Evolus Inc. Q1 2023 Earnings Call

Okay.

Greetings and welcome to ever less first quarter 'twenty to 'twenty three earnings call. At this time all participants are in a listen only mode. A 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. Please note. This conference is being recorded.

I will now turn the conference over to David Erickson, Vice President of Investor Relations. Thank you you may begin.

Thank you operator, and welcome to everyone joining us on today's call with me today are David Motors that he's president and Chief Executive Officer, Louis Avalon, Chief Medical Officer, and head of R&D, and Sandra Beaver Chief Financial Officer.

Our prepared remarks today will include forward looking statements within the meaning of United States Securities Laws and management May make additional forward looking statements in response to your questions.

Forward looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business strategy operations or financial performance, a detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K quarterly reports on form 10.

Q and current reports on form 8-K.

Actual results may differ materially from those expressed in or implied by the forward looking statements. The company undertakes no obligation to 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 inverse.

Your relations website at <unk> Dot com.

On the homepage of our Investor Relations website, we have added a slide deck pertaining to today's dermal filler announcement. These slides are intended as a supplement to our remarks and you do not need them for this call.

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.

Thank you David.

Along with strong first quarter financial results. We are excited to announce we have taken a strategic step in achieving our goal of transforming catalysts into a multi product aesthetic company.

As you read the press release issued today <unk> signed an exclusive long term agreement with imitate for first generation coal technology hyaluronic acid line of fillers in the United States.

After a thorough assessment of the global filler landscape, we identified an exceptional partner with a comprehensive and differentiated line of fillers in late stage development.

<unk>, which is the same firm that developed the latest generation of Restylane fillers for Gal Derma has a long history of success in medical aesthetics.

Our announcement today is the beginning of a strategic and long term partnership.

Our deep experience in the clinical development and commercialization of market, leading fillers together with <unk> rich history in R&D excellence makes for a powerful combination to bring this first generation technology to market.

It's highly competitive filler line, which we have branded Apple lease is in the late stages of development and is expected to launch in the first half of 2025.

For background injectable Neurotoxins and dermal fillers are the top two of aesthetic procedures and represent nearly half the value of the current 9 billion U S aesthetic market.

Dermal fillers represents a $1 $6 billion market today and are projected to nearly double in size to $3 billion by 2028.

From a consumer standpoint toxins and fillers are synergistic with fillers being the most common add on procedure by toxin patients.

From a competitive standpoint, today's dermal filler market comprises a handful of players with approximately 80% share held by the top two Brad Jupiter and rapidly.

In a few moments really will share the unique attributes of the products that we're bringing to market and why these attributes will empower us to compete effectively and capture meaningful share in the large and fast growing dermal filler market.

Looking ahead to commercialization, we have the existing infrastructure to power the launch of Apple lease.

Our cash pay focus platform was designed for scale and the launch of <unk> lease will benefit from our four key pillars.

Our tenured sales force, which is propelled you're about to a double digit share position in the past two years.

Our fast growing consumer loyalty program, which is quickly reached a half million members and is on pace to exceed 1 million prior to the watch.

Third our proprietary and cost efficient digital infrastructure that enables a frictionless customer experience and lastly, due to our cash pay focus a co branded media program that drives faster practice growth and supports building the brand.

From a financial standpoint. This long term partnership is highly capital efficient and margin accretive at scale.

<unk> will provide additional financial color during her prepared remarks, but here are the key elements.

Atlas will pay similar taste $16 2 million euros in total milestones over five years.

This includes an upfront cash payment of $4 1 million euros with a balanced based on annual milestone payments gated by product approval requirements beginning in 2025.

We will also pay a mid single digit royalty to <unk>, we will draw down $50 million available from our credit facility, which we had set aside for corporate development and its $50 million is expected to continue to fund the company to profitability, including milestone payments and development and launch costs associated with this transaction.

The combination of a highly competitive filler line with a capital efficient deal structure makes us a unique opportunity to create a lasting filler franchise that has the potential to add tremendous value to analysts and our shareholders.

Together with <unk>, the total addressable market for our combined product portfolio expanded by 70%.

This gives us the confidence to increase our 2028 total net revenue target by 200 million to $700 million.

Which is a compound annual growth rate of nearly 30%.

Now I'll turn it over to Rudy to provide more product information.

Thank you David.

