Q4 2021 Evolus Inc Earnings Call
Hello, and welcome to the evolution fourth quarter 2021 earnings call and webcast. At this time all participants are good listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad as a reminder, this conference is being record.
It is now my pleasure to turn the call over to David Erickson, Vice President of Investor Relations. Please go ahead.
Thank you operator, and welcome to everyone joining us on today's call with me today are David Motors, any president and Chief Executive Officer, Lauren Silvernail, Chief Financial Officer, and Executive Vice President Corporate development, and really Abelard, Chief Medical Officer, and head of research and development.
Our prepared remarks today will include forward looking statements within the meaning of United States Securities Laws and management May make additional forward looking statements in response to your questions forward looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations or financial performance.
A detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K quarterly reports on Form 10-Q , and current reports on form 8-K actual results may differ materially from those expressed in or implied by the forward looking statements. The company undertakes no obligation to up.
Date or review any estimate projection or forward looking statement.
Additionally, todays discussion will include non-GAAP financial measures, which should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC and on our Investor Relations website.
<unk> Dot com.
Lastly, following the conclusion of today's call a replay will be available on our website at <unk> dot com and with that I'll turn the call over to David.
Thank you for joining our year end earnings call 2021 was an incredible year we.
We relaunched <unk> and the business accelerated each quarter, resulting in 76% top line growth, while keeping the growth of our non-GAAP operating expense to 13%.
The majority of the incremental spend for the year was directed towards brand building efforts through our first in class co branded media program and we funded the company to profitability and beyond allowing us to focus on building the business in 2022.
For this year, our focus is on execution.
We expect our topline to grow 43% to 50% and we remain very confident in our ability to deliver on these above market growth expectations.
At the same time, our gross profit profile also improves dramatically in the fourth quarter with the conclusion of the royalty obligation to our largest competitor.
Next we plan to expand our footprint beyond North America with a launch into Europe , which represents the second largest market in the world.
And we will begin enrolling patients into our extra strength phase III study this quarter.
Now, let me get into some of the detail.
Our results for the fourth quarter and full year 2021 were unchanged from the preliminary results. We shared on January 26 for.
For the quarter, we delivered record revenue of $34 7 million, which represented 68% growth over sales in the fourth quarter of the prior year.
Our quarter over quarter or sequential growth rate was 30%, which we estimate was more than double the industry growth rate.
Against the backdrop of strong underlying U S aesthetic market condition <unk> continued to gain market share.
For the full year, we finished very strong with a total revenue of nearly $100 million, which was up 76% over prior year.
After successfully resolving our legal matters in Q1, we quickly regained momentum and invested in brand building efforts, which accelerated our growth each quarter during the year.
Could not be more proud of the Atlas team for their dedication and resolve this team stepped up to the challenge of a relaunch and executed our plan each quarter.
I'd also like to take a moment to thank our customers for enabling our success not only for their confidence in <unk>, but also their recognition of the value <unk> provides through our millennial focus and unique co branded marketing program.
Our strong exit to the year, along with favorable underlying trends and the aesthetic neurotoxin market positions us for continued growth and share gain in 2022.
It also gives us the confidence to introduce revenue guidance for the first time that reflects another year of above industry average growth.
For 2022, we expect to generate total net revenues between 143 and $150 million, which factors in a first quarter impact from the omicron variant and the return of normal market conditions for the balance of the year.
Building on our robust growth in the U S. We're moving forward on our international expansion in the third quarter of this year, we plan to commence the launch of Vascepa in Europe , the second largest neurotoxin market globally.
We've also made great progress in entering the Australian market one of the top tenants static markets in the world as we announced previously the regulatory authority recently accepted our and receive a submission, which we expect will lead to approval next year in Australia.
Our targeted customer Reengagement strategy. This past year successfully resulted and are capturing a greater share of the U S toxin market in 2021.
In the fourth quarter, we continued to build our customer base by adding 400, new accounts, bringing our full year number of new accounts to 1400. The addition of these new accounts, bringing our total account base since launch to more than 7000 purchasing customers.
