Fortress Biotech Q2 2026 Earnings Report

Fortress Biotech EPS Results

• Actual EPS: -$0.08
• Consensus EPS: -$0.20
• Beat/Miss: Beat by +$0.12
• One Year Ago EPS: N/A

Fortress Biotech Revenue Results

• Actual Revenue: $18.72 million
• Expected Revenue: $18.30 million
• Beat/Miss: Beat by +$418.00 thousand
• YoY Revenue Growth: N/A

Fortress Biotech Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 12, 2026
• Conference Call Time: 4:30PM ET

Fortress Biotech (NASDAQ:FBIO) is a clinical‐stage biopharmaceutical company focused on acquiring, developing and commercializing novel pharmaceutical and biotechnology products. Headquartered in New York, the company operates through a network of majority‐owned subsidiaries that target areas of high unmet medical need, including oncology, rare diseases and dermatology. Fortress Biotech’s business model emphasizes in‐licensing or acquiring promising drug candidates and coordinating their development through specialized affiliate companies, allowing for flexible capital allocation and focused management of individual programs.

Through its portfolio of subsidiaries, Fortress Biotech advances a diversified pipeline spanning small molecules, biologics and cell therapies. Its affiliates include companies developing immuno‐oncology therapies, gene and cell therapy approaches for genetic and rare disorders, as well as topical and systemic dermatology products. By leveraging internal expertise and external partnerships, the company seeks to optimize trial design, regulatory strategy and commercialization pathways for each candidate, aiming to accelerate time to market and enhance value creation.

Founded in 2007 by Pablo Legorreta, Fortress Biotech completed its initial public offering under the name Coronado Biosciences before rebranding to its current identity in 2016. Over more than a decade, the company has cultivated relationships with leading academic institutions, contract research organizations and commercial partners to support global clinical development and eventual product launches. While its primary operations are based in the United States, Fortress Biotech’s programs often involve international trial sites and regulatory filings across North America and Europe.

Under the leadership of Chairman and Chief Executive Officer Pablo Legorreta, Fortress Biotech maintains a strategic focus on unlocking the potential of under‐resourced programs. By structuring development efforts through dedicated subsidiaries, the company aims to balance risk and reward, fostering innovation across multiple therapeutic areas while preserving the flexibility to collaborate with larger pharmaceutical and biotechnology firms.

Fortress Biotech Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter revenue increased 23% year over year to $18.5 million, while GAAP net loss narrowed to $0.3 million from $3.8 million and EBITDA turned positive. Management reiterated its expectation that 2026 will be a breakout year and that the company will remain EBITDA positive for the rest of the year.
• Positive Sentiment: EMROSI continued to gain traction, generating $8.1 million in Q2 revenue and approximately 36,000 prescriptions, up 20% sequentially. Unique dermatology prescribers rose to more than 4,500, while new prescriptions reached a monthly record in June.
• Positive Sentiment: Payer access and reimbursement improved, with high-quality formulary coverage increasing from 34% to approximately 38% of commercial lives; a major national health plan added EMROSI to its formulary in August. Management expects improving coverage to support higher average selling prices and sales growth in the second half.
• Negative Sentiment: QBREXZA revenue was somewhat weak in the quarter, which management attributed to patient and payer mix and lingering insurance-deductible resets, although prescription demand improved in June and July. SG&A is expected to increase somewhat in the second half as additional marketing and advertising programs are implemented.
• Neutral Sentiment: Journey deployed five additional dermatology sales representatives and launched Eurax Cream in July, positioning it as the third product in the sales portfolio. Management reported early positive feedback but provided no revenue guidance, while also continuing to explore international licensing opportunities for its patented products.

Presentation

[Operator]

I would now like to turn the call over to Jaclyn Jaffe, the company's Senior Director of Corporate Operations. Please go ahead, Jaclyn.

[Jaclyn Jaffe, Senior Director of Corporate Operations at Journey Medical]

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 Ram 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 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 filed with the SEC today and the company's press release that accompanies this call, particularly the cautionary statements in it.

