Q4 2022 Evolus Inc Earnings Call
Greetings and welcome to the fourth quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now my pleasure to introduce your host David Erickson, Vice President Investor Relations. Thank you David you may begin.
Thank you operator, and welcome to everyone joining us on today's call with me today are David Motors, any president and Chief Executive Officer, Rudy Abelard, Chief Medical Officer head of R&D, and Sandra Beaver Chief Financial Officer.
Prepared remarks today will include forward looking statements within the meaning of the United States Securities Laws and management May make additional forward looking statements in response to your questions.
We're looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations or financial performance of <unk>.
Tailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K.
Early reports on Form 10-Q, and current reports on form 8-K.
Actual results may differ materially from those expressed in or implied by the forward looking statements. The company undertakes no obligation to update or review any estimate projection or forward looking statement.
Additionally, todays discussion will include non-GAAP financial measures, which should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC and on our Investor Relations website at <unk> Dot com.
Lastly, following the conclusion of today's call a replay will be available on our website at <unk> dot com and with that I'll turn the call over to David.
Thank you David.
The successful results of the fourth quarter of 2020 to clearly demonstrate the significant progress we are making to deliver on our long term strategy to become a leader in the performance beauty market.
In 2022, we achieved many important accomplishments that enhance our position to continue our growth and expand market share.
In 2022, we grew total revenue, 49%, reaching the top end of the guidance we introduced in January of that year.
For the second year in a row <unk> was the fastest growing toxin in the aesthetic market and then 2022, we cross into a double digit share position.
During the year, we completed enrollment in our phase two extra strength study leading to the relief are very encouraging interim data earlier this year.
In 2022, we expanded our international operations beyond Canada and began our expansion into the European region with a successful launch in Great Britain.
And importantly throughout the year, we reduced our use of operating cash as we continue on our path to reaching profitability.
All of these achievements set the stage for a strong and exciting 2023, where we expect to continue delivering above market growth and generating total net revenue of $180 million to $190 million.
This keeps us on track to reach total revenue of $500 million by 2028, a 22% compound annual growth rate.
We continue to expect non-GAAP operating expenses to be between 145 and $150 million and remain committed to reaching positive non-GAAP operating income by year end without the need for any additional capital to fund our current operations.
Okay.
We will continue expanding our international presence with the launch of the receiver in Germany and Austria.
We plan to enter additional European countries in 2023, and we are actively planning for a launch in Australia, where we have recently received marketing approval.
In addition, we look forward to completing our phase II extra strength study and presenting final result in the second half of the year.
Now I'll get into some of the details.
Our final results for the fourth quarter and full year 2022 were unchanged from the preliminary results we shared on January 18th.
As reported quarterly revenue grew 26% year over year and was up 29% on a quarter over quarter or sequential basis.
Both metrics are multiples above the estimated industry growth rate and clearly demonstrate that <unk> continued to gain market share.
We finished the year with strong momentum with total revenue growing 49% to $149 million and our key metrics, reaching new highs.
For example in the fourth quarter, we added 700, new accounts for a total of more than 2500, new customers in 2022.
This brings the total number of new accounts purchasing chabot since launch to more than 9500.
Importantly, the reorder rate among our customers remains about 70%.
Aided by the switch your Tox promotional campaign, we kicked off in the third quarter enrollment.
Enrollment in the <unk> rewards consumer loyalty program grew more than 75% in 2022 to reach $1 5 million members.
Our switch your Tox program has proven to be effective.
We estimate the program added a percentage point to our market share in the back half of the year.
Switch your talks with the single biggest driver of our new patient volume during that period and resulted in greater commitment from our customers, who dedicated higher volumes of their business through Chicago and this momentum continues.
Looking at the health of the toxin market underlying U S aesthetic market conditions remained strong and the demand for Neurotoxins continues to grow at a healthy rate.
Shifting attitudes about health and beauty broader acceptance of aesthetics and growing consumer purchasing power are continuing to fuel this market expansion.
According to a recent Mckinsey study the younger demographic is twice as likely as the older demographic to adopt injectables, which plays to our strength as a company uniquely focused on a younger consumer with the brand and digital platform designed to appeal specifically to that audience.