The acceleration of our growth was largely due to the continued adoption of our co branded marketing, which is first in class and possible because of our cash pay business model through co branded marketing we offer a range of advertising options with the dual benefit of building brand awareness of <unk> and the customers' practice.
Our co branded marketing program grew considerably throughout the year.
During 2021, we ran more than 2300 individualized campaigns across the country, resulting in more than 1 billion media impressions for the year. This is more than four times. The number of campaigns. We ran in 2020 and 20 times the number of impressions.
The latest expansion to our co branded marketing the offering is streaming TV now customers can select from an even wider range of advertising options, which includes digital billboards and streaming television advertising avail.
Available to our top tier accounts. These customized television commercials showcase of participating practice and their injectors to a highly targeted demographic residing within a short radius of the practice.
Airing on streaming platforms, such as Hulu and networks like Bravo the.
Educate consumers about getting a quick in office treatment with Chabot and include a direct call to action for booking appointments on the spot using their smartphone and a QR code.
Co branded marketing drives both brand awareness and consumers in the practices.
Once consumers enter the practice our goal is to enroll them into the <unk> rewards loyalty program.
In the six quarters since we launched the program we have enrolled more than 270000 consumers and repeat treatments totaled over 120000, which demonstrates effective patient retention.
We also continue to over index against the younger demographic.
Nearly 40% of our user base and the loyalty program is represented by millennials and younger patients higher than the overall category of toxin users, where millennials and younger are currently estimated to represent less than 30%.
The millennial segment is the future growth driver for the aesthetic market and our marketing and digital capabilities are targeted to reach this underpenetrated demographic efficiently and effectively.
Before I turn it over to Roy for an update on our phase II extra strength clinical study I would like to take a few moments.
To outline the opportunity before us as we embark on this important trial.
To date, no neurotoxin has FDA approval for two strengths in the <unk> area.
Recently, we conducted a pilot survey of <unk> customers to gauge their interest in an extra strength dosage of <unk>.
We found that 86%, we'd like to have extra strength as part of their product offering. However, they expected the original strength 20 unit dose, which still comprise the majority of their use.
This clinical program will uniquely position us to capitalize on this opportunity by offering to strengthen <unk> original and extra strength, while optimizing pricing because of our cash pay flexibility.
With that I'll now turn the call over to <unk> to provide more color around the phase II study. Thank you David.
I am pleased to share with you that we've made a great deal of progress preparing for the extra strength <unk> program.
This is a phase III registration study and as such it will give us the flexibility to pursue our longer duration indication for glabella lines on label.
As I mentioned before since the launch of <unk>, we've learned a great deal about the product performance clinically.
And the feedback we get from clinicians is that <unk> is very precise what are the main safety concerns regarding clinical studies with toxins is around the potential for local and distant spread of the drug and we believe that our precise nature of your BOE makes it well suited for glabella lines indication at a higher dose.
For background.
In 2005, the <unk> published on the concept of increasing the duration of a toxins effect by increasing the dose and they were able to show in two separate publications that this work in both males and females.
Since then we've seen other companies showed that this concept applies to their respective toxins and we've also observed that there is a plateau to the duration of effect.
In our two U S. Pivotal studies, we found that should bolster ratios effect was 21 weeks when measuring a one point improvement on a validated <unk> line scale.
In our head to head phase III trial against Botox, we learned that two of those duration was approximately one week longer than botox at 20 units in the global region using that same one point improved measurement.
Our extra strength study is a double blind randomized prospective three arm design.
With respect to controls one of our potential competitors has been delayed in their approval. So we adjusted that design and we will be using to active controls 20 units of <unk> and 20 units of botox reconstituted on label.
These will be compared to the extra strength, which of all arm a 40 unit hyper concentrated <unk> formulation.
Five study sites have been selected in a total of 150 patients will be enrolled and followed for up to one year.
The study will not only look at duration of effect, but importantly, we'll also try to understand the potential clinical tradeoffs for patients when using longer duration formulations.
