Journey Medical Corp expands credit facility and appoints new board member

Journey Medical Corporation (NASDAQ:DERM), a pharmaceutical company specializing in dermatological treatments, has entered into an amended credit agreement, increasing its borrowing capacity. On July 9, 2024, the company amended its credit facility with SWK Funding LLC, raising the limit from $20 million to $25 million. This increase is contingent on the FDA approval of its DFD-29 product candidate by June 30, 2025.

The Scottsdale, Arizona-based company, which operates under the organization name 03 Life Sciences, has already drawn $20 million from the facility. The additional $5 million will be available upon meeting specified conditions related to the DFD-29 product candidate's approval. The term loan, which matures on December 27, 2027, has quarterly repayment obligations starting in February 2026, with the amount depending on the company's revenue performance.

Interest on the loan is set at a rate of the three-month term SOFR plus 7.75%, with an increase in the event of default. Journey Medical can prepay the loan with a premium, and a 5% exit fee of the original principal amount will be due upon full repayment. The company also paid a $50,000 origination fee and covered certain legal expenses of the lenders at the time of the amendment.

In a concurrent development, Journey Medical's Board of Directors has expanded from five to six members with the appointment of Michael C. Pearce. Pearce brings extensive experience in healthcare investment and advisory roles and has served on several boards, including biopharmaceutical companies. He will receive compensation in line with the company's program for non-employee directors, including stock units and an annual cash retainer.

Additionally, the company has introduced the Journey Medical Corporation Deferred Compensation Plan, a non-qualified plan for non-employee directors and select executives, allowing them to defer up to 100% of their compensation.

This financial move and board expansion are based on the company's SEC filing and reflect Journey Medical's strategic growth initiatives and governance enhancements.

In other recent news, Journey Medical Corp. reported a 7% increase in revenue in the first quarter of 2024, reaching $13 million, primarily driven by robust sales of dermatology products Qbrexza and Accutane. The company's strategic cost-cutting measures have led to profitability, with revenues surpassing SG&A expenses.

Roth/MKM has resumed coverage on Journey Medical's stock, assigning a Buy rating based on the potential of DFD-29, an oral treatment for rosacea. The firm forecasts that DFD-29 could generate at least $200 million in annual sales by 2028, driving the company to profitability by 2025.

Journey Medical is preparing for the launch of DFD-29 following positive Phase 3 trial results, anticipating a significant market share upon approval. These recent developments signal a company that is not only growing but also strategically positioning itself for future success, focusing on portfolio expansion, cost management, and advancing DFD-29 toward market approval.

InvestingPro Insights

As Journey Medical Corporation progresses with strategic financial and governance developments, real-time data from InvestingPro provides a snapshot of the company's current market position. With a market capitalization of $113.67 million and a price-to-book ratio of 8.75 as of Q1 2024, Journey Medical is trading at a valuation that reflects its growth potential and the anticipation surrounding its DFD-29 product candidate. The company's revenue growth of 27.82% over the last twelve months signals robust performance, complementing the positive momentum seen in its 174.4% return over the last year.

InvestingPro Tips suggest that while analysts expect a sales decline in the current year, the company's significant return over the last week and strong three-month performance highlight investor confidence. Journey Medical's moderate level of debt and absence of dividend payments indicate a reinvestment of resources into its core business operations.

For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available, providing deeper insights into Journey Medical's financial health and stock performance. Interested readers can take advantage of the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further valuable tips for informed decision-making.

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