Breaking Down Sol-Gel Technologies Ltd. (SLGL) Financial Health: Key Insights for Investors

You're looking at Sol-Gel Technologies Ltd. (SLGL) and trying to map the path from a clinical-stage company to a commercial success, but the Q3 2025 numbers defintely make you pause. The headline is clear: while the long-term pipeline is advancing, the near-term financials show significant strain, so you need to understand the burn rate and the catalysts. The company just reported a Q3 2025 net loss of $5.9 million on a stark revenue drop to just $0.4 million-that's down from $5.4 million in the same quarter last year-as the non-recurring licensing revenue from Q2's $17.2 million evaporated. Still, the good news is the company's cash, cash equivalents, and marketable securities total $20.9 million as of September 30, 2025, which they project will fund operations into the first quarter of 2027. That runway gives them time to push their lead candidate, SGT-610 for Gorlin syndrome, toward its pivotal Phase 3 top-line results in Q4 2026, plus explore the massive opportunity in high-frequency Basal Cell Carcinoma (BCC) that could at least double SGT-610's commercial potential. It's a classic biotech trade-off: high R&D spend-$5.7 million in Q3-for a future payoff, but the clock is ticking on that $20.9 million balance.

Revenue Analysis

You're looking at Sol-Gel Technologies Ltd. (SLGL) and seeing some volatile numbers, so let's cut through the noise. The direct takeaway is this: Sol-Gel's revenue story in 2025 is a tale of two streams-a significant one-time cash injection that boosted the year-to-date figures, and a steep drop in recurring revenue in the most recent quarter.

For the nine months ended September 30, 2025, Sol-Gel Technologies Ltd. reported total revenue of $18.69 million, which is a healthy 65.98% increase compared to the $11.26 million reported for the same period in 2024. This looks great on a year-to-date basis, but it masks a crucial shift in the underlying business model.

• Q2 2025 revenue was $17.2 million.
• Q3 2025 revenue was only $0.4 million.
• That's a massive 92.6% drop from Q3 2024's $5.4 million.

Here's the quick math: The second quarter's revenue of $17.2 million was the outlier, driven by a major strategic transaction. Without that, the revenue profile is much leaner, which is what the Q3 number shows. The company is defintely in a transition phase.

Breakdown of Primary Revenue Sources

Sol-Gel Technologies Ltd.'s revenue primarily comes from two buckets: licensing agreements and product royalties. However, the 2025 numbers were completely reshaped by a one-time asset sale. The sale of the U.S. rights to their two key approved products, EPSOLAY and TWYNEO, to Mayne Pharma Group Limited was the single largest revenue driver for the year.

This sale contributed $16 million in the second quarter of 2025, which is why the Q2 year-over-year growth rate was a staggering 217.71%. This is non-recurring revenue, essentially a monetization of future U.S. royalty streams. The more sustainable, recurring revenue streams look like this:

What this estimate hides is the loss of the Padagis agreement revenue and the general decline in royalty income, which collectively made up the bulk of Q3 2024's revenue. The Q3 2025 revenue of $0.4 million was almost entirely license revenue from ex-US agreements, showing how reliant the company is on its pipeline and ex-US partnerships now that the U.S. commercial rights are gone.

Mapping Near-Term Revenue Opportunities

The significant change is the shift from a hybrid model (development, U.S. commercialization via partner, ex-US licensing) to a pure-play clinical-stage dermatology company focused on pipeline assets like SGT-610 for Gorlin syndrome. The Mayne Pharma deal brought in capital, extending the cash runway into the first quarter of 2027, but it also stripped out the near-term product-based revenue.

The opportunity is in the future royalty streams from new ex-US agreements. For instance, Sol-Gel Technologies Ltd. expects its TWYNEO and EPSOLAY launches in new territories (like Australia and New Zealand via Viatris) to provide an annual royalty stream that could grow gradually to approximately $10 million by 2031. That's a long-term view, not a near-term fix. For a deeper dive into who is betting on this long-term strategy, you should check out Exploring Sol-Gel Technologies Ltd. (SLGL) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking at Sol-Gel Technologies Ltd. (SLGL) and seeing a clinical-stage specialty pharmaceutical company. That means profitability metrics will look very different from a mature, cash-cow business. The direct takeaway is that while the gross margin (the revenue left after production costs) is strong, the company is still deep in the red due to massive research and development (R&D) expenses. This is a classic biotech profile: high gross profit, but a significant operating loss.