In 2023, we expect to grow at least twice as fast as the aesthetic neurotoxin market and we will drive outperformance by adding as many as 2000, new customers increasing share in the new accounts, we added in 2022 and deepening our relationships with our more tenured and established customers.
As we approach 10000 accounts, our penetration is only now approaching one third of potential U S. Customers. This represents a considerable future future opportunity to broaden our reach with our differentiated value added business model.
As customers gain confidence using <unk>, they increased their purchasing quantities and unlock greater benefit through our loyalty program such as co branded marketing.
These actions aided by our expanding consumer loyalty program and a meaningful contribution from international markets will drive total revenues of $180 million to $190 million in 2023.
Our projected growth this year puts us on a trajectory toward achieving $500 million in sales in 2028 through a combination of a fundamentally strong aesthetic neurotoxin market continued market share gains in the U S and meaningful contribution from international market.
Let me break this down for you.
We estimate the U S aesthetic neurotoxin market totaled approximately $2 2 billion at the end of 2022.
And assuming historical annual growth rate will grow to approximately $4 billion or roughly double by the end of 2028.
If we only maintain pace with the market that would represent one third of the growth needed to reach our target.
The next third is achieved through market share gains the majority of which is captured in this year's guidance.
Lastly, as we continue to grow our international footprint, we believe sales outside the U S will represent the remaining third which will ultimately comprised 15% to 20% of our total revenue.
Overall, we believe this $500 million target as both realistic and achievable and it's important to note that it assumes no label expansion for jumbo and receiver nor any acquisition.
Now turning to our international business.
We are continuing to gain traction with new received on Great Britain, which was launched in the fourth quarter of last year.
Initial interest continuing to build and we are generating broader awareness through educational sessions led by key opinion leaders.
Our brand and entire approach. This static market is helping us establish a distinctive presence in Europe , and we will use the strategy in Germany, and Austria. The second biggest talk to market in that region, where we are just now launching.
The addition of these two countries means we are now off we are now able to offer to receive up to approximately 40% of the roughly $500 million European market.
In 2023, we plan to continue broadening our European presence as part of a phased expansion.
In January we are pleased to report the receipt of regulatory approval to begin selling new CEVA in Australia, and we're actively planning for a product launch Australia is one of the largest market opportunities per static neurotoxins outside the U S and our expansion there as well as in Europe will be a key driver of our sales growth over the next five years.
I would now like to turn the call over to Roy to discuss our phase III extra strength results, including some additional data about the control arms brewing. Thank you David.
As recently reported <unk> extra strength phase II study continues to progress and is on track to be completed no later than June of this year.
The plan is to then present the topline data at one of the major medical conferences in the second half of 2023.
At <unk>. This past January the first interim data was released and Dallas cosmetic surgery and Medicine meeting later this week the data will be presented once again, along with the control results.
As a reminder, the data so far has demonstrated no difference in safety profile between the CFO extra strength 20, <unk> or 20 units of botox with 88% of adverse events being rated as mild and no serious adverse events reported.
The time required for patient to return back to their baseline glabella scale score and the duration of at least a one point improvement on that same scale as assessed by the investigator are similar at this time in the study with the <unk> 40 units extra strength armed them.
Construction of duration of $26 one weeks.
In the controls 20 units as you follow lasted 21 six weeks 20 units of Botox $21, one weeks, which is in line with previous studies.
Global aesthetic improvement was also assessed by the investigators to determine at the time it took a subject to return back to their baseline appearance.
This results paralleled the <unk> line scale findings.
<unk> extra strength arm lasted $26 three weeks <unk>.
<unk> to $21 six weeks in 'twenty as CFO and 21 weeks in the <unk> unit Botox arm.
And with that I'll turn it back to you David Thank.
Thank you Rory.
Overall these interim results are significant step forward in our strategy to provide a longer duration treatment option.
With a product that offers a unique precision profile and natural looking result.
We believe having the ability to offer the flexibility of either option using the same commercially approved chabot vial physicians ablative very favorably and is underpenetrated and growing market.
Before I turn the call over to Sandra I'd like to briefly discuss the recent legal matter involving many tox and our partner Daiwa as reported on February 10, the Central District Court in Korea ruled in favor of <unk> and our long standing.
Trade secret dispute with de Wille.