Since our last call trial protocols have been finalized monitoring and safety plans completed study sites are being activated and we have now received our approval from the institutional review board or IRB to proceed with the trial.
Filed all of our documents with the FDA using our open IND and remain on track to enroll the first subject this month.
We're very excited about our extra strength program and well on our way I look forward to providing you with updates on future calls back to you David.
Thank you Marie.
Before we move to the financials I'd like to take a moment to address the personnel news we issued this week.
On Tuesday, we announced the addition of Chris dose amount of focus to the <unk> leadership team as senior Vice President corporate development.
<unk> joins us from Olympus Corporation, where he led global M&A and business development for the past several years.
<unk> has extensive experience includes positions and business and market development corporate strategy and operations across a number of health care companies and we look forward to his contributions tablets as we continued to execute on our growth plans.
And today, we announced the retirement of Lauren Silvernail, our Chief Financial Officer, and Executive Vice President of corporate development effective at the end of May.
Lauren joined established shortly after I did in 2018 and together with our colleagues. She has helped build this company from a development stage organization to a fast growing and well funded commercial business.
During her tenure Lauren has assembled a high performing team. She has led the restructuring of our balance sheet and most recently helped spearhead the successful negotiation of a credit facility that bond Devil is through cash flow breakeven.
Lawrence experience and dedication have been instrumental in helping <unk> get to the strong position, we enjoy today and she has our sincerest gratitude.
The search for her successor is already underway and we wish her the very best in retirement with that I'll turn the call over to Laura <unk>.
Thank you David I really appreciate the kind words.
I have truly enjoyed my time here at analyst and the ability to work alongside.
So many great people, who are dedicated to the success of this company choosing to retire at the end of May was not an easy decision, but after nearly 20 years as a public company CFO I'm excited to begin a new chapter of my life I leave knowing the company is in a strong financial position with an outstanding leadership team to guidance and I.
Look forward to seeing Evelyn executed growth strategy to become a leading multi product static company now.
Now in the business.
I'd like to start by reiterating just how pleased David and I are with the performance of the team this quarter and a strong finish to 2021.
As he mentioned and as we reported in our pre release net revenues for the fourth quarter was $34 7 million up 68% compared to net revenue in the fourth quarter of 2020, and up 30% honest sequential quarter over quarter basis year over year sales were driven.
Primarily by higher volumes, and importantly, a higher average selling price.
<unk> with last quarter, the pricing environment for neurotoxin products in the U S remains quite healthy.
Our reported gross margin for the full year, 2021 was 79%, including receipt of a $25 5 million settlement payment.
Our adjusted gross margin for the year, excluding the amortization of intangibles and the settlement payment was 56, 3% at the high end of our guidance.
Selling general and administrative expenses on a GAAP basis for the fourth quarter of 2021 were $33 3 million up from $27 $4 million during the fourth quarter of 2020.
The majority of this increase was driven by variable spending including co branded marketing investments for the fourth quarter of 2021 SG&A expense on a GAAP basis included $2 6 million of noncash stock based stock based compensation expense we.
We are making solid progress towards profitability, our non-GAAP loss from operations in the fourth quarter of 2021 was $12 2 million. However, it's important to note that 2021 included a lower gross margin due to the payment of settlement royalties non-GAAP loss from operations excludes.
Stock based compensation revaluation of the contingent royalty obligation depreciation amortization and settlement payments.
We are also making strong inroads towards cash flow breakeven with slightly more than $4 million of cash used to operate the business in the fourth quarter, which was lower than the previous two quarters.
We ended the year with $146 million in cash compared to $108 million at September 32021, an increase of just short of $39 million and.
Contributing to this increase were $69 million of net proceeds from the first tranche of our credit facility offset by its scheduled final debt payment of $20 million can be Evelyn founders.
$6 million in net royalty payments and the cash used to operate the business with more than $4 million.
In the first quarter of this year, we made our second settlement payment of $15 million.
Just one final settlement payment milestone of $5 million to be paid out in the first quarter of 2023.
