Journey Medical Corp - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 printed soft top-line but a large bottom-line upside: revenue of $12.62M*, down sequentially and year over year, versus S&P Global consensus of $14.21M*, while diluted EPS was approximately $0.07*, dramatically above the consensus loss of $(0.35)*; the EPS surprise was aided by a one-time “loss recovery” realized in December and recognized in 2024 financials.
• Emrosi (40 mg minocycline MR) received FDA approval in November; initial distribution began, first prescriptions were filled, and payer coverage had reached ~20% of commercial lives and ~4% of Medicare lives by the March 26 call; full promotion targeted for April 2025.
• Management met all FY24 guidance ranges (Product revenue $55.1M, SG&A $40.2M, R&D $9.9M) and ended the year with $20.3M cash, positioning for the Emrosi launch ramp.
• 2025 guidance was deferred until after early launch data and further payer contracting; near-term stock catalysts include payer coverage wins, prescription velocity, additional Emrosi publications, and potential ex-U.S. out-licensing progress.

What Went Well and What Went Wrong

What Went Well

• Emrosi approval and launch readiness: “We delivered a solid performance in 2024…received first cycle FDA approval for Emrosi…we have begun distribution…first prescriptions have been dispensed…with full promotion expected in April 2025.”
• Early market access and KOL engagement: Coverage reached ~20% of 188M commercial lives and ~4% of 58M Medicare lives; AAD engagement was strong, with interest in head-to-head superiority versus Oracea and favorable safety/tolerability profile.
• FY24 execution: Met all 2024 guidance ranges; cash of $20.3M at 12/31/24 supports launch; Adjusted EBITDA positive for FY24 despite R&D and launch investments.

What Went Wrong

• Top-line softness in Q4 and miss vs revenue consensus: Q4 revenue of $12.62M* trailed the $14.21M* S&P Global consensus; sequential down from Q3 ($14.63M) and YoY decline vs Q4 2023 ($15.26M). Drivers across 2024 included higher rebates and lower unit volumes in legacy products.
• Quality of EPS beat: Q4’s positive EPS was supported by a one-time “loss recovery” booked in 2024 (cash received in December), and capitalization of a $15M approval milestone to intangibles (to be amortized), limiting read-through to core earnings power.
• Guidance and reimbursement visibility still evolving: No 2025 guidance; coverage remains in early innings with peak coverage expected 12–18 months post-launch and some step edits likely through generic oral agents.

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to Journey Medical's 2024 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 call over to Jaclyn Jaffe, the company's Senior Director of Corporate Operations. Please go ahead.

Jaclyn Jaffe (Senior Director of Corporate Operations)

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, and Joseph Benesch, Chief Financial Officer. Joining for the Q&A portion of the call will be Ramsey Alloush, General Counsel and Corporate Secretary, Dr. Srinivas Sidgiddi, Vice President of Research and Development, and Louis Donati, Director of Market Access. 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 filed with 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 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, March 26, 2025.

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)

Thank you, Jaclyn, and good afternoon to everyone on the call today. 2024 was a pivotal year for Journey Medical as we delivered on all of our guidance ranges for the year and positioned the company to launch Emrosi, our best-in-class oral treatment for rosacea. We reported annual revenue of $56 million in 2024, and the fourth quarter marked the sixth consecutive quarter that the company achieved positive non-GAAP adjusted EBITDA. Additionally, we submitted our new drug application for Emrosi in early 2024 and received an on-time first cycle approval from the FDA in November. In 2024, we also paid out a total of $22 million in FDA filing fees and milestone payments to Dr. Reddy's Laboratories. These one-time payments completed our financial obligations associated with Emrosi's regulatory fees and development milestones in the United States for the rosacea indication.

