Q2 2023 Revance Therapeutics Inc Earnings Call

Welcome to the revamped therapeutics second quarter 2023 financial results and corporate update conference call. At this time, all participants are in a listen only mode.

Management's prepared remarks, we will hold a Q&A session to ask a question at that time. Please press star followed by one on your Touchtone phone.

Yeah.

Thank you operator, joining us on the call today are Chief Executive Officer, Mark Foley President and.

During this conference call management will make forward looking statements, including statements related to 2023 guidance cash flow breakeven operating leverage blockbuster potential in our capital structure, our ability to draw on our debt each of revenue and expenses the market our growth potential our CD approval and entry into therapeutics our commercials.

Success account penetration injector and consumer preferences and behavior, the efficacy and duration to densify the benefits to us practices are consumers of our products and strategy and thought.

They are our marketing and training plans or strategic partnerships, and our strategy and priorities blended operation and commercialization plans and tiny.

Our actual results and the timing of events could differ materially from those anticipated in such forward looking statements as a result of these risks and uncertainties doctors.

Factors that could cause results to be different from these statements include factors. The company describes in the section titled Risk factors in our annual report on Form 10-K filed with the SEC on February 28, 2023, and the quarterly reports on Form 10-Q filed with the SEC.

Three and today August eight 2023.

Undertakes.

No duty or obligation to update any forward looking statements as a result of new information future events or changes in expectations.

On today's call, we will present, both GAAP and non-GAAP financial measures reconciliation of non-GAAP to GAAP measures included in our press release with that I will turn the call over to Mark Foley Chief Executive Officer of Ing.

Mark.

Thank you Jessica and good afternoon, everyone and thank you for joining our second quarter 2023 financial results Conference call.

Q2 was the foundational quarter for the company as it represented the first full quarter of <unk> highly anticipated launch. It also included the plant expansion and realignment of our sales force. The first expansion in more than two years and included the fortification of our balance sheet with $100 million and equity raised through our ATM program.

$50 million of debt, which we plan to draw before the end of August collectively this contributed to our strong Q2 results and record quarterly revenue of $58 1 million, which reflected a 105% increase year over year.

As Dr. <unk> commercial commercial rollout continues we remain very encouraged by the product's performance, which includes not only duration, but also reports a fast onset and improve skin texture as evidenced by the initial product uptake and ongoing demand.

Still early in our launch we continue to experience a very high level of interest from both injectors and consumers <unk> differentiated performance profile we.

We are executing well against our launch strategy, where the valuable learnings from our preview program have been incorporated into our full commercial launch which is focused on accounts, where we have an existing relationship.

In addition, enthusiasm for our expanded and highly complementary product portfolio remains high.

Given the growth trajectory of Botox, if INR a J. We believe we are on track to realize our blockbuster opportunity in aesthetics, which continues to be supported by our differentiated products commercial strategy and high performing team.

We remain focused on executing in aesthetics. We're also excited about our opportunity in therapeutics, which is just around the corner with a <unk> date of August 19 for cervical dystonia or CD indication.

We believe tax price potential and therapeutics is significant and CD approval, where sir will serve as our entry point into the $2 5 billion.

U S therapeutic neuromodulator market.

With Doctor Five's unique peptide formulation, we believe the product has the ability to meaningfully improve patient outcomes and therapeutics, specifically <unk> long duration has the potential to both reduce treatment frequency and perhaps more importantly, minimize symptom reemergence prior to re treatment, which is a common issue for CD pay.

<unk> is currently receiving neurotoxin injections.

In clinical practice patients experienced painful symptom recurrence as early as eight to 10 weeks, yeah cannot be retreated until 12 weeks.

Based on our CD patient survey that was published in a peer reviewed article in the journal of neurology by Dr. Camilla, 88% of patients reported symptom reemergence between injections.

Because of this treatment gap, we believe <unk> has the potential to provide a more durable treatment option for patients seeking improved symptom relief within their current treatment cycle.

And given its differentiated efficacy and safety profile, we believe <unk> value proposition will resonate strongly with all stakeholders, including patients providers and payers and we look forward to sharing more details on our plans for therapeutics at our Investor Day in September .

With a number of upcoming milestones and the ongoing launch of <unk>. The second half of the year promises to be both busy and exciting.

We are fortunate to be executing from a position of strength due to the recent introduction of <unk>, our expanded sales force and bolstered balance sheet alongside a strong and resilient facial injectables market with that I'll turn the call over to Duston duston. Thank.

Thank you Mark I'm very proud of the team's strong execution in the second quarter, our strategic priorities, where Q2 for Q2 were two fold first ensuring that we have the necessary commercial infrastructure to support both <unk> launch and the ongoing growth of the IHA product lines and.

Second leveraging strong provider engagement to drive deeper account penetration across our portfolio <unk>. This entailed building provider confidence in ensuring smooth practice integration to our training and education initiatives for RH.

This involved driving growth in the collection to advanced injection trainings that highlight the dynamic and adaptable rheological properties of the four different pillars. We.

