What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-03-27 compared with 2024-03-29 · 139 added, 173 removed, 436 unchanged (42% of the section changed)

We are a commercial-stage pharmaceutical company founded in October 2014 that focuses on the development and commercialization of pharmaceutical products for the treatment of dermatological conditions.

Our current portfolio includes seven branded and two authorized generic prescription drugs for dermatological conditions that are marketed in the U.S.

We are managed by experienced life science executives with a track record of creating value for their stakeholders and bringing novel medicines to the market, enabling patients to experience increased quality of life, and enabling physicians and other licensed medical professionals to provide better care for their patients.

We aim to acquire rights to future products by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing, these products through our field sales organization.

Since inception, we have made significant investments to build out our commercial product portfolios, which we believe, coupled with our experienced dermatology sales leadership team and our seasoned field sales force, will position our business for growth.

We are a majority-owned subsidiary of Fortress.

We are a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S.

Food and Drug Administration (“FDA”) approved prescription pharmaceutical products for the treatment of dermatological conditions.

Our current product portfolio includes eight FDA-approved prescription drugs for dermatological conditions that are marketed in the U.S.

We acquire rights to products and product candidates by licensing or otherwise acquiring an ownership interest in, funding the research and development of, and eventually commercializing the products through our field sales organization.

We are a controlled subsidiary of Fortress Biotech, Inc.

(“Fortress” or “Parent”).

2024 Highlights and Events

On December 27, 2023, we entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”).

The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million.

On the closing date, we drew $15.0 million.

The remaining $5.0 million may be drawn upon our request within 12 months after the closing date.

Loans under the Credit Facility (the “Term Loans”) mature on December 27, 2027 unless the Credit Facility is otherwise terminated pursuant to the terms of the Credit Agreement and bear interest at a rate per annum equal to the three-month term Secured Overnight Financing Rate (“SOFR”) (subject to a SOFR floor of 5%) plus 7.75%.

The interest rate resets quarterly.

Interest payments begin in February 2024 and are paid quarterly.

Beginning in February 2026, we are required to repay the outstanding principal of the Term Loans quarterly in an amount equal to 7.5% of the principal amount of funded Term Loans.

If our total revenue, measured on a trailing twelve-month basis, is greater than $70 million as of December 31, 2025, principal repayment is not required until February 2027, at which point we are required to repay a portion of the outstanding principal of the Term Loans quarterly in an amount equal to 15% of the principal amount of funded Term Loans.

On August 31, 2023, we entered into a license agreement (the “New License Agreement”) with Maruho Co., Ltd., a Japanese company specializing in dermatology (“Maruho”), whereby we granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos (the “Territory”).

Under the terms of the New License Agreement, Maruho paid us $19.0 million as a non-refundable upfront payment.

Maruho is also obligated to make royalty payments to us related to sales of the product in the Territory equal to the corresponding rate payable by us to Dermira under the asset purchase agreement between us and Dermira.

In July 2023, we announced positive topline data from our two DFD-29 Phase 3 clinical trials for the treatment of papulopustular rosacea.

The Phase 3 clinical trials achieved the co-primary and all secondary endpoints, the subjects completed the 16-week treatment and the drug was well-tolerated.

DFD-29 demonstrated statistical superiority over both the standard of care, Oracea® capsules, and placebo for Investigator’s Global Assessment treatment success and the reduction in the total inflammatory lesion count in both studies.

We summitted a New Drug Application (“NDA”) under Section 505(b)(2) of the United States Federal Food, Drug and Cosmetic Act (“FDCA”) with the U.S.

Food and Drug Administration (the “FDA”) for DFD-29 on January 4, 2024, paying a $4.0 million filing fee, and expect potential approval from the FDA in the second half of 2024.

On March 18, 2024, we announced the FDA accepted the Company’s NDA with a Prescription Drug User Fee Act goal date of November 4, 2024.

On November 1, 2024, the FDA approved Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg), formerly referred to as DFD-29 (“Emrosi”), for the treatment of inflammatory lesions of rosacea in adults.

Emrosi was developed by Journey in collaboration with Dr.

Reddy’s Laboratories, Ltd.

Our initial supply became available in March 2025.

In addition, the initial distribution of Emrosi to pharmacies is ongoing and the first Emrosi prescriptions have been filled.

We anticipate sales promotion of Emrosi beginning in April 2025.

We intend to commercialize Emrosi in the U.S.

with our existing commercial team.

CORPORATE INFORMATION

9 unchanged sentences

Our Market, Products and Relevant Disease States

As of December 31, 2023, our major actively marketed products, which have been approved by the FDA for sale in the United States, include:

● Qbrexza® (a medicated cloth towelette for the treatment of primary axillary hyperhidrosis), acquired and launched in May 2021;

Our major marketed products, which have been approved by the FDA for sale in the United States, include:

● Emrosi TM (Minocycline Hydrochloride Extended Release Capsules, 40 mg for the treatment of inflammatory lesions of rosacea in adults), approved by the FDA in November 2024, sales promotion beginning in April 2025.

● Qbrexza® (a medicated cloth towelette for the treatment of primary axillary hyperhidrosis in patients nine years of age and older), acquired and launched in May 2021;

● Accutane® (an oral isotretinoin drug for the treatment of severe recalcitrant nodular acne), licensed in July 2020 and launched in March 2021;

8 unchanged sentences

and radiation dermatitis), acquired in 2021 and launched in 2023.

