ 100 $ 91 Right-of-use assets exchanged for new operating lease liabilities $ 188 $ — Weighted-average remaining lease term - operating leases 2.1 1.0 Weighted-average discount rate - operating leases 6.25 % 4.0 % As of December 31, 2022, future payments of operating lease liabilities are as follows: For the year ended December 31, ($’s in thousands) 2023 $ 92 2024 102 2025 9 Total lease payments 203 Less: present value discount (12) Total operating lease liabilities $ 191 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
DEBT | NOTE 12. DEBT The Company’s Debt obligations at December 31, 2022 and 2021 were as follows: December 31, 2022 Net Principal Unamortized Carry ($’s in thousands) Balance Discount & Fees Amount Deferred cash payment $ 5,000 $ 9 $ 4,991 EWB Revolving LOC 2,948 — 2,948 Total Short-Term Debt $ 7,948 $ 9 $ 7,939 EWB Term Loan (Long-term) $ 20,000 $ 174 $ 19,826 Total Debt & Obligations $ 27,948 $ 183 $ 27,765 December 31, 2021 EWB Revolving LOC (Short-term) $ 812 $ — $ 812 East West Bank Line of Credit and Long-Term Debt On January 12, 2022, the Company entered into a third amendment of the loan and security agreement with EWB (the “Amendment”), which increased the borrowing capacity of the Company’s revolving line of credit to $10.0 million, $2.9 million of which was outstanding at December 31, 2022, and added a term loan not to exceed $20.0 million. Both the revolving line of credit and the term loan mature on January 12, 2026. In January 2022 and August 2022, the Company borrowed $15.0 million and $5.0 million, respectively, against the term loan. The term loan bears interest at a floating rate equal to 1.73% above the prime rate and are payable monthly. The term loan effective interest rate at December 31, 2022 is 9.64%. The term loan contains an interest-only payment period through January 12, 2024, with an extension through July 12, 2024, if certain covenants are met, after which the outstanding balance of each term loan is payable in equal monthly installments of principal, plus all accrued interest, through the term loan maturity date. The Company may prepay all or any part of the term loan without penalty or premium, but may not re-borrow any amount, once repaid. Any outstanding borrowing against the revolving line of credit bears interest at a floating rate equal to 0.70% above the prime rate. The Amendment includes customary financial covenants such as collateral ratios and minimum liquidity provisions. The Company was in compliance with all applicable financial covenants under the Amendment as of December 31, 2022. The remaining $7.1 million revolving line of credit is fully available to the Company without any restrictions, other than certain customary and ordinary closing conditions. The Company accounted for the Amendment as a debt modification. The remaining unamortized debt issuance costs related to the original revolving facility together with any lender fees and direct third-party costs incurred in connection with the entry into the Amendment are considered associated with the new arrangement. The fees allocated to the revolving line are amortized over the new four-year term of the amended revolving facility. The fees allocated to the term loan are recorded as a debt discount and amortized to interest expense over the four-year term of the term loan under the effective interest method. |
INTEREST EXPENSE AND FINANCING
INTEREST EXPENSE AND FINANCING FEES | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST EXPENSE AND FINANCING FEES | |
INTEREST EXPENSE AND FINANCING FEES | NOTE 13. INTEREST EXPENSE AND FINANCING FEES Interest expense and financing fees for the years ended December 31, 2022 and 2021 consisted of the following: Year Ended December 31, 2022 2021 Interest payments on EWB term loan and LOC $ 1,153 $ — Imputed Interest on acquired intangible assets 519 781 Amortization/Accretion 347 2,572 Interest and Fees on convertible preferred shares — 2,845 Dividends payable on convertible preferred shares — 820 EWB LOC Fees — 16 Total Interest Expense and Financing Fees $ 2,019 $ 7,034 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. COMMITMENTS AND CONTINGENCIES License Agreements The Company has undertaken to make contingent milestone payments to the licensors of its portfolio of drug products and candidates. In addition, the Company shall pay royalties to such licensors based on a percentage of net sales of each drug candidate following regulatory marketing approval. For additional information on future milestone payments and royalties, see Note 4 and Note 5. |
STOCKHOLDERS' EQUITY AND CLASS
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | NOTE 15. STOCKHOLDERS’ EQUITY AND CLASS A PREFERRED STOCK Common Stock The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue 50,000,000 shares of $0.0001 par value Common Stock of which 6,000,000 shares are designated and authorized as Class A Common Stock. Voting Rights Each holder of Common Stock is entitled to one vote per share of Common Stock held on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s Certificate of Incorporation and bylaws do not provide for cumulative voting rights. Each holder of Class A Common Stock is entitled to a number of votes that is equal to 1.1 times a fraction, the numerator of which is the sum of the shares of outstanding Common Stock, including the Class A Common Stock and the denominator of which is the number of outstanding shares of Class A Common Stock. Thus, the holders of the Class A Common Stock will at all times constitute a voting majority. Dividends The holders of the Company’s outstanding shares of Common Stock and Class A Common Stock are entitled to receive dividends, if any, as may be declared from time to time by the Company’s Board of Directors out of legally available funds. Liquidation In the event of the Company’s liquidation, dissolution or winding up, holders of Common Stock and Class A Common Stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of the Company’s debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any outstanding shares of Preferred Stock. Rights and Preference Holders of the Company’s Common Stock and Class A Common Stock have no preemptive, conversion or subscription rights, and there is no redemption or sinking fund provisions applicable to either the Common Stock or the Class A Common Stock. The rights, preferences and privileges of the holders of Common Stock and Class A Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of the Company’s Preferred Stock that are or may be issued. On November 16, 2021, the Company completed an IPO of its common stock and issued 3,520,000 shares of its common stock at $10.00 per share, which resulted in net proceeds of approximately $30.6 million, after deducting underwriting discounts and other offering costs. In addition, as a result of the IPO, the Company issued shares of its Common stock based on the following. 8% Cumulative Convertible Class A Preferred Offering In March 2021, the Company commenced an offering of 8% Cumulative Convertible Class A Preferred Stock (“Class A Preferred Offering”). The Class A Preferred Offering terminated on July 18, 2021 and raised gross proceeds of $19 million. The Class A Preferred Stock automatically converts into the Company’s Common Stock upon a sale of the Company or a financing in an amount of at least $25.0 million within a year of the closing date of the Class A Preferred Offering (extendable by another six months at the Company’s option) at a discount of 15% to the per share qualified stock price. In the event that neither a sale of the Company nor a $25.0 million financing was completed, the Class A Preferred Stock was to be exchanged for shares of Fortress common stock, at a 7.5% discount to the average Fortress common stock trading price over the 10-day period preceding such exchange. The Company issued an aggregate of 758,680 Class A Preferred shares at a price of $25.00 per share, for gross proceeds of $19.0 million. Following the payment of placement agent fees of $1.9 million, and other expenses of $0.1 million, the Company received $17.0 million of net proceeds. In connection with the Company’s IPO, the company issued 2,231,346 shares of common stock resulting from the conversion of all of the Class A Preferred Stock. |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | NOTE 16. SHARE-BASED COMPENSATION In 2015, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical Corporation 2015 Stock Plan (the “Plan”) authorizing the Company to grant up to 4,642,857 shares of Common Stock to eligible employees, directors, and consultants in the form of restricted stock, restricted stock units (“RSUs”), stock options and other types of grants. