Q4 2019 Earnings Call
Welcome to the Thursday the 4th quarter and full-year 2019 Financial results in corporate update conference call at this time. All participants are in a listen-only mode following Management's prepared remarks. We will hold a Q&A session to ask a question at that time, please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference, please press * 0 operator assistance as a reminder. This call is being recorded today, February 24th, 2027. I like to turn the conference call over to Jeannie Herbert senior director of investor relations and corporate Communications for events, please go ahead.
Thank you. Joel joining us on the call today from revance is President and chief executive officer Mark Foley Chief Financial Officer, Toby Chief Operating Officer and president of our service and product operations. Hi Josie Chief commercial officer Aesthetics and Therapeutics Dustin suits earlier today revance release financial results for the fourth quarter of the year ended December 31st, 2019. If you have not received this news release or would like to be added to the company's distribution list to receive future releases. Please go to the investor relations section that says website which can be found at www during this conference call management will make forward-looking statements including statements related to Revenge this 2026 results and guidance the clinical development of our product candidates business strategy and planned operations anticipated pre-commercial and launch plans Financial estimates with respect.
the same distribution agreements
And potential product candidates and Technologies. These forward-looking statements are based on the company's current expectations, and inherently involve significant risk and uncertainties. Our actual results in the back events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties factors that could cause results to be different from these statements include factors. The company describes in the section titled risk factors in our current report on form 8-k as filed with the SEC on February 10th 2020 revance caution. You not to place any undue Reliance on forward-looking statements and undertakes, no Duty or obligation to update any forward-looking statements as a result of new information future events or changes in its expectations with that. I'll now turn the call over to Mark Foley mark. Thank you, Jeannie. Good afternoon everyone and thank you for joining our fourth quarter and full-year 2019 conference call.
2019
Revance made significant progress in the initiation and enrollment of several important clinical trials will also submitting a biologics license application to the US Food and Drug Administration office for a neuromodulator taxi botulinum toxin a for injection or taxi for short for the treatment of global Airlines. This year has set us up for a transformational wage progress has set us up for a transformational twenty $20 a year, which we believe will be characterized by excitement and execution.
Twenty-twenty contains no less than 12 transformative clinical Regulatory and Commercial events that could generate significant value for our company and position revance to be an innovation leader in both ascetics and Therapeutics. We take started the year with the signing of an exclusive distribution agreement toxins range of FDA-approved dermal fillers off the first and only approved for the correction of moderate-to-severe dynamic facial wrinkles and folds T octanes modern resilient hyaluronic acid, rrha range of dermal fillers off our highly complementary as we look to build out our facial Aesthetics franchise together with our next Generation neuromodulator. These high-quality fillers create a synergistic portfolio of products to address the needs of Physicians and patients alike with this distribution agreement we get
Operator: BF-WATCH TV 2021 Welcome to the Revance Therapeutics 4th Quarter and Full Year 2019 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode.
Operator: Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference... Please press star zero for operator. As a reminder, this call is being recorded today, February 24th, 2020. I would now like to turn the conference call over to Jeanne Herbert, Senior Director of Investor Relations and Corporate Communications for REBA. Please go ahead.
Access to the one point 1 billion dollar market, which is growing 10% Angel eight.
Jeanne Herbert: Thank you, Joelle. Joining us on the call today from Revance are President and Chief Executive Officer Mark Foley, Chief Financial Officer Toby Schilke, Chief Operating Officer and President of R&D and Product Operations Dr. Abhay Joshi, and Chief Commercial Officer, Aesthetics and Therapeutics, Dustin Sjuts. Earlier today, Revance released financial results for the fourth quarter and full year ended December 31, 2019.
Delhi to pull forward to build out of our static Field Force the opportunity to shape a whole new premium category in the facial injectables market and perhaps most importantly teoxane RHA fillers provide revance with a portfolio of facial injectables that will help optimize the dock to launch assuming approval later this year.
Jeanne Herbert: If you have not received this news release or would like to be added to the company's distribution list to receive future releases, please go to the Investor Relations section of Revance's website, which can be found at www.revance.com. During this conference call, management will make forward-looking statements, including statements related to Revance's 2020 financial results and guidance, the clinical development of our product candidates, business strategy and planned operations, anticipated pre-commercial and launch plans, financial estimates with respect to the Teoxane distribution agreement, and potential product candidates and technologies. These forward-looking statements are based on the company's current expectations and inherently involve significant risk and uncertainty. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties.
Beyond the three dermal fillers that are already FDA-approved RHA to 3 and 4. We also have rights to further Innovations in the dermal filler space this includes RHA one for perioral rhytids, which are fine lines around the mouth expected to receive FDA approval in 2021 based on early internal projections in the bank to pay to launch timing of daksi. We estimate break even for the filler distribution agreement with an eighteen to twenty-four months after launch and pay back of our filler launch Investments by 2023 wage.
Following on the heels of our deal. We were notified that are b l a c for for Global Airlines was accepted for review by the FDA and it's correspondence the FDA stated. No potential filing review issues were identified and that there are currently no plans to hold an advisory committee meeting. The FDA also said a padutha Target action date of November 25th, 2020. We remain focused on ensuring a successful FDA review process and have confidence in the quality of our submission in the experience of our team from a clinical perspective. We will continue to bear fruit from the Investments. We've made in our development Pipeline with five trial readouts plan for taxi in 2020.
these include three
Phase two open-label clinical readouts for facial Aesthetics in for headlines crow's feet and a new trial initiated in December in Upper facial lines, the Facebook read out and plantar fasciitis and perhaps most notably the clinical read out for a spin one phase 3 pivotal trial and cervical dystonia.
Jeanne Herbert: Factors that could cause results to be different from these statements include factors the company describes in the section titled Risk Factors in our current report on Form 8K as filed with the SEC on February 10, 2020. Revance cautions you not to place any undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in its expectations. With that, I'll now turn the call over to Mark Foley. Thank you, Jeannie.
