Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Dec. 15, 2021 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Entity File Number | 001-41063 | |
Entity Registrant Name | JOURNEY MEDICAL CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-1879539 | |
Entity Address, Address Line One | 9237 E Via de Ventura Blvd. | |
Entity Address, Adress Line Two | Suite 105 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85258 | |
City Area Code | 480 | |
Local Phone Number | 434-6670 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | DERM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001867066 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock A | ||
Entity Common Stock, Shares Outstanding | 6,000,000 | |
Common excluding Class A | ||
Entity Common Stock, Shares Outstanding | 10,659,646 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash | $ 21,689 | $ 8,246 |
Accounts receivable, net | 31,738 | 23,928 |
Inventory | 11,614 | 1,404 |
Prepaid expenses and other current assets | 1,754 | 1,664 |
Total current assets | 66,795 | 35,242 |
Intangible asset, net | 13,043 | 15,029 |
Operating lease right-of-use asset, net | 111 | 175 |
Deferred tax assets | 8,361 | 1,454 |
Other assets | 749 | 6 |
Total assets | 89,059 | 51,906 |
Current liabilities | ||
Accounts payable | 28,180 | 1,839 |
Accounts payable - related party | 600 | 117 |
Accrued expenses | 26,048 | 21,498 |
Accrued expenses - related party | 433 | |
Installment payments - licenses, short-term (net of debt discount of $567 and $778 as of September 30, 2021 and December 31, 2020, respectively) | 4,433 | 4,522 |
Operating lease liabilities, short-term | 96 | 85 |
Total current liabilities | 59,790 | 28,061 |
Income tax payable | 99 | |
Note payable, related party | 14,972 | 5,220 |
Installment payments - licenses, long-term (net of debt discount of $461 and $863 as of September 30, 2021 and December 31, 2020, respectively) | 3,539 | 8,137 |
Derivative warrant liability | 4,365 | |
Convertible class A preferred stock settled note, short-term (net of debt discount of $1,923 as of September 30, 2021) | 18,078 | |
Operating lease liabilities, long-term | 24 | 97 |
Total liabilities | 100,768 | 41,614 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity (deficit) | ||
Additional paid-in capital | 5,413 | 5,171 |
(Accumulated deficit) retained earnings | (17,123) | 5,120 |
Total stockholders' (deficit) | (11,709) | 10,292 |
Total liabilities and stockholders' equity | 89,059 | 51,906 |
Common Stock A | ||
Stockholders' equity (deficit) | ||
Common stock, $.0001 par value, 50,000,000 shares authorized, 3,161,333 and 3,151,333 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively | $ 1 | $ 1 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Licenses debt discount, Current | $ 567 | $ 778 |
Licenses debt discount, Non current | 461 | $ 863 |
Convertible class A preferred stock, debt discount | $ 1,923 | |
Par value | $ 0.0001 | $ 0.0001 |
Common stock authorized | 50,000,000 | 50,000,000 |
Common stock issued | 3,161,333 | 3,151,333 |
Common stock outstanding | 3,161,333 | 3,151,333 |
Common Stock A | ||
Common stock authorized | 6,000,000 | |
Common stock issued | 6,000,000 | 6,000,000 |
Common stock outstanding | 6,000,000 | 6,000,000 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Unaudited Condensed Consolidated Statements of Operations | ||||
Product revenue, net | $ 19,610 | $ 9,447 | $ 45,617 | $ 30,808 |
Operating expenses | ||||
Cost of goods sold - product revenue | 11,167 | 3,379 | 22,559 | 10,313 |
Research and development | 718 | 747 | ||
Research and development-licenses acquired, expense | 76 | 13,819 | ||
Selling, general and administrative | 10,755 | 5,829 | 24,776 | 16,270 |
Wire transfer fraud loss | 9,540 | 9,540 | ||
Total operating expenses | 32,256 | 9,208 | 71,441 | 26,583 |
(Loss) income from operations | (12,646) | 239 | (25,824) | 4,225 |
Other expense | ||||
Interest expense | 1,373 | 187 | 2,936 | 492 |
Change in fair value of derivative liability | 2 | 184 | ||
Total other expense | 1,375 | 187 | 3,120 | 492 |
Net (loss) income before income taxes | (14,021) | 52 | (28,944) | 3,733 |
Income tax (benefit) expense | (3,375) | 23 | (6,701) | 952 |
Net (loss) income | $ (10,646) | $ 29 | $ (22,243) | $ 2,781 |
Net (loss) income per common share - basic | $ (1.16) | $ 0 | $ (2.43) | $ 0.30 |
Net (loss) income per common share - diluted | $ (1.16) | $ 0 | $ (2.43) | $ 0.26 |
Weighted average common shares outstanding - basic | 9,161,333 | 9,133,333 | 9,160,344 | 9,133,333 |
Weighted average common shares outstanding - diluted | 9,161,333 | 10,800,475 | 9,160,344 | 10,817,678 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common StockCommon Stock A | Common Stock | Paid-In Capital | Retained Earnings (Accumulated Deficit.) | Total |
Balance at Beginning at Dec. 31, 2019 | $ 1 | $ 2,914 | $ (163) | $ 2,752 | |
Balance at Beginning (in shares) at Dec. 31, 2019 | 6,000,000 | 3,133,333 | |||
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. | |||||
Stock-based compensation expense | 131 | 131 | |||
Contribution (distribution) of capital - extinguishment of related party payable | 1,159 | 1,159 | |||
Net income (loss) | 2,781 | 2,781 | |||
Balance at Ending at Sep. 30, 2020 | $ 1 | 4,204 | 2,618 | 6,823 | |
Balance at Ending (in shares) at Sep. 30, 2020 | 6,000,000 | 3,133,333 | |||
Balance at Beginning at Jun. 30, 2020 | $ 1 | 3,867 | 2,589 | 6,457 | |
Balance at Beginning (in shares) at Jun. 30, 2020 | 6,000,000 | 3,133,333 | |||
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. | |||||
Stock-based compensation expense | 32 | 32 | |||
Contribution (distribution) of capital - extinguishment of related party payable | 305 | 305 | |||
Net income (loss) | 29 | 29 | |||
Balance at Ending at Sep. 30, 2020 | $ 1 | 4,204 | 2,618 | 6,823 | |
Balance at Ending (in shares) at Sep. 30, 2020 | 6,000,000 | 3,133,333 | |||
Balance at Beginning at Dec. 31, 2020 | $ 1 | 5,171 | 5,120 | 10,292 | |
Balance at Beginning (in shares) at Dec. 31, 2020 | 6,000,000 | 3,151,333 | |||
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. | |||||
Stock-based compensation expense | 41 | 41 | |||
Exercise of stock options for cash | 7 | 7 | |||
Exercise of stock options for cash (In shares) | 10,000 | ||||
Contribution (distribution) of capital - extinguishment of related party payable | 194 | 194 | |||
Net income (loss) | (22,243) | (22,243) | |||
Balance at Ending at Sep. 30, 2021 | $ 1 | 5,413 | (17,123) | (11,709) | |
Balance at Ending (in shares) at Sep. 30, 2021 | 6,000,000 | 3,161,333 | |||
Balance at Beginning at Jun. 30, 2021 | $ 1 | 5,684 | (6,477) | (792) | |
Balance at Beginning (in shares) at Jun. 30, 2021 | 6,000,000 | 3,161,333 | |||
Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity. | |||||
Stock-based compensation expense | 8 | 8 | |||
Contribution (distribution) of capital - extinguishment of related party payable | (279) | (279) | |||
Net income (loss) | (10,646) | (10,646) | |||
Balance at Ending at Sep. 30, 2021 | $ 1 | $ 5,413 | $ (17,123) | $ (11,709) | |
Balance at Ending (in shares) at Sep. 30, 2021 | 6,000,000 | 3,161,333 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flows from Operating Activities: | ||
Net (loss) income | $ (22,243) | $ 2,781 |
Reconciliation of net loss to net cash provided by operating activities: | ||
Depreciation expense | 4 | |
Bad debt (reserve) expense | (67) | 47 |
Amortization of debt discount | 648 | |
Accretion of convertible preferred shares | 1,034 | |
Non-cash interest | 616 | 492 |
Extinguishment of related party income tax payable | 908 | |
Amortization of product revenue license fee | 1,983 | 1,065 |
Amortization of operating lease right-of-use assets | 64 | 68 |
Stock-based compensation expense | 41 | 131 |
Change in fair value of derivative liability | 184 | |
Deferred taxes (benefit) provision | (6,701) | 44 |
Research and development-licenses acquired, expense | 13,819 | |
Increase (decrease) in cash and cash equivalents resulting from changes in operating assets and liabilities: | ||
Accounts receivable | (7,743) | (2,205) |
Inventory | (10,210) | (195) |
Income tax payable | (99) | (14) |
Prepaid expenses and other current assets | 174 | 353 |
Other assets | (743) | (200) |
Accounts payable | 25,852 | 5,961 |
Accounts payable, related party | 695 | 42 |
Accrued expenses | 3,350 | (9,136) |
Accrued expenses, related party | 433 | |
Lease liabilities | (62) | (68) |
Net cash provided by operating activities | 1,025 | 78 |
Cash Flows from Investing Activities: | ||
Purchase of research and development licenses | (8,800) | (1,000) |
Net cash used in investing activities | (8,800) | (1,000) |
Cash Flows from Financing Activities: | ||
Proceeds from the exercise of stock options | 7 | |
Proceeds from Fortress note | 9,540 | |
Payment of license note payable | (5,300) | |
Proceeds from convertible preferred shares | 18,967 | |
Payment of debt issuance costs associated with convertible preferred shares | (1,996) | |
Net cash provided by financing activities | 21,218 | |
Net increase (decrease) in cash | 13,443 | (922) |
Cash at beginning of period | 8,246 | 4,801 |
Cash at end of period | 21,689 | 3,879 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 157 | 98 |
Supplemental disclosure of non-cash financing and investing activities: | ||
Unpaid debt offering cost | 214 | |
Unpaid deferred offering cost | 264 | |
Derivative warrant liability associated with convertible preferred shares | 362 | |
Extinguishment of related party payable relates to deferred tax assets | $ 194 | 251 |
Unpaid intangible assets | $ 3,727 |
ORGANIZATION AND PLAN OF BUSINE
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2021 | |
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”) was formed on July 18, 2014. 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 current product portfolio includes five branded and three authorized generic prescription drugs for dermatological conditions that are marketed in the U.S. The Company acquires rights to future products by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing, the products through their exclusive field sales organization. As of September 30, 2021 and December 31, 2020, the Company is a majority-owned subsidiary of Fortress Biotech, Inc. (“Fortress” or “Parent”). Liquidity and Capital Resources Since inception, the Company’s operations have been financed primarily through a working capital note from Fortress, cash received from customers and proceeds from the Company’s 8% Cumulative Convertible Class A Preferred Offering. For the next twelve months from the issuance of these unaudited interim condensed consolidated financial statements the Company will be able to fund its operations through a combination of its operating activities and the East West Bank Working Line of Credit of $7.5 million, see Note 12. On November 16, 2021, the Company completed an initial public offering (collectively the “Journey IPO” or “IPO”) of its common stock, which resulted in net proceeds of approximately $31.2 million, after deducting underwriting discounts and other offering costs. The Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance its capital structure. The Company may seek to raise capital through debt or equity financings to expand its product portfolio. If such funding is not available or not available on terms acceptable to the Company, the Company’s current plans for expansion of its product portfolio will be curtailed. In addition to the foregoing, the Company experienced minimal impact on revenue levels and its liquidity due to the worldwide spread of COVID-19. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