As announced in December we entered into a six year $125 million credit facility with pharma client advisors the.
The facility is structured in two tranches with 75% and $50 million, we borrowed $75 million tranche in the fourth quarter, which results in quarterly interest payments of about $1 $8 million. We expect this first $75 million tranche will be sufficient to fund evelyn through cash growth cash flow.
Breakeven removing the need for any further financing of our current operations. We have until the end of 2022 to borrow the second tranche of $50 million with no additional restrictions or covenants. This second tranche provides us with financial flexibility as we explore opportunities to expand our ports.
Palio.
Before I turn it back to David I would like to summarize our 2022 guidance, which remains unchanged. We continue to expect total net revenues of $143 million to $150 million, which assumes a minimal contribution from international markets.
We expect our full year adjusted gross margin to be between 58% and 61%.
Getting in September our settlement royalty rate will decrease significantly which will dramatically lift our fourth quarter adjusted gross margin to be in the range of 68% to 71%.
Full year non-GAAP operating expenses are expected to be between $135 million and $140 million, which consists mainly of continued investments in the growth of <unk> in the U S plus the new CEVA launch expenses in Europe and for modeling purposes, we suggest to use approximately 56.
<unk> shares for the year.
Back to you David.
Thank you Lawrence and.
In closing we are immensely proud of our strong finish in 2021 and confident we are a brand building strategy that can continue to generate robust growth and market share gains.
We finished 2021, achieving all time highs across lead metrics, including number of accounts and enrollment and repeat treatments and our loyalty program.
These strong trends drove record high revenue and market share for Hugo and create a favorable backdrop entering 2022.
Our focus this year is to continue driving these trends with investments behind training on the precision of our product co branded marketing to further create awareness of <unk> in the younger demographic and expansion of our dosing with the phase II extra strength study, we look forward to updating on our progress as the year unfolds with that we're ready to take quest.
<unk>.
Thank you and I'll be conducting a question and answer session if you'd like to be placed into question queue. Please press star one on your telephone keypad confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing star one.
One moment, please while we poll for questions. Our first question today is coming from Marc Goodman from SBB Leerink. Your line is in our lives.
Yes, good afternoon, everybody. So a couple of questions number one can you give us a sense of.
The market in general what you thought was in the fourth quarter and where you think your market share ended up in the fourth quarter.
And and just I think there was a comment about pricing remains healthy can you just give us a sense of.
Is that.
Were there any price increases across you know across the.
The products out there.
Has there been any anything going on in pricing just give us a sense there and then just lastly for first quarter.
Since fourth quarter was so strong and it's such a seasonally.
<unk> quarter, how do we think about first quarter relative to fourth quarter. I mean is it possible that this could be down from fourth quarter.
Do you expect some growth.
Hi, Mark Thanks for your questions.
If you start with the market I'll talk about fourth quarter and what that means for first quarter and then they come back to pricing.
The fourth quarter was very strong what we saw was continued strength in the aesthetic market in the fourth quarter was no exception to that our performance within the fourth quarter.
Obviously picked up a meaningful step and we do believe that a large part of that increase in revenue was driven by market share and.
And not necessarily market growth and I think thats, a continued trend youre seeing reflected in our guidance for 2022, where we've guided to market to the business growing at 43% to 50% when we assume the market is going to grow in the mid teens. So you have a guidance range, that's roughly three times higher than the market.
Growth expectation, so we expect our share gains to persist now at the same time there is seasonality to this market and you asked about the first quarter generally in the first quarter you expect to see a sequential step down of roughly 10 to 15 point offer the prior fourth quarter.
Of course this year you have a former kron some impact on top of that which we expect to be very minimal in the quarter. So youll have to factor for all of those at this time, we're not guiding on a quarterly basis. So we guided on a full year, we feel very confident in that guidance as far as pricing is concerned.
Pricing historically in this category has been very strong for manufacturers, you've seen consistency and price increases across the major players in last year was certainly not an exception you saw that in our earnings announcement, we mentioned that we gained on not just volume, but also on price year on year end 2021.