We are very pleased to have executed on all fronts on commercial infrastructure. We successfully completed the onboarding of our 50 additional sales representatives, bringing our total sales force to more than $1 50. This was a foundational undertaking executed in an accelerated timeframe and I'm very proud of the team for all their efforts in executing against our plan.

The team is strong with deep sales experienced balanced across the <unk> and other high growth verticals with a key focus on product launches, we provided intense training on both <unk> and the IHA collection and realigned territories across the country to optimize coverage for our targeted accounts.

Heading into Q3. The team is the team is settling into their new territories and forming new relationships. While also supporting the transition our previous accounts importantly, they are focused on driving adoption across both products.

Our next priority was to continue to drive deeper account penetration through provider engagement across several areas.

<unk>, we continue to leverage the training and education across live and virtual formats. Our programs focused on optimizing aesthetic outcomes informed by real World clinical experience education also focused on practice integration, including product performance value proposition pricing profitability and expectation.

Got it.

Our engagement efforts were also underscored by the launch of our first direct to consumer campaign in June we initiated an unbranded breakup as botox campaign targeting experienced female users between the age of $25 and 55. The campaign was designed to highlight the unmet need an innovation gap across the neuromodulator category and that existing consumers now have a choice.

On a new treatment option.

Since the campaign initiation in June the targeted unbranded campaign delivered strong kpis of the reach of 57 million impressions and more than 9 million views across key channels and platforms combined with our brand and it's about time <unk> digital campaigns and our first live Influencer event in Nashville, reactivated strong social buzz across our.

It forms increased product website traffic and drove increased searches for <unk> availability via our practice locator.

We believe all of these metrics should translate into greater consumer awareness and demand for <unk>, which in turn allows us to drive deeper partnership with the accounts that carry our product.

While our marketing efforts will continue to focus on the provider as we believe that that generate the greatest return on investment. We also expect to leverage targeted consumer campaigns to augment our launch going forward.

Turning to our a J engaging with customers on the broad utility of the collection is very important for growing our share of wallet Needless skin training continues to be the strongest interest to our customers as they learn and perfect. Our <unk> injection techniques in Q2, we organized a group of our key U S faculty to attend an immersive training session in London with top international and <unk>.

<unk>, we look forward to having our learnings we share with our practice partners through a series of upcoming training programs.

Further we're very excited to see the expansion of our <unk> label to include Kenya will use. The addition of Kenny level provide injectors with another option to advance aesthetic outcomes, allowing IHA for to have even greater utility and delivering natural volume for moderate to severe dynamic folds and deeper deficit.

Overall, we believe our robust engagement activities in Q2 and to date have been essential in supporting <unk> launch and the continued growth of the IHA collection.

As a result of our strong execution on Q2 priorities <unk> sales increased 47% over the previous quarter to $22 6 million, having recently completed our first full quarter of launch we continue to be encouraged by the products performance, which is consistent with the data from our clinical trials and by our revenue results, which are in la.

With our internal operating plan with our total sales through Q2, we've already surpassed the total sales generated by any competitor to botox cosmetic and our first launch year.

We also saw solid revenue growth for the IHA collection in Q2 up 25% year over year to $31 $8 million.

The team has done an outstanding job in growing the collection, while navigating through our sales force expansion and launching <unk>.

Further we ended the quarter with over 6000 accounts across our Fedex portfolio, demonstrating the continued momentum of our commercial efforts.

Looking at the back half of the year remained well positioned to execute on our plan to achieve this our priorities are one leveraging <unk> to drive greater account adoption and engagement to increasing sales force productivity and three leveraging the value proposition of our full portfolio to grow share. These efforts will continue to be reinforced by the support.

We provide to injectors and optimizing outcomes and enhancing practice integration.

Before I turn the call to Tobey I'd like to provide another positive development in our partnership with Fosun pharma and expansion of <unk> in international markets.

July Fosun announced the BLA for <unk> for the treatment of cervical dystonia is accepted for review by China's National Medical products administration or NPA. The action followed the MPA is acceptance of <unk> for Gabon lines. In April were very pleased with the steady progress our partners, making and commercializing <unk>.

China, which remains the second largest market globally for neuromodulators valued at over $740 million <unk> alone with that I'll turn the call over to Toby to cover our second quarter financials.

Thank you Dustin total revenue for the second quarter 2023 was $58 $1 million.

Representing 105% increase from the same period last year due to increased sales of the <unk> collection and the launch of <unk>.

Revenue in the second quarter included $31 $8 million of Ari J collection revenue $22 $6 million of <unk> revenue and $3 $7 million of service revenue.

Turning to the cost of product revenue I would like to remind everyone that in accordance with GAAP, we were expensing <unk> manufacturing costs incurred at our northern California facility as a period R&D expense item until the product was approved <unk>.

Emily with argues approval, we began capitalizing gasify manufacturing costs incurred at that facility.

When our <unk> inventory produced prior to approval also known as zero cost inventory is depleted we expect our cost of product revenue to increase.