As background hydronic asset or.

Is the main component in our extracellular matrix and the most popular soft tissue fillers today are made from a J.

When injected Haa takes up space in the soft tissue, which in turn reduces the appearance of lines and wrinkles.

They can also be used to add volume in areas of the face where volume has been lost because of aging.

These products are widely used in aesthetics and generally administered by the St providers co inject neurotoxins.

<unk> is a private company headquartered in France with more than 25 years of global leadership in R&D and manufacturing of aesthetics and medical biomaterials and as previously.

Mentioned, where the developers of the Restylane lines for Gal Derma known as Obi T technology outside the U S and expression technology in the U S.

Are you at least line of fillers was developed by the same or announce scientists, but with a brand new process that solves one of the manufacturing issues that leads to impurities and the breakdown of the natural ha's structure.

Typically during manufacturing the key strands are cross link could be DTE in order to create a desired rheological profile, such as hardness and elastic properties and.

And also to increase the duration of the gel.

This cross linking reaction is commonly done with heat to facilitate the cross linking however, this hot environment also causes then naturally long and complex structures to fragment, we generally low molecular weight and generate low molecular weight H J.

Not only does this fragmentation take away from the natural dynamic properties of the Hh out.

But these fragments are also known to be pro inflammatory and can lead to adverse events.

<unk> has developed a novel manufacturing process that helps preserve the natural structure of DHA and one of the key puzzles. They solved with how to do the cross linking reaction in a cold environment avoiding the fragmentation caused by each this coal.

<unk> not only preserves more at the natural structure Vijay it means that less cross linking with bvd is required to obtain the same gel dynamics.

Our <unk> product line has five distinct pillars that will cover a broad spectrum of filler indications, including mid faced volume restoration nasal labial folds lip volume in contouring and an eye product to address the hollows under the eye that can lead to dark circles.

Each of these five pillars are in late stage development.

The first two smooth and lyft are expected to receive FDA clearance in 2025, and we will address nasal labial folds.

Sculpt product will address mid faced volume loss and should be approved in 2026.

The lipid I products are expected to follow in 2027, which provides for a meter cadence of product launches over three consecutive years.

The development cost associated with the first three pillars have been funded by <unk> and Atlas will support the activities to obtain these approvals.

The iron lip product registration process will be led by Atlas and the expenses for obtaining these approvals will be shared by both <unk>.

This partner with shipment with similar case, a company with a heritage and <unk> innovation has provided us with a very competitive and full portfolio of PHA pillars, and we look forward to bringing this new coal technology to the U S market with that I'll hand back to you David.

Thanks Marie.

We're fortunate to have Rudy and his R&D team, who collectively have an extensive history of bringing dermal fillers to market globally, including leading numerous juvenile products to approval.

As you can tell we're very excited about <unk> and the potential to offer this first generation coal technology with unique attributes that can compete effectively against the market leading fillers.

As we continue to add customers in grocery <unk> market position. He will provide an even larger base from which to launch <unk>, our strong digital capabilities, including the Atlas rewards loyalty program and our co branded media offer a platform on which we can build another durable brand.

Together <unk> and at least will form the backbone of what can be an even broader portfolio of leading aesthetic products.

Now I'll shift gears and talk about our continued strong execution in the quarter before turning it over to Sandra who will cover the financials and transaction terms.

Following a record 2022, we are off to a strong start in 2023 and are very pleased with our first quarter performance.

Strong sales growth reflected continued market share gains, which keeps us on track to achieve total net revenue of $180 million to $190 million for the year in.

In addition, we continue to manage operating expenses overall were off to a good start in 2023, and we expect another year of strong growth now.

Now I'll get into some of the details as reported quarterly revenue grew 23% year over year, a rate well above the growth rate reported by the industry leader and a clear indication clear indication <unk> continued to gain market share.

Our key metrics continued to reflect strong momentum and validates the resilience of our unique business strategy. During the first quarter, we added more than 600, new accounts, bringing our total customer count to more than 10000.

While this growth is impressive I'll remind you that we have just now penetrated one third a potential U S customers.

And our customer reorder rates remained very healthy tracking above 70%.

In the quarter, we added more than 60000, new members to our <unk> rewards consumer loyalty program, bringing our total user base to 570000 total.

Total redemptions for the quarter hit an all time high as existing users continue to return for repeat treatment <unk> demonstrating sustained brand loyalty.