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 accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. The Company’s unaudited interim condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated. Emerging Growth Company From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited interim condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company upon completion of a public offering would meet the definition of an emerging growth company and would elect 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 unaudited condensed 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 product returns, coupons, rebates, chargebacks, discounts, allowances and distribution fees paid to certain wholesalers, inventory realization and useful lives of amortizable intangible assets. 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. Cash The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash at September 30, 2021 and December 31, 2020 consisted entirely of cash in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation insured limits. 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 16 for significant customers. Revenue Recognition The Company records revenue in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers 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 trade discounts, rebates, coupons and right of return. Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances. Accruals for these provisions are presented in the unaudited interim condensed consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated. Trade Discounts and Other Sales Allowances Product Returns The Company currently estimates products returns to be approximately 3% of gross sales to the wholesalers. The 3% rate is estimated by using both historical and industry data. On a quarterly basis, the Company monitors products returns and will adjust this percentage if needed. The Company does not estimate returns for sales made to the specialty pharmacies as their historical ordering pattern is approximately every two two Government Chargebacks U.S. Government Rebates current quarter; and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period. Coupons — Managed Care Rebates Accounts Receivable Accounts receivable consists of amounts due to the Company for product sales. The Company’s accounts receivable reflects discounts for estimated early payment. Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts that are outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due and the customer’s current ability to pay its obligation to the Company. The Company writes off accounts receivable when they become uncollectible. The allowance for doubtful accounts was $0.1 million at both September 30, 2021 and December 31, 2020. Inventories Inventories comprise raw materials and finished goods, which are valued at the lower of cost and net realizable value, on a first-in, first-out basis. The Company evaluates the carrying value of inventories on a regular basis, taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. The acquired Qbrezxa finished goods inventory includes a fair value step-up of $6.5 million, which will be expensed within cost of sales, as the inventory is sold to customers. All of the step-up finished goods inventory is expected to be sold in 2021. The Qbrezxa finished goods inventory fair value step-up expensed as a component of cost of goods sold for the three and nine months ended September 30, 2021, was $3.0 million and $4.2 million, respectively. Property and Equipment Computer equipment, furniture and fixtures and machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the estimated useful lives or the term of the respective leases. 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 primarily 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 property and equipment, for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. 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. Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. 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. Stock-based Compensation The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The fair value of the Company’s common stock underlying the stock options is also an input to the Black-Scholes option pricing model. The Company engages an independent third-party valuation firm to provide an estimate of the fair value of its common stock annually, utilizing input from management. The fair value of the Company’s common stock was determined considering a number of objective and subjective factors, including valuations of guideline public companies, transactions of guideline public companies, discounts for lack of control transactions, lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, which requires the use of a number of 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 stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Forfeitures are recorded as they occur. All stock-based compensation costs are recorded in selling, general and administrative (“SG&A”) expense in the unaudited condensed consolidated statements of operations. Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved. Research and development costs primarily consist of personnel related expenses, stock-based compensation, payments made to third parties for license and milestone costs related to in-licensed products and technology, payments made to third party contract research organizations. In accordance with Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development Allocated Parent Cost Certain Parent costs associated with the activities of the Company have been allocated. The expense allocations to Journey are employee and stock-based compensation for finance and accounting services provided to the Company based on time spent on Journey projects. The allocations were based on assumptions that management believes are reasonable. For the three months ended September 30, 2021 and 2020, the allocated expenses were approximately $0.2 million and nil, respectively, and were recorded to selling, general and administration expenses. For the nine months ended September 30, 2021 and 2020, the allocated expenses were approximately $0.4 million and nil, respectively, and were recorded to selling, general and administration expenses. Income Taxes As of September 30, 2021 and December 31, 2020, the Company is included in the Fortress consolidated federal tax return and consolidated or combined state tax returns in multiple jurisdictions. The Company’s unaudited interim condensed consolidated financial statements recognize the current and deferred income tax consequences that result from the Company’s activities during the current and preceding periods pursuant to the provisions of ASC Topic 740, Income Taxes, 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 Company’s use of net operating losses (“NOLs”) of Fortress (including other Fortress group members) alternatively any Company NOLs will accrue to the benefit of Fortress. Since Fortress does not require the Company to pay in any form for the utilization of the consolidated group’s NOLs, the tax benefit the Company realizes has been recorded as a capital contribution and any Company NOLs accrued to Fortress’ benefit would be a deemed dividend. 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 management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of cumulative tax and book income incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will realize the benefits of the net deferred tax assets as of September 30, 2021 and December 31, 2020. 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. As of September 30, 2021 and December 31, 2020, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company would classify 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 in 2021 or 2020. Earnings Per Share Basic net income (loss) per share of common stock is calculated by dividing net income (loss) 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 (“RSUs”), determined using the treasury stock method. See Note 18 below. Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Recently Issued Accounting Pronouncements In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) In August 2020, the FASB issued ASU 2020-06 “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2021 | |
INVENTORY | |
INVENTORY | NOTE 3. INVENTORY The Company’s inventory consists of the following: September 30, December 31, ($in thousands) 2021 2020 Raw materials $ 5,453 $ — Work-in-process — — Finished goods 6,161 1,404 Total inventories $ 11,614 $ 1,404 The acquired Qbrezxa finished goods inventory includes a fair value step-up of $6.5 million, which will be expensed within cost of sales, as the inventory is sold to customers. All of the step-up finished goods inventory is expected to be sold in 2021. For additional information on the Company’s acquisition of Qbrexza, please refer to Note 5. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4. PROPERTY AND EQUIPMENT The Company’s property and equipment consisted of the following: Useful Life September 30, December 31, ($in thousands) (Years) 2021 2020 Leasehold improvements 2 11 11 Total property and equipment 11 11 Less: Accumulated depreciation (11) (11) Property and equipment, net $ — $ — The Company’s depreciation expense for the three months ended September 30, 2021 and 2020 was nil and $1,000, respectively. The Company’s depreciation expense for the nine months ended September 30, 2021 and 2020 was nil and $4,000, respectively. Depreciation expense is recorded as a component of selling, general and administrative expense in the unaudited condensed consolidated statements of operations . |
INTANGIBLES
INTANGIBLES | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLES | |
INTANGIBLES | NOTE 5. INTANGIBLES On March 31, 2021, the Company executed an Asset Purchase Agreement (the “Qbrexza APA”) with Dermira, Inc. a subsidiary of Eli Lilly and Company (“Dermira”). Pursuant to the terms of the agreement, the Company acquired the rights to Qbrexza® (glycoprronium), a prescription cloth towelette to treat primary axillary hyperhidrosis in patients nine years of age or older. Upon HSR acceptance, which was received on May 13, 2021, the Company paid the upfront fee of $12.5 million to Dermira. In addition, Dermira is eligible to receive up to $144 million in the aggregate upon the achievement of certain sales milestones. The royalty structure for the agreement is tiered with royalties for the first two years ranging from approximately 40% to 30%. Thereafter for a period of eight years royalties are approximately 12.0% to 19.0%. Royalty amounts are subject to 50% diminution in the event of loss of exclusivity due to the introduction of an authorized generic. Upon closing of the Qbrexza® purchase, the Company became substituted for Dermira as the plaintiff in U.S. patent litigation commenced by Dermira on October 21, 2020 in the U.S. District Court of Delaware (the “Patent Litigation”) against Perrigo Pharma International DAC (“Perrigo”) alleging infringement of certain patents covering Qbrexza® (the “Qbrexza® Patents”), which are included among the proprietary rights to Qbrexza®. The Patent Litigation was initiated following the submission by Perrigo, in accordance with the procedures set out in the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”), of an Abbreviated New Drug Application (“ANDA”). The ANDA seeks approval to market a generic version of Qbrexza® prior to the expiration of the Qbrexza® Patents and alleges that the Qbrexza® Patents are invalid. Perrigo is subject to a 30-month stay preventing it from selling a generic version, but that stay is set to expire on March 9, 2023. Trial in the Patent Litigation is scheduled for September 19, 2022. The Company cannot make any predictions about the final outcome of this matter or the timing thereof. The purchase price of $12.5 million included the asset Qbrexza as well as finished goods and raw material inventory. The Company also has the obligation to accept any product returns related to sales made by Dermira. The Company allocated the upfront payment to inventory since the fair value of the inventory and Qbrexza rights exceeded the purchase price. The future contingent milestone payments, if achieved, will be recorded to intangible asset and amortized over the seven-year life of the asset commencing on the closing date. The table below provides a summary of the Company’s intangible assets at September 30, 2021 and December 31, 2020, respectively: Estimated Useful ($in thousands) Lives (Years) September 30, 2021 December 31, 2020 (Unaudited) Ceracade ® 3 $ 300 $ 300 Luxamend ® 