Turning to Opex gap.

GAAP Opex for the second quarter was $123 6 million.

Compared to $86 2 million for the same period in 2022.

Excluding cost of revenue depreciation amortization and stock based compensation non-GAAP Opex was $83 2 million for the second quarter compared to $62 million for the same period last year.

For the six months ended June 32023, non-GAAP operating expenses were up 27% compared to the same period last year, while total product revenue increased 116% during the same period continuing to improve the operating leverage in our business.

As we previously stated we expect our 2023, GAAP opex to be $460 million to $480 million and non-GAAP , opex, which exclude cost of revenue depreciation amortization and stock based compensation to be 320 to three <unk>.

Third $40 million or 2023, non-GAAP research and development expense is expected to be $80 million to $90 million.

Okay.

Turning to our balance sheet, we successfully completed several financing activities to support our commercial growth in aesthetics and anticipated entry into therapeutics. During the second quarter, we raised $100 million in net proceeds through our ATM program, bringing our cash cash equivalents and short term <unk>.

<unk> to $319 7 million at quarter end.

We also recently amended our notes purchase agreement with <unk> capital and revised our committed eight five fixed $100 million second tranche notes available for issuance to $50 million and revised our uncommitted 100 million.

Third tranche note to $150 million both at similar economics, we plan to issue our second tranche notes of $50 million at eight 5% fixed interest rates shortly provided that certain conditions are met.

With the modification to the <unk> agreement and the proceeds from our ATM program, we have taken a prudent approach to managing our capital structure.

Combined with our current cash position and anticipated revenues and expenditures, we believe our business will be funded to cash flow breakeven.

Finally revamp the shares of common stock outstanding as of July 31, 2023 were approximately $88 million with 95 6 million fully diluted shares excluding the impact of convertible debt.

And with that I'll turn the call back over to Mark.

Thank you Tobey in closing we are very pleased with our <unk> launch is going thus far and are encouraged by the trajectory of our U S aesthetics portfolio. The second half of the year promises to be very eventful as we look to continue our share growth in aesthetics gain entry into therapeutics and host our Investor day in September at our Nashville head.

Quarters, where we expect to provide a deeper dive into our business along with our planned financial guidance.

To thank the entire <unk> organization for their tireless efforts and unwavering commitment to bring the latest innovation in aesthetics and therapeutics to the market, while supporting our valued customers along the way.

With that I will now open the call up for questions operator.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. We ask that you. Please limit yourself to one question and one follow up your first question comes from the line of Seamus Fernandez from Guggenheim. Your line is open.

Oh, great. Thanks for the questions and congrats on the.

Continued progression with <unk> just wanted to get a.

At or sense of how we should be thinking about the third quarter trajectory.

Trajectory.

Just because typically it tends to be a seasonally weak quarter and then how we should be thinking about and kind of the trajectory for jakafi in.

In the fourth quarter.

Along those lines, just trying to get a better sense of maybe a little bit of the rhythm of how the the.

The rest of the year is likely to shake out and then I just have one follow up question.

Sure. Thanks, Shannon so in terms of the overall trajectory as you know we're not in a position to guide at this point and if you look at where our two different products or add in their lifecycle IHA is more mature and it's more likely to follow the typical seasonality in the aesthetics business, whereas <unk> were in launch mode.

Right now and as we've talked historically with the addition of the reps and the realignment of territories and selling two products the newness of that define the relationships.

A little early for us to be forecasting what the rhythm is going to be from a quarterly perspective on that we do expect at our Investor day in September to provide more clarity about what our plans are for financial guidance going forward.

But right now as we talked in Q2, we continue to be encouraged with the overall trends that we're seeing in the market and the resilience that we're seeing in the in the accounts that were calling on.

Perfect and then just.

One quick follow up.

As it relates to our H E.

Argued discounting <unk> at all or are you still kind of managing them as to sort of dynamic and completely separate brands.

And I know folks are very interested to know if you're willing to provide some color on the number of accounts that you're in I suspect. The answer is that you guys are keeping that close to the best for competitive reasons, but.

Just wanted to ask that as well thanks.

Sure maybe I'll start with the second part first yes, so we talked about being in over 6000 accounts collectively across all of our products and services at the end of Q2 and consistent with what we communicated.

Communicated on the <unk> product line, we think right now thats a metric that we're comfortable continuing to put out there. It makes sense certainly as we get deeper into the <unk> launch and we go forward. We will continue to look at what are different metrics that we have confidence in that we think are worth sharing on that side of it.

In terms of discounting at this point, we believe due to the innovation of both our <unk> product line and <unk> that we've looked at this point to look at them independently. We've got a very simple straightforward pricing structure for both <unk> and.

And for <unk>, where at any point in time that an account purchases from us. They can take advantage of one of four different price levels based on how much they purchase and that given point in time. So at this point, we haven't deviated from that overall pricing structure certainly as we go forward. We will continue to look at ways that we can leverage that.