Looking at the health of the U S toxin market overall, we continue to be encouraged by the strong demand for Neurotoxins, which is driving continued growth and adoption shifting.

Shifting attitudes about health and beauty broader acceptance of aesthetics and growing consumer purchasing power are continuing to fuel this market, particularly among the younger demographic, who prioritize personal beauty treatments over other discretionary purchases.

As a reminder, our 2023 revenue goal is driven by a combination of continued to cap expansion and deepening our relationships with both recently added and established customers.

The attributes of <unk> and the unique brand we have bill provide a compelling reason for new accounts to trials you both.

Then as customers gained confidence they increase their purchase quantities and unlock greater practice building benefits through our <unk> program, such as our co branded marketing or CBS .

<unk>, which is a program unique to analysts and only possible because of our cafe focus offers a range of advertising options from digital promotion to Billboard to streaming TV.

Our TV App program continues to be a key driver of customer loyalty our.

Our internal metrics show that accounts to take advantage of Evelyn <unk> benefit and participate in our consumer loyalty program go to grow two to three times faster than those that do not.

Now turning to our international business, we are continuing to gain traction with new Steve on Great Britain, and in Germany, and Austria, where we just initiated our launch.

We are pleased with our first few quarters into the launch in Europe , and we plan to continue broadening our European presence this year as part of our base expansion into this $500 million market.

Looking forward, our investment into international geographies positions <unk> to become a global market leader in this space.

Beyond Europe , we recently received regulatory clearance in Australia for <unk>, where we are planning for product launch Australia is one of the largest market opportunities for static neurotoxins outside the U S and our expansion there combined combined with continued growth in Europe , and Canada is expected to ultimately comprise 15% to 20 <unk>.

<unk> of our total <unk> revenue in 2028.

Finally, I'm pleased to inform you that we will complete our phase III extra strength study later this month.

Presentation of the full dataset is planned for early November at the American Society for Dermatologic surgery Conference in Chicago.

Since the presentation of the interim data in January we have received interest from customers about combining the unique precision profile and natural looking results of <unk> with the option of a longer duration formulation.

We're in the process of collecting input from key opinion leaders and groups of injectors to help us determine the best strategy for maximizing the value of this important data and with that Sandra over to you.

Thank you David.

I would like to Echo Davids earlier comments and congratulate the Atlas team for another quarter of strong sales growth operating expense management and overall performance I.

I would also like to Echo my enthusiasm over the seller partnership with <unk>, We have announced this represents a material benefit to our financial forecast across the top line gross margin and operating income margin and a meaningful step in transforming <unk> into a multi product aesthetic company.

Turning to the results.

Global net revenues for the first quarter were $41 7 million up 23% compared to net revenue in the first quarter of 2022.

Sales in the U S comprised more than 90% of revenues this quarter as sales in international markets continues to build.

In the U S, where the pricing environment remained strong overall, our sales were driven primarily by higher volumes and a modestly higher average selling price.

Our reported gross margin for the first quarter was 16, 1%.

And our adjusted gross margin, which excludes the amortization of intangible was 79% and in line with our guidance.

Our GAAP operating expenses for the first quarter were $53 8 million compared to $54 3 million in the fourth quarter.

non-GAAP operating expenses for the first quarter were $35 5 million compared to $35 7 million in the prior quarter.

As a reminder, non-GAAP operating expenses exclude private cost of sale.

Reported selling general and administrative expenses for the first quarter with $37 4 million and slightly higher than the $36 $7 million recorded in the fourth quarter. This quarter SG&A expenses included $3 2 million of noncash stock based compensation compared with $2 3 million in the fourth.

Quarter.

Our non-GAAP loss from operations in the first quarter with $5 9 million compared to $5 4 million reported in the fourth quarter.

Both non-GAAP operating expenses and non-GAAP loss from operations exclude stock based compensation expense.

Revaluation of the contingent royalty obligation.

And depreciation and amortization.

Turning to the balance sheet.

We ended the first quarter with $31 5 million in cash compared to $53 9 million at December 31, 2022.

In the first quarter net cash used for operating activities was $20 6 million, which included our final settlement payment of $5 million under the many tasks that alternative settlement agreement.

Net cash used in the first quarter of 2023 was lower than the first quarter of 2022, representing continued progress towards cash flow breakeven.