Mark J. Foley: Good afternoon everyone, and thank you for joining our fourth quarter and full year 2019 conference call. In 2019, Revance made significant progress in the initiation and enrollment of several important clinical trials while also submitting a Biologics License Application to the U.S. Food and Drug Administration for our neuromodulator, Daxibotulinum Toxin A for Injection, or DAXI for short, for the treatment of glabellar lines. This year has set us up for a transformational 2020, and this progress has set us up for a transformational 2020, a year which we believe will be characterized by excitement and execution.
In terms of executive management during the fourth quarter. I stepped in as president and chief executive officer. And we promoted Dustin suits to Chief commercial officer. We also provides all by joji to the position of Chief Operating Officer and president of R&D and product operations and president Assad to senior vice president technical operations to continue to build our team of Leaders with extensive commercialization experience. We recently appointed Dwight Moxie as the company's senior vice president general counsel in corporate secretary Dwight joins us from ultragenyx where he was vice president Deputy general counsel overseeing global commercial operations litigation research and development and Regulatory matters.
Mark J. Foley: 2020 contains no less than 12 transformative clinical, regulatory, and commercial events that could generate significant value for our company and position Revance to be an innovation leader in both aesthetics and therapeutics. We kicked-started the year with the signing of an exclusive U.S. distribution agreement for Teoxane's range of FDA-approved dermal fillers, the first and only FDA-approved for the correction of moderate to severe dynamic facial wrinkles and folds. Teoxane's Modern Resilient Hyaluronic Acid, or RHA, range of dermal fillers is highly complementary as we look to build out our facial aesthetics franchise, together with our next generation neuromodulator, DAX. These high quality fillers create a synergistic portfolio of products to address the needs of physicians and patients alike. With this distribution agreement, we get access to the $1.1 billion U.S. filler market, which is growing 10% annually.
Mark J. Foley: The ability to pull forward to build out our U.S. aesthetics field force and the opportunity to shape a whole new premium category in the facial injectables market. And perhaps most importantly, Teoxane's RHA fillers provide Revance with a portfolio of facial injectables that will help optimize the DAXI launch, assuming approval later this year. Beyond the three dermal fillers that are already FDA approved, RHA 2, 3, and 4, we also have rights to further innovations in the dermal filler space.
Prior to ultragenyx he served in general and legal counsel.
Positions at Allergan and GlaxoSmithKline. We're thrilled to welcome Dwight to the revamped family and Dwight will report to me and we'll serve as a member of the senior executive team now to give you an update on our progress and Aesthetics and the RHA dermal filler launched. I will hand the call over to our chief commercial officer to set exit Therapeutics. Dustin suits Dustin. Thanks Mark, as you can imagine, we busy completing or commercialization activities for the plan that us launched Mr. RHA dermal filler line in the second quarter as of the high-level progress on our launch place at the 22nd annual International Master course on Aging Science World Congress or in cast in Paris the years from both prevent Antioch, same part of multiple demonstrations and discussions allowing us to showcase our differentiated and Innovative portfolio of facial injectables. Teoxane presented to posters one focused on the registration trial results from birth.
And very oral lines and to a comparative study in the physical properties of the RHA line of dermal fillers Seahawks thing also ran a standing-room-only educational Symposium on the science and college application other dermal filler portfolio overall more than five hundred US aesthetic positions.
Mark J. Foley: This includes RHA-1 for perioral rite aids, which are fine lines around the mouth, expected to receive FDA approval in 2021. Based on early internal projections and the anticipated launch timing of DAXI, we estimate break-even for the filler distribution agreement within 18 to 24 months after launch. Payback of our Filler Launch Investments by 2023. Following on the heels of our Teoxane deal, we were notified that our BLA for DAXI for globular lines was accepted for review by the FDA. In its correspondence, the FDA stated that no potential filing review issues were identified and that there are currently no plans to hold an advisory committee.
Attended the conference and we're introduced to the RHA range of dermal fillers along with the compelling results generated from the phase 3 to current program on Taxi since the Seahawks changes in agreement announced we have received over twenty-five hundred resumes further demonstrating the unique opportunity presents in this growing Marketplace. We have nearly completed a thorough vetting and selection process for our sales leaders. Once on board will turn our attention to the aesthetic account executive positions, which will be selected and in place for a launch in second-quarter.
Was she an opportunity opportunity to serve a physician and consumer who value a better experience our marketing strategy will be focused in these key areas first providing quality products that deliver a compelling value proposition second aligning a select network of aesthetic health care professional with Discerning consumers and finally delivering a differentiated and improved outcome for the consumer and the position turning to our operational side. We are nearing the completion of two key infrastructure projects one a high touch customer service function with the right mix of people technology and processes and to an end in technology infrastructure built with the customer experience in mind to enable our customers and sales teams to focus on what they do best.
Mark J. Foley: The FDA also set the PDUFA target action date of November 25, 2020. We remain focused on ensuring a successful FDA review process and have confidence in the quality of our submission and the experience of our team. From a clinical trial perspective, we will continue to bear fruit from the investments we've made in our development pipeline with five trial readouts planned for DAXI in 2020. These include three Phase II open-label clinical readouts for facial aesthetics. Forehead Lines, Prose Feet, and a new trial initiated in December in Upper Facial Lines.