The portfolio to create win win scenarios for our accounts and Thats one of the things that our team is actively working on but at this point, we continue to primarily be focused on each product standing on its own from a discounting tier perspective.

Thanks, guys and congrats on the good quarter.

Thanks Seamus.

And your next question comes from the line of David <unk> from Piper Sandler Your line is open.

Okay.

Hey, thanks so.

Mark I think in over the past few weeks.

In various presentations you had talked about.

The sales cycle for <unk> being <unk>.

Somewhat.

Longer than what it was in preview.

And I guess the question here is.

Maybe I know you are not in a position to guide, but how should we think about.

Training and.

And on boarding of accounts and what that means.

For business that might spillover into <unk> and even <unk>.

So how should we think about that.

And then I have a follow up thanks.

Sure. So let me take you back in terms of the overall training as you know we were pleasantly surprised with the strength of the orders that we saw in December when we started with our preview group, we sort of expected them to follow a more normal cadence, where they get exposure to the product. They treat a series of patients and then they look for.

Feedback and follow up on those patients to inform next steps I think partly because of the limited number of accounts that had access to diversify at that early phase clinical trial data and their early experience. They leaned in very heavy we learned an awful lot from that preview phase, which has been very helpful. In terms of optimizing our training program.

For our full commercial launch, which we kicked off in March and we've seen that the March group and the <unk> commercial launch group.

Behave in a fashion that we would have expected from the beginning which is the first step is they attended training program. Our bias is Nashville, but we also have a.

A virtual option for accounts to make sure that we can meet them in a place that makes the most sense. That's step one. The next step is then the rep schedule at the time to bring sample product into these accounts so that they can treat.

Series of patients, whether they are staff or some of their customers and that logistically takes some coordination both on the reps part and on the practices part and the scheduling of patients. So if you look at kind of the bottleneck, that's probably got more of a impact on the onboard even have an account then the actual training program itself and then.

We will see a range of behaviors by these accounts to onboard some are convinced and are leaning in our all in on Dachsie early on trying to figure out which of their patients does this best fit for some accounts are going to be a little more measured and are going to treat some patients. They are going to follow up in the short term and given that the.

The main benefit that a lot of these accounts C. With Axophyte is the duration profile. Some are then going to want to wait longer also to see the duration proud profile to inform and then we have a group that are going to be a little bit more cautious they'll treat some patients and then theyre going to wait and maybe ask for them. So given that we didn't kick off our full commercial launch until March we are seeing those accounts.

Move through that cycle in a way that we would have predicted from the beginning and so we're seeing them in these different phases.

Our current focus is on those accounts that we have an existing relationship with.

Given that we have.

No them and have that relationship and so as we go forward towards the back half of the year, we'll see those accounts start to play out in terms of their experience with the product as we continue to onboard new ones as well.

And just a quick follow up.

What portion of your accounts on Jakafi are coming down in Nashville. These days, we're training versus the reps actually going onsite. So the practitioner to get trains whats that mix look like.

Yeah, we haven't said specifically the mix, but it's definitely I would say, it's starting to shift more towards the virtual side of it in the early phases. It was much more natural base, but I think because of the virtual options and the flexibility that we're providing to both the sales reps in the accounts, we're seeing that tip, a little bit more towards the virtual side now.

Okay. That's helpful. Thanks.

Great. Thanks, David.

Your next question comes from the line of Chris Giovanni from Goldman Sachs. Your line is open.

Chris Chris.

Yes, sorry about that mute on the ordering pattern. Obviously you kicked off in December with an unprecedented level of pre orders can you talk about that particular tranche those folks who are part of the initial target group and whether Youre seeing reordering now we are now six months post and I use that time frame to think of.

Downstream potentially utilization during the first quarter and durability.

Anything to help us comment to sort of get a sense for whether that initial group that you were targeting and reordering and then a second question. Maybe can you comment more broadly about the tone of market in general both for neurotoxin and for fillers.

Some competitors have talked about a more sluggish similar market dynamics, given the higher price point for that and maybe little slower to recover what is it you're seeing in particular weaker prestige target customer base of the market tone for both of those segments toxins and Chillers.

Sure.

Thanks, Chris So first off on the ordering patterns.

Go back to our Q1 last quarter, we talked about.

Review accounts, making up a majority of the revenue in Q1, and we made that commentary because.

In Q4, because of the large amount of purchases that people made at the very beginning of their experience with <unk>. We wanted to address some of the concerns around stocking and so we did see in Q1 that that represented the majority of sales in the first quarter and as we said we trained a little over 400 in that preview account, but that was to put sort of.

That stocking order into context, now that we've gone into full commercial launch.

The preview accounts no longer make up a majority of our account base and they don't make up a majority of our revenue base at this point.

But again in that preview group, we're seeing a mix of behaviors. We're seeing some who are all in where <unk> has become their primary toxin, we're seeing some where it fits into their ecosystem along with other toxins, which frankly is the beauty of what <unk> offers is the great thing about our business models it doesn't have to be.