Additionally, we sell two authorized generic products:

● sulconazole nitrate cream and solution, 1% antifungal agents indicated for the treatment of tinea cruris and tinea corporis caused by Trichophyton rubrum , Trichophyton mentagrophytes , Epidermophyton floccosum , and Microsporum canis ,* and for the treatment of tinea versicolor .

*Efficacy for this organism in the organ system was studied in fewer than 10 infections.

EXELDERM ® Cream is also indicated for the treatment of tinea pedis (athlete’s foot).

Effectiveness of EXELDERM ® Solution has not been proven in tinea pedis .

These products were launched in January 2020;

● doxycycline hyclate immediate release 50mg tablets, indicated as adjunctive therapy for severe acne to reduce the development of drug-resistant bacteria as well as to maintain the effectiveness of doxycycline hyclate and other antibacterial drugs, launched in May 2018.

Our Products and Relevant Disease States

Rosacea and the Current Standard of Care

Rosacea is a chronic, relapsing, inflammatory skin condition that most commonly presents with symptoms such as deep facial redness, acne-like inflammatory lesions (papules and pustules) and spider veins (telangiectasia).

According to The National Rosacea Society, it is estimated that rosacea affects well over 16 million Americans and as many as 415 million people worldwide.

Rosacea is most frequently seen in adults between 30 and 50 years of age.

Surveys conducted by The National Rosacea Society report more than 90% of rosacea patients said their condition had lowered their self-confidence and self-esteem, and 41% reported that it had caused them to avoid public contact or cancel social engagements.

Among rosacea patients with severe symptoms, 88% said the disorder had adversely affected their professional interactions, and 51% said they had missed work because of their condition.

The tetracycline class of antibiotics (minocycline and doxycycline) are considered to be effective options for the treatment of papulopustular rosacea.

Oral doxycycline (40mg) has been approved for the treatment of only inflammatory lesions (papules and pustules) of rosacea and is available under the proprietary name Oracea ® (Galderma L.P.) in the US.

Oracea is generally considered to be the current standard of care.

Minocycline is widely believed to be the most effective tetracycline agent due to its high lipophilicity, which is anticipated to permit greater permeation into, and accumulation in, the sebaceous follicles and layers of the epidermis.

Emrosi for the Treatment of Rosacea

Emrosi (previously referred to as DFD-29) is a 40mg minocycline hydrochloride extended release capsule for oral use indicated to treat inflammatory lesions (papules and pustules) of rosacea in adults.

Emrosi 40mg is now the lowest-dose approved oral minocycline hydrochloride approved by the FDA.

It was developed using Multiple Unit Pellet System technology, which combines Immediate Release (25%) and Extended Release (75%) Minocycline pellets for uniform drug release.

Emrosi has shown superiority to Oracea and Placebo on the co-primary endpoints and all secondary endpoints in two phase 3 studies and was well-tolerated.

The NDA was filed under Section 505(b)(2) of the Food Drug and Cosmetic Act (“FDCA”) in January 2024 and was approved in November 2024 by the FDA (NDA 219015).

Emrosi has Orange Book-listed patents that extend through January of 2039.

Zilxi® for the Treatment of Rosacea

Zilxi® (1.5% minocycline foam) was approved by the FDA in May 2020 and became available in pharmacies nationwide in October 2020.

Zilxi is a once-daily novel antibiotic foam formulation of minocycline for the treatment of inflammatory lesions of rosacea in adults.

Similar to Amzeeq, Zilxi leverages MST™ technology and is the first minocycline product of any form to be approved by the FDA for use in rosacea.

We believe the anti-inflammatory properties of minocycline delivered in our innovative foam technology make Zilxi a highly appealing treatment option for rosacea patients.

Zilxi has Orange Book-listed patents that extend through October of 2030.

The topical rosacea market had more than 4.3 million prescriptions in 2024 while the oral rosacea market had more than 700,000 according to Symphony Health.

Excessive Underarm Sweating and the Current Standard of Care

Excessive underarm sweating, commonly referred to as primary axillary hyperhidrosis (“PAH”), is a rare disorder characterized by excessive sweating in the armpits.

Excessive underarm sweating, commonly referred to as primary axillary hyperhidrosis (“PAH”), is a disorder characterized by excessive sweating in the armpits.

The exact cause of PAH is not known, and the disorder affects males and females equally.

34 unchanged sentences

Accutane belongs to a class of drugs that affects all four major pathogenic processes in acne:

increased sebum production, irregular follicular desquamation, propionibacterium acnes proliferation and inflammation.

increased sebum

production, irregular follicular desquamation, propionibacterium acnes proliferation and inflammation.

Accutane has achieved a strong market position and is well known in the dermatology community.

The oral isotretinoin market had over 2 million prescriptions in 2023 according to Symphony Health.

The oral isotretinoin market had just under 2.3 million prescriptions in 2024 according to Symphony Health.

Targadox® for the Treatment of Severe Acne

4 unchanged sentences

Amzeeq® for the Treatment of Moderate-to-Severe Acne

Amzeeq® (4% minocycline foam), formerly known as FMX101, was approved by the FDA in October 2019 and became available in pharmacies nationwide in January 2020.

Amzeeq® (4% minocycline foam) was approved by the FDA in October 2019 and became available in pharmacies nationwide in January 2020.

Amzeeq is a once-daily novel topical antibiotic foam formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate-to-severe acne vulgaris in patients nine years of age and older.

1 unchanged sentence

We believe that the combination of a well-established antibiotic in a well-tolerated, easy to use foam makes Amzeeq a very attractive treatment option for patients.

