Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 27, 2024 | Jun. 30, 2023 | |
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
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, Postal Zip Code | 85258 | ||
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 | ||
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 | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 12,252,052 | ||
Entity Central Index Key | 0001867066 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
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 | 13,932,310 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 27,439 | $ 32,003 |
Accounts receivable, net of reserves | 15,222 | 28,208 |
Inventory | 10,206 | 14,159 |
Prepaid expenses and other current assets | 3,588 | 3,309 |
Total current assets | 56,455 | 77,679 |
Intangible assets, net | 20,287 | 27,197 |
Operating lease right-of-use asset, net | 101 | 189 |
Other assets | 6 | 95 |
Total assets | 76,849 | 105,160 |
Current liabilities | ||
Accounts payable | 18,149 | 36,570 |
Due to related party | $ 195 | $ 413 |
Other Liability, Current, Related Party, Type [Extensible Enumeration] | us-gaap:RelatedPartyMember | us-gaap:RelatedPartyMember |
Accrued expenses | $ 20,350 | $ 19,388 |
Accrued interest | 22 | 160 |
Income taxes payable | 53 | 35 |
Line of credit | 2,948 | |
Deferred cash payment, net of discount | 4,991 | |
Installment payments - licenses, short-term | 3,000 | 2,244 |
Operating lease liability, short-term | 99 | 83 |
Total current liabilities | 41,868 | 66,832 |
Term loan, net of discount | 14,622 | 19,826 |
Installment payments - licenses, long-term | 1,412 | |
Operating lease liability, long-term | 9 | 108 |
Total liabilities | 56,499 | 88,178 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity | ||
Additional paid-in capital | 92,703 | 85,482 |
Accumulated deficit | (72,355) | (68,502) |
Total stockholders' equity | 20,350 | 16,982 |
Total liabilities and stockholders' equity | 76,849 | 105,160 |
Common stock | ||
Stockholders' equity | ||
Common stock | 1 | 1 |
Common Stock Class A | ||
Stockholders' equity | ||
Common stock | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Par value | $ 0.0001 | |
Common stock authorized | 50,000,000 | |
Common stock | ||
Par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 50,000,000 | 50,000,000 |
Common stock issued | 13,323,952 | 11,765,700 |
Common stock outstanding | 13,323,952 | 11,765,700 |
Common Class A | ||
Par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 50,000,000 | 50,000,000 |
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, 2023 | Dec. 31, 2022 | |
Revenue: | ||
Product revenue, net | $ 59,662 | $ 70,995 |
Other revenue | 19,519 | 2,674 |
Total revenue | 79,181 | 73,669 |
Operating expenses | ||
Cost of goods sold - product revenue | 26,660 | 30,775 |
Research and development | 7,541 | 10,943 |
Selling, general and administrative | 43,910 | 59,468 |
Loss on impairment of intangible assets | 3,143 | |
Total operating expenses | 81,254 | 101,186 |
Loss from operations | (2,073) | (27,517) |
Other expense (income) | ||
Interest income | (322) | (60) |
Interest expense | 1,698 | 2,019 |
Foreign exchange transaction losses | 183 | 89 |
Total other expense (income) | 1,559 | 2,048 |
Loss before income taxes | (3,632) | (29,565) |
Income tax expense | 221 | 63 |
Net Loss | $ (3,853) | $ (29,628) |
Net loss per common share: | ||
Basic | $ (0.21) | $ (1.69) |
Diluted | $ (0.21) | $ (1.69) |
Weighted average number of common shares: | ||
Basic | 18,232,422 | 17,531,274 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock Common Class A | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at beginning at Dec. 31, 2021 | $ 1,000 | $ 1,000 | $ 80,915,000 | $ (38,874,000) | $ 42,043,000 |
Balance at beginning (in shares) at Dec. 31, 2021 | 6,000,000 | 11,316,344 | |||
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |||||
Share-based compensation | 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 | $ 0 | ||||
Issuance of common stock for vested restricted stock units (in shares) | 293,707 | ||||
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 CHANGES IN STOCKHOLDERS' EQUITY | |||||
Share-based compensation | $ 0 | 2,606,000 | 2,606,000 | ||
Exercise of stock options for cash | 121,000 | 121,000 | |||
Exercise of stock options for cash (In shares) | 0 | 82,300 | |||
Issuance of common stock, ATM offering, net of issuance costs of $140 | $ 0 | 4,494,000 | 4,494,000 | ||
Issuance of common stock, ATM offering, net of issuance costs of $140 (in shares) | 748,703 | ||||
Issuance of common stock for vested restricted stock units (in shares) | 0 | 727,249 | |||
Net loss | $ 0 | (3,853,000) | (3,853,000) | ||
Balance at ending at Dec. 31, 2023 | $ 1,000 | $ 1,000 | $ 92,703,000 | $ (72,355,000) | $ 20,350,000 |
Balance at ending (in shares) at Dec. 31, 2023 | 6,000,000 | 13,323,952 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | |
Stock issuance costs | $ 140 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (3,853) | $ (29,628) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 435 | 284 |
Non-cash interest expense | 353 | 770 |
Amortization of debt discount | 356 | 63 |
Amortization of acquired intangible assets | 3,767 | 4,277 |
Amortization of operating lease right-of-use assets | 88 | 88 |
Share-based compensation | 2,606 | 4,425 |
Loss on impairment of intangible assets | 3,143 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 12,551 | (5,380) |
Inventory | 3,953 | 1,744 |
Prepaid expenses and other current assets | (279) | (871) |
Other assets | 55 | |
Accounts payable | (18,421) | 14,343 |
Related party expenses | (218) | (228) |
Accrued expenses | 962 | (3,568) |
Accrued interest | (138) | 160 |
Income tax payable | 18 | 27 |
Lease liabilities | (83) | (95) |
Net cash provided by (used in) operating activities | 5,240 | (13,534) |
Cash flows from investing activities | ||
Acquired intangible assets | (5,000) | (20,000) |
Net cash (used in) investing activities | (5,000) | (20,000) |
Cash flows from financing activities | ||
Proceeds from the exercise of stock options | 121 | 142 |
Payment of license installment note payable | (1,000) | (5,000) |
Payment of debt issuance costs associated with convertible preferred shares | (214) | |
Proceeds from line of credit | 28,000 | 5,000 |
Repayment of line of credit | (30,948) | (2,864) |
Proceeds from term-loan | 15,000 | 19,763 |
Net cash (used in) provided by financing activities | (4,804) | 16,456 |
Net change in cash | (4,564) | (17,078) |
Cash at the beginning of the period | 32,003 | 49,081 |
Cash at the end of the period | 27,439 | 32,003 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1,127 | 993 |
Cash paid for income taxes | 181 | 168 |
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 | |
Atm offering | ||
Cash flows from financing activities | ||
Proceeds from issuance of common stock, ATM offering, net of issuance costs | 4,494 | |
IPO | ||
Cash flows from financing activities | ||
Offering costs for the issuance of common stock | $ (371) | |
East West Bank | Term loan | ||
Cash flows from financing activities | ||
Repayment of EWB term-loan | (20,000) | |
Payment of issuance costs associated with loan | (91) | |
SWK Funding LLC | Term loan | ||
Cash flows from financing activities | ||
Payment of debt issuance costs associated with convertible preferred shares | (200) | |
Payment of issuance costs associated with loan | $ (380) |
ORGANIZATION AND PLAN OF BUSINE
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2023 | |
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 seven branded and two 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. As of December 31, 2023 and 2022, the Company is a majority-owned subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”). Liquidity and Capital Resources At December 31, 2023, the Company had $27.4 million in cash and cash equivalents as compared to $32.0 million at December 31, 2022. On December 27, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date, the Company drew $15.0 million. The remaining $5.0 million may be drawn upon the Company’s request within 12 months after the closing date. Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027, and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Interest payments begin in February 2024 and are paid quarterly. Beginning in February 2026, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans. On August 31, 2023, the Company entered into a license agreement (the “New License Agreement”) with Maruho Co., Ltd., a Japanese company specializing in dermatology (“Maruho”), whereby the Company granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”). Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza ® in the Territory, Maruho paid $19.0 million to the Company as a non-refundable upfront payment. 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”). In connection with the 2022 Shelf, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) relating to shares of the Company’s common stock. The Company may offer and sell up to 4,900,000 shares of its common stock, from time to time. During 2023, the Company issued 748,703 shares of common stock under the 2022 Shelf, generating net proceeds of $4.5 million. At December 31, 2023, 4,151,297 shares remain available for issuance under the 2022 Shelf. The Company regularly evaluates market conditions, its liquidity profile, and financing alternatives, including out-licensing arrangements for its products to enhance its capital structure. The Company may seek to raise capital through debt or equity financings to expand its product portfolio and for other strategic initiatives, which may include sales of securities under either the 2022 Shelf or a new registration statement or drawing on the SWK Credit Facility. The Company cannot make any assurances that such additional financing will be available and, if available, the terms may negatively impact the Company’s business and operations. The Company’s current assumptions, projected commercial sales of our products, clinical development plans and regulatory submission timelines are uncertain and may not emerge as expected. Additionally, as a result of recurring losses, substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