Mark J. Foley: phase II readout in plantar fasciitis, and perhaps most notably, the clinical readout for our Aspen 1, phase 3, pivotal trial and Cervical Dystonia. In terms of executive management, during the fourth quarter, I stepped in as President and Chief Executive Officer, and we promoted Dustin Sjuts to Chief Commercial Officer. We also promoted Abhay Joshi to the position of Chief Operating Officer and President of R&D and Product Operations, and Azeedan Najad to Senior Vice President, Technical Operations. To continue to build our team of leaders with extensive commercialization experience, we recently appointed Dwight Moxvey as the company's Senior Vice President, General Counsel, and Corporate Secretary. Dwight joins us from Ultragenyx, where he was Vice President, Deputy General Counsel, overseeing global commercial operations, litigation, research, development, and regulatory matters. Prior to Ultragenics, he served in general and legal counsel positions at Allergan and GlaxoSmithKline. We're thrilled to welcome Dwight to the Revance family.
Combining revance antioxidant is compelling across all constituencies t o r h a dermal fillers along with daksi Once approved will give us a powerful Aesthetics portfolio page to create a new premium category in facial injectables.
Mark J. Foley: And Dwight will report to me and will serve as a member of the Senior Executive. Now, to give you an update on our progress in aesthetics and the RHA dermal filler launch, I will hand the call over to our Chief Commercial Officer, Aesthetics and Therapeutics, Dustin Sjuts. Thanks, Mark.
The RHA dermal filler launch will put revance representatives in physician offices for the first time building relationships introducing the concept of premium facial injectables ahead at the potential approval of our next Generation neuromodulator product taxi. This will help us optimize that actually launched and put us well on the road to significant market share in facial Aesthetics. Our team is excited and enthusiastic about our plans for Revenge optional entry to the booming facial injectable marketplace with that'll and the call back to Mark. Thanks Dustin with her acceptance and are announced Paducah date of November 25th. 2012. Organization is focused on supporting the Doxie approval process. Our clinical team is also gearing up for the substantial amount of clinical data that will become available once the follow-ups and our faith is two and phase three trials have been completed.
and facial Aesthetics the data
For generating will enable us to compile a comprehensive information package for potential vaccine practitioners with all three phase to open-label her face studies to be completed not available before. Taxis expected end-of-year launch. These results will be shared at Key medical conferences as to clinical data for therapeutic indications enrollment is committed in our service dystonia Aspen one phase 3 pivotal trial and we expect to report top-line results in the second half of twenty-twenty are plantar fasciitis Phase 2 trial is a fully enrolled in we expect also announced these top-line results in second half of 2020.
Dustin S. Sjuts: As you can imagine, we're busy completing our commercialization activities for the planned U.S. launch of our RHA Thermal Filler Launcher, as well as the high-level progress on our launch. At the recent 22nd Annual International Master Course on Aging Science, World Congress, or MCAS, in Paris, leaders from both Revance and Teoxane were part of multiple demonstrations and discussions allowing us to showcase our differentiated and innovative portfolio of Keoxane presented two posters, one focused on the U.S. registration trial results for RHA-1 in perioral lines. 2, a comparative study of the physical properties of the RHA line of dermal fillers. Keoxane also ran a standing room only educational symposium on the science and clinical application of their dermal filler portfolio.
Dustin S. Sjuts: Overall, more than 500 U.S. aesthetic physicians attended the conference and were introduced to the RHA range of dermal fillers, along with the compelling results generated from the Phase III SECURA program on DAX. Since the Teoxane distribution agreement was announced, we have received over 2,500 resumes, further demonstrating the unique opportunity Revance presents in this growing market. We have nearly completed a thorough vetting and selection process for our sales leaders.
Finally are Juniper Phase 2 trial in Upper Limb spasticity continues to enroll patients. We anticipate enrollment to be complete in mid 2020. This means that by the year end by the end of the year, we could have a positive phase three program in one of the major muscle movement disorders and data on another phase to program for pain disorder. Both of them could materially inform the opportunities that exist for taxi and Therapeutics turning to our biosimilar asset. We are waiting for Milan to decide whether they plan to move forward with us on the biosimilar to box development program Milan heads up until April 30th, 2022 indicate whether or not they plan to opt-in.
The bulk of our recent corporate highlights. Now. Let me turn the call over to Toby to summarize. Our financial results afterwards have a few closing comments before we begin today's Q&A session Toby. Thank you Mark for the full year the company tightly controlled expenses. And as a result, we spent below our 2019 financial gap guidance of 172 $185 million with gaap operating expenses of $165 million dollars and non-gaap operating expenses of $144 million dollars as compared to the guidance range of $148 to $158 million dollars.
Dustin S. Sjuts: Once on board, we'll turn our attention to the aesthetic account executive positions, which will be selected and in place for a launch in the second quarter. We see an opportunity to serve physicians and consumers who value a better experience. Our marketing strategy will be focused on these key areas. First, providing quality products that deliver a compelling value proposition.
Dustin S. Sjuts: Second, aligning a select network of aesthetic healthcare professionals with discerning consumers. And finally, delivering a differentiated and improved outcome for the consumer and the physician. Turning to our operational side, we are nearing the completion of two key infrastructure projects. One, a high-touch customer service function with the right mix of people, technology, and processes.
Revenue for the full year 2019 consisted of four hundred and thirteen thousand thirteen thousand dollars recognized from The Upfront and incremental payments from the mile and Thursday to Botox program. Please see the earnings release for the full fourth quarter and year-end results with the financing. We just concluded on February 14th. We had cash cash equivalents in short-term Investments of 533.3 million dollars enough to fund the company into twenty $23.
Dustin S. Sjuts: And two, an end-to-end technology infrastructure built with the customer experience in mind to enable our customers and sales teams to focus on what they do best. The strategic logic of combining Revance and Teoxane is compelling across all stakeholders. Deoxyne's RHA dermal fillers, along with Daxi, once approved, will give us a powerful aesthetics portfolio and allow us to create a new premium category in facial injectors. The RHA dermal filler launch will put Revance representatives in physician offices for the first time, building relationships and introducing the concept of premium facial injectables ahead of the potential approval of our next generation neuromodulator product, Daxone. This will help us optimize the Daxi launch and put us well on the road to significant market share in facial aesthetics. Our team is excited and enthusiastic about our plans for Revance's exceptional entry into the booming facial injectable market. With that, I'll hand the call back to Mark. Thanks, Dustin.