The topical acne market had almost 21 million prescriptions in 2023 according to Symphony Health, presenting significant unmet needs of patients and healthcare providers to be addressed.

The topical acne market had more than 23.5 million prescriptions in 2024 according to Symphony Health, presenting significant unmet needs of patients and healthcare providers to be addressed.

As the first topical minocycline to be approved by the FDA for any condition, we believe that Amzeeq may provide a new treatment alternative for patients and healthcare providers who are unsatisfied with their current therapies.

Amzeeq has Orange Book-listed patents that extend through September of 2037.

Ximino® for the Treatment of Inflammatory Lesions of Non-Nodular Moderate to Severe Acne

During fiscal 2022 and part of fiscal 2023, we marketed and sold Ximino® (minocycline hydrochloride extended-release 45mg, 90mg, and 135mg capsules), which is indicated for the treatment of inflammatory non-nodular lesions (pimples and red bumps) associated with moderate to severe acne.

We discontinued selling Ximino in September 2023.

The oral minocycline market had just under 2.7 million prescriptions in 2023 according to Symphony Health.

Fungal Infections of the Skin and the Current Standard of Care

28 unchanged sentences

Anti-Itch Product for the Treatment of Pruritus

Our acquired anti-itch product is indicated to treat pruritis, scabies, and other skin itch conditions (“Anti-itch Product”).

Our acquired anti-itch product is indicated to treat pruritus, scabies, and other skin itch conditions (“Anti-itch Product”).

Our Anti-itch Product delivers prescription relief and is non-steroidal and antihistamine free.

3 unchanged sentences

We plan on launching our Anti-itch Product through our field sales force during the second half of 2025 or first half of 2026.

Rosacea and the Current Standard of Care

According to The National Rosacea Society, it is estimated that rosacea affects well over 16 million Americans (F1000Research 2018, 7(F1000 Faculty Rev):1885) and as many as 415 million people worldwide.

Rosacea is most frequently seen in adults between 30 and 50 years of age.

Among rosacea patients with severe symptoms, 88% said the disorder had adversely affected their professional interactions, and 51% said they had missed work because of their condition.

The rosacea market had 3.8 million prescriptions in 2023 according to Symphony Health.

The tetracycline class of antibiotics (minocycline and doxycycline) are considered to be effective options for the treatment of papulopustular rosacea, likely due to anti-inflammatory activities that are usually manifested at doses much lower than those prescribed for treatment of bacterial infections.

A low dose of doxycycline (i.e., 40 mg taken once daily) as oral formulation has been approved for the treatment of only inflammatory lesions (papules and pustules) of rosacea and is available under the proprietary name Oracea® in the US.

Oracea is generally considered to be the current standard of care.

Minocycline, first introduced in 1971, is widely believed to be the most effective tetracycline agent due to its high lipophilicity, which is anticipated to permit greater permeation into, and accumulation in, the sebaceous follicles and layers of the epidermis.

We offer two products, Zilxi and, if approved, DFD-29, that we believe provide a new treatment alternative for patients and healthcare providers who are unsatisfied with their current rosacea therapies.

Zilxi® for the Treatment of Papulopustular Rosacea

Zilxi® (1.5% minocycline foam), was approved by the FDA in May 2020 and became available in pharmacies nationwide in October 2020.

Zilxi is a once-daily novel antibiotic foam formulation of minocycline for the treatment of inflammatory lesions of rosacea in adults.

Similar to Amzeeq, Zilxi leverages MST™ technology and is the first minocycline product of any form to be approved by the FDA for use in rosacea.

We believe the anti-inflammatory properties of minocycline delivered in our innovative foam technology make Zilxi a highly appealing treatment option for rosacea patients.

Zilxi has Orange Book-listed patents that extend through October of 2030.

DFD-29 for the Treatment of Rosacea

DFD-29 is a low-dose minocycline (40 mg) extended release capsule formulation for oral use for the treatment of papulopustular rosacea.

The rationale of selecting DFD-29 doses lower than the approved minocycline dose is based on the lower protein binding and higher lipophilicity of minocycline.

In a Phase 1 PK study (DFD-29-CD-001) in 24 healthy subjects, the systemic exposure of minocycline from DFD-29 (minocycline HCl) ER capsules 40 mg was much lower than that seen with the approved antibiotic dose of minocycline, although this was not a head-to-head study.

A Phase 2 study (DFD-29-CD-002) in 205 subjects with papulopustular rosacea, demonstrated that DFD-29 (40 mg) was significantly superior to placebo and Oracea®, on the co-primary endpoints of IGA treatment success and absolute inflammatory lesion count reduction.

The study also showed DFD-29 was well-tolerated.

DFD-29 has also shown superiority to Oracea and Placebo on the co-primary endpoints and all secondary endpoints in two phase 3 studies and was well-tolerated.

The NDA was filed under Section 505(b)(2) of the FDCA, in January 2024 and is under review by the FDA.

Luxamend® for Wound Healing

9 unchanged sentences

Our strategic priorities include continuing to augment and grow our product portfolio and organization in order to maximize long-term value creation.

This will consist of both commercial execution on our existing product portfolio, including lifecycle management, out-licensing of our current branded products and/or technologies in global markets, as well as investing in additional growth strategies through product and company acquisitions, licensing, or developing new products.

This will consist of both commercial execution on our existing product portfolio, including lifecycle management, out-licensing of our current branded products, intellectual property and/or technologies in global markets, as well as investing in additional growth strategies through product and company acquisitions, licensing, or developing new products.