<unk> everything to everybody, we know from our market research that duration is the number one unmet need and that this will definitely resonate with a healthy portion of their consumer base and so we're seeing a group that's in the middle that's still trying to figure out even in the previous group, where where does this fit in terms of what percentage of their practices are going to make up and then we see some that are a little bit more.

Served at that have used it thought the results were great and then have sort of said <unk> offer to a certain subset of patients that might be smaller and patients that ask for it and so that group no longer represents the majority as we move into this full phase I think it's early to start to getting into reordering trends and stuff because the full commercial cohort.

Might behave a little differently than the previous group, but we've been able to refine those learnings from the preview group with its launch and we feel very good about how we streamline the messaging the feedback around pricing expectations setting in terms of this new growth group.

And then on your second question about the tone of the market.

Again, given that we are focused more on the prestige segment, we continue to feel very good about.

The overall health of the market certainly <unk> and.

In our business model is more advanced and as you said I do think that we have heard from some of the accounts that they are seeing perhaps maybe a little bit more measured approach in some cases with consumers on the filler because of the cost.

And the lack of frequency of that whereas the toxin appears to continue to be very robust and a little less affected but again, given where we are in our launch trajectory, it's going to be less of an issue, but we have heard a little bit of that narrative out there I think there's optimism for the back half of the year and Thats.

Thats still to be seen.

Got it thank you.

Thanks, Chris.

Your next question comes from the line of Stacy <unk> from TD Cowen Your line is open.

Hi, Thanks for taking our questions and congrats on the quarter. So we have a few questions.

So if you'd be willing to share as a teaser for the September R&D day, what might be some potential metrics that you might provide as we track the tax file lines. So that's the first question and then if we could.

Would you be willing to disclose how many patients have been injected with taxpayer right now maybe some anecdotal feedback on re treatments or patients returning.

Just as we are trying to kind of get some some measurement for the launch and then finally regarding cervical dystonia upcoming approval how should we be thinking about early payer discussions just in terms of the flexibility regarding frequency for treatments and potential range of doses. So just help us understand the potential positioning of the product. Thanks, so much.

Sure Stacy so maybe I'll take the first two and then the third one off to duston on the CD question on the payer side of things. So yes September .

September day, we talk in our scripted remarks about our ongoing confidence in the blockbuster potential and aesthetics and we talked about with the recent $100 million capital raise plus the additional $50 million notes from a theory that we can fund our broader business to breakeven and so we feel those are important.

Milepost to put out there in terms of how we're thinking and feeling about the business overall.

At the September Investor Day, our goal is to really provide more details behind what's given us the confidence in the business Youll hear from physicians, who have real world experience with the product and there'll be some good Q&A there, while we spend a lot more time on the therapeutic side of it and then we'll talk a little bit about kind of what our planned financial guide.

<unk> is going to be in terms of revenue and timing and those types of things.

And so our goal is to provide more of the building blocks as to why again, we have the confidence in the business that we do in <unk>.

Are patients treated I think thats, we can align that up with revenue.

And for the most part physicians are ordering a lot of product thats going to sit on the shelf and so you can kind of back into the.

The revenue and the number of vials in the assumed amount of product per patient. We don't have a really good way to note number of patients treated because somebody might use a couple of hours on one patients and somebody might use apple bias. So it really depends on how much product, they're getting on a per patient basis, but I think revenue.

At this point, we think is probably the best indicator to look at overall demand in Houston as Doug mentioned in his scripted comments, we feel very good about the first three quarters of our launch in that from a revenue standpoint, it's outpacing any of the other toxin launches outside of botox cosmetic and the market so even with our very measured.

And disciplined approach to how we're rolling this out we feel very good from a revenue standpoint in terms of how the first three quarters have played out.

And I'll turn it over to you on the CD side of things, yes. Thanks Mark.

Stacy I think we're really excited about the opportunity to kind of get our feet into the therapeutics market with this unique formulation and <unk>, it's been more than 10 years since another treatment option as happened had been available in cervical dystonia and so these patients have significant desires for an improved treatment paradigm quite different than what you kind of see in the aesthetic side.

In terms of there are certain satisfaction levels and things of that nature on the aesthetic side, but but in cervical dystonia.

There's certainly room for opportunity here to improve the patient dynamic.

Our team has been having preliminary conversations with.

With payers ultimately the desire to improve patient outcomes is key and we believe that we will have the same flexibility that you typically have in this market around dose titration.

Expansion of the sales force I guess, just how it messaging changed from sales if at all and what are the main goals and kpis. Thanks.

Yeah. So.

Two side of it.

It's more or less around the salesforce expansion, we added the 50 raps and we were had sort of telegraphed our plan to expand that field force for quite some time given that we've been at 100 reps for the last two years and that team has done a really good job of selling the R. H a collection, but we knew that with the addition of <unk> that they say what is going to become more complicated for the reps there.