2
We are issuing our guidance for 2020. We expect 2020 gaap operating expense to be in the range of 272 two hundred and eighty million dollars and non-gaap operating expense which excludes depreciation and stock-based compensation in the range of 220 to 230 million dollars. The increase over 2019 is driven primarily by launch activities, including the hiring of a field force in the second quarter or Vance expects 20-29 a research and development expense to be $95 to $100 million dollars.
Mark J. Foley: With our BLA acceptance and our announced PDUFA date of November 25, 2020, our organization is focused on supporting the DAXI approval process. Our clinical team is also gearing up for the substantial amount of clinical data that will become available once the follow-ups in our Phase 2 and Phase 3 trials have been completed. In Facial Aesthetics, the data we are generating will enable us to compile a comprehensive information package for potential DAXI practitioners, with all three Phase II, Open Label, Upper Phase studies to be completed and available before DAXI's expected end-of-year launch. These results will be shared at key medical conferences. As to clinical data for therapeutic indications, enrollment is complete in our Cervical Dystonia Aspen 1 Phase 3 pivotal trial, and we expect to report top-line results in the second half of 2020. Our plantar fasciitis phase 2 trial is likewise fully enrolled, and we expect to also announce these top-line results in the second half of 2020. Finally, our Juniper Phase 2 trial in upper limb spasticity continues to enroll patients.
in terms of Revenue
We will not provide sales guidance until we can determine the launch trajectory of our RHA filler line. We will however provide updates on our progress as we approach the market wage.
advances shares outstanding as of February 13th 2024 approximately 56.9
Mark J. Foley: We anticipate enrollment to be complete in mid-2020. This means that by the end of the year, we could have a positive phase three program in one of the major muscle movement disorders and data on another phase two program for a pain disorder, both of which could materially inform the opportunities that exist for Daxian Therapeutics. Turning to our biosimilar asset, we are waiting for Mylan to decide whether they plan to move forward with us on the Biosimilar to Botox Development Program. Mylan has until April 30, 2020, to indicate whether or not they plan to opt in.
Mark J. Foley: That covers the bulk of our recent corporate highlights. Now, let me turn the call over to Toby to summarize our financial results. Afterward, I'll have a few closing comments before we begin today's Q&A session. Thank you.
Tobin C. Schilke: Thank you, Mark, for the full year of tightly controlled expenses. And as a result, we spent below our 2019 financial gap OPEX guidance of $173 to $185 million, with GAAP operating expenses of $165 million and non-GAAP operating expenses of $144 million as compared to the guidance range of $148 to $158 million. Revenue for the full year 2019 consisted of $413,000 recognized from the upfront and incremental payments from MyLan under the Biosimilar to Botox program. Please see the earnings release for the full fourth quarter of the year. With the financing we just concluded on February 14th, we had cash, cash equivalents, and short-term investments.
Tobin C. Schilke: $533.3 million, enough to fund the company into 2023. Today, we are issuing our guidance for 2020. We expect 2020 GAAP operating expense to be in the range of $270 to $280 million and non-GAAP operating expense, which excludes depreciation and stock-based compensation, in the range of $220 to $230 million. The increase over 2019 is driven primarily by launch, while including the hiring of a field force in the second quarter. Revance expects non-GAAP research and development expenses of 95 to 100 million dollars.
Tobin C. Schilke: In terms of revenue, we will not provide sales guidance until we can determine the launch trajectory of our RHA filler line. We will, however, provide updates on our progress as we approach the market. Revance's shares outstanding as of February 13, 2020, were approximately 56.9 million with 62.2 million fully diluted shares.
Mark J. Foley: And with that, I'll turn the call back to Mark. Thank you, Toby. 2020 is truly a pivotal year for Revance, and I'm pleased with the significant number of potential value-creating events ahead of us. With the Teoxane Dermal Filler Deal and the anticipated approval of DAXI, we are well positioned to become an innovation leader in facial injectables and therapeutic neuromodulators. Also, with our recent capital raises, we are very well funded as we prepare for two significant product launches and await important clinical data readouts. With more than half a billion dollars in cash and investments, we will launch from a position of strength and with an ability to be laser focused on execution. With the Teoxan agreement and BLA acceptance, we have achieved the first two of 12 catalysts for 2020.
Operator: We look forward to keeping you updated on our launch activities and the 10 remaining catalysts throughout the year. With that, I will now open up the call to questions. Operator.
Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key.
Annabel Eva Samimy: Please stand by while we compile the Q&A roster. Our first question comes from Annabel Samimy with Stiefel. Your line is now open.
Mark J. Foley: Hi guys, thanks for taking my questions. So just wanted to ask you since the Teoxane launch is coming up shortly, any thoughts around the pricing of Teoxane and you're talking about creating a premium category, what do you think you need to do there to essentially, you know, establish yourself as that premium other than, you know, possible price given the increasing noise of Juvederm again in, in, you know, The second question is, I guess none of us should be surprised by the increase in cash burn given the launches coming up and the continued therapeutic development, but I'm wondering if you can maybe frame for us how much of the spend in sales and marketing Potentially leverage into next year so that, Transcripts provided by Transcription Outsourcing, LLC.
Mark J. Foley: The Teoxane RHA filler line; we're going to hold on giving specific pricing until launch, probably for competitive reasons too, but we do think it's a premium product. If you look at the differentiated label claim around dynamic wrinkles and folds, I think they've done a nice job of positioning themselves in a unique way in the market. And if you look at how that product has performed in the top five markets in Europe, it's a great product. And so we believe that it will stack up very favorably against the other fillers. And we think it will fit very consistently with, you know, Daxi and sort of the premium nature of that product.