[Jaclyn Jaffe, Senior Director of Corporate Operations at Journey Medical]

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 a 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, Wednesday, August 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.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Thank you, Jaclyn, and good afternoon to everyone on the call today. We continued to make solid progress in our business in the second quarter as we delivered strong revenue growth and improved profitability during the period. Emrosi revenues were $8.1 million in Q2, up significantly year-over-year and sequentially from the first quarter on higher prescription volume, improving payer reimbursement, and a significant step-up in the number of dermatology writers prescribing the brand. These metrics not only trended positively, but also showed acceleration, and we expect this progress to continue in the coming quarters. Our total net product revenues for the second quarter rose by 23% year-over-year, while operating expenses increased by less than 1% compared to Q2 of last year. We remain focused on delivering strong top-line growth and leveraging our proven dermatology commercial infrastructure.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We are executing on these initiatives and as a result, we generated positive EBITDA in the second quarter. With this performance, we continue to believe that 2026 will be a breakout year for Journey Medical with respect to both revenue growth and profitability. Emrosi prescriptions totaled approximately 36,000 in the second quarter, up from about 30,000 total prescriptions in the first quarter of this year. This represents approximately 20% sequential quarterly growth for the product, which is up from the 11% sequential quarterly prescription growth seen last quarter. Importantly, the growth is being driven by new prescriptions in addition to refills, with successive increases in NRx on a monthly basis. In June, we saw a strong increase with over 5,300 new prescriptions filled, up from an average of 4,700 NRx in the preceding three months. This was an all-time monthly high for the product.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We reported last quarter that approximately 3,700 unique dermatology prescribers had written a prescription of Emrosi. Today, I am pleased to report that there are now over 4,500 unique prescribers writing for the brand. This is more than a 40% increase in Emrosi prescribers from the 3,200 prescribers that we had at the end of 2025. We believe that these accelerating trends are encouraging and demonstrate that as more prescribers and patients gain experience with Emrosi, product loyalty will increase, and the franchise value will continue to compound. As we had planned, we hired an additional five dermatology sales professionals into our commercial organization during the second quarter. These experienced representatives joined the company in late July and were recently deployed into the field.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

The time to fill these relatively large sales territories couldn't be better, and we expect that contributions from these new representatives will add to our already strong market penetration efforts. With over 15,000 dermatologists in the United States, there is significant room for us to grow our base of prescribers. We are increasing our peer-to-peer marketing activities, and we remain active at key dermatology medical conferences to expand awareness of Emrosi's superior clinical benefits in the treatment of rosacea. The superior head-to-head efficacy results demonstrated in our phase III clinical trials comparing Emrosi to the only other branded oral rosacea treatment, Oracea, continue to be central in driving adoption throughout the dermatology community. Emrosi's placebo-like safety and tolerability profile is proving to be durable, which is another important factor in recruiting new prescribers.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

From the patient perspective, Emrosi's rapid onset of action and superior skin clearing effects compared to Oracea are key, and real-world patient experiences are supporting a growing base of loyal end users. Helping us to further broaden awareness of Emrosi in the market, we expect to announce new journal publications for the product in the coming quarters, and we believe that Emrosi has potential to be incorporated into the consensus treatment guidelines for rosacea. The payer community is also taking note of Emrosi's early success in the market, and we are continuing to make progress with the downstream health plans. Importantly, the calculated average selling price for Emrosi based on prescriptions increased in Q2 over Q1. After increasing previously in Q1 over Q4, as reimbursed prescriptions are becoming an increasing part of the business mix. As Emrosi's formulary status improves, we believe that our ASP will continue to rise.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Earlier this year, we completed our agreements with all the top three GPOs in the nation, bringing plan access for Emrosi to over 169 million of the 192 million covered commercial lives in the U.S. With those agreements in place, our focus is to pursue high-quality formulary coverage with the downstream health plans, meaning a single-step edit or better. We made good progress in the second quarter as the percentage of commercial lives with high-quality formulary coverage increased from 34% in Q1 to approximately 38% currently. Supporting this positive trend, a large national health plan placed Emrosi on its formulary in early August, and we expect to see traction from that addition this quarter. I will now turn the call over to our CFO, Joe Benesch, to review our second quarter financial results.