We expect in 2022 that will gain on price again, as well as volume and I do believe that we're in a position of strength as a manufacturer and we're in a very healthy market not just in these past two years, but that over time the reserve resilience of pricing in this market sits in the hands of the manufacturers.
We have seen price increase from one of the larger competitors in this space, we have not seen it yet this year across the board.
Thank you.
Thank you. Your next question today is coming from Louise Chen from Cantor Fitzgerald. Your line is now live.
Hi, Thanks for taking my questions and Lauren Thanks for all your contributions to Atlas and the industry, we will really Miss working with you. So my questions are as follows the 'twenty to 'twenty two guidance of $143 million to $150 million seems to assume very little upside from the fourth quarter revenue run rate. So what are the asami.
Machines in the 2022 revenue guidance that are holding you back from forecasting a stronger sequential growth off of fourth quarter I understand your comments on <unk> I was wondering if theres anything else.
And then what is your capital allocation strategy and then lastly can you provide more color on how you think about the sales potential of the international opportunity each analyst.
Great. Thanks Louise.
I'm going to take the first point around our guidance and then turn it over to Loren for your other two questions. Let's just start with our assumptions for the category as a whole for this year, we're assuming that the toxin market in 2022 for the U S will grow in the mid teens as you've seen in our guidance, we've given guidance of 43% to 50% growth year.
On year coming off of a year was 76% growth. So we are giving guidance that's roughly three times above what we expect the market to grow with which gives you the confidence of that we have in our business our ability to continue to gain share and at the same time to your earlier question about Q4 in <unk>.
<unk> a run rate off of that look this is our first time, providing revenue guidance and I just want to reiterate that we feel very confident in the numbers that we've given you for the year and we want to execute on those numbers and we will give you updates as we make progress great I'll turn it over to war great. Thanks, Luis for the kind comments with regard to capital allocation when we.
Look at the investment of a marginal dollar today the best return in 2022 for US is into the U S business.
So if you look at the non-GAAP operating expense investments, we're making this year of between 135 and $140 million. We have said previously that Europe is in the high single digit million dollars expenses. If you back that out you dropped down into the low $130 million range invest.
It into the growth of the U S business, our run rate coming off of the fourth quarter, we had a $31 million opex quarter, non-GAAP opex quarter, which would annualize at 124, you can see that the growth of expenses is far smaller.
Then in the U S than it is than the sales growth, which is very high approaching 50%. So our capital allocation is the growth of the U S business that said our long term ambition is to be a global aesthetics player and so we are funding that launch in Europe . This year.
And as far as lead your last one was.
Hi.
Last question I had for you was just how can you think about or how should we think about the international sales opportunity to adolescent or you're trying to reach out outside the U S. And you know what are those sales going to look like here yeah. This year because the launches in the second half those sales, albeit at a low single digit millions so they don't.
<unk> much to the sales total for the year, it's all driven off of the U S.
Thank you.
Thank you. Your next question is coming from Annabel <unk> from Stifel. Your line is now live.
Uh huh.
Hi, Thanks for taking my question and good.
On Louisa's comments, Florida, we're going to Miss you. Thank you for your contributions.
Great working with you and hopefully we'll see you soon again.
So separately.
If we can.
Trying to get I guess get a little bit of color on the epilepsy epilepsy.
Program.
I just wanted to get a sense of the productivity. So how much repeat ordering do you see claims familiar Alex partners versus your standard customers and just to sort of qualify it a little bit or other accounts, who are not part of this epilepsy program now seen I guess, what's around them as far as the individualized.
And localized content and promotion and wine to get in on this co branding initiative.
I guess the second question is a little bit more cost related and if you could just confirm for us.
Kansas correctly, the investment dollars that you put toward these marketing efforts are tied directly to the level of sales so that pretty much implies that you have a predictable margin at least on the downside and then room for leverage on the upside so effectively good clarity on the profitability. So whatever a dollar of spend you know how much it's going to be coming in terms of volumes.
And Ah Yeah, and I think you answered my guidance question. So I'll just stop there.