Tobin C. Schilke: But, you know, we're going to hold on to the specifics around the pricing until we get into the market. Regarding sort of the makeup of the spend in that one, I turn that over to Toby, and he can comment a little bit on sort of what are the key buckets as we look at the guidance that we're given for 2020. Thanks, Annabel.
Tobin C. Schilke: Great questions. You know, in terms of the drivers year on year, obviously, you're seeing an increase because of the, you know, the acceleration of our plan to bring in the field force and then the variable marketing associated with launching both a filler and DAXI in 2020. Um, you know, your question was about sort of are we going to have some additional one-time expenses, um, that were shifted from the year 2021, it sounded like, into 2020, and the answer is yes, um, they're mainly on sort of the infrastructure investments that we're making and sort of the field-based, um, information technology, um, and sort of ERP systems, but, um, you know, kind of on the overall context, it'll be hard to sort of discern from sort of year-to-year numbers, especially as we have the full-year roll-on in 2021 for the full-year effect.
Tobin C. Schilke: Maybe to just pile on that a little and answer that a little more, I mean, you know, the great thing about these two products is that there is a great sort of overlap and synergy between, you know, the sales forces of both. And so, while we are pulling forward sales and marketing expenses to support the filler launch, by the time that DAXI gets approved, there's not going to be a whole lot of additional costs that go into supporting that. There will be, obviously, some marketing that's dedicated to that. We might add some additional reps, but a lot of the infrastructure investment and the big sort of sales force addition isn't going to need to be duplicated later. It's more of a pull forward this year, and that's what this number is reflecting.
Tobin C. Schilke: And then I think you had one last question, Annabel, on 2023 and the cash guidance there. And, you know, we have, you know, sort of baked in revenue forecasts because we're launching two products there. And obviously, there's a balance there with higher revenue. You have higher investment with lower revenue. You make different decisions about that.
Ken Cattatore: I feel pretty confident about that 2020. Thank you. Our next question comes from Ken Cattatore with Cowan & Company. Your line is now open.
Mark J. Foley: Hey guys, just a question on how we should be thinking about the pacing of the launch. And I know you don't want to give any specific revenue, but can you talk about metrics we should be looking out for, or things that you're going to be measuring the sales force on Teoxane and then, obviously, DAXE seems more of a 2021 event. I don't know if you want to give us any sense of what revenues we should expect for DAXE in 2020? So just things that you're holding yourself to and the team accountable for in terms of metrics that we can be paying attention to and monitoring, and then any thoughts on sales force size, or are you going to hold that tight for competitive purposes? Thank you. Yeah, Ken, a great question. So I'll try the latter one first.
Mark J. Foley: I think we've been pretty consistent saying that, you know, kind of roughly 100 reps is what we plan to start with. And we've talked about the DAXI launch, you know, we might grow that up to sort of 120 to 130. But we'll, you know, we'll kind of wait to see how we're phasing into this, but we do plan to start out of the gate with roughly 100 reps. In terms of the launch cadence and metrics and what to expect there, you know, I think that since we'll be launching in Q2, and we're bringing on a whole new sales force, I would expect the first phase to be heavy sampling. And, you know, targeting and getting those right, you know, sort of positions.
Mark J. Foley: So I think that, you know, any kind of revenue on the filler line is going to be more towards the latter part of the year because of the way we're going to, you know, start to phase this. And I think the same with DAXI as well. When we finally get approval for DAXI, this will be the first time that it's used commercially outside of clinical trials. And I think it's going to be really important that we are partnered with, you know, a select group of physicians to make sure that we're optimizing the launch. And so, you know, we really don't expect any meaningful contribution to the DAXI portfolio until next year.
Mark J. Foley: And then again, on the filler side of it, we just want to make sure that we're being really thoughtful about, you know, the physicians that we're partnering with, establishing this premium brand that we're talking about. And since we're just coming online in Q2 and expect some sampling, again, things will be kind. Thank you. Our next question comes from Terence Flynn with Goldman Sachs. Your line is now open. Hi, this is Holly Barrow.
Terence C. Flynn: Two for us. One, can you provide updated thoughts on potential bundling strategies, assuming DAX is approved later this year? And are you planning to target a broader base of physicians now that you have fillers in the portfolio than you were initially just planning with DAX? Yeah, so that's a great question.
Mark J. Foley: So on the bundling strategy, again, I think we're going to hold on to sort of any of the specific tactics and pricing until we're actually in the marketplace. You know, clearly, by having both toxins and fillers in the bag, it does give us sort of greater flexibility to meet the needs of both the consumers and the injectors themselves. And we think by having both of them, it will give us an opportunity to offer incentives to practices that utilize both of them. But again, the specifics of that, you know, we're going to hold on until we get into the market. And then in terms of, you know, whether or not the fillers are going to allow us to target a broader base, you know, again, I think that'll get into sort of the execution side of it. We're going to be mindful of, you know, making sure that we're targeting the physicians that we think are going to be a good fit for both of our products.
Mark J. Foley: But we think if we do the right job of educating and training and creating the right value proposition that, you know, whether it's a filler or a neurotoxin, we should be able to go after whoever we think is the ideal customer for us. I don't think either of these products change the way that we ultimately think about this market and our go-to-market strategy. Thank you. The next question comes from David Amsellem with Piper Thandler. Your line is now open. Thanks. So, just a couple.
David A. Amsellem: So, Mark, you referenced the idea of a premium experience for the T-Oxane fillers. And in that vein, I wanted to get your thoughts as to who the initial patient pool will be. Is it going to be filler experience patients who are looking for a different experience? Do you think you'll be able to get patients new to fillers initially? And how should we think about that in the context of this idea of a premium product or premium experience? That's number one.