As a result, this clears the way for Emrosi's commercial debut and our ability to increase our product revenues and operating cash flow as the product gains traction in the market. Despite these payments, our balance sheet remained strong ahead of the Emrosi launch with $20.3 million in cash as of December 31. We believe that Journey is well-positioned ahead of the Emrosi launch, given that our current commercial organization is already targeting the same dermatology prescribers that treat the vast majority of rosacea patients. This means that Emrosi sales have potential to generate significant operating leverage for the business. Given the market opportunity for Emrosi, which is entering a billion-dollar-plus treatment category with superior phase III clinical results against the current oral standard of care, we believe that the product can be transformational to our business.

Other accomplishments in 2024 include presentations of Emrosi clinical data at key medical congresses, such as the American Academy of Dermatology annual conference in March, the Dermatologic Education Foundation nurse practitioner and physician assistant conference in July, and the Fall Clinical Dermatology conference in October. In November 2024, our licensed partner, Cutia Therapeutics, received regulatory approval to market Amzeeq in China, which triggered a $1 million milestone payment to Journey. Continuing the business momentum from last year, 2025 is off to a strong start. Earlier this month, we hosted an exhibit booth at the 2025 AAD conference in Orlando, Florida. The AAD meeting attracts more than 20,000 attendees, including top dermatology KOLs and high-prescribing physicians, nurse practitioners, and physician assistants.

Our exhibit booth at the conference was very productive in terms of foot traffic and the time that attendees spent in our exhibit to learn about Emrosi's recent FDA approval and our superior head-to-head phase III results against Oracea. Notably, dermatologists were interested in Emrosi's low-dose modified release formulation comprised of 10 milligram immediate release and 30 milligrams of extended release minocycline, as well as the product's favorable safety and tolerability profile. We also observed significant attendee interest in the before and after photos of patients in our phase III clinical trials, which were a focal point in our exhibit. Many dermatologists already know Journey, our current products, and the strong customer service that we provide, including our copay assistance and access programs. We believe that the AAD meeting was highly successful and generated significant customer interest heading into the Emrosi launch.

Our national sales meeting kicks off next week, and with our launch quantities in place, we recently began shipping Emrosi inventory into the distribution channel and have already begun seeing prescriptions dispensed. As a result, we are well-prepared to execute on a robust launch in early April. On our pre-commercial update call in February, we noted approximately 12% commercial payer coverage for Emrosi at the time due to our initial market access efforts, which began immediately after Emrosi's FDA approval last November. As an update, we now have coverage of approximately 20% of the 188 million commercial lives and 4% of the 58 million Medicare lives, enabling those patients access to Emrosi through their health insurance plans. We expect the number of payers and covered lives to increase substantially throughout the remainder of this year and into 2026.

So far, we believe that the early progress is promising, and we expect to report on the ramp-up in payer coverage throughout the year. Earlier this month, our phase III results from Emrosi were published in a peer-reviewed article in the Journal of the American Medical Association, or JAMA Dermatology, one of the most well-recognized journals in medicine. Notably, this journal has among the highest impact factors in the dermatology field. The paper focused on the head-to-head clinical superiority of Emrosi on both of our co-primary endpoints against Oracea and placebo, with very high statistical significance. As well, the publication noted that Emrosi's phase III results met all of the secondary endpoints, including a statistically significant benefit in reducing erythema or the redness associated with rosacea compared to placebo. The publication also noted the favorable safety profile of Emrosi.

We believe that the JAMA publication is a significant positive that coincides well with our launch and can create additional awareness of Emrosi's benefits as we roll the drug out into the market. In addition to the JAMA article, we anticipate two more publications on Emrosi this year, with one focusing on the microbiology study that we conducted, which demonstrates the drug's sub-antimicrobial effects and the other on the quality of life improvement for patients taking Emrosi to treat their rosacea symptoms. As well, Journey is planning to attend, exhibit, and present at additional dermatology-focused medical congresses throughout 2025. With that, I will now turn the call over to our CFO, Joe Benesch, to review our financial results for 2024.