3 50 50 Targadox ® 3 1,250 1,250 Ximino ® 7 7,134 7,134 Exelderm ® 3 1,600 1,600 Accutane 5 4,727 4,727 Anti-itch product (1) 3 3,942 3,945 Total intangible assets 19,003 19,006 Accumulated amortization (5,960) (3,977) Net intangible assets $ 13,043 $ 15,029 (1) As of September 30, 2021, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the three or nine months ended September 30, 2021. Commercial launch of this product is expected in the first half of 2022. The Company’s amortization expense for the three months ended September 30, 2021 and 2020 was approximately $0.7 million and $0.4 million, respectively. The Company’s amortization expense for the nine months ended September 30, 2021 and 2020 was approximately $2.0 million and $1.1 million, respectively. Amortization expense is recorded as a component of cost of goods sold in the Company’s unaudited condensed consolidated statements of operations. The table below provides a summary for the nine months ended September 30, 2021, of the Company’s recognized expense related to its product licenses, which was recorded in costs of goods sold on the unaudited condensed consolidated statement of operations: Intangible ($in thousands) Assets, Net Beginning balance at January 1, 2021 $ 15,029 Reductions: Anti-itch Product license acquisition adjustment (3) Amortization expense (1,983) Ending balance at September 30, 2021 $ 13,043 Future amortization of the Company’s intangible assets is as follows: Total ($in thousands) Ximino® Accutane® Amortization Three months ending December 31, 2021 $ 255 $ 236 $ 491 Year ended December 31, 2022 1,019 946 1,965 Year ended December 31, 2023 1,019 945 1,964 Year ended December 31, 2024 1,019 946 1,965 Year ended December 31, 2025 1,019 945 1,964 Thereafter 595 157 752 Sub-total $ 4,926 $ 4,175 $ 9,101 Assets not yet placed in service: Anti-itch product license acquisition — — 3,942 Total $ 4,926 $ 4,175 $ 13,043 |
LICENSE ACQUIRED
LICENSE ACQUIRED | 9 Months Ended |
Sep. 30, 2021 | |
LICENSES ACQUIRED | |
LICENSES ACQUIRED | NOTE 6. LICENSES ACQUIRED On June 29, 2021, the Company entered a license, collaboration, and assignment agreement (the “DFD Agreement”) to obtain the global rights for the development and commercialization of a late-stage development modified release oral minocycline for the treatment of rosacea (“DFD-29”) with Dr. Reddy’s Laboratories, Ltd (“DRL”). Pursuant to the terms and conditions of the DFD-29 Agreement, the Company agreed to pay $10.0 million, of which $2.0 million (the “First Installment”) was paid upon execution and $8.0 million (the “Second Installment”) is payable 90 days following June 29, 2021. Additional contingent regulatory and commercial milestone payments totaling up to $163.0 million are also payable. Royalties ranging from approximately 10% to approximately 15% are payable on net sales of the DFD-29 product. In accordance with ASC 730-10-25-1, Research and Development Additionally, the Company is required to fund and oversee the Phase 3 clinical trials approximating $24.0 million, based upon the current development plan and budget. Either party may terminate the agreement prior to NDA approval in the event of bankruptcy or a material breach that remains uncured beyond the applicable cure period. Additionally, DRL may terminate the agreement if Company: i.) ceases development of the product for 6 consecutive months (except if such cessation is caused by DRL, applicable laws, or action/inaction of any third party beyond Company's control); ii.) files a patent challenge on any claim for a product patent or DRL background patent; or iii.) fails to initiate development of the product in the European Union ("EU") (such termination solely relates to the rights granted in EU) within 24 months after product regulatory approval or cause first commercial sale in at least one country in the EU within 72 months after product regulatory approval. The DFD Agreement also includes contingent payments to be made to DRL in the event of an Initial Public Offering (“IPO”) of the Company or sale of the Company, See Note 7. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2021 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 7: FAIR VALUE MEASUREMENTS 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, 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. Placement Agent Warrants In connection with the Company’s Class A Preferred Stock offering (see Note 15), the Company will issue upon a Qualified Financing (an external financing of $25.0 million or greater) to the placement agent warrants (“the Placement Agent Warrants”) to purchase 5% of the shares of common stock into which the Class A Preferred Stock converts. The Placement Agent Warrants have a term of 5 years. At September 30, 2021, the value of the placement agent warrants was deemed to be $0.5 million. In connection with the Company’s IPO the company issued 111,567 shares of common stock in related to the conversion of all of the warrants. Contingent Payment Derivative In connection with the DFD Agreement, the Company agreed to pay DRL additional consideration upon either an initial public offering of the Company’s common stock (“IPO”) or an acquisition of the Company, the agreement further specifies that only one payment can be made. The contingent payment associated with an IPO of the Company’s common stock, is deemed to be achieved if upon the completion of an IPO the Company’s market capitalization on a fully diluted basis is $150 million or greater at the close of business on the date of such IPO. The payment due for the achievement of the IPO criteria is a follows: (a) issue to DRL a number of shares of the Company’s common stock equal to $5.0 million as calculated using a fifteen (15) day volume weighted average price (“VWAP”) of the Company’s closing price, measured fifteen (15) days following the IPO; or (b) make a cash payment to DRL equal to $5.0 million. In connection with the Company’s IPO on November 16, 2021, calculated using a 15-day VWAP of $9.1721 per share, we issued 545,131 unregistered shares of common stock in the Company to DRL. The restrictions on the unregistered shares of common stock are governed by the terms set forth in the DFD Agreement and applicable securities laws. In the event the IPO contingency was not satisfied, and the Company or its affiliate executes a definitive agreement for an acquisition event during the period beginning on June 29, 2021 and ending twenty-four (24) months after the regulatory approval of DFD-29 (“Acquisition Event”), the Company shall pay to DRL: (a) 20% of the value of DFD-29 attributable to the acquisition event, if such acquisition event occurs between closing and New Drug Application (“NDA”) approval; or (b) 12% of the value of DFD-29 attributable to the acquisition event, if such acquisition event occurs within 24 months after NDA approval. However, since the IPO contingency was satisfied on November 12, 2021 there is no further obligation to make a payment to DRL in the event of an Acquisition Event. The Company valued the contingent payment discussed above utilizing a Probability Weighted Expected Return Method (PWERM) model. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of September 30, 2021 were as follows: September 30, 2021 Discount rate 30 % Expected dividend yield — Expected term 3 months to 5 years At September 30, 2021 the value of the contingent payment warrant is $3.8 million, and was recorded on the unaudited condensed consolidated balance sheet. No liability was recorded at December 31, 2020. The following table classifies into the fair value hierarchy of the Company’s financial instruments, measured at fair value as of September 30, 2021: Fair Value Measurement as of September 30, 2021 ($in thousands) Level 1 Level 2 Level 3 Total Liabilities Derivative warrant liabilities $ — $ — $ 4,365 $ 4,365 Total $ — $ — $ 4,365 $ 4,365 The table below provides a roll-forward of the changes in fair value of Level 3 financial instruments as of September 30, 2021: Warrants ($in thousands) liabilities Balance at December 31, 2020 $ — Additions: Contingent payment warrant 3,819 Placement agent warrant 362 Change in fair value of warrant liability 184 Balance at September 30, 2021 $ 4,365 During the nine-month period ended September 30, 2 2 |
RELATED PARTY AGREEMENTS
RELATED PARTY AGREEMENTS | 9 Months Ended |
Sep. 30, 2021 | |
RELATED PARTY AGREEMENTS | |
RELATED PARTY AGREEMENTS | NOTE 8. RELATED PARTY AGREEMENTS Shared Services Agreement with Fortress On November 12, 2021, the Company and Fortress entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees. Fortress’s Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Agreement, the Company will reimburse Fortress for the salary and benefit costs associated with these employees based upon actual hours worked on Journey related projects following the completion of their initial public offering. To date, Fortress employees have provided services to the Company totaling approximately $0.5 million. Upon completion of the Company’s initial public offering, the amount converted into 52,438 shares of Journey common stock at the initial public offering price of $10.00 per share. In addition, In the normal course of business, the Company reimburses Fortress for various payroll related costs and selling, general and administrative costs. As of September 30, 2021 and December 31, 2020, the Company had a balance of approximately $1.0 million and $0.1 million, respectively, recorded as accounts payable and accrued expenses – related party on the condensed consolidated balance sheets. Fortress Note Since the Company’s inception in October 2014, Fortress has funded the Company’s operations through a working capital loan pursuant to the terms of a future advance promissory note (the “Fortress Note”). The Fortress Note matures on or before December 31, 2024. On September 30, 2021, the Fortress increased the Journey promissory note by $9.5 million in response to a cyber incident that occurred at Journey and resulted in $9.5 million of fraudulent payments. The $9.5 million contribution was approved by the boards of directors of both the Fortress and Journey and will ensure that Journey’s accounts payable function will continue to operate smoothly. This contribution, along with $5.2 million already outstanding under the Journey Promissory Note converted into 1,476,044 shares of Journey common stock upon the consummation of the Journey IPO at the Journey IPO price of $10.00 per share. At September 30, 2021 and December 31, 2020, the Company’s outstanding balance under the related party note was approximately $14.7 million and $5.2 million, respectively. The related party note to Fortress is recorded as a long-term note payable on the condensed consolidated balance sheets and is an interest-free note. Fortress Income Tax At of September 30, 2021, the Company is 93% owned by Fortress and has been filing consolidated federal tax returns and consolidated or combined state tax returns in multiple jurisdictions with Fortress. In connection with the filing of the consolidated tax return, the Company’s tax liabilities for the year ended December 31, 2020 of $1.9 million was satisfied utilizing NOLs generated by Fortress. Extinguishment of these liabilities to Fortress was recorded on the Company’s condensed consolidated balance sheets as a contribution of capital. Additionally, see Note 17 below for a discussion of income taxes. Avenue Secondment with Journey Effective June 1, 2021, Avenue and the Company entered into a secondment agreement for a certain Avenue employee to be seconded to the Company. During the secondment, the Company will have the authority to supervise the Avenue employee and will reimburse Avenue for the employee’s salary and salary-related costs. The term of this agreement lasts until the approval of IV tramadol by the FDA or until the employee’s services are needed again by the Fortress. The amount reimbursable to Avenue is approximately $0.1 million for the three and nine months ended September 30, 2021. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 9. ACCRUED EXPENSES Accrued expenses consisted of the following: September 30, December 31, ($in thousands) 2021 2020 (Unaudited) Accrued expenses: Accrued employee compensation $ 2,411 $ 2,041 Research and development - license fees 629 — Accrued royalties payable 4,496 2,682 Accrued coupon and rebates 12,449 12,869 Reserve for product returns 3,652 2,580 Other 2,411 1,326 Total accrued expenses $ 26,048 $ 21,498 |