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. At the Company’s 2022 Annual Meeting, held on June 21, 2022, the Company’s stockholders approved, among other matters, an amendment to the Plan to increase the number of shares of Common Stock issuable under the Plan by 3,000,000 to 7,642,857. At December 31, 2022 there were 1,146,620 shares available for issuance under the Plan. The Company grants stock options to employees, non-employees and Directors with exercise prices equal to the closing price of the underlying shares of the Company’s common stock on the Nasdaq Capital Market on the date that the options are granted. Options granted have a term of ten years from the grant date. Options granted generally vest over four-year period. Compensation cost for stock options is charged against operations on a straight-line basis over the vesting period. The Company estimates the fair value of stock options on the grant date by applying the Black-Scholes option pricing valuation model. Total compensation cost charged against operations related to the above plan for the years ended December 31, 2022 and 2021 was $4.4 million and $2.5 million, respectively. The following table summarizes the components of share-based compensation expense in the consolidated statements of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, ($’s in thousands) 2022 2021 Research and development $ 73 $ — Selling, general and administrative 4,352 2,466 Total non-cash compensation expense related to share-based compensation included in operating expense $ 4,425 $ 2,466 Stock Options The weighted-average key assumptions used in determining the fair value of options granted for the year ended December 31, 2022 are as follows: 2022 Risk-free interest rate 2.89% - 4.20% Expected volatility 80.25% - 86.18% Weighted average expected volatility 85.45% Expected term (years) 5.60 - 6.35 Expected dividend yield 0% The weighted average grant-date fair value of stock options issued during the year ended December 31, 2022 was $2.67 per share. The Company did not grant any stock options during the year ended December 31, 2021. The following table summarizes the Company’s stock option activity for the year ended December 31, 2022: Weighted Weighted average Number average Aggregate remaining of exercise intrinsic contractual Shares price value life (years) Outstanding options at December 31, 2021 2,104,334 $ 0.79 $ 9,661,393 4.68 Granted 1,149,000 3.59 — 9.53 Exercised (155,649) 1.01 141,019 — Forfeited (105,500) 3.20 9,805 — Expired (32,185) 1.39 17,058 — Outstanding options at December 31, 2022 2,960,000 $ 1.76 $ 2,217,815 5.65 Options vested and exercisable at December 31, 2022 1,897,500 $ 0.76 $ 2,209,600 3.50 For the years ended December 31, 2022 and 2021, the Company issued 155,649 and 10,000 shares, respectively, of Common Stock upon the exercise of outstanding stock options and received proceeds of $142,330 and $6,800, respectively. For the years ended December 31, 2022 and 2021, approximately $0.8 million and $51,669, respectively, of stock option compensation cost was charged against operations. At December 31, 2022, the Company had unrecognized share-based compensation expense related to all unvested options of $2.0 million, which the Company expects to recognize over a weighted-average period of approximately 2.4 years. Restricted Stock Units The following table summarizes the Company’s RSU activity for the year ended December 31, 2022: Weighted average Number of grant date units Fair value Unvested balance at December 31, 2021 715,030 $ 4.12 Granted 1,907,225 4.10 Vested (293,707) 4.33 Forfeited (67,500) 4.80 Unvested balance at December 31, 2022 2,261,048 $ 4.05 For the years ended December 31, 2022 and 2021 the Company issued 293,707 and 136,500 shares of Common Stock, respectively, upon the vesting of RSU’s amounting to $0.9 million and $1.4 million, respectively, in total aggregate fair market value. For the years ended December 31, 2022 and 2021, approximately $3.6 million and $2.5 million, respectively, of RSU compensation cost was charged against operations. The $2.5 million of RSU compensation cost that was charged against operations for the year ended December 31, 2021 includes $2.4 million of RSU compensation cost related to RSU’s that fully vested upon the Company’s IPO on November 12, 2021. At December 31, 2022 approximately 2,261,048 of RSU’s remained unvested and there was approximately $4.8 million of unrecognized compensation cost related to RSUs, which the Company expects to recognize over a weighted-average period of approximately 1.9 years. |
REVENUES FROM CONTRACTS AND SIG
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | 12 Months Ended |
Dec. 31, 2022 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | NOTE 17. REVENUES FROM CONTRACTS WITH CUSTOMERS Disaggregation of Net Revenues The Company has the following actively marketed products, Qbrexza®, Amzeeq®, Zilxi®, Accutane®, Ximino®, Exelderm®, and Targadox®. All of the Company’s product revenues are recorded in the U.S. Revenues by product are summarized as follows: Year Ended December 31, ($ in thousands) 2022 2021 Qbrexza® $ 26,715 $ 17,056 Accutane® 18,373 10,053 Targadox® 7,972 22,378 Amzeeq® 7,242 — Ximino® 4,957 8,247 Zilxi® 2,273 — Exelderm® 3,463 5,363 Other branded revenue — 37 Total product revenues $ 70,995 $ 63,134 The Company recognized other revenue as follows: Year Ended December 31, ($in thousands) 2022 2021 Other revenue $ 2,674 $ — Total other revenue $ 2,674 $ — Other revenue for the year ended December 31, 2022 included a net $2.5 million milestone payment from Maruho Co., Ltd, upon receipt of marketing and manufacturing approval for Rapifort® Wipes 2.5% (Qbrexza®), as well as $0.2 million in royalties from Maruho on sales of Rapifort® Wipes 2.5% in Japan. Significant Customers As of December 31, 2022, two of the Company’s customers accounted for more than 10% of its total accounts receivable balance at 16.7% and 10.4%. As of December 31, 2021, two of the Company’s customers accounted for more than 10% of its total accounts receivable balance at 16.3% and 12.9%. For the year ended December 31, 2022 and 2021, none of the Company’s customers accounted for more than 10% of its total gross product revenue. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 18. INCOME TAXES The components of the income tax provision are as follows: Years Ended December 31, ($’s in thousands) 2022 2021 Current: Federal $ — $ — State 63 67 Total current 63 67 Deferred: Federal (6,701) (7,829) State (1,737) (1,474) Total deferred (8,438) (9,303) Valuation allowance 8,438 10,870 Total income tax expense $ 63 $ 1,634 Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. The significant components of the Company’s deferred tax assets consisted of the following: December 31, ($’s in thousands) 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 6,553 $ 3,113 Amortization of license fees 4,951 4,760 R&D capitalization 2,462 — Stock compensation 1,293 667 Lease liability 48 25 Reserve on sales return, discount and bad debt 2,988 3,573 Accruals and reserves 574 505 Tax credits 1,152 193 Business interest expense deduction limit 322 41 State taxes 13 12 Total deferred tax assets 20,356 12,889 Less: valuation allowance (19,307) (10,870) Deferred tax assets, net $ 1,049 $ 2,019 Deferred tax liability: Section 481(a) adjustment on reserve on sales return, discount and bad debt (1,001) (1,996) Right-of-use asset (48) (23) Deferred tax assets, net $ — $ — A reconciliation of the statutory tax rates and the effective tax rates is as follows: Years Ended December 31, 2022 2021 Percentage of pre-tax income: U.S. federal statutory income tax rate 21 % 21 % State taxes, net of federal benefit 4 % 4 % Non-deductible items (0) % (5) % Provision to return 0 % 0 % Change in state rate 0 % 0 % Change in valuation allowance (28) % (26) % Other 3 % 2 % Effective income tax rate (0) % (4) % The Company has incurred NOLs in previous years. As of December 31, 2022, the Company had total federal NOLs of approximately $27.0 million, of which $7.6 million is subject to expiration and will begin to expire in the year 2033, total state NOLs of $17 million, of which $4.7 million is subject to expiration and will begin to expire in the year 2026, and federal income tax credits of $1.2 million, which will begin to expire in 2031. Approximately $19.4 million of the federal NOLs and $12.3 million of the state NOLs can be carried forward indefinitely. The utilization of the Company’s NOLs are subject to annual Internal Revenue Code Section 382 limitations (382 Limitations). Based on the analysis of the NOLs carryovers subject to the 382 Limitations, the Company has concluded that the 382 Limitations would not prevent the Company from utilizing all of its NOLs carryovers before expiration. The Company is subject to U.S. federal and various state taxes. As of December 31, 2022, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2019 tax year. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state. |
NET (LOSS) INCOME PER COMMON SH
NET (LOSS) INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2022 | |
NET (LOSS) INCOME PER COMMON SHARE | |
NET (LOSS) INCOME PER COMMON SHARE | NOTE 19. NET (LOSS) INCOME PER COMMON SHARE The Company accounts for and discloses net earnings (loss) per share using the treasury stock method. Net earnings (loss) per common share, or basic earnings (loss) per share, is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Net earnings (loss) per common share assuming dilutions, or diluted earnings (loss) per share, is computed by reflecting the potential dilution from the exercise of in-the-money stock options, and non-vested restricted stock units. The Company’s basic and diluted weighted-average number of common shares outstanding for years ended December 31, 2022 and 2021 were as follows: Year ended December 31, 2022 2021 Basic 17,531,274 10,189,844 Common stock equivalents: Unvested restricted stock units 2,261,048 715,030 Stock Options 1,566,131 1,879,378 Diluted 21,358,453 12,784,252 The Company’s Common Stock equivalents, including unvested restricted stock and options have been excluded from the computation of diluted loss per share for the years ended December 31, 2022 and 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average Common Stock outstanding used to calculate both basic and diluted income loss per share is the same for the years ended December 31, 2022 and 2021. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated. |