An important part of our growth strategy is to identify new business development opportunities, including development stage and commercial drugs that we may acquire from other pharmaceutical companies.

1 unchanged sentence

Successful development and commercialization of any future in-licensed development stage or commercial drugs will require us to navigate the many laws and regulations of governmental authorities and regulatory agencies around the world, including the FDA, relating to the manufacture, development, approval and commercialization of investigational drugs.

For development stage drugs, we may require financial resources significantly in excess of our current cash on hand and amounts that we may borrow under our Credit Facility, and it may take many years for us to receive marketing approval, if ever, for any in-licensed or acquired product candidate.

For development stage drugs, we may require financial resources significantly in excess of our current cash on hand, and it may take many years for us to receive marketing approval, if ever, for any in-licensed or acquired product candidate.

Competitive Strengths

18 unchanged sentences

We have a specialized and differentiated access and distribution network of over 600 specialty pharmacies and wholesalers, where we directly sell our products, with limited distribution through traditional national wholesalers.

This decentralized approach allows us to maximize our brand equity across our product portfolio through strategic relationships directly with pharmacies and allows us to provide exceptional customer service and access to patients and physicians.

This decentralized approach allows us to maximize our brand equity across our product portfolio with pharmacies and allows us to provide exceptional customer service and access to patients and physicians.

● Active business development initiative .

1 unchanged sentence

We consistently evaluate both synergistic acquisitions that leverage our existing infrastructure, as well as more transformative assets that would require building out or restructuring our field sales force.

We have extensive relationships in the industry that help us stay abreast of developments in our space and continually monitor new opportunities.

We believe that we are an ideal partner for development stage companies with limited or no commercial capabilities, as well as established pharmaceutical companies looking to deprioritize their dermatology portfolio.

We regularly engage in discussions with an array of companies, including traditional large pharma, mid-size specialty pharma companies and smaller companies that focus on research and development, although we have not entered into any definitive agreements or arrangements.

Another important part of our business development strategy is to continue to out-license our branded products and/or proprietary technologies in global markets.

We have extensive relationships in the industry that help us stay informed of developments in our space and continually monitor new opportunities.

We regularly engage in discussions with an array of companies, both domestic and international, including traditional large pharma, mid-size specialty pharma companies and smaller companies that focus on research and development, although we have not entered into any definitive agreements or arrangements.

Another important part of our business development strategy is to continue to out-license our branded products, intellectual property and/or proprietary technologies in global markets.

Major Customers

3 unchanged sentences

License & Collaboration Agreements and Acquisitions

We continue to seek to enhance our product line and develop a balanced portfolio of differentiated products through product acquisitions and in-licensing or acquiring rights to products and technologies from third parties.

We intend to enter into strategic alliances and collaborative arrangements with third parties, which will give us rights to develop, manufacture, market and/or commercialize pharmaceutical products, the rights to which are primarily owned by these third parties.

We continue to seek to enhance our product line and develop a portfolio of differentiated products through product acquisitions and in-licensing or acquiring rights to products and technologies from third parties.

We intend to enter into strategic alliances and collaborative

arrangements with third parties, which will give us rights to develop, manufacture, market and/or commercialize pharmaceutical products, the rights to which are primarily owned by these third parties.

These alliances and arrangements can take many forms, including licensing arrangements, co-development and co-marketing agreements, co-promotion arrangements, research collaborations and joint ventures.

1 unchanged sentence

However, because profits from alliance products are shared with the counterparties to the collaborative arrangement, the gross margins on alliance products are generally lower, sometimes substantially so, than the gross margins that could be achieved had we not opted for a development partner.

From time to time, we may also seek to grant licenses or sublicenses of rights to develop, sell and distribute our products to third parties in exchange for the payment of license fees and/or royalty payments.

Environmental Matters

5 unchanged sentences

We currently employ 41 individuals, all of whom are full-time employees.

We have 41 employees in sales and marketing, 14 employees in general and administrative positions, and 3 employees in research and development positions.

We have 34 employees in sales and marketing, 19 employees in general and administrative positions, and 3 employees were utilized in research and development positions during 2024.

Additionally, we have retained a number of expert advisors and consultants that help us navigate through different aspects of our business.

3 unchanged sentences

Geographic Areas

All of our product revenues are generated from operations or otherwise earned within the U.S.

We are entitled to receive commercial milestones payments from Maruho, our exclusive licensing partner in Japan, based on certain net sales achievements for Rapifort® Wipes 2.5% (Qbrexza®), for the treatment of primary axillary hyperhidrosis.

We also received a one-time upfront license payment totaling $19.0 million from Maruho during 2023 under the New License Agreement in which we granted Maruho exclusive rights to Qbrexza in Korea and other Asian countries.

In general, all of our product revenues are generated from operations or otherwise earned within the U.S.

During 2023, we received a one-time upfront license payment totaling $19.0 million from Maruho Ltd., our exclusive licensing partner in Japan (“Maruho”), under the license agreement we entered into with Maruho, dated August 31, 2023 (the “New License Agreement”) in which we granted Maruho exclusive rights to Qbrexza in Korea and other Asian countries.

Seasonality of Business

4 unchanged sentences

Fortress is a biopharmaceutical company dedicated to acquiring, developing and commercializing pharmaceutical and biotechnology products and product candidates at its majority-owned and majority-controlled subsidiaries and joint ventures, and at entities founded by Fortress and in which it maintains significant minority ownership positions.