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 audited 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, specialty pharmacy discounts, managed care rebates, product returns, 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, 2023 and 2022 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 are 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 $0.5 million and $0.4 million at December 31, 2023 and 2022, 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 $0.3 million and $0.4 million at December 31, 2023 and 2022, respectively. 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. 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. 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 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3 Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. 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. During the year ended December 31, 2023, the Company recorded an impairment loss associated with its intangible asset balance. See Note 5 for further details. The Company did not record any impairment losses on long-lived assets for the year ended December 31, 2022. 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 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, specialty pharmacy discounts, managed care rebates, product returns, 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 series of judgements about future events and uncertainties and can rely 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 Chargebacks and Government Chargebacks Wholesaler fees — Specialty Pharmacy Discounts — Managed Care Rebates Product Returns Income Taxes As of December 31, 2023, the Company was 52.01% 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, 2023 and 2022 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, 2023 and 2022, 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, 2023 and 2022. Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORY | |
INVENTORY | NOTE 3. INVENTORY The Company’s inventory consisted of the following at December 31, 2023 and 2022: December 31, ($’s in thousands) 2023 2022 Raw materials $ 4,640 $ 6,454 Work-in-process 884 395 Finished goods 4,987 7,739 Inventory at cost 10,511 14,588 Inventory reserves (305) (429) Total Inventories $ 10,206 $ 14,159 |
ASSET ACQUISITION
ASSET ACQUISITION | 12 Months Ended |
Dec. 31, 2023 | |
ASSET ACQUISITION | |
ASSET ACQUISITION | NOTE 4. ASSET ACQUISITION In January 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 APA”). The Company also acquired the associated inventory related to the products. The Vyne APA 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 and $200 million, the Company is required to make a one-time payment of $10.0 million and $20.0 million, respectively, in that year only, per product. In addition, the Company will pay Vyne 10% of any upfront payment received by the Company from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the Vyne APA. The following table summarizes the aggregate consideration transferred for the assets acquired by the Company in connection with the Vyne APA: Aggregate Consideration ($’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 was accreted to the $5.0 million January 2023 cash payment over a one-year period through interest expense. The Company made the $5.0 million deferred cash payment in January 2023. The following table summarizes the assets acquired in the Vyne APA: Assets ($’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, 2023 | |
INTANGIBLES | |
INTANGIBLES | NOTE 5. INTANGIBLES The Company’s finite-lived intangible assets consist of acquired intangible assets. During the year ended December 31, 2023, the Company experienced lower net product revenues and gross profit levels for its Ximino products. Based on these results, the Company revised the financial outlook and plans for its Ximino products. The Company assessed the revised forecast for Ximino and determined that this constituted a triggering event, and the results of the analysis indicated the carrying amount was not expected to be recovered. The Company recorded an intangible asset impairment charge of $3.1 million during the year ended December 31, 2023. This non-cash charge was recorded to loss on impairment of intangible assets in the consolidated statements of operations. The table below provides a summary of the Company’s intangible assets at December 31, 2023 and 2022, respectively: Estimated December 31, ($’s in thousands) Useful Lives (Years) 2023 2022 Intangible assets - product licenses 3-9 $ 37,925 $ 37,925 Accumulated amortization (14,495) (10,728) Accumulated impairment loss (3,143) — Total intangible assets $ 20,287 $ 27,197 The Company’s amortization expense for the years ended December 31, 2023 and 2022 was approximately $3.8 million and $4.3 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, 2024 $ 3,257 December 31, 2025 3,257 December 31, 2026 2,471 December 31, 2027 1,775 Thereafter 5,585 Subtotal 16,345 Asset not yet placed in service 3,942 Total $ 20,287 |
LICENSES ACQUIRED
LICENSES ACQUIRED | 12 Months Ended |
Dec. 31, 2023 | |
LICENSES ACQUIRED | |
LICENSES ACQUIRED | NOTE 6. LICENSES ACQUIRED DFD-29 In June 2021, the Company entered a license, collaboration, and assignment agreement (the “DFD-29 Agreement”) to obtain 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”); provided, that DRL retained certain rights to the program in select markets including Brazil, Russia, India and China. Pursuant to the terms and conditions of the DFD-29 Agreement, the Company paid $10.0 million. Based on the development and commercialization of DFD-29, additional contingent regulatory and commercial milestone payments totaling up to $158.0 million may also become payable by the Company. The Company is required to pay royalties ranging from approximately ten percent to fifteen percent on net sales of the DFD-29 product, subject to certain reductions. Additionally, the Company was required to fund and oversee the Phase 3 clinical trials beginning upon the license of DFD-29 in 2021. The Phase 3 clinical trials substantially concluded in July 2023 upon the Company’s receipt of positive topline results from the trials. From inception to date the Company has incurred approximately $23.8 million in costs associated with the development of DFD-29. Qbrexza In March 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 Qbrexza APA, the Company acquired the rights to Qbrexza® (glycopyrronium), 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 $144.0 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 certain reductions in the event there is a loss of exclusivity. Accutane In July 2020, the Company entered into an exclusive license and supply agreement for Accutane (the “Accutane Agreement”) with DRL. Pursuant to the Accutane Agreement, the Company paid $5.0 million. Three additional milestone payments totaling $17.0 million are contingent upon the achievement of certain net sales milestones. The Company is required to pay royalties in an amount equal to a low-double digit percentage of net sales. The term of the Accutane Agreement is ten years and renewable upon mutual agreement. Each party may terminate the Accutane Agreement for an uncured material breach by the other party or for certain bankruptcy or insolvency related events. The Company may also terminate the Accutane Agreement without cause upon 180 days written notice to DRL. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 7: FAIR VALUE MEASUREMENTS Financial assets and liabilities measured at fair value on a recurring basis are summarized below: December 31, 2023 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 27,439 $ — $ — $ 27,439 Total $ 27,439 $ — $ — $ 27,439 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 |
RELATED PARTY AGREEMENTS
RELATED PARTY AGREEMENTS | 12 Months Ended |
Dec. 31, 2023 | |