[Joseph Benesch, CFO at Journey Medical]

Thank you, Claude, and good afternoon to everyone on the call. I will now review our financial results for the second quarter of 2026. Total revenue for the quarter was $18.5 million, compared to $15 million in the second quarter of 2025, reflecting a 23% increase from period to period. This growth was primarily driven by momentum from continued commercial demand for Emrosi, which generated $8.1 million in net revenue for the quarter. Turning to gross margin, we reported a 67% margin for the second quarter of 2026, consistent with the prior year quarter. SG&A expenses were $10.9 million for the quarter, compared to $11.9 million in the second quarter of 2025. The decrease was primarily due to the impact of launch-related spending for Emrosi in the prior quarter.

[Joseph Benesch, CFO at Journey Medical]

Our GAAP net loss narrowed to $300,000, or $0.01 per share basic and diluted, compared to a net loss of $3.8 million or $0.16 per share basic and diluted for Q2 2025. On a non-GAAP basis, both EBITDA and adjusted EBITDA were positive for the three and six-month periods ended June 30, 2026. EBITDA reflected net income of $1.4 million and $1.1 million for the second quarter and the six-month period ended June 30, 2026, respectively, compared to net losses of $1.9 million and $4.1 million for the prior-year quarter and the prior year-to-date period, respectively.

[Joseph Benesch, CFO at Journey Medical]

Adjusted EBITDA, which is generally our EBITDA number less non-cash share-based compensation expense, reflected net income of $2.9 million and $3.5 million for the second quarter and the six-month period ended June 30, 2026, respectively, compared to net losses of $500,000 and $1.4 million for the prior year quarter and the prior year-to-date period, respectively. We ended the quarter with $25.6 million in cash compared to $24.1 million as of December 31, 2025. In summary, our second quarter results reflect the continued execution of our plan to become sustainably EBITDA positive. Through revenue growth, margin improvement, and expense optimization, which we intend to remain focused on. Thank you very much. I will now turn the call back over to Claude.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Thank you, Joe. The second quarter was another productive period for Journey Medical, with clear progress made on our business objectives. We are delivering on our goal to generate positive EBITDA for the remainder of the year, and with our net product sales growing significantly faster than our expenses. We are making solid progress toward becoming sustainably earnings and cash flow positive. Emrosi continues to gain market share in the rosacea treatment segment, with prescription growth accelerating in Q2, and our base of new prescribers increasing at an impressive rate. With total prescriptions growing by 20% sequentially from the first quarter of this year, we believe that the promise of Emrosi is beginning to be realized broadly in the market. Importantly, patient experiences are validating that the superior benefits in our phase III clinical trials are highly clinically meaningful.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We remain focused on achieving high prescriber and patient satisfaction rates, as this is the cornerstone of our efforts to build a strong base and deliver compounding growth for the brand. With market momentum building, our payer coverage continues to improve as well. The trends of higher ASPs since the beginning of the year is a reflection of that progress. Emrosi was added to the formulary of a major national health plan earlier this month, and with other payer initiatives in various stages of progress, we continue to expect our ASP to improve throughout the back half of the year, fueling Emrosi's sales growth. With our business moving in the right direction, we believed it was the perfect time to expand our commercial organization, and we did so by recently hiring and deploying five new sales professionals to fill new territories.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We also executed on launching a niche dermatology product late in the second quarter called Eurax Cream. Our new sales professionals and this new addition to our product lineup are expected to augment our efforts to grow company revenues, with Emrosi remaining as high-priority detail in the Journey portfolio. With regards to business development activities, we continue to explore out-licensing opportunities for the commercial rights to our patented products in non-U.S. territories. In addition to the potential to in-license assets to expand our dermatology product offering and increase value for the company. We continue to expect that 2026 will be a breakout year for Journey Medical, and we will remain committed to delivering on our core objectives: to improve the lives of patients, offer innovative treatment options to dermatology healthcare providers, and to create long-term value for our shareholders. Thank you.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Operator, we are now ready to open the lines for Q&A.

[Operator]

We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Scott Henry with Alliance Global Partners. Please go ahead.

[Scott Henry, Analyst at Alliance Global Partners]

Thank you, and good afternoon. Claude, you gave a lot of color on ASP. I am just going to ask you a couple follow-up questions, so bear with me. Were there any inventory movements in the quarter that can sometimes inflate or even deflate that ASP on a specific quarter?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

None. No.