Fortress has a talented and experienced business development team, comprised of scientists, doctors, and finance professionals, who identify, evaluate, and propose for our consideration promising products and product candidates.

We have a nine-year operating history and we are a majority owned subsidiary of Fortress.

Product Licensing Agreements and Asset Acquisitions

Rapifort® Wipes 2.5% (Qbrexza)

Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory, Maruho paid $19.0 million as a non-refundable upfront payment.

On February 11, 2022, we announced that Maruho received marketing and manufacturing approval for Rapifort Wipes 2.5% (Qbrexza), for the treatment of primary axillary hyperhidrosis, triggering a net $2.5 million milestone payment to us.

The net payment reflected a milestone payment of $10.0 million to us from our exclusive licensing partner in Maruho, offset by a $7.5 million payment to Dermira, pursuant to the terms of the asset purchase agreement between us and Dermira.

In conjunction with the terms of the licensing agreement with Maruho, the milestone payment was due from Maruho within 30 days of the approval.

We acquired global rights to Qbrexza from Dermira in 2021.

So long as it holds shares of our Class A Common Stock, of which it is currently the sole holder, Fortress will at all times have voting control of us.

Fortress has a talented and experienced business development team, comprised of scientists, doctors, and finance professionals, who identify, evaluate, and propose for our consideration.

In-licensing Agreements and Asset Acquisitions

Amzeeq, Zilxi, FCD105 and the Molecule Stabilizing Technology Platform

On January 12, 2022, we entered into an Asset Purchase Agreement (the “APA”) with Vyne Therapeutics Inc.

On January 12, 2022, we entered into an Asset Purchase Agreement (the “Vyne APA”) with Vyne Therapeutics Inc.

(“Vyne”) to acquire Vyne’s Molecule Stabilizing Technology™ franchise (the “Acquisition”) for an upfront payment of $20.0 million, with an additional $5.0 million payment due on the one-year anniversary of the closing of the Acquisition.

The APA also provides for contingent net sales milestone payments:

The Vyne APA also provides for contingent net sales milestone payments:

in the first calendar year in which annual sales reach each of $100 million, $200 million, $300 million, $400 million and $500 million, we will be required to make a one-time payment of $10 million, $20 million, $30 million, $40 million and $50 million, respectively, in that year only, per product, totaling up to $450.0 million.

In addition, Journey will pay Vyne 10% of any upfront payment received by Journey from a licensee or sublicensee of the products in any territory outside of the United States, subject to exceptions for certain jurisdictions as detailed in the APA.

There are no subsequent milestone payments or royalties beyond the aforementioned payments.

The Acquisition included two FDA-approved products (Amzeeq® and Zilxi®), and a development-stage dermatology program (FCD105), along with the Molecule Stabilizing Technology proprietary platform.

DFD-29 Agreement

On June 29, 2021, we entered into a license, collaboration, and assignment agreement with Dr.

Reddy’s Laboratories, Ltd.

(“DRL”) to obtain the global rights for the development and commercialization of DFD-29, a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “DFD-29 Agreement”).

We acquired global rights to DFD-29, including in the U.S.

Emrosi TM (formerly DFD-29)

On June 29, 2021, we entered into a license, collaboration, and assignment agreement with DRL to obtain the global rights for the development and commercialization of Emrosi TM (“Emrosi”), a late-stage development modified release oral minocycline that is being evaluated for the treatment of inflammatory lesions of rosacea (the “Emrosi Agreement”).

We acquired global rights to Emrosi, including in the U.S.

and Europe, except that DRL has retained certain rights to the program in select markets including Brazil, Russia, India, China and the Commonwealth of Independent States (“CIS”) countries.

Pursuant to the DFD-29 Agreement, we agreed to make an upfront payment of $10.0 million, comprised of a $2.0 million payment upon execution and $8.0 million which was paid on September 29, 2021, 90 days following execution, with additional contingent regulatory, commercial, and corporate-based milestone payments, totaling up to $158.0 million.

Royalties ranging from ten percent to twenty percent are payable on net sales of the product.

Pursuant to the Emrosi Agreement, we agreed to make an upfront payment of $10.0 million, comprised of a $2.0 million payment upon execution and $8.0 million which was paid on September 29, 2021, 90 days following execution.

In addition, we paid two developmental milestones in 2024.

In January 2024 we paid a $3.0 milestone to DRL, based on FDA acceptance of the NDA application for Emrosi, and in December of 2024 we paid a $15.0 million milestone payment to DRL, which was triggered by the November 1, 2024 FDA approval of Emrosi.

Upon the $15.0 million milestone payment, the assets related to Emrosi, including the NDA, regulatory documentation and intellectual property, transferred to us.

Pursuant to the Emrosi Agreement we may be required to pay additional contingent regulatory, commercial, and corporate-based milestone payments, totaling up to $150.0 million.

Royalties ranging from ten percent to fourteen percent are payable on net sales of the product.

Royalties are payable in each country until the last-to-expire patent in such country expires.

Royalties are subject to a 50% reduction in the event that a generic competitor launches in an applicable country where we market and sell the product.

We are responsible for the prosecution and enforcement of patents licensed under the DFD-29 Agreement.

The DFD-29 Agreement contains customary representations, warranties, and indemnities, and title transfers to us on the date of achievement of certain regulatory milestones set forth in the agreement, after which our licenses become our acquired assets.

Each party may also terminate the DFD-29 Agreement for material breach by the other party or for certain bankruptcy or insolvency related events.