Courts ruling has no impact on our operations. Despite an inaccurate article, suggesting otherwise in fact as part of our 2021 settlement with Medi Tox, we resolved all litigation with them and specifically agreed that any pending or future litigation between <unk> and day, one would not affect <unk> ability to manufacture.
At export jugal foreign receiver to analysts, nor our ability to sell it and with that Andrew over to you.
Thank you David.
I would like to start by reiterating how pleased David and I are with the performance of the Evelyn team and a strong finish to 2022.
We successfully grew sales well in excess of the market and at the same time, we carefully managed operating expenses, which came in at $135 7 million and a low end of our $135 million to $140 million guidance.
It also helps us required a steady decrease in our operating cash usage each quarter.
US on a clear path to achieving profitability in 2023.
As a result, we continue to be confident that we have sufficient cash to achieve profitability and we do not have any expectations on the need for additional capital.
Turning to the numbers.
As we reported in our pre announcement global net revenues for the fourth quarter were $43 6 million up 26% compared to net revenue in the fourth quarter of 2021.
And up 29% on a sequential quarter over quarter basis.
Included in sales this quarter was <unk> 7 million of sales to Canada, which are reflected at service revenues on the P&L.
Sales into Great Britain, which are included in product revenue right minimal this quarter.
Year over year sales were driven primarily by higher volume and a modestly higher average selling price.
The pricing environment for neurotoxin product in the U S continues to remain choppy.
As anticipated in our Q3 results our fourth quarter performance benefited from participation in the switch your Tox program with consumer redemption is driving increased demand and enabling recognition of revenue deferred from Q3. This is reflected in a reduction of our accrued revenue contract liability on the balance sheet as compared to Q3.
<unk>.
Our reported gross margin for the fourth quarter was 67, 7% and our adjusted gross margin, which excludes the amortization of intangibles of 69, 4%.
This sequentially higher margin rate over the third quarter reflects a material decrease in our settlement royalty obligations, resulting from the conclusion of the royalty to Abbvie on September 16, and the decrease of the royalty to Manny talk to a mid single digit rate calculated on global net sales.
This brings to an end all royalty obligations to abbvie and lowers our royalty rates in many tax until it expires in 10 years.
In 2023, you should expect our adjusted gross margin rate to be in the range of 68, 71%.
Reported selling general and administrative expenses for the fourth quarter were $36 7 million compared to $34 8 million in the third quarter.
This increase was related primarily to greater commercial activities supporting our revenue growth.
This quarter SG&A expenses included $2 4 million of noncash stock based compensation.
Our GAAP operating expenses for the fourth quarter were $54 3 million compared to $51 8 million in the third quarter non.
non-GAAP operating expenses for the fourth quarter were $35 7 million compared to $33 7 million in the prior quarter.
For the full year non-GAAP operating expenses were $135 7 million.
Our non-GAAP loss from operations in the fourth quarter.
That $4 million compared to $13 3 million reported in the third quarter.
As a reminder, non-GAAP operating expenses excluding product costs.
Both non-GAAP operating expenses and non-GAAP loss from operations excludes stock based compensation expense revaluation of the contingent royalty obligation depreciation and amortization and IP R&D expense.
Turning to the balance sheet, we ended the year with $53 9 million in cash compared to $65 6 million at September 32022 for a difference of $12 million in the fourth quarter net cash used for operating activities was $8 8 million, which was nearly 50% lower than the amount used in the <unk>.
Third quarter and the continuation of the favorable trends you've seen this year as a reminder, our final settlement payment of $5 million was paid during the first quarter of 2023, which satisfies our total settlement milestone obligations.
In our pre announcement in January we committed to reaching profitability in the fourth quarter of 2023, which we define as a positive non-GAAP operating income.
I'd like to take a moment to illustrate the progress we made during 2022, it gives us confidence in achieving that profitability golf.
Our GAAP cash flow statement includes several settlement related activities and other non operating items that weren't excluded better represent our cash consumption and clearly indicate a more favorable trend our reported use of cash from operations. In 2022 was $84 9 million with 57% of this related to settlement and royalty payment.
IP R&D and interest expense.
The remaining 43%, which is $36 6 million demonstrates continued progress toward achieving positive operating cash flows and continued to decrease quarter over quarter throughout 2022 from a high of $14 6 million in Q1 to allow a $2 1 million in Q4.