Mark J. Foley: And then, number two, switching gears to therapeutics. And I've probably asked this in 20 different ways over the last couple of years, but I'll just ask it again. And the question is, how do you think about building out commercial infrastructure for, say, cervical dystonia or other movement disorders, or just broadly speaking, for therapeutic indications in general? And is that something that you're wedded to?
Mark J. Foley: Or are you looking at potential partners for some or all of these therapeutic indications? They're great questions, You know, I think the first one, your question about, you know, kind of who we are targeting with the launch of the fillers, which consumers, you know, and you've, I think you've heard this from other players in the industry, this is a market that continues to be significantly underpenetrated. And it's growing, you know, low double digits, 10%. So I think anytime that there's something new that comes into the market, it does drive increased awareness among consumers, and people like to seek out what's new. So we do think that we will get some of our traction from new patients that either are already in the channel but haven't had fillers, or those that are outside the channel who hear about, you know, sort of the next new filler that's in the market and use that as an opportunity.
Mark J. Foley: So I think we will definitely get some new consumers that come in. And then, conversely, too, I think that, you know, we're gonna be a really appealing alternative for consumers that are already in the channel and that are getting fillers that might be looking for a different experience. Or, you know, the physician likes some of the performance properties of the filler. And as I mentioned before, Keoxane's fillers in Europe, which is a highly competitive market, have been really strong, and they've been able to compete very successfully in, you know, the top five European markets without the benefit of a neurotoxin. And so they've solely been competing on the performance of the product.
Mark J. Foley: So, you know, we think it's going to be competitive, we think it's going to resonate with some injectors, we think it's going to resonate with some consumers, and we think, you know, we'll capture some existing patients, and through coming into the market, we will drive some new ones as well. In terms of your question about sort of our therapeutic strategy, there's no real change there. We've always talked about, you know, controlling the distribution of our products in both aesthetics and therapeutics in North America and looking to find partners for these assets outside of it. Obviously, as you referenced, it would be a different sales force that would sell cervical dystonia. These would be neurologists that would be administering the neurotoxin and those indications.
Mark J. Foley: We said in the US, if we need to build our own sales force, it's kind of 60 to 80 reps. So it's a pretty targeted effort. And, you know, currently, we continue to think that that strategy makes sense, which is that we could look to commercialize this directly ourselves in North America, and then we could continue to look for partners outside of that. You know, having said that, we're going to continue to evaluate opportunities. You know, CD is our program that's most advanced and furthest along, but if you look where that is in the phase three data reading out in the second half of this year, you're talking about approval at some time in 2023-ish. So we still have some time.
Mark J. Foley: And with additional clinical data, you know, we'll certainly circle back and re-evaluate, is this the right strategy, or are there other ways that we think could better unlock value for it? But for now, there's no real change in our approach to that market. Okay, great. Thank you.
Balaji V. Prasad: Our next question comes from Balaji Prasad with Barclays. Your line is now open. Firstly, on the fillers, you said that you introduced this recently to the U.S. KOLs. Were there any learnings for your team? Were there any pushbacks that we need to consider? And what kind of expectations does it give you around RAM dynamics?
Mark J. Foley: Secondly, it's something that I asked last month. Can you help us understand the development and competitive landscape for fillers globally? I'm trying to understand the minimum period of dominance deoxygen can have on this market.
Mark J. Foley: I'm not sure I exactly understood your second question, but I'll start with the first one and then we can always pivot over. So in terms of what's been the physician response, so, you know, there were obviously clinical trial sites here in North America that were involved with the trial, and, you know, like a lot of these clinical trials, companies go to thought leaders in the industry to work with on these trials. And so, you know. These injectors had great experience with the Teoxane products, and they shared that information with their colleagues. And so we come into the U.S. market with a group of KOLs that have had, you know, very favorable experiences with it.
Mark J. Foley: Secondly, there are a number of international meetings where a lot of these, you know, KOLs attend and they share information. So a lot of these U.S. physicians have seen the data on the Teoxane fillers at some of these meetings. They've talked to some of their colleagues that have been injecting the products outside of the United States, and they're anxious to get their hands on them. I think the performance of the product is, you know, very good in terms of how it performs, but also the softer side of it. How easy is it to inject? How easy is it to massage?
Mark J. Foley: What's the sort of patient feelings on it? And so at the recent MCAS meeting that we talked about, because of the announced partnership, there were more U.S. physicians that paid attention to it. And we sense a lot of excitement, and certainly with the number of physicians that we have already been engaged with on our neuromodulator program, they're certainly excited to, you know, get experience with this new filler line. And so we think as we go into the U.S., we're going to have a large number of physicians that are going to be very interested in trialing the product. And we also think that the performance of the product and the customer experience is going to drive, you know, good usage of the product.
Mark J. Foley: We also think that from a marketing standpoint, their ability to get a unique labeling claim around dynamic wrinkles and folds gives us an opportunity to certainly position this in a way that other fillers can't. And so we feel good about that. And then, again, maybe you could clarify for me again your second question because I wasn't exactly sure what you were looking for there. Sure, Mark.
Mark J. Foley: Thanks. So what I was asking was to kind of understand the development and competitive landscape for fillers that could end up being material threats to Teoxin in the future and at what life cycle they could be. And as I said, what I'm trying to understand is the minimum period of competitive dominance Teoxin can have on this market. Great. It's a great question.
Mark J. Foley: So, obviously, we're, you know, it's a U.S. agreement, so I'll focus on the U.S. market. But, you know, there are some other fillers that are working their way through the FDA approval system. And so we do expect to see some other hyaluronic acid fillers come into the market sort of in the next two to three years, probably closer to three years.