INSTALLMENT PAYMENTS - LICENSES
INSTALLMENT PAYMENTS - LICENSES | 9 Months Ended |
Sep. 30, 2021 | |
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 periods presented: September 30, 2021 Anti-Itch ($in thousands) Ximino 1 Accutane 2 Product 3 Total Installment payments - licenses, short-term $ 2,000 $ 2,000 $ 1,000 $ 5,000 Less: imputed interest (472) (84) (11) (567) Sub-total installment payments - licenses, short-term $ 1,528 $ 1,916 $ 989 $ 4,433 Installment payments - licenses, long-term $ 3,000 $ 1,000 $ — $ 4,000 Less: imputed interest (428) (33) — (461) Sub-total installment payments - licenses, long-term $ 2,572 $ 967 $ — $ 3,539 Total installment payments - licenses $ 4,100 $ 2,883 $ 989 $ 7,972 December 31, 2020 Anti-Itch ($in thousands) Ximino 1 Accutane 2 Product 3 Total Installment payments - licenses, short-term $ 2,000 $ 500 $ 2,800 $ 5,300 Less: imputed interest (602) (122) (54) (778) Sub-total installment payments - licenses, short-term $ 1,398 $ 378 $ 2,746 $ 4,522 Installment payments - licenses, long-term $ 5,000 $ 3,000 $ 1,000 $ 9,000 Less: imputed interest (775) (88) — (863) Sub-total installment payments - licenses, long-term $ 4,225 $ 2,912 $ 1,000 $ 8,137 Total installment payments - licenses $ 5,623 $ 3,290 $ 3,746 $ 12,659 Note 1: Imputed interest rate of 11.96% and maturity date of July 22, 2024. Note 2: Imputed interest rate of 4.03% and maturity date of July 29, 2023. Note 3: Imputed interest rate of 4.25% and maturity date of January 1, 2022. |
OPERATING LEASE OBLIGATIONS
OPERATING LEASE OBLIGATIONS | 9 Months Ended |
Sep. 30, 2021 | |
OPERATING LEASE OBLIGATIONS | |
OPERATING LEASE OBLIGATIONS | NOTE 11. OPERATING LEASE OBLIGATIONS The Company leases 3,681 square feet of office space in Scottsdale, Arizona. In August 2020, the Company amended its office lease and extended the lease term for an additional 25 months at an annual rate of approximately $0.1 million. The term of the amended lease commenced on December 1, 2020 and will expire on December 31, 2022. The Company recorded rent expense as follows: Three Months Ended September 30, Nine Months Ended September 30, ($in thousands) 2021 2020 2021 2020 Lease cost Operating lease cost 23 23 67 70 Variable lease cost 1 — 3 — Total lease cost $ 24 $ 23 $ 70 $ 70 The following table summarizes quantitative information about the Company’s operating leases: Nine Months Ended September 30, ($in thousands) 2021 2020 Operating cash flows from operating leases $ 67 $ 70 Weighted-average remaining lease term – operating leases 1.1 0.3 Weighted-average discount rate – operating leases 4.0 % 6.0 % As of September 30, 2021, future minimum lease payments under lease agreements associated with the Company’s operations were as follows: Future Lease ($in thousands) Liability Three Months Ended December 31, 2021 $ 24 Year Ended December 31, 2022 100 Total 124 Less: present value discount (4) Operating lease liabilities $ 120 |
LINE OF CREDIT
LINE OF CREDIT | 9 Months Ended |
Sep. 30, 2021 | |
LINE OF CREDIT. | |
LINE OF CREDIT | NOTE 12. LINE OF CREDIT East West Bank Working Capital Line of Credit On March 31, 2021, the Company entered into an agreement with East West Bank (“EWB”) in which EWB agreed to provide a $7.5 million working capital line of credit. The line of credit is secured by the Company’s receivables and cash. Interest on the line is the greater of 4.25% or the Prime Rate plus 1%. The agreement matures in 36 months. There have been no amounts drawn upon this line of credit during the three or nine months ended September 30, 2021. |
INTEREST EXPENSE AND FINANCING
INTEREST EXPENSE AND FINANCING FEES | 9 Months Ended |
Sep. 30, 2021 | |
INTEREST EXPENSE AND FINANCING FEES | |
INTEREST EXPENSE AND FINANCING FEES | NOTE 13. INTEREST EXPENSE AND FINANCING FEES Interest expense and financing fees for the periods consisted of the following: Three Months Ended September 30, 2021 2020 ($in thousands) Interest Fees 1 Total Interest Fees 1 Total Convertible preferred shares $ 450 $ 378 $ 828 $ — $ — $ — Dividend payable 365 — 365 — — — Installment payments - licenses 2 170 — 170 187 — 187 Anti-itch product Note 10 — 10 — — — Total Interest Expense and Financing Fee $ 995 $ 378 $ 1,373 $ 187 $ — $ 187 Nine Months Ended September 30, 2021 2020 ($in thousands) Interest Fees 1 Total Interest Fees 1 Total Convertible preferred shares $ 1,034 $ 648 $ 1,682 $ — $ — $ — Dividend payable 628 — 628 — — — Installment payments - licenses 2 616 — 616 492 — 492 Anti-itch product Note 10 — 10 — — — Total Interest Expense and Financing Fee $ 2,288 $ 648 $ 2,936 $ 492 $ — $ 492 Note 1: Amortization of fees in connection with debt raises. Note 2: Imputed interest expense related to Ximino, Accutane and anti-itch cream acquisitions. The conversion premium relates to the 15% discount at which the Class A Preferred Stock converts, see Note 15. In accordance with the measurement and recognition guidance of ASC 835-30 Imputation of Interest, the Company will accrete the convertible preferred share settled notes to the estimated settlement amount of $14.7 million. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. COMMITMENTS AND CONTINGENCIES License Agreements The Company has undertaken to make contingent milestone payments to the licensors of its portfolio of drug products and candidates. In addition, the Company shall pay royalties to such licensors based on a percentage of net sales of each drug candidate following regulatory marketing approval. For additional information on future milestone payments and royalties, see Note 5. |
STOCKHOLDERS' EQUITY AND CLASS
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2021 | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | NOTE 15. STOCKHOLDERS’ EQUITY AND CLASS A PREFERRED STOCK Common Stock The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue 50,000,000 shares of $0.0001 par value Common Stock of which 6,000,000 shares are designated and authorized as Class A Common Stock. Voting Rights Each holder of Common Stock is entitled to one vote per share of Common Stock held on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s Certificate of Incorporation and bylaws do not provide for cumulative voting rights. Each holder of Class A Common Stock is entitled to a number of votes that is equal to 1.1 times a fraction, the numerator of which is the sum of the shares of outstanding Common Stock including the Class A Common Stock and the denominator of which is the number of outstanding shares of Class A Common Stock. Thus, the 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. 8% Cumulative Convertible Class A Preferred Offering In March 2021, the Company commenced an offering of 8% Cumulative Convertible Class A Preferred Stock (“Class A Preferred Offering”) in an aggregate minimum amount of $12.5 million and an aggregate maximum amount of $30.0 million. The Class A Preferred Offering terminated on July 18, 2021. The Class A Preferred Stock automatically converts into the Company’s Common Stock upon a sale of the Company or a financing in an amount of at least $25.0 million within a year of the closing date of the Class A Preferred Offering (extendable by another six months at the Company’s option) at a discount of 15% to the per share qualified stock price. In the event that neither a sale of the Company nor a $25.0 million financing is completed, the Class A Preferred Stock will be exchanged for shares of Fortress common stock, at a 7.5% discount to the average Fortress common stock trading price over the 10-day period preceding such exchange. The Company has completed five closings in connection with the Class A Preferred Offering (“Closings”). In connection with the Closings, the Company issued an aggregate of 758,680 Class A Preferred shares at a price of $25.00 per share, for gross proceeds of $19.0 million. Following the payment of placement agent fees of $1.9 million, and other expenses of $0.1 million, the Company received $17.0 million of net proceeds. In connection with the Company’s IPO the company issued 2,231,346 shares of common stock in connection with the conversion of all of the preferred stock. The Company evaluated the terms of the Class A Preferred Offering under ASC 480, Distinguishing Liabilities from Equity Dividends on the Class A Preferred Stock will be paid quarterly in shares of Fortress common stock based upon a 7.5% discount to the average trading price over the 10-day period preceding the dividend payment date As consideration for the foregoing, the Company will issue to Fortress additional shares of common stock, debt securities, or a combination of the two for the amount of such dividend. At September 30, 2021, the Company recorded $0.4 million representing the dividend payable on September 30, 2021 to the Class A Preferred Stock shareholders. This amount is recorded in accrued expenses, related party. Stock Options In 2015, the Company’s Board of Directors adopted, and stockholders approved, the Journey Medical 2015 Stock Plan (the “Plan”) authorizing the Company to grant up to 3,000,000 shares of common stock to eligible employees, directors, and consultants in the form of restricted stock, stock options and other types of grants. In August 2020, the Company’s Board of Directors approved an increase to the shares available for issuance under the Plan by 642,857 shares. The amount, terms, and exercisability provisions of grants are determined by the Board of Directors. As of September 30, 2021 and December 31, 2020, 1,158,667 and 34,000 shares, respectively, were available for issuance under the Plan. The following table summarizes the Company’s stock option activities: Weighted average Total remaining Weighted average weighted average contractual life Number of shares exercise price intrinsic value (years) Outstanding options at December 31, 2020 2,142,000 $ 0.80 $ 7,934,320 5.72 Exercised (10,000) 0.68 — — Forfeited (22,666) 1.37 — — Outstanding options at September 30, 2021 2,109,334 $ 0.79 $ 7,825,129 4.94 Options vested and exercisable at September 30, 2021 1,988,416 $ 0.75 $ 7,448,011 4.78 During the nine months ended September 30, 2021, exercises of stock options resulted in total proceeds of approximately $7,000. For the three months ended September 30, 2021 and 2020, the Company recognized approximately $8,000 and $32,000 , respectively, of stock-based compensation expense related to options. For the nine months ended September 30, 2021 and 2020, the Company recognized approximately $41,000 and $131,000, respectively of stock-based compensation expense related to options. Stock option expense is recorded as a component of SG&A in the Company’s unaudited interim condensed consolidated statements of operations. As of September 30, 2021, the Company had unrecognized stock-based compensation expense related to all unvested options of $34,000, which the Company expects to recognize over a weighted-average period of approximately 1.2 years. Restricted Stock Units Weighted average grant Number of shares price Unvested balance at December 31, 2020 815,524 $ 3.37 Restricted stock units forfeited (107,000) 3.37 Unvested balance at September 30, 2021 708,524 $ 3.37 The unvested RSUs vest contingent upon a change of control, sale of the Company or an initial public offering event occurring within five years of the grant date. As of September 30, 2021, no stock-based compensation expense has been recorded related to these grants. Stock-based compensation expense for these awards in the amount of $2.8 million, the fair value as calculated on the grant date, will be recorded if and when it becomes probable that one of the contingent vesting events will be achieved. |
REVENUES FROM CONTRACTS AND SIG
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | 9 Months Ended |