Thank you and all of those are all excellent questions.
Just for background for the group the Avalon program is our pricing program and what's unique about <unk> is not only do we offer a greater savings on Hugo as you purchase more product, but we reinvest some of those savings back into co branded marketing and that reinvestment is what's differentiating us.
<unk> to the market set and it's only enabled because of our cash pay focus that we're able to do that and to your point and about what we're seeing within <unk> is very impressive which is why we've continued to invest into it not only have we seen the number of <unk> accounts continue to increase as we look at our business through the quarters.
That accounts are wanting not only to participate in our co branded media benefits in our purchasing more to benefit from it but they are moving up to higher levels. As we continue to progress throughout the quarter. So if you sort of looked at slide right now and we showed you the trans they'd be moving up into the right and we're seeing that <unk> is variable.
Active and driving accounts to commit the greater portion of their market share to Chabot and I don't want to underestimate also the importance of the quality of Chabot, that's helping drive that their confidence in this brand is rising as they are using more of it in the co branded media is becoming a catalyst that's driving that younger generation into their practice.
We think that the <unk> program in totality makes us very unique in this category and this is just the very beginning of creating the brand impressions driving awareness of <unk> throughout that younger demographic and creating more leads for these accounts and that is something we're actively tracking on a regular basis and we see.
The spillover effect that it has in local markets. If you use one of our media vehicles. As an example last year, we placed over 1000 billboards around the United States through co branded media those billboards resulted and other neighboring accounts that would frequently drive by them seeing their competitor on it.
Billboard and they would be calling our representatives asking for how those accounts firm that benefit and in opening new doors for us not just within that geography, but even across the U S. This isn't just a physical presence social media is driving a large part of it.
Our accounts are very active on social media not just with their patients, but also their peers have an opportunity to see that and this is something thats unique to this category no. Other toxin has advertised directly in partnership with a customer in a targeted way within a local geography, and we believe that we're in the very early innings of scaling our co branded.
Media.
Over 2000 media campaigns as I pointed out earlier is a significant number but this market has a tremendous opportunity for growth and then lastly, it all comes down to the profitability of the investment and we have a global data and analytics group that scrutinizes, our investment down to each account level, we look at the media mix whether that.
As digital Billboard or now TV and the investment that goes behind it as you pointed out it is variable spend and spend that can become more efficient over time as our media purchasing tower rises and we've already seen that benefit as well and I think you saw that reflected in our overall operating expense discipline.
Last year as you saw we grew at a very high clip and still only grow our opex at roughly one fifth of the level of our topline growth and I think thats the efficiency that we strive to continue to drive towards which is to invest to build a brand long term, but to continue to have topline far outpace our expense line.
Okay.
Great if I could just follow up on one other question.
In terms of the pricing that you mentioned.
Where is that really coming from is it from lower discount then that you're offering because it seems that there's more.
People become.
You know higher orders are.
Part of this that looks.
No program.
Part of that benefit would be that they'd get greater discounts, but maybe I'm thinking about it incorrectly as far as Alex partners go theyre, not necessarily getting more discount, but they're getting more advertising dollars. So maybe you can just clarify that where the pricing is coming from.
Sure. So last year, we did take a price increase upon settlement and that price increase impacted across the customer group.
As you pointed out as customers continue to buy us co branded media.
I can improve their price point, yet relative to the prior year, it's still an increase and this year, you'll see the same impact as well and as you think about each of the tiers, both within <unk> and accounts that arc within Avalon, we're continuing to populate each of those tiers. So as accounts move up within <unk> and purchase more to earn CBS benefit.
We're spending a significant amount of time, adding new accounts at lower tiers that are not yet benefiting from all of the better pricing as well as <unk> co branded media. So it's a continuum, it's not a static customer base and that's reflected in the overall account growth. We ended 2020 with about 5600 accounts and we ended two.
<unk> thousand 21, with roughly 7000 accounts and so this market has over 30000 aesthetic customers and if you look at it through that lens, we have a long ways to go in terms of adding new accounts and making each of those accounts more productive I think what we're most impressed with now is that once we gain these accounts, we feel confident that we have.