Emerging Growth Company | Emerging Growth Company From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard-setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited interim condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company meets the definition of an emerging growth company and elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates made by management include provisions for coupons, chargebacks, wholesaler fees, prompt-pay discounts, specialty pharmacy discounts, managed care rebates, product returns, government rebates and other allowances customary to the pharmaceutical industry. Significant estimates made by management also include inventory realization, valuation of intangible assets, useful lives of amortizable intangible assets and share-based compensation. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, which reflects products for the treatment of dermatological conditions. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on these deposits. The Company’s accounts receivable primarily represent amounts due from drug wholesalers and specialty pharmacies in the United States. The Company performs periodic credit evaluations of customers and does not require collateral. An allowance for doubtful accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and the customer’s current ability to pay its obligations to the Company. Accounts receivables balances are written off against the allowance when it is probable that the receivable will not be collected. See Note 17 for significant customers. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at December 31, 2022 and 2021 consisted entirely of cash and cash equivalents in institutions within the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation insured limits. |
Accounts Receivable, Net | Accounts Receivable, Net The Company’s accounts receivable consists of amounts due from customers related to product sales and have standard payment terms. For certain customers, the accounts receivable for the customer is net of prompt payment or specialty pharmacy discounts. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in their credit profile. The Company reserves against accounts receivable for estimated losses that may arise from a customer’s inability to pay, and any amounts determined to be uncollectible are written off against the reserve when it is probable that the receivable will not be collected. The Company has historically not experienced significant credit losses. The allowance for doubtful accounts was $0.4 million and $0.1 million at December 31, 2022 and 2021, respectively. |
Inventories | Inventories Inventories are recorded at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company periodically reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized. The Company’s inventory reserves were $0.4 million and zero at December 31, 2022 and 2021, respectively. |
Property and Equipment | Property and Equipment Computer equipment, furniture and fixtures and machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the estimated useful lives or the term of the respective leases. |
Leases | Leases Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved. Research and development costs primarily consist of personnel related expenses, payments made to third parties for license and milestone costs related to in-licensed products and technology, and payments made to third party contract research organizations. In accordance with Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development |
Contingencies | Contingencies The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. |
Fair Value Measurement | Fair Value Measurement The Company follows accounting guidance on fair value measurements for financial assets and liabilities measured at fair value on a recurring basis. Under the accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories: Level 1 Level 2 Level 3 The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses and other current liabilities. |
Intangible Assets | Intangible Assets Intangible assets are reported at cost, less accumulated amortization and impairments. Intangible assets with finite lives are amortized over their estimated useful lives, which represents the estimated life of the product. Amortization is calculated using the straight-line method. During the ordinary course of business, the Company has entered into certain licenses and asset purchase agreements. Potential milestone payments for achieving sales targets or regulatory development milestones are recorded when it is probable of achievement. Upon a milestone payment being achieved, the milestone payment will be capitalized and amortized over the remaining useful life for approved products and expensed for milestones prior to FDA approval. Royalty payments are recorded as cost of goods sold as sales are recognized. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets, including intangible assets with finite useful lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable (a “triggering event”). Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the long-lived asset in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. The Company has not recorded any impairment losses on long-lived assets for the years ended December 31, 2022 and 2021. |
Share-based Compensation | Share-based Compensation The Company has a share-based compensation plan in place and records the associated share-based compensation expense over the requisite service period. The share-based compensation plan and related compensation expense are discussed more fully in Note 16 to the Company’s consolidated financial statements. Compensation expense for service-based stock options is charged against operations on a straight-line basis over the vesting period, which is generally four years. Forfeitures are recorded as they occur. Share-based compensation costs are recorded in both research and development and selling, general and administrative expense in the Company’s consolidated statements of operations. Options granted have a term of 10 years from the grant date. The Company estimates the fair value of all service-based stock option awards as of the grant date by applying the Black-Scholes option pricing valuation model. The application of this valuation model involves assumptions, including the fair value of the common stock, expected volatility, risk-free interest rate, expected dividends and the expected term of the option. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The following inputs are used in the Black-Scholes calculation. Expected term—The Company has elected to use the “simplified method” for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option (generally 10 years). Expected volatility— Historical information is the primary basis for the selection of the expected volatility of options granted. However, as the Company has limited trading history for its common shares, the expected volatility was estimated based on the average volatility for comparable guideline publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle or area of specialty. Risk-free interest rate— The risk-free interest rate is selected based upon yields of United States Treasury issues with a term equal to the expected life of the option being valued. Expected dividend yield—The Company has not issued any dividends in our history and do not expect to issue dividends over the life of the options; therefore, the Company has estimated the dividend yield to be zero. Restricted stock units (“RSU’s”) that are service based are recorded as deferred compensation and amortized into compensation expense on a straight-line basis over the vesting period, which ranges from three Prior to the Company’s IPO, which closed on November 16, 2021, the fair value of the Company’s common stock underlying stock options was an input to the Black-Scholes option pricing model. The Company engaged an independent third-party valuation firm to provide an estimate of the fair value of its common stock annually, utilizing input from management. The fair value of the Company’s common stock was determined considering a number of objective and subjective factors, including valuations of guideline public companies, transactions of guideline public companies, discounts for lack of control transactions, lack of liquidity of the Company’s common stock, and the general and industry-specific economic outlook. |
Net Loss (Income) Per Share | Net Loss (Income) Per Share Basic net (loss) income per share of common stock is calculated by dividing net (loss) income by the weighted-average number of shares of common stock outstanding during the reporting period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the reporting period after giving effect to dilutive potential common shares for stock options and restricted stock units, determined using the treasury stock method. See Note 19 below. |
Revenue Recognition | Revenue Recognition The Company records and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company’s revenues primarily result from contracts with customers, which are generally short-term and have a single performance obligation – the delivery of product. The Company’s performance obligation to deliver products is satisfied at the point in time that the goods are received by the customer, which is when the customer obtains title to and has the risks and rewards of ownership of the products. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Many of the Company’s products sold are subject to a variety of deductions. Revenues are recorded net of provisions for variable consideration, including coupons, chargebacks, wholesaler fees, prompt pay discounts, specialty pharmacy discounts, managed care rebates, product returns, government rebates and other deductions customary to the pharmaceutical industry. Accruals for these provisions are presented in the consolidated financial statements as reductions to gross sales in determining net sales and as a contra asset within accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated: Coupons redemption rates, and the cost per coupon claim that the Company expects to receive. The estimate of product remaining in the distribution channel is comprised of estimated inventory at the wholesaler as well as an estimate of inventory on the shelves at the specialty pharmacies, which the Company estimates based upon historical ordering patterns. The estimated redemption rate is based on historical redemptions as a percentage of units sold. The cost per coupon is based on the coupon rate. Chargebacks and Government Chargebacks Wholesaler fees – Prompt-Pay Discounts Specialty Pharmacy Discounts Managed Care Rebates Product Returns |