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 (the “Shared Services Agreement”). Fortress’ Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Shared Services 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 the Company’s initial public offering, which occurred in November 2021. In addition, the Company reimburses Fortress for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of the Company. For the year ended December 31, 2023 and 2022, the Company recorded related party expenses to Fortress of approximately $0.1 million and $0.1 million, respectively. The due to related party liability at December 31, 2023 and 2022, were $0.2 million and $0.4 million, respectively, and primarily relate to reimbursable expenses incurred by Fortress on behalf of the Company. The Company would have incurred these costs irrespective of the relationship with Fortress. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 9. ACCRUED EXPENSES Accrued expenses for the years ended December 31, 2023 and 2022 consisted of the following: December 31, ($’s in thousands) 2023 2022 Accrued expenses and other short-term liabilities: Accrued coupons and rebates $ 9,987 $ 7,604 Accrued compensation 3,374 2,586 Accrued royalties payable 2,015 2,627 Return reserve 4,077 3,689 Accrued inventory 352 112 Accrued research and development 20 1,404 Accrued legal, accounting and tax 185 334 Accrued iPledge program 174 447 Other 166 585 Total accrued expenses $ 20,350 $ 19,388 |
INSTALLMENT PAYMENTS - LICENSES
INSTALLMENT PAYMENTS - LICENSES | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 and 2022: December 31, 2023 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 3,000 $ — $ 3,000 Less: imputed interest — — — Sub-total installment payments - licenses $ 3,000 $ — $ 3,000 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 |
OPERATING LEASE OBLIGATIONS
OPERATING LEASE OBLIGATIONS | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 Operating lease cost $ 97 $ 93 Variable lease cost 5 4 Total lease cost $ 102 $ 97 The following table summarizes quantitative information about the Company’s operating leases (dollars in thousands): For the Years Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 92 $ 100 Right-of-use assets exchanged for new operating lease liabilities $ — $ 188 Weighted-average remaining lease term - operating leases 1.1 2.1 Weighted-average discount rate - operating leases 6.25 % 6.25 % As of December 31, 2023, future payments of operating lease liabilities are as follows: For the year ended December 31, ($’s in thousands) 2024 $ 102 2025 9 Total lease payments 111 Less: present value discount (3) Total operating lease liabilities $ 108 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2023 | |
DEBT | |
DEBT | NOTE 12. DEBT The Company’s Debt obligations at December 31, 2023 and 2022 were as follows: December 31, ($’s in thousands) 2023 Principal balance $ 15,000 Plus: Exit fee 750 Less: Debt discount and fees (1,128) Net carry amount (Long-term) $ 14,622 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 SWK Long-Term Debt On December 27, 2023, the Company entered into a Credit Agreement with SWK. The Credit Agreement provides for a term loan Credit Facility in the original principal amount of up to $20.0 million. On the Closing Date, the Company drew $15.0 million. The remaining $5.0 million may be drawn upon request by the Company within 12 months after the Closing Date. Term Loans under the Credit Facility mature on December 27, 2027. The Term Loans accrue interest which is payable quarterly in arrears. The Term Loans bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly. Beginning in February 2026, the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date. If the total revenue of the Company, measured on a trailing twelve-month basis, is greater than $70.0 million as of December 31, 2025, the principal repayment start date is extended from February 2026 to February 2027, at which point the Company is required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 15% of the principal amount of funded Term Loans, with any remaining principal balance due on the maturity date. The Company may at any time prepay the outstanding principal balance of the Term Loans in whole or in part. Prepayment of the Term Loans is subject to payment of a prepayment premium equal to (i) 2% of the Term Loans prepaid plus the amount of interest that would have been due through the first anniversary of the Closing Date if the Term Loans are prepaid prior to the first anniversary of the Closing Date, (ii) 1% of the Term Loans prepaid if the Term Loans are prepaid on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, or (iii) 0% if prepaid thereafter. Upon repayment in full of the Term Loans, the Company will pay an exit fee equal to 5% of the original principal amount of the Term Loans. Additionally, the Company paid an origination fee of $0.2 million on the Closing Date and incurred issuance costs of $0.2 million, both of which have been recorded as a debt discount. The Company is accreting the carrying value of the SWK Term Loan to the original principal balance plus the exit fee over the term of the loan using the effective interest method. The amortization of the discount is accounted for as interest expense. The effective interest rate on the SWK Term Loan for the fiscal year ended December 31, 2023 was 15.1%. The fair value of the debt approximates its carrying value. The SWK Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of the Company. As of December 31, 2023, the Company was in compliance with the financial covenants under the SWK Credit Facility. As of December 31, 2023, the contractual maturities of the long-term debt, including the payment of the exit fee, are as follows (dollars in thousands): Years ending December 31, Term Loan 2024 $ — 2025 — 2026 4,500 2027 11,250 Total 15,750 Debt discount (1,128) Total, net 14,622 Current portion — Term-loan (long-term) $ 14,622 East West Bank Line of Credit and Long-Term Debt The Company was previously party to a Loan and Security Agreement, dated March 31, 2021 (as amended, the “EWB Facility”), with East West Bank (“EWB”), under which EWB made a $20.0 million term loan and a $10.0 million revolving line of credit available to the Company. During 2023, the Company voluntarily repaid the entire $20.0 million outstanding term loan principal balance under the EWB Facility. The repayment satisfied all of the Company’s outstanding debt obligations under the EWB Facility. The Company has no further obligations to EWB. |
INTEREST EXPENSE AND FINANCING
INTEREST EXPENSE AND FINANCING FEES | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 and 2022 consisted of the following: Year Ended December 31, 2023 2022 Interest payments on term loans and LOC $ 989 $ 1,153 Amortization/accretion 356 347 Imputed interest on acquired intangible assets 353 519 Total interest expense and financing fees $ 1,698 $ 2,019 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
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 is required to 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 6. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 15. STOCKHOLDERS’ EQUITY 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. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 there were 1,487,994 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. In 2023, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical Corporation 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The Company initially reserved 300,000 shares of common stock for future issuance under the 2023 ESPP. As of December 31, 2023, 300,000 shares were available for issuance under the 2023 ESPP. The following table summarizes the components of share-based compensation expense in the consolidated statements of operations for the years ended December 31, 2023 and 2022: Year Ended December 31, ($’s in thousands) 2023 2022 Research and development $ 110 $ 73 Selling, general and administrative 2,496 4,352 Total non-cash compensation expense related to share-based compensation included in operating expense $ 2,606 $ 4,425 Stock Options The weighted-average key assumptions used in determining the fair value of options granted for the year ended December 31, 2023 are as follows: 2023 Risk-free interest rate 3.45% - 4.44% Expected volatility 89.09% - 101.75% Weighted average expected volatility 91.08% Expected term (years) 5.37 - 6.25 Expected dividend yield 0% The weighted average grant-date fair value of stock options issued during the year ended December 31, 2023 was $1.27 per share. The weighted average grant-date fair value of stock options issued during the year ended December 31, 2022 was $2.67 per share. The following table summarizes the Company’s stock option activity for the year ended December 31, 2023: Weighted Weighted average Number average Aggregate remaining of exercise intrinsic contractual Shares price value life (years) Outstanding options at December 31, 2022 2,960,000 $ 1.76 $ 2,217,815 5.65 Granted 430,756 1.64 — — Exercised (82,300) 1.46 — — Forfeited (504,687) 3.06 — — Expired (33,900) 3.58 — — Outstanding options at December 31, 2023 2,769,869 $ 1.49 $ 3,441,146 4.53 Options vested and exercisable at December 31, 2023 1,984,475 $ 0.96 $ 1,758,134 2.83 For the years ended December 31, 2023 and 2022, the Company issued 82,300 and 155,649 shares, respectively, of Common Stock upon the exercise of outstanding stock options and received proceeds of $120,555 and $142,330, respectively. For the years ended December 31, 2023 and 2022, approximately $0.5 million and $0.8 million, respectively, of stock option compensation cost was charged against operations. At December 31, 2023, the Company had unrecognized share-based compensation expense related to all unvested options of $0.9 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years. Restricted Stock Units The following table summarizes the Company’s RSU activity for the