Sol-Gel Technologies Ltd. Annual Report - How They Did This Year

Hey there! Let's look at Sol-Gel Technologies' annual report for this past year. Think of this as us chatting over coffee about how the company's doing. I'll explain the important parts simply, without confusing financial words.

This report covers the year ending December 31, 2025. First, a big change happened: the company did a 1-for-10 reverse stock split on May 2, 2025. This means if you owned 10 shares, you now own 1. The price per share changed to match. They likely did this to raise the stock price. This helps meet exchange rules and attract bigger investors. Your total investment value didn't change right away. But, investors often see reverse splits as a bad sign. They can point to business problems or long-term low stock prices.

Here's what we'll cover to see how they did and if it's a good investment:

1. What does this company do and how did they perform this year? Sol-Gel Technologies is a pharmaceutical company. They develop and sell skin treatments (dermatology). They create new skin drugs, often using their special microencapsulation technology. Then, they partner with bigger drug companies to sell them.

   • Their approved products are already on the market:
     • Twyneo: A daily cream for acne. It's special because it's non-antibiotic. This offers a different way to treat acne. The FDA approved it in July 2021.
     • Epsolay: A daily cream for rosacea. Rosacea causes skin redness and bumps. This product also uses their special technology. It delivers benzoyl peroxide with less irritation. The FDA approved it in April 2022.
   • They also have products in development:
     • SGT-610: A gel they are testing. It aims to prevent certain skin cancers (BCCs) in people with Gorlin Syndrome. This could expand them into cancer skin treatments.
     • SGT-210: Another skin drug they are developing. It targets a specific growth factor (EGFR). It has limited effects on the whole body. This means it focuses on local treatment with fewer side effects. The company makes money mainly from upfront payments. They also get milestone payments and royalties. These come from licensing and partnership deals for their products.

2. Financial performance - income, profit, growth metrics The company makes money from several sources. These include royalties on product sales by partners. They also get money from licensing deals and other services. Important financial numbers include their operating costs. These are mainly research and development (R&D) and general and administrative (G&A) costs. These costs are vital for a drug company. R&D costs show their investment in new drugs like SGT-610 and SGT-210. G&A covers things like overhead, legal, and office work. At the end of 2025, 2,786,158 shares were available to trade (after the 1-for-10 reverse stock split on May 2, 2025). Knowing how they make money (royalties, licensing) and what they spend it on (R&D, G&A) is key. This helps us understand their financial health.

3. Major wins and challenges this year Sol-Gel Technologies made many partnerships and agreements. These show good activity and possible future income. These deals usually include upfront payments and milestone payments. They also get royalties from future product sales. This gives them different ways to earn money.

   • Key Wins and Agreements:
     • They have an Exclusive License Agreement with Searchlight Pharma Inc. It started in June 2023 and runs through 2024 and 2025. Searchlight Pharma can exclusively sell some Sol-Gel products in Canada. This shows they are growing into the North American market beyond the U.S.
     • In May 2024, they signed a Purchase Agreement with Beimei. This deal involves their intellectual property and goes into 2025. It likely means they sold or licensed specific patents or special technology.
     • They also signed a Product Purchase Agreement with Mayne Pharma Group Limited in April 2025. This deal lasts all year. It likely involves supplying a specific product or drug ingredient.
     • Earlier, in January 2023, they had several agreements. These include an Asset Purchase Agreement with Pellepharm. They also had a Subscription Agreement with M Arkin Dermatology Ltd. And a Purchase Agreement with Armistice Capital. These deals likely brought in a lot of money or assets. This could be for new drugs in development or strategic investments.
     • They also partnered with Omnichem in 2025. This could be for making products, managing supplies, or research. These partnerships show the company's strategy. They use outside companies to sell products. This lets them focus on developing new drugs.

4. Financial health - cash, debt, liquidity The company's financial health looks good because of how they invest. They hold U.S. Government securities and corporate bonds. These investments were in place at the end of 2024 and 2025. This shows they manage their cash carefully. They want to protect their money and keep it accessible. Government securities are very safe and easy to turn into cash. Corporate bonds offer a bit more return with moderate risk. These investments suggest they have enough cash. This gives them a cushion for R&D and daily costs. These investments are a good sign of financial stability and cash management.

5. Key risks that could hurt the stock price A few things could hurt Sol-Gel Technologies' stock price:

   • The 1-for-10 reverse stock split on May 2, 2025, is one risk. They did it to meet listing rules. But investors can see it as a bad sign. It often suggests a company has low stock prices. This can lower investor confidence. It might make people think the company is in trouble. This can happen even if the business itself is fine.
   • The company is a "Non-Accelerated filer." It is no longer an "Emerging growth company." As a "Non-Accelerated filer," they have fewer reporting rules. This means less frequent or detailed public information. Larger companies have stricter rules. No longer being an "Emerging growth company" means they passed certain size limits. But being a "Non-Accelerated filer" still means they are smaller. This can mean fewer analysts cover them. Big investors might show less interest. Their stock price might also be more volatile. It could be harder to buy or sell shares. This is compared to bigger, older drug companies.
   • As a drug company, Sol-Gel Technologies faces natural risks. These include failed clinical trials and tough regulatory rules. They also face intellectual property challenges and strong competition.

6. Competitive positioning The company works in the very competitive skin treatment market. Their approved products are Twyneo (for acne) and Epsolay (for rosacea). They also have new drugs for skin cancer in development. Many big drug companies are in this market. They have large sales teams and marketing budgets. Generic drug makers are also competitors. Sol-Gel's edge is its special microencapsulation technology. This technology aims to make drugs work better and cause fewer side effects. This could offer unique products. But success needs constant new ideas and strong clinical study results. They also need good sales partnerships. And they need good market access and insurance coverage. The market for acne and rosacea drugs is big. But it's also full of many branded and generic options.

7. Leadership or strategy changes Dates around late 2024 and early 2025 point to a CEO change. This likely means a new leader took over around that time. A CEO change is a big deal for a company. It can signal new strategies or a different focus. Or it might be a response to past results. Investors watch these changes closely. They look for impacts on future growth, how the company runs, and its culture.

8. Future outlook The company's future depends on its new products and partnerships. Moving forward with drugs like SGT-610 and SGT-210 could drive future growth. But this depends on successful trials and approvals. Many licensing and purchase deals extend into 2025 and beyond. These include Searchlight Pharma, Beimei, Mayne Pharma, and Omnichem. This shows a strong plan to use outside experts to sell products. It could also expand where their products are available. There's also a "subsequent event" with insurance companies in 2026. This could involve product coverage, payment decisions, or a settlement. It might affect future income or financial stability.

9. Market trends or regulatory changes affecting them The skin treatment market is always changing. Patient needs, new technology, and rule changes affect it. The FDA approved Twyneo and Epsolay in the past. These were big steps. But the company always works under strict rules. New trends include more demand for non-antibiotic treatments. This helps Twyneo. There's also more focus on personalized medicine. And changes in how insurers pay for drugs. Any changes in FDA rules could impact Sol-Gel's drugs. This includes development, approval, or post-market checks. The company's success depends on handling these rules and market needs.