Income Taxes | Income Taxes As of December 31, 2022, the Company was 57.34% owned by Fortress Biotech, Inc. (“Fortress”) and was filing consolidated federal tax returns and consolidated or combined state tax returns in multiple jurisdictions with Fortress for tax years prior to 2021. As the Company completed its initial public offering on November 12, 2021, it deconsolidated from the Fortress consolidated group for federal income tax purpose. The financial statements recognize the current and deferred income tax consequences that result from the activities during the current and preceding periods, as if the Company were a separate taxpayer rather than a member of the Fortress consolidated income tax return group. Fortress has agreed that the Company does not have to make payments to Fortress for the use of net operating losses (“NOLs”) of Fortress (including other Fortress group members). Since Fortress does not require the Company to pay in any form for the utilization of the consolidated group’s NOLs, the tax benefit realized have been recorded as a capital contribution. The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if it believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. The Company has considered its history of cumulative tax and book income/loss incurred since inception, and the other positive and negative evidence, and has concluded that it is not more likely than not that it will realize the benefits of the net deferred tax assets as of December 31, 2022 and 2021 and therefore a full valuation allowance on all of the deferred tax assets is required. For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. For the years ended December 31, 2022 and 2021, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company classifies interest and penalties related to uncertain tax positions as income tax expense, if applicable. There was no interest expense or penalties related to unrecognized tax benefits recorded through December 31, 2022 and 2021. |
Comprehensive Income | Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements There are no recent accounting pronouncements that are expected to have a material impact on the Company’s consolidated financial statements or related disclosures. |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
Schedule of inventory | December 31, December 31, ($’s in thousands) 2022 2021 Raw materials $ 6,454 $ 5,572 Work-in-process 395 — Finished goods 7,739 4,290 Inventory at cost 14,588 9,862 Inventory reserves (429) — Total Inventories $ 14,159 $ 9,862 |
ASSET ACQUISITION (Tables)
ASSET ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ASSET ACQUISITION | |
Schedule of aggregate consideration transferred for the assets acquired | Aggregate Consideration ($’s in thousands) Transferred Consideration transferred to Vyne at closing $ 20,000 Fair Value of deferred cash payment due January 2023 4,740 Transaction costs 223 Total consideration transferred at closing $ 24,963 |
Schedule of fair value of assets acquired | Assets ($’s in thousands) Recognized Inventory $ 6,041 Identifiable Intangibles: Amzeeq Intangible 15,162 Zilxi Intangible 3,760 Fair value of net identifiable assets acquired $ 24,963 |
INTANGIBLES (Tables)
INTANGIBLES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLES | |
Schedule of intangible assets | December 31, 2022 Estimated Useful Gross Lives Carrying Accumulated Intangible ($’s in thousands) (Years) Value Amortization Assets, Net Amortizable intangible assets: Ceracade® 3 $ 300 $ (300) $ — Luxamend® 3 50 (50) — Targadox® 3 1,250 (1,250) — Ximino® 7 7,134 (3,482) 3,652 Exelderm® 3 1,600 (1,600) — Accutane ® 5 4,727 (1,733) 2,994 Amzeeq® 9 15,162 (1,597) 13,565 Zilxi® 6 3,760 (716) 3,044 33,983 (10,728) 23,255 Non-amortizable intangible assets: Anti-itch product (1) 3 3,942 — 3,942 Total intangible assets $ 37,925 $ (10,728) $ 27,197 (1) As of December 31, 2022, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the year ended December 31, 2022. Commercial launch of this product is expected in 2023. December 31, 2021 Estimated Useful Gross Lives Carrying Accumulated Intangible ($’s in thousands) (Years) Value Amortization Assets, Net Amortizable intangible assets: Ceracade® 3 $ 300 $ (300) $ — Luxamend® 3 50 (50) — Targadox® 3 1,250 (1,250) — Ximino® 7 7,134 (2,463) 4,671 Exelderm® 3 1,600 (1,600) — Accutane® 5 4,727 (788) 3,939 15,061 (6,451) 8,610 Non-amortizable intangible assets: Anti-itch product (1) 3 3,942 — 3,942 Total intangible assets $ 19,003 $ (6,451) $ 12,552 (1) As of December 31, 2021, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the year ended December 31, 2021. The commercial launch of this product is expected in 2023. The table below provides a summary for the year ended December 31, 2022 and 2021, of the Company’s recognized intangible amortization expense related to its product licenses, which was recorded in costs of goods sold on the consolidated statement of operations: Intangible ($’s in thousands) Assets, Net Balance at December 31, 2020 $ 15,029 License acquisition adjustment (3) Amortization expense (2,474) Balance at December 31, 2021 $ 12,552 VYNE License agreement 18,922 Amortization expense (4,277) Balance at December 31, 2022 $ 27,197 |
Schedule of future amortization of intangible assets | Total For the years ended Amortization December 31, 2023 $ 4,277 December 31, 2024 4,277 December 31, 2025 4,277 December 31, 2026 3,064 Thereafter 7,360 Subtotal 23,255 Asset not yet placed in service 3,942 Total $ 27,197 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | December 31, 2022 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 32,003 $ — $ — $ 32,003 Total $ 32,003 $ — $ — $ 32,003 December 31, 2021 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 49,081 $ — $ — $ 49,081 Total $ 49,081 $ — $ — $ 49,081 |
Schedule of roll-forward of changes in fair value of Level 3 financial instruments | Warrant ($in thousands) liabilities Fair value at December 31, 2020 $ — Additions: Contingent payment warrant 3,819 Placement agent warrant (see note 15) 362 Change in fair value of warrant liabilities: Contingent payment warrant (139) Placement agent warrant 586 Settlement of warrant liabilities in connection with IPO: Conversion of contingent payment warrants to common shares (3,680) Conversion of placement agent warrants to common shares (948) Fair value at December 31, 2021 $ — Fair value at December 31, 2022 $ — |
Placement Agent Warrants | |
FAIR VALUE MEASUREMENTS | |
Schedule of weighted average significant unobservable inputs used in measuring liabilities | Risk-free interest rate 0.98 % Expected dividend yield — Expected term in years 1.0 Expected volatility 50 % |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | December 31, ($’s in thousands) 2022 2021 Accrued expenses and other short-term liabilities: Accrued coupons and rebates $ 7,604 $ 10,603 Accrued compensation 2,586 2,702 Accrued royalties payable 2,627 3,833 Return reserve 3,689 3,240 Accrued Inventory 112 253 Accrued research and development 1,404 870 Accrued legal, accounting and tax 334 512 Accrued iPledge program 447 41 Accrued marketing and advertising — 229 Other 585 450 Total accrued expenses $ 19,388 $ 22,733 |
INSTALLMENT PAYMENTS - LICENS_2
INSTALLMENT PAYMENTS - LICENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INSTALLMENT PAYMENTS - LICENSES | |
Schedule of installment payments - licenses | December 31, 2022 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 2,500 $ 1,500 $ 4,000 Less: imputed interest (256) (88) (344) Sub-total installment payments - licenses $ 2,244 $ 1,412 $ 3,656 December 31, 2021 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 5,000 $ 4,000 $ 9,000 Less: imputed interest (490) (373) (863) Sub-total installment payments - licenses $ 4,510 $ 3,627 $ 8,137 |
OPERATING LEASE OBLIGATIONS (Ta
OPERATING LEASE OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OPERATING LEASE OBLIGATIONS | |
Schedule of rent expense and quantitative information | The Company recorded rent expense as follows (dollars in thousands): For the Years Ended December 31, 2022 2021 Operating lease cost $ 93 $ 89 Variable lease cost 4 4 Total lease cost $ 97 $ 93 The following table summarizes quantitative information about the Company’s operating leases (dollars in thousands): For the Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities $ 100 $ 91 Right-of-use assets exchanged for new operating lease liabilities $ 188 $ — Weighted-average remaining lease term - operating leases 2.1 1.0 Weighted-average discount rate - operating leases 6.25 % 4.0 % |
Summary of operating lease liability | For the year ended December 31, ($’s in thousands) 2023 $ 92 2024 102 2025 9 Total lease payments 203 Less: present value discount (12) Total operating lease liabilities $ 191 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Schedule of debt obligation | December 31, 2022 Net Principal Unamortized Carry ($’s in thousands) Balance Discount & Fees Amount Deferred cash payment $ 5,000 $ 9 $ 4,991 EWB Revolving LOC 2,948 — 2,948 Total Short-Term Debt $ 7,948 $ 9 $ 7,939 EWB Term Loan (Long-term) $ 20,000 $ 174 $ 19,826 Total Debt & Obligations $ 27,948 $ 183 $ 27,765 December 31, 2021 EWB Revolving LOC (Short-term) $ 812 $ — $ 812 |
INTEREST EXPENSE AND FINANCIN_2