year ended December 31, 2023: Weighted average Number of grant date units Fair value Unvested balance at December 31, 2022 2,261,048 $ 4.05 Granted 119,888 1.82 Vested (727,249) 3.96 Forfeited (346,764) 4.10 Unvested balance at December 31, 2023 1,306,923 $ 3.88 For the years ended December 31, 2023 and 2022 the Company issued 727,249 and 293,707 shares of Common Stock, respectively, upon the vesting of RSU’s amounting to $2.9 million and $0.9 million, respectively, in total aggregate fair market value. For the years ended December 31, 2023 and 2022, approximately $2.0 million and $3.6 million, respectively, of RSU compensation cost was charged against operations. At December 31, 2023 approximately 1,306,923 of RSU’s remained unvested and there was approximately $1.6 million of unrecognized compensation cost related to RSUs, which the Company expects to recognize over a weighted-average period of approximately 1.5 years. Employee Stock Purchase Plan The 2023 ESPP provides that eligible employees may contribute up to 10% of their eligible earnings toward a semi-annual purchase of the Company’s common stock. The 2023 ESPP is qualified under Section 423 of the Internal Revenue Code. The employee’s purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the last date of purchase (or, if not a trading day, on the immediately preceding trading day). The offering period under the 2023 ESPP has a duration of six months, and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85% of the lesser of (i) the fair market value of the Company’s common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of the Company’s common stock on the purchase date. The Company estimates the fair value of the common stock under the 2023 ESPP using a Black-Scholes valuation model. The fair value was estimated on the date of grant for the offering period beginning August 1, 2023 using the Black-Scholes option valuation model and the straight-line attribution approach with the following assumptions: risk-free interest rate (5.5%); expected term (0.5 years); expected volatility (129%); and an expected dividend yield (0%). The Company recorded $46,700 of stock-based compensation under the 2023 ESPP for the year ended December 31, 2023. As of December 31, 2023, there was unrecognized stock-based compensation expense of $9,524 related to the current ESPP offering period, which ends January 31, 2024. |
REVENUES FROM CONTRACTS WITH CU
REVENUES FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2023 | |
REVENUES FROM CONTRACTS WITH CUSTOMERS | |
REVENUES FROM CONTRACTS WITH CUSTOMERS | NOTE 17. REVENUES FROM CONTRACTS WITH CUSTOMERS Disaggregation of Net Revenues The Company has the following actively marketed products, Qbrexza®, Amzeeq®, Zilxi®, Accutane®, Exelderm®, Targadox®, and Luxamend®. All of the Company’s product revenues are recorded in the U.S. Revenues by product are summarized as follows: Year Ended December 31, ($ in thousands) 2023 2022 Qbrexza® $ 25,410 $ 26,715 Accutane® 20,168 18,373 Amzeeq 6,201 7,242 Targadox® 3,204 7,972 Exelderm® 2,395 3,463 Zilxi 1,962 2,273 Ximino® 287 4,957 Luxamend® 35 — Total product revenues $ 59,662 $ 70,995 The Company recognized other revenue as follows: Year Ended December 31, ($in thousands) 2023 2022 Non-refundable upfront payment from Maruho $ 19,000 $ — Net milestone payment from Maruho — 2,500 Royalties on sales of Rapifort® Wipes 2.5% $ 519 174 Total other revenue $ 19,519 $ 2,674 Other revenue reflects royalties on sales of Rapifort® Wipes 2.5% in Japan, from Maruho, the Company’s exclusive out-licensing partner in Japan. Other revenue for the year ended December 31, 2023 also reflects a net $19.0 million payment from Maruho under the New License Agreement. Other revenue for the year ended December 31, 2022 also reflects a net $2.5 million milestone payment from Maruho. In January 2022, Maruho received manufacturing and marketing approval in Japan for Rapifort Wipes 2.5% (Japanese equivalent to U.S. FDA approved Qbrexza ® Maruho License Agreement On August 31, 2023, the Company entered into the New License Agreement with Maruho. Under the terms of the New License Agreement, the Company granted an exclusive license to develop and commercialize Qbrexza for the treatment of primary axillary hyperhidrosis in the Territory. Prior to the date of the New License Agreement, the Company and Maruho were party to an existing exclusive amended and restated license agreement (the “First A&R License Agreement”), under which Maruho acquired exclusive license rights to Qbrexza in Japan. In connection with Journey’s entry into the New License Agreement, Journey and Maruho also entered into the Second Amended and Restated Exclusive License Agreement (the “Second A&R License Agreement”), which supersedes the First A&R License Agreement. The Second A&R License Agreement contains modifications that remove Maruho’s obligation to pay Journey royalties on its net sales of Rapifort (the Japanese equivalent of Qbrexza) in Japan for sales occurring after October 1, 2023 and removes Maruho’s obligation to pay $10.0 million to Journey in the event that Maruho achieves net sales of at least ¥4 billion (yen) of Rapifort during a single fiscal year. All other remaining potential milestone payment obligations, which aggregate to $45.0 million, remain in full force and effect. Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory, Maruho paid the Company a $19.0 million non-refundable upfront payment. Maruho is also obligated to pay royalties to the Company related to sales of the product in the Territory equal to the corresponding rate payable by the Company to Dermira under the asset purchase agreement between Journey and Dermira. The New License Agreement may be terminated by Maruho in its entirety or on a region-by-region basis for convenience upon 30 days’ notice to the Company. The Company does not have any obligation to assist in the regulatory approval efforts of Maruho under the New License Agreement in the Territory. The arrangement with Maruho provides for the transfer of the following: (i) an exclusive license of Qbrexza from Journey to Maruho, including all related patents and know-how, and (ii) a non-exclusive license from Journey to Maruho to manufacture or have manufactured drug substance and products outside of the Territory, but exclusively for the sale of products in the Territory. Significant Customers As of December 31, 2023, one of the Company’s customers accounted for more than 10.0% of its total accounts receivable balance at 13.0%. As of December 31, 2022, two of the Company’s customers accounted for more than 10.0% of its total accounts receivable balance at 16.7% and 10.4%. For the year ended December 31, 2023 and 2022, none of the Company’s customers accounted for more than 10.0% of its total gross product revenue. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 18. INCOME TAXES The components of the income tax provision are as follows: Years Ended December 31, ($’s in thousands) 2023 2022 Current: Federal $ 34 $ — State 187 63 Total current 221 63 Deferred: Federal (753) (6,701) State (94) (1,737) Total deferred (847) (8,438) Valuation allowance 847 8,438 Total income tax expense $ 221 $ 63 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) 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 4,376 $ 6,553 Amortization of license fees 5,603 4,951 R&D capitalization 3,312 2,462 Stock compensation 1,081 1,293 Lease liability 27 48 Reserve on sales return, discount and bad debt 3,566 2,988 Accruals and reserves 723 574 Tax credits 1,491 1,152 Business interest expense deduction limit — 322 State taxes — 13 Total deferred tax assets 20,179 20,356 Less: valuation allowance (20,154) (19,307) Deferred tax assets, net $ 25 $ 1,049 Deferred tax liability: Section 481(a) adjustment on reserve on sales return, discount and bad debt — (1,001) Right-of-use asset (25) (48) Deferred tax assets, net $ — $ — A reconciliation of the statutory tax rates and the effective tax rates is as follows: Years Ended December 31, 2023 2022 Percentage of pre-tax income: U.S. federal statutory income tax rate 21 % 21 % State taxes, net of federal benefit (1) % 4 % Non-deductible items (4) % (0) % Provision to return (1) % 0 % State tax adjustments (1) % 0 % Change in valuation allowance (23) % (28) % Share-based compensation (10) % 0 % Tax credits 13 % 3 % Effective income tax rate (6) % (0) % As required by ASC 740, the Company has evaluated the evidence bearing upon the realizability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, the Company has determined that it is more likely than not that it will not realize the benefits of these assets. Accordingly, the Company recorded a valuation allowance of $20.2 million at December 31, 2023. The valuation allowance increased by $0.8 million during the year ended December 31, 2023, primarily as a result of the increase in NOL carryforwards generated in the current period. As of December 31, 2023, the Company had federal and state NOL carryforwards of approximately $15.6 million and $22.7 million, respectively. The Federal NOL carryforwards do not expire, but $19.5 million of the state NOL carryforwards expire if not utilized prior to 2042. Utilization of the U.S. federal and state NOL carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax liabilities, respectively. The Company has performed calculations to support that its NOL carryovers are subject to limitations under section 382 (“382 Limitations”). Based on the analysis of the NOL carryovers subject to the 382 Limitations, the Company has concluded that the 382 Limitations would not prevent the Company from utilizing all of its NOL carryovers prior to expiration. The Company is subject to U.S. federal and state taxes. As of December 31, 2023, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2020 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, 2023 | |