Joseph Benesch (CFO)

Thank you, Claude. Hello, everyone. I'd like to start by saying that we are pleased to have met all of our financial guidance ranges for 2024. As a reminder, for the full year, we anticipated product sales in the range of $55-$60 million, SG&A expense in the range of $39-$42 million, and R&D expense in the range of $9-$10 million. For this year, given the upcoming launch of Emrosi and the variability that goes along with any drug launch, we plan to offer 2025 financial guidance later in the year after we assess initial Emrosi's prescription demand and have conducted additional payer contract negotiations. Moving to our financial results for 2024, our total net product revenue in 2024 was $55.1 million, which compares to the $59.7 million that were reported in 2023.

The decrease was primarily due to overall higher rebate costs across our product portfolio and lower unit volumes, mainly from our legacy products. Total revenues for 2024 were $56.1 million. This includes a $1 million milestone payment that was triggered upon Cutia receiving market authorization for Amzeeq in China. Under the Cutia agreement, Journey is also entitled to royalties on sales of Amzeeq in the licensed territory. Full year 2023 total revenues of $79 million include the $19 million upfront licensing payment and $500,000 in royalties that we received from our partner, Maruho Limited. Our cost of goods sold decreased by $2 million, or 9%, to $20.9 million for the full year 2024. The lower cost of goods was mainly due to decreased product royalties stemming from contractual royalty decreases in 2023 and the discontinuation of Ziana in 2023.

Research and development expenses increased by $2.3 million to $9.9 million for the full year 2024. The increase was primarily driven by non-recurring payments of $4.1 million to the Emrosi NDA filing fee in January 2024 and the $3 million contractual milestone payment to Dr. Reddy's, which was triggered by the FDA's acceptance of our NDA application for Emrosi in March 2024. These increases were offset by lower clinical trial expenses as the Emrosi phase III clinical program was concluded in 2023. Looking now to our SG&A expenses, SG&A decreased by $3.7 million, or 8%, to $40.2 million for the full year 2024. The year-over-year decrease was mainly due to the full realization of our expense optimization efforts that were completed in 2023.

Continuing to our net loss for the periods, net loss to common shareholders was $14.7 million, or $0.72 per share basic and diluted for the full year 2024. This compares to a net loss to common shareholders of $3.9 million, or $0.21 per share basic and diluted for the full year of 2023. The net loss in 2023 includes the license fee revenue and product-related royalties of $19.5 million that we received from Maruho. Turning now to our non-GAAP results, our non-GAAP adjusted EBITDA for the full year 2024 was a positive $800,000, or $0.04 per share basic and $0.03 per share diluted. This compares to positive adjusted EBITDA of $15.6 million, or $0.85 per share basic and $0.75 per share diluted for the full year of 2023.

This includes the license fee revenue and product-related royalties of $19.5 million that we received from Maruho. At December 31, 2024, we had $20.3 million in cash and cash equivalents compared to the $27.4 million at December 31, 2023. Thank you very much. I will now turn the call back over to Claude.

Claude Maraoui (Co-Founder, President and CEO)

Thank you, Joe. We executed well in 2024, ending the year on a high note and setting up our business for a transformational year in 2025. Emrosi is now approved and ready for launch, and the entire company is energized as we prepare to go to market with a product that is clearly superior to the current standard of care and addresses an unmet need for improving the treatment of rosacea patients. As the first internally developed asset for the company, Emrosi fits directly into our current dermatology commercial model with no need to add to our sales force to promote the product. As such, we have the financial and organizational resources in place to execute on a strong launch.

We believe that Emrosi will become a major growth driver for Journey Medical, given its potential to achieve peak annual sales of an estimated $200 million in the United States and $100 million internationally, providing significant operating leverage to our business. An exciting year lies ahead with several potential catalysts to create value, including the launch of Emrosi and subsequent ramp in prescriptions for the product. Two additional peer-reviewed publications and medical conference presentations anticipated during the year, and anticipated increase in covered lives gaining access to Emrosi during 2025. Our financial progress as we drive the business towards sustainable, positive EBITDA and profitability, and the potential for business development activity, which may include licensing the commercial rights to our products outside the U.S. to create additional shareholder value.