We remain confident in our ability to manage our operating expenses during 2023 and as I noted at the beginning of my comment we continue to expect that our existing cash balance will fund our current operations through cash flow breakeven, eliminating the need for additional capital.
As a reminder, we continue to look at corporate development opportunities to expand our portfolio and leverage the strong infrastructure that we have built.
To fund development activity, we have the $50 million tranche available under the <unk> line of credit.
To provide additional flexibility we intend to file a shelf registration statement in an ATM along with our Form 10-K by Tomorrow morning.
These filings are intended to ensure we have the financial capacity to pursue business development opportunities expeditiously as they arrive there is no intention to utilize these funds for working capital our ongoing business operations, given we fully expect our existing cash balance is sufficient to fund our current business to breakeven and beyond.
<unk>.
Before I turn it back over to David I would like to summarize our 2023 guidance.
Total net revenues to be between 180 and $190 million.
Over 90% of which will come from sales in the U S and the balances from international market are.
Our quarterly revenue assumptions assume a return to historical seasonal revenue pattern.
And adjusted gross margin to be in the range of 68% to 71%.
Full year non-GAAP operating expenses to be between $145 and $150 million, which consist mainly of continued investments in the growth of <unk> in the U S plus new CEVA launch expenses internationally.
And achieving positive non-GAAP operating income in the fourth quarter.
Other modeling assumptions include quarterly interest expense of $2 6 million and a full year weighted average shares outstanding of approximately $57 million back.
Back to you David.
Thank you Sandra.
In closing we are building a performance beauty company uniquely positioned to enable us to create a modern edgy brand for the younger generation.
Eight quarters since the relaunch we've made significant strides in building <unk> brand awareness to number two in our category among consumers.
Through data and training, we have established <unk> as the precise neurotoxin among injectors and we're seeing the benefits of that positioning reflected in our double digit market share in the category.
These achievements give us strong confidence in our ability to outpace underlying market growth by a factor of two and 2023 and to grow our revenue revenues organically to $500 million by 2028 in.
In addition, as we've discussed in the past, we intend to complement our existing product offering with potential acquisitions to extend and deepen our reach across our core markets utilizing our unique capabilities and go to market strategy.
We have built a strong growth platform from which we can launch additional opportunities and we fully expect to leverage that platform over time.
Lastly, thanks to the focus and excellent execution of our team we have delivered on our guidance provided a clear view of our path to profitability instead achievable long term financial goals with that we're ready to take questions.
Yes.
Thank you we will now be conducting a question and answer session. If you'd like to ask your question. Please press star one on your telephone keypad.
Information tone will indicate your line is in the question queue.
Press Star two if you'd like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Thank you. Our first question is from Annabel <unk> with Stifel. Please proceed with your question.
Hi, all thanks for taking my question.
Few I guess first on.
The long acting toxin.
Extra strength Thomson data just wondering about the response that you're getting the data you reported on this extra strength.
Obviously some of this was driven by.
Jack your experiences themselves or experimentation, rather and I'm just wondering the extent switch this data could potentially accelerate off label use and is there any different thoughts too.
The reception of the long duration toxin in the market.
With.
Some of the feedback you're getting in some of the.
Data, that's being generated by the competitors. Thanks.
Okay.
I'll take the first question Annabel.
Okay.
When we first presented the data I think it surprised a number with the clinicians we've certainly seen for instance, a one point improvement being marked at about 21 weeks and this has come in I'm sorry at about 24 weeks to 23, 5% to 24 weeks so coming in at 26 weeks certainly as a comparable data set where we are in terms of feedback right. Now is early what we're.
Are seeing is a lot of interest we're seeing clinicians are basically asking have you reformulate it too to kind of reproduce what you did in the studies. So we're getting right now kind of the early calls of clinicians who are starting to play with it in their clinics on their patients who were trying to do a side by side to the other products.
Okay great.
Sorry go ahead no go ahead.
No I was just wondering in terms of like any further thoughts to a long duration market and the demand for long duration products now that you're seeing from the reception from the clinicians.
I mean, I'll take a first kind of shadow it really hasnt changed from our first representation to you.
It's been pretty consistent there is a great deal of interest in having a longer duration product in their portfolio in that number that keeps coming up is about 86% with like the optionality to have a longer duration, but again when we ask that second question in terms of tell us how you deploy the original strength versus the longer duration the.