INTEREST EXPENSE AND FINANCING FEES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INTEREST EXPENSE AND FINANCING FEES | |
Schedule of interest expense and financing fees | Year Ended December 31, 2022 2021 Interest payments on EWB term loan and LOC $ 1,153 $ — Imputed Interest on acquired intangible assets 519 781 Amortization/Accretion 347 2,572 Interest and Fees on convertible preferred shares — 2,845 Dividends payable on convertible preferred shares — 820 EWB LOC Fees — 16 Total Interest Expense and Financing Fees $ 2,019 $ 7,034 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE BASED COMPENSATION | |
Summary of components of share-based compensation expense | Year Ended December 31, ($’s in thousands) 2022 2021 Research and development $ 73 $ — Selling, general and administrative 4,352 2,466 Total non-cash compensation expense related to share-based compensation included in operating expense $ 4,425 $ 2,466 |
Schedule of weighted-average key assumptions used in determining the fair value of options granted | 2022 Risk-free interest rate 2.89% - 4.20% Expected volatility 80.25% - 86.18% Weighted average expected volatility 85.45% Expected term (years) 5.60 - 6.35 Expected dividend yield 0% |
Schedule of stock option activities | Weighted Weighted average Number average Aggregate remaining of exercise intrinsic contractual Shares price value life (years) Outstanding options at December 31, 2021 2,104,334 $ 0.79 $ 9,661,393 4.68 Granted 1,149,000 3.59 — 9.53 Exercised (155,649) 1.01 141,019 — Forfeited (105,500) 3.20 9,805 — Expired (32,185) 1.39 17,058 — Outstanding options at December 31, 2022 2,960,000 $ 1.76 $ 2,217,815 5.65 Options vested and exercisable at December 31, 2022 1,897,500 $ 0.76 $ 2,209,600 3.50 |
Schedule of restricted stock units | Weighted average Number of grant date units Fair value Unvested balance at December 31, 2021 715,030 $ 4.12 Granted 1,907,225 4.10 Vested (293,707) 4.33 Forfeited (67,500) 4.80 Unvested balance at December 31, 2022 2,261,048 $ 4.05 |
REVENUES FROM CONTRACTS AND S_2
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Schedule of disaggregation of net revenues | Year Ended December 31, ($ in thousands) 2022 2021 Qbrexza® $ 26,715 $ 17,056 Accutane® 18,373 10,053 Targadox® 7,972 22,378 Amzeeq® 7,242 — Ximino® 4,957 8,247 Zilxi® 2,273 — Exelderm® 3,463 5,363 Other branded revenue — 37 Total product revenues $ 70,995 $ 63,134 |
Schedule of other revenue | Year Ended December 31, ($in thousands) 2022 2021 Other revenue $ 2,674 $ — Total other revenue $ 2,674 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Summary of provision benefit of income tax and effective tax rate | Years Ended December 31, ($’s in thousands) 2022 2021 Current: Federal $ — $ — State 63 67 Total current 63 67 Deferred: Federal (6,701) (7,829) State (1,737) (1,474) Total deferred (8,438) (9,303) Valuation allowance 8,438 10,870 Total income tax expense $ 63 $ 1,634 |
Schedule of components of the Company's deferred tax assets | December 31, ($’s in thousands) 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 6,553 $ 3,113 Amortization of license fees 4,951 4,760 R&D capitalization 2,462 — Stock compensation 1,293 667 Lease liability 48 25 Reserve on sales return, discount and bad debt 2,988 3,573 Accruals and reserves 574 505 Tax credits 1,152 193 Business interest expense deduction limit 322 41 State taxes 13 12 Total deferred tax assets 20,356 12,889 Less: valuation allowance (19,307) (10,870) Deferred tax assets, net $ 1,049 $ 2,019 Deferred tax liability: Section 481(a) adjustment on reserve on sales return, discount and bad debt (1,001) (1,996) Right-of-use asset (48) (23) Deferred tax assets, net $ — $ — |
Schedule of reconciliation of the statutory tax rates and the effective tax rates | Years Ended December 31, 2022 2021 Percentage of pre-tax income: U.S. federal statutory income tax rate 21 % 21 % State taxes, net of federal benefit 4 % 4 % Non-deductible items (0) % (5) % Provision to return 0 % 0 % Change in state rate 0 % 0 % Change in valuation allowance (28) % (26) % Other 3 % 2 % Effective income tax rate (0) % (4) % |
NET (LOSS) INCOME PER COMMON _2
NET (LOSS) INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NET (LOSS) INCOME PER COMMON SHARE | |
Schedule of basic and diluted weighted-average number of common shares outstanding | Year ended December 31, 2022 2021 Basic 17,531,274 10,189,844 Common stock equivalents: Unvested restricted stock units 2,261,048 715,030 Stock Options 1,566,131 1,879,378 Diluted 21,358,453 12,784,252 |
ORGANIZATION AND PLAN OF BUSI_2
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS (Details) | 12 Months Ended | |||||
Jan. 12, 2022 USD ($) item | Nov. 16, 2021 USD ($) shares | Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) shares | Aug. 31, 2022 USD ($) | Jan. 31, 2022 USD ($) | |
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Number of branded drugs in product portfolio | item | 8 | 8 | ||||
Number of authorized generic prescription drugs | item | 3 | |||||
Cash and cash equivalents | $ 32,003,000 | $ 49,081,000 | ||||
Common stock par value | $ / shares | $ 0.0001 | |||||
Stock issued value | $ 30,615,000 | |||||
Borrowings | $ 27,948,000 | |||||
Prime rate | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Interest rate | 1.73% | |||||
Revolving line of credit | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Remaining borrowing capacity. | $ 2,900,000 | |||||
Interest rate | 0.70% | |||||
Revolving line of credit | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Maximum borrowing capacity | $ 10,000,000 | |||||
Remaining borrowing capacity. | $ 7,100,000 | |||||
Term loan | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Borrowings | $ 5 | $ 15 | ||||
Term loan | Revolving line of credit | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Maximum borrowing capacity | $ 20 | |||||
Common Stock | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Common stock par value | $ / shares | $ 0.0001 | |||||
Number of shared issued for conversion of preferred stock | shares | 2,231,346 | |||||
Number of shares issued for conversion of related part debt | shares | 1,610,467 | |||||
Stock issued value | $ 150,000,000 | $ 1,000 | ||||
Stock issued (in shares) | shares | 4,900,000 | 3,520,000 | ||||
IPO | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Proceeds of initial public offering | $ 30,600,000 | |||||
Stock issued (in shares) | shares | 3,520,000 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Information (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segment | 1 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts | $ 0.4 | $ 0.1 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Finished goods inventory, fair value step up | $ 400,000 | $ 0 |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2022 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Options granted | 10 years |
Minimum | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Stock-based compensation option vesting period | 3 years |
Maximum | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Stock-based compensation option vesting period | 4 years |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Effective income tax rate | 0% | (4.00%) |
Provision (benefit) for income taxes | $ 63 | $ 1,634 |
Percentage of tax positions interest rate | 50% | |
Unrecognized tax benefits | $ 0 | 0 |
Interest expense or penalties related to unrecognized tax benefits | $ 0 | $ 0 |
Fortress | ||
Income Taxes | ||
Ownership interest (as a percent) | 57.34% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
INVENTORY | ||
Raw materials | $ 6,454 | $ 5,572 |
Work-in-process | 395 | |
Finished goods | 7,739 | 4,290 |
Inventory at cost | 14,588 | 9,862 |
Inventory reserves | (429) | |
Total Inventories | $ 14,159 | $ 9,862 |
ASSET ACQUISITION (Details)
ASSET ACQUISITION (Details) $ in Millions | 12 Months Ended | |
Jan. 12, 2022 USD ($) item | Dec. 31, 2022 item | |
Asset Acquisition | ||
Number of branded drugs in product portfolio | item | 8 | 8 |
Vyne product acquisition | ||
Asset Acquisition | ||
Upfront payment | $ 20 | |
Additional payment | 5 | |
One-time payment | $ 450 | |
Percentage of upfront payment received | 10% | |
Vyne product acquisition | If annual sales reaches to $100 million | ||
Asset Acquisition | ||
Annual sales | $ 100 | |
One-time payment | 10 | |
Vyne product acquisition | If annual sales reaches to $200 million | ||
Asset Acquisition | ||
Annual sales | 200 | |
One-time payment | 20 | |
Vyne product acquisition | If annual sales reaches to $300 million | ||
Asset Acquisition | ||
Annual sales | 300 | |
One-time payment | 30 | |
Vyne product acquisition | If annual sales reaches to $400 million | ||
Asset Acquisition | ||
Annual sales | 400 | |
One-time payment | 40 | |
Vyne product acquisition | If annual sales reaches to $500 million | ||
Asset Acquisition | ||
Annual sales | 500 | |
One-time payment | $ 50 | |
Minocycline products | ||
Asset Acquisition | ||
Business Acquisition interest | 4% | |
Molecule Stabilizing Technology | ||
Asset Acquisition | ||
Business Acquisition interest | 1.50% |
ASSET ACQUISITION - Aggregate c
ASSET ACQUISITION - Aggregate consideration transferred for the assets acquired (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Asset Acquisition | |
Consideration transferred to Vyne at closing | $ 20,000 |
Fair Value of deferred cash payment due January 2023 | 4,991 |
Deferred cash payment (net of discount of $9) | 4,991 |
Vyne product acquisition | |
Asset Acquisition | |
Consideration transferred to Vyne at closing | 20,000 |
Fair Value of deferred cash payment due January 2023 | 4,740 |
Transaction costs | 223 |
Total consideration transferred at closing | 24,963 |
Deferred cash payment (net of discount of $9) | $ 4,740 |
ASSET ACQUISITION - Fair value