For the trailing twelve months (TTM) ended in October 2025, Sol-Gel Technologies Ltd.'s gross profit margin stood at a low 1.8%. [cite: 8 in previous step] However, there are wildly different figures, such as an earlier report showing a gross profit of $11.31 million on $11.54 million in revenue, which would imply a phenomenal 97.98% margin. [cite: 1 in previous step] This volatility is a key risk. The most recent nine-month period ended September 30, 2025, saw total sales of $18.69 million.

• Gross Margin: 1.8% (TTM, highly volatile).
• Operating Margin: -879.6% (Q1 2025, showing R&D burn).
• Net Margin: -16.8% (9-months 2025, a significant loss).

Here's the quick math on the operational side: In the first quarter of 2025 alone, the company reported an operating loss of $9.069 million against a revenue of just over $1 million. This translates to an operating profit margin of approximately -879.6%. This isn't a sign of poor cost management in a mature sense; it's the cost of being a clinical-stage company, where R&D is the primary operating expense. Research and development expenses were $8.8 million in Q1 2025, up from $5.3 million a year prior, showing the accelerating investment in their pipeline, like SGT-610.

Industry Comparison and Efficiency

When you stack Sol-Gel Technologies Ltd.'s profitability against the specialty pharmaceutical industry, the difference is stark. A typical pharmaceutical company, especially one with branded drugs, sees a Gross Profit Margin between 60% and 80%, an Operating Profit Margin between 20% and 40%, and a Net Profit Margin between 10% and 30%. [cite: 11 in previous step] Sol-Gel Technologies Ltd.'s TTM gross margin of 1.8% is nowhere near this benchmark, and the net loss for the first nine months of 2025 was $3.14 million, resulting in a net profit margin of about -16.8%.

What this estimate hides is the binary nature of drug development. The low margins are a function of revenue being primarily milestone-based license fees, not high-volume product sales. Operational efficiency, in this context, is less about trimming overhead and more about the effective use of R&D capital. The widening net loss in Q3 2025 to $5.9 million from $0.4 million a year ago, despite advancing key drug trials, is a clear sign of the near-term financial strain. Still, the company has a cash runway into the first quarter of 2027, giving it time to reach key milestones. [cite: 8 in previous step]

You need to focus on the pipeline success, not the current P&L. For a deeper look at the institutional backing for this high-risk, high-reward model, consider Exploring Sol-Gel Technologies Ltd. (SLGL) Investor Profile: Who's Buying and Why?

The trend is clear: profitability is negative and highly volatile, but the operational efficiency is currently measured by the progress of SGT-610, not traditional cost management.

Your next step should be to track the Phase 3 trial results for SGT-610, expected in Q4 2026. That is the defintely the key catalyst that will flip these numbers.

Debt vs. Equity Structure

If you're looking at Sol-Gel Technologies Ltd. (SLGL), the immediate takeaway is that this is an equity-funded company, not a debt-leveraged one. They run with minimal traditional debt, which is a common, and often necessary, posture for a clinical-stage specialty pharmaceutical firm.

The company's balance sheet reflects this strategy clearly. As of June 2025, Sol-Gel Technologies Ltd.'s total debt stood at an extremely low €1.01 Million (approximately $1.08 million), which is a tiny fraction of their overall funding base. In fact, some analysts have even described the company as essentially 'debt-free' as of March 2025, which underscores just how minimal their reliance on interest-bearing loans is. They simply aren't using debt to fuel their research and development (R&D) and commercialization efforts.

Here's the quick math on their leverage:

• Debt-to-Equity Ratio: The most recent quarter's Debt-to-Equity ratio is a remarkably low 4.16% (or 0.0416).
• Industry Standard: For the Drug Manufacturers-Specialty & Generic industry, the average Debt-to-Equity ratio is closer to 0.49 (or 49%).

To be fair, Sol-Gel Technologies Ltd.'s ratio is about 12 times lower than the industry average, which tells you they have immense financial flexibility and very little risk of a debt-servicing crisis. That's a huge plus for a company still burning cash on clinical trials.