We at Journey Medical are looking forward to a productive 2025, and we are laser-focused on driving value for patients, our physician customers, and our shareholders. Thank you. Operator, we are now ready to open the lines for Q&A.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star, then one on a touch-tone phone. If you're 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 and then two. Our first question comes from Thomas Flaten with Lake Street Capital Markets. Please go ahead.

Thomas Flaten (Senior Research Analyst)

Thank you. Hey, good afternoon. Thanks for taking the questions. Claude, just first on payer coverage, what do you think we should be expecting as you exit 2025? I know you said there'd be a nice ramp, but relative to the 24% that you have now, where do you think we should be ending the year?

Claude Maraoui (Co-Founder, President and CEO)

Yeah. Hi, Thomas. Our goal, obviously, is to obtain as many covered lives as possible. The expectation to peak commercial coverage should take anywhere from 12 to 18 months. I do have our market access lead with us here, Louis Donati. I'm going to pass that to him and let him give you a little more detail.

Louis Donati (Director of Market Access)

I appreciate the question, by the way. Market Access team is working actively, obviously, on commercial coverage as well as the Medicare line of business. Out of the 188 million lives commercially across the U.S., the anticipation is April 1, July 1, October 1, and so forth, we will have that ramp-up period with peak coverage 12-18 months out. The anticipation, again, is based on a lot of the high demand through the field because the more demand, the better coverage we will get. The head-to-head studies will back up that demand also because the payers are very happy with the head-to-head studies. To give you a specific target right now, let's just wait a few months until we get more intel from the demand from the field.

I'm actively working with the GPOs and PBMs to obviously let them know of the head-to-head studies. Give us a few more months, and we will report back. Again, peak coverage is 12-18 months post-launch.

Thomas Flaten (Senior Research Analyst)

Great. I appreciate that. From your interactions with KOLs and other doctors at AAD, how important did they view the erythema data? Depending on that, what are you doing to get that data into the hands of physicians given that it didn't end up in the label?

Claude Maraoui (Co-Founder, President and CEO)

Yeah. I guess a couple of things there. First of all, the AAD had significant interest from our providers and PAs as well. The erythema, interesting enough, was not the key subject at all. The head-to-head performance really is catching people and saying, "Okay, let me listen to more. Tell me about the safety." They did not hit the erythema whatsoever. Outside of that, we also have held already to date, Thomas, we've done three ad boards. We've done a scientific ad board already. Overwhelmingly, the response, again, the head-to-head is really what's capturing people's interest and why they want to prescribe Emrosi moving forward. That's really one of the reasons why we believe we anticipate this to becoming the new standard of care. In terms of erythema, to answer your question, we have our Head of Medical Affairs on as well, and that's Dr. Srinivas Sidgiddi.

He can speak more about that. Srini.

Srinivas Sidgiddi (VP of Research and Development)

Sure, Claude. Thank you so much. I hope I'm audible. Thomas, thanks for the question. First of all, we are very pleased with the JAMA publication and the data presented there. As Claude mentioned in his presentation, the JAMA publication covers the co-primary endpoints as well as all the secondary endpoints. Erythema was one of the secondary endpoints which showed success against placebo. That data being in a journal like JAMA Derm is really very important, and we are fortunate to get this out at the right time. With the high impact factor, the high credibility, and the wide readership of JAMA Dermatology, there will be natural visibility of the erythema data from the phase III studies.

The medical affairs group is well-trained to answer specific questions related to erythema from the dermatology prescribers about the phase III results on erythema or any other clinical data related to those studies. As a result, we expect that the JAMA Derm publication will have a huge impact in disseminating the erythema data.

Claude Maraoui (Co-Founder, President and CEO)

The one last thing.

Thomas Flaten (Senior Research Analyst)

Sorry, Claude.