ASSET ACQUISITION - Fair value of assets acquired in the VYNE Product Acquisition (Details) | Dec. 31, 2022 USD ($) |
Amzeeq intangible | |
Asset Acquisition | |
Identifiable Intangibles | $ 15,200,000 |
Zilxi intangible | |
Asset Acquisition | |
Identifiable Intangibles | 3,800,000 |
Vyne product acquisition | |
Asset Acquisition | |
Inventory | 6,041,000 |
Fair value of net identifiable assets acquired | 24,963,000 |
Vyne product acquisition | Amzeeq intangible | |
Asset Acquisition | |
Identifiable Intangibles | 15,162,000 |
Vyne product acquisition | Zilxi intangible | |
Asset Acquisition | |
Identifiable Intangibles | $ 3,760,000 |
INTANGIBLES (Details)
INTANGIBLES (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2022 | |
Amzeeq intangible | ||||
Intangibles | ||||
Identifiable Intangibles | $ 15,200,000 | |||
Zilxi intangible | ||||
Intangibles | ||||
Identifiable Intangibles | 3,800,000 | |||
Vyne product acquisition | Amzeeq intangible | ||||
Intangibles | ||||
Identifiable Intangibles | 15,162,000 | |||
Vyne product acquisition | Zilxi intangible | ||||
Intangibles | ||||
Identifiable Intangibles | $ 3,760,000 | |||
Anti-itch product | ||||
Intangibles | ||||
Useful life | 3 years | |||
Accutane | ||||
Intangibles | ||||
Useful life | 5 years | |||
Asset purchase agreement | Qbrexza | ||||
Intangibles | ||||
Upfront fees | $ 12,500,000 | |||
Milestone payments payable | $ 144,000,000 | $ 144,000,000 | ||
Percentage of diminution in royalty | 50% | |||
Age of patients | 9 years | |||
Stay period | 30 months | |||
Purchase price | $ 12,500,000 | |||
Useful life | 7 years | |||
Asset purchase agreement | Qbrexza | Royalty payment percentage for first two years | ||||
Intangibles | ||||
Period of royalty payments | 2 years | |||
Asset purchase agreement | Qbrexza | Royalty payment percentage for eight years thereafter | ||||
Intangibles | ||||
Term of royalty | 8 years | |||
Asset purchase agreement | Qbrexza | Minimum | Royalty payment percentage for first two years | ||||
Intangibles | ||||
Percent of royalty payments | 30% | |||
Asset purchase agreement | Qbrexza | Minimum | Royalty payment percentage for eight years thereafter | ||||
Intangibles | ||||
Percent of royalty payments | 12% | |||
Asset purchase agreement | Qbrexza | Maximum | Royalty payment percentage for first two years | ||||
Intangibles | ||||
Percent of royalty payments | 40% | |||
Asset purchase agreement | Qbrexza | Maximum | Royalty payment percentage for eight years thereafter | ||||
Intangibles | ||||
Percent of royalty payments | 19% |
INTANGIBLES - Schedule of intan
INTANGIBLES - Schedule of intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
INTANGIBLES | |||
Gross Carrying Value | $ 37,925 | $ 19,003 | |
Accumulated Amortization | (10,728) | (6,451) | |
Intangible Assets, Net | 27,197 | 12,552 | $ 15,029 |
Amortization expense | 4,277 | 2,474 | |
Amortizable intangible assets | |||
INTANGIBLES | |||
Gross Carrying Value | 33,983 | 15,061 | |
Accumulated Amortization | (10,728) | (6,451) | |
Intangible Assets, Net | $ 23,255 | $ 8,610 | |
Ceracade | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 300 | ||
Accumulated Amortization | $ (300) | ||
Ceracade | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 300 | ||
Accumulated Amortization | $ (300) | ||
Luxamend | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 50 | ||
Accumulated Amortization | $ (50) | ||
Luxamend | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 50 | ||
Accumulated Amortization | $ (50) | ||
Targadox | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 1,250 | ||
Accumulated Amortization | $ (1,250) | ||
Targadox | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 1,250 | ||
Accumulated Amortization | $ (1,250) | ||
Ximino | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 7 years | ||
Gross Carrying Value | $ 7,134 | ||
Accumulated Amortization | (2,463) | ||
Intangible Assets, Net | $ 4,671 | ||
Ximino | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 7 years | ||
Gross Carrying Value | $ 7,134 | ||
Accumulated Amortization | (3,482) | ||
Intangible Assets, Net | $ 3,652 | ||
Exelderm | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 1,600 | ||
Accumulated Amortization | $ (1,600) | ||
Exelderm | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 1,600 | ||
Accumulated Amortization | $ (1,600) | ||
Accutane | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 5 years | ||
Gross Carrying Value | $ 4,727 | ||
Accumulated Amortization | (788) | ||
Intangible Assets, Net | $ 3,939 | ||
Accutane | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 5 years | ||
Gross Carrying Value | $ 4,727 | ||
Accumulated Amortization | (1,733) | ||
Intangible Assets, Net | $ 2,994 | ||
Amzeeq | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 9 years | ||
Gross Carrying Value | $ 15,162 | ||
Accumulated Amortization | (1,597) | ||
Intangible Assets, Net | $ 13,565 | ||
Zilxi | Amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 6 years | ||
Gross Carrying Value | $ 3,760 | ||
Accumulated Amortization | (716) | ||
Intangible Assets, Net | 3,044 | ||
Anti-itch product | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 3,942 | ||
Intangible Assets, Net | $ 3,942 | ||
Amortization expense | $ 0 | ||
Anti-itch product | Non-amortizable intangible assets | |||
INTANGIBLES | |||
Estimated Useful Lives (Years) | 3 years | ||
Gross Carrying Value | $ 3,942 |
INTANGIBLES - Schedule of int_2
INTANGIBLES - Schedule of intangible assets roll forward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLES | ||
License acquisition adjustment | $ 18,922 | $ (3) |
Amortization expense | 4,277 | 2,474 |
Indefinite-Lived Intangible Assets | ||
Balance at beginning | 12,552 | 15,029 |
License acquisition adjustment | 18,922 | (3) |
Amortization expense | (4,277) | (2,474) |
Balance at end | 27,197 | $ 12,552 |
December 31, 2023 | $ 4,277 |
INTANGIBLES - Future amortizati
INTANGIBLES - Future amortization expense (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Future amortization expense | |||
December 31, 2023 | $ 4,277 | ||
December 31, 2024 | 4,277 | ||
December 31, 2025 | 4,277 | ||
December 31, 2026 | 3,064 | ||
Thereafter | 7,360 | ||
Subtotal | 23,255 | ||
Asset not yet placed in service | 3,942 | ||
Intangible Assets, Net | $ 27,197 | $ 12,552 | $ 15,029 |
Ximino | |||
Future amortization expense | |||
Intangible Assets, Net | 4,671 | ||
Accutane | |||
Future amortization expense | |||
Intangible Assets, Net | 3,939 | ||
Anti-itch product | |||
Future amortization expense | |||
Intangible Assets, Net | $ 3,942 |
LICENSES ACQUIRED (Details)
LICENSES ACQUIRED (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Nov. 16, 2021 $ / shares shares | Jun. 29, 2021 USD ($) | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | |
LICENSES/PRODUCTS ACQUIRED | ||||
Payments to Acquire Productive Assets | $ 20,000 | |||
Research and development - licenses acquired | $ 13,819 | |||
License development cost | 13,000 | |||
Contingent Payment Derivative | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Unregistered shares issued | shares | 545,131 | |||
Volume weighted average price per share related to shares issued | $ / shares | $ 9.1721 | |||
Number of days for calculating weighted average price | 15 days | |||
D F D Agreement | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Amount payable | $ 10,000 | $ 10,000 | ||
Research and development - licenses acquired | $ 3,800 | |||
D F D Agreement | Contingent Payment Derivative | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Value of shares to be issued | 5,000 | |||
Unregistered shares issued | shares | 545,131 | |||
Cash payment | $ 5,000 | |||
Volume weighted average price per share related to shares issued | $ / shares | $ 9.1721 | |||
Number of days for calculating weighted average price | 15 days | |||
Number of payments | item | 1 | |||
D F D Agreement | Minimum | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Percentage of royalties payable on net sales | 10% | |||
D F D Agreement | Minimum | Contingent Payment Derivative | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Market Capitalization | $ 150,000 | |||
D F D Agreement | Maximum | ||||
LICENSES/PRODUCTS ACQUIRED | ||||
Threshold additional contingent regulatory and commercial milestone payments payable | $ 158,000 | |||
Percentage of royalties payable on net sales | 15% |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial assets and liabilities measured at fair value on a recurring basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Cash and cash equivalents | $ 32,003 | $ 49,081 |
Total | 32,003 | 49,081 |
Level 1 | ||
Assets: | ||
Cash and cash equivalents | 32,003 | 49,081 |
Total | $ 32,003 | $ 49,081 |
FAIR VALUE MEASUREMENTS-Placeme
FAIR VALUE MEASUREMENTS-Placement Agent Warrants (Details) - Placement Agent Warrants $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) Y shares | |
FAIR VALUE MEASUREMENTS | |
Percentage of shares to purchase from financing | 5% |
Warrants term | 5 years |
Percentage of discount on exercise price of warrants | 15% |
Conversion of contingent payment warrants to common stock (in shares) | shares | 111,567 |
Minimum | |
FAIR VALUE MEASUREMENTS | |
Qualified external financing | $ | $ 25 |
Risk-free interest rate | |
FAIR VALUE MEASUREMENTS | |
Measurement input | 0.98 |
Expected term in years | |
FAIR VALUE MEASUREMENTS | |
Measurement input | Y | 1 |
Expected volatility | |
FAIR VALUE MEASUREMENTS | |
Measurement input | 50 |
FAIR VALUE MEASUREMENTS - Signi
FAIR VALUE MEASUREMENTS - Significant unobservable inputs (Details) - Contingent Payment Warrant | Dec. 31, 2022 M |
Discount rate | |
FAIR VALUE MEASUREMENTS | |
Measurement input | 30 |
Expected term in years | Minimum | |
FAIR VALUE MEASUREMENTS | |
Measurement input | 3 |
Expected term in years | Maximum | |