Sol-Gel Technologies Ltd. balances its funding not through debt issuances or complex refinancing activities-there have been no major credit ratings or new debt issuances reported-but through equity and operational cash. The company's liquidity is strong, holding $20.9 million in cash, cash equivalents, and marketable securities as of September 30, 2025. [cite: 3 in step 1]

Their financing strategy is all about equity funding, which is typical for a biotech firm that needs capital to get a drug to market. The most significant recent capital structure move was a 1-for-10 reverse share split on May 1, 2025, [cite: 1 in step 1] an action designed to boost the per-share price and maintain NASDAQ listing compliance, which is a purely equity-side maneuver. They are prioritizing a long cash runway, which they project will last into the first quarter of 2027, [cite: 3 in step 1] over the risks of high leverage. You can learn more about their long-term goals in their Mission Statement, Vision, & Core Values of Sol-Gel Technologies Ltd. (SLGL).

The short-term and long-term liabilities they do carry-like the $4,573 thousand in current liabilities and $2,318 thousand in long-term liabilities as of March 31, 2025-are mostly operational items like accounts payable and operating lease obligations, not bank loans. This structure is defintely a high-risk, high-reward play: they avoid debt costs but rely heavily on their existing cash and the market's willingness to fund future equity raises if the cash runway shortens.

Liquidity and Solvency

You need to know if Sol-Gel Technologies Ltd. (SLGL) can cover its short-term bills, especially for a clinical-stage company with high Research and Development (R&D) costs. The direct takeaway is that their current liquidity is exceptionally strong, but it's fueled by a one-time asset sale, not core operations.

Looking at the most recent data, Sol-Gel Technologies Ltd. (SLGL) shows a robust liquidity position. The Current Ratio, which compares all current assets to current liabilities, sits at a strong 7.32 as of November 2025. This means the company holds over seven dollars in liquid assets for every dollar of short-term debt, which is defintely a comfortable margin.

The Quick Ratio (Acid-Test Ratio), which is more stringent because it excludes inventory, is also very high at approximately 4.99. This tells me their immediate, most liquid assets-cash and receivables-are more than sufficient to meet all current obligations. For a biotech, this is the number that really matters, since inventory (drug stock) can be slow to move.

• Current Ratio: 7.32 (Strong short-term coverage).
• Quick Ratio: 4.99 (Excellent immediate liquidity).

The trend in working capital is a bit more complex. The massive liquidity boost came from the strategic sale of U.S. rights for EPSOLAY and TWYNEO to Mayne Pharma, bringing in a total of $16 million during 2025. This cash injection dramatically inflated the working capital base in the second quarter. However, the total cash, cash equivalents, and marketable securities decreased from a Q2 2025 high of $24.2 million to $20.9 million by the end of Q3 2025. That's a roughly $3.3 million draw-down in one quarter, showing the ongoing cash consumption is real, even with a huge cash cushion.

Here's the quick math on the cash flow: The Trailing Twelve Months (TTM) Cash from Operations is negative, sitting at about -$5.66 million. This negative operating cash flow is the company's 'cash burn,' driven by R&D expenses, which were $5.7 million in Q3 2025 alone. The Cash from Investing, however, is positive at $4.41 million (TTM), which is the direct result of that one-time asset sale. So, they are burning cash from running the business, but they sold an asset to cover it.

What this estimate hides is the true, underlying burn rate without the asset sale. The core strength is the cash runway, which Sol-Gel Technologies Ltd. (SLGL) expects to last into the first quarter of 2027. This runway gives them ample time to reach the Phase 3 SGT-610 top-line results, expected in the fourth quarter of 2026.

The main liquidity strength is the $20.9 million cash balance and the resulting long cash runway. The key concern is the persistent negative operating cash flow. They are funding their future drug development with past product sales, which is a common but non-sustainable model for a development-stage company. You can find more details on how this strategy is shaping the shareholder base in Exploring Sol-Gel Technologies Ltd. (SLGL) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Sol-Gel Technologies Ltd. (SLGL) and trying to figure out if the recent stock surge makes it a buy or a bubble. The short answer is: Sol-Gel Technologies is priced like a high-growth biotech, which means traditional valuation metrics are messy, but the market is defintely betting on its pipeline. The stock has climbed a staggering 576.20% over the last 12 months, but the full-year 2025 earnings forecast suggests it's still a story stock, not a value play.

