Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to Journey Medical's third quarter 2026 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of this call will be available approximately one hour after the end of the call for approximately 30 days. I would now like to turn the conference over to Jaclyn Jaffe the company's senior director of corporate operations. Please go ahead, Jaclyn.

Good afternoon, and thank you for participating in today's conference call. Joining me from Journey Medical's leadership team are Claude Maraoui, co-founder, president, and chief executive officer, Joseph Benesch, chief financial officer, and Ramsey Alloush, chief operating officer and general counsel, who will participate in the Q&A portion of the call. During this call, management will be making forward-looking statements, including statements that address, among other things, Journey Medical's expectations for future performance, operational results, financial condition, and the receipt of regulatory approvals. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Journey Medical's most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K files of the SEC today, and the company's press release that accompanies this call, particularly the cautionary statements in it. Today's conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in the company's earnings press release. The content of this call contains time-sensitive information that is accurate only as of today, Thursday, November 12th, 2026. Except as required by law, Journey Medical disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Claude Maraoui, co-founder, president, and chief executive officer of Journey Medical.

Thank you, Jaclyn, and good afternoon to everyone on the call today. We continue to make progress in the third quarter, delivering top-line growth and improved profitability during the period. Our total revenue grew by 8% in Q3, with net product sales increasing 11% year over year. Net sales of Amorosi were $9 million in the third quarter, up year over year and sequentially from the second quarter, driven by higher prescription volume, improving payer reimbursement, and an increase in the number of dermatology writers prescribing the brand. We expect that these key metrics will continue to trend positively in the coming quarters. I am pleased to report that we achieved positive EBITDA for the second consecutive quarter. We remain focused on investing in our proven dermatology commercial infrastructure and driving top-line growth to advance the business toward becoming net earnings and cash flow positive. MROSI prescriptions totaled approximately 40,000 in the third quarter, up from about 36,000 total prescriptions in the second quarter of this year. This represents approximately 8% sequential quarterly growth for the product. Importantly, the growth continues to be driven by strong refill demand and the continued ramp in MROSI prescribers. During the third quarter, the number of unique Ambrosie prescription writers grew by approximately 500 to over 5,000 unique prescribers of the product. This number was our internal goal for the year, so we've already reached this objective and are continuing to grow the prescriber base further. We believe that there is critical mass building behind Ambrosie and that the value of the brand is continuing to compound as more prescribers and patients experience the product's clinical benefits. With over 14,000 dermatologists in the United States, there is still significant room for us to grow the number of MROSI prescribers. A recent addition of five new sales territories is intended to further increase the product's market penetration. With our direct sales professionals, ongoing peer-to-peer marketing activities, and our active presence at key dermatology medical conferences, we are continuing to expand the awareness of Ambrosie's superior clinical benefits in the treatment of rosacea. We recently attended the 26th Annual Fall Clinical Dermatology Conference. where we sponsored a poster highlighting clinical data on Ambrosie's superior skin clearing effects. The post hoc data analysis from our phase three clinical trial showed that nearly 50% of patients that achieved the primary endpoint of investigator global assessment or IGA success had complete resolution of their rosacea symptoms at the end of the treatment period with Ambrosie. This equates to nearly 30% of the mild to moderate rosacea patients achieving clear skin or an IGA score of zero with ambrosia treatment. In comparison, only 12.8% of patients on a ratio achieved an IGA score of zero or completely clear skin. Notably, clinical research shows that rosacea patients who achieve complete symptom clearance experience a significant delay in their time to relapse, and they remain free of symptoms longer than those who reach only partial clearance. With over two and a half times more patients achieving clear skin with ambrosia compared to a ratio, We believe that these data are compelling and significantly support MROSI's best-in-class clinical profile. The superior head-to-head efficacy demonstrated in our Phase III clinical trials comparing MROSI to Aresha remains a central message in driving adoption throughout the dermatology community. And these data on complete skin clearance reinforce that message. MROSI's placebo-like safety and tolerability profile continues to be durable, and this is another important factor in expanding the base of new prescribers. Additionally, MROSI's rapid onset of action and superior skin clearing effects are resonating with patients. Refill rates for Amrosi remain strong, rising nearly 12% from Q2 to Q3, providing a good indication of the high patient satisfaction with the product. In addition to our direct sales efforts, we expect awareness of Amrosi to increase in the market as we plan to announce new journal publications for the product in the coming quarters. and we believe that MROSI has potential to be incorporated into the consensus treatment guidelines for rosacea. Turning to our activities with payers, we are continuing to make progress with the downstream health plans. The calculated average selling price for MROSI based on prescription units has increased each quarter since the beginning of the year as reimbursed prescriptions are becoming an increasing part of the business mix. In addition to working on adding Ambrosie to more health plan formularies, we are also pulling through an increased proportion of prescriptions from regions that have more comprehensive formulary coverage. After completing agreements with all of the top three GPOs in the nation earlier this year, our focus remains on pursuing high quality formulary coverage with the downstream health plans, meaning a single step at it or better. Currently, 40% of commercial lives have high quality access to MROSI. Building on our progress, A large national health plan placed MROSI on its formulary in early August, and we expect another larger national plan to adopt MROSI on formulary shortly. Importantly, national plan adoption can have wide-reaching effects as many smaller regional plans typically model their prescription coverage based on national health plan formularies. and with that, I will turn the call over to our CFO, Joe Benesch to review our third quarter financial results.