We're gonna have to sell both R. H a <unk>, while also looking to expand accounts and so we felt the best way to prepare for that was to increase the number of reps. The great thing about it differentiated product is that there's plenty of opportunity to drive share adoption gross but it takes a little bit more handholding and work on the front end too.

To educate practices about all the differences with that product. So really there hasn't been a change in messaging due to the salesforce expansion if anything it's trying to make sure that their arms to be able to sell both products and not get pulled too far in one direction, obviously with the docks if I launch that's generating a lot of excitement and enthusiasm.

<unk> I'm in the market, but obviously, they've got a cell or <unk> as well and we talked a lot about sort of the headwinds tailwinds as we ultimately got into that.

Expansion that that they were going to be some things that we think are gonna be tailwinds over time, but that in the near term in terms of handing off relationships and passing over one relationship from one rep to another we knew was going to take a little bit of extra effort on that side of it and so that's really on the messaging side, but nothing's really changed there.

And on the metric headache, you you you would kind of envision that it's really a revenue target metric for each rep rates are built off of quotas.

And ultimately what are good health metrics for them to look at how many accounts are ordering with them in each territory that's different for territory different geographic geographic territory. They look at what's the kind of crossover with the action already J and so it's early but they're looking at those traditional metrics.

And roll up quite differently now.

Because we have 150 geographies that we're looking at versus 100, and so so some of those metrics are gonna be different and so that's why we're looking at those things and we'll be able to kind of continue to watch those but we feel good about our progress.

Great. Thanks, so much.

Great. Thank you.

Your next question comes from the line of Annabel, sending me from Stifel. Your line is open.

Hi, Thanks for taking my question I have a few as well.

So clearly your grandfather.

From the 400 initial focus accounts, but as he broaden out maybe not yet and the full 6000 would you say that you've gone deeper than some of the initial accounts or broader with tax fine. I guess also is you brought in how are you able to control I guess, both the injector experienced in the message in these first.

For people are still trying to I understand how to use it what the product characteristics are with with with <unk> and then you had noted specifically that you've gotten some learnings from the initial.

Batch of physicians Uhm, how is your <unk>.

<unk> messaging changed specifically with regard to these learnings from the first injectors, that's I guess.

20 questions [laughter].

[laughter]. Thanks, Annabel yeah. So in terms of the deeper versus broader I mean, the nice thing is even if you look at where rat with already J. It's 6000 accounts. It's a smaller subset of the 40000 account. So we're already prioritizing those accounts were were going at it in a targeted fashion and because we've added another 50 rash.

We tried to break down these territories into manageable pieces. So that the reps are able to spend the necessary time to make sure that when the onboard an account that they are able to provide them with the necessary resources to be successful and again, we've got a very thoughtful process from the training we talked about to how they treat patients out of the gate with a <unk>.

They're providing samples and then with a follow up and the activities are and so just like with our AJ. We believe that this targeted strategy is the right approach and.

The reps have to continue to manage through the Onboarding of new accounts will they also schedule and allocate time to go back and circle up with existing accounts that have can experience with it and this is going to be an ongoing focus worst training and education isn't going to start and stop with their first use of the product is going to be an ongoing follow up and.

Passing on tips and tricks, which gets to your second question of what were those key learnings from the preview program and I think we've talked about some of these but we knew that people were going to reconstitute a little differently. Obviously, we've got on on label recommended reconstitution, but people reconstitute differently, even with other conventional toxins.

And so they were gonna experience and experiment with some of that.

Pricing how are they going to price it to the consumer obviously the higher the price I think the expectations of the consumer goes up so what's that sweet spot for the practice, where there is more margin opportunity for them, but also a good experience with the patient and just kind of their experience in different areas on the dosing side of it as well.

Well, we did find that some of these early practices just out of conservatism. We're we're dosing at a level that was delivering less than the amount of neurotoxin that that would be giving with a competitor and so you weren't trying to make sure that they are appropriately dosing. So all these things have led to a refined approach around.

One patient and expectation setting pricing kind of what people are seeing from Ah Ah Ah Ah dosing standpoint in glabella area to make sure that they are dose in the right way and we believe that all this has helped US again with a more streamlined approach to onboarding accounts.

Mmk and just a follow up on the 50 sales reps when exactly did they come on board and get fully trained and.

Shall we have can impact yet or is it can it be more measure. It just based on the time that they have to spend with the accounts and onboard the <unk> you know I'm important these accounts.

<unk> 30, you know that 50 per cent increase in your in your in your sales force I would imagine it would have had an impact more significant impact.

Yeah, well, we all boarded them late Q1 early Q2, and so some of these folks come from the aesthetic industry others come from.

Other types of medical technologies, where they understand the sale at the physician level and.

So you can imagine some of them are going to need a little bit more training and education to come up to speed in the market. So like you want early Q too you start cutting territory's they start going out there having to make sure that they are servicing existing account. So there's a handoff process with some of our existing account.

