Q2 2022 Revance Therapeutics Inc Earnings Call
Okay.
Unknown Executive: Welcome to the Revance Therapeutics Second Quarter 2022 Financial Results and Corporate Update Conference Call.
Welcome to the Robbins Therapeutics second quarter 2022 financial results and corporate update conference call. At this time, all participants are in a listen only mode.
Unknown Executive: At this time, all participants are in a listen-only mode.
Ken Cacciatore: Your line is now open.
Unknown Executive: Following management's prepared remarks, we will hold a Q&A session.
Following managements prepared remarks, we will hold a Q&A session to ask a question at that time. Please press star followed by one one on your Touchtone phone as a reminder, this call is being recorded today Tuesday August nine 2022.
Unknown Executive: To ask questions at that time, please press star followed by 11 on your touchtone phone.
Unknown Executive: As a reminder, this call is being recorded today, Tuesday, August 9, 2022.
Unknown Executive: I would now like to send a conference call over to Jessica Serra, Head of Investor Relations and ESG for review.
I would now like to turn the conference call. This is Sarah.
Russia Relations and E S Chief for rent. Please go ahead.
Thank you Bella joining us on the call today.
Chief Executive Officer, Mark Foley President and.
And she was financial Officer told me Schulke.
During this conference call management will make forward looking statements, including statements related to the regularity hard partners and potential approval for doxey botulinum toxin injection.
And collateralized and in therapeutic indications potential indications for Archer route density.
RJ collection on open platform consumer preferences, the benefits to us.
And patients are our products and services.
Performance 2022 guidance expected cash runway strategic priorities, our capital allocation plan our markets.
But the opportunity for potential growth of our business strategy and operations and commercialization plans.
Actual results could.
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 differ from these statements include factors described in the section titled Risk factors in our quarterly report on Form 10-Q filed with each day August nine 2022.
<unk> undertakes no duty or obligation to update any forward looking statements as a result of new information future events or changes in that.
Expectations.
Jessica Serra: Please go ahead.
That I will turn the call over to Mark Foley Chief Executive Officer.
Sure.
Jessica Serra: Thank you, Bella.
Ken Cacciatore: Thanks.
Thank you Jessica good afternoon, everyone and thank you for joining our second quarter 2020 financial results Conference call.
Jessica Serra: Joining us on the call today from Revance are Chief Executive Officer Mark Foley, President Dustin Sjuts, and Chief Financial Officer Toby Schilke.
Ken Cacciatore: As Seamus said, thank you for the transparency here.
We're very pleased with our performance in the second quarter highlighted by our best <unk> quarter to date and solid account growth across our pillars and Opal relational commerce platform.
Ken Cacciatore: We really appreciated Mark, and team on the observations, but maybe I'll just try to follow up and see if I can get a bit of a different answer.
<unk> results reflect the continued success of our launch and also the strength and resilience of the facial injectable market.
Ken Cacciatore: Is there any sense, as you look at these observations, whether there would be a need to actually on-site inspect?
We're also excited to announce the launch of our AK Route density the first and only FDA approved dermal filler for dynamic carryall or lift line.
It is the latest innovation to our already taken election, which now includes four pillars that meet a broad range of consumer and practice needs.
Jessica Serra: During this conference call, management will make forward-looking statements, including statements related to the regulatory process and potential approval for doxybotulinum toxin A for injection.
Ken Cacciatore: And then maybe part of that, can you talk about whether we're engaged in label discussions?
As a result of the progress we've made in the first half of the year, including the Resubmission and acceptance of our BLA productive botulinum toxin for injection and our strong commercial traction we look forward to our September eight yesterday and the prospect of entering a new growth phase.
Ken Cacciatore: Just wondering if you'll give any more detail.
Ken Cacciatore: And then in terms of the rollout, I know previously we talked about wanting to be a bit selective as we rolled out DAXI with the hopeful approval.
As a reminder, the FDA designated our BLA as a class II Resubmission, which has a six month review period and includes a required re inspection of our manufacturing facility.
Ken Cacciatore: Mark, if you can give us a little bit of sense, is it going to be necessary for you to actually train a clinician?
As we've previously communicated we did not intend to provide details regarding our ongoing interactions with the agency. However in light of the information. We received this morning regarding the likelihood that the agency could satisfy deploy request on our manufacturing inspections prior to our produce today, we would like to.
Ken Cacciatore: Do they have to kind of get through a bit of a process?
Ken Cacciatore: Can you just talk about how you're going to come to roll this out?
<unk>, everyone with the regulatory update so that all investors so that all investors have access to the same information.
Jessica Serra: And provide a line of added therapeutic indications, potential indications for RHA density, the effects of RHA collection on the OPAL platform, consumer preferences, the benefits to us, practices, and patients of our products and services, our financial performance, 2022 guidance, expected cash runway, strategic priorities, and capital allocation plans, our markets and revenue opportunity, our potential growth and our business strategy, planned operations, and commercialization plans, our actual results, and the timing that could differ materially from those anticipated in such forward-looking statements as a result of these risk and risk guarantees.
Ken Cacciatore: And the 4,000 accounts that you currently have, if you can give us any sense about the volume that they do.
Jessica Serra: Factors that could cause results to be different from these statements include factors company described in the section titled Risk Factors in our quarterly report on Form 10-Q filed with ESG today, August 9, 2022.
First I'm pleased to report that the FDA completed their inspection of our manufacturing facility from July 11 to July 15.
Jessica Serra: Revance undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in its expectations.
Jessica Serra: With that, I will turn the call over to Mark Foley, Chief Executive Officer of Revance.
Ken Cacciatore: Is this a situation where these accounts are 50% of the botch line and toxin volume?
Mark Foley: Mark?
Ken Cacciatore: Or I'm throwing out a random number to see if you'll contextualize for us kind of the initial account base and what their current volume is in terms of botch line and toxin.
The corrective and preventative actions completed in response to the final observations from the previous form 483 that we received in July 2021 related to our pre approval inspections have been reviewed by the FDA and are considered closed.
Ken Cacciatore: Thanks so much.
Mark Foley: Thanks, Ken.
Mark Foley: Thank you, Jessica.
Lastly at the conclusion of the reinspection of our manufacturing facility in July the agency provided us with a 483 that included three observations for transparency and reference we've included a summary of the observations in our earnings press release and Form 10-Q.
Mark Foley: Good afternoon, everyone, and thank you for joining our second quarter 2022 financial results conference call. We're very pleased with our performance in the second quarter, highlighted by our best RHA quarter to date and solid account growth across our fillers and OPAL relational commerce platform. These results reflect the continued success of our launch and also the strength and resilience of the facial injectables market.
Mark Foley: So, you know, in regards to your first question, you know, do we expect with, the three observations that we summarized in the recent Form 43, do we expect a re-inspection?
A couple of points I would like to make about the three observations on form 483, we received on July 15 2022.
Mark Foley: We provided comprehensive responses to the observations.
Mark Foley: There's no additional data that, we're waiting on.
First it does not include any of the five observations that were outstanding from our previous 443 related to our pre approval inspection tool.
Youll recall that these observations were the focus of our Resubmission and as previously stated are considered closed.
Mark Foley: You know, it's probably not appropriate for us to comment exactly on how the FDA will receive the responses, but we feel very good in terms of, you know, what we were able to put in the responses and, you know, felt that we were able to provide a comprehensive response to the items that were identified.
Second we are confident in our responses, which we have already provided to the FDA and I'm proud of our team for the timely turnaround.
Mark Foley: And so we continue to believe that the September 8th to do the date is a good date.
We continue to expect a decision from the agency buyer producer date of September eight which is just one month away.
Mark Foley: And again, going back to kind of the comment earlier, it felt really good that we were able to close out the five observations from the original Form 483.
Mark Foley: On the label itself, again, you know, when we received sort of the CRL last time, we communicated at that point in time that we, everything else had already been wrapped up at that point in time. The only thing that was outstanding was the inspection of our facility.
Amy obtaining approval remains our top corporate priority for 2022, and our team is prepared and eager to launch our flagship drug product once approved.
Mark Foley: And so, you know, there's no new updates there.
Mark Foley: You know, we believe that the FDA label negotiations were already concluded.
Mark Foley: And so there's no update to that.
As a reminder, upon approval, we will have the opportunity to expand our access to the $3 $2 billion U S based on Injectables market, which according to the latest decision resources Group report includes Neuromodulators sales of $1 7 billion and dermal filler sales of $1 5 billion.
Mark Foley: The last one in regards to sort of the rollout of DAXI, and I'll hand this over to Dustin in a second, but, you know, we often sort of characterize the market as roughly 40,000 accounts of which, you know, we're targeting the top third as part of our prestige, strategy.
Mark Foley: So that's called, you know, 13 to 15,000 accounts really in 4,000 of those, but we're still in a subset of those accounts.
Mark Foley: And so we still have a ways to go.
Further according to the American Society of plastic Surgeons, Neuromodulators and dermal fillers remains a top two most performed minimally invasive aesthetic procedures.
Shortly the market has grown at high single to low double digits and has held up well against macroeconomic headwinds such as the economic recession in 2008 2009.
Even with the Covid pandemic in 2020, we saw a V shaped recovery in the following year when practices reopen.