Thank you, Claude. And good afternoon to everyone on the call. I will now review our financial results for the third quarter of 2026. Total revenue for the quarter was $19 million compared to $15 million in the third quarter of 2025. An 8% increase from period to period. This growth was primarily driven by the continued commercial demand for Ambrosie, which generated $9 million in net revenue for the quarter. Turning to gross margin, we reported a 69% margin for the third quarter of 2026 compared to 67% in the third quarter of 2025, due mainly to Ambrosie's lower cost impact on cost of sales. SG&A expenses were $12.6 million for the quarter, compared to $12.1 million in the third quarter of 2025. The increase was primarily due to a one-time expense of $1.7 million recognized upon the settlement of a dispute with a former vendor. This was partially offset by a reduction in launch-related expenses for Amrosi compared to the prior quarter. Our gap net loss narrowed to $1.3 million, or 5 cents per share of basic and diluted, compared to a net loss of $3.9 million, or 14 cents per share, basically diluted, for 3Q 2025. On a non-GAAP basis, both EBITDA and adjusted EBITDA were positive for the quarter. Notably, adjusted EBITDA, which is generally our EBITDA number, less non-cash share-based compensation expense, reflected net income of $3.5 million for the third quarter compared to $1.4 million for the prior year quarter. We ended the quarter with $22.3 million in cash compared to $24.1 million at December 31, 2025. Thank you very much. I will now turn the call back over to Claude.

Thank you, Joe. The third quarter was another period of solid performance for the company as we continued to generate revenue growth and positive EBITDA. Our net product sales grew significantly faster than our expenses. keeping us on path toward becoming sustainably earnings and cash flow positive. Ambrosia continues to gain traction in the rosacea treatment market with growing prescription demand and the base of new prescribers still increasing at an impressive rate. With approximately 40,000 total prescriptions during the third quarter and now over 5,000 unique prescribers writing for the product, We believe that the brand is becoming widely recognized in the dermatology community. Given MROSI's superior efficacy profile and potential for the drug to be added to the consensus treatment guidelines, we remain focused on making MROSI the oral standard of care for rosacea treatment. Importantly, We believe that the high refill rates seen in the prescription data validate that our Phase III clinical results are translating into real-world patient experiences that are highly clinically meaningful. Achieving and maintaining high prescriber and patient satisfaction rates are key priorities for us, as they represent the cornerstone of our efforts to build a strong brand franchise. Along with the positive demand trends, we are also continuing to improve Ambrosie's payer coverage. The trend of higher ASPs since the beginning of the year is a reflection of that progress. We continue to expect our ASP to trend higher in the coming quarters as we focus on pulling through more prescriptions in regions where health plan coverage is favorable and with the new health plan formularies expected to come online soon. With regard to business development activities, we continue to explore out-licensing opportunities for the commercial rights to our patented products in non-US territories. In addition to the potential to in-license assets to expand our dermatology product offering and increase value for the company. We look forward to finishing the year strong, and we remain committed to delivering on our core objectives, which are to improve the lives of patients, offer the innovative treatment options to dermatology healthcare providers, and to create long-term value for our shareholders. Thank you. Operator, we are now ready to open the lines for Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question is from Brandon Foulkes with H.C. Wainwright. Please go ahead.