Additionally, we agreed to fund and oversee the Phase III clinical trials.

From inception to date we have incurred approximately $23.8 million in costs associated with the development of DFD-29.

The DFD-29 Agreement will remain in effect on a country-by-county basis until the expiration of the revenue percentage term in the relevant country, which period begins on the first commercial sale of a product in that country and ends upon the expiration or invalidation date of the last revenue generating patent in such country.

The DFD-29 Agreement terminates in its entirety upon the expiry of the revenue percentage term in the last country covered under the DFD-29 Agreement.

Qbrexza Agreement

3 unchanged sentences

We are obligated to make payments to Dermira of up to $144.0 million in the aggregate upon the achievement of certain milestones.

For the first two years, we were required to pay royalties on sales ranging from the mid-thirty to the mid-twenty percent.

Thereafter, we are required to pay royalties on Qbrexza net sales ranging from the lower teen digits to the upper teen digits, which are payable for a period of eight years ending in 2029, subject to certain reductions.

We are required to pay royalties on Qbrexza net sales ranging from the lower teen digits to the upper teen digits, which are payable for a period of eight years ending in 2029, subject to certain reductions.

The Qbrexza APA contains customary representations, warranties, and indemnities.

11 unchanged sentences

On July 29, 2020, we entered into a license and supply agreement for Accutane® (the “Accutane Agreement”) with DRL.

Pursuant to the Accutane Agreement, we agreed to pay $5.0 million, comprised of an upfront payment of $1.0 million paid upon execution, with additional milestone payments totaling $4.0 million.

Pursuant to the Accutane Agreement, we agreed to pay $5.0 million, comprised of an upfront payment of $1.0 million paid upon execution, with additional milestone payments totaling $4.0 million due over time.

To date, we have paid all of the additional milestone payments.

12 unchanged sentences

We intend to launch this product during the second half of 2025 or first half of 2026.

Ximino Agreement

On July 22, 2019, we entered into an asset purchase agreement for Ximino® (the “Ximino APA”) with Sun.

Pursuant to the Ximino APA, total consideration is $9.4 million, with an upfront payment of $2.4 million, which was payable within 60 days after execution on September 22, 2019.

Pursuant to the terms of the Ximino APA, the remaining $7.0 million is due on the second anniversary and for the next four anniversaries of the Ximino APA thereafter.

In addition, we are obligated to pay royalties in the mid-single digits based on net sales of Ximino, subject to specified reductions until the end of 2022.

The Ximino APA contains customary representations, warranties, and indemnities.

Each party may also terminate the Ximino APA for material breach by the other party or for certain bankruptcy or insolvency related events.

No additional licensing or milestone payments are required.

We commenced sales of this product in August 2019.

We discontinued selling Ximino in September 2023.

Exelderm Agreement

14 unchanged sentences

We commenced sales of this product in October 2016.

Out - licensing Agreements

On August 31, 2023, we entered into the New License Agreement with Maruho, whereby we granted an exclusive license to Maruho to develop and commercialize Qbrexza® for the treatment of primary axillary hyperhidrosis in South Korea, Taiwan, Hong Kong, Macau, Thailand, Indonesia, Malaysia, Philippines, Singapore, Vietnam, Brunei, Cambodia, Myanmar and Laos.

Under the terms of the New License Agreement, in exchange for the exclusive rights to Qbrexza in the Territory, Maruho paid $19.0 million as a non-refundable upfront payment.

Cutia License Agreement

In January 2022, as a part of the Vyne APA, we assumed a license agreement with Cutia Therapeutics (HK) Limited, a Hong Kong biopharmaceutical company with experience in developing pharmaceutical products in the greater China region (the “Cutia Agreement”).

Pursuant to the agreement, Cutia was granted an exclusive license to obtain regulatory approval of and commercialize Amzeeq (topical 4% minocycline foam) and Zilxi (topical 1.5% minocycline foam) in mainland China, Taiwan, Hong Kong and Macau.

We have agreed to supply the finished Licensed Products to Cutia for clinical and commercial use at an agreed price.

On November 11, 2024, Cutia received marketing approval for topical 4% minocycline foam from the National Medical Products Administration (the “NMPA”) of the People’s Republic of China.

The approval triggered a $1.0 million dollar milestone payment to us.

Research and Development

As discussed above, on June 29, 2021, we obtained the global rights from DRL for the development and commercialization of DFD-29, a late-stage development modified release oral minocycline that is being developed for the treatment of inflammatory lesions of rosacea.

Through this collaboration, the parties were required to work together to complete the development of DFD-29, which included conducting two Phase III studies to assess the efficacy, safety and tolerability of oral DFD-29 for the treatment of rosacea and the January 4, 2024 regulatory submission of an NDA under Section 505(b)(2) of the FDCA.

As discussed above, on June 29, 2021, we obtained the global rights from DRL for the development and commercialization of Emrosi, then known as DFD-29, a modified release oral minocycline we developed for the treatment of inflammatory lesions of rosacea.

Through this collaboration, the parties were required to work together to complete the development of the product, which included conducting two Phase 3 studies to assess the efficacy, safety and tolerability of oral Emrosi for the treatment of rosacea and the January 4, 2024 regulatory submission of an NDA under Section 505(b)(2) of the FDCA.

DRL provided development support, including responding to any requests for information or clarification from FDA regarding the NDA.

On March 17, 2022, we dosed the first patient in our Phase III clinical trials evaluating DFD-29 (Minocycline Modified Release Capsules 40 mg) for the Treatment of Rosacea.