Here's the quick math on why a simple Price-to-Earnings (P/E) ratio doesn't tell the whole story for a clinical-stage company. For the 2025 fiscal year, the estimated forward P/E ratio sits at a deeply negative -52.6x. That negative number is a red flag for value investors, but for a dermatology company focused on drug development like Sol-Gel Technologies, it just confirms the market is pricing in future profits from products like TWYNEO® and EPSOLAY®, not current earnings.

To be fair, the Price-to-Book (P/B) ratio is more grounded, currently at 2.68. This figure is a decent measure of how much investors are paying for every dollar of the company's book equity (assets minus liabilities). It's above the typical benchmark of 1.0, but it's not wildly inflated for a company with approved products and a Phase 3 trial underway for SGT-610. You can review their strategic focus in depth here: Mission Statement, Vision, & Core Values of Sol-Gel Technologies Ltd. (SLGL).

When a company isn't consistently profitable, Enterprise Value-to-EBITDA (EV/EBITDA) often comes up negative and becomes less useful. Instead, we look at Enterprise Value-to-Sales (EV/Sales) for a clearer picture of its market value relative to its top-line revenue. For 2025, Sol-Gel Technologies' EV/Sales ratio is approximately 3.97x. This is a more relevant metric, suggesting the market is valuing their revenue streams-especially the royalty and supply revenue from their commercialized products-at nearly four times the sales figure.

The stock price trend is the most compelling number here. The share price has seen a massive jump, rising by 576.20% in the last 12 months and showing a year-to-date return of 263.51% as of November 2025. This huge run-up reflects optimism following their Q2 2025 net income of $11.6 million and positive clinical milestones.

Here is a snapshot of the key valuation metrics:

As for investor payouts, Sol-Gel Technologies is currently focused on reinvesting capital into its pipeline. The company has a dividend yield of 0.00% and does not pay a dividend. This is standard for a company prioritizing clinical development and market penetration over returning capital to shareholders.

Finally, the analyst community is bullish. The consensus rating from the single analyst covering the stock is a Strong Buy. They've set a 12-month price target of $50, which suggests an upside of about 38.89% from a recent trading price of $34.20. That's a clear signal that Wall Street sees significant runway, but remember, a single analyst's rating carries higher risk than a broad consensus.

The clear action here is to keep a close eye on the Q4 2025 top-line results for SGT-210, expected soon, as that will be the next major catalyst to either validate the recent stock price gains or trigger a correction.

Risk Factors

You're looking at Sol-Gel Technologies Ltd. (SLGL), a clinical-stage dermatology company, and the first thing you need to understand is that its risk profile is not for the faint of heart. This is a binary bet, plain and simple. The company's valuation hinges almost entirely on the success of its lead pipeline candidates, especially SGT-610. The core risk is that if the science doesn't pan out, the stock price will defintely reflect it.

The company's high volatility is confirmed by a beta of 1.41, meaning it moves significantly more than the overall market. Plus, the financial health indicators, like a Piotroski F-Score of 3 (out of 9), point to poor business operations, and the Altman Z-Score of 1.25 places the company squarely in the financial distress zone, which is a major red flag for any seasoned investor.

Operational and Pipeline Risks

The single biggest operational risk is the outcome of the Phase 3 trial for SGT-610 (patidegib gel, 2%) for Gorlin syndrome. Top-line results are not expected until the fourth quarter of 2026. Until that data hits, the stock will trade on speculation, and any delay in the timeline or negative results would be catastrophic.

Also, commercialization risk is real. The market for their pipeline drugs, like SGT-610 and SGT-210, might not be as large as anticipated. For example, the Phase 1b trial for SGT-210 (for Darier disease) already faced recruitment challenges in Israel due to a limited number of eligible patients, which forced them to conclude the current phase early. That's a clear sign of the difficulty in developing treatments for rare diseases.

Financial Health and Cash Burn

The Q3 2025 earnings report highlighted the immediate financial challenge: a sharp drop in revenue and a widening net loss. Total revenue for the third quarter of 2025 was just $0.4 million, a significant drop from the $5.4 million reported in Q3 2024. Here's the quick math on the quarterly performance:

The burn rate is high. As of September 30, 2025, Sol-Gel Technologies Ltd. had a total cash, cash equivalents, and marketable securities balance of $20.9 million. Management expects this cash to fund operations into the first quarter of 2027. This cash runway of about 15 months means they will likely need to raise capital again before the SGT-610 trial results are public, which introduces the risk of shareholder dilution.