Over the mid to long term the U S market as expected expected to grow at a compound annual growth rate of 8% to $4 $7 billion by 2026.
Given the current economic environment and questions surrounding its potential impact on facial injectables market I'd like to make a few comments.
Mark Foley: So I don't know that we're in a position to be able to comment in terms of the percent of the toxin market that those 4,000 accounts occupy, but I'll let him speak to sort of the rollout launch strategy in greater detail.
Dustin Sjuts: Yeah, thanks, Mark.
To date based on the accounts that we're calling on we haven't seen an impact on activity that would be beyond typical seasonality trends.
Youll recall that the second and fourth quarters are usually the busiest times of the year for procedures compared to the first and third quarters. However.
However, should macroeconomic factors begin to impact consumer spending in our target accounts, we take comfort in the resilience of the facial injectable market prior downturns and more importantly are uniquely positioned in the market versus other manufacturers.
First we are still on our launch phase with the Orange a collection.
Second we are bringing new innovations to the market, including today's launch of our AK Route density at the launch of our next generation Neuromodulator approved and third we have a differentiated go to market strategy that is focused on the prestige segment.
Now, let me turn to therapeutics.
The approval of Baxter botulinum toxin, a projection for glabella lines would allow us to unlock the opportunity and muscle movement disorders, we have a strong pipeline in this category with our completed phase III program for cervical dystonia, and our completed phase III program upper limb spasticity.
Clinical data in both of these programs demonstrated that the bottom line impact on a per injection efficacy and median duration of effect of up to 24 weeks.
We will be ready to file a supplemental BLA for cervical dystonia. Shortly after the FDA approval of our long acting neuromodulator and put all our lives.
As a reminder, cervical dystonia would be our entry point into the over $900 million U S. Muscle movement disorder category that is expected to grow to $1 4 billion in the U S by 2026.
In summary, we feel very good about the growth of our base business or expanding our AK collection and our pipeline in aesthetics and therapeutics pending approval at Baxter botulinum toxin a for injection for both dollar loans.
Dustin Sjuts: So as it relates to DAXI, we're going to follow the proven track record we've had for rolling out products with our preview program. What we'll do is we'll bring some of our providers here to our Nashville headquarters, where we're able to roll out a significant training program focused really on three areas.
With that I'll turn the call over to Doug who will cover our performance in the second quarter. Thank.
Dustin Sjuts: First, clinical.
Thank you Mark we're very proud to have delivered our best quarter of <unk> sales in Q2.
$25 5 million.
A 50% increase year over year. This brings our first half 2022, our HLA sales $46 3 million in cumulative sales since launch over $130 million. These are solid result, independent of a neuromodulator, telling us the RH as a product that stands on its own.
During the second quarter, we saw healthy demand and productivity across our accounts awareness and adoption continues to be driven by our targeted sales and marketing initiatives World class training and education programs and most importantly, I injector and consumer satisfaction at the quarter end, we have over 4000 accounts across our portfolio representing a straw.
Dustin Sjuts: As you know, we need to go through the clinical duration profile of DAXI from an efficacy perspective and a safety perspective, both across all of our clinical trials, phase three and phase two.
<unk> raised a practice partners all anticipating a <unk> date.
September eight pradaxa botulinum toxin for injection.
Mark Foley: We're also excited to announce the launch of RHA Redensity, the first and only FDA-approved dermal filler for dynamic perioral or lip lines. Redensity is the latest innovation to our RHA collection, which now includes four distinct fillers that meet a broad range of consumer and practice needs.
Dustin Sjuts: We'll also talk about our formulation.
We're also excited to continue to bring new innovation to market with the launch of our NK redemption.
Dustin Sjuts: I mentioned earlier, this is the first ever formulated product with a peptide that delivers, efficacy and duration with similar amount of API than other products on the market.
For density was approved by the FDA through our partner <unk> SA and is the first and only FDA approved dermal filler for both superficial dermal and dermal injection apparent override our lift lines. It has the most stretched compared to <unk>, three and four and a shallow us injection depth, allowing it to adapt to the highly dynamic movement.
Dustin Sjuts: So we'll go through that.
Dustin Sjuts: And then lastly, practice integration.
Dustin Sjuts: You've seen often it's, important for practices to understand not only the profile of how to inject the product, but how to actually integrate it into practice, how to charge and how to convince consumers that's the right product for them.
Dustin Sjuts: So we'll focus on all of that while also getting those key learnings through that period of time around the minor tweaks that injectors will make around kind of their recipe for exactly how they'd like to utilize DAXI in a real world setting.
Dustin Sjuts: And then we'll go broader into our practice partners, the RHA folks that have leaned in, with us at RHA, as well as with Opal.
Dustin Sjuts: And then just to comment on your final question, we felt like the prestige category represents roughly 50% of the aesthetic marketplace.
Dustin Sjuts: And so we feel very good that the foundation for the account that we're in will be a great, foundation to start for DAXI botulinum toxin type A projections.
Dustin Sjuts: Thanks so much.
He is.
Unknown Executive: Thank you.
But through density injectors can software fine tune the appearance of lip line, a challenging area to treat prior to the introduction of our density and.
Annabel Samimy: And your next question comes from the line of Annabel Samimy with TFL.
Annabel Samimy: Your line is now open.
And like the rest of the <unk> collection. The product is designed to closely resemble the natural Haa founded this gain results with natural and can last through 12 months after that.
Annabel Samimy: Hi.
I'd say now in the market, we have four dynamic formulations of pillars that offer a wide range of injection depth across the continuum of consumer needs.
Annabel Samimy: Thanks for taking my question.
Annabel Samimy: Just to follow up on the rollout, can you just confirm that the rollout that you plan, is it already full overlap with those accounts that are using the RHA filler?
<unk> density for fine tuning lifts are two for softening facial lines.
Three refine the soothing smoothing of wrinkles and folds and IHA four for natural volume for severe fold deeper deficit.
Annabel Samimy: Or are you reaching out to different accounts who may have not adopted the RHA filler but were very, very close, like KOLs or clinical trialists who had already used DACI?
Annabel Samimy: So I'm just curious about that.
Annabel Samimy: And the second question I have is, you know, we've all done surveys regarding reception to long-acting products, and clearly they're viewed as very differentiated, and they would have strong reception, strong penetration.
Annabel Samimy: But there's some views still in the market that just would still be niche, because if you drill down a little further, they may not use it as broadly as, you know, in their broad population as typical.
In fact, we are the only company to have introduced pork pillar to market within two years.
Annabel Samimy: So what are you finding when you drill down in your market research?
Consistent with the launch of our <unk> two three and four we completed preview our early training and education program with practice partners are very encouraged by the positive feedback. We've received injectors that redemption is different than anything that have had on yourselves, it's easy to inject and the ability to correct very fine lines around the mouth filled the void.
<unk> and existing products.
I believe the product is essential and excited to have her density complement their filler lineup.
Consumer feedback has also been very positive and loved to smooth the natural liquids redundancy.
<unk> density is also currently being evaluated in a clinical trial by our partner <unk> SA for the correction of info overall hollows, where tier trough. This is another delicate area of the face of challenging to treat and we are excited about the prospects of a potential label expansion of our <unk> density.
Turning to <unk>, we continue to make progress in driving adoption and building membership capabilities. During the second quarter gross processing volume or <unk> for Q2 was $166 million up 23, 2% year over year on a trailing 12 month basis.
<unk> told over $600 million at the end of Q2 at.
As a reminder, we believe <unk> is an important indicator of our future revenue potential in the U S aesthetics payment processing market and opportunity to exceed half a billion dollars per year.
We will continue to focus on new features and account growth for Opel not only deepen our relationships with our practice partners, but also unlock additional revenue potential for events.
Annabel Samimy: Do they receive it and expect penetration as broadly as what we're receiving in our surveys that we do probably in less detailed fashion than you do?
Summary, we feel really good about how our aesthetics portfolio is poised for additional growth, particularly with the addition of Dr. Botulinum toxin day for injection and Capella line. If approved our attention is focused on our September eight <unk> date, we are very much looking forward to introducing differentiated performance profile of our next generation neuromodulator to the U S.
Mark Foley: As a result of the progress we made in the first half of the year, including the resubmission and acceptance of our BLA for Daxubotulinum toxin A for injection and our strong commercial traction, we look forward to our September 8th bidufa date and the prospect of entering the new growth phase. As a reminder, the FDA designated our BLA as a Class II resubmission, which has a six-month review period and includes a required reinspection of our manufacturing facility.
Annabel Samimy: Thanks.
Dustin Sjuts: Great.
Fedex markets.
Mark Foley: As we previously communicated, we did not intend to provide details regarding our ongoing interactions with the agency.
Dustin Sjuts: Well, this is Doug, and I'll take those and Mark can add on as he feels appropriate.
Consistent with our approach to the launch of the <unk> collection, the commercial launch of taxi botulinum toxin acre injection will be preceded by a preview program with elite practice partners.
Dustin Sjuts: So on the rollout, you know, I'm not in a position to go specific, you know, position by position or injector by injector.
Dustin Sjuts: But our first and primary focus is on outcomes.
Dustin Sjuts: Who are going to be those that are going to help us through this process and focus on getting great outcomes?