FAIR VALUE MEASUREMENTS | |
Measurement input | 5 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent Payment Derivative (Details) - Contingent Payment Derivative $ / shares in Units, $ in Millions | 12 Months Ended | |
Nov. 16, 2021 $ / shares shares | Dec. 31, 2022 USD ($) item | |
FAIR VALUE MEASUREMENTS | ||
Number of days for calculating weighted average price | 15 days | |
Unregistered shares issued | shares | 545,131 | |
Volume weighted average price per share related to shares issued | $ / shares | $ 9.1721 | |
D F D Agreement | ||
FAIR VALUE MEASUREMENTS | ||
Number of payments | item | 1 | |
Value of shares to be issued | $ 5 | |
Number of days for calculating weighted average price | 15 days | |
Cash payment | $ 5 | |
Unregistered shares issued | shares | 545,131 | |
Volume weighted average price per share related to shares issued | $ / shares | $ 9.1721 | |
D F D Agreement | Minimum | ||
FAIR VALUE MEASUREMENTS | ||
Market Capitalization | $ 150 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Change In Level 3 Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in fair value of Level 3 financial instruments | ||
Asset transfers, level 1 to 2 | $ 0 | $ 0 |
Liability transfers, level 2 to 1 | 0 | |
Transfers in and out of level 3 | $ 0 | 0 |
Conversion of contingent payment warrants to common shares | ||
Changes in fair value of Level 3 financial instruments | ||
Settlement of warrant liabilities in connection with IPO | (3,680) | |
Conversion of placement agent warrants to common shares | ||
Changes in fair value of Level 3 financial instruments | ||
Settlement of warrant liabilities in connection with IPO | (948) | |
Placement Agent Warrants | ||
Changes in fair value of Level 3 financial instruments | ||
Additions | 362 | |
Change in fair value of warrant liability | 586 | |
Contingent Payment Warrant | ||
Changes in fair value of Level 3 financial instruments | ||
Additions | 3,819 | |
Change in fair value of warrant liability | $ (139) |
RELATED PARTY AGREEMENTS (Detai
RELATED PARTY AGREEMENTS (Details) - Fortress - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 16, 2021 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
RELATED PARTY AGREEMENTS | ||||
Ownership interest (as a percent) | 57.34% | |||
Shared Services Agreement with Fortress | ||||
RELATED PARTY AGREEMENTS | ||||
Service provided by employees of related party | $ 100,000 | $ 600,000 | ||
Company's outstanding balance | $ 500,000 | |||
Fortress note converted into shares | 52,438 | |||
Share price | $ 10 | |||
Shared Services Agreement with Fortress | Accounts Payable and Accrued Liabilities | ||||
RELATED PARTY AGREEMENTS | ||||
Due to related parties | 400,000 | $ 600,000 | ||
Fortress Note | ||||
RELATED PARTY AGREEMENTS | ||||
Note payable, related party | $ 5,200,000 | |||
Fortress note converted into shares | 1,476,044 | |||
Related party transaction, fraudulent payments | $ 9,500,000 | |||
Accounts payable, related party | $ 9,500,000 | |||
Share price | $ 10 | |||
Original amount of debt converted | $ 5,200,000 | |||
Related party increase in promissory note | $ 9,500,000 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued expenses and other short-term liabilities: | ||
Accrued coupons and rebates | $ 7,604 | $ 10,603 |
Accrued compensation | 2,586 | 2,702 |
Accrued royalties payable | 2,627 | 3,833 |
Return reserve | 3,689 | 3,240 |
Accrued Inventory | 112 | 253 |
Accrued research and development | 1,404 | 870 |
Accrued legal, accounting and tax | 334 | 512 |
Accrued iPledge program | 447 | 41 |
Accrued marketing and advertising | 229 | |
Other | 585 | 450 |
Total accrued expenses | $ 19,388 | $ 22,733 |
INSTALLMENT PAYMENTS - LICENS_3
INSTALLMENT PAYMENTS - LICENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, short-term | $ 2,500 | $ 5,000 |
Less: imputed interest | (256) | (490) |
Sub-total installment payments - licenses, short-term | 2,244 | 4,510 |
Installment payments - licenses, long-term | 1,500 | 4,000 |
Less: imputed interest | (88) | (373) |
Sub-total installment payments - licenses, long-term | 1,412 | 3,627 |
Installment payments - licenses | 4,000 | 9,000 |
Less: imputed interest | (344) | (863) |
Sub-total installment payments - licenses | $ 3,656 | $ 8,137 |
OPERATING LEASE OBLIGATIONS (De
OPERATING LEASE OBLIGATIONS (Details) - ft² | Dec. 31, 2022 | Sep. 30, 2022 |
OPERATING LEASE OBLIGATIONS | ||
Area of property under lease | 3,681 | |
Renewal term | 25 months |
OPERATING LEASE OBLIGATIONS - R
OPERATING LEASE OBLIGATIONS - Rent expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease cost | ||
Variable lease cost | $ 4 | $ 4 |
Operating lease cost | 93 | 89 |
Total lease cost | 97 | 93 |
Cash paid for amounts included in the measurement of lease liabilities | 100 | $ 91 |
Right-of-use assets exchanged for new operating lease liabilities | $ 188 | |
Weighted-average remaining lease term - operating leases | 2 years 1 month 6 days | 1 year |
Weighted-average discount rate - operating leases | 6.25% | 4% |
OPERATING LEASE OBLIGATIONS - F
OPERATING LEASE OBLIGATIONS - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Future Lease Liability | ||
2023 | $ 92 | $ 100 |
2024 | 102 | |
2025 | 9 | |
Total lease payments | 203 | |
Less: present value discount | (12) | |
Operating lease liabilities | $ 191 |
DEBT (Details)
DEBT (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
DEBT | ||
Unamortized Discount & Fees | $ 183,000 | |
Net Carry Amount | 27,765,000 | |
Principal Balance | 27,948,000 | |
Deferred cash payment | ||
DEBT | ||
Unamortized Discount & Fees | 9,000 | |
Net Carry Amount | 4,991,000 | |
Principal Balance | 5,000,000 | |
EWB Revolving LOC (Short-term) | ||
DEBT | ||
Net Carry Amount | 2,948,000 | $ 812,000 |
Principal Balance | 2,948,000 | $ 812,000 |
Total Short-Term Debt | ||
DEBT | ||
Unamortized Discount & Fees | 9,000 | |
Net Carry Amount | 7,939,000 | |
Principal Balance | 7,948,000 | |
EWB Term Loan (Long-term) | ||
DEBT | ||
Unamortized Discount & Fees | 174,000 | |
Net Carry Amount | 19,826,000 | |
Principal Balance | $ 20,000,000 |
DEBT - Additional information (
DEBT - Additional information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Aug. 31, 2022 | Jan. 31, 2022 | Jan. 12, 2022 | |
Debt | ||||
Long-term debt | $ 27,765,000 | |||
Prime rate | ||||
Debt | ||||
Spread on variable rate | 0.70% | |||
Term loan | ||||
Debt | ||||
Amount borrowed | $ 5,000,000 | $ 15,000,000 | ||
Interest on line of credit | 9.64% | |||
Term loan | Third Amendment | ||||
Debt | ||||
Spread on variable rate | 1.73% | |||
Term loan | Third Amendment | East West Bank | ||||
Debt | ||||
Maximum borrowing capacity | $ 20,000,000 | |||
Revolving line of credit | ||||
Debt | ||||
Maximum borrowing capacity | $ 7,100,000 | |||
Revolving line of credit | Third Amendment | ||||
Debt | ||||
Amortization period for amended revolving facility | 4 years | |||
Revolving line of credit | Third Amendment | East West Bank | ||||
Debt | ||||
Maximum borrowing capacity | $ 2,900,000 | $ 10,000,000 |
INTEREST EXPENSE AND FINANCIN_3
INTEREST EXPENSE AND FINANCING FEES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Interest Expense and Financing Fee [Line Items] | ||
Interest expense | $ 2,019 | $ 7,034 |
Interest | ||
Interest Expense and Financing Fee [Line Items] | ||
Interest payments on EWB term loan and LOC | 1,153 | |
Imputed interest on acquired intangible assets | 519 | 781 |
Amortization/Accretion | 347 | 2,572 |
Interest and Fees on convertible preferred shares | 2,845 | |
EWB Fees | 16 | |
Dividends payable on convertible preferred shares | 820 | |
EWB LOC Fees | 16 | |
Total Interest Expense and Financing Fee | $ 2,019 | $ 7,034 |
STOCKHOLDERS' EQUITY AND CLAS_2
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Common Stock (Details) | 12 Months Ended | |
Dec. 31, 2022 Vote $ / shares shares | Dec. 31, 2021 $ / shares shares | |
STOCKHOLDERS' EQUITY | ||
Common stock authorized | 50,000,000 | 50,000,000 |
Par value | $ / shares | $ 0.0001 | |
Number of votes per share | Vote | 1 | |
Voting rights ratio | 1.1 | |
Common stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock authorized | 50,000,000 | 50,000,000 |
Common stock issued | 11,765,700 | 11,316,344 |
Par value | $ / shares | $ 0.0001 | $ 0.0001 |
Common Stock Class A | ||
STOCKHOLDERS' EQUITY | ||
Common stock authorized | 6,000,000 | |
Common stock issued | 6,000,000 | 6,000,000 |
Par value | $ / shares | $ 0.0001 | $ 0.0001 |
STOCKHOLDERS' EQUITY AND CLAS_3
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Cumulative Convertible Class A Preferred Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Nov. 16, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 18, 2021 | |
STOCKHOLDERS' EQUITY | |||||
Percent of discount on share price | 7.50% | ||||
Number of trading days prior to exchange | 10 days | ||||
Other expenses | $ 371 | $ 1,550 | |||
IPO | |||||
STOCKHOLDERS' EQUITY | |||||
Issue price | $ 10 | ||||
Stock issued (in shares) | 3,520,000 | ||||
Class A Preferred Stock | |||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock dividend rate | 8% | ||||
Convertible preferred stock, value authorized | $ 19,000 | ||||
Preferred stock conversion financing amount trigger | $ 25,000 | ||||
Preferred stock conversion extension term | 6 months | ||||
Percent of discount on share price | 15% | ||||
Issue price | $ 25 | ||||
Gross proceeds | $ 19,000 | ||||
Stock issued (in shares) | 758,680 | ||||
Placement agent fees | $ 1,900 | ||||
Other expenses | 100 | ||||
Net proceeds | $ 17,000 | ||||
Common stock issued in connection with conversion of preferred stock | 2,231,346 |
SHARE BASED COMPENSATION - 2015
SHARE BASED COMPENSATION - 2015 Stock Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 21, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2015 | |
SHARE BASED COMPENSATION | ||||