A flywheel that can move these accounts from trialing the product to gaining confidence in the product and then experiencing the benefits through co branded media that keeps them sticky and I wouldn't underestimate the importance of our <unk> rewards program, which drove these consumers back into their offices.
One insightful point here in the fourth quarter alone 100000 consumers benefited from our.
<unk> rewards program, that's 100000 transactions that took place in the fourth quarter alone and we are only six quarters into this program. So our customers are seeing the benefits of our branding investment through advertising. They are also seeing the benefits of the investment we have on the backend and bringing these patients back to their practices.
Great. Thanks, a lot.
Thank you. Our next question is coming from Greg Fraser from Securities. Your line is now live.
Thanks, and good afternoon folks and Laura let me add my congrats on the retirement, it's been a real pleasure working with you over the years.
Thank you.
First question on the extra strength study is the intent that that study could support a regulatory filing assuming the study is positive.
And then just following up on the European opportunity how are you thinking.
That's qualitatively about the launch curve beyond this year.
Maybe you can comment on the key differences between the U S. European airports to consider it and how should we think about how much you'll have to spend over time to build a brand in Europe .
Thank you.
Okay.
Why don't I take the question on Europe , and I'm going to turn it over to Rudy to address the extra strength portion.
If you are comparing U S and Europe .
Compared to a bit of apples and oranges in all fairness, you've got a U S category Thats roughly $2 billion for neurotoxin and a euro market. That's the second largest market in the world that's valued at roughly $500 million so call it a quarter of the size.
At the same time, you have to factor for the pricing differential in Europe , its a lower average selling price and of course Europe isn't one market. That's many individual markets that comprise Europe . So the advantage. We feel we have is one two years of experience in.
Launching <unk> in the U S that we can apply.
To get Europe off to a fast start Fortunately under Chris <unk> leadership, we've hired great management in Europe that team is actively building out our plans and we feel very confident in our ability to create value in that market that being said Lawrence spoke to the single digit millions in investment we're going to make to launch in Europe and that should give you a feel for.
How we are investing into a market that has potential at the same time, we want to make sure that as we invest we see a strong return from that investment over time, you should really value. The U S. As the key driver of our long term revenue and growth, but Europe is going to play an important role both today and over time as we add additional assets into our port.
Folio and I'll turn it over to Rudy to address your question for the extra strength sure and with respect to the phase III the <unk>.
<unk> is once we have the phase II data, we have the optionality to continue to serve.
Registration process phase II data alone won't get you a label, but it gives us a good feel for what that data looks like and helps us make decisions as we go through the process.
Thank you.
Thank you next question today is coming from Douglas Tsao from H C. Wainwright. Your line is now live.
Hi.
Good afternoon, and thanks for taking the questions and wishing barnwell.
We shared all of her contributions and enjoyed working throughout the years.
Maybe as a starting point I'd just be curious on the extra strength.
Do you anticipate seeing these same benefits across all the potential uses of cubo ore.
Will it largely be seen.
Political dollars.
Sure.
That's a great question.
Everyone has looked thus far is the globe Bella.
So your question remains unanswered truly and I think we'll just find that there will be idiosyncrasies of as we go into different indications with a higher strength, we'll see different things, but one thing we want to keep in mind of course are there are certain areas, where if there is a problem of longer duration means that problems sticks around for long.
Longer so that's why you see most trying the global or regional first and and then just dipping their toes in other indications.
And Doug maybe I'll take additional color to really just in talking to doctors that are using extra striped out today in their daily practices. What we're finding is extra strength has value for them in particular patient types and in certain areas and they are continuing to use your original strength in other areas and that's where we really see the advantage of having both the original and.
The extra strength doses in the end, we do believe injectors want to have that optionality, just as consumers well around what the right dosing is for that given area and that's what makes us unique and pursuing both with our cash based strategy.
Okay, Great and then obviously I think lauren's comment she referenced herbalist, becoming a multi product aesthetics company.