Sep. 30, 2021 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | NOTE 16. REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS Disaggregation of Net Revenues The Company has the following marketed products, Qbrexza®, Accutane®, Targadox®, Ximino®, Exelderm®, Luxamend® and Ceracade®. Substantially all of the Company’s product revenues are recorded in the U.S. Revenues by product are summarized as follows (dollars in thousands): Three months ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue Targadox® $ 5,184 $ 7,214 $ 18,110 $ 22,195 Ximino® 2,864 1,031 6,277 5,854 Exelderm® 1,366 1,226 4,319 2,913 Accutane® 3,531 — 5,672 — Qbrexa® 6,636 — 11,204 — Other branded revenue 29 (24) 35 (154) Total Product revenue, net $ 19,610 $ 9,447 $ 45,617 $ 30,808 Significant Customers For the three months ended September 30, 2021, one of the Company’s customers accounted for more than 10% of its total gross product revenue. For the nine months ended September 30, 2021, none of the Company’s customers accounted for more than 10% of its total gross product revenue As of September 30, 2021, two of the Company’s customers accounted for more than 10% of its total accounts receivable balance at 20.7% and 14.9%. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2021 | |
INCOME TAXES | |
INCOME TAXES | NOTE 17. INCOME TAXES 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 management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of cumulative tax and book income incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will realize the benefits of the net deferred tax assets as of September 30, 2021 and 2020. For the nine months ended September 30, 2021 and 2020, income tax expense or (benefit) was ($6.7 million) and $1.0 million, respectively, resulting in an effective income tax rate of 23.19% and 25.43%, respectively. The change in effective tax rate is due to changes in unfavorable permanent book tax differences. 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. As of September 30, 2021, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company would classify 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 September 30, 2021. |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 9 Months Ended |
Sep. 30, 2021 | |
NET INCOME PER COMMON SHARE | |
NET INCOME PER COMMON SHARE | NOTE 18. NET INCOME PER COMMON SHARE The following shares of potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding, as the effect of including such securities would be anti-dilutive for the three and nine months ended September 30, 2021: Three Months Ended Nine Months Ended September 30, 2021 Unvested restricted stock units 718,415 750,857 Outstanding Options 1,730,717 1,734,157 Total potential dilutive effect 2,449,132 2,485,014 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 three and nine months ended September 30, 2021, as the effect would be to reduce the loss per share. Therefore, the weighted average common stock outstanding used to calculate both basic and diluted income loss per share is the same for the three and nine months ended September 30, 2021. The following is a reconciliation of the numerator and denominator of the diluted net income per share computations for the three and nine-month periods ended September 30, 2020 (in thousands except for share and per share amounts): Three Months Ended Nine Months Ended September 30, 2020 Net income $ 29 $ 2,781 Weighted average shares outstanding - basic 9,133,333 9,133,333 Stock options 1,667,142 1,684,345 Weighted average shares outstanding - diluted 10,800,475 10,817,678 Per share data: Basic $ — $ 0.30 Diluted $ — $ 0.26 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | NOTE 19. SUBSEQUENT EVENT Journey Initial Public Offering (the “Journey IPO”) The Journey IPO closed on November 16, 2021, resulting in the issuance of 3,520,000 shares of Journey’s common stock. The shares were issued at $10.00 per share, resulting in net proceeds of approximately $31.2 million, after deducting underwriting discounts and other offering costs. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. The Company’s unaudited interim condensed consolidated financial statements include the accounts of the Company and the accounts of the Company’s wholly-owned subsidiary, JG Pharma, Inc. (“JG” or “JG Pharma”). All intercompany balances and transactions have been eliminated. |
Emerging Growth Company | Emerging Growth Company From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s unaudited interim condensed consolidated financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended, the Company upon completion of a public offering would meet the definition of an emerging growth company and would elect 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 unaudited condensed 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 product returns, coupons, rebates, chargebacks, discounts, allowances and distribution fees paid to certain wholesalers, inventory realization and useful lives of amortizable intangible assets. 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. |
Cash | Cash The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash at September 30, 2021 and December 31, 2020 consisted entirely of cash in institutions in the United States. Balances at certain institutions have exceeded Federal Deposit Insurance Corporation insured limits. |
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 16 for significant customers. |
Revenue Recognition | Revenue Recognition The Company records revenue in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers 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 trade discounts, rebates, coupons and right of return. Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances. Accruals for these provisions are presented in the unaudited interim condensed consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated. Trade Discounts and Other Sales Allowances Product Returns The Company currently estimates products returns to be approximately 3% of gross sales to the wholesalers. The 3% rate is estimated by using both historical and industry data. On a quarterly basis, the Company monitors products returns and will adjust this percentage if needed. The Company does not estimate returns for sales made to the specialty pharmacies as their historical ordering pattern is approximately every two two Government Chargebacks U.S. Government Rebates current quarter; and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period. Coupons — Managed Care Rebates |
Accounts Receivable | Accounts Receivable Accounts receivable consists of amounts due to the Company for product sales. The Company’s accounts receivable reflects discounts for estimated early payment. Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts that are outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due and the customer’s current ability to pay its obligation to the Company. The Company writes off accounts receivable when they become uncollectible. The allowance for doubtful accounts was $0.1 million at both September 30, 2021 and December 31, 2020. |
Inventories | Inventories Inventories comprise raw materials and finished goods, which are valued at the lower of cost and net realizable value, on a first-in, first-out basis. The Company evaluates the carrying value of inventories on a regular basis, taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. The acquired Qbrezxa finished goods inventory includes a fair value step-up of $6.5 million, which will be expensed within cost of sales, as the inventory is sold to customers. All of the step-up finished goods inventory is expected to be sold in 2021. The Qbrezxa finished goods inventory fair value step-up expensed as a component of cost of goods sold for the three and nine months ended September 30, 2021, was $3.0 million and $4.2 million, respectively. |
Property and Equipment | Property and Equipment Computer equipment, furniture and fixtures and machinery and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the estimated useful lives or the term of the respective leases. |
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 primarily 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 property and equipment, for impairment at least annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. 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. |
Leases | Leases Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. |
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. |
Stock-based Compensation | Stock-based Compensation The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The fair value of the Company’s common stock underlying the stock options is also an input to the Black-Scholes option pricing model. The Company engages an independent third-party valuation firm to provide an estimate of the fair value of its common stock annually, utilizing input from management. The fair value of the Company’s common stock was determined considering a number of objective and subjective factors, including valuations of guideline public companies, transactions of guideline public companies, discounts for lack of control transactions, lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, which requires the use of a number of 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 stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Forfeitures are recorded as they occur. All stock-based compensation costs are recorded in selling, general and administrative (“SG&A”) expense in the unaudited condensed consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform research and development services on the Company’s behalf will be expensed as services are rendered or when the milestone is achieved. Research and development costs primarily consist of personnel related expenses, stock-based compensation, payments made to third parties for license and milestone costs related to in-licensed products and technology, payments made to third party contract research organizations. In accordance with Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development |
Allocated Parent Cost | Allocated Parent Cost Certain Parent costs associated with the activities of the Company have been allocated. The expense allocations to Journey are employee and stock-based compensation for finance and accounting services provided to the Company based on time spent on Journey projects. The allocations were based on assumptions that management believes are reasonable. For the three months ended September 30, 2021 and 2020, the allocated expenses were approximately $0.2 million and nil, respectively, and were recorded to selling, general and administration expenses. For the nine months ended September 30, 2021 and 2020, the allocated expenses were approximately $0.4 million and nil, respectively, and were recorded to selling, general and administration expenses. |
Income Taxes | Income Taxes As of September 30, 2021 and December 31, 2020, the Company is included in the Fortress consolidated federal tax return and consolidated or combined state tax returns in multiple jurisdictions. The Company’s unaudited interim condensed consolidated financial statements recognize the current and deferred income tax consequences that result from the Company’s activities during the current and preceding periods pursuant to the provisions of ASC Topic 740, Income Taxes, 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 Company’s use of net operating losses (“NOLs”) of Fortress (including other Fortress group members) alternatively any Company NOLs will accrue to the benefit of Fortress. Since Fortress does not require the Company to pay in any form for the utilization of the consolidated group’s NOLs, the tax benefit the Company realizes has been recorded as a capital contribution and any Company NOLs accrued to Fortress’ benefit would be a deemed dividend. 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 management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of cumulative tax and book income incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will realize the benefits of the net deferred tax assets as of September 30, 2021 and December 31, 2020. 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. As of September 30, 2021 and December 31, 2020, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company would classify 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 in 2021 or 2020. |