Are you still goes with the with the original strength for a variety of reasons. One is just trying to learn their way through it to see what the product does and doesn't do.
And then.
A number of folks don't necessarily want patients coming in only.
Twice a year they like the cadence of four months, so that they can actually utilize other products and other touch points.
And the only thing I'd add to <unk> of course as you know it's early days there has been a lot greater interest in what we anticipated around understanding our extra strength formulation and the data and of course, we have our medical affairs team, that's able to to address those questions, but what's encouraging here is of course.
As you know that we have the optionality of using the current original strengths and then for those that are interested in understanding the extra strength. That's another option that's available to them in their clinical practice and so Rick.
Regardless of how the mix plays out over time, I think we're generating that data was very insightful for our customers.
Okay, and if I could just ask.
And one more follow up related to this I'm sure.
Your 500 million guidance assumed.
Inc.
Our constant market share after this year and standard market grows but.
No contribution from other products or is this when this extra strength. So what do you think the extra strength might add.
Uh huh.
Assume that and you got it.
Yes, it's a great question to your point our guidance currently assumes the existing 20 unit dose will be the dose both in the U S as well as internationally.
Do assume some further share gains beyond this year.
Though that.
That share gain increase starts to moderate as the product gets into the maturity cycle.
And as you pointed out we don't assume.
Any potential benefits of adding additional assets in the bag or even the extra strength or the market potentially growing at a faster clip over time. So I think those are those are parts that we haven't factored in there of course.
We believe that we're in control of the guidance. We provided so we focused on what we have on label is the key driver of that growth.
Okay, great. Thank you.
Thank you. Our next question is from Marc Goodman with SBB. Please proceed with your question.
So can you help us understand the O U S kind of rollout over the next lets say 24 months and just what countries come on and how you expect revenues to kind of ramp.
And just give us a sense, Canada historically has been a little choppy you book some revenues in a quarter that you don't are we done with that and now Canada is going to be pretty consistent on a quarter to quarter basis.
Sure Good question Mark.
Look the international business as you pointed out it's been a very small part of the story.
It's been only Canada up until recently as we started to book U K and now Germany next we've captured 40% of the European market. So we're starting to build.
Some sizable amount of business there in the international and that will continue to grow I think we'll provide more color as we.
Have further clarity around our timing for expansion into the next market. Just so you understand the backdrop behind that we look at this expansion internationally in phases.
Clearly getting the international business represents 15% to 20% of our overall revenue by 2028 is a significant idea and getting each of those markets right finding the right partners as we enter them as.
As well as executing on our launch strategy with the team that we've deployed in Europe . Those are all important ideas. So we're going to continue to be patient take our time enter the biggest markets likely first and then expand into some of the smaller markets, but the advantages you know that we have is we're the first neurotoxins to be approved through the central body.
In Europe , which means we have access to every country in that market. So we do have the ability to enter those markets thoughtfully over the next couple of years, but we'll give you more color on what's next after Germany and Austria.
After we get that launch off the ground really entire flying out here tomorrow to Germany for that launch meeting thats going to take place. So it's an exciting time to be entering another big market for us and to have the Australian approval earlier than we had anticipated. So we continue to execute on our plan and we will give you updates as we make progress.
And then just a comment on Canada, yes.
<unk>, Canada.
We do believe will continue to grow and as a result will be more consistent in terms of the revenue that we see I think you saw the big greater consistency last year in terms of booking Canada revenue than you did the prior year and Youll continue to see that be the cases, we get into this year, where we expect more consistency of their ordering each quarter.
Yes.
Okay. Thanks.
Thank you. Our next question comes from Douglas Tsao with H C. Wainwright. Please proceed with your question.
Hi, good afternoon, thanks for taking the questions I guess David.
Certainly.
The focus of our conversation around business development has sort of picked up steam at least from my perspective. So how are you thinking.
About that from a timing standpoint.
And how is the sort of market in terms of opportunities and how close are you to potentially adding another product to the bag. Thank you.
Yes, thanks for the question Doug.
Corporate development as a priority for the company I think we've we've proven that we can execute with our flagship product here in the U S.
And this team has the capacity in the field.