Hi, thanks for taking my questions. Congrats on the progress in the course. And maybe just two from you. How are you thinking about potential improvements in morosity net revenue per prescription through 4Q and then 2027? Can you just talk about it? high-quality formulary coverage, where that stands today versus how you think about that in 2027. Thank you.

Sure, Brandon. Thank you for the two questions. I'll speak in general, and I think we'll have Ramsey give you some more details. But really, in the fourth quarter coming up here that we're in currently and heading into 2027, We feel like there is a lot of progress and a lot of momentum that's being built around our market access team and the negotiations that we've been having with many national formulary plans as well as regional plans. So we've made some good progress. I'm going to pass this over to Ramsey. He can give you more details and we'll go from there.

Hi, Brandon. And without giving any sort of guidance, Claude mentioned that we are expecting to be added to the, it is the largest national plan in the United States. We expect that to go into effect at the beginning of the year, so 2027. So when you think about ASP growth and revenue growth, that's going to be a big contributing factor in having more of our prescriptions go through as covered versus relying on our bridging program. And so that's a really big catalyst for us in a couple of ways. Obviously, one is from the revenue side. But secondarily, it really gives a lot of credence to the brand for Ambrose to be added to this premier plan. So we think we're going to have a lot of momentum and we're going to continue to have momentum. with the other national formulary plans that we're continuously working on in terms of formulary adoption. So that's the big catalyst for us early on. We expect that to truly improve 2027 with a number of others that we're expecting early on in 2027 as well. And when you think about high quality coverage, I think that was the other part of your question, I think the last call we were in that high 30s, low 40% range of what we're considering quality coverage. So 40% of the commercial lives, it's about 170, 180 million lives that are out there. And yeah, I think it's been pretty steady at this point. Like we said, the next ad here should help bump that number up and just to redefine what quality coverage is. that's a patient being able to get Ambrosie with a single step or better. We think that is really where our benchmark is. We think that's appropriate. We've had numerous discussions with a number of plans and they believe that that's the appropriate positioning for Ambrosie for the category. And so we have no reason to believe that that shouldn't be our benchmark for quality coverage. And that's what we're aspiring to have with these additional formularies that are expected to come online in 2027.

Great. Thank you very much.

Next question is from Scott Henry with AGP. Please go ahead.

Thank you. And good afternoon. Some great progress on MROSI. which I will get into, but I have to ask because I'm curious. 1.7 million is a lot for a vendor dispute. Could you give us any color on what happened there?

Yeah. I'm going to pass that along to Joe Benesch, our CFO. Joe?

Sure. So Scott, really, it reflects a dispute with a former vendor from several years ago. It's non-recurring, you know, one-time payment. We reserved for this, you know, settlement previously. And when we settled the payment that we made this quarter, it's now fully resolved. So it was just an addition onto the accrual.

Okay. Is it a cash outlay?

Yeah, it was a one-time cash outlay of 1.7. Okay.

All right. Thanks. I'll check out the filing as well. But more importantly, shifting payments, over to Amrosi. There was some noise in October. I believe it was switching of the payer coverage situation. It seems to have normalized by now. My question is, will it impact Q4 numbers in any way? Maybe it'll be a little lower because of that one month of transition, or do you think you've caught it off? all of it back and pick that up as well. Just trying to think of how we should model that sort of one-time event.