Mark J. Foley: So we feel like we certainly have several years to get into the market. And then, you know, we do believe, obviously, because we did this distribution deal, that partnering a filler with a neuromodulator is really important in order to meet the needs of the injector and the patients. And so most of these new ones coming in are going to be filler only, which we think is going to create sort of a higher bar. But, you know, if you look at, you know, Europe, where all of these products are already approved, and so there's much more competition, Tioxin has performed really well. They're the number four market shareholder in the top five EU markets.
Mark J. Foley: And this is with sort of the latest technology and all the competition. So we think that this is a filler line that's going to perform really well. And for the next several years, there won't really be any new competition.
Timothy Francis Lugo: And then even when competition does show up, which is several years away, Thank you. Thank you. Our next question comes from Tim Lugo with William Blair. Your line is now open.
Mark J. Foley: Thank you for the question and congratulations on all the... And all you've done through in Q1 as well as Q4. Specifically for Europe, how should we think about that 9% penetration number, which has been cited for the T-axine fillers without a neurotoxin paired with them? Is that sort of floor penetration we can expect in the U.S., or is there something unique in Europe that I'm not appreciating?
Mark J. Foley: I mean, obviously, it's hard for us to sort of forecast what we think that means. We look at it, and we think it bodes well in terms of, you know, the usage, largely being attributed to the quality of the product. And if you look at, you know, how the deoxane fillers came into the market, you know, Valerie Tupan, the founder there, was involved in the early days of Jumiderm and creating that, and I think she learned a lot about not just the science of making HA fillers but the art, which comes down to the manufacturing process and everything else. That then translates into how easy it is to work with and how easy it is to use.
Mark J. Foley: So we think it speaks to the quality of it. But I think it's really hard for us to say that, you know, 9% there translates to a certain percentage here. And then when you pair it with a neurotoxin, what that means, I just don't know that we're at a point where we can get sort of that level of guidance on it. Obviously, we're optimistic. We need time to get into the market and make sure that we've got, you know, the right relationships established and that we're also properly prepared for Daxi. But, you know, we think it's a good indicator as we move into the U.S. market. And with the myelin biosimilar decision coming up, if your partner decides not to continue with the program, remind me again, are you looking, would you look to repartner that program, or was there something unique to Myelin that made them a preferred partner, or maybe the market dynamics have changed a bit where now even pursuing a biosimilar has changed a bit? Great question!
Mark J. Foley: You know, we've talked about this before, but before entering into the agreement with Mylan, there were other parties that we were talking to at that time. So there was interest from others. But we felt that Mylan was the best partner for us.
Mark J. Foley: And it's been great working with them. They've obviously got a lot of experience in that space. When we entered into the agreement, there were, you know, two unknowns that were kind of looming large. One was whether or not the 351k pathway would be available to us. And based on our meeting with the agency there, they, you know, their meeting minute notes did say that there is a 351k pathway that is available. Not that it doesn't have risk, but we do feel like there is a pathway. And the second thing was that there was more characterization work that was needed to be done.
Mark J. Foley: And we feel like we've made pretty good progress on the characterization side. So if, for whatever reason, Mylan decides not to opt in, you know, we feel like we would be back at that same decision point, which is, okay, where do we go now? We feel like the assets have been de-risked based on some of the progress that's been made on those fronts. And so I think, you know, if they choose not to opt in, we'll take a pause and step back and reevaluate sort of where we go from here.
Mark J. Foley: All right, thank you for the question. Thank you. Our next question comes from Seamus Fernandez with Guggenheim. Your line is now open.
Seamus Christopher Fernandez: Oh, great. Thanks for the question. So just a couple of quick ones.
Mark J. Foley: If you guys wouldn't mind, can you just update us on the kind of supply that you're prepared to launch in the U.S. market with the deoxane fillers? And then the second thing is, what are you hearing from physicians? As we talk to physicians about the opportunity for the deoxane fillers, we hear two things. And in fact, one is the sort of problems with Juvederm, which includes formation of no
Dustin S. Sjuts: And then separately, there's also just sort of some service complaints that we're starting to hear about on the margins. I would just love to hear your thoughts on the opportunity there. And then the last question, can you just update us on what your learnings were from the plantar fasciitis clinical trial that gives you confidence to move forward into Phase 2? Just give us a general sense of how we should be thinking about those data as they approach, since that seems like a unique opportunity. Great. Well, great question.
Mark J. Foley: Thanks. So first off, on the supply side of it, we haven't given sort of any color guidance around sort of sales forecast or minimums on that, although the agreement does contain those.
Mark J. Foley: And we have worked closely with deoxane to make sure that they have the adequate amount of product to support our launch needs and our forecast. So we feel very good about the position that we'll enter the market with. In terms of the second question, you want to hit that on nodules and sort of what's going on in the market? I'm looking to dust this here.
Dustin S. Sjuts: Yeah, I think you're hearing a little bit about that as it relates to the Vycross technology that was introduced in 2003. But I think it's important to understand how the dynamics of the filler market have changed. Vycross was introduced in 2003 worldwide, but it didn't come to the U.S. until more recently, while Valerie and Deoxane introduced RHA in 2015. So they had an understanding of kind of how that product was made, how it was engineered to try to drive different characteristics, and really took that into account when they created the RHA technology. So we are hearing that as well. I think we don't have specific information directly related to Voluma, however, or excuse me, Vycross, but the safety profile of the RHA fillers is well known. Deoxane itself has sold more than 10 million syringes worldwide.
Dustin S. Sjuts: I think it's important to understand that we have a very large data set as to its properties, both from an efficacy standpoint and safety. So we'll definitely be bringing that information to bear. Some of those conversations around publications happened at MCAS as well, where there was data published on different types of safety characteristics.