[Scott Henry, Analyst at Alliance Global Partners]

Okay. Oftentimes I will see this where the ASP is drifting up, but it is not a straight line, but you sound pretty confident that we could get Because this was about a 10% boost over our first quarter, which is fantastic. But it sounds like you are looking for sequential gains the next couple quarters as well. Is that the correct interpretation?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

That's correct. I think you'll see good progress from Q4 last year, Q1 to Q2, and our expectation is that we'll continue to gain better ASPs as more reimbursement from our payer strategy gets implemented and more reimbursement's happening through the insurance companies.

[Scott Henry, Analyst at Alliance Global Partners]

Okay. Great. I don't know if you can speak to the season. Q2 was great, and you had some significant gains, but it's kind of plateaued for the past couple weeks around 3,000 a week. Is there any seasonality where we may get a boost coming out of the summer months? Any thoughts on that?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Yeah, it's a good question. Fair question. As I'm looking at market data and just looking the past six, seven quarters of the total market, pretty consistent throughout. You would anticipate from summer going into winter with the cold weather coming into play in the next several months that there's some changes. It's minimal, and I would not put a lot of seasonality to it. We've had good growth consistent throughout the whole year. You'll see some weeks, Scott, that there's maybe several weeks that are the same level and then we get a bump up. That's what we've seen with this brand on a consistent basis as we've launched it here in 2026. We just got Symphony numbers, for example, for July. We had about 13,000 prescriptions for Emrosi in June, and now we have approximately 14,000. So we've increased it in a good fashion.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

New prescriptions are up. The trends are very strong. We hit about 5,300 new prescriptions. The last three months preceding that was about 4,700. So, the trends are very positive. In my opening remarks, we talked about unique prescribers. I will tell you, from closing out 2025, we had about 3,200 prescribers. We moved that up to approximately 3,700 prescribers ending Q1. We're close to 4,500+ prescribers right now. So more physicians are jumping on and it's really looking positive.

[Scott Henry, Analyst at Alliance Global Partners]

Okay. So some great momentum going there. Just shifting gears, a couple of the other products. Qbrexza was down a little bit in the quarter. That is kind of the second product that really matters here now. How do you see that product? Is that a flattish product? Or should we think about that as a declining product? Just wanted to hear your thoughts on the big picture, long-term view on Qbrexza in these next four to six quarters.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Yeah, sure. Qbrexza is a fantastic product, very meaningful to the company. Right now it is second out of the bag in terms of promotion with our field sales force. Obviously, Emrosi is first out of the bag. And we have great contribution from Qbrexza, very consistent over the time that we have had it. It brings in roughly about $25 million-$26 million. You will see some up and down quarters with the brand. This past one was a little bit light. I would contribute that to probably a few things. One is patient mix, payer mix, right? We do not control that blend that is happening during the quarter, so that is certainly a big part of it. I think you will have some residual effects from insurance deductible resets from the beginning of the year that leak into Q2.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We are going into a very good, strong season for hyperhidrosis, the hotter summer months. Again, we had an extremely strong month of June. We hit over 14,000+ prescriptions, about 14,500 to be exact. As I mentioned with Emrosi, we just got the July numbers and we are just shy of the 15,000 mark. So demand is increasing. Patient satisfaction with the brand is extremely high. It is just very convenient. You can use this brand any time of the day or evening. There are no restrictions. The simple use of it, Scott, makes it very friendly. The fact there is no aluminum-containing ingredients in the brand makes it very appealing to a lot of people. The brand is growing, and we see great contribution. So I would expect with consistency that you have seen over the last couple of years with this.

[Scott Henry, Analyst at Alliance Global Partners]

Okay, great. I will wrap it up there. Thank you for taking the questions.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Sure. Thank you.

[Operator]

The next question comes from Mayank Mamtani with B. Riley Securities. Please go ahead.

[Mayank Mamtani, Analyst at B. Riley Securities]

Yes, good afternoon, team. Thanks for taking our questions and congrats on a lot of progress here. Maybe on the operating leverage, if I could start there. Your SG&A stayed unchanged while obviously you are reporting on very strong commercial KPIs. Was wondering in second half with all the corporate developments you talked about, including niche launch, should we expect a step up in SG&A starting with 3Q? I have a few follow-ups after that.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Sure. Joe, would you like to take that one?