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, 2023 and 2022 were as follows: Year ended December 31, 2023 2022 Basic and diluted 18,232,422 17,531,274 Potentially dilutive securities: Unvested restricted stock units 1,306,923 2,261,048 Stock options 1,345,193 1,566,131 Total potentially dilutive securities 20,884,538 21,358,453 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, 2023 and 2022, 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, 2023 and 2022. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 20. SUBSEQUENT EVENTS The Company evaluates events that occur after the period’s end date through the date the financial statements are available to be issued. Accordingly, management has evaluated subsequent events through the date these financial statements are issued and has determined that no subsequent events require disclosure in these financial statements. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
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 audited 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, specialty pharmacy discounts, managed care rebates, product returns, 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, 2023 and 2022 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 are 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 $0.5 million and $0.4 million at December 31, 2023 and 2022, 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 $0.3 million and $0.4 million at December 31, 2023 and 2022, respectively. |
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. 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. |
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 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3 Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. 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. During the year ended December 31, 2023, the Company recorded an impairment loss associated with its intangible asset balance. See Note 5 for further details. The Company did not record any impairment losses on long-lived assets for the year ended December 31, 2022. |
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 |
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, specialty pharmacy discounts, managed care rebates, product returns, 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 series of judgements about future events and uncertainties and can rely 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 Chargebacks and Government Chargebacks Wholesaler fees — Specialty Pharmacy Discounts — Managed Care Rebates Product Returns |
Income Taxes | Income Taxes As of December 31, 2023, the Company was 52.01% 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, 2023 and 2022 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, 2023 and 2022, 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, 2023 and 2022. |
Comprehensive Income | Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements and disclosures. |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORY | |
Schedule of inventory | December 31, ($’s in thousands) 2023 2022 Raw materials $ 4,640 $ 6,454 Work-in-process 884 395 Finished goods 4,987 7,739 Inventory at cost 10,511 14,588 Inventory reserves (305) (429) Total Inventories $ 10,206 $ 14,159 |
ASSET ACQUISITION (Tables)
ASSET ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 | |
INTANGIBLES | |
Summary of intangible assets | Estimated December 31, ($’s in thousands) Useful Lives (Years) 2023 2022 Intangible assets - product licenses 3-9 $ 37,925 $ 37,925 Accumulated amortization (14,495) (10,728) Accumulated impairment loss (3,143) — Total intangible assets $ 20,287 $ 27,197 |
Schedule of future amortization of intangible assets | Total For the years ended Amortization December 31, 2024 $ 3,257 December 31, 2025 3,257 December 31, 2026 2,471 December 31, 2027 1,775 Thereafter 5,585 Subtotal 16,345 Asset not yet placed in service 3,942 Total $ 20,287 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | December 31, 2023 ($’s in thousands) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 27,439 $ — $ — $ 27,439 Total $ 27,439 $ — $ — $ 27,439 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 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | December 31, ($’s in thousands) 2023 2022 Accrued expenses and other short-term liabilities: Accrued coupons and rebates $ 9,987 $ 7,604 Accrued compensation 3,374 2,586 Accrued royalties payable 2,015 2,627 Return reserve 4,077 3,689 Accrued inventory 352 112 Accrued research and development 20 1,404 Accrued legal, accounting and tax 185 334 Accrued iPledge program 174 447 Other 166 585 Total accrued expenses $ 20,350 $ 19,388 |
INSTALLMENT PAYMENTS - LICENS_2
INSTALLMENT PAYMENTS - LICENSES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INSTALLMENT PAYMENTS - LICENSES | |
Schedule of installment payments - licenses | December 31, 2023 ($’s in thousands) Short-Term Long-Term Total Installment payments - licenses $ 3,000 $ — $ 3,000 Less: imputed interest — — — Sub-total installment payments - licenses $ 3,000 $ — $ 3,000 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 |
OPERATING LEASE OBLIGATIONS (Ta
OPERATING LEASE OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
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, 2023 2022 Operating lease cost $ 97 $ 93 Variable lease cost 5 4 Total lease cost $ 102 $ 97 The following table summarizes quantitative information about the Company’s operating leases (dollars in thousands): For the Years Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 92 $ 100 Right-of-use assets exchanged for new operating lease liabilities $ — $ 188 Weighted-average remaining lease term - operating leases 1.1 2.1 Weighted-average discount rate - operating leases 6.25 % 6.25 % |
Schedule of operating lease liability | For the year ended December 31, ($’s in thousands) 2024 $ 102 2025 9 Total lease payments 111 Less: present value discount (3) Total operating lease liabilities $ 108 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
DEBT | |
Schedule of debt obligation | December 31, ($’s in thousands) 2023 Principal balance $ 15,000 Plus: Exit fee 750 Less: Debt discount and fees (1,128) Net carry amount (Long-term) $ 14,622 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 |
Schedule of carrying value of long-term debt | Years ending December 31, Term Loan 2024 $ — 2025 — 2026 4,500 2027 11,250 Total 15,750 Debt discount (1,128) Total, net 14,622 Current portion — Term-loan (long-term) $ 14,622 |
INTEREST EXPENSE AND FINANCIN_2
INTEREST EXPENSE AND FINANCING FEES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INTEREST EXPENSE AND FINANCING FEES | |
Schedule of interest expense and financing fees | Year Ended December 31, 2023 2022 Interest payments on term loans and LOC $ 989 $ 1,153 Amortization/accretion 356 347 Imputed interest on acquired intangible assets 353 519 Total interest expense and financing fees $ 1,698 $ 2,019 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SHARE-BASED COMPENSATION | |
Summary of components of share-based compensation expense | Year Ended December 31, ($’s in thousands) 2023 2022 Research and development $ 110 $ 73 Selling, general and administrative 2,496 4,352 Total non-cash compensation expense related to share-based compensation included in operating expense $ 2,606 $ 4,425 |
Schedule of weighted-average key assumptions used in determining the fair value of options granted | 2023 Risk-free interest rate 3.45% - 4.44% Expected volatility 89.09% - 101.75% Weighted average expected volatility 91.08% Expected term (years) 5.37 - 6.25 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, 2022 2,960,000 $ 1.76 $ 2,217,815 5.65 Granted 430,756 1.64 — — Exercised (82,300) 1.46 — — Forfeited (504,687) 3.06 — — Expired (33,900) 3.58 — — Outstanding options at December 31, 2023 2,769,869 $ 1.49 $ 3,441,146 4.53 Options vested and exercisable at December 31, 2023 1,984,475 $ 0.96 $ 1,758,134 2.83 |
Schedule of restricted stock units | Weighted average Number of grant date units Fair value Unvested balance at December 31, 2022 2,261,048 $ 4.05 Granted 119,888 1.82 Vested (727,249) 3.96 Forfeited (346,764) 4.10 Unvested balance at December 31, 2023 1,306,923 $ 3.88 |
REVENUES FROM CONTRACTS WITH _2
REVENUES FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
REVENUES FROM CONTRACTS WITH CUSTOMERS | |
Schedule of disaggregation of net revenues | Year Ended December 31, ($ in thousands) 2023 2022 Qbrexza® $ 25,410 $ 26,715 Accutane® 20,168 18,373 Amzeeq 6,201 7,242 Targadox® 3,204 7,972 Exelderm® 2,395 3,463 Zilxi 1,962 2,273 Ximino® 287 4,957 Luxamend® 35 — Total product revenues $ 59,662 $ 70,995 |