Managing our operating expenses and cash remained high priority.

Continue to have confidence in the performance as you know and to see that as evidenced by our strong first quarter results and are on track to deliver $180 million to $190 million in revenue as we announced earlier this year.

Miller agreement announced today is capital efficient with analyst being fully funded to profitability utilizing the additional $50 million of farm upon that accretive to both gross margin and operating margin, while providing significant topline growth without diluting shareholders.

Okay.

Turning to the details of the transaction.

The agreement, we have signed with <unk> gives us the exclusive rights to the at least dermal filler line throughout the United States for all aesthetic and dermatological use it.

The contracts cover the 15 year period with automatic five year renewal.

The total consideration of $16 2 million, which is approximately $17 $8 million based on current foreign exchange rate.

<unk>, an upfront cash payment of $4 1 million euros.

And $12 1 million euros, and milestone payment beginning with $1 6 million euros in 2025.

<unk> 1 million euros in $2023 2 million euros in 2027, and $3 2 million euros in 2028.

Except for the upfront payment all milestone payments are payable in June of each year and are anticipated to be capitalized.

<unk> continues to be filed at the profitability utilizing the available 50 million second tranche of debt confirm there.

There is no dilution, resulting from this agreement is no Evelyn shares are being issued.

In addition to the amounts already mentioned Atlas will pay <unk>, a mid single digit royalty on net sales that will start once the product is launched in 2025.

<unk> has also agreed to meet certain minimum purchase targets each year for the duration of the agreement.

In order to fund this transaction, we are drawing the $50 million to park have now and the other half before it expired at the end of this year.

We believe the structure of this transaction represents a very efficient use of our capital and ensuring that we are fully funded to sustained profitability.

Overall disagreement shifts our profitability to 2025 and it has positive implications for both gross margin and operating income margin there will be high utilization of our existing sales force.

<unk> infrastructure analyst rewards program and co branded media offering along with a modest expansion of our sales force and medical affairs clinician to support the filler launch. This will result in improved operating leverage.

As David mentioned in his opening remarks, we are raising our projected 2028 total net revenue target to $700 million from $500 million. This equates to a compounded annual growth rate of 29% on a total addressable market that is 70% greater with the addition of the filler product line.

This higher 2028 target assumes we launched to sell our product in 2025, one and 2026 and two product in 2027.

With that context in mind I'd like to summarize our 2023 guidance.

Total net revenues of between 180 and $190 million over 90% of which will come from sales in the U S and the balance from international market.

Our quarterly revenue assumptions assume a return to a industry seasonal revenue pattern.

And adjusted gross margin in the range of 68% to 71%.

We are making a modest revision to our full year 2023, non-GAAP operating expense guidance, which is now between 153 and $158 million and revised from $145 to $150 million. This different is the investment associated with our filler launch, including the op.

Cash payment of $4 1 million Europe .

This modest increase in non-GAAP operating expense guidance as noted previously we will shift our profitability out of 2023 and with the additional $50 million tranche from final Cod, we remain fully funded to sustained profitability election has reached in 2025.

David.

Thank you Sandra today marks an exceptional milestone in the history of our company as envisioned tablets is evolving from a single product line into a multi product aesthetics company. The addition of the Abilene dermal filler line expands our addressable market by 70% into the most relevant and complementary markets adjacent to narrow toxin.

We have the platform the salesforce the loyalty program the co branded marketing the financing in fact everything in place to seamlessly lever our capabilities and efficiently bring these products to market.

Most importantly, the unique attributes of <unk> position us to compete effectively and gain share in the large and growing dermal filler market.

Today marks an inflection point in the growth trajectory of <unk>, we are augmenting the strong underlying growth of our <unk> franchise, which by itself is expected to grow over 20% on a compound basis too.

Together <unk> will drive 29% compounded revenue growth over the next five years with expanded gross and operating margins at scale.

Today is the first day of a new future for Atlas for our employees, our customers and their patients and importantly for our shareholders. We cannot be more excited about what the future holds and we look forward to sharing the journey with you with that we're ready to take questions.

Thank you if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Our first question is from Louise Chen with Cantor Fitzgerald. Please proceed.

Hi, This is Wayne onshore due east congrats on all the progress this quarter.

All my questions. So the first thing I'd like to ask is on <unk>.

Right now you have the exclusive U S distribution rights.