Claude Maraoui (Co-Founder, President and CEO)

Yeah, Thomas. The other part, I would invite you, if you haven't yet, and as well as all the other listeners, the Emrosi website really has phenomenal before and after photos. I would invite you to take a look and see the baseline versus the finished results of the patients at week 16. It's pretty dramatic, and there's really great indication of how powerful it is to your question specifically.

Thomas Flaten (Senior Research Analyst)

Got it. Thanks for taking the questions. I appreciate it.

Operator (participant)

The next question comes from Scott Henry with AGP. Please go ahead.

Scott Henry (Managing Director and Senior Research Analyst)

Thank you. Good afternoon. I don't know if I missed it or if your plan is to do it later, but do you have any thoughts on 2025 guidance or a plan for initiating that?

Claude Maraoui (Co-Founder, President and CEO)

Yeah. Give us a few more months. This is really mostly related to 2024 and us hitting all of our guidance that we gave. We're going to let the launch of Emrosi really begin here. We've got our national sales meeting set up next week, and then we'll have the full force of the commercial team out there for physicians to hear their voice and learn about Emrosi. We're going to wait a little bit before we give guidance. At this point, just please be patient with that.

Scott Henry (Managing Director and Senior Research Analyst)

Okay. Fair enough. As far as the early days, because you have filled some prescriptions, would you say that the reimbursement environment, has it been in line with expectations? Has it been better? Has it been worse? I know you have very few data points, but I like to ask the question just to see if there's anything there to focus on.

Claude Maraoui (Co-Founder, President and CEO)

Yeah, definitely. The distribution into the pharmacy channel is there, so we're glad to say that we've got that checked off and ready to go for the full launch here in the next couple of weeks. In terms of coverage and reading into that, it's just too early to tell. We're definitely seeing the prescriptions coming in. We certainly have some coverage happening. I would tell you that around the 20% mark right now in terms of getting adoption on formularies is probably on target and what I would utilize at this point as of today.

Scott Henry (Managing Director and Senior Research Analyst)

Okay. Should we expect reported revenues in Q1? I know you'll fill some scripts, but sometimes there's a lag there. Should we look for just modest, small amounts in Q1?

Claude Maraoui (Co-Founder, President and CEO)

That's correct, Scott. I would tell you that Q2 will have meaningful revenues starting to begin with Emrosi in Q2. I wouldn't expect much in Q1.

Scott Henry (Managing Director and Senior Research Analyst)

Makes sense. For fourth quarter, if my math is correct, the revenue was down sequentially from Q3 somewhat notably. I know you talked about some of the reasons. My question is, when we think about the base business, is it more reflective of all the quarters in 2024, or is there a step down in fourth quarter 2024 that we should think about continuing into 2025?

Claude Maraoui (Co-Founder, President and CEO)

Yeah. I'll start out, and then I'm going to hand this off to Joe. If you take a look at the last several years, I think the base business has been relatively steady. We've got some legacy brands that continue to erode. When we look at our base business, our core four, it's been pretty consistent. Joe, if you wanted to add to that, please.

Joseph Benesch (CFO)

Yeah. I think when we look at the first quarter, the first quarter is always going to be a little bit lower, right, because of rate resets that go through our P&L. I think you could look at the full year 2024, and that's more representative of the true business.

Scott Henry (Managing Director and Senior Research Analyst)

Okay. None of the products you would say have kind of reset at lower levels? I mean, mostly I'm thinking Qbrexza and Accutane are the main drivers there.

Claude Maraoui (Co-Founder, President and CEO)

Yeah. Qbrexza continues to perform well for us. We continue to see script growth year over year, and it's holding very solid. It obviously has some new competition out there. Again, the prescriptions continue to show very good positive signs. Again, when you look year over year, we're growing that product. With Accutane, as we've stated in the past, there were a couple of new entries towards the second and third quarter of 2024. We did see some slowdown with Accutane. We've stabilized that business relatively well, and we believe we're going to have good performance with Accutane.