With a strong base of customers to support the next asset. So clearly that's something that we're putting energy into.
We remain of course.
Dilution sensitive.
<unk>.
Have a bias towards commercial stage assets or near commercial stage assets.
It's something we're very active on Fortunately.
We're in a unique position there is only one neurotoxin in the market today.
That has a singularity and focus and that gives us the opportunity to see a lot of assets that companies would like to see partnered with us and so we'll continue to be selective we're not under a timeline in terms of a date, we need to execute something but it is a priority and it has been in all fairness for.
Some time, so that has that hasnt changed but we do think that the market environment is evolving around us which creates opportunities that may not have been there before.
And David how much.
Now you would that potentially unlock for us though itself not just add obviously, a new product ads revenue, but would that help jumpstart cubo.
From a market share standpoint, potentially take it above your sort of current 2028 guidance.
Yes, Doug.
I have a view that each product, especially if youre launching a product has to stand on its own before the combination of products results in something greater than the individual parts. So I think to answer that question, we would have to be more specific which unfortunately I can't get into that level of detail on this call but.
Getting a management team that can launch product and execute well with them high quality products that are durable. These are assets that you believe 510 years from now consumers will continue to come in and get treated with those products in high growth market. I think those are the fundamental elements that we look for in an asset that we'd want to bring into the portfolio.
<unk> and then clearly having a customer base that is approaching 10000 is meaningful with the relationships, we built and the brand that we currently have in the market.
Okay, great. Thank you. Thank you.
Thank you. Our next question is from Louise Chen with Cantor Fitzgerald. Please proceed with your question Hi.
Hi, Thank you for taking my question. So I had a few for you first one I wanted to ask you is do you see that.
One 8% of that $500 million of sales in 2028 with international and.
I also wanted to ask on seizing our revenues for 2023 should it follow sort of the typical aesthetic kind of sales or because you are on a growth trajectory.
Sequentially increase every quarter and then for your guidance for 2023, how much of that is international versus U S. Thank you.
Louise Thanks, so much for the question I guess I'll take those in order as it relates to the $500 million guidance. Yes, we did say, we anticipate roughly 15% to 20% of that revenue to be generated outside of the US So you did hear that correctly and that is our expectation.
As it relates to 2023 phasing, we see us returning to typical aesthetic market seasonality as opposed to being on a ramp curve associated with our initial launch which really was mostly in 2021. So that is a higher fourth quarter expectation and likely a higher second quarter with some lower performance in the third quarter.
Is the typical seasonality we see in this market. So that is certainly what we are anticipating coming into 2023 and our guidance.
As for your third question International in our 2023 guidance, we have not broken out international as it relates to 2023 revenue. So we will continue to launch across those markets.
In <unk>.
In Europe , as well as evaluating Australia, but we expect that the majority of our revenue call. It over 90% to continue to come from the U S.
Thank you.
Thank you. Our next question is from Nevada tie with BNP Paribas Exane. Please proceed with your question.
Hi, Thanks for taking my questions.
So I know it's early days, but do you have updated thoughts on the competitive environment, including Bihar launch late March and my second question is just follow up.
So ABB from Nokia.
Wholesale.
Could we assume potentially higher acquisition size 50 million from.
The ATM filing thank you.
Yes, maybe I'll take the first one and hand, it over to Sandra to take the second.
Yes, I think you're right it's early days.
We really don't view it as competition, the fact that diversifies entering the market, we see it as an opportunity.
As you know with the extra strength data, it's raising the exercise entrants is raising a lot of questions around it and that in itself creates an opportunity an opportunity with accounts that are considering potentially switching neuro tox and options, which opens the door for Hugo because 90% of the business is not currently with our brands.
And also an opportunity to educate around the relationship between dosing and duration.
That of course gets handled through our medical affairs team. So in aggregate the entry of <unk> I think creates a lot of interest creates opportunity and likely leads to further market expansion, which we think is which is interesting but it is early days hard to assess.
What that could mean over time, but it certainly makes it interesting in this space.
No Matt Thanks for the question as it relates to the ATM filing, but we do still have access to the pharma online.
$50 million constant expires at the end of this year as of December 31, 2023, and we did up until the middle of last year also have the shelf, although without an ATM.
As we look to our 10-K filing for this year.