Possible to expand into international markets.

And then the second question I have is al Cho, who besides the ones you have already received approval ex U S, which ones are you most excited about and how do you size those opportunities. Thank you.

Great. Thank you for the questions.

I'll I'll have Sandra comment on the.

Our pathway forward internationally, but as you pointed out today, we announced the U S distribution rights that was our focus from a corporate development standpoint in the U S. As you know we've had success in building the <unk> franchise since launch and we built the infrastructure now that enables us to take that platform.

<unk> and add additional assets around it so that has been our focus I'll turn it over to Andrew to comment a bit on international and then I'll turn it over to Rudy to give his comments on the different filler products before I add a few yeah. So I guess as it relates to heavily as David mentioned, our focus is on the U S rights and it's by far the largest man.

Where we currently operate to offers us the greatest incremental short term opportunity with this new portfolio.

As far as Tivo goes entering market in Europe and a.

Rational way so we're trying to ensure the highest degree of success in each market. As you know we are already launched in Great Britain last year, we launched in Germany, and Austria as well this year and we continue to work on our progress in terms of where we will launch throughout Europe with the rights that we have today as well as Australia.

And just from my side. Your question was where was it launched right now all of these products are in late stage development for the most part and one of the products has just been launched in Europe in a limited fashion to lift product.

But effectively they are all brand new and we're pretty excited about all of them again because of the full spectrum. We've got two different products I'll go to the nasal labial folds that have those attributes appropriate for there and then the sculpt product is very interesting because we know that.

The mid face volume is one of the bigger sectors. When it comes to fillers in particular to the H eight side and then we have those other two products. Following on that are going to be much softer like the lip product, which will give us both the.

Turing and the volume and then the <unk> product, which there aren't very many out there right now approved with that indication.

Thanks Maria.

<unk> underlying there and rues comments is that this is a broad portfolio.

That covers the large majority of needs in the facial filler market and because of its differentiated with each of the different byproduct. It gives us some unique advantages that of course as we get closer to commercialization, we will provide more color around that and then lastly on the international front, we do have plans to build out our portfolio.

Those ago internationally as well.

As Andrew pointed out we're in the early days of commercialization. So we will continue to be thoughtful about what we do on the corporate development side as you can sense, we have been very dilution sensitive in the deals that we've done I think in this case, we were able to structure a partnership with <unk>, where they saw the value of what we're building here in the <unk>.

U S and we designed the deal structure that allowed them to benefit from the long term growth of the value that we can create with the launch of their filler line.

Very helpful. Thank you so much.

Thank you Brian .

Our next question is from Annabel <unk> with Stifel. Please proceed.

Hi, guys. Thanks for taking my question and congratulations on an interesting deal and a good quarter.

So I guess first with regards to the new product.

Hum.

Outlined very clearly what the technology offers.

In terms of I.

I guess, the benefits in manufacturing and and and I guess some of the the.

Shortfalls are the other products, but in terms of steel or outcome for the patient is there any level of differentiation.

And for the patient or from an injector experience. So maybe you can help.

Help us understand that a little bit because this killer spaces obviously.

Getting somewhat crowded so so just a little bit of help there. Thanks.

Thanks for the question Annabel.

Right now what we're seeing is the what.

What we're hoping obviously was when we.

Decrease the fragmentation that these gels, we'll have properties that will be much more dynamic.

And with the use of <unk> and of course with taking away that fragmentation element.

Potentially eliminating some of the adverse events that we see and we've all heard of the late onset and early onset reactions that we've had.

These products right now where we have some data is coming out of Europe , and a small studies that are there and.

When we look at it from an efficacy standpoint from a patient satisfaction perspective from a aesthetic improvement we're getting very positive results there and obviously the trials here in the United States are still in process, but in the very late stage. So it's a good question, we'll see but right now the key the main reason that we're very excited about it is this core technology.

At the end of the day safety is Paramount and we believe we've got a leg up on that.

And maybe I can follow up with Sandra.

You noted the Opex.

Opex is going up this year, Israel result of this Gil so does that mean that youre going to be starting the you're sharing in the lip and and I believe so are you starting to R&D programs now and is that the reason for the increase in expenses or is it something else.