Earnings Per Share | Earnings Per Share Basic net income (loss) per share of common stock is calculated by dividing net income (loss) 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 (“RSUs”), determined using the treasury stock method. See Note 18 below. |
Comprehensive Income | Comprehensive Income The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income. |
Recently Adopted/Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Recently Issued Accounting Pronouncements In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) In August 2020, the FASB issued ASU 2020-06 “ Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INVENTORY | |
Schedule of inventory | September 30, December 31, ($in thousands) 2021 2020 Raw materials $ 5,453 $ — Work-in-process — — Finished goods 6,161 1,404 Total inventories $ 11,614 $ 1,404 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | Useful Life September 30, December 31, ($in thousands) (Years) 2021 2020 Leasehold improvements 2 11 11 Total property and equipment 11 11 Less: Accumulated depreciation (11) (11) Property and equipment, net $ — $ — |
INTANGIBLES (Tables)
INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLES | |
Schedule of intangible assets | Estimated Useful ($in thousands) Lives (Years) September 30, 2021 December 31, 2020 (Unaudited) Ceracade ® 3 $ 300 $ 300 Luxamend ® 3 50 50 Targadox ® 3 1,250 1,250 Ximino ® 7 7,134 7,134 Exelderm ® 3 1,600 1,600 Accutane 5 4,727 4,727 Anti-itch product (1) 3 3,942 3,945 Total intangible assets 19,003 19,006 Accumulated amortization (5,960) (3,977) Net intangible assets $ 13,043 $ 15,029 (1) As of September 30, 2021, this asset has not yet been placed in service, therefore no amortization expense was recognized on this asset for the three or nine months ended September 30, 2021. Commercial launch of this product is expected in the first half of 2022. |
Schedule of intangible assets roll forward | Intangible ($in thousands) Assets, Net Beginning balance at January 1, 2021 $ 15,029 Reductions: Anti-itch Product license acquisition adjustment (3) Amortization expense (1,983) Ending balance at September 30, 2021 $ 13,043 |
Schedule of future amortization of intangible assets | Total ($in thousands) Ximino® Accutane® Amortization Three months ending December 31, 2021 $ 255 $ 236 $ 491 Year ended December 31, 2022 1,019 946 1,965 Year ended December 31, 2023 1,019 945 1,964 Year ended December 31, 2024 1,019 946 1,965 Year ended December 31, 2025 1,019 945 1,964 Thereafter 595 157 752 Sub-total $ 4,926 $ 4,175 $ 9,101 Assets not yet placed in service: Anti-itch product license acquisition — — 3,942 Total $ 4,926 $ 4,175 $ 13,043 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
FAIR VALUE MEASUREMENTS | |
Schedule of fair value hierarchy of financial instruments, measured at fair value | Fair Value Measurement as of September 30, 2021 ($in thousands) Level 1 Level 2 Level 3 Total Liabilities Derivative warrant liabilities $ — $ — $ 4,365 $ 4,365 Total $ — $ — $ 4,365 $ 4,365 |
Schedule of roll-forward of changes in fair value of Level 3 financial instruments | Warrants ($in thousands) liabilities Balance at December 31, 2020 $ — Additions: Contingent payment warrant 3,819 Placement agent warrant 362 Change in fair value of warrant liability 184 Balance at September 30, 2021 $ 4,365 |
Contingent Payment Warrant | |
FAIR VALUE MEASUREMENTS | |
Schedule of weighted average significant unobservable inputs used in measuring liabilities | September 30, 2021 Discount rate 30 % Expected dividend yield — Expected term 3 months to 5 years |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | September 30, December 31, ($in thousands) 2021 2020 (Unaudited) Accrued expenses: Accrued employee compensation $ 2,411 $ 2,041 Research and development - license fees 629 — Accrued royalties payable 4,496 2,682 Accrued coupon and rebates 12,449 12,869 Reserve for product returns 3,652 2,580 Other 2,411 1,326 Total accrued expenses $ 26,048 $ 21,498 |
INSTALLMENT PAYMENTS - LICENS_2
INSTALLMENT PAYMENTS - LICENSES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INSTALLMENT PAYMENTS - LICENSES | |
Schedule of installment payments - licenses | September 30, 2021 Anti-Itch ($in thousands) Ximino 1 Accutane 2 Product 3 Total Installment payments - licenses, short-term $ 2,000 $ 2,000 $ 1,000 $ 5,000 Less: imputed interest (472) (84) (11) (567) Sub-total installment payments - licenses, short-term $ 1,528 $ 1,916 $ 989 $ 4,433 Installment payments - licenses, long-term $ 3,000 $ 1,000 $ — $ 4,000 Less: imputed interest (428) (33) — (461) Sub-total installment payments - licenses, long-term $ 2,572 $ 967 $ — $ 3,539 Total installment payments - licenses $ 4,100 $ 2,883 $ 989 $ 7,972 December 31, 2020 Anti-Itch ($in thousands) Ximino 1 Accutane 2 Product 3 Total Installment payments - licenses, short-term $ 2,000 $ 500 $ 2,800 $ 5,300 Less: imputed interest (602) (122) (54) (778) Sub-total installment payments - licenses, short-term $ 1,398 $ 378 $ 2,746 $ 4,522 Installment payments - licenses, long-term $ 5,000 $ 3,000 $ 1,000 $ 9,000 Less: imputed interest (775) (88) — (863) Sub-total installment payments - licenses, long-term $ 4,225 $ 2,912 $ 1,000 $ 8,137 Total installment payments - licenses $ 5,623 $ 3,290 $ 3,746 $ 12,659 Note 1: Imputed interest rate of 11.96% and maturity date of July 22, 2024. Note 2: Imputed interest rate of 4.03% and maturity date of July 29, 2023. Note 3: Imputed interest rate of 4.25% and maturity date of January 1, 2022. |
OPERATING LEASE OBLIGATIONS (Ta
OPERATING LEASE OBLIGATIONS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
OPERATING LEASE OBLIGATIONS | |
Schedule of rent expense and quantitative information | Three Months Ended September 30, Nine Months Ended September 30, ($in thousands) 2021 2020 2021 2020 Lease cost Operating lease cost 23 23 67 70 Variable lease cost 1 — 3 — Total lease cost $ 24 $ 23 $ 70 $ 70 Nine Months Ended September 30, ($in thousands) 2021 2020 Operating cash flows from operating leases $ 67 $ 70 Weighted-average remaining lease term – operating leases 1.1 0.3 Weighted-average discount rate – operating leases 4.0 % 6.0 % |
Schedule of future minimum lease payments under lease agreements | Future Lease ($in thousands) Liability Three Months Ended December 31, 2021 $ 24 Year Ended December 31, 2022 100 Total 124 Less: present value discount (4) Operating lease liabilities $ 120 |
INTEREST EXPENSE AND FINANCIN_2
INTEREST EXPENSE AND FINANCING FEES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INTEREST EXPENSE AND FINANCING FEES | |
Schedule of interest expense and financing fees | Three Months Ended September 30, 2021 2020 ($in thousands) Interest Fees 1 Total Interest Fees 1 Total Convertible preferred shares $ 450 $ 378 $ 828 $ — $ — $ — Dividend payable 365 — 365 — — — Installment payments - licenses 2 170 — 170 187 — 187 Anti-itch product Note 10 — 10 — — — Total Interest Expense and Financing Fee $ 995 $ 378 $ 1,373 $ 187 $ — $ 187 Nine Months Ended September 30, 2021 2020 ($in thousands) Interest Fees 1 Total Interest Fees 1 Total Convertible preferred shares $ 1,034 $ 648 $ 1,682 $ — $ — $ — Dividend payable 628 — 628 — — — Installment payments - licenses 2 616 — 616 492 — 492 Anti-itch product Note 10 — 10 — — — Total Interest Expense and Financing Fee $ 2,288 $ 648 $ 2,936 $ 492 $ — $ 492 Note 1: Amortization of fees in connection with debt raises. Note 2: Imputed interest expense related to Ximino, Accutane and anti-itch cream acquisitions. |
STOCKHOLDERS' EQUITY AND CLAS_2
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | |
Schedule of stock option activities | Weighted average Total remaining Weighted average weighted average contractual life Number of shares exercise price intrinsic value (years) Outstanding options at December 31, 2020 2,142,000 $ 0.80 $ 7,934,320 5.72 Exercised (10,000) 0.68 — — Forfeited (22,666) 1.37 — — Outstanding options at September 30, 2021 2,109,334 $ 0.79 $ 7,825,129 4.94 Options vested and exercisable at September 30, 2021 1,988,416 $ 0.75 $ 7,448,011 4.78 |
Schedule of restricted stock units | Weighted average grant Number of shares price Unvested balance at December 31, 2020 815,524 $ 3.37 Restricted stock units forfeited (107,000) 3.37 Unvested balance at September 30, 2021 708,524 $ 3.37 |
REVENUES FROM CONTRACTS AND S_2
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | |
Schedule of disaggregation of net revenues | The Company has the following marketed products, Qbrexza®, Accutane®, Targadox®, Ximino®, Exelderm®, Luxamend® and Ceracade®. Substantially all of the Company’s product revenues are recorded in the U.S. Revenues by product are summarized as follows (dollars in thousands): Three months ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue Targadox® $ 5,184 $ 7,214 $ 18,110 $ 22,195 Ximino® 2,864 1,031 6,277 5,854 Exelderm® 1,366 1,226 4,319 2,913 Accutane® 3,531 — 5,672 — Qbrexa® 6,636 — 11,204 — Other branded revenue 29 (24) 35 (154) Total Product revenue, net $ 19,610 $ 9,447 $ 45,617 $ 30,808 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
NET INCOME PER COMMON SHARE | |
Schedule of potentially dilutive securities excluded from computation of diluted weighted average shares outstanding | Three Months Ended Nine Months Ended September 30, 2021 Unvested restricted stock units 718,415 750,857 Outstanding Options 1,730,717 1,734,157 Total potential dilutive effect 2,449,132 2,485,014 |
Schedule of reconciliation of numerator and denominator of the diluted net income per share | The following is a reconciliation of the numerator and denominator of the diluted net income per share computations for the three and nine-month periods ended September 30, 2020 (in thousands except for share and per share amounts): Three Months Ended Nine Months Ended September 30, 2020 Net income $ 29 $ 2,781 Weighted average shares outstanding - basic 9,133,333 9,133,333 Stock options 1,667,142 1,684,345 Weighted average shares outstanding - diluted 10,800,475 10,817,678 Per share data: Basic $ — $ 0.30 Diluted $ — $ 0.26 |
ORGANIZATION AND PLAN OF BUSI_2
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS (Details) $ in Millions | Nov. 16, 2021USD ($) | Sep. 30, 2021USD ($)item | Mar. 31, 2021USD ($) |
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||
Number of branded drugs in product portfolio | item | 5 | ||
Number of authorized generic prescription drugs | item | 3 | ||
IPO | |||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||
Proceeds of initial public offering | $ 31.2 | ||
Subsequent Event | IPO | |||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||
Proceeds of initial public offering | $ 31.2 | ||
Convertible Class A Preferred | |||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||
Preferred stock dividend rate | 8.00% | ||
Working Line of Credit | East West Bank | |||
ORGANIZATION AND PLAN OF BUSINESS OPERATIONS | |||
Line of credit | $ 7.5 | $ 7.5 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Information (Details) | 9 Months Ended |
Sep. 30, 2021segment | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of operating segment | 1 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) | 9 Months Ended |
Sep. 30, 2021Y | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Prompt payment discount term | 1 |
Percentage of gross sales to wholesalers | 3.00% |
Terms of historical ordering pattern | 14 days |
Inventory turns, term | 14 days |
Percentage of product revenues sold | 85.00% |
Minimum | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Prompt payment discount payment term days | 30 days |
Maximum | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Products returned for expiration reimbursement percentage | 5.00% |
Prompt payment discount payment term days | 75 days |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts | $ 0.1 | $ 0.1 |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Inventory [Line Items] | ||