[Joseph Benesch, CFO at Journey Medical]

Yeah, sure. Mayank, the answer is yes, somewhat, right? You're not going to see any surprises, but we do have some marketing programs, some advertising programs that we'll probably implement the third, fourth quarter. Overall, I expect to see the percentage of revenue from SG&A pretty consistent.

[Mayank Mamtani, Analyst at B. Riley Securities]

Okay. Claude, you talked about the major national plan added in early August. Was obviously wondering how that impacts net ASP in second half or what you've seen already relative to this nice improvement you've seen in first and second quarter. I was also wondering on the refill rate that continues to climb up, is there a year-end number that is in your mind, you can see how trends are telling you? Is there any, how your unique prescriber number also is moving, how many physicians are writing Emrosi? Is there maybe correlation between these two big KPIs you're tracking?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Sure. I'll start with the latter two parts of your question there. Refill rates are very important. We have been very committed on being on message in terms of our phase III clinical trials. Our commercial team is executing, talking about four-month trials, and I think it's resonating extremely well with our prescribers. So, if they are prescribing Emrosi, which again, we continue to see more and more prescribers each quarter. Depending on how they are giving the refills, if it's one prescription plus three refills, that's according to our phase III clinical trials. Dermatologists are artists. Patients come in and present their rosacea in different parts, phases, to the physician. So they're going to vary on how many refills they get and what they're comfortable with. So that's going to go up and down.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

As we get these new prescribers on board, once they get those patients back, they're going to get more and more comfortable with the brand. So refill rates are important. The month of July that just came in, again, an all-time high with 14,000 prescriptions. Our refill rate for that particular month, for example, is at 1.5 plus the regular fill. So you're at about 2.5 right now, if you think about it. You can also see a surge in new prescriptions. As I mentioned, we were averaging about 4,700 new prescriptions a month. Now we moved that up to about 5,300 prescriptions.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

The refill rate, even though that's compounding now with more physicians using this and giving refills to their patients, the refill rate is important, but I think you have to look at total prescriptions, and that line continues to demonstrate very strong positive growth. I would tell you that that's how I would think about it, Mayank. In terms of the new national healthcare plan, I'm going to ask Ramsey to jump in here and talk about that a little bit and then potential for the rest of the year.

[Ram Alloush, COO and General Counsel at Journey Medical]

Sure. Hi, Mayank, and thanks for the question. I think the question was, with this new national formulary on board, what is our sort of expectation from improvement on ASP? Obviously, it's an upward trajectory. It's a very large national plan. As you know, as of April, we had signed all three major GPOs. In the second quarter, we did have some number of lives come over from that third GPO. This will be in addition to that. This is a separate national formulary in which we were able to get Emrosi on formulary four. We do expect improvement. We talk about 38% quality of the 192 million lives having access to Emrosi with a single step therapy or better. Adding this new national formulary is going to increase that number, right? From the 70+ million lives, it's going to go up from there.

[Ram Alloush, COO and General Counsel at Journey Medical]

We think that's the least amount of friction that a patient really should have to be able to get a prescription through the adjudication process and pick up their prescription. We do have a number, and we've said this previously, a number of other sort of negotiations and presentations going on with other large national formularies. We think the fact that we are able to be successful with a positive add with the one we were just recently added to should help us in our momentum going forward. Yeah, we expect good milestones to be hit throughout Q3 into Q4 and obviously into 2028 as well.

[Mayank Mamtani, Analyst at B. Riley Securities]

Great. My final question, on the ex-U.S. out licensing efforts, including for Emrosi, is there anything IP related or of sorts like that may be also playing a role there? Or is it just these things can take a little while, especially ex-U.S. where our dynamics are very different. Thanks so much for taking my question.

[Ram Alloush, COO and General Counsel at Journey Medical]

Yeah. Claude, if you do not mind, I can take the out-licensing question as well.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Sure. Yeah.

[Ram Alloush, COO and General Counsel at Journey Medical]

As you may know, Emrosi, Qbrexza, Amzeeq, Zilxi, those are our patented brands in which we acquired. We acquired global rights. We maintain global patent portfolio for all of those brands. Qbrexza is available in Japan with our partners, Maruho. We did additional out-licensing in Korea, Taiwan, and other ASEAN countries. Amzeeq is available in China with our partners, Cutia, commercially available, they launched about a year ago. We continue to have additional conversations with out-licensing with those brands, but more importantly, Emrosi. In terms of ongoing negotiations, what I can tell you is that they are happening on a consistent basis. We do have IP, as I mentioned, globally, which includes Europe, Canada, Australia, New Zealand, Japan, and other parts of Asia. So in terms of the robustness of the IP and the market opportunity, it is there.