Finally, we recently participated in the 2022 talks with International Conference. We presented data on taxi botulinum toxin a per injection that included new data demonstrating the unique properties of our novel Excipient peptide or.
Dustin Sjuts: And also those that have leaned in with us.
Our poster showcases how the positively charged excipient peptide combined directly to the core narrowed toxin and can enhance the binding of the neurotoxin to impact neuronal cell.
Dustin Sjuts: So it will be a combination of those groups.
Dustin Sjuts: It's important to look at how providers learn from each other in today's environment, both from a podium perspective, but also from a hands-on perspective.
The new data underscore dachsie botulinum toxin a for injections innovative formulation and our commitment to the advancement of research a neurotoxin in both aesthetic and therapeutic indications with that I will turn the call over to Toby to cover our second quarter financials. Thank you, Jeff and total revenue for the second quarter of 2022.
Dustin Sjuts: And also those that are willing to work with us on this journey of how do we maximize that practice integration and learn from those launches that have happened previously.
Dustin Sjuts: So it will be a combination of those groups.
Dustin Sjuts: As it relates to kind of our market research, we feel very good that the consumer uptick and the practice uptick of this product will be well received.
Mark Foley: However, in light of the information we received this morning regarding the likelihood that the agency could satisfy the FOIA request on our manufacturing inspection prior to our bidufa date, we would like to provide everyone with a regulatory update so that all investors have access to the same information. First, I am pleased to report that the FDA completed their inspection of our manufacturing, facility from July 11 to July 15. Next, the corrective and preventative actions completed in response to the five observations, from the previous Form 483 that we received in July 2021 related to our pre-approval inspection have been reviewed by the FDA and are considered closed.
Dustin Sjuts: It's not a unique value proposition in that it is the first product. It offers something different to botulinum toxin patients, both from an efficacy perspective and a duration perspective.
Creased, 51% from the same period in 2021 to $28 4 million.
Mark Foley: Lastly, at the conclusion of the re-inspection of our manufacturing facility in July, the, agency provided us with a Form 483 that included three observations.
Dustin Sjuts: All others are formulated more similarly to the same.
Dustin Sjuts: With this peptide and our clinical profile, we believe that whether they're getting toxins four times a year or, more likely, most of them getting toxins 1.8 times a year, this is going to have a value.
Primarily driven by increased sales of the <unk> J collection.
Mark Foley: For transparency and reference, we've included a summary of the observations in our earnings, press release in Form 10-2.
Revenue for the second quarter included $25 5 million of.
Our product revenue $1 $7 million of collaboration revenue and $1 $2 million of service revenue.
Mark Foley: A couple of points I would like to make about the three observations on Form 483 we received, on July 15, 2022.
Turning to operating expenses, we continue to execute on our corporate priority of disciplined cash capital allocation. In addition to our ongoing cash preservation measures.
GAAP operating expenses for the second quarter were $86 2 million compared.
Compared to $89 1 million for the same period last year, excluding depreciation amortization and stock based compensation, our non-GAAP operating expenses were 62.0 million.
An 8% decline over the same period last year due to lower SG&A expenses, and lower R&D costs related to clinical trial and regulatory activities for.
For the six months ended June 32022, non-GAAP operating expenses were down 7% compared to the same period last year.
As a reminder, we project R&D expense in 2022 to be primarily driven by manufacturing cost for <unk> botulinum toxin for injection, which according to GAAP accounting standards are expensed as a period cost until the drug product is approved.
As for our operating expense outlook, we maintain our previously announced GAAP and non-GAAP expense guidance for 2022.
Turning to our balance sheet, our total cash cash equivalents and short term investments as of June 32022, or $233 8 million.
Call that we enhanced our financial flexibility earlier this year with the closing of a $300 million note purchase agreement with <unk> capital, we issued the first $100 million note payable on the closing of the agreement in March 2022, pending the approval of vaccine botulinum toxin a for injection.
We will have the option to initiate issue another $100 million note until September 2023, and additional option of uncommitted borrowings of up to $100 million.
It's available upon commercial revenue target achievement.
We believe we have the cash runway into 2024 with the additional $100 million in committed notes available subject to the FDA approval of our neuromodulator.
Finally, <unk> shares of common stock outstanding as of July 29, 2022, or approximately $73 1 million was $80 7 million fully diluted shares excluding the impact of convertible debt.
And with that I'll turn the call back over to Mark.
Dustin Sjuts: If they get injected with Daxi Botulinum Toxin Type A for injection twice a year, that aesthetic look that they'll receive with Daxi will be different than anything that they have had with other toxins.
Thank you Tobey our commercial track record since launching two years ago continues to give me confidence in our people strategy and our innovative portfolio of products and services importantly, it also gives me confidence in our ability to successfully launch Dr. Botulinum toxin April injection, if approved and to begin realizing our therapy.
Potential post approval.
Mark Foley: First, it does not include any of the five observations that were outstanding from our, previous Form 483 related to our pre-approval inspection. You will recall that these observations were the focus of our resubmission and, as previously, stated, are considered closed.
I'd like to thank the clinical manufacturing operations and regulatory teams for the successful resubmission of our BLA and for their hard work in preparing for the recent re inspection of our manufacturing facility.
I'd also like to thank the commercial team for the excellent performance in the first half of the year.
Dustin Sjuts: And so we feel really good that it can add value across a variety of segments.
We look forward to the tremendous opportunities ahead and to updating you on our progress along the way.
Mark Foley: Second, we are confident in our responses, which we have already provided to the FDA, and I'm proud of our team for the timely turnaround.
With that I will now open the call up for questions operator.
Mark Foley: We continue to expect a decision from the agency by our due date of September 8th, which, is just one month away.
Mark Foley: Yeah, and I'll just build on to that, Annabelle.
Mark Foley: Obtaining approval remains our top corporate priority for 2022 and our team is prepared, and eager to launch our flagship drug product once approved. As a reminder, upon approval, we will have the opportunity to expand our access to the, $3.2 billion U.S. facial injectables market, which, according to the latest Decision Resource Group report, includes neuromodulator sales of $1.7 billion and dermal filler sales of, $1.5 billion.
Mark Foley: Further, according to the American Society of Plastic Surgeons, neuromodulators and dermal, fillers remain the top two most performed minimally invasive aesthetic procedures.
Mark Foley: So we certainly don't see this as a niche market.
Mark Foley: Historically, the market has grown in high single to low double digits and has held up, well against macroeconomic headwinds, such as the economic recession in 2008 and 2009. Even with the COVID pandemic in 2020, we saw a V-shaped recovery in the following year, when practices reopened. Over the mid to long term, the U.S. market is expected to grow at a compound annual growth, rate of 8% to $4.7 billion by 2026.
Mark Foley: Certainly it will have its place, and we've long talked about the nice thing about having a long-acting alternative is it gives practices and consumers a choice.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Mark Foley: Given the current economic environment and questions surrounding its potential impact, on the facial injectables market, I'd like to make a few comments.
<unk> Milo compile the Q&A roster.
Mark Foley: To date, based on the accounts that we are calling on, we haven't seen an impact on activity, that would be beyond typical seasonality trends. You'll recall that the second and fourth quarters are usually the busiest times of the year, for procedures compared to the first and third quarters.
Mark Foley: And so this doesn't need to be a one-size-fits-all, but it will provide, we believe, a valuable alternative for both patients and practices.
Mark Foley: However, should macroeconomic factors begin to impact consumer spending in our target, accounts, we take comfort in the resilience of the facial injectables market prior to downturns and, more importantly, are uniquely positioned in the market versus other manufacturers, us to unlock our opportunity in multiple movement disorders.
And our first question comes from the line of Seamus Fernandez with Guggenheim Partners. Your line is now open.
Mark Foley: We have a strong pipeline in this category with our completed phase three program for, cervical dystonia and our completed phase two program for upper limb spasticity. The clinical data in both of these programs demonstrated Daxibotulinum toxin A for injection, efficacy and median duration of effect of up to 24 weeks.
Mark Foley: And our market research suggests that both consumers and injectors identify the lack of duration as being the number one unmet need.
Mark Foley: We will be ready to file a supplemental BLA for cervical dystonia shortly after the FDA's, approval of our long-acting neuromodulator in glabellar lines.
Mark Foley: As a reminder, cervical dystonia would be our entry point into the over $900 million, U.S. muscle movement disorder category that is expected to grow to $1.4 billion in the, U.S. by 2026.
Great.
Mark Foley: And that's reported out at over 80% in both of those categories, which to us is kind of amazing that you've got these procedures that are being done millions of times a year.
And thanks for all the detail on the manufacturing and FDA update guys. So just a couple of quick.
Mark Foley: And despite that, they continue to express disappointment with the duration of the existing products.
Questions there.
Mark Foley: And so we believe that this will be a really nice add to the armamentarium of the practices and the providers and an alternative for consumers.
<unk> reviewed the additional observations and first off congrats on closing the five observations I'm sure that was.
Challenging and a great relief to see that closed out.
But on the three additional observations they strike us as as minor as we kind of read those observations but.
What did your consultants kind of say about those observations and can you just give us any color on your thoughts. It obviously seems like you feel quite good heading into.