Logical and efficient time for us to consider introducing a new shelf, along with which we could evaluate whether or not we wanted to include an ATM. So I wouldn't read anything into that about any potential acquisitions. At this time really it's a matter of the efficiency and ensuring we have gradually.
Acceptable flexible availability of capital should we need it.
For the right opportunity.
Not any anything else that you should consider in terms of why we filed back.
Thank you.
Thank you. Our next question is from Serge Belanger with Needham <unk> Company. Please proceed with your question.
Hi, good afternoon.
Questions for the.
The first one just on overall market trends it doesn't sound like there was any macro headwinds in the fourth quarter.
If you're seeing similar trends in the first two months of the year so far.
And second question around the yugo product with Tivo.
It's also up for approval in the coming months. So it could be a second entrant in the U S market.
Curious how you view that.
That product relative to <unk> and <unk>.
Its presence in Europe , it's kind of giving you a preview of what it could do in the U S.
Yeah.
Great. Thanks for the questions.
Yes, you are right in the fourth quarter of last year.
We saw minimal impact from the economy, we did hear a little bit of noise from some customers, but as you said overall was a strong quarter in terms of procedural demand we've seen that carry forward into the new year as a matter of fact in the new year, we really don't hear much of any customers complaining about procedural volumes. So.
At least qualitatively you could argue that the markets are as good if not potentially stronger as we entered the new year than they were when we exited them. So I think we feel good about the overall market trends as it relates to new competition.
Yes of course competitors have to receive approval and we have to have a look at their data and understand the product before we can opine with a view, but we're fortunate that this is a market that's been in existence for over 20 years.
Today, there are five competitors in this space and over time, there could be a six.
I think it's a very healthy market with plenty of room.
For new entrants to come in and carve out their own space, we see a highly underpenetrated consumer market opportunity.
And in the end a company needs to enter in this market with their unique value proposition in order to establish a presence here.
So in this case, we do see this product outside the U S and UK.
For both entering that market at the same time I think it's probably too early to say what role we play versus others.
But I think we think of it the same way, which is it doesn't change our trajectory of our potential as a company, but it potentially creates an opportunity for another player to come in here and establish a presence.
Thank you.
Thank you. Our next question is from Greg Fraser with true Securities. Please proceed with your question.
Good afternoon folks and thanks for taking the questions.
I'm wondering if you're seeing any differences or notable trends and behavior among consumers and your loyalty program based on H, such as differences in frequency of injections for the millennials versus older consumers.
And then on the outlook the revenue outlook for 2023 can you be more specific on the amount of growth that you're factoring in for the overall U S market. Thanks.
Sure I'll take the first part I'll turn it over to Andrew to give you a view on our growth assumptions for.
For the outlook, we do look at our consumer data very closely.
As you know we have half a million consumers now in the program.
Many more transactions than we have consumers because many of them are coming back two three and four times now that the program has been in existence for several years. So we're fortunate that we have such a large database to reference we don't see a difference amongst the demographic groups in terms of.
The retention rates they did stratify similarly across groups retention rates are very high.
Across the ranges wish you well.
And as a matter of fact.
Most of the patients that we see in there that are newer to <unk> or newer to toxin tend to skew younger hence our advertising is having its impact and then of course with programs like switch or Tox, where we added a significant number of new consumers. Those are switches from other brands. So we're getting conversions, which tend to skew older when theyre coming from.
The market leader in other products like that so we do have a very diverse pool of consumers in our loyalty program, depending on what their sources skewing older. They're transitioning from another neurotoxins or younger if they're new to the category.
That will continue to be the case and the last thing I'd say is.
It is interesting how the younger demographic does gravitate to loyalty programs at a higher rate than the older generation, that's not unique to aesthetics, it's across consumer purchasing patterns within this younger groups. So having a loyalty program is an important dimension, having a text based loyalty program, which is what we have.
It also creates an ease by which we communicate with these consumers and then lastly, what we've done that's unique and different in addition to text based approaches all of our communications with consumers our partnership with the practice and so that drives greater confidence and higher open rates and that we're partner with these offices and <unk>.
Communicate as one voice with them I think those are all factors that have played an important role in us scaling the program because practices trust and the partnership we built with them, but it also improves our retention rates because consumers get the messages not just from the manufacturer, but also from the practice and those are some unique dimensions of our program.