Sure, Scott. You know, the co-pay bridging program is real important for us, and it just really gives access to patients that perhaps have insurance coverage but MROSI isn't there on formulary yet. That's the real purpose of it. And, you know, right from to give a little more color, when we launched our program back in April of 2025, when we launched Ambrosie, we actually started with a 050 copay program. And then a couple months later, we switched over to 00. And then later on, another switch occurred. back in January of this year to 0.35. As Ramsey mentioned, and as in some of my earlier comments, we're getting more plans that are picking up in row seat, which is fantastic. And we believe that changing this to 0.50 really optimizes profitability for the company and More patients now will have coverage under MROSI with their health care plan, so they'll still be paying the $0. So we're still having good, strong access. The co-pay bridging program is doing its job. And we did have volatility towards the end of September into October. And like you said, it's recovering pretty well. but when we have made changes looking at our history, there is a little bit of a downward trend and then we bump back up. So the fourth quarter, I would imagine in that October, November timeframe that we're getting close to back even and we'll start to see a rise but there is a little volatility and that's what that was from.

Okay, thank you for that color, Claude. And as well, Earlier, there was mention of the large national plan coming in January 2027. Could you give an idea of how many lives that covers? How should we think about that in terms of magnitude and impact it should have relative to the base? It sounds like a pretty interesting incremental positive, and I just wanted to flush that out, just like that.

Yeah, no, look, it's a great achievement. I think we landed in a real good spot. The market access team, along with Ramsey, get their credit for this. This is a plan with over 25 million lives. So the impact should certainly be felt beginning in Q1. You know, we still don't control patient mix on who's getting the rosacea, with what insurance plans they have when they go in, but we certainly anticipate a good pickup there from non-reimbursed prescriptions to profitable prescriptions.

Yeah, that's great. Final question, I guess, Claude, it's probably best for you is, you know, a lot of times when you see a drug launch that's going well, as Amrosi is, companies will add resources to it. You have a limited patent duration, so if it's going well, sometimes you press it to really harvest that asset. Do you think that you will explore adding resources in 2027, given the success, given the ability to leverage that investment over a larger base?

You know, it's a great question. We certainly are looking at a number of different programs. First and foremost, where we win the battle day in and day out is in front of the dermatology providers. And we did increase our sales force from 35 to about 40 reps. There is another potential increase that we're looking at from a head count in 2027. So that certainly will require resources. I think also the market access team has a number of programs to help us with increasing our share with the national formulary plans, et cetera. So there's a number of different programs. They are certainly not inexpensive. So we believe we're gonna put in the right resources to get us to the goals that we wanna hit. Most importantly, we wanna continue to grow that that top line sales number and be thoughtful on our spend and make sure that that corresponds well to the bottom line.

Okay, great. Thank you for taking the questions.

The next question is from Thomas Flatton with Lake Street Capital Markets. Please go ahead.

Hey guys, thanks for taking the question. It's Wes on for Thomas. I was wondering if we could just start off. I remember you kicked off a switching trial program for dermatologists who haven't quite adopted ambrosia around mid-year. So, I mean, with this being the first full quarter, what are you seeing for conversions from the trial and how is the ongoing prescribing?

Yeah, I'm glad you brought that up. It was a pretty big success. This trial program, really, we looked at doctors, dermatologists, and TAs that have not come on board for whatever the reason was, and we were able to provide them you know, monthly trade sizes to really think about patients where they could potentially use Ambrosie instead of Oratia or the Oratia generics. I don't have specific numbers for you. I can tell you that there has been really a fair amount of conversion. Yeah, we're doing that and we look on continuing to possibly go to a second trial in 2027 just to continue that momentum.

Awesome. Thank you. And then just a follow-up here. I mean, excluding the one-time vendor item, SG&A was about $10.8 million. With the new reps in the field, how should we think about SG&A as a percentage of revenue coming into the next quarter and into 2027?

Joe, would you like to take that one?

Sure, sure. You know, I think you're going to see as a percentage of revenue consistent or a little bit lower as a percentage of revenue. As Claude said, we're going to continue to invest in the portfolio, you know, specifically in the growth of Ambrosie, add some Salesforce and those programs into 2027. So there will be some thoughtful spend. But as a percentage of revenue, you should see it actually decrease a little bit or stay consistent.

Awesome. That's helpful. Thank you.

The next question is from Mayank Maumtani with B. Riley Securities. Please go ahead.

Hey, team. Good afternoon. This is Amin on for Mayank. I wanted to ask, how should we be thinking about, you know, gross to net exiting 2026 and into 2027 as you kind of have these national formulary wins kind of come online? and what's the usual lag before a win shows up in the net price?