So it's a couple of things one is obviously the initial milestone payment, which we didn't mention is the largest portion of that increase in the Opex guidance. Yes. We are starting the registration process for the two additional indications this year as well. So that is also included in there and some just modest other expenses that fall into opex associated with the deal.

Got it and then maybe David for you.

I know you haven't reached final data with the <unk>.

Extra strength trial, yet, but obviously the interim data has been made public.

You sort of touched on this earlier, but obviously I'm sure your loyal customers have taken notice and how receptive are they to having that flexibility to offer a long term treatment. How should we think about adoption just based on their feedback do you think it's.

The same now that there's some more noise about long duration toxins in the space are they getting more excited about it or is it still the same assumptions going forward, there's going to be once a smaller segment of the market and the initial.

<unk> line is going to be the biggest bulk of it.

<unk>.

Sure.

Good question Annabel so.

Watch.

Yeah.

Our next question is from Marc Goodman with S V. B Securities. Please proceed.

David What's your sense of how the market grew in the first quarter, you know given what Allergan reported for their botox number and how are you thinking about the full year growth.

Of the category now just given that we're already into may Thank you.

Great. Thanks for the question Mark.

Triangulating just as you are in terms of what the procedural growth as we.

We are seeing that the market is growing we do believe in the first quarter, we had modest growth lets call. It somewhere in the single digit range could be upper to mid single digits and we think this category continues to be resilient as we speak with customers. What we hear back is toxins remain the gateway procedure in aesthetics and then pay.

<unk> are continuing to come back with a high level of frequency and then of course, you know if you assume for a moment here that the market grew mid single digits.

We continue to gain on both.

Growing within our existing customer base, where our share continues to expand and we see a differentiation even within the segmentation of our customers that use our co branded media that grow faster than those that don't and when you layer on <unk> rewards they grow even faster with Atlas rewards and co branded media than those that do not.

We felt very good about the underlying strength of our existing customer set and then the overlay to our growth is of course. The continued addition of new accounts and we're pleased to get to 10000, that's meaningful scale to have in the United States market. It creates a great baseline for us as we think about down the road launching future product, but there is still so.

Much opportunity for us to continue to go wider and I think you've now seen the consistency by which we are operating our business that is the markets fluctuate to some degree a few points here and there and market growth the underlying strength of our business continues to be resilient through that and I think it speaks to our cash based strategy is working and will continue.

To gain that values, you see us achieve our guidance range for the year.

Are you still thinking the market growth for the full year is 5% to 10% is that how you're thinking about it.

We had said high single low double digit growth rate.

It's still early to call out the full year any differently than how we perceived it going into the year, but we remain very confident in the outlook, we provided in our guidance.

Thanks.

Thanks Mark.

Our next question is from Nevada tie with BNP Paribas. Please proceed.

Hi.

Nations on the solid quarter and the deal that Jason for no bonds.

So I have two questions maybe the first one is for me is on the.

Extra strength study so now with the control group data on hand.

Help us understand how does it compare with the taxi buys data in terms of duration and I will follow up with a 61.

Sure. Thank you for the question.

The first comment I'll make of course.

It's always a we should always be very very conservative when we try to talk about how one study data set compares to another dataset unless you actually did a head to head. So I think that's important for us to I'll say that in terms of the control. We saw control that behaved just like we saw in other studies. So there is.

Control is just in line with what we expected and we saw duration profile of 26 weeks and if we look at the published data from <unk>.

Look at a one point improvement they came in at 23 and a half weeks in one study with online and about 26.

24 weeks in the Sakura studies, we came in when we looked at one point at 26 weeks, so fairly close and when we looked at time for patients to return back to their baseline. We came in at about 26 weeks one of the <unk> studies showed about 26 weeks and the other one showed just shy of 22.

Seven weeks, so I would say right now when we used 40 units of <unk>.

Chabot extra strength it looks fairly comparable to the taxi 40 unit data with the datasets that we have and the last reminder of course is a couple of things.

The patient demographics were quite different.

Most of our patients were actually difficult patients they were severe taxes little different baseline demographics, they were mostly moderate and.

So that's one consideration has taken place.

Okay.

Okay. Okay. Thank you so much that's very helpful.

One is you just touched on the competitive advantage or AV I believe which is the core technology.

Can you give us more color on a how do you plan to.

Leverage this core technology advantage to compete with Archie theater, and potentially do with them.

Sure so.

I'll start with.