Obviously you've spoken.
Recently that business development I'm just curious.
Yes.
We should interpret that as as reflecting greater urgency on the part of the company to queue brought in the portfolio.
Yes.
Well first off it's great to have Chris those onboard and Laurens done certainly a phenomenal job of leading corporate development on top of her CFO responsibilities, but theres a lot of value in having dedicated focus against it and as Loren said look we aspire to be a multi product aesthetic company overtime. If you look at our three <unk>.
Priority <unk>.
First to start with our singularity and focus it's about execution on the U S business and our launch on the international side at the same time, we are actively looking at ways to expand our product portfolio.
<unk> flagship brand will continue to be <unk> going forward in the U S. Our new <unk> outside the U S. But our next asset to the extent that it accelerates our flagship product creates a lot of value for our customers for consumers and of course for investors into the company in.
This is going to be an important part of our capital allocation strategy as we think about business development or corporate development going forward.
Okay, great. Thank you so much.
Thank you. Our next question is coming from Damian.
<unk> from Mizuho Securities. Your line is now live.
Great. Thanks for taking my questions.
So let me present my thanks and.
Grants to Lauren and then maybe just a couple of follow up ones on the market share sort of discussion from before.
One I'm wondering if you could maybe sort of breakdown millennials versus.
Nonetheless, although maybe more in terms of.
So what youre seeing there it looks like some of the medi spa sort of market versus say plastic surgeons <unk> cut.
Cosmetic dermatologist.
Then my second question.
Previously you kind of.
The ITC is Susan.
And Covid and all that you talked about some longer term market share assumption than trying to become the number two player in the market I'm. Just wondering now that you've had sort of stabilized to some extent you guys are growing nicely can you just give some maybe new perspective.
You see your market share evolving over time, and where do you see.
What would you be comfortable with in terms of your where your opinion relative to the other players, saying one or two years from now thank you.
Thanks for the questions.
<unk> I appreciate that first on on shares as you know not all manufacturers are public. So we don't have access to all the revenue figures as we close out each quarter, but we do look at what is available publicly.
The toxin market, we do index, our revenue relative to whats available publicly what you'd see if you did that analysis is that we've gained meaningful share I suspect we're trading in the single digit market share roughly the upper end of that range, but likely not a double digit market share just yet so as you think about this $2 billion.
Category, there is a significant opportunity in front of us as we continue to expand accounts and add new ones as well as grow accounts within our co branded media or <unk> program.
This year.
We've mentioned in the past, we don't provide too much color on the composition of our business.
Because of the importance of maintaining the privacy of that internally, but we have said that we do over index within the medical Spa channel, we do believe that medical spas in the United States represent roughly 60% of the total toxin value.
And by over indexing clearly that means we have a business that has a higher market share within that medical spa channels than we do outside of it.
We're continuing to see really great great strength, there I think our positioning is well suited for the customer types, that's looking to expand their patient base by targeting a younger generation and our advertising is effective.
And it's customized around these accounts and it replaces a significant portion of their advertising spend at a significantly lower cost based on our national purchasing power and then of course, the profitability profile of improving the profit in there number one procedure for their practices is a meaningful difference maker in these these practices overall.
And then long term, we haven't provided updated guidance as it relates to share I can tell you that we do expect to continue to gain share. We provided revenue guidance for this year and it reflects the growth this year largely coming from market share rather than market growth and we expect that to be a trend that will continue.
To build from as you know, we relaunched <unk> in the U S. Beginning in the second quarter of last year or so in our first three quarters, we significantly outpaced market growth and we expect to do that again this year and if you extrapolate that trend I think youre unify that we're in a very favorable profile going forward and we don't expect that to slow down.
Yeah.
Okay. Thank you.
Thank you we reached end of our question and answer session I would like to turn the floor back over to management for any further or closing comments.
Thank you operator, if you missed any portion of this call a replay will be posted to our website. Later today. Thank you to everyone for joining US. We appreciate your interest in <unk> and will be available if you have additional questions.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.