Schedule of other revenue | Year Ended December 31, ($in thousands) 2023 2022 Non-refundable upfront payment from Maruho $ 19,000 $ — Net milestone payment from Maruho — 2,500 Royalties on sales of Rapifort® Wipes 2.5% $ 519 174 Total other revenue $ 19,519 $ 2,674 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule of components of the income tax provision | Years Ended December 31, ($’s in thousands) 2023 2022 Current: Federal $ 34 $ — State 187 63 Total current 221 63 Deferred: Federal (753) (6,701) State (94) (1,737) Total deferred (847) (8,438) Valuation allowance 847 8,438 Total income tax expense $ 221 $ 63 |
Schedule of company's deferred tax assets | December 31, ($’s in thousands) 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 4,376 $ 6,553 Amortization of license fees 5,603 4,951 R&D capitalization 3,312 2,462 Stock compensation 1,081 1,293 Lease liability 27 48 Reserve on sales return, discount and bad debt 3,566 2,988 Accruals and reserves 723 574 Tax credits 1,491 1,152 Business interest expense deduction limit — 322 State taxes — 13 Total deferred tax assets 20,179 20,356 Less: valuation allowance (20,154) (19,307) Deferred tax assets, net $ 25 $ 1,049 Deferred tax liability: Section 481(a) adjustment on reserve on sales return, discount and bad debt — (1,001) Right-of-use asset (25) (48) Deferred tax assets, net $ — $ — |
Schedule of reconciliation of the statutory tax rates and the effective tax rates | Years Ended December 31, 2023 2022 Percentage of pre-tax income: U.S. federal statutory income tax rate 21 % 21 % State taxes, net of federal benefit (1) % 4 % Non-deductible items (4) % (0) % Provision to return (1) % 0 % State tax adjustments (1) % 0 % Change in valuation allowance (23) % (28) % Share-based compensation (10) % 0 % Tax credits 13 % 3 % Effective income tax rate (6) % (0) % |
NET (LOSS) INCOME PER COMMON _2
NET (LOSS) INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
NET (LOSS) INCOME PER COMMON SHARE | |
Schedule of basic and diluted weighted-average number of common shares outstanding | Year ended December 31, 2023 2022 Basic and diluted 18,232,422 17,531,274 Potentially dilutive securities: Unvested restricted stock units 1,306,923 2,261,048 Stock options 1,345,193 1,566,131 Total potentially dilutive securities 20,884,538 21,358,453 |
ORGANIZATION AND PLAN OF BUSI_2
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Dec. 27, 2023 USD ($) | Aug. 31, 2023 USD ($) | Jan. 26, 2023 USD ($) shares | Aug. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) item $ / shares shares | Dec. 31, 2022 USD ($) | |
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Number of branded drugs in product portfolio | item | 7 | |||||
Number of authorized generic prescription drugs | item | 2 | |||||
Cash and cash equivalents | $ 27,439 | $ 32,003 | ||||
Proceeds from term-loan | 15,000 | $ 19,763 | ||||
Stock issued value | $ 4,494 | |||||
Common stock par value | $ / shares | $ 0.0001 | |||||
Non-refundable upfront payment from Maruho | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Proceeds from non-refundable payment | $ 19,000 | $ 19,000 | ||||
Common Stock | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Stock issued value | $ 150,000 | |||||
Stock issued (in shares) | shares | 4,900,000 | 748,703 | ||||
Number of Shares Available for Issuance | shares | 4,151,297 | |||||
Proceeds from issuance of common stock | $ 4,500 | |||||
Term loan | East West Bank | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Maximum borrowing capacity | $ 20,000 | |||||
Proceeds from term-loan | 15,000 | |||||
Outstanding principal balance voluntarily paid off | $ 20,000 | |||||
Remaining borrowing capacity. | $ 5,000 | |||||
Principal amount of funded term loans | 7.50% | |||||
Term loan | East West Bank | SOFR | ||||||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | ||||||
Spread on variable rate | 7.75% | |||||
Floor rate | 5% |
BASIS OF PRESENTATION - Segment
BASIS OF PRESENTATION - Segment Information (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segment | 1 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts | $ 0.5 | $ 0.4 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Finished goods inventory, fair value step up | $ 0.3 | $ 0.4 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-based Compensation (Details) | 12 Months Ended |
Dec. 31, 2023 | |
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_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Taxes | ||
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) | 52.01% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
INVENTORY | ||
Raw materials | $ 4,640 | $ 6,454 |
Work-in-process | 884 | 395 |
Finished goods | 4,987 | 7,739 |
Inventory at cost | 10,511 | 14,588 |
Inventory reserves | (305) | (429) |
Total Inventories | $ 10,206 | $ 14,159 |
ASSET ACQUISITION (Details)
ASSET ACQUISITION (Details) $ in Millions | Jan. 12, 2022 USD ($) |
Vyne product acquisition | |
Asset Acquisition | |
Upfront payment | $ 20 |
Additional payment | $ 5 |
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 |
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 Agreement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Jan. 31, 2023 | |
Asset Acquisition | |||
Consideration transferred to Vyne at closing | $ 5,000 | $ 20,000 | |
Fair value of deferred cash payment due January 2023 | $ 4,991 | $ 5,000 | |
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 |
ASSET ACQUISITION - Fair value
ASSET ACQUISITION - Fair value of assets acquired in the VYNE Product Acquisition Agreement (Details) - Vyne product acquisition $ in Thousands | Dec. 31, 2023 USD ($) |
Asset Acquisition | |
Inventory | $ 6,041 |
Fair value of net identifiable assets acquired | 24,963 |
Amzeeq intangible | |
Asset Acquisition | |
Identifiable Intangibles: | 15,162 |
Zilxi intangible | |
Asset Acquisition | |
Identifiable Intangibles: | $ 3,760 |
INTANGIBLES - Intangible assets
INTANGIBLES - Intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INTANGIBLE ASSETS | ||
Intangible asset impairment charge | $ 3,143 | |
Intangible assets - product licenses | 37,925 | $ 37,925 |
Accumulated Amortization | (14,495) | (10,728) |
Accumulated impairment loss | (3,143) | |
Total intangible assets | 20,287 | 27,197 |
Amortization expense | 3,767 | 4,277 |
Cost of goods sold | ||
INTANGIBLE ASSETS | ||
Amortization expense | $ 3,800 | $ 4,300 |
Minimum | ||
INTANGIBLE ASSETS | ||
Estimated Useful Lives (Years) | 3 years | 3 years |
Maximum | ||
INTANGIBLE ASSETS | ||
Estimated Useful Lives (Years) | 9 years | 9 years |
Ximino | ||
INTANGIBLE ASSETS | ||
Intangible asset impairment charge | $ 3,100 |
INTANGIBLES - Future amortizati
INTANGIBLES - Future amortization expense (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Future amortization expense | ||
December 31, 2024 | $ 3,257 | |
December 31, 2025 | 3,257 | |
December 31, 2026 | 2,471 | |
December 31, 2027 | 1,775 | |
Thereafter | 5,585 | |
Subtotal | 16,345 | |
Asset not yet placed in service | 3,942 | |
Total intangible assets | $ 20,287 | $ 27,197 |
LICENSES ACQUIRED (Details)
LICENSES ACQUIRED (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jun. 30, 2021 | Mar. 31, 2021 | Jul. 31, 2020 | |
D F D Agreement | |||
LICENSES ACQUIRED | |||
Amount payable | $ 10 | ||
Development costs incurred | $ 23.8 | ||
D F D Agreement | Minimum | |||
LICENSES ACQUIRED | |||
Percentage of royalties payable on net sales | 10% | ||
D F D Agreement | Maximum | |||
LICENSES ACQUIRED | |||
Threshold additional contingent regulatory and commercial milestone payments payable | $ 158 | ||
Percentage of royalties payable on net sales | 15% | ||
Asset purchase agreement | Qbrexza | |||
LICENSES ACQUIRED | |||
Age of patients | 9 years | ||
Asset purchase agreement | Royalty payment percentage for first two years | Qbrexza | |||
LICENSES ACQUIRED | |||
Period of royalty payments | 2 years | ||
Asset purchase agreement | Royalty payment percentage for eight years thereafter | Qbrexza | |||
LICENSES ACQUIRED | |||
Term of royalty | 8 years | ||
Asset purchase agreement | Minimum | Royalty payment percentage for first two years | Qbrexza | |||
LICENSES ACQUIRED | |||
Percent of royalty payments | 30% | ||
Asset purchase agreement | Minimum | Royalty payment percentage for eight years thereafter | Qbrexza | |||
LICENSES ACQUIRED | |||
Percent of royalty payments | 12% | ||
Asset purchase agreement | Maximum | Royalty payment percentage for first two years | Qbrexza | |||
LICENSES ACQUIRED | |||
Percent of royalty payments | 40% | ||
Asset purchase agreement | Maximum | Royalty payment percentage for eight years thereafter | Qbrexza | |||
LICENSES ACQUIRED | |||
Percent of royalty payments | 19% | ||
Asset purchase agreement | Eli Lilly and Company | Qbrexza | |||
LICENSES ACQUIRED | |||
Upfront fees | $ 12.5 | ||
Milestone payments payable | $ 144 | ||
License and supply agreement With DRL | Accutane | |||
LICENSES ACQUIRED | |||
Amount of expense paid under the agreement | $ 5 | ||
Contingent amount payable | $ 17 | ||
Term of accutane | 10 years | ||
Termination accutane agreement period | 180 days |
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, 2023 | Dec. 31, 2022 |
Assets: | ||
Cash and cash equivalents | $ 27,439 | $ 32,003 |
Total | 27,439 | 32,003 |
Level 1 | ||
Assets: | ||
Cash and cash equivalents | 27,439 | 32,003 |
Total | $ 27,439 | $ 32,003 |
RELATED PARTY AGREEMENTS (Detai
RELATED PARTY AGREEMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
RELATED PARTY AGREEMENTS | ||