We filed the NDA with the FDA on January 4, 2024.

The two Phase III studies conducted in the US and Germany demonstrated that DFD-29 was statistically superior to Oracea ® and Placebo on multiple efficacy endpoints relevant to the treatment of rosacea.

DFD-29 also demonstrated statistical superiority to Placebo in reducing erythema of rosacea.

The safety profile of DFD-29 in the two Phase III studies was similar to Placebo.

Based on the Phase III data, we are seeking an indication to treat inflammatory lesions and erythema of rosacea in patients 18 years of age and older for DFD-29.

On November 1, 2024, Emrosi received approval by the FDA for the treatment of inflammatory lesions of rosacea in adults and is being manufactured for commercialization.

Intellectual Property

2 unchanged sentences

As part of our development and acquisition strategy, we place a strong emphasis on the patent protection for potential products.

Three of our marketed products, Qbrexza, Amzeeq, and Zilxi, as well as DFD-29, currently have patent protection.

Four of our FDA approved products, Emrosi, Qbrexza, Amzeeq, and Zilxi, , currently have patent protection with patents listed in the FDA Orange Book.

Emrosi Patents

With regard to Emrosi, we own three issued U.S.

patents and one U.S.

continuation application, as well as one issued foreign patent (Mexico) and eight foreign pending patent applications (one in each of Australia, Canada, Europe, Japan, Korea, and South Africa;

and two in New Zealand) covering methods of treating an inflammatory skin condition by selecting and administering an oral composition comprising reduced dose of minocycline and the relevant pharmacokinetic parameters, and we intend to pursue composition-of-matter patents, where possible, and dosage and formulation patents, as well as method-of-use patents on novel indications for known compounds.

The three issued U.S.

patents will expire in 2039.

Qbrexza Patents

We own or have an exclusive license to twenty two issued U.S.

patents and forty one issued foreign patents, which include granted European patent rights that have been validated in selected European Patent Organization (“EPO”) member states (Switzerland, Germany, Spain, France, Great Britain, Ireland, and Italy), Australia, Canada, Mexico, Israel, Japan, Hong Kong, Korea, and New Zealand, Singapore, and South Africa, and six pending U.S.

We own or have an exclusive license to 22 issued U.S.

patents and 41 issued foreign patents, which include granted European patent rights that have been validated in selected European Patent Organization (“EPO”) member states (Switzerland, Germany, Spain, France, Great Britain, Ireland, and Italy), Australia, Canada, Mexico, Israel, Japan, Hong Kong, Korea, and New Zealand, Singapore, and South Africa, and six pending U.S.

patent applications, one pending Patent Cooperation Treaty application, and sixteen pending foreign patent applications.

Of these patents and patent applications:

There are eighteen issued U.S.

There are 18 issued U.S.

patents, thirty seven issued foreign patents (AU, CA, selected EP member states, Mexico, Japan, Hong Kong, Korea, New Zealand, Singapore, and South Africa), two pending U.S.

patent applications and three pending foreign applications (in Israel and Hong Kong), all relating to Qbrexza.

We own fourteen of the issued U.S.

We own 14 of the issued U.S.

patents, both of the pending U.S.

patent applications, twenty of the issued foreign patents, and two of the pending foreign applications, and have exclusively licensed from Rose U worldwide rights to four of the issued U.S.

patents, seventeen issued foreign patents, and one pending foreign patent applications.

patent applications, 20 of the issued foreign patents, and two of the pending foreign applications, and have exclusively licensed from Rose U worldwide rights to four of the issued U.S.

patents, 17 issued foreign patents, and one pending foreign patent application.

The issued Qbrexza patents contain claims directed to individually packaged wipes for the treatment of hyperhidrosis where the wipes contain a composition comprising Qbrexza or other related compounds, and methods of alleviating hyperhidrosis using such compositions and contain claims directed to compositions comprising Qbrexza or other related compounds, individually packaged wipes comprising such compositions, absorbent pads comprising Qbrexza pharmaceutical compositions and methods of treating hyperhidrosis with topical administration of Qbrexza or other related compounds.

3 unchanged sentences

Amzeeq, Zilxi & the Molecular Stabilizing Technology Platform Patents

We own thirty nine issued U.S.

We own 39 issued U.S.

patents and twenty issued foreign patents, and nine pending U.S.

1 unchanged sentence

Of these patents and patent applications:

● There are twenty one issued U.S.

● There are 21 issued U.S.

patents, fifteen issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), six pending U.S.

4 unchanged sentences

and foreign patent applications relating to Amzeeq will expire between 2030 and 2037.

● There are fourteen issued U.S.

● There are 14 issued U.S.

patents, fifteen issued foreign patents (Australia, Canada, Europe, Israel, Mexico, United Kingdom, South Africa), four pending U.S.

7 unchanged sentences

patent applications, and five issued foreign patents (Canada, Israel, and Mexico).

DFD-29 Patents

With regard to DFD-29, we have an exclusive license to one U.S.

patent family including three issued U.S.

patents and one U.S.

continuation application, as well as one issued foreign patent (Mexico) and eight foreign pending patent applications (one in each of Australia, Canada, Europe, Japan, Korea, and South Africa;

The three issued U.S.

patents will expire in 2039.