Mark Foley: In summary, we feel very good about the growth of our base business, our expanding RHA collection, and our pipeline in aesthetics and therapeutics pending approval of Daxibotulinum toxin A for injection for glabellar lines.
The Paducah date on September eight and then the second question.
Just wanted to get a little bit of the color as we speak with physicians.
Some experts basically talk about their experience in clinical trials with taxi.
Citing a little bit of a different sort of spreading.
Dynamic versus what one might experience with botox. How are you guys. How do you think about that is that sort of a clinical advantage from your perspective.
Or is it something that.
It'll become a clinical advantage once the physicians are actually experience with the product.
That's all thanks, so much.
Okay.
Mark Foley: With that, I'll turn the call over to Dustin, who will cover our performance in the second quarter.
Mark Foley: And again, we don't expect it to be everything to everybody, but we do expect it's going to resonate and that there will be a large portion of patients and injectors that look to this as an alternative.
Thanks, Shannon so first off.
As you mentioned, we're very pleased with our ability to retire the five observations from the original 43 observations and to your point it was great.
Annabel Samimy: Okay, great.
Unknown Executive: Thank you.
Great work by the team to put the Resubmission package together to address sort of the outstanding items that were agreed upon with the agency, where we needed to re qualify that sell banks. So again, certainly heartening to us and the team to closeout. Despite observations, it's probably not appropriate for us to comment.
Unknown Executive: Thank you.
David Amsellem: And your next question comes from the line of David Amsellem from Piper Sandler.
David Amsellem: Your line is now open.
David Amsellem: Thanks.
On the three observations that we got this latest go round just because of where we are with the agency and as we said normally we wouldn't be commenting on these things, but given the.
Dustin Sjuts: Dustin?
Dustin Sjuts: Thank you, Mark.
David Amsellem: So just a couple of questions.
News that we received the morning that this morning that a redacted version of our form eight 443 may become public prior to our produce today. We thought it was important that all shareholders have the same information, but we feel very good about the responses that we pulled together they were complete they were constant comprehensive theres nothing else Thats outstanding related to the responses.
Dustin Sjuts: We're very proud to have delivered our best quarter of RHA sales in Q2, totaling $25.5, million, a 50% increase year over year. This brings our first half 2022 RHA sales to $46.3 million and cumulative sales since, launch to over $130 million.
Dustin Sjuts: These are solid results independent of a neuromodulator, telling us that RHA is a product that stands, on its own.
Dustin Sjuts: During the second quarter, we saw healthy demand and productivity across our accounts.
Dustin Sjuts: Awareness and adoption continue to be driven by our targeted sales and marketing initiatives, world-class training and education programs, and most importantly, high injector and consumer satisfaction.
And those three observations and we continue to feel very good that we will get a response from the agency on our application by the <unk> date of September eight.
Dustin Sjuts: At the quarter end, we have over 4,000 accounts across our portfolio, representing a strong, race of practice partners, all anticipating the PDUFA date of September 8th for Daxibotcha line of toxin aid for injection.
Dustin Sjuts: We are also excited to continue to bring new innovation to market with the launch of RHA, Redensity.
Dustin Sjuts: Redensity was approved by the FDA through our partner, Tiocaine SA, and is the first, and only FDA-approved dermal filler for both superficial dermal and dermal injection of periodontal rite or lip lines.
Dustin Sjuts: It has the most stretch compared to RHA 2, 3, and 4, and the shallowest injection depth, allowing it to adapt to the highly dynamic movement areas of the lip.
Dustin Sjuts: With Redensity, injectors can soften or fine-tune the appearance of lip lines, a challenging, area to treat prior to the introduction of Redensity.
Dustin Sjuts: And like the rest of the RHA collection, the product is designed to closely resemble the, natural HA found in the skin.
Dustin Sjuts: Results look natural and can last through 12 months.
Dustin Sjuts: With Redensity now in the market, we have four dynamic formulations of fillers that, offer a wide range of injection depths across the continuum of consumer needs. RHA Redensity for fine-tuning lips, RHA 2 for softening facial lines, RHA 3 for refined, smoothing of wrinkles and folds, and RHA 4 for natural volume for severe folds, deeper deficits.
Dustin Sjuts: In fact, we are the only company to have introduced four fillers to market within two years.
Terms of your second question regarding color on taxi and does it spread differently or anything like that we've long talked about sort of a staged rollout that we're going to go through but I would like to hand, it over to Dustin. So he can provide a little bit more commentary on that.
Seamus for your question I think if we look at the majority of the study work that was done with taxi within Capella in line and it was very very well received by those injector site. We've.
You've got to remind that taxes, the first ever unique formulation that has stabilized with our proprietary peptide.
Will act a bit differently than other products as it relates to the specific spreading or different characteristics relative to that I'm not aware of any data that's able to compare that if actually some of the data that we actually just released at toxins talks about the positive charge in the finding of the anchoring of how that peptide stays attached.
Two the botulinum toxin molecule once it's been reconstituted so do you ultimately think that theres actually a different effect that you would have more of a of an anchoring effect around those areas. Obviously as Mark mentioned this is a different product and it will take a little bit of time for the practices define their specific recipe.
We're really happy with the results that they have in clinical trials once they go into.
Real world setting they will like to tweak things based off that look that they have and so we look forward to providing them that opportunity with our preview program.
But all in all we've been very pleased with both the efficacy duration profile and the safety profile of <unk> across both wireline and then with our upper facial lines lateral canthal lines and ultimately for headlines phase II data.
Great. Thanks, guys.
Great. Thanks Joseph.
And your next question comes from the line of Ken Cacciatore with Cowen. Your line is now open.
David Amsellem: So just going back to the Form 483, I guess maybe I'll sort of take a different angle and ask you, Mark, if you were surprised at getting additional observations.
Thanks, Seamus said, thank you for the transparency here really appreciate it mark and team on the observations, but maybe I'll just try to follow up and see if I can.
David Amsellem: Was this something where you were caught flat-footed or was this something that you had an inkling might happen?
Get a bit of a different answer is there any sense as you look at these observations.
Whether there would be a need to actually on site.
Expect and then may be part of that can you talk about whether we're engaged in label discussions just wondering if you could give any more detail and then in terms of the rollout I know previously we talked about wanting to be a bit selective as we as we rolled out taxi with the hopeful approval Mark if you can give us a little bit of sense as it is.
It's going to be necessary for you to actually train a clinician that did they have to kind of get through a bit of a process, but can you just talk about how youre going to come to roll. This out in the 4000 accounts that you currently have if you can give us any sense about the volume that they do is this a situation where these accounts are <unk>.
The percent of the botulinum toxin volume or im throwing out a random number to see if youll contextualize for us kind of the initial account base.
And what their current volume is in terms of botulinum toxin. Thanks, so much.
David Amsellem: Just wanted to see if I can gain any insights there.
Thanks, Ken So in regards to your first question do we expect to be three observations that we summarized in our recent form 43, two week factory inspection, we provided comprehensive responses to the observation. There is no additional data that we're waiting on.
It's probably not appropriate for us to comment exactly on how the FDA will receive responses.
Responses, but we feel very good in terms of.
What we were able to put it in their responses and felt that we were able to provide a comprehensive response to the items right enterprise. So we continue to believe that the September eight produced to date is a good date and again going back to kind of the comment earlier I feel really good that we were able to close out the five observations from the original <unk>.
83.
On the label itself again, when we received sort of the CRM last time, we communicated at that point in time, we everything else had already been wrapped up at that point in time, the only thing that was outstanding with the inspection of our facility.
So there's no new updates there.
We believe that the FDA label negotiations were already concluded.
And so there is no update to that the last one in regards to sort of the rollout of back seat audience I'll hand, this over to Dustin in a second but we often sort of characterize the market as roughly 40000 accounts of which we are targeting the top third as part of our prestige strategy. So this call 13 net 15000.
That accounts for only 4000 of those there were still in a subset of those accounts and so we still have a ways to go.
I don't know that we're in a position to make the comment in terms of the percent of the toxin market that those 4000 accounts occupied but I'll, let them speak to sort of the rollout strategy in greater detail.
Thanks, Mark so as it relates to <unk>, we're going to follow the proven track record we've had for rolling out products with our preview program and we will do is we'll bring some of our providers geared to our Nashville headquarters, where we're able to rollout a significant training program focused really on three areas first clinical as you know we need to go through the clinical duration profile.
Dustin Sjuts: Consistent with the launch of RHA 2, 3, and 4, we completed PREVIEW, our early training, and education program, with practice partners, and were very encouraged by the positive feedback we've received.
Dustin Sjuts: Injectors said Redensity is different than anything they have had on their cells, it's, easy to inject, and its ability to correct very fine lines around the mouth fills the void in existing products.
Dustin Sjuts: They believe the product is essential and are excited to have Redensity complement their, filler lineup.
Dustin Sjuts: Consumer feedback has also been very positive. They love the smooth and natural look with Redensity.
Dustin Sjuts: RHA Redensity is also currently being evaluated in a clinical trial by our partner, Tiaxin, SA, for the correction of info-orbital hollows or tear troughs. This is another delicate area of the face that is challenging to treat, and we're excited, about the prospects of a potential label expansion of RHA Redensity.