Okay. Great. Just one accounting question. I see the loss recovery of 4553. Was that in fourth quarter? Is that related to the cyber attack? Also on the accounting side, the $15 million approval milestone, how should we think about that being? I thought we may see it expensed in the fourth quarter, but it doesn't look like it. How should we account for that going forward?

Joseph Benesch (CFO)

Right. To your first question, Scott, the $4.6 million crypto, it was the recovery. We received the cash in December, so we're happy to put that through our P&L. For the second question, the $15 million, we were able to capitalize that as an intangible asset, and we will amortize that over the life of the patent, which is through 2039.

Scott Henry (Managing Director and Senior Research Analyst)

Okay. Will that be amortized through the acquired intangible assets line, which is now broken out, or will it be lower down?

Joseph Benesch (CFO)

No, it'll be right in that line.

Scott Henry (Managing Director and Senior Research Analyst)

Okay. Great. Thank you for taking the questions.

Joseph Benesch (CFO)

You're welcome.

Operator (participant)

The next question comes from Brandon Folkes with Rodman & Renshaw. Please go ahead.

Brandon Folkes (Analyst)

Hi. Thanks for taking my questions, and congratulations on all the progress. Maybe just two from me. Firstly, how do you think about pricing across the portfolio? Obviously, talking about more the legacy portfolio here in 2025. Just kind of with the Emrosi launch, with the operating leverage you do have in your business, how do you think about capital allocation in 2025 and maybe beyond that as well? Thank you.

Claude Maraoui (Co-Founder, President and CEO)

Sure. Joe, would you like to take that?

Joseph Benesch (CFO)

Sure. As far as capital allocation, we're good with cash. We're very comfortable with our cash at this point. Can you speak to the other part of the question, please?

Brandon Folkes (Analyst)

Pricing across the base business or legacy portfolio in 2025? Just sort of what are you seeing? Obviously, there's competitor interaction. Maybe just whether you want to go product by product or just sort of holistically across the portfolio, how do we think about kind of net pricing in 2025?

Joseph Benesch (CFO)

In 2025.

Claude Maraoui (Co-Founder, President and CEO)

Yeah.

Joseph Benesch (CFO)

Go ahead. Go ahead, Claude.

Claude Maraoui (Co-Founder, President and CEO)

Yeah. I mean, just generally, Brandon, with our legacy brands, when we look at Exelderm and Targadox, I think our pricing is going to be holding steady. We do not see much of a difference between one year to the next. The fact is those brands do have their competitive generics out there, especially with Targadox. There is some erosion in the volume of the scripts more so than it is a pricing game with that. The one benefit is too, with Exelderm, is we no longer have the obligation of paying royalties, so our margins for that product have actually gotten better. In terms of our remainder, our core fours, I have been calling it in 2024, we believe that net pricing should remain the same as you have seen.

Scott Henry (Managing Director and Senior Research Analyst)

Great. Thanks very much.

Operator (participant)

The next question comes from Jason Wittes with Roth Capital. Please go ahead.

Jason Wittes (Managing Director and Senior Research Analyst)

Hi. Thanks for taking the questions. In terms of sort of the milestones for the Emrosi launch that you guys are looking for internally, at least the things that I guess the bottlenecks, I mean, reimbursement and getting in the formularies, I would think would be sort of the main things to track. Obviously, at least from our checks with physicians, there seems to be a lot of interest in the drug from the physician side. I assume just that logistics of those other two items are kind of what's going to determine the outlook for 2025. Is that the right way to think about it?

Claude Maraoui (Co-Founder, President and CEO)

I think you're tracking correctly. I think there were two areas that we need to focus in on. One was supply, and we're glad to say that we've got ample supply and more supply on the way. We feel real good with that. The distribution part has been taken care of, and the backup supplies, again, we're in a good position there. I think you can put that one on the side. Secondly, in terms of getting more formulary coverage, we feel really good. The progress that we've done already, I think, shows a good indicator in where things are going. We've had great conversations with all the major plans. I keep saying it, but it's so meaningful. These small molecules, there's not too many head-to-head comparisons.