Yeah, I'll start that out, and then Joe will give you a little time to remark as well. But growth connects real important. As we continue to move forward down the path with negotiating with more plans, the conversion is really important, and there's substantial upside. as we get more plans here to increase that gross to net. So that's really key and fundamental for us. I think the changes with the co-pay bridging program that we have also helped in the gross to net. And one of the primary, actually, the primary growth driver for us is Ambrosian. That's a high margin product for us. I think that's just going to help overall with the company as the revenues continue to increase for that. Joe, go ahead, please.

Sure, sure. I think, you know, as the business moves from, you know, more uncovered business away from the coupon program, you know, into reimbursed and rebatable business, you know, that's where you're going to see most of the growth in gross to net. and in addition, we're always working to optimize all the other lines of gross net, specifically returns and some of the other lines. So that's the way we're thinking about it. Okay, thank you.

No, let me just add one more point to that. I think your question was just in terms of timing of when you would expect to see something like that, like the big national formulary win that's expected to take place in January. One thing to note about the first quarter, as you know, there are the deductible resets So some of that may take a little bit of time to really flow through to truly see the benefit. And historically, I think that'll show progression in the ASPS quarters progressed. But we do want to take into account that part of the year where patients will have their deductible resets covered or not, right? And so that's going to come into effect. But absolutely, 25 million lives being added to the pool of candidates that can get this drug as covered with a single step or better. It's a large amount. And so we do expect upward trend on ASP and improvement in gross to net as the quarters progress in 27, in addition to any other formulary whims that we expect, but we haven't yet discussed.

Okay. Thank you. That's really helpful. And if I may, are you planning to provide any formal, you know, 2027 be it revenue or EBITDA guidance. And I guess like, what are the kind of the key assumptions for MROSI growth, I guess, versus the base portfolio?

Yeah, in terms of giving guidance, we're strongly considering it. As you just heard, this new plan that's taking effect in the first quarter is fantastic, but we're gonna see how that really impacts everything. and then we're expecting a number of other wins as well. So again, depending on patient mix and how that goes, we're probably gonna be somewhat apprehensive here in the first half of next year to give any particular guidance and we'll see how quickly those wins come and how things stabilize. But it certainly will be going up in our estimation.

Okay. Thank you. We'll definitely be on the lookout for, you know, first half 27. I guess, you know, just a final question with regards to kind of the script data. So the third party kind of shows October TRX running kind of below the 3Q weekly average. I guess, what are you seeing in your own data so far in 4Q? And I guess, how quickly are those newly added reps, you know, becoming productive?

Yeah, so we hired five new representatives. Really kind of kickoff for us was the July 1 this year. And so they've started and, you know, they're starting to roll. We're giving them time. I think, you know, a good two quarters is a fair amount of time and we should see some substantial, you know, progress. hopefully profitability from those territories here very shortly. And they're a great group and some are doing remarkably well and some are just getting going. So it's a mix there. What was the other part of your question?

In terms of kind of your own data as far as kind of the TRX, So far in 4Q.

Yeah, sure. I think the way I would look at it is, again, with the copay bridging program, moving up the copay from 0.35 to 0.50. We talked a little bit about the volatility. We're seeing some good comeback right now. I think it'll stabilize here. I think December certainly will be a very good month for us historically, so we expect the same. So anytime we've done this, there is a little bit of a downturn. It might take anywhere from four to eight weeks and then you start seeing the charge back up. So we're looking at each week closely as you are and we feel very good. Take into account 5,000 prescribers, take into account strong refill rates and take into account the real strong positive patient feedback. When patients are on this drug with the data that I spoke to in my comments earlier, really getting full and complete clearance of your rosacea is just outstanding. And we really are becoming the standard oral medication to treat rosacea here. So it's just better for the patients. We're making it easy for patients to receive the product. And our reps are doing a great job giving the message, dropping the samples off, and talking about our copay program. So it's resonating well.

I appreciate it, team. Thank you so much.

Thank you.

This concludes our question and answer session. and it concludes the conference. Thank you for attending today's presentation. You may now disconnect.