Finished goods inventory, fair value step up | $ 6.5 | |
Cost of goods sold | ||
Inventory [Line Items] | ||
Finished goods inventory fair value step-up expensed | $ 3 | $ 4.2 |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allocated Parent Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Selling, general and administrative expenses | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Share based compensation expense | $ 0.2 | $ 0 | $ 0.4 | $ 0 |
BASIS OF PRESENTATION AND SUM_8
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Unrecognized tax benefits | $ 0 | $ 0 | |
Interest expense or penalties related to unrecognized tax benefits | $ 0 | $ 0 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
INVENTORY | ||
Raw materials | $ 5,453 | |
Finished goods | 6,161 | $ 1,404 |
Total inventories | 11,614 | $ 1,404 |
Finished goods inventory, fair value step up | $ 6,500 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Property and Equipment Net | |||||
Total property and equipment | $ 11,000 | $ 11,000 | $ 11,000 | ||
Less: Accumulated depreciation | (11,000) | (11,000) | $ (11,000) | ||
Depreciation expense | $ 1,000 | $ 4,000 | |||
Leasehold Improvements | |||||
PROPERTY AND EQUIPMENT | |||||
Useful life (Years) | 2 years | 2 years | |||
Property and Equipment Net | |||||
Total property and equipment | $ 11,000 | $ 11,000 | $ 11,000 |
INTANGIBLES (Details)
INTANGIBLES (Details) - Asset purchase agreement - Qbrexza - USD ($) $ in Millions | May 13, 2021 | Mar. 31, 2021 | Mar. 01, 2021 |
Intangibles | |||
Upfront fees | $ 12.5 | ||
Milestone payments payable | $ 144 | ||
Percentage of diminution in royalty | 50.00% | ||
Age of patients | 9 years | ||
Stay period | 30 months | ||
Purchase price | $ 12.5 | ||
Useful life | 7 years | ||
Royalty payment percentage for first two years | |||
Intangibles | |||
Period of royalty payments | 2 years | ||
Royalty payment percentage for eight years thereafter | |||
Intangibles | |||
Term of royalty | 8 years | ||
Minimum | Royalty payment percentage for first two years | |||
Intangibles | |||
Percent of royalty payments | 30.00% | ||
Minimum | Royalty payment percentage for eight years thereafter | |||
Intangibles | |||
Percent of royalty payments | 12.00% | ||
Maximum | Royalty payment percentage for first two years | |||
Intangibles | |||
Percent of royalty payments | 40.00% | ||
Maximum | Royalty payment percentage for eight years thereafter | |||
Intangibles | |||
Percent of royalty payments | 19.00% |
INTANGIBLES - Schedule of intan
INTANGIBLES - Schedule of intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Intangibles | |||||
Total intangible assets | $ 19,003 | $ 19,003 | $ 19,006 | ||
Accumulated amortization | (5,960) | (5,960) | (3,977) | ||
Net intangible assets | 13,043 | 13,043 | 15,029 | ||
Amortization expense | 700 | $ 400 | $ 1,983 | $ 1,065 | |
Ceracade | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 3 years | ||||
Total intangible assets | 300 | $ 300 | 300 | ||
Luxamend | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 3 years | ||||
Total intangible assets | 50 | $ 50 | 50 | ||
Targadox | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 3 years | ||||
Total intangible assets | 1,250 | $ 1,250 | 1,250 | ||
Ximino | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 7 years | ||||
Total intangible assets | 7,134 | $ 7,134 | 7,134 | ||
Net intangible assets | 4,926 | $ 4,926 | |||
Exelderm | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 3 years | ||||
Total intangible assets | 1,600 | $ 1,600 | 1,600 | ||
Accutane | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 5 years | ||||
Total intangible assets | 4,727 | $ 4,727 | 4,727 | ||
Net intangible assets | 4,175 | $ 4,175 | |||
Anti-itch product | |||||
Intangibles | |||||
Estimated Useful Lives (Years) | 3 years | ||||
Total intangible assets | 3,942 | $ 3,942 | $ 3,945 | ||
Amortization expense | $ 0 | $ 0 |
INTANGIBLES - Schedule of int_2
INTANGIBLES - Schedule of intangible assets roll forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Condensed consolidated statement of operations: | ||||
Beginning balance at January 1, 2021 | $ 15,029 | |||
Anti-itch Product license acquisition adjustment | (3) | |||
Amortization expense | $ (700) | $ (400) | (1,983) | $ (1,065) |
Ending balance at September 30, 2021 | $ 13,043 | $ 13,043 |
INTANGIBLES - Future amortizati
INTANGIBLES - Future amortization expense (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Future amortization expense | ||
Three months ending December 31, 2021 | $ 491 | |
Year ended December 31, 2022 | 1,965 | |
Year ended December 31, 2023 | 1,964 | |
Year ended December 31, 2024 | 1,965 | |
Year ended December 31, 2025 | 1,964 | |
Thereafter | 752 | |
Sub-total | 9,101 | |
Net intangible assets | 13,043 | $ 15,029 |
Ximino | ||
Future amortization expense | ||
Three months ending December 31, 2021 | 255 | |
Year ended December 31, 2022 | 1,019 | |
Year ended December 31, 2023 | 1,019 | |
Year ended December 31, 2024 | 1,019 | |
Year ended December 31, 2025 | 1,019 | |
Thereafter | 595 | |
Sub-total | 4,926 | |
Net intangible assets | 4,926 | |
Accutane | ||
Future amortization expense | ||
Three months ending December 31, 2021 | 236 | |
Year ended December 31, 2022 | 946 | |
Year ended December 31, 2023 | 945 | |
Year ended December 31, 2024 | 946 | |
Year ended December 31, 2025 | 945 | |
Thereafter | 157 | |
Sub-total | 4,175 | |
Net intangible assets | 4,175 | |
Anti-Itch product | ||
Future amortization expense | ||
Assets not yet placed in service | $ 3,942 |
LICENSES ACQUIRED (Details)
LICENSES ACQUIRED (Details) - USD ($) $ in Thousands | Jun. 29, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Licenses acquired | |||
Second installment payable | $ 7,972 | $ 12,659 | |
D F D Agreement | |||
Licenses acquired | |||
Amount payable | $ 10,000 | 10,000 | |
First installment paid | 2,000 | ||
Second installment payable | $ 8,000 | ||
Period within which second installment is payable | 90 days | ||
Amount payable to fund clinical trials | $ 24,000 | ||
D F D Agreement | Minimum | |||
Licenses acquired | |||
Percentage of royalties payable on net sales | 10.00% | ||
D F D Agreement | Maximum | |||
Licenses acquired | |||
Threshold additional contingent regulatory and commercial milestone payments payable | $ 163,000 | ||
Percentage of royalties payable on net sales | 15.00% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Placement Agent Warrants - USD ($) $ in Millions | Nov. 16, 2021 | Sep. 30, 2021 |
FAIR VALUE MEASUREMENTS | ||
Percentage of shares to purchase from financing | 5.00% | |
Warrants term | 5 years | |
Warrants outstanding | $ 0.5 | |
Subsequent Event | ||
FAIR VALUE MEASUREMENTS | ||
Conversion of stock, shares issued | 111,567 | |
Minimum | ||
FAIR VALUE MEASUREMENTS | ||
Qualified external financing | $ 25 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent Payment Derivative (Details) - D F D Agreement - Contingent Payment Derivative $ / shares in Units, $ in Millions | Nov. 16, 2021$ / sharesshares | Sep. 30, 2021 | Sep. 30, 2021USD ($)item |
Derivative [Line Items] | |||
Number of payments | item | 1 | ||
Value of shares to be issued | $ 5 | ||
Number of days for calculating weighted average price | 15 days | ||
Cash payment | $ 5 | ||
Period after regulatory approval | 24 months | ||
Volume weighted average price per share related to shares issued | $ / shares | $ 9.1721 | ||
Subsequent Event | |||
Derivative [Line Items] | |||
Unregistered shares issued | shares | 545,131 | ||
Acquisition Event Occurring Between Closing and NDA Approval | |||
Derivative [Line Items] | |||
Percentage of payments to be made on value of product | 20.00% | ||
Acquisition Event Occurring Within 24 Months After NDA Approval | |||
Derivative [Line Items] | |||
Percentage of payments to be made on value of product | 12.00% | ||
Minimum | |||
Derivative [Line Items] | |||
Market Capitalization | $ 150 |
FAIR VALUE MEASUREMENTS - Signi
FAIR VALUE MEASUREMENTS - Significant unobservable inputs (Details) - Contingent Payment Warrant | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
FAIR VALUE MEASUREMENTS | ||
Warrants outstanding | $ 3,800,000 | $ 0 |
Discount rate | ||
FAIR VALUE MEASUREMENTS | ||
Measurement input | 0.30 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value hierarchy (Details) - Fair Value, Recurring $ in Thousands | Sep. 30, 2021USD ($) |
Liabilities | |
Derivative warrant liability | $ 4,365 |
Total | 4,365 |
Level 3 | |
Liabilities | |
Derivative warrant liability | 4,365 |
Total | $ 4,365 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Change In Level 3 Financial Instruments (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Changes in fair value of Level 3 financial instruments | |
Additions | $ 184,000 |
Balance at end of the period | 4,365,000 |
Asset transfers, level 1 to 2 | 0 |
Asset transfers, level 2 to 1 | 0 |
Liability transfers, level 1 to 2 | 0 |
Liability transfers, level 2 to 1 | 0 |
Transfers in and out of level 3 | 0 |
Placement Agent Warrants | |
Changes in fair value of Level 3 financial instruments | |
Additions | 362,000 |
Contingent Payment Warrant | |
Changes in fair value of Level 3 financial instruments | |
Additions | $ 3,819,000 |
RELATED PARTY AGREEMENTS (Detai
RELATED PARTY AGREEMENTS (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 16, 2021 | Nov. 12, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Shared Services Agreement with Fortress | ||||||
RELATED PARTY AGREEMENTS | ||||||
Service provided by employees of related party | $ 0.5 | |||||
Accounts payable and accrued expenses - related party | $ 1 | $ 1 | $ 1 | $ 0.1 | ||
Shared Services Agreement with Fortress | Subsequent Event | ||||||
RELATED PARTY AGREEMENTS | ||||||
Stock Issued During Period, Shares, Issued for Services | 52,438 | |||||
Share Price | $ 10 | |||||
Fortress Note | ||||||
RELATED PARTY AGREEMENTS | ||||||
Outstanding balance under the related party note | 14.7 | $ 14.7 | $ 14.7 | 5.2 | ||
Related party increase in promissory note | 9.5 | |||||
Related Party Transaction, Fraudulent Payments | 9.5 | |||||
Accounts payable, related party | 9.5 | |||||
Original amount of debt converted | $ 5.2 | |||||
Stock Issued During Period, Shares, Issued for Services | 1,476,044 | |||||
Share Price | $ 10 | $ 10 | $ 10 | |||
Fortress Income Tax | ||||||
RELATED PARTY AGREEMENTS | ||||||
Related Party Transaction, Net Operating Loss Utilized to Settle Income Tax Liabilities | $ 1.9 | |||||
Fortress Income Tax | Fortress | ||||||
RELATED PARTY AGREEMENTS | ||||||
Ownership interest (as a percent) | 93.00% | 93.00% | 93.00% | |||
Avenue Secondment with Journey | ||||||
RELATED PARTY AGREEMENTS | ||||||
Service provided by employees of related party | $ 0.1 | $ 0.1 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
ACCRUED EXPENSES | ||
Accrued employee compensation | $ 2,411 | $ 2,041 |
Research and development - license fees | 629 | |
Accrued royalties payable | 4,496 | 2,682 |
Accrued coupon and rebates | 12,449 | 12,869 |
Reserve for product returns | 3,652 | 2,580 |
Other | 2,411 | 1,326 |
Total accrued expenses | $ 26,048 | $ 21,498 |
INSTALLMENT PAYMENTS - LICENS_3
INSTALLMENT PAYMENTS - LICENSES (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, short-term | $ 5,000 | $ 5,300 |
Less: imputed interest | (567) | (778) |
Sub-total installment payments - licenses, short-term | 4,433 | 4,522 |
Installment payments - licenses, long-term | 4,000 | 9,000 |
Less: imputed interest | (461) | (863) |
Sub-total installment payments - licenses, long-term | 3,539 | 8,137 |
Total installment payments - licenses | 7,972 | 12,659 |
Ximino | ||
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, short-term | 2,000 | 2,000 |
Less: imputed interest | (472) | (602) |
Sub-total installment payments - licenses, short-term | 1,528 | 1,398 |
Installment payments - licenses, long-term | 3,000 | 5,000 |
Less: imputed interest | (428) | (775) |
Sub-total installment payments - licenses, long-term | 2,572 | 4,225 |
Total installment payments - licenses | $ 4,100 | $ 5,623 |
Imputed interest rate | 11.96% | 11.96% |
Accutane | ||