When you're able to demonstrate statistical significance with a highly efficacious product, the plans are certainly interested, and we feel very good in terms of being able to get on these formularies. The one area is, like Louis just said earlier, it takes anywhere between 12-18 months, and we will see good progress on a quarterly basis and better coverage as we go. Have a little patience in this game, but on all accounts, it looks very promising from that point as well.

Jason Wittes (Managing Director and Senior Research Analyst)

Okay. That's helpful. Thank you. I guess you put out $100 million international opportunity for Emrosi. Is that something that you're going to look to out-license at some point? I assume that's kind of the goal here. How should we think about that?

Claude Maraoui (Co-Founder, President and CEO)

Yes. In terms of finding the right partner to out-license to is exactly what we're looking at. We certainly want to focus our efforts here in the United States. We've got a real good handle on that, and that's where our focus is going to be. Our business development strategy is to out-license this. I think as we continue to see early success onward in 2025, I think it makes it even that much more tempting for partners outside to look at Emrosi as a very viable product on an international basis.

Jason Wittes (Managing Director and Senior Research Analyst)

Got it. Thanks. I'll jump back in here.

Operator (participant)

The next question comes from Kalpit Patel with B. Riley Securities. Please go ahead.

Kalpit Patel (Senior Biotech Analyst)

Yeah. Hey, good afternoon, and thanks for taking the questions. Maybe a few on the market access and launch-related questions. You mentioned that the peak coverage for Emrosi, you would expect 12-18 months from the day of the launch. I guess what exactly is the peak coverage percentage? That's question number one. The second question is, in terms of the covered lives, you gave a new updated 20% and 4% number for the different groups. What percentage of those are unrestricted versus single-step edits?

Claude Maraoui (Co-Founder, President and CEO)

Thanks, Kalpit. Louis, would you like to take that one, please?

Louis Donati (Director of Market Access)

Sure. Hi, Kalpit. It's Lou, by the way. Thanks for the call, and thanks for the question. Peak coverage, again, trying to get ahead of it is maybe doing a disservice to what we're trying to do early on because I don't want to give you a number right now. It's 12-18 months down the road. All I can say is we've prepped the market early fall through today. Right now, about 20% commercial coverage is where the forecast should be, actually ahead of forecast, in my opinion. I expect Emrosi because, again, we keep on talking about head-to-head studies and demand. I really believe this will be a really good product to the market in rosacea, and we will get the coverage that we anticipated.

Just give us a few months to get out there with the field force, and we can report back, number one. Number two, the 20% commercial coverage, and that includes federal employees and health exchange out of the 188 million lives. There is a mixed bag of unrestricted access and restricted access. The good news is the payer response has been very positive. There are some payers that are actually adopting Emrosi currently in an unrestricted position with no utilization management. That is prior authorizations and no steps. The response has been very well received. Again, give us some time as a market access team to get out there. Once we get the demand from the field, that is definitely going to help our discussions long-term. Just give us a few more months, and we will report back, okay?

Kalpit Patel (Senior Biotech Analyst)

Okay. Got it. A couple of follow-ups here. Is the step edits that's being mandated by some of these payers, should we assume that that's a generic ratio, or does it also include off-label antibodies?

Louis Donati (Director of Market Access)

Primarily, the payer response has been, to get to Emrosi, if there's going to be a step edit, it's going to be through generic or oral agent. It could be minocycline and/or doxycycline. The drug policies will vary, but generic oral agents would be the step.

Kalpit Patel (Senior Biotech Analyst)

Got it. Okay. Last question for me. After you guys announced your pricing and launched the drug here, has there been any pricing moved by Galderma for their brand name Rosacea?

Claude Maraoui (Co-Founder, President and CEO)

Actually, we have not seen any market movement in terms of pricing, Kalpit, since we've launched, since we've announced.

Kalpit Patel (Senior Biotech Analyst)

Got it. Thank you very much for taking the question.

Operator (participant)

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