In terms of fully productive we talked about Q3 is when we would expect to start to see them fully productive obviously some hit the ground running in Q2 and others, they're gonna take a little bit longer to get up and running because they're newer to the overall industry, but that's that's sort of the cadence of the starting and what we would expect from them.

Okay got it and then if I can squeeze in one about cervical dystonia have you had label discussions with F D a and what <unk>.

<unk>, what you might be able to include their outside of just clinical study data regarding either durability factor. Maybe you know alright can you make specific durability claims are specific re treatment claims and the label to to differentiate from the current products.

Is it just like with our <unk> our lines approval, we didn't get into the specifics of where we were with our agency discussions, but what we did say with boller lines is that given the effort and a thought that went into designing the clinical trial program that we did expect the the data from the clinical trials to be in the label as we believe that that's the most comprehensive way to represent.

The products performance to clinicians so that they can make sure.

They can give to patients that the best experience.

As you probably recall from our cervical dystonia trial, we saw again consistent duration of effect similar to what we saw an article about our lines trial and and also we saw very encouraging safety results in the trial as well and so we would expect the data from the cervical dystonia clinical program to be in the label in that <unk>.

<unk> ultimately underpin what we can say about the product in the market.

We do have the dates coming up August 19th So we continue to feel cautiously optimistic about the F. D. A meeting that timeframe again, we can't control that for sure, but we feel good about where we are in that process.

Got it thank you.

Alright, thanks anyway.

Your next question comes from the line of Tim logo from William Blair. Your line is open.

Thanks for taking my question and maybe just to.

Dig a little bit deeper into earlier comments can you just explicitly address some of the noise that we're hearing on the market around the duration of gag safari might not be sick, but not the six months and with the and as you mentioned Mark the data expected and the C D <unk>.

<unk> will be <unk>, you know it has been similar to feel better lines to date are you confident that they will not be major differences in how duration as you can be therapeutic market versus the aesthetic market.

Yeah. So thanks, Tim So first on the noise on the duration side of it I would say first and foremost the experienced that we're seeing play out in practice and the aesthetic market is very consistent from the clinical trial data. So if you look at our trial data median duration was six months, which meant some patients got less than six months and some got more than six months and I think that's <unk>.

<unk> expectation setting and finding the cohort of patients at this being a resonate the most with and I come back to it. So I guess, it's not surprising if somebody has promised to patient six months and they don't get six months that there could be some level of disappointment, but the great news about this is that we know that there's a large group of patients out there.

Who would like to get more duration and where this is going to resonate and so I think it's quite possible will you'll have a practice, where <unk> resonates with a large portion of the patients, but yet, though we saw him that for whatever reason either for pricing or expectations. It might not be the first choice, but that's great. Because we think there's a a great market that we can build out there.

With a differentiated profile and so again, we continue to feel really good about the performance of the product and and the fact that it's performing very consistent with what we saw in the clinical trials.

On the cervical dystonia side of it and we have no reason to believe that the outcomes and cervical dystonia would be different from what we saw in the clinical trial. We saw both 125 and the 250 unit dose very encouraging duration results and as I mentioned before a very encouraging.

Encouraging safety profile as well.

As we've talked earlier.

It's not only an opportunity for perhaps more duration for these patients and longer symptom relief, but perhaps even equally important is making sure that in this 12 week window, where patients cannot get retreated that they see as much symptom relief as possible in in the survey that we referenced in our prepared remarks.

Over 80 per cent of patients see symptom reemergence within that 12 week time frame and so we think that.

<unk>, if I could represent a really compelling treatment alternative for a number of C. D patients and again sitting here today, we would expect that the product will perform similar to how it didn't clinical trials.

Great. Thank you.

Thanks.

Your next question comes from the line of parents plane from Morgan Stanley . Your line is open.

Great. Thanks, so much for taking the question I was wondering if there's any reason why <unk> growth walnut a minimum be linear through the third quarter in fourth quarter of this year. Thank you.

Yeah, Great question parents, I mean, I think it's just it's hard to predict we feel really good about the overall trajectory of the business and the opportunity and feel very good about our statements that we made about the.

Blockbuster potential in aesthetics, which is obviously going to be significantly underpinned by <unk> performance. The path in the direction that we get there is difficult given that as I pointed out earlier accounts are gonna engage at different levels. Some are going to engage in be onboard from the beginning and others are going to treat some patient and then wait and see.

It's really hard to know what the the overall cadence that that is going to be in his you know we're not at a point, where where your guiding yet.

But we do feel very good about our ability to drive.

Good growth over time.

And your next question comes from a line of <unk> from B N. P. Your line is open.

Hi, Thanks for taking my questions.

Uhm duration. So we have some fears have mentioned that next exercise duration feedback. So you said iPhone ATC backing you you and you said that Tony due to practices using vanilla disease.

<unk>.

Yeah, Thanks to van.

I mean, it's hard it as I mentioned and kind of the the response to Tim's question.

We're seeing performance, it's very consistent with the clinical trial data. So again, if if a patient has promised six months and they get something less than six months, particularly if they're paying a healthy premium there could be disappointment and so I think it all comes down to.