Additional Intellectual Property and Proprietary Right Protection

15 unchanged sentences

If our competitors prepare and file patent applications in the U.S.

that claim technology also claimed by us, we may have to participate in derivation proceedings declared by the USPTO to determine proper inventorship of a claimed of invention, which could result in substantial cost, even if the eventual outcome is favorable to us.

that claim technology also claimed by us, we may have to participate in derivation proceedings declared by the USPTO to determine proper inventorship of a claim of invention, which could result in substantial cost, even if the eventual outcome is favorable to us.

Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that before we commercialize any of our products, any related patent may expire or remain in existence for only a short period following commercialization, thus reducing any advantage of the patent.

31 unchanged sentences

Accordingly, we face pressure to continually seek out technological innovations and to market our products effectively.

Our major competitors, including Galderma Laboratories, Almirall, Novan Therapeutics, Leo Pharma, Mayne Pharma, Botanix Pharmaceuticals, and Ortho Dermatologics, among others, vary depending on therapeutic and product category, dosage strength and drug-delivery systems, among other factors.

Our major competitors, including Galderma Laboratories, Almirall, Leo Pharma, Mayne Pharma, Botanix Pharmaceuticals, and Ortho Dermatologics, among others, vary depending on therapeutic and product category, dosage strength and drug-delivery systems, among other factors.

Generic Competition

82 unchanged sentences

Pharmaceutical Coverage, Pricing and Reimbursement

Sales of any pharmaceutical product depend, in part, on the extent to which such product will be covered by third-party payors, such as federal, state, and foreign government healthcare programs, commercial insurance, and managed healthcare organizations, and the level of reimbursement for such product by third-party payors.

Significant uncertainty exists as to the coverage and reimbursement status of any newly approved product.

Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.

One third-party payor’s decision to cover a particular product does not ensure that other payors will also provide coverage for the product.

As a result, the coverage determination process can require manufacturers to provide scientific details, information on cost-effectiveness, and clinical support for the use of a product to each payor separately.

This can be a time-consuming process, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

In addition, third-party payors are increasingly reducing reimbursements for pharmaceutical products and related services.

government and state legislatures have continued implementing cost-containment programs, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products.

Third-party payors are increasingly challenging the prices charged, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical products, in addition to questioning their safety and efficacy.

Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit sales of any product.

Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reduce physician usage and patient demand for the product.

At the state level, there are also new laws and ongoing ballot initiatives that create additional pressure on drug pricing and may affect how pharmaceutical products are covered and reimbursed.

A number of states have adopted or are considering various pricing actions, such as those requiring pharmaceutical manufacturers to publicly report proprietary pricing information, limit price increases or to place a maximum price ceiling or cap on certain products.

Existing and proposed state pricing laws have added complexity to the pricing of pharmaceutical drug products.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

Pharmaceutical products may face competition from lower-priced products in foreign countries that have placed price controls on pharmaceutical products and may also compete with imported foreign products.

Furthermore, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, that it will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available, or that the third-party payors’ reimbursement policies will not adversely affect the ability for manufacturers to sell products profitably.

The ability to successfully commercialize any product candidate that receives marketing authorization depends in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.

Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.

A primary trend in the healthcare industry in the United States and elsewhere is cost containment.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system, including implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.

In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010

(the “Affordable Care Act”) was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.

There have been significant ongoing judicial, administrative, executive and legislative efforts to modify or eliminate the Affordable Care Act.

Changes to and under the Affordable Care Act remain possible but it is unknown what form any such changes or any law proposed to replace or revise the Affordable Care Act would take, and how or whether it may affect our business in the future.

We expect that changes to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

We also expect that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that can be charged for drug products.

Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from private payers.

The Inflation Reduction Act of 2022 (the “IRA”) contains substantial drug pricing reforms, including the establishment of a drug price negotiation program within the U.S.

Department of Health and Human Services that would require manufacturers to charge a negotiated “maximum fair price” for certain selected drugs or pay an excise tax for noncompliance, the establishment of rebate payment requirements on manufacturers of certain drugs payable under Medicare Parts B and D to penalize price increases that outpace inflation, and requires manufacturers to provide discounts on Part D drugs.

Orphan drugs that treat only one rare disease are exempt from the IRA’s drug negotiation program.

Substantial penalties can be assessed for noncompliance with the drug pricing provisions in the IRA.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand or additional pricing pressures.

These and other healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any current product or future product candidate.

Any reduction in reimbursement from Medicare or other government healthcare programs may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for drugs.

It is uncertain whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such may be.

In addition, increased Congressional scrutiny of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject the industry to more stringent product labeling and post-marketing testing and other requirements.

It is also unclear what impact any changes made by the new presidential administration will have on the industry.

Such actions may impact the development and commercialization of drug products.

International Regulations

4 unchanged sentences

PHRMA Code and April 3, 2003 Department of Health and Human Services Office of Inspector General, OIG Compliance Program for Pharmaceutical Manufacturers

We have established and implemented a corporate compliance program designed to prevent, detect and correct violations of state and federal healthcare laws, including laws related to advertising and promotion of our products that are in compliance with the PHRMA Code and the Health and Human Services Office of Inspector General (“OIG”) Compliance Program requirements for Pharmaceutical Manufacturers.

Code and the Health and Human Services Office of Inspector General (“OIG”) Compliance Program requirements for Pharmaceutical Manufacturers.

Healthcare Fraud, Waste and Abuse

21 unchanged sentences

Other Healthcare Laws and Compliance Requirements

In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the United States Department of Health and Human Services, the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments.

of the United States Department of Health and Human Services, the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments.

Drug Quality and Security Act (“DQSA”)

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business