Dustin Sjuts: Turning to OPAL, we continue to make progress in driving adoption and building membership, capabilities during the second quarter. Gross processing volume, or GPV, for Q2 was $166 million, up 23.2% year-over-year. On a trailing 12-month basis, GPV totaled over $600 million at the end of Q2.
Dustin Sjuts: As a reminder, we believe GPV is an important indicator of our future revenue potential, in the U.S. aesthetics payment processing market, an opportunity that exceeds half a billion dollars per year.
Steve from an efficacy perspective, and a safety perspective, both across all of our clinical trials phase III and phase II. We will also talk about our formulation mentioned earlier. This is the first ever formulated product with a peptide that delivers efficacy and duration with similar amount of API that other products on the market. So we'll go through that and then lastly practice.
Integration seen often it's important for practices to understand not only the profile have injected product, but how to actually integrated into practice, how to charge and how it how do I convince consumers at the right product for them. So we'll focus on all of that while also getting those key learnings through that period of time around the minor tweaks that objectives will make.
Around kind of the recipe for exactly how they'd like to utilize taxi in a real world setting and then we'll go broader into our practice partners.
Folks that have leaned in with US sorry, Jay as well as with <unk> and then just a comment on your on your final question. We don't like the prestige category represents roughly 50% of the aesthetic marketplace and so we feel very good that the foundations for the accounts that we're in will be a great foundation to start <unk> botulinum toxin.
Dustin Sjuts: We will continue to focus on new features and account growth for OPAL to not only deepen, our relationships with our practice partners, but also unlock additional revenue potential for REVANCE.
Dustin Sjuts: In summary, we feel really good about how our aesthetics portfolio is poised for additional, growth, particularly with the addition of Daxibotulinum toxin A for injection in Gabella line, if approved.
Dustin Sjuts: Our attention is focused on our September 8th PDUPA date, and we are very much looking, forward to introducing a differentiated performance profile of our next-generation neuromodulator to the U.S. aesthetics market.
Dustin Sjuts: Consistent with our approach to the launch of the RHA collection, the commercial launch, of Daxibotulinum toxin A for injection will be preceded by our preview program with elite practice partners.
Dustin Sjuts: Finally, we recently participated in a 2022 Toxin International Conference, where we presented, data on Daxibotulinum toxin A for injection that included new data demonstrating a unique properties of our novel excipient peptide. Our poster showcased how the positively charged excipient peptide can bind directly to the, core neurotoxin and can enhance the binding of the neurotoxin to intact neuronal cells.
Dustin Sjuts: New data underscored Daxibotulinum toxin A for injection's innovative formulation and, our commitment to the advancement of research of neurotoxins in both aesthetics and therapeutic indications.
Taipei projections.
Thanks, so much.
Thanks, Ken.
Okay.
And your next question comes from the line of Adam.
Both I mean, you with Stifel. Your line is now open.
Hi, Thanks for taking my question.
Just a follow up on the rollout can you just confirm that.
The rollout that you.
Plan is it already full overlap with those accounts that are using the RSA filler or are you reaching out to.
Different accounts, who may have not you may have not adopted the RSA seller, but we're very very close like kols or.
Clinical trial. That's go ahead already is.
So I'm just curious about that.
Second question I have is we've all done surveys.
Regarding reception to long acting products and clearly they're viewed as very differentiated than they would have strong reception strong penetration.
But there are some do you still in the market that would still be niche because if you drill down a little further.
They may not use it as broadly.
And their broad populations.
So what are you finding when you drill down on with your in your market research today.
Do they receive it expect penetration as broadly as were receiving in our in our survey is that we can probably.
Unless detailed fashion than you do thanks.
Toby Schilke: With that, I will turn the call over to Toby to cover our second quarter financials.
Great.
I'll take both of those and Mark can add on as it feels appropriate on the rollout.
Toby Schilke: Thank you, Dustin.
Toby Schilke: Total revenue for the second quarter of 2022 increased 51% from the same period in 2021, to $28.4 million, primarily driven by increased sales of the RHA collection. Revenue for the second quarter included $25.5 million of product revenue, $1.7 million of, collaboration revenue, and $1.2 million of service revenue.
Toby Schilke: Turning to operating expenses, we continue to execute on our corporate priority of disciplined, cash capital allocation in addition to our ongoing cash preservation measures. Gap operating expenses for the second quarter were $86.2 million compared to $89.1 million for the same period last year.
In a position to go specific physician by physician injected by injector, but but our first and primary focus is on outcomes, who are who are going to be those that are going to help us through this process and focus on getting great outcomes and also those that have leaned in with us. So it would be a combination of those groups. It's important to look at how providers learn from each other in today's environment both from a.
Toby Schilke: Excluding depreciation, amortization, and stock-based compensation, our non-gap operating expenses were $62.0 million, an 8% decline over the same period last year due to lower SG&A expenses and lower R&D costs related to clinical trial and regulatory activities. For the six months ended June 30, 2022, non-gap operating expenses were down 7% compared to the same period last year. As a reminder, we project R&D expense in 2022 to be primarily driven by manufacturing costs for daxibotulinum toxin A for injection, which according to GAP accounting standards are expensed as a period cost until the drug product is approved.
Toby Schilke: As for our operating expense outlook, we maintain our previously announced GAP and non-GAP expense guidance for 2022.
Toby Schilke: Turning to our balance sheet, our total cash, cash equivalents, and short-term investments as of June 30, 2022 were $233.8 million. Recall that we enhanced our financial flexibility earlier this year with the closing of a $300 million note purchase agreement with Ethereum Capital. We issued the first $100 million note payable on the closing of the agreement in March 2022.
Toby Schilke: And with that, I'll turn the call back over to Mark.
Toby Schilke: Pending the approval of daxibotulinum toxin A for injection, we will have the option to initiate issue another $100 million note until September 2023. An additional option of uncommitted borrowings of up to $100 million is available upon commercial revenue target achievement.
Mark Foley: Thank you, Toby.
Toby Schilke: We believe we have the cash runway into 2024 with the additional $100 million in committed notes available, subject to the FDA approval of our neuromodulator.
Mark Foley: Our commercial track record since launching two years ago continues to give me confidence in our people, strategy, and our innovative portfolio of products and services.
Toby Schilke: Finally, revances shares of common stock outstanding as of July 29, 2022 were approximately $73.1 million, with $80.7 million fully diluted shares, excluding the impact of convertible debt.
Mark Foley: Importantly, it also gives me confidence in our ability to successfully launch daxibotulinum toxin A for injection, if approved, and to begin realizing our therapeutic potential post-approval.
Podium perspective, but also from a hands on perspective and also those that are willing to work with us on this journey of how do we maximize that practice integration. It learn from those those launches have happened previously so it will be a combination of those groups as it relates to kind of our market research, we feel very good that the consumer uptick in the practice uptake of this product will be.
Well received it's got a unique value proposition that it is the first product offer something different to botulinum toxin patients both from an efficacy perspective, and a duration perspective, all others are formulated more similar to the same with this peptide and our clinical profile, we believe that whether theyre getting talks about four times a year.
Or more likely most of them getting talks at one eight times a year. This is going to have a value if they get injected with active botulinum toxin type a projections twice a year that aesthetic looked at bill received with vaccine will be different than anything that they have had with other toxin and so we feel really good that it can add.
Add value across a variety of segments.
And I'll just build on that Annabel. So we certainly don't see this as a niche market.
Certainly it will have its place that we've long talked about the nice thing about having a long acting alternative as it gives practices and consumers have choice and so it doesn't need to be a one size fits all but it will provide we believe a valuable alternative for both patients and practice in our market research suggests that both consumers and <unk>.
<unk> identified the lack of duration as being the number one unmet need and that's reported out at over 80% and both of those categories, which is kind of amazing that you've got these procedures that are being done millions of times a year and despite that they continue to express disappointment with the duration of.
The existing products and so we.
We believe that this will be a really nice add to the armamentarium of the practices.
The providers.
And in alternative for consumers and again, we don't expect it to be everything to everybody, but we do expect it's going to resonate in that there will be a large portion of patients and injectors that that look to this as an alternative.
Okay, great. Thank you.
Thank you.
And your next question comes from the line of David <unk> from Piper Sandler Your line is now open.
Okay.
So just couple of questions. So just going back to the.
To the form 43 is I guess, maybe I'll sort of take a different angle and SCE Mark if you were surprised at getting additional.
Observation.
Is this something where you were caught flat footed.
Something that you had an inkling might happen just wanted to see if we can gain any insights there.
David Amsellem: And then secondly, on RHA, you talked about consumer behavior and you're not seeing anything beyond seasonality.
And then secondly on Alright, Jay you talked about.
Consumer behavior, and Youre not seeing anything beyond.
David Amsellem: And I guess the question is, going forward, as the footprint of the product grows to the extent there's still these macroeconomic pressures, do you look at 4Q, which is the strongest season in this space, as potentially a trouble spot, if you will?
Seasonality and I guess the question is going forward.
As the footprints of the product.
Yes.
Rose to.
To the extent there is still these macroeconomic pressures.
Do you look at.
Four two.
Which is the strongest season in this space as potentially.
A trouble spot if you will.