That whole technology right now top of mind for a clinician is how well the product works, but safety of course is Paramount and we know from the literature that the small fragments.

Our problem they can be pro inflammatory and the FDA is very aware of this also when you when you interact with the FDA, that's something that they want visibility and so from that perspective, I think we have a very.

Very nice product and then ultimately from an efficacy standpoint, we'll be revealing the data we've got control from the studies, we are using the wrestling lined out.

I think to be a responsible once the data comes out it will speak for itself.

Thank you.

Our next question is from Douglas Tsao with H C. Wainwright. Please proceed.

Okay.

Hi can you hear me yes.

Hi.

David Congrats on the.

The deal I'm just curious.

Obviously, you're emphasizing safety advantage are there anything about the other lease line from a filler stamp, but performance standpoint that sort of makes it particularly appropriate for your targeted customer set in terms of how it would be us.

That's a great question Doug.

Launching entire new filler line requires the positioning work the clinical data and then the commercial strategy comes out of that.

Clearly today, we we've only announced the product line and really and I spend a significant amount of time assessing different dermal filler technologies around the globe and I can tell you that firsthand. This is one of the most differentiated assets that's going to enter the market anytime in the near future and that is hard to come across because Hollywood assets are very safe and effective.

Products were all.

Also.

Very impressed by the the amount of scrutiny that's been put into these studies.

The scale of the studies as well as what they're measuring and of course, we don't have that data to share with you today, but that will be data that would be forthcoming along with our our commercial strategy. So theres a lot more to come however, we do know that.

The number one product line that's added following a neurotoxin for these patients as facial fillers. So clearly theres a lot of synergy with the consumer base, where they are willing to add on fillers and they'll add on fillers in different areas of the face which is why it's so important for us to enter the market with a broader differentiated portfolio.

Our facial fillers and then beyond that from a customer standpoint, we referenced in 10000 customers today. The overlap is entirely almost entirely one to one meeting accounts that use neurotoxins are using neuro tox are using facial fillers as well. So there's clearly a lot of synergy here by half.

The two sides are as far as the differentiation both to the consumer and to the practitioner that's going to be forthcoming of course, we wouldnt reveal that level of detail till we get closer to commercialization.

Okay, and then just as a follow up David I'm, just curious how long were you engage with Cintas in terms of.

Getting this deal done and I'm curious was it a competitive process.

Yeah. Good question of course, that's confidential.

So I can't get into the details of that will go.

I'd ask well so that the table, but of course as you can imagine we're the only <unk>.

Company with a neurotoxin in the U S that is not partnered with another filler.

<unk> been in this aesthetic category for 25 years.

<unk> experienced an R&D and their head of R&D. This particular product line is the next generation the latest generation that they've designed so they wanted to enter a partnership that was longer term and you can see from the construct of the deal.

Mid single digit royalty structure. They wanted to benefit from the success of this Apple lease line over time and that is why we were able to structure a deal that was constructive for both parties for the long term.

Okay.

Great. Thank you.

Our next question is from <unk> Prasad with Barclays. Please proceed.

Good afternoon. This is Shawn <unk> questions and congrats on the deal. So just a quick one on the dermal filler as the co technology keeps the natural structure of the molecule could you give us a ballpark range of the safety differentiation versus the existing product starts and though you would expect to see.

A real world setting thank you.

Yes. The question is can we give you a safety that's why we do the clinical studies him. So I really cant wouldn't be proper for me to speak about our safety.

And how it compares to others a without having the final data set from the studies.

What I can share with you is what I shared earlier, we know that in the literature that pro.

Pro inflammatory low molecular weight can be problematic I am guessing I can share is with with this new technology. There are other attributes that and get into one of the really interesting things about the gel is we know that we all cover <unk> Prime which is a harness of a gel, but when you stress that thermally and then you retest that a lot of the other.

Fillers tend to lose a lot of those properties and with this new technology. What we're seeing is that actually what stands that and we believe that that will also have benefits as we go through our clinical trials and generate our final dataset.

Got it very helpful. Thank you.

We have reached the end of our question and answer session I would like to turn the conference back over to management for closing comments.

Okay. Thank you operator, if you missed any portion of this call a replay will be posted to our website. Later today. Thanks to everyone for joining US. We appreciate your interest in <unk> and it will be available if you have any additional questions.

Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Yeah.

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Yeah.

Okay.

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