Share based compensation expense | $ 4,425 | $ 2,466 | ||
Stock Options | ||||
SHARE BASED COMPENSATION | ||||
Number of shares authorized for grant | 7,642,857 | |||
Share based compensation expense | $ 800 | 51,669 | ||
Granted period | 10 years | |||
Vesting period | 4 years | |||
Stock Plan 2015 [Member] | ||||
SHARE BASED COMPENSATION | ||||
Number of additional shares authorized for grant | 3,000,000 | |||
Number of shares available for issuance | 1,146,620 | |||
Share based compensation expense | $ 4,400 | $ 2,500 | ||
Stock Plan 2015 [Member] | Stock Options | ||||
SHARE BASED COMPENSATION | ||||
Number of shares authorized for grant | 4,642,857 |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Components of share-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | $ 4,425 | $ 2,466 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | 73 | |
Selling, general and administrative expenses | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | $ 4,352 | $ 2,466 |
SHARE-BASED COMPENSATION - Weig
SHARE-BASED COMPENSATION - Weighted-average key assumptions (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares | |
SHARE-BASED COMPENSATION | |
Expected volatility | 86.18% |
Weighted average expected volatility | 85.45% |
Expected dividend yield | 0% |
Weighted average grant date fair value | $ 2.67 |
Minimum | |
SHARE-BASED COMPENSATION | |
Risk-free interest rate | 2.89% |
Expected volatility | 80.25% |
Expected term (years) | 5 years 7 months 6 days |
Maximum | |
SHARE-BASED COMPENSATION | |
Risk-free interest rate | 4.20% |
Expected term (years) | 6 years 4 months 6 days |
SHARE BASED COMPENSATION - Stoc
SHARE BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Average intrinsic value | ||
Outstanding options at - beginning | $ 9,661,393 | |
Granted | 0 | |
Exercised | 141,019 | |
Forfeited | 9,805 | |
Expired | $ (17,058) | |
Outstanding options - ending | $ 9,661,393 | |
Weighted average remaining contractual life (year) | ||
Outstanding options, Weighted average remaining contractual life (years) | 4 years 8 months 4 days | |
Granted | 9 years 6 months 10 days | |
Share-based Payment Arrangement, Option [Member] | ||
Number of shares | ||
Outstanding options - beginning | 2,104,334 | |
Granted | 1,149,000 | |
Exercised | (155,649) | (10,000) |
Forfeited | (105,500) | |
Expired | (32,185) | |
Outstanding options - ending | 2,960,000 | 2,104,334 |
Options vested and exercisable at December 31, 2022 | 1,897,500 | |
Weighted average exercise price | ||
Outstanding options - beginning | $ 0.79 | |
Granted | 3.59 | |
Exercised | 1.01 | |
Forfeited | 3.20 | |
Expired | 1.39 | |
Outstanding options - ending | 1.76 | $ 0.79 |
Options vested and exercisable at December 31, 2022 | $ 0.76 | |
Average intrinsic value | ||
Outstanding options - ending | $ 2,217,815 | |
Options vested and exercisable at December 31, 2022 | $ 2,209,600 | |
Weighted average remaining contractual life (year) | ||
Outstanding options, Weighted average remaining contractual life (years) | 5 years 7 months 24 days | |
Options vested and exercisable at December 31, 2022 | 3 years 6 months |
SHARE BASED COMPENSATION - St_2
SHARE BASED COMPENSATION - Stock Options - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE BASED COMPENSATION | ||
Proceeds from the exercise of stock options | $ 142 | $ 7 |
Share based compensation expense | $ 4,425 | $ 2,466 |
Unrecognized stock-based compensation expense recognition period | 1 year 10 months 24 days | |
Share-based Payment Arrangement, Option [Member] | ||
SHARE BASED COMPENSATION | ||
Exercise of stock options for cash (In shares) | 155,649 | 10,000 |
Proceeds from the exercise of stock options | $ 142,330 | $ 6,800 |
Share based compensation expense | 800 | 51,669 |
Unrecognized stock-based compensation expense | $ 2,000 | $ 1,400 |
Unrecognized stock-based compensation expense recognition period | 2 years 4 months 24 days |
SHARE BASED COMPENSATION - Rest
SHARE BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Nov. 12, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Weighted average grant price | |||
Share based compensation expense | $ 4,425 | $ 2,466 | |
Unrecognized compensation cost expects to recognize over weighted-average period | 1 year 10 months 24 days | ||
Restricted stock units | |||
Number of units | |||
Unvested balance - beginning | 715,030 | ||
Granted | 1,907,225 | ||
Vested | (293,707) | (136,500) | |
Forfeited | (67,500) | ||
Unvested balance - ending | 2,261,048 | 715,030 | |
Weighted average grant price | |||
Unvested balance - beginning | $ 4.12 | ||
Granted | 4.10 | ||
Vested | 4.33 | ||
Forfeited | 4.80 | ||
Unvested balance - ending | $ 4.05 | $ 4.12 | |
Number of units issued | 293,707 | 136,500 | |
Aggregate fair market value | $ 900 | ||
Share based compensation expense | $ 2,400 | $ 3,600 | $ 2,500 |
Number of unvested shares outstanding | 2,261,048 | 715,030 | |
Unrecognized stock-based compensation expense | $ 4,800 |
REVENUES FROM CONTRACTS AND S_3
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS - Disaggregation of net revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | $ 70,995 | $ 63,134 |
Qbrexza | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 26,715 | 17,056 |
Accutane | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 18,373 | 10,053 |
Targadox | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 7,972 | 22,378 |
Amzeeq | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 7,242 | |
Ximino | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 4,957 | 8,247 |
Zilxi | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 2,273 | |
Exelderm | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | $ 3,463 | 5,363 |
Other branded products | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | $ 37 |
REVENUES FROM CONTRACTS AND S_4
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS - Other revenue (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Other revenue | $ 2,674 |
Total other revenue | $ 2,674 |
Qbrexza | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Royalty percentage | 2.50% |
Licensing agreement with Maruho | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Other revenue | $ 2,500 |
Total other revenue | 2,500 |
Sales | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Other revenue | 200 |
Total other revenue | $ 200 |
Royalty percentage | 2.50% |
REVENUES FROM CONTRACTS AND S_5
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS - Significant Customers (Details) - customer | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Product Revenue | Customer Concentration Risk | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Number of Customers | 0 | 0 |
Accounts Receivable | Credit Concentration Risk | Two Customers | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Number of Customers | 2 | 2 |
Accounts Receivable | Credit Concentration Risk | Customer One | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Concentration risk, percentage | 16.70% | 16.30% |
Accounts Receivable | Credit Concentration Risk | Customer Two | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Concentration risk, percentage | 10.40% | 12.90% |
INCOME TAXES - Components of in
INCOME TAXES - Components of income tax provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
State | $ 63 | $ 67 |
Total current | 63 | 67 |
Federal | (6,701) | (7,829) |
State | (1,737) | (1,474) |
Total deferred | (8,438) | (9,303) |
Valuation allowance | 8,438 | 10,870 |
Total income tax expense | $ 63 | $ 1,634 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 6,553 | $ 3,113 |
Amortization of license fees | 4,951 | 4,760 |
R&D capitalization | 2,462 | |
Stock compensation | 1,293 | 667 |
Lease liability | 48 | 25 |
Reserve on sales return, discount and bad debt | 2,988 | 3,573 |
Accruals and reserves | 574 | 505 |
Tax credits | 1,152 | 193 |
Business interest expense deduction limit | 322 | 41 |
State taxes | 13 | 12 |
Total deferred tax assets | 20,356 | 12,889 |
Less: valuation allowance | (19,307) | (10,870) |
Deferred tax assets, net | 1,049 | 2,019 |
Deferred tax liability: | ||
Section 481(a) adjustment on reserve on sales return, discount and bad debt | (1,001) | (1,996) |
Right-of-use asset | $ (48) | $ (23) |
INCOME TAXES - Effective tax ra
INCOME TAXES - Effective tax rates (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Percentage of pre-tax income: | ||
U.S. federal statutory income tax rate | 21% | 21% |
State taxes, net of federal benefit | 4% | 4% |
Non-deductible items | 0% | (5.00%) |
Provision to return | 0% | 0% |
Change in state rate | 0% | 0% |
Change in valuation allowance | (28.00%) | (26.00%) |
Other | 3% | 2% |
Effective income tax rate | 0% | (4.00%) |
INCOME TAXES (Details)
INCOME TAXES (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Federal | |
INCOME TAXES | |
Total federal net operating loss | $ 27 |
Net operating loss carryforwards | 7.6 |
Federal | Research Tax Credit Carryforward | |
INCOME TAXES | |
Net operating loss carryforwards | 19.4 |
State | |
INCOME TAXES | |
Net operating loss carryforwards | 4.7 |
Total state net operating loss | 17 |
State | Research Tax Credit Carryforward | |
INCOME TAXES | |
Net operating loss carryforwards | 12.3 |
Federal income tax credits | |
INCOME TAXES | |
Net operating loss carryforwards | $ 1.2 |
NET (LOSS) INCOME PER COMMON _3
NET (LOSS) INCOME PER COMMON SHARE - Schedule of basic and diluted weighted-average number of common shares outstanding (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
NET INCOME PER COMMON SHARE | ||
Basic | 17,531,274 | 10,189,844 |
Common stock equivalents: | ||
Diluted | 21,358,453 | 12,784,252 |
Unvested restricted stock units | ||
Common stock equivalents: | ||
Diluted | 2,261,048 | 715,030 |
Stock Options | ||
Common stock equivalents: | ||
Diluted | 1,566,131 | 1,879,378 |