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, short-term | $ 2,000 | $ 500 |
Less: imputed interest | (84) | (122) |
Sub-total installment payments - licenses, short-term | 1,916 | 378 |
Installment payments - licenses, long-term | 1,000 | 3,000 |
Less: imputed interest | (33) | (88) |
Sub-total installment payments - licenses, long-term | 967 | 2,912 |
Total installment payments - licenses | $ 2,883 | $ 3,290 |
Imputed interest rate | 4.03% | 4.03% |
Anti-Itch product | ||
INSTALLMENT PAYMENTS - LICENSES | ||
Installment payments - licenses, short-term | $ 1,000 | $ 2,800 |
Less: imputed interest | (11) | (54) |
Sub-total installment payments - licenses, short-term | 989 | 2,746 |
Installment payments - licenses, long-term | 1,000 | |
Sub-total installment payments - licenses, long-term | 1,000 | |
Total installment payments - licenses | $ 989 | $ 3,746 |
Imputed interest rate | 4.25% | 4.25% |
OPERATING LEASE OBLIGATIONS (De
OPERATING LEASE OBLIGATIONS (Details) $ in Thousands | Sep. 30, 2021USD ($)ft² | Aug. 31, 2020USD ($) |
OPERATING LEASE OBLIGATIONS | ||
Area of property under lease | ft² | 3,681 | |
Renewal term | 25 months | |
Lease annual rate | $ | $ 100 | $ 100 |
OPERATING LEASE OBLIGATIONS - R
OPERATING LEASE OBLIGATIONS - Rent Expense and Quantitative Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Lease cost | ||||
Operating lease cost | $ 23 | $ 23 | $ 67 | $ 70 |
Variable lease cost | 1 | 3 | ||
Total lease cost | $ 24 | $ 23 | 70 | 70 |
Operating cash flows from operating leases | $ 67 | $ 70 | ||
Weighted-average remaining lease term - operating leases | 1 year 1 month 6 days | 3 months 18 days | 1 year 1 month 6 days | 3 months 18 days |
Weighted-average discount rate - operating leases | 4.00% | 6.00% | 4.00% | 6.00% |
OPERATING LEASE OBLIGATIONS - F
OPERATING LEASE OBLIGATIONS - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Aug. 31, 2020 |
Future Lease Liability | ||
Three Months Ended December 31, 2021 | $ 24 | |
Year Ended December 31, 2022 | 100 | $ 100 |
Total | 124 | |
Less: present value discount | (4) | |
Operating lease liabilities | $ 120 |
LINE OF CREDIT (Details)
LINE OF CREDIT (Details) - Line of Credit - East West Bank - USD ($) $ in Millions | Mar. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
LINES OF CREDIT | |||
Working Capital line of credit | $ 7.5 | $ 7.5 | $ 7.5 |
Interest on line of credit | 4.25% | ||
Line of credit term | 36 months | ||
Amount drawn | $ 0 | $ 0 | |
Prime Rate | |||
LINES OF CREDIT | |||
Spread on variable rate | 1.00% |
INTEREST EXPENSE AND FINANCIN_3
INTEREST EXPENSE AND FINANCING FEES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Interest Expense and Financing Fee [Line Items] | ||||
Total interest and fees | $ 828 | $ 1,682 | ||
Dividend payable | 365 | 628 | ||
Installment payments - licenses | 170 | $ 187 | 616 | $ 492 |
Total interest and fees | 1,373 | 187 | $ 2,936 | 492 |
Convertible preferred shares, Conversion premium, Discount rate | 15.00% | |||
Convertible preferred share settlement amount | 14,700 | $ 14,700 | ||
Anti-Itch product | ||||
Interest Expense and Financing Fee [Line Items] | ||||
Anti-itch product Note | 10 | 10 | ||
Interest | ||||
Interest Expense and Financing Fee [Line Items] | ||||
Convertible preferred shares, Interest | 450 | 1,034 | ||
Dividend payable | 365 | 628 | ||
Installment payments - licenses | 170 | 187 | 616 | 492 |
Total interest | 995 | $ 187 | 2,288 | $ 492 |
Interest | Anti-Itch product | ||||
Interest Expense and Financing Fee [Line Items] | ||||
Anti-itch product Note | 10 | 10 | ||
Fees | ||||
Interest Expense and Financing Fee [Line Items] | ||||
Convertible preferred shares, Fees | 378 | 648 | ||
Financing fees | $ 378 | $ 648 |
STOCKHOLDERS' EQUITY AND CLAS_3
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Common Stock (Details) | 9 Months Ended | |
Sep. 30, 2021Vote$ / sharesshares | Dec. 31, 2020$ / sharesshares | |
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | ||
Common stock authorized | 50,000,000 | 50,000,000 |
Par value | $ / shares | $ 0.0001 | $ 0.0001 |
Number of votes per share | Vote | 1 | |
Voting rights ratio | 1.1 | |
Common Stock A | ||
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK | ||
Common stock authorized | 6,000,000 |
STOCKHOLDERS EQUITY AND CLASS A
STOCKHOLDERS EQUITY AND CLASS A PREFERRED STOCK - Cumulative Convertible Class A Preferred Offering (Details) $ / shares in Units, $ in Millions | Nov. 16, 2021shares | Mar. 31, 2021USD ($) | Sep. 30, 2021USD ($)item$ / sharesshares |
Class of Stock [Line Items] | |||
Percent of discount on share price | 7.50% | ||
Number of trading days prior to exchange | 10 days | ||
Cumulative Convertible Class A Preferred Stock | |||
Class of Stock [Line Items] | |||
Preferred stock dividend rate | 8.00% | ||
Preferred stock conversion extension term | 6 months | ||
Preferred stock conversion financing amount trigger | $ 25 | ||
Percent of discount on share price | 15.00% | 7.50% | |
Number of trading days prior to exchange | 10 days | ||
Dividends payable | $ 0.4 | ||
Number of closings | item | 5 | ||
Number of common stock shares issued | shares | 758,680 | ||
Issue price | $ / shares | $ 25 | ||
Gross proceeds | $ 19 | ||
Placement agent fees | 1.9 | ||
Other expenses | 0.1 | ||
Net proceeds | $ 17 | ||
Cumulative Convertible Class A Preferred Stock | Subsequent Event | |||
Class of Stock [Line Items] | |||
Conversion of stock, shares issued | shares | 2,231,346 | ||
Cumulative Convertible Class A Preferred Stock | Minimum | |||
Class of Stock [Line Items] | |||
Convertible preferred stock, value authorized | $ 12.5 | ||
Cumulative Convertible Class A Preferred Stock | Maximum | |||
Class of Stock [Line Items] | |||
Convertible preferred stock, value authorized | $ 30 |
STOCKHOLDERS' EQUITY AND CLAS_4
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - 2015 Stock Plan (Details) - Stock Options - shares | 1 Months Ended | |||
Aug. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of additional shares authorized for grant | 642,857 | |||
Number of shares available for issuance | 1,158,667 | 34,000 | ||
Stock Plan 2015 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized for grant | 3,000,000 |
STOCKHOLDERS' EQUITY AND CLAS_5
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Stock option activity (Details) - Stock Options - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of shares | ||
Outstanding options at December 31, 2020 | 2,142,000 | |
Exercised | (10,000) | |
Forfeited | (22,666) | |
Outstanding options at September 30, 2021 | 2,109,334 | 2,142,000 |
Options vested and exercisable at September 30, 2021 | 1,988,416 | |
Weighted average exercise price | ||
Outstanding options at December 31, 2020 | $ 0.80 | |
Exercised | 0.68 | |
Forfeited | 1.37 | |
Outstanding options at September 30, 2021 | 0.79 | $ 0.80 |
Options vested and exercisable at September 30, 2021 | $ 0.75 | |
Total weighted average intrinsic value | ||
Outstanding options at December 31, 2020 | $ 7,934,320 | |
Outstanding options at September 30, 2021 | 7,825,129 | $ 7,934,320 |
Options vested and exercisable at September 30, 2021 | $ 7,448,011 | |
Outstanding options, Weighted average remaining contractual life (years) | 4 years 11 months 8 days | 5 years 8 months 19 days |
Options vested and exercisable at September 30, 2021 | 4 years 9 months 10 days |
STOCKHOLDERS' EQUITY AND CLAS_6
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Stock options (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Proceeds from the exercise of stock options | $ 7,000 | |||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Proceeds from the exercise of stock options | 7,000 | |||
Share based compensation expense | $ 8,000 | $ 32,000 | 41,000 | $ 131,000 |
Unrecognized stock-based compensation expense | $ 34,000 | $ 34,000 | ||
Unrecognized stock-based compensation expense recognition period | 1 year 2 months 12 days |
STOCKHOLDERS' EQUITY AND CLAS_7
STOCKHOLDERS' EQUITY AND CLASS A PREFERRED STOCK - Restricted Stock Units (Details) - Restricted stock units $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2021USD ($)$ / sharesshares | |
Number of shares | |
Unvested balance at December 31, 2020 | shares | 815,524 |
Restricted stock units forfeited | shares | (107,000) |
Unvested balance at September 30, 2021 | shares | 708,524 |
Weighted average grant price | |
Unvested balance at December 31, 2020 | $ / shares | $ 3.37 |
Restricted stock units forfeited | $ / shares | 3.37 |
Unvested balance at September 30, 2021 | $ / shares | $ 3.37 |
Vesting period | 5 years |
Share based compensation expense | $ | $ 0 |
Stock-based compensation expense contingent upon vesting event | $ | $ 2.8 |
REVENUES FROM CONTRACTS AND S_3
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS - Disaggregation of net revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | $ 19,610 | $ 9,447 | $ 45,617 | $ 30,808 |
Targadox | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | 5,184 | 7,214 | 18,110 | 22,195 |
Ximino | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | 2,864 | 1,031 | 6,277 | 5,854 |
Exelderm | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | 1,366 | 1,226 | 4,319 | 2,913 |
Accutane | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | 3,531 | 5,672 | ||
Qbrexa | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | 6,636 | 11,204 | ||
Other branded products | ||||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Product revenue, net | $ 29 | $ (24) | $ 35 | $ (154) |
REVENUES FROM CONTRACTS AND S_4
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS - Significant Customers (Details) - Customer Concentration Risk [Member] - customer | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Accounts Receivable [Member] | Two Customers [Member] | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Number of Customers | 2 | |
Accounts Receivable [Member] | Customer One | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Concentration risk, percentage | 20.70% | |
Accounts Receivable [Member] | Customer Two | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Concentration risk, percentage | 14.90% | |
Product Revenue | Customer One | ||
REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS | ||
Number of Customers | 1 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
INCOME TAXES | |||||
Income tax (benefit) expense | $ (3,375,000) | $ 23,000 | $ (6,701,000) | $ 952,000 | |
Effective income tax rate | 23.19% | 25.43% | |||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Interest expense or penalties related to unrecognized tax benefits | $ 0 | $ 0 |
NET INCOME PER COMMON SHARE - P
NET INCOME PER COMMON SHARE - Potentially dilutive securities (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
NET INCOME PER COMMON SHARE | ||
Total potential dilutive effect | 2,449,132 | 2,485,014 |
Restricted stock units | ||
NET INCOME PER COMMON SHARE | ||
Total potential dilutive effect | 718,415 | 750,857 |
Outstanding Options | ||
NET INCOME PER COMMON SHARE | ||
Total potential dilutive effect | 1,730,717 | 1,734,157 |
NET INCOME PER COMMON SHARE - R
NET INCOME PER COMMON SHARE - Reconciliation of diluted net income per share computations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reconciliation of Earnings Per Share | ||||
Net income (loss) | $ (10,646) | $ 29 | $ (22,243) | $ 2,781 |
Weighted average common shares outstanding - basic | 9,161,333 | 9,133,333 | 9,160,344 | 9,133,333 |
Stock options | 1,667,142 | 1,684,345 | ||
Weighted average common shares outstanding - diluted | 9,161,333 | 10,800,475 | 9,160,344 | 10,817,678 |
Net (loss) income per common share - basic | $ (1.16) | $ 0 | $ (2.43) | $ 0.30 |
Net (loss) income per common share - diluted | $ (1.16) | $ 0 | $ (2.43) | $ 0.26 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - IPO $ / shares in Units, $ in Millions | Nov. 16, 2021USD ($)$ / sharesshares |
Subsequent Event [Line Items] | |
Proceeds from issuance of common stock in IPO | $ 31.2 |
Subsequent Event | |
Subsequent Event [Line Items] | |
Number of common stock shares issued | shares | 3,520,000 |
Issue price | $ / shares | $ 10 |
Proceeds from issuance of common stock in IPO | $ 31.2 |