External and Mitigation Strategies

Like all biotech firms, Sol-Gel Technologies Ltd. faces external headwinds like intense competitive pressures in the dermatology space and the ever-present regulatory challenges from the Food and Drug Administration (FDA) and other bodies. Their revenue is also heavily dependent on future licensing agreements and the timing of milestone payments from partners like Mayne Pharma and Viatris.

What this estimate hides is the company's clear strategy to mitigate these financial and market risks:

• Extending Cash Runway: The strategic sale of U.S. rights to their approved products, EPSOLAY and TWYNEO, was a calculated move to push their cash runway into Q1 2027.
• Cost Control: General and administrative expenses decreased to $1 million in Q3 2025, down from $1.4 million in Q3 2024, showing a commitment to cost-saving measures.
• Market Expansion: They are actively pursuing high-frequency Basal Cell Carcinoma (BCC) as an additional indication for SGT-610, a move that could at least double the drug's commercial potential if successful.

If you want a deeper dive into the financials, you can read the full analysis at Breaking Down Sol-Gel Technologies Ltd. (SLGL) Financial Health: Key Insights for Investors. Your next step should be to model the probability of SGT-610's success and its impact on the $20.9 million cash position. Finance: Draft a sensitivity analysis on the cash runway based on a six-month delay in the SGT-610 trial results by end of next week.

Growth Opportunities

You're looking at Sol-Gel Technologies Ltd. (SLGL) and seeing a mixed financial picture for 2025, which is fair. The company's future growth isn't about current sales of its approved products, but about its late-stage pipeline, which is defintely a high-risk, high-reward bet.

The near-term financials show a one-time boost: Q2 2025 revenue hit a strong $17.2 million, largely due to the $16 million sale of U.S. rights for EPSOLAY and TWYNEO to Mayne Pharma. This deal is crucial because it shored up the balance sheet, extending the cash runway into the first quarter of 2027. But, the Q3 2025 net loss of $5.9 million reminds us that core operations are still burning cash as they fund R&D. The consensus full-year 2025 Earnings Per Share (EPS) forecast is still negative at -$0.68.

Here's where the real money could be made-in the pipeline and strategic market expansion.

• SGT-610 (Gorlin Syndrome): The lead Orphan Drug candidate, which is a topical treatment for Gorlin syndrome (a rare genetic disorder causing multiple basal cell carcinomas). It's in a Phase-3 trial with results expected in Q4 2026. If approved, it is expected to be the first therapy of its kind, targeting potential peak annual revenue of more than $300 million.
• SGT-210 (Darier Disease): A topical drug for Darier disease, another severe skin condition with a significant unmet medical need. The market potential is estimated between $200 million and $300 million, with Phase-1b results anticipated in Q4 2025.
• Global Partnerships: Sol-Gel Technologies Ltd. is actively expanding its reach, recently securing Health Canada's approval for EPSOLAY and signing a new commercialization agreement with Viatris for EPSOLAY in Australia and New Zealand. These partnerships translate global demand into non-dilutive revenue streams, which is smart.

The company's competitive advantage lies in its proprietary Sol-Gel technology (a chemical process for synthesizing high-purity solids from a liquid phase), which allows for the creation of innovative topical drug formulations. This technology is the core barrier to entry for competitors in their niche dermatology focus.

To be fair, the growth projections are heavily weighted on the successful clinical data for SGT-610 and SGT-210. The Mayne Pharma deal bought them time, but now they need to execute on the clinical trials. You can see how the market is reacting to this risk/reward profile by Exploring Sol-Gel Technologies Ltd. (SLGL) Investor Profile: Who's Buying and Why?

Here's the quick math on the potential: a $16 million one-time deal in Q2 is nice, but the potential $300 million+ annual revenue from SGT-610 is the game-changer. That's why analysts are still giving a Buy rating with a $50.00 price target. Still, the company is burning cash on R&D, so watch the Q4 2025 cash balance closely.

Your clear action here is to track the top-line data release for SGT-210 in Q4 2025; that's the next major catalyst that will either validate or undermine the current valuation.