Mark Foley: I'd like to thank the clinical, manufacturing, operations, and regulatory teams for the successful resubmission of our BLA and for their hard work in preparing for the recent re-inspection of our manufacturing facility.
David Amsellem: I'd like to get your thoughts on how you think that part of the year might play out given the backdrop that we've been talking about.
Mark Foley: I'd also like to thank the commercial team for the excellent performance in the first half of the year.
So to get your thoughts on.
Mark Foley: We look forward to the tremendous opportunities ahead and to updating you on our progress along the way.
How you think that part of the year might play out given the backdrop that we've been talking about thanks.
Mark Foley: With that, I will now open the call up for questions.
David Amsellem: Thanks.
Yeah. Thanks, David So first question, where are we surprised or disappointed I mean, clearly when you prepare for an inspection youre, hoping that New York had any observations right. So, but I will set up a team did an amazing job and again I come back to the fact that we closed out the five observations.
From the first form 483, so I think the team did a great job there as you'll see from the summary that we provided items went into related to <unk>.
Single development batches, where we didn't follow kind of a procedure or an S&P as youre talking about a single batch where that was the case.
We provided a very comprehensive responses there is nothing else Thats outstanding and so certainly everybody would have loved to have had any observations, but we like and it sometimes to AUM inspection.
And you are ready and sometimes they find things, but again I think our team did a great job and again I'll come back to a very proud and pleased.
With sort of the timeliness and the comprehensiveness of the response that was put forward.
Unknown Executive: Operator?
Mark Foley: Thanks, David.
In terms of consumer behavior.
There's a few things that are worth noting.
First of all going into Q4, we'll have to wait until we get closer to that to make any commentary on the Q4 side of things, but as Youre aware. This is a market segment that has proven to be fairly resilient through other economic downturn 2008, 2009 coming out of the pandemic. These are procedures certainly the facial injectables.
It starts to become a little bit more integrated into lifestyle and so they are less sort of.
Discretionary and more habitual for these patients and so.
Maybe it's that we're calling on a smaller subset of practices that were kind of lumping into this prestige category, but thus far.
Today, we've just not seen sort of a softening and even if you go back over time and you look at periods of time, where macroeconomic conditions did plan. It did have an impact but it was certainly more muted than in other discretionary spending items and as we pointed out before.
We're also in kind of a launch based with density having just launched on the chase side, we're still only 4000 accounts and.
For our neuromodulator, if approved that's going to give us yet another new innovation to bring into the market and so we're going to have some things that counterbalance any macroeconomic conditions should they tend to be more pronounced in Q4 going forward.
Unknown Executive: Thank you.
Mark Foley: So first question, were we surprised or disappointed?
Okay.
Okay. Thank you.
Mark Foley: I mean, clearly when you prepare for an inspection, you're hoping that you aren't going to have any observations, right?
Great. Thank you.
Yes.
Mark Foley: In terms of, you know, consumer behavior, you know, I think there's a few things that are worth noting.
And your next question comes from the line of.
Tim Lugo with William Blair. Your line is now open.
Unknown Executive: As a reminder, to ask a question, you will need to press star 11 on your telephone.
Mark Foley: You know, first off, going into Q4, we'll have to wait until we get closer to that to make any commentary on the Q4 side of things.
Thanks for taking my question.
Mark Foley: And as we pointed out before, you know, we're also in kind of a launch phase with, you know, Redensity having just launched on the R8J side.
And I guess regarding the third observation mentioned in the press release.
About not adding redundant place the storage of the working cell banks.
I think the bill.
<unk>.
440 degree mentioned.
Mark Foley: We're still only in 4,000 accounts.
Lack of having a working cell banks.
Remind us what all the issues with having a working cell banks how difficult is it to this we're done.
Right.
And.
The fact that maybe the working for a bank issue doesn't seem to be well.
Repeating.
Again, now that we can be a three new observation.
Can you just kind of talk.
Looking through this and clarify that with you.
Okay.
Sure Tim.
Mark Foley: And, you know, for a neuromodulator, if approved, that's going to give us yet another new innovation to bring into the market.
Mark Foley: And so we're going to have some things that counterbalance any macroeconomic conditions should they tend to be more pronounced in Q4 going forward.
We use sort of.
Third party redundant facilities to store and maintain some of our cell bank material or kind of more disaster purposes. This is a third party site that is already registered with us that we've already used and so the issue for number three with bat.
David Amsellem: Okay, thank you.
Unknown Executive: Great, thank you.
Tim Lugo: And your next question comes from the line of Tim Lugo with William Bear.
Tim Lugo: Your line is now open.
In our BLA filing we had not updated that site to include the newly qualified working cell banks. So we took care of that we did in our filing addressed. The addition of the new work in cell bank to that third party redundant storage facility, which is already under registration with us.
Tim Lugo: Thanks for taking my question.
Tim Lugo: And I guess regarding the third, observation mentioned in the press release about not adding a redundant site for storage of the working cell bank, I think the last form 43 mentioned the lack of having a working cell bank.
Tim Lugo: Can you kind of remind us what are the issues with having a working cell bank and how difficult is it to add this redundant site and the fact that maybe the working cell bank issue doesn't seem to be repeating again now that we can have these three new observations.
Tim Lugo: Can you kind of, I guess, talk me through this and clarify it as much as you can?
Okay.
So.
That sounds easy.
Easy enough.
Yes.
So let's think about it.
Active although none of this is.
When it comes to manufacturing.
Lack the kind of the.
On validated working cell bank was raised again does that.
Are we able to kind of jump ahead and think that that was all of those issues have been mitigated.
For the three.
Yes, that's what we tried to communicate in sort of our prepared remarks. So the lack of a qualified cell bank at the time. The FDA showed up the last time was part of one of the five observations and we indicated that after our type a meeting the FDA was clear in terms of what they needed to see from us and.
Order for us to resubmit, our BLA and provide them with the necessary information and ultimately what they wanted with the qualification of the new cell bank with three consecutive drug substance batches and one drug product that so we provided all of that information and our resubmission and at the recent inspection of our facility. They indicated that we have successfully.
<unk> addressed the five observations in the original form 483, so we feel very good that those have been closed out. So there is there's nothing open right now as it relates to the cell Bang for the qualification of the cell Bank B. The summary that we provided of the form 480 threes that were recently provided or the only things that are outstanding and again as I am.
Mentioned, we have provided.
All of the responses to those three questions with nothing but remains up and at least from our end.
Alright, Thank you for all that color you're very helpful.
Mark Foley: Sure, Tim.
Alright, Thanks, Tim.
Unknown Executive: Please stand by while we compile the Q&A roster.
Mark Foley: So, you know, we use sort of, third-party redundant facilities to store and maintain some of our cell bank material for kind of more disaster purposes.
Your next question comes from the line of Douglas Tsao from H C. Wainwright. Your line is now open.
Seamus Fernandez: And our first question comes from the line of Seamus Fernandez with Guggenheim Partners.
Mark Foley: This is a third-party site that is already registered with us that we, already use.
Hi, good afternoon, thanks for taking the questions just.
Going back to the <unk> 43.
Just wanted to clarify one point too it sounds like both these observations were related to a single law.
Seamus Fernandez: Your line is now open.
Mark Foley: And so the issue for number three was that in our VLA filing, we had not updated that site to include the newly qualified working cell bank. So we took care of that. We did, in our filing, address the addition of the new working cell bank to that third-party redundant storage facility which is already under registration with us.
But it sounds like this a lot was afforded with.
Seamus Fernandez: Great.
Mark Foley: Okay.
With this lot this locked to clarify or confirm was not used to satisfy the requirements of the original complete response letter.
Seamus Fernandez: Thanks.
Tim Lugo: That sounds, easy enough, you know, from a 10,000-foot perspective.
That's correct Doug.
These are two individual development box the one.
Seamus Fernandez: And thanks for all the detail on the manufacturing and FDA updates, guys.
Tim Lugo: I know none of this is easy when it comes to, manufacturing.
<unk> was awarded based on sort of the leap B summarized there. The other one was a separate development block neither of them used for any sort of clinical trials for sort of our validation process. These were into independent development loss.
Okay great.
Tim Lugo: But the lack that kind of unvalidated working cell bank was raised again, are we able to kind of jump ahead and think that that was all of those issues have been mitigated from the last Form 43?
And so they don't just to confirm again, they don't affect the BLA in any way or sort of the meat of the BLA. Besides just addressing.
These process issues, which I know are important but they don't have implicate broader implications for the fda's evaluation of the BLA.
Mark Foley: Yeah, that's what we tried to communicate in sort of our prepared, remarks.
Yes, I mean, I don't want to go so far as to speak on behalf of the FDA on that side of it but yes.
Mark Foley: So the lack of a qualified cell bank at the time the FDA showed up the last time was, you know, part of one of the five observations.
These were not lots of batches that were included in our validation of our.
New working cell bank. These were sort of one off observations related to drug substance single drug substance lots that were development lots.
Great. Thank you and again it wasn't going to ask you to speak for the FDA and I understand that sensitivity.
And then just maybe stepping back I just wanted to congrats on the performance of the <unk> line.
Your key competitor in the filler market didn't have nearly as good performance in the second quarter.
You were up I think 22% sequentially and they were sort of down.