Patient expectation, how much of a pricing premium that they're asking for and and ultimately what they get but we believe that based on the data that we're seeing and experience with the preview group that healthy portion of patients are getting the value that they were paying for and that doesn't mean that they can't co exist where you.

Some patients who for whatever reason feel they didn't didn't get the duration or the duration wasn't worth the money, but yet you have a large and healthy group that did get there and that's part of working with these practices around the expectations setting again that the products performing very consistent with what we've seen in the clinical trials I don't know that you can kind of limited.

To any specific group, but again, we're very encouraged with what we're seeing in the market.

Thank you for that and then just a quick one on the <unk>. So why don't you send reach Houston second <unk> 250 me so and.

Uhm changed the amendment.

Yeah. Thanks and von this is Toby so we we took prudent steps as we mentioned on the prepared remarks. So in Q2 weird raised $100 million through our a T. M. And then we looked at sort of our capital structure and we thought it would be prudent to work with <unk> to find a reasonable amount the the.

Sort of managers that debt to equity ratio on our cap structure and so they're they're very constructed defined away with that still eight and a half fixed mmm right for a second chance, where we feel really pleased with the partnership with it.

Thank you very much.

Thanks.

And again, if you would like to ask a question Press Star then the number one on your telephone keypad. Your next question comes from the line I've Charles away from Missoula Ho Your line is open.

Hi, This is Charles on for <unk> I just had one question on the if your strategy has changed in terms of targeting the prestige accounts cause some investors have pointed out that uhm meadows spots had been offering <unk> recently.

So.

<unk>.

Thanks, Charles No. Our strategy has not changed again, if you if you look at our prestige strategy one of the things that underpins. The prestige strategy is that does to know advertise pricing and so it's really accounts that are not looking to use solely prices the way to drive new patient traffic, particularly with our products.

That ultimately gets adjudicated at the rep level and so we trust them a lot to make good choices and in today's growing aesthetic market. You also have a number of accounts that might have a medical director who is.

A physician at one practice, but yet as a medical director at another practice and in those cases, you can find that product makes its way from one of these practices to another and so without the specifics it would be hard to know, but no. Our strategy has not changed we continue to focus on accounts that are comfortable with our no advertised pricing policy for.

For our products, which we think ultimately.

Horses patients to make a decision around who do they want to go for our products in any given market and not just have price be the driver, but ultimately it's the the rap that makes those decisions at the local level and again as I said in many cases, you'll have a medical director or a physician or an injector that might crossover a number of different accounts in relationships.

Where you can see some cross pollination, there as well.

Alright, thank you.

Great. Thanks for us.

And your next question comes from the line of Douglas sale from H C. Wainwright. Your line is open.

Hi, good afternoon, thanks for taking the questions just curious.

Curious in terms of the accounts that are right now really leaning into <unk> are you finding that those are accounts.

That were already sort of open just switching away from botox and embraced kubo or you know is it that they are just simply adding <unk> are you finding it it's botox account looking for you know.

<unk> and.

To add to their practice, just giving the differentiated profile. Thank you.

Douglas stuff and I'll take a stab at that one we really haven't seen a specific type of account that that's going to lean <unk> more than others based off of the competitive landscape. I think we've seen there are certain providers that I got a really good experience, where there'd be preview or on the early side of our launch trajectory. It fits their practice in terms of their.

Pricing dynamics day, they've had good results, they're continuing to drive that through until we've seen some that are switched significant patients off of Ah dysport or a <unk> or see them and we've also seen that happen with botox I'll certainly obviously botox has the largest share and obviously has the largest kind of I'd say moat around them as it relates to their loyalty programs and coupons and things.

And so I'm sure, we'll we'll we'll be dealing with some of those pieces over time, but but no. We haven't seen kind of a specific type of practice and ultimately leaned into <unk>. It's really early and so we've got equal opportunity across the landscape, because despite whatever product or using <unk> as an opportunity to provide that patient something different.

And as a follow up are you finding or when you talk to injectors are they sort of waiting for the <unk> for the patient to bring it up or are they selecting certain types of patients who they deal <unk> most benefit from from that spot. Thank you.

Yeah, Doug Health assessment, <unk> realize and most of the launch it it's pretty similar so you've got some practices that are bringing up to every single patient. They believe in it they they believe that value proposition and they have a high conversion rates. Some practices are more the wait and see type and are waiting for some of those activities around the consumer awareness, which obviously, we talked a little bit about it and more act.

Invading some of those and you got others that are that are kind of even sitting on the sidelines waiting to kind of see how others approached product that's pretty typical with aesthetics and you'll also see that that's why it's not maybe a yes or no today. It's gonna have this overall progression. So I think that's kind of how we are seeing a breakdown in as we get more and more customers in.

They're in different stages, it will help us determine had a segment those.

Okay, great. Thank you.

Yep.

<unk>.

There are no further questions. This concludes today's conference call. Thank you for your participation you may now disconnect.

Mmm.

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