[Ram Alloush, COO and General Counsel at Journey Medical]

As you kind of mentioned, it does take some time to get to the meeting of the minds, to have the right structure in place, to make sure all the right political climate is in place, given certain new legislative or executive order actions that are kind of ongoing. Obviously, our primary focus is making Emrosi the standard of care, the gold standard in the U.S. for rosacea. We certainly think, and we have ongoing discussions with other companies, that there is great opportunity in those regions as well. So, we will continue to update as we go and obviously once something definitive is available.

[Mayank Mamtani, Analyst at B. Riley Securities]

Very helpful. Thank you, guys.

[Ram Alloush, COO and General Counsel at Journey Medical]

Sure.

[Operator]

The next question comes from Brandon Folkes with H.C. Wainwright. Please go ahead.

[Brandon Folkes, Analyst at H.C. Wainwright]

Hi, thanks for taking my questions, and congrats on the quarter. Maybe just two from me. Staying on Emrosi, you look to be making very good progress here on the gross-to-net and obviously on volume. Maybe just where is the remaining friction in access today, including payer access, especially that friction that you believe you could remove or loosen over the next 12 months? Secondly, from me, just having a look at your Q, Eurax, I believe that is how you pronounce it, apologies if it is not. Can you just give us more color on your expectations for that product? Maybe when it launched in the quarter, and how you envision that product growing over time. Thank you.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Yeah, certainly. Brandon, you nailed it. Eurax is the correct name, 10% crotamiton. This is an anti-itch, antipruritic product. It is non-steroidal, non-histaminic, and fragrance-free. We worked diligently to change this formula. This is a brand that we picked up a number of years ago from another pharmaceutical company, and we really believe it is an enhanced formulation, and it will be welcomed in the dermatology community for their patients that suffer from significant itching. We trained our commercial team in June, and we launched the brand in July. So brand new out there. When you take a look at our portfolio, this is coming in right behind Qbrexza in the third position. So Emrosi first, Qbrexza second, and then followed by Eurax right now. So it is brand new. It is just starting out. We are starting to see some traction.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We're getting some positive feedback from our dermatology base of physicians. We like what we're hearing so far, but again, it's relatively early. We think it's going to be a good, strong contributor to our base business. Nothing in terms of giving any guidance here, but we're going to be obviously tracking prescriptions and physician counts, and all the major KPIs that you would think regarding the brand. That's where it's at right now. It is in the compensation plan for our commercial team. There is focus and attention and promotion happening behind it. In terms of, I believe you wanted to maybe look at more managed care and some of the points that we're having in the discussions with the various payers. Is that correct?

[Brandon Folkes, Analyst at H.C. Wainwright]

Yes. Thank you.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Okay. Ramsey, did you want to jump back in here for that?

[Ram Alloush, COO and General Counsel at Journey Medical]

Sure.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Please.

[Ram Alloush, COO and General Counsel at Journey Medical]

Yeah. I think more specifically, Brandon, you were looking at where the friction is out in the market in terms of barriers, if you will, UMs. We talk again, we talk about what the quality of lives are, and that's that 72 million, that 38%. We also talked about access, which is pathway to a prescription, and that's more like 169 million lives. If you look at the delta between the two, you're going to see that the, let's call it 80, 90 more million lives that potentially have access to Emrosi might have a larger barrier in terms of that friction. That could be, for example, a prior auth or a double step that's in place.

[Ram Alloush, COO and General Counsel at Journey Medical]

Our job is identifying where those bottlenecks are, and we've been doing that on a consistent basis and speaking with those plans to see what it takes to get Emrosi down to our benchmark, which is that quality single step therapy or better. Obviously, from a clinical perspective, we have a strong value proposition. There are other drugs available to them in the market from a rosacea treatment standpoint. Our category, again, we're saying a single step through any of those, either oral or topical agents. Typically, when prescribers do prescribe for rosacea, they're using an oral, and they also may supplement with a topical. Again, with our head-to-head data, the fact that our drug works in essentially half the time as Oracea.