Meaningfully on a year on year basis. So.
I'm just curious if you saw anything in the market I know there's been some concerns about the sort of macro environment, just given the broader sort of.
Economic environment I'm, just curious if you saw anything and is there anything that might have spoken to what your largest competitor saw.
Mark Foley: And we indicated that after our Type A meeting, the FDA was clear in terms of what they needed to see from us in order for us to resubmit our VLA and provide them with the necessary information. And ultimately, what they wanted was the qualification of the new cell bank with three consecutive drug substance batches and drug product batch. So we provided all that information in our resubmission. And at the recent inspection of our facility, they indicated that, we had successfully addressed the five observations in the original Form 483.
And I'll hit it at the beginning and then hand it over to Doug <unk> got any additional color to add to that really again, we're in launch phase so really our main.
Mark Foley: So we feel very good that those have been closed out.
So our focus is finding accounts that are willing to sort of try and evaluate the RH a filler line and that obviously trying to drive deeper penetration in those accounts and we're doing that through training and education.
Peer influencers that are sharing their experiences and outcomes and I think with the methodical approach that we've taken we're seeing nice uptake.
Archie collections of great collections, So I think they're seeing it as a product line that adding something thats incremental to what they have do to sort of the natural way that the product moves there and I also think it's a reflection of the strategy that we've taken we've taken a very deliberate strategy focused on prestige accounts.
We've got transparent pricing, we're trying to help make sure that they're getting the right outcomes and emphasis are profitable and value added service for us and so we did in the quarter. We just saw a sort of steady as she goes continuing to drive more account growth.
And a little bit deeper penetration, but does not know if you want to add anything to that.
The fact that it's a differentiated strategy not built around couponing and not built around programs.
At certain point in time, I think you heard the commentary from that organization around how they had programs in certain time to drive a certain behaviors and we have built our business on this product being unique.
<unk> formulated uniquely adding value to both the injector and the consumer and we're going to continue to leverage that and so we've got a nice opportunity in front of us with four different skus that allows us to go deeper into accounts, but also as Mark mentioned, we've got an opportunity to expand our account base. So we're in a very unique at <unk>.
Aren't positioned in some of those competitors and we feel good about.
To leverage that and so we've got a nice opportunity in front of us with four different skus that allows us to go deeper into accounts, but also as Mark mentioned, we've got an opportunity to expand our account base. So we're in a very unique and different position than some of those competitors and we feel good about that and poised to launch the.
Yes.
Portfolio.
Okay, great. Thanks, very much and congratulations on the progress.
And your last question comes from the line of.
Sure, It's bill Langer from Needham <unk> Company. Your line is now open.
Hi, good afternoon.
I guess I'll get in on the topic is your.
In terms of new form 43 observations now that you've submitted your responses.
<unk>.
Are you expecting any kind of feedback from the FDA to date.
Closed the issues out or provide additional.
Suggestive actions to rectify these observations.
It's certainly possible we could hear something back at this point, we've not heard anything back we've provided our comprehensive responses to the agency.
And it's quite likely that we won't hear anything back other than sort of the final decision on that project today.
And if you hear something back would that be something you would disclose or it depends on the nature of the response.
Yes.
I hate to say never again, our biases towards not providing ongoing interaction with the agency could imagine there is a variety of players at that takes and Thats our normal protocol.
Unfortunately at the break from that a few times due to the redacted form 43 that were put out there and our awareness. This morning that we would likely get another 443 put out there prior to reduce the date so.
Unless we thought it was something that significantly compromised or approve ability, we would not be commenting on that.
Okay Fair enough and then just a broader market question.
Based on the earnings reports of other toxin companies.
This is a market that.
And the last two or three quarters has significantly outpaced its usual.
High single digit to low double digit growth rates just curious.
How that changes your.
Pricing and bundling strategy for vaccines.
Yeah.
Yes. This is duston I think first of course excited right the more growth and more opportunities for all players here, especially one that has a first innovation in 30 years. So we feel really good about our capitalization on that opportunity.
And in any market, especially one that's growing innovation comes at a premium and so we feel good about our pricing strategy and we feel good about.
The premium opportunity that we have in launching something this innovative that provides value to both the injector.
And the consumers. So I don't think anything that we've seen really kind of changes of our launch strategy today, just the more the merrier, we're happy that the market continues to grow and we look forward to capitalize on that.
Got it and then one.
Last one you talked about your plans to.
The escalade for cervical dystonia.
But what about plans to re initiate the development of other therapeutic indications.
Specificity is.
This one but I know in the past you bought Wil talked about migraine and migraine indication.
Yes, I think we want to get through approval and into the market and then revisit that based on sort of our capital allocation and sort of where we want to focus our dollars, but clearly the filing of our escalate for cervical dystonia will represent our first foray into therapeutics and more particularly the muscle movement disorder category.
Which is sizable and we're encouraged about that so.
The nice thing about this is that these are markets that continue to grow and expand and we believe that the.
The promise of a long acting neuromodulator in the category will still resonate over time and so we'll get back to you is we feel we've got more clarity around what's the right time to.
<unk> Therapeutics program beyond cervical dystonia.
Okay.
Questions.
Great. Thanks Serge.
Okay.
Sure.
Our Q&A session and today's conference call. Thank you for your participation you may disconnect at this time.
Goodbye.
Seamus Fernandez: So just a couple of quick questions there.
Mark Foley: So there's, nothing open right now as it relates to the cell bank or the qualification of the cell bank.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
Seamus Fernandez: You know, as you've reviewed the additional observations and, you know, first off, congrats, on closing the five observations.
Mark Foley: The summary that we provided of the Form, 483s that were recently provided are the only things that are outstanding.
Seamus Fernandez: I'm sure that was, you know, challenging and a great relief to see that closed out.
Mark Foley: And again, as I mentioned, we have provided all of the, responses to those three questions with nothing that remains outstanding, at least from our end.
Ken Cacciatore: And your next question comes from the line of Ken Cacciatore with Cohen.
Unknown Executive: To raise your hand during Q&A, you can dial star 11.
Seamus Fernandez: But you know, on the three additional observations, they strike us as as minor as we kind of read, those observations.
Tim Lugo: All right.
Seamus Fernandez: But, you know, what are what did your consultants kind of say about those observations?
Tim Lugo: Thank you for all that clarity.
Seamus Fernandez: And can you just give us any color on your thoughts?
Tim Lugo: Very helpful.
Seamus Fernandez: It obviously seems like you feel quite good heading into the PDUFA date on September 8th.
Tim Lugo: Great.
Seamus Fernandez: And the second question, just wanted to get a little bit of the color, you know, as we, speak with physicians, some experts basically talk about their experience in clinical trials with DAXI, you know, citing a little bit of a different sort of spreading dynamic versus what one might experience with Botox.
Unknown Executive: Thanks, Tim.
[music].
Seamus Fernandez: How are you guys, you know, how do you think about that?
Douglas Tsao: Your next question comes from the line off Douglas Tsao from HSC Wainwright.
Seamus Fernandez: Is that, you know, sort of a clinical advantage from your perspective?
Douglas Tsao: Your line is now open.
Seamus Fernandez: Or is it something that, you know, it'll become a clinical advantage once the physicians are, actually experienced with the product?
Douglas Tsao: Hi, good afternoon.
Hum.
Seamus Fernandez: That's all.
Douglas Tsao: Thanks for taking the questions.
Seamus Fernandez: Thanks so much.
Douglas Tsao: Just going back to the 43, just wanted to clarify this one point.
Mark Foley: Thanks, Seamus.
Douglas Tsao: It sounds like both these observations were related to a single lot, but it sounds like this lot was aborted.
Okay.
Mark Foley: So, first off, you know, as you mentioned, we're very pleased with our ability to retire, the five observations from the original form 43 observations and to your point, it was, you know, great work by the team to, you know, put the resubmission package together to address sort of the outstanding items that were agreed upon with the agency where we needed to re-qualify that cell bank.
Douglas Tsao: So with this lot, this lot, to clarify or confirm, was not used to satisfy the requirements of the original complete response letter?
Mark Foley: So, again, it was certainly heartening to us and the team to close out those five observations.
Douglas Tsao: That's correct, Doug.
Yes.
Mark Foley: It's probably not appropriate for us to comment on kind of on the three observations that, we got this latest go-round just because of where we are with the agency.
Douglas Tsao: So these are two individual development lots.
Mark Foley: And as we said, normally we wouldn't be commenting on these things, but given the, you know, news that we received this morning that a redacted version of our form 43 may become public prior to our producing date, we thought it was important that all shareholders had the same information.
Douglas Tsao: So one was aborted based on sort of the leak that we summarized there.
Mark Foley: But, you know, we feel very good about the responses that we pulled together. They were complete. They were comprehensive.
Douglas Tsao: The other one was a separate development lot.
Okay.
Mark Foley: There's nothing else that's outstanding related to the responses to those three observations.
Douglas Tsao: Neither of them used for any sort of clinical trials for sort of our validation process. These were independent development lots.
Mark Foley: And we continue to feel very good that, you know, we'll get a response from the agency, on our application by the due date of September 8th.
Douglas Tsao: Okay, great.