Dustin S. Sjuts: And on the service side of things, I think it's really important to understand that there is data out there now that there are 30 to 50,000 accounts in aesthetics, and so most companies are out there trying to call on all of those with different sizes of sales forces. We're making a very strategic decision to create a new marketplace, which will allow us to have a kind of premium experience, both on the product side and from the company, which will allow us to have a much higher level of service within the certain types of accounts that are going to partner with us. And for the plantar fasciitis question, why don't I turn it over to Al-Hai to answer that? Great, Seamus.
Unknown Executive: So I think on the plantar side, we have made a number of changes to the clinical trial design that I described earlier because we learned a lot from our first study. Notably, what we did was we have two doses here instead of one dose, so we have a low dose and a high dose. Secondly, we changed our primary endpoint, which is based on a numeric pain rating scale compared to a visual analog scale where you have less of a distinction between how the patient talks about their experience. We also included a 10-day run-in period. That means we analyze how the patient feels for the first 10 days prior to entering into a trial just on day one. And that gives us an idea of how the patient is feeling and what the overall psyche behind pain is for that particular patient.
Unknown Executive: We also changed the duration of the trial for 6 to 12 months versus 3 months, which we had for our first... And with regard to the numeric pain rating scale, we are now evaluating it over five days versus one day, because that gives you an average score, and that is at week number 8. And last but not least, we made a very significant change where we changed the location of injection only to the plantar surface, as opposed to the plantar and ventral surfaces. So we believe that with all these changes based on our learning. There is significant opportunity, as you said, and we look forward to it. Thank you. Great
Mark J. Foley: Thank you. The next question comes from D.P. Yang with Mizuho Securities.
D.P. Yang: Your line is now open. Hi, this is Dan Clark on behalf of Defay Yang. Thanks for taking our questions. I have two, if you don't mind.
Unknown Attendee: First, are you guys changing your potential market share assumptions for DAXE given that you now have Teoxane in the portfolio? And then, as a follow-up, how much of an incremental benefit would the approval of RHA-1B for the filler line have? Great question. So in terms of sort of penetration assumptions, no, we haven't really put any penetration assumptions out there. But, you know, obviously, having the two together, we feel like it will allow us to be more competitive in the accounts that we're targeting. So overall, it's probably an efficiency play because it's the same reps calling again on the same injectors and, in many cases, treating the same consumers.
Mark J. Foley: But it certainly will give us more flexibility to compete in a bundled nature if that's what we need to do. And then on the, Yeah, so on the RHA-1 side, the RHA-2, 3, and 4, we feel meet most of the needs today. So the RHA-1 filler is being designed for perioral, you know, sort of fine lines around the mouth.
Mark J. Foley: So we actually think that this is going to be a bit more of a unique product when it comes to the marketplace. You know, we're expecting approval in 2021, so we're really excited to get that product on the market. So we're looking at this for, you know, sort of, much finer lines, more superficial, and you know, we're excited to get that one in. Anything you want to add to that, Dustin? Dustin Sjuts No, I think we covered that. Chris Shibutani Okay.
Mark J. Foley: Great. Thanks for your questions. Thank you. Thank you. Our next question comes from Serge Belanger with Needham & Company. Your line is now open. Hey, good afternoon.
Serge D. Belanger: Thanks for taking my questions. The first one, Mark, wanted to go back to some of your comments and your prepared remarks. I think you mentioned that you were expecting break even on the Teoxane dermal launch within 18 months and maybe a positive ROI on that investment by 2023. Do I have that correctly? And can you maybe talk about some of the assumptions behind that?
Serge D. Belanger: Thanks, Serge. I'll take this one. This is Toby.
Tobin C. Schilke: So in our prepared marks, we said 18 to 24 months after launch, we would break even on the filler distribution Agreement. So what we meant by that is, when you look at the economics of selling that filler line, while we also have Dax, that's what we meant there. And then, obviously, as that starts to break even, then the payback on the investments that we made over that eight-year period. For more information, visit www. FEMA.gov Thanks for the clarification.
Serge D. Belanger: My next question is on the... couple, I think there's two or three open-label phase two trials weaning out this year in various facial areas. Just wanted to know what the strategy is here. I know they were initially to inform dosing as well as injection patterns, but is there a longer-term strategy to advance these to phase three trials and kind of replicate the Botox aesthetic label? Yeah, so great question there.
Mark J. Foley: You know, I think we'll kind of wait as we get through the completion of the phase two trials. But obviously, the nice thing is that we will have the phase two top level data on these facial trials to inform sort of injection pattern technique and dosing. You know, these are not, you know, at the time that we will read these trials out, we won't have duration data. So it's more of a kind of an acute efficacy and a dosing strategy study.
Mark J. Foley: And then, you know, after these phase two studies, we'll evaluate the timing and whether or not we move into phase three on the AAD, I'll squeeze in one last one. AAD is next month. I'm sure it's kind of going to be the launch of the teoxane fillers, but is there any other data that we should be looking for at the meeting? Yeah, so we're not prepared to talk about sort of launch timing and date yet. You know, we've said Q2 thus far. And so, you know, we'll be launching at some point in Q2, in terms of what else to expect at AAD. I don't think there's anything new that we'll be bringing to AAD at this time. As you know, the lead time for those meetings is typically relatively long, and so we'll be bringing new information to other meetings but likely not at AAD this year.
Serge D. Belanger: Great thanks. Thank you. Our next question comes from Douglas Tsao with HC Wainwright. Your line is now open. If your line is unmuted, please unmute. Hey Doug, are you there?
Douglas Dylan Tsao: I'm not showing any further questions at this time. I would now like to turn the call back over to Mark Foley for any closing remarks. Great. Thank you, Operator. Our travel schedule over the next several months includes attendance at the Cowan, Barclays, and Needham Health Care Conferences and also involves road shows in Los Angeles, the Midwest, and New York.
Mark J. Foley: Please reach out to Jeanne if you'd like to meet with us when we're in your area, or if you would like to schedule a call. With that, I would like to thank you all for participating in today's call. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.