[Ram Alloush, COO and General Counsel at Journey Medical]

Eight weeks, we achieved the results greater than what Oracea did in our study in 16 weeks, with strong value proposition, not only from a clinical perspective but from a financial perspective, and this is resonating very well with the payers. This isn't a very highly managed category, right, in terms of rosacea and what the payers have on their plates, right? When you think of GLP-1s, other oncology, rare disease, orphan drugs. So it takes a little bit more time. We are having, again, we have great contacts with the important plans that we think are going to make the difference that, for example, may have a double step or a PA and why we think it's not appropriate to have that Utilization Management in place for our drug given the data and the financial profile for it.

[Ram Alloush, COO and General Counsel at Journey Medical]

So yeah, I'd say the scripts that are going through with those are still going to continue to grow through, but they could go through at a higher rate which, covered, which is going to improve our reimbursement if we're able to remove and reduce those barriers. And that's what we're going to continue to do through Q3, Q4, and into 2028 as well.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Yeah, Brandon, in terms of negotiation, that's what our market access team is doing. I think Ramsey set it up very well here. But we're negotiating potential look-backs. It could be six months, 12 months, a year plus. Those, if they've tried a topical or if they've tried an oral, we're playing with the and/or part of it here. So again, I think where we stand today at about 38% quality, one step at it or less, is a good position. We could certainly increase that number significantly. But we are holding to our strategy of trying to get the least resistance and to simply get the patients on what we believe to be the best treatment for rosacea orally right now. So those are the types of things that we go back and forth with.

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

We think taking that time is important and it makes a lot of business sense.

[Operator]

As a reminder, if you would like to ask a question, please press star then one to join the question queue. The next question comes from Thomas Flaten with Lake Street. Please go ahead.

[Thomas Flaten, Analyst at Lake Street]

Hey, good afternoon, guys. Congrats on the Emrosi performance. Just a few from me. Claude, with respect to the new reps that were hired, can I assume those were white space hires or are you already territory splitting?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Out of the five, most of them are in white space, but we do have some areas where the number of dermatologists and the penetration is better well served with splitting it. So you have a little mix of both, Tom.

[Thomas Flaten, Analyst at Lake Street]

Got it. Then with respect to physician utilization, have they cued in on a specific element of your efficacy, I mean, time or overall resolution erythema that is the driving reason for their use?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

In terms of just physician feedback, it is astounding how they are looking at the efficacy. The superiority factor that we have that the FDA gave us is resonating well with patients. When the physicians are seeing them back a month or two after their initial prescription, the reinforcement from the patient and what the clearance rate is rather incredible. Again, we are doing what Oracea did in half the time, and I think that is really a major part of it. Plus, the other factor is you are talking about a fantastic safety profile, very tolerable. They are not getting that pushback that they could have had, for example, with acne and immediate-release minocycline. They are not getting that same pushback with this proprietary formulation of Emrosi. So they like what they are getting, and I think they are building confidence.

[Thomas Flaten, Analyst at Lake Street]

Then back to the physicians again, if I may. Are there specific subtypes of rosacea patients that they are primarily using it on or are they kind of using it more broadly than having identified a subtype?

[Claude Maraoui, Co-Founder, President, and CEO at Journey Medical]

Well, we are indicated for papulopustular rosacea, so certainly that severe, moderate to severe. Our indication allows us to go broader. But you are talking about moderate and severe patients, I would say, are what they are putting Emrosi in that category. I am generalizing here, but I would tell you that that would be where the niche is for the brand right now.

[Thomas Flaten, Analyst at Lake Street]

That's great. Thank you.

[Operator]

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

Participants

Analysts

• Jaclyn Jaffe, Senior Director of Corporate Operations at Journey Medical
• Claude Maraoui, Co-Founder, President, and CEO at Journey Medical
• Joseph Benesch, CFO at Journey Medical
• Scott Henry, Analyst at Alliance Global Partners
• Mayank Mamtani, Analyst at B. Riley Securities
• Ram Alloush, COO and General Counsel at Journey Medical
• Brandon Folkes, Analyst at H.C. Wainwright
• Thomas Flaten, Analyst at Lake Street