Mark Foley: In terms of your second question regarding, you know, Colorado DAXI and, you know, does, it spread differently or anything like that, you know, we've long talked about sort of a staged rollout that we're going to go through, but I'd like to hand it over to Dustin so that he can provide a little bit more commentary on that.
Douglas Tsao: And so they don't, just to confirm again, they don't affect the BLA in any way or sort of the meat of the BLA besides just addressing these process issues, which I know are important, but they don't have broader implications for the FDA's evaluation of the BLA.
Dustin Sjuts: Yeah.
Douglas Tsao: Yeah, I mean, I don't want to go so far as to speak on behalf of the FDA on that side of it.
Dustin Sjuts: Thanks, Seamus, for your question.
Douglas Tsao: But yeah, I mean, these were not lots or batches that were included in our validation of our new working cell bank. These were sort of one-off observations related to drug substance, single drug substance lots that were development lots.
Okay.
Dustin Sjuts: I think if we look at the majority of the study work that was done with DAXI, it was, in gumbella lines, and it was very, very well received by those injector sites.
Douglas Tsao: Okay, great.
Okay.
Dustin Sjuts: We've got to remind that DAXI is the first in ever unique formulation that is stabilized, with our proprietary peptides, so it will act a bit differently than other products.
Douglas Tsao: Thank you.
Dustin Sjuts: As it relates to the specific spreading or different characteristics relative to that, I'm not aware of any data that's able to compare that.
Douglas Tsao: And again, I wasn't trying to ask you to speak for the FDA, and I understand that sensitivity.
Okay.
Dustin Sjuts: If actually some of the data that we actually just released at Toxins talks about the positive, charge and the binding and the anchoring of how that peptide stays attached to the toxin molecule once it's been reconstituted, so you ultimately would think that there's actually a different effect and that you'd have more of an anchoring effect around those areas.
Douglas Tsao: And then just maybe stepping back, I just want to congrats on the performance of the RHA line.
[music].
Dustin Sjuts: Obviously, as Mark mentioned, this is a different product, and it will take a little bit of, time for the practices to find their specific recipe.
Douglas Tsao: You know, your key competitor in the filler market didn't have nearly as good performance in the second quarter. You know, you were up, I think, 22% sequentially, and they were sort of down meaningfully in a year on your basis.
Dustin Sjuts: We're really happy with the results that they have in clinical trials.
Douglas Tsao: So, you know, I'm just curious if you saw anything in the market.
Dustin Sjuts: Once they go into real-world settings, they'll like to tweak things based off of the look, that they have.
Douglas Tsao: I know there's been some concerns about the sort of macro environment just given the broader sort of economic environment.
Dustin Sjuts: And so we look forward to providing them that opportunity with our preview program.
Douglas Tsao: I'm just curious if you saw anything, and is there anything that might have spoken to what your largest competitor saw?
Dustin Sjuts: But all in all, we've been very pleased with both the efficacy, duration profile, and the, safety profile of DAXI across both traveler lines, and then with our upper facial lines, lateral canthal lines, and ultimately forehead lines phase two data.
Mark Foley: And I'll hit it at the beginning and then hand it over to Dustin to see if he's got any additional color to add.
Dustin Sjuts: Great.
Mark Foley: I can say that really, again, we're in launch phase, so really our main, you know, sort of focus is finding accounts that are willing to sort of try, and evaluate the RHA filler line and then obviously try to drive deeper penetration in those accounts.
Yes.
Dustin Sjuts: Thanks, guys.
Mark Foley: And we're doing that through training and education, you know, peer influencers that are sharing their experiences and outcomes.
Dustin Sjuts: Great.
Mark Foley: And I think with the methodical approach that we've taken, you know, we're seeing nice uptake.
[music].
Unknown Executive: Thank you.
Mark Foley: And, you know, the RHA collection is a great collection, so I think they're seeing it as a product line that's adding something that's incremental, to what they have due to sort of the natural way that the product moves there. And I also think it's a reflection of the strategy that we've taken.
Mark Foley: We've taken a very deliberate strategy focused on prestige accounts where, you know, we've got transparent pricing.
Mark Foley: We're trying to help make sure that they're getting the right outcomes and that this is a profitable and value-added service for us.
Mark Foley: And so, you know, we did in the quarter.
Mark Foley: We just saw sort of steady as she goes, continuing to drive more account growth and a little bit deeper penetration.
Dustin Sjuts: But Dustin, I don't know if you want to add anything to that.
Dustin Sjuts: No, I think you hit the fact that it's a differentiated strategy not built around couponing, and not built around programs at certain points in time.
Dustin Sjuts: I think you heard the commentary from that organization around, you know, how they had programs at certain times that drive certain behaviors.
Dustin Sjuts: And we have built our business on this product being unique, uniquely formulated, uniquely adding value to both the injector and the consumer. And we're going to continue to leverage that.
Dustin Sjuts: And so we've got a nice opportunity in front of us with four different SKUs that allows us to go deeper into accounts.
Yes.
Dustin Sjuts: But also, as Mark mentioned, we've got an opportunity to expand our account base.
Yes.
Dustin Sjuts: So we're in a very unique and different position than some of those competitors.
Yes.
Dustin Sjuts: And we feel good about that and poised to launch the full product.
Yes.
Dustin Sjuts: Okay, great.
Yes.
Douglas Tsao: Thanks very much.
Douglas Tsao: Congratulations on the progress.
Douglas Tsao: And your last question comes from the line of Serge Belanger from Edelman Company.
[music].
Serge Belanger: Your line is now open.
Serge Belanger: Hi, good afternoon.
Serge Belanger: I guess I'll get in on the topic du jour in terms of new form 43 observations.
Sure.
Serge Belanger: Now that you've submitted your responses, are you expecting any kind of feedback from the FDA?
Serge Belanger: Do they close the issues out or provide additional suggestive actions to rectify these observations?
Yeah.
Serge Belanger: It's certainly possible we could hear something back.
Serge Belanger: At this point, we've not heard anything back.
Yes.
Serge Belanger: We've provided our comprehensive responses to the agency.
Serge Belanger: And, you know, it's quite likely that we won't hear anything back other than sort of their final decision on the fiduciary.
Serge Belanger: And if you hear something back, would that be something you would disclose or it depends on the nature of the response?
Serge Belanger: Yeah, I mean, you know, I hate to say never again.
Serge Belanger: Our bias is towards not providing ongoing interaction with the agency.
Serge Belanger: I can imagine there's a variety of flavors that that takes and that's our normal protocol.
Serge Belanger: Unfortunately, I had to break from that a few times due to the redacted form 43 that were put out there in our awareness this morning that we would likely get another form 43 put out there prior to our fiduciary date.
Serge Belanger: So, you know, unless we thought it was something that significantly compromised our approvability, we would not be commenting on that.
Serge Belanger: Okay, fair enough.
Serge Belanger: Then just a broader market question. Based on the earnings reports of, other toxin companies, this is a market that at least in the last two or three quarters has significantly outpaced its usual high single digit to low double digit growth rates.
Serge Belanger: Just curious how that changes your pricing and buttling strategy for DAXE.
Serge Belanger: Yes, sir.
Dustin Sjuts: This is Dustin.
Dustin Sjuts: I think first, we're excited, right?
Dustin Sjuts: The more growth, the more, opportunity for all players here, especially one that has the first innovation in 30 years.
Dustin Sjuts: So we feel really good about our capitalization on that opportunity.
Dustin Sjuts: And in any market, especially, one that's growing, innovation comes at a premium.
Dustin Sjuts: And so we feel good about our pricing strategy. We feel good about both the premium opportunity that we have in launching something this innovative, that provides value to both the injector and the consumer.
Dustin Sjuts: So I don't think anything we've seen really kind of changes our launch strategy today.
Dustin Sjuts: Just the more, the merrier.
Dustin Sjuts: We're happy that the market continues to grow, and we look forward to capitalizing on that.
Serge Belanger: Got it.
Serge Belanger: One last one.
Serge Belanger: You talked about your plans to submit the SPLA for cervical dystonia.
Serge Belanger: But what about plans to re-initiate the development of other therapeutic indications? Upper limb spasticity is the obvious one.
Serge Belanger: But I know in the past, you've also talked, about migraine and migraine indications.
Mark Foley: Yes, Serge, I think, you know, we want to get through approval and into the market and, then revisit that based on sort of our capital allocation and sort of where we want to focus our dollars.
Mark Foley: But clearly, you know, the filing of our SPLA for cervical dystonia will represent our first, foray into therapeutics and more particularly the muscle movement disorder category, which is sizable and we're encouraged about that.
Mark Foley: So you know, the nice thing about this is that these are markets that continue to grow, and expand and we believe that the, you know, promise of a long acting neuromodulator in the category will still resonate over time.
Mark Foley: And so, you know, what we'll get back to is we feel we've got more clarity around what's, the right time to, you know, advance the therapeutics program beyond cervical dystonia.
Mark Foley: Yeah, thanks for taking questions.
Serge Belanger: Great.
Unknown Executive: Thanks, Serge.
Unknown Executive: That's our Q&A session and today's conference call.
Unknown Executive: Thank you for your participation.
Unknown Executive: You may disconnect at this time.
Unknown Executive: Goodbye.
Unknown Executive: The conference will begin shortly.