Journey Medical Corporation Secures Credit Facility with SWK Holdings for up to $20 Million
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Insights
The entry into a credit facility by Journey Medical Corporation with SWK Holdings Corporation is a strategic financial move that indicates the company's proactive approach to securing capital for its operational and developmental needs. The $20 million credit line offers a buffer that can be instrumental in funding the company's general corporate purposes, which likely includes marketing, research and development and administrative expenses. The initial draw of $15 million with an option for an additional $5 million, contingent on meeting certain operational and financial metrics, suggests a performance-based financing structure.
From a liquidity standpoint, this credit facility provides Journey Medical with the flexibility to manage cash flow more efficiently, especially as it gears up for the submission of a New Drug Application (NDA) for DFD-29. The interest-only period for the first two years, with a possible extension to three years, offers the company a reprieve from principal repayments, which could alleviate short-term financial pressure and enable the company to focus resources on the potential launch of DFD-29.
However, stakeholders should be aware of the implications of such financial arrangements. While it provides necessary capital, it also adds to the company's debt profile and could impact future earnings due to interest obligations. The maturity of the loan in four years will necessitate a solid repayment plan, ideally supported by successful commercialization of their products and revenue growth.
The dermatological market is competitive, with several players vying for market share. Journey Medical's focus on FDA-approved products for dermatological conditions places it in a niche that has seen steady growth, driven by increasing awareness and prevalence of skin conditions. The potential launch of DFD-29, assuming FDA approval, could capture a significant market opportunity, provided the product demonstrates efficacy and safety that meets or exceeds current treatments.
Market dynamics in the pharmaceutical sector are influenced by regulatory approvals and the anticipation of a New Drug Application indicates progress in the product pipeline, which could be a positive signal to investors and industry stakeholders. The success of DFD-29's launch will be critical in determining the return on investment for the capital being deployed through the credit facility. The company's ability to meet the specified operational and financial metrics to draw the additional $5 million will likely depend on their commercial execution and market penetration strategies.
It's also important to consider the broader economic context, as changes in healthcare policy, insurance coverage and consumer spending can affect the demand for prescription pharmaceutical products. Journey Medical's strategic financing decisions must align with market expectations and the evolving landscape of the dermatological sector.
Within the pharmaceutical industry, the development and commercialization of new drugs are pivotal moments that can significantly alter a company's trajectory. For Journey Medical, the development of DFD-29 represents not just a potential new revenue stream but also an expansion of its product portfolio in the dermatology space. The clinical and regulatory pathway for new drugs is complex and costly, necessitating substantial financial resources to cover various stages from clinical trials to marketing.
The funding secured through the credit facility is likely earmarked for these critical activities, with a focus on the New Drug Application submission. The NDA process is rigorous, requiring comprehensive data on drug safety, efficacy and manufacturing quality. Success in this stage would validate the company's research efforts and could lead to a competitive edge in the market if DFD-29 addresses an unmet medical need or offers superior treatment options.
In the long term, the commercial success of DFD-29 will hinge on its therapeutic value and integration into clinical practice. The investment in its development and potential launch should be scrutinized against the backdrop of clinical outcomes and patient benefits. If DFD-29 is well-received in the market, it could bolster the company's reputation and lead to increased stockholder value. Conversely, any setbacks in the regulatory process or post-market could pose risks to the company's financial health and the utility of the credit facility.
Provides additional capital for general corporate purposes including funding to support the potential launch of DFD-29
SCOTTSDALE, Ariz., Jan. 02, 2024 (GLOBE NEWSWIRE) -- Journey Medical Corporation (Nasdaq: DERM) (“Journey Medical” or “the Company”), 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, today announced that the Company has entered into a credit facility with an affiliate of SWK Holdings Corporation (“SWK”), a specialized finance company with a focus on the global healthcare sector, providing for borrowings of up to
“This financing strengthens Journey Medical’s balance sheet and provides us with additional operational flexibility. The funding will support general corporate purposes, as well as anticipated expenses for DFD-29, including an upcoming New Drug Application submission and preparation for its potential commercial launch, pending FDA approval,” said Claude Maraoui, Co-Founder, President and Chief Executive Officer of Journey Medical.
The Credit Facility provides for an initial term loan of
About Journey Medical Corporation
Journey Medical Corporation (Nasdaq: DERM) (“Journey Medical”) is a commercial-stage pharmaceutical company that primarily focuses on the selling and marketing of U.S. Food and Drug Administration-approved prescription pharmaceutical products for the treatment of dermatological conditions through its efficient sales and marketing model. The company currently markets eight branded and two generic products that help treat and heal common skin conditions. The Journey Medical team comprises industry experts with extensive experience in developing and commercializing some of dermatology’s most successful prescription brands. Journey Medical is located in Scottsdale, Arizona and was founded by Fortress Biotech, Inc. (Nasdaq: FBIO). Journey Medical’s common stock is registered under the Securities Exchange Act of 1934, as amended, and it files periodic reports with the U.S. Securities and Exchange Commission (“SEC”). For additional information about Journey Medical, visit www.journeymedicalcorp.com.
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. As used below and throughout this press release, the words “the Company”, “we”, “us” and “our” may refer to Journey Medical. Such statements include, but are not limited to, any statements relating to our growth strategy and product development programs and any other statements that are not historical facts. The words “anticipate,” “believe,” “estimate,” “may,” “expect,” “will,” “could,” “project,” “intend,” “potential” and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. Factors that could cause actual results to differ materially from those currently anticipated include: the fact that our products and product candidates are subject to time and cost intensive regulation and clinical testing and as a result, may never be successfully developed or commercialized; a substantial portion of our sales derive from products that may become subject to third- party generic competition, the introduction of new competitor products, or an increase in market share of existing competitor products, any of which could have a significant adverse impact on our operating income; we operate in a heavily regulated industry, and we cannot predict the impact that any future legislation or administrative or executive action may have on our operations; our revenue is dependent mainly upon sales of our dermatology products and any setback relating to the sale of such products could impair our operating results; competition could limit our products’ commercial opportunity and profitability, including competition from manufacturers of generic versions of our products; the risk that our products do not achieve broad market acceptance, including by government and third-party payors; our reliance third parties for several aspects of our operations; our dependence on our ability to identify, develop, and acquire or in-license products and integrate them into our operations, at which we may be unsuccessful; the dependence of the success of our business, including our ability to finance our company and generate additional revenue, on the successful development and regulatory approval of the DFD-29 product candidate and any future product candidates that we may develop, in-license or acquire; clinical drug development is very expensive, time consuming, and uncertain and our clinical trials may fail to adequately demonstrate the safety and efficacy of our current or any future product candidates; our competitors could develop and commercialize products similar or identical to ours; risks related to the protection of our intellectual property and our potential inability to maintain sufficient patent protection for our technology and products; our business and operations would suffer in the event of computer system failures, cyber-attacks, or deficiencies in our or our third parties’ cybersecurity; the substantial doubt about our ability to continue as a going concern; the effects of major public health issues, epidemics or pandemics on our product revenues and any future clinical trials; our potential need to raise additional capital; Fortress controls a voting majority of our common stock, which could be detrimental to our other shareholders; as well as other risks described in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022, subsequent Reports on Form 10-Q, and our other filings we make with the SEC. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward- looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as may be required by law, and we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Company Contact:
Jaclyn Jaffe
(781) 652-4500
ir@jmcderm.com
Media Relations Contact:
Tony Plohoros
6 Degrees
(908) 591-2839
tplohoros@6degreespr.com
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