Due to related party | $ 195 | $ 413 |
Shared Services Agreement with Fortress | Fortress | ||
RELATED PARTY AGREEMENTS | ||
Service provided by employees of related party | 100 | 100 |
Due to related party | $ 200 | $ 400 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Accrued expenses and other short-term liabilities: | ||
Accrued coupons and rebates | $ 9,987 | $ 7,604 |
Accrued compensation | 3,374 | 2,586 |
Accrued royalties payable | 2,015 | 2,627 |
Return reserve | 4,077 | 3,689 |
Accrued inventory | 352 | 112 |
Accrued research and development | 20 | 1,404 |
Accrued legal, accounting and tax | 185 | 334 |
Accrued iPledge program | 174 | 447 |
Other | 166 | 585 |
Total accrued expenses | $ 20,350 | $ 19,388 |
INSTALLMENT PAYMENTS - LICENS_3
INSTALLMENT PAYMENTS - LICENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, Short-Term | $ 3,000 | $ 2,500 |
Less: imputed interest, Short-Term | (256) | |
Sub-total installment payments - licenses, Short-Term | 3,000 | 2,244 |
Installment payments - licenses, Long-Term | 1,500 | |
Less: imputed interest, Long-Term | (88) | |
Sub-total installment payments - licenses, Long-Term | 1,412 | |
Installment payments - licenses | 3,000 | 4,000 |
Less: imputed interest | (344) | |
Sub-total installment payments - licenses | $ 3,000 | $ 3,656 |
OPERATING LEASE OBLIGATIONS (De
OPERATING LEASE OBLIGATIONS (Details) $ in Millions | 1 Months Ended | |
Sep. 30, 2022 USD ($) | Dec. 31, 2023 ft² | |
OPERATING LEASE OBLIGATIONS | ||
Area of property under lease | ft² | 3,681 | |
Renewal term | 25 months | |
Lease annual rate | $ | $ 0.1 |
OPERATING LEASE OBLIGATIONS - R
OPERATING LEASE OBLIGATIONS - Rent expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Lease cost | ||
Operating lease cost | $ 97 | $ 93 |
Variable lease cost | 5 | 4 |
Total lease cost | 102 | 97 |
Cash paid for amounts included in the measurement of lease liabilities | $ 92 | 100 |
Right-of-use assets exchanged for new operating lease liabilities | $ 188 | |
Weighted-average remaining lease term - operating leases | 1 year 1 month 6 days | 2 years 1 month 6 days |
Weighted-average discount rate - operating leases | 6.25% | 6.25% |
OPERATING LEASE OBLIGATIONS - F
OPERATING LEASE OBLIGATIONS - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Future Lease Liability | |
2024 | $ 102 |
2025 | 9 |
Total lease payments | 111 |
Less: present value discount | (3) |
Total operating lease liabilities | $ 108 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
DEBT | ||
Principal balance | $ 15,000 | $ 27,948 |
Plus: Exit fee | 750 | |
Less: Debt discount and fees | (1,128) | (183) |
Net carry amount | $ 14,622 | 27,765 |
Deferred cash payment | ||
DEBT | ||
Principal balance | 5,000 | |
Less: Debt discount and fees | (9) | |
Net carry amount | 4,991 | |
EWB Revolving LOC | ||
DEBT | ||
Principal balance | 2,948 | |
Net carry amount | 2,948 | |
Total Short-Term Debt | ||
DEBT | ||
Principal balance | 7,948 | |
Less: Debt discount and fees | (9) | |
Net carry amount | 7,939 | |
EWB Term Loan (Long-term) | ||
DEBT | ||
Principal balance | 20,000 | |
Less: Debt discount and fees | (174) | |
Net carry amount | $ 19,826 |
DEBT - Additional information (
DEBT - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 27, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
DEBT | |||
Amount drawn | $ 15,000 | $ 19,763 | |
Payments of Debt Issuance Costs | 214 | ||
Debt instrument, Face value | 15,000 | $ 27,948 | |
Term loan | East West Bank | |||
DEBT | |||
Maximum borrowing capacity | $ 20,000 | ||
Amount drawn | 15,000 | ||
Remaining borrowing capacity | $ 5,000 | ||
Principal amount of funded term loans | 7.50% | ||
Outstanding principal balance voluntarily paid off | $ 20,000 | ||
Term loan | East West Bank | SOFR | |||
DEBT | |||
Floor rate | 5% | ||
Spread on variable rate | 7.75% | ||
Term loan | SWK Funding LLC | |||
DEBT | |||
Maximum borrowing capacity | $ 20,000 | ||
Amount drawn | 15,000 | ||
Remaining borrowing capacity | $ 5,000 | ||
Principal amount of funded term loans | 7.50% | ||
Minimum amount of revenue | $ 70,000 | ||
Principal amount of loan payable | 15% | ||
Exit Fees on Percentage of Principal Amount | 5% | ||
Loan Processing Fee | $ 200 | ||
Payments of Debt Issuance Costs | $ 200 | ||
Debt Instrument, Interest Rate, Effective Percentage | 15.10% | ||
Spread on variable rate | 7.75% | ||
Term loan | SWK Funding LLC | Term Loans Prepaid Prior to the First Anniversary of the Closing Date [Member] | |||
DEBT | |||
Prepayment premium on percentage of term loan | 2% | ||
Term loan | SWK Funding LLC | Term Loans Prepaid Prior On Or After The First Anniversary of the Closing Date [Member] | |||
DEBT | |||
Prepayment premium on percentage of term loan | 1% | ||
Term loan | SWK Funding LLC | Term Loans Prepaid Thereafter [Member] | |||
DEBT | |||
Prepayment premium on percentage of term loan | 0% | ||
Term loan | SWK Funding LLC | SOFR | |||
DEBT | |||
Floor rate | 5% | ||
Term loan | Third Amendment | East West Bank | |||
DEBT | |||
Maximum borrowing capacity | $ 20,000 | ||
Revolving line of credit | Third Amendment | East West Bank | |||
DEBT | |||
Maximum borrowing capacity | $ 10,000 |
DEBT - Contractual Maturities o
DEBT - Contractual Maturities of the Long-term debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
DEBT | ||
2026 | $ 4,500 | |
2027 | 11,250 | |
Total | 15,750 | |
Debt discount | (1,128) | $ (183) |
Total, net | 14,622 | 27,765 |
Term-loan (long-term) | $ 14,622 | $ 19,826 |
INTEREST EXPENSE AND FINANCIN_3
INTEREST EXPENSE AND FINANCING FEES (Details) - Interest - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Interest expense and financing fees | ||
Interest payments on EWB term loan and LOC | $ 989 | $ 1,153 |
Amortization/Accretion | 356 | 347 |
Imputed interest on acquired intangible assets | 353 | 519 |
Total Interest Expense and Financing Fees | $ 1,698 | $ 2,019 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock (Details) | 12 Months Ended | |
Dec. 31, 2023 Vote $ / shares shares | Dec. 31, 2022 $ / shares shares | |
STOCKHOLDERS' EQUITY | ||
Common stock authorized | 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 | 13,323,952 | 11,765,700 |
Par value | $ / shares | $ 0.0001 | $ 0.0001 |
Common Stock Class A | ||
STOCKHOLDERS' EQUITY | ||
Common stock authorized | 50,000,000 | 50,000,000 |
Common stock issued | 6,000,000 | 6,000,000 |
Par value | $ / shares | $ 0.0001 | $ 0.0001 |
SHARE-BASED COMPENSATION - 2015
SHARE-BASED COMPENSATION - 2015 Stock Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jun. 21, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2015 | |
SHARE BASED COMPENSATION | ||||
Share based compensation expense | $ 2,606 | $ 4,425 | ||
Vesting period | 4 years | |||
Employee Stock Option | ||||
SHARE BASED COMPENSATION | ||||
Number of shares authorized for grant | 7,642,857 | |||
Share based compensation expense | $ 500 | $ 800 | ||
Granted period | 10 years | |||
Stock Plan 2015 | ||||
SHARE BASED COMPENSATION | ||||
Increase in number of shares authorized for grant | 3,000,000 | |||
Number of shares available for issuance | 1,487,994 | |||
Stock Plan 2015 | Employee Stock Option | ||||
SHARE BASED COMPENSATION | ||||
Number of shares authorized for grant | 4,642,857 | |||
2023 Employee Stock Purchase Plan | ||||
SHARE BASED COMPENSATION | ||||
Increase in number of shares authorized for grant | 300,000 | |||
Shares of common stock reserved for future issuance under the plan | 300,000 |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Components of share-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Components of share-based compensation expense | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | $ 2,606 | $ 4,425 |
Research and development | ||
Components of share-based compensation expense | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | 110 | 73 |
Selling, general and administrative | ||
Components of share-based compensation expense | ||
Total non-cash compensation expense related to share-based compensation included in operating expense | $ 2,496 | $ 4,352 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Options - Weighted-average key assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | ||
Weighted average expected volatility | 91.08% | |
Expected dividend yield | 0% | |
Weighted average grant date fair value | $ 1.27 | $ 2.67 |
Minimum | ||
SHARE-BASED COMPENSATION | ||
Risk-free interest rate | 3.45% | |
Expected volatility | 89.09% | |
Expected term (years) | 5 years 4 months 13 days | |
Maximum | ||
SHARE-BASED COMPENSATION | ||
Risk-free interest rate | 4.44% | |
Expected volatility | 101.75% | |
Expected term (years) | 6 years 3 months |
SHARE-BASED COMPENSATION - St_2
SHARE-BASED COMPENSATION - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Average intrinsic value | ||
Outstanding options at - beginning | $ 2,217,815 | |
Outstanding options - ending | $ 2,217,815 | |
Weighted average remaining contractual life (year) | ||
Outstanding options, Weighted average remaining contractual life (years) | 5 years 7 months 24 days | |
Stock Options | ||
Number of Shares | ||
Outstanding options - beginning | 2,960,000 | |
Granted | 430,756 | |
Exercised | (82,300) | (155,649) |
Forfeited | (504,687) | |
Expired | (33,900) | |
Outstanding options - ending | 2,769,869 | 2,960,000 |
Options vested and exercisable at December 31, 2023 | 1,984,475 | |