Thanks, David and thanks, Craig for the question as it relates to our 2023 guidance and are underpinning market assumptions that support that guidance, we have not seen in our recent history and material impact from any economic headwinds and our performance and we've not seen any indications of a material impact to the market and the <unk>.
Growth in the market based on the indicators that we've released in 2022 on patient growth as well as customer growth in light of those things as we gave our pre released early in January our view is that we expected the 2023 market to be in the high single low double digit growth range and that's why it does underpin the guidance that.
That we gave.
So I think it's worth noting that the market itself is highly underpenetrated frankly still have a lot of customers entering the market with <unk>.
These growth projections as well as new consumers entering the market to support these growth projections.
Thank you.
Thank you. Our next question is from.
Here with Mizuho. Please proceed with your question.
Hey, guys. Thanks for taking my question, So I guess to follow up on Greg's question a bit.
Sure.
Just kind of curious would you be able to opine on why I guess al again is kind of projecting maybe a decline in the market. This year.
Is there anything that they're seeing or do you think they are seeing that could be different for botox in the U S. And secondly, I think you spoke about gaining most of your share this year in order to reach your $500 million target by 2028 could you kind of help us understand where you are.
I think the share would come from thanks.
<unk>.
Sure.
Look on the market itself.
It's hard for me to comment on what our competitors have mentioned that I think for US. If you look at our growth last year. The majority of the 49% growth came through share gain and not through actual procedural volume. So I think.
We don't always have a clear view on what's happening with overall procedural volume, but we do know.
From the research, we do and the conversations we have with customers that we believe the procedural volume in the market is growing and the market is healthy, but I can bridge the gap for you with with what other competitors have set.
Second as far as.
Share gain since launch when we look back it's been over 80% of <unk> share in the market has come from the market leader.
And we have not seen that shift even programs like switch your tox. They werent targeting any particular toxin, but they continue to significantly over indexed against the market leader likely because the 900 kilo Delta molecule is the molecule thats owned by <unk> as well as by the market leader and so there is a.
Comfort level with that being the gold standard and it's.
Simplicity to the transition of moving away from.
The market leader <unk>, and I think that might be the key driver of that difference that the learning curve is probably the closest.
Between these two brands.
I don't anticipate that will change going forward.
Okay. Thank you.
Okay.
Thank you. Our next question is from philosophy Prasad with Barclays. Please proceed with your question.
Hi, This is mahela on for <unk>. Thanks for taking our questions just on extra strength with the results anticipated in the second half of the year I guess, just what do you think what do you need to see in these phase two results really just to convince you of its potential and just one other follow up going back to business development plan could you also just.
Provide some additional insights into some of the areas you plan to explore thanks.
I'll take the first question.
In terms of what do we need to convince ourselves of what we have seen the insurance date already is pretty telling we've seen a very nice safety profile and we're seeing very competitive numbers already from a duration perspective.
What we plan to do is wait until we have the final data set which makes sense of course, and then we plan to have advisory reports.
Effectively astro clinicians and the Hcp's, who are using the product right now what would make sense from their perspective for us as a next step and if you've really kind of lends itself to three obvious options. One has just published the study and we have.
An extensive medical Affairs group, who could then answer your questions in a compliant way and solicit medical responses.
The other extreme is to take this all the way through to full registration for a label.
That obviously would take some time, but when we look at the competitive labels Theres nothing convincing.
Take it to that extreme and then the thing in the middle is probably.
Some sort of phase four or some sort of head to head study to actually see how things compare relative to one another so effectively we're going to wait until the data comes in and we're going to have a number of advisory boards to decide on the next steps.
Yeah and on the corporate development side.
We've outlined the criteria that we're looking for which is large durable markets with differentiated assets that.
The IP that we think protects the asset over time and from that standpoint. This is a beauty category and thats, how we positioned <unk> and to the extent you have a product that meets a profile that I outlined that as something that would be an area of interest to us.
Okay.
Okay.
Thank you there are no further questions at this time I'd like to hand, the floor back over to management for any closing comments.
Thank you operator.
If you missed any portion of this call a replay will be posted to our website. Later today. Thank you to everyone for joining US. We appreciate your interest in <unk> and will be available if you have additional questions.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.