Weighted average exercise price | ||
Outstanding options - beginning | $ 1.76 | |
Granted | 1.64 | |
Exercised | 1.46 | |
Forfeited | 3.06 | |
Expired | 3.58 | |
Outstanding options - ending | 1.49 | $ 1.76 |
Options vested and exercisable at December 31, 2023 | $ 0.96 | |
Average intrinsic value | ||
Outstanding options - ending | $ 3,441,146 | |
Options vested and exercisable at December 31, 2023 | $ 1,758,134 | |
Weighted average remaining contractual life (year) | ||
Outstanding options, Weighted average remaining contractual life (years) | 4 years 6 months 10 days | |
Options vested and exercisable at December 31, 2023 | 2 years 9 months 29 days |
SHARE-BASED COMPENSATION - St_3
SHARE-BASED COMPENSATION - Stock Options - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SHARE BASED COMPENSATION | ||
Share based compensation expense | $ 2,606 | $ 4,425 |
Proceeds from the exercise of stock options | 121 | 142 |
Unrecognized stock-based compensation expense | 1,600 | |
Employee Stock Option | ||
SHARE BASED COMPENSATION | ||
Share based compensation expense | $ 500 | $ 800 |
Exercise of stock options for cash (In shares) | 82,300 | 155,649 |
Proceeds from the exercise of stock options | $ 120,555 | $ 142,330 |
Unrecognized stock-based compensation expense | $ 900 | $ 900 |
Unrecognized stock-based compensation expense recognition period | 1 year 10 months 24 days |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Weighted average grant date Fair value | ||
Share based compensation expense | $ 2,606 | $ 4,425 |
Unrecognized stock-based compensation expense | $ 1,600 | |
Restricted stock units | ||
Number of units | ||
Unvested balance - beginning | 2,261,048 | |
Granted | 119,888 | |
Vested | (727,249) | (293,707) |
Forfeited | (346,764) | |
Unvested balance - ending | 1,306,923 | 2,261,048 |
Weighted average grant date Fair value | ||
Unvested balance - beginning | $ 4.05 | |
Granted | 1.82 | |
Vested | 3.96 | |
Forfeited | 4.10 | |
Unvested balance - ending | $ 3.88 | $ 4.05 |
Share based compensation expense | $ 2,000 | $ 3,600 |
Number of units issued | 727,249 | 293,707 |
Aggregate fair market value | $ 2,900 | |
Number of unvested shares outstanding | 1,306,923 | 2,261,048 |
Unrecognized compensation cost expects to recognize over weighted-average period | 1 year 6 months |
SHARE-BASED COMPENSATION - Empl
SHARE-BASED COMPENSATION - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
SHARE BASED COMPENSATION | ||
Expected dividend yield | 0% | |
Share based compensation expense | $ 2,606 | $ 4,425 |
Unrecognized stock-based compensation expense | $ 1,600 | |
Employee Stock Purchase Plan | ||
SHARE BASED COMPENSATION | ||
Maximum employee contribution of the eligible earnings | 10% | |
Offering period (in months) | 6 months | |
Purchase price of common stock (in percent) | 85% | |
Risk-free interest rate | 5.50% | |
Expected term (years) | 6 months | |
Expected volatility | 129% | |
Expected dividend yield | 0% | |
Share based compensation expense | $ 46,700 | |
Unrecognized stock-based compensation expense | $ 9,524 |
REVENUES FROM CONTRACTS WITH _3
REVENUES FROM CONTRACTS WITH CUSTOMERS - Disaggregation of net revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | $ 59,662 | $ 70,995 |
Qbrexza | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 25,410 | 26,715 |
Accutane | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 20,168 | 18,373 |
Amzeeq | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 6,201 | 7,242 |
Targadox | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 3,204 | 7,972 |
Exelderm | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 2,395 | 3,463 |
Zilxi | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 1,962 | 2,273 |
Ximino | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | 287 | $ 4,957 |
Luxamend | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Product revenues | $ 35 |
REVENUES FROM CONTRACTS WITH _4
REVENUES FROM CONTRACTS WITH CUSTOMERS - Other revenue (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Other Revenue | |||
Other revenue | $ 19,519 | $ 2,674 | |
Customer concentration risk | |||
Other Revenue | |||
Royalty percentage | 2.50% | ||
Qbrexza | |||
Other Revenue | |||
Royalty percentage | 2.50% | ||
Net milestone payment from Maruho | |||
Other Revenue | |||
Other revenue | $ 19,000 | 2,500 | |
Non-refundable upfront payment from Maruho | |||
Other Revenue | |||
Other revenue | 19,000 | ||
Royalties on sales of Rapifort Wipes 2.5% | |||
Other Revenue | |||
Other revenue | $ 519 | 174 | |
Other revenue | Royalties on sales of Rapifort Wipes 2.5% | |||
Other Revenue | |||
Royalty percentage | 2.50% | ||
Sales | Net milestone payment from Maruho | |||
Other Revenue | |||
Other revenue | $ 2,500 |
REVENUES FROM CONTRACTS WITH _5
REVENUES FROM CONTRACTS WITH CUSTOMERS - Maruho License Agreement (Details) $ in Thousands, ¥ in Billions | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2023 USD ($) | Aug. 31, 2023 USD ($) | Aug. 31, 2023 JPY (¥) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
REVENUES FROM CONTRACTS WITH CUSTOMERS | |||||
Notice period for cancellation | 30 days | 30 days | |||
Other revenue | $ 19,519 | $ 2,674 | |||
New License Agreement | |||||
REVENUES FROM CONTRACTS WITH CUSTOMERS | |||||
Proceeds from non-refundable payment | $ 19,000 | $ 19,000 | |||
Amount of obligation payment terminated | $ 10,000 | 10,000 | |||
Remaining obligation payments | $ 45,000 | ||||
Other revenue | $ 19,000 | ||||
New License Agreement | Net sales of at least ¥4 billion (yen) | |||||
REVENUES FROM CONTRACTS WITH CUSTOMERS | |||||
Net sales | ¥ | ¥ 4 |
REVENUES FROM CONTRACTS WITH _6
REVENUES FROM CONTRACTS WITH CUSTOMERS - Significant customers (Details) - customer | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Product revenue | Customer concentration risk | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Number of customers | 0 | 0 |
Accounts receivable | One customer | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Number of customers | 1 | |
Accounts receivable | Credit Concentration Risk | Two customers | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Number of customers | 2 | |
Accounts receivable | Credit Concentration Risk | Customer One | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Concentration risk, percentage | 16.70% | |
Accounts receivable | Credit Concentration Risk | Customer Two | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Concentration risk, percentage | 10.40% | |
Accounts receivable | Credit Concentration Risk | One customer | ||
REVENUES FROM CONTRACTS WITH CUSTOMERS | ||
Number of customers | 1 | |
Concentration risk, percentage | 13% |
INCOME TAXES - Components of in
INCOME TAXES - Components of income tax provision (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
Federal | $ 34 | |
State | 187 | $ 63 |
Total current | 221 | 63 |
Federal | (753) | (6,701) |
State | (94) | (1,737) |
Total deferred | (847) | (8,438) |
Valuation allowance | 847 | 8,438 |
Total income tax expense | $ 221 | $ 63 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 4,376 | $ 6,553 |
Amortization of license fees | 5,603 | 4,951 |
R&D capitalization | 3,312 | 2,462 |
Stock compensation | 1,081 | 1,293 |
Lease liability | 27 | 48 |
Reserve on sales return, discount and bad debt | 3,566 | 2,988 |
Accruals and reserves | 723 | 574 |
Tax credits | 1,491 | 1,152 |
Business interest expense deduction limit | 322 | |
State taxes | 13 | |
Total deferred tax assets | 20,179 | 20,356 |
Less: valuation allowance | (20,154) | (19,307) |
Deferred tax assets, net | 25 | 1,049 |
Deferred tax liability: | ||
Section 481(a) adjustment on reserve on sales return, discount and bad debt | (1,001) | |
Right-of-use asset | $ (25) | $ (48) |
INCOME TAXES - Effective tax ra
INCOME TAXES - Effective tax rates (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Percentage of pre-tax income: | ||
U.S. federal statutory income tax rate | 21% | 21% |
State taxes, net of federal benefit | (1.00%) | 4% |
Non-deductible items | (4.00%) | 0% |
Provision to return | (1.00%) | 0% |
State tax adjustments | (1.00%) | 0% |
Change in valuation allowance | (23.00%) | (28.00%) |
Share-based compensation | (10.00%) | 0% |
Tax credits | 13% | 3% |
Effective income tax rate | (6.00%) | 0% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INCOME TAXES | ||
Valuation allowance recorded | $ 20,154 | $ 19,307 |
Valuation allowance | 800 | |
Increase in valuation allowance due to increase in NOL carryforward | 800 | |
Federal | ||
INCOME TAXES | ||
Net operating loss carryforwards | 15,600 | |
State | ||
INCOME TAXES | ||
Net operating loss carryforwards | 22,700 | |
Net operating loss carryforwards subject to expiration | $ 19,500 |
NET (LOSS) INCOME PER COMMON _3
NET (LOSS) INCOME PER COMMON SHARE (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Denominator | ||
Weighted-average shares outstanding - basic | 18,232,422 | 17,531,274 |
Dilutive impact from: | ||
Potentially dilutive securities | 20,884,538 | 21,358,453 |
Unvested restricted stock units | ||
Dilutive impact from: | ||
Potentially dilutive securities | 1,306,923 | 2,261,048 |
Employee Stock Option | ||
Dilutive impact from: | ||
Potentially dilutive securities | 1,345,193 | 1,566,131 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (3,853) | $ (29,628) |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |