Revance Therapeutics, Inc. (RVNC) on Q1 2022 Results - Earnings Call Transcript
Operator: Welcome to the Revance Therapeutics’ First Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this call is being recorded today, Tuesday, May 10, 2022. I would now like to turn the conference call over to Jessica Serra, Head of Investor Relations and ESG for Revance. Please go ahead.
Jessica Serra: Thank you, Nika. Joining us on the call today from Revance, are Chief Executive Officer, Mark Foley; President, Dustin Sjuts; and Chief Financial Officer, Toby Schilke. During this conference call, management will make forward-looking statements, including statements related to the regulatory process and potentional approval and timing of approval of DaxibotulinumtoxinA for Injection in glabellar lines and a therapeutic indication, plans related to RHA Redensity and OPUL platform the benefits to us practices and patients of our products and services, our financial performance, 2022 guidance, expected cash runway, strategic priorities, and capital allocation plans, our market and revenue opportunity and the market demand for our products and services, portfolio growth and our business strategy, planned operations and commercialization plans. With that I will turn the call over to Mark Foley, Chief Executive Officer of Revance. Mark?
Mark Foley: Thank you, Jessica. Good afternoon everyone, and thank you for joining our first quarter 2022 financial results conference call. We had a very productive start to the year delivering on several important objectives. First and most importantly, the FDA accepted our BLA resubmission for DaxibotulinumtoxinA for Injection for glabellar lines. With the acceptance, we received a new PDUFA date of September 8, 2022, which reflects a Class 2 resubmission and will include a reinspection of our manufacturing facility. This important regulatory milestone was made possible by the completion of our new working cell bank qualification package in Q1. And I would like to thank the technical operations, clinical and regulatory teams for all of their hard work in achieving this objective. Having a PDUFA date is key. This will be the first time since our deferred action in November, 2020, that we are working towards a specific date. We will continue to work with the FDA to facilitate their timely review while recognizing that we are now one step closer to a potential approval later this year. Another priority was to strengthen our balance sheet and extend our cash runway in order to support our strategic priorities of getting our lead asset approved, increasing sales of our RHA Collection and enhancing our customer relationships with OPUL. To that end, we were pleased to achieve this key objective by completing a $300 million non-dilutive debt financing with Athyrium Capital and raising an additional $31.8 million in net proceeds from our ATM offering program. With our recent financing activities and the additional notes that we can issue with the FDA approval of DaxibotulinumtoxinA for Injection, our cash runway can be extended into 2024. We believe we are well positioned for the significant opportunity ahead at Revance. In aesthetics, we believe our innovative portfolio of products and services will allow us to capitalize on the multi-billion dollar market opportunity that continues to grow at a healthy clip. [Indiscernible] portfolio is our long-acting neuromodulator and we are both ready and excited to bring our drug product to market. Our commercial infrastructure is strong anchored by our proven 100 plus person sales team, or over 3,500 aesthetic accounts, which continue to grow, and our industry-leading training and experience center at our Nashville corporate headquarters. Together with our differentiated commercial strategy and complimentary portfolio offering, we believe DaxibotulinumtoxinA for Injection has a solid foundation for commercial success. Additionally, in advance of the anticipated approval of our neuromodulator, we’ve entered into partnerships with two experienced fill finish contract manufacturing organizations to help support our production needs. This is in addition to the drug substance and drug product we will be manufacturing at our Northern California facility. Turning to therapeutics. We continue to be excited about the opportunity for our long-acting neuromodulator. Currently we are ready to file a supplemental BLA for DaxibotulinumtoxinA for Injection for the treatment of cervical dystonia following the FDA approval of our indication for glabellar lines. We successfully completed our ASPEN Phase 3 clinical program in November of last year and have been actively preparing our supplemental filing. Given the encouraging data from our clinical programs, which showed that our drug product was generally safe, effective, and had a long duration profile. We look forward to our potential opportunity in therapeutics as well. The indication for cervical dystonia will be our entry point into the $1.2 billion global muscle movement disorder category, which has a compound annual growth rate in the high single-digits. In summary, we have several important near-term catalysts across our business and execution will continue to be key. We remain bullish on the long-term market opportunity for Revance and in particular, on our ability to lead the long-acting neuromodulator segment. I would like to thank all members of the organization for their continued dedication and support in advancing our corporate objectives and priorities. With that, let me turn the call over to Dustin who will cover our performance in the first quarter. Dustin?
Dustin Sjuts: Thank you, Mark. I’d like to start by highlighting again, the significant regulatory milestone we’ve achieved with the FDA’s acceptance of a resubmission. With the September 8 PDUFA date, we are looking forward to potential approval and launch of our neuromodulator in the not too distant future. The cornerstone of the Revance aesthetic strategy is to foster long-term partnerships with exclusive providers and provide product innovation that delivers the best consumer outcomes. We believe that DaxibotulinumtoxinA for Injection once approved will anchor that strategy, build on our track record with RHA and OPUL and position us for accelerated growth in the years ahead. Now turning to our performance. Growth continue to cross our aesthetic portfolio in the first quarter with our RHA Collection reaching an all time sales of over $100 million just after completing its first year of commercial launch. RHA sales for the quarter totaled $20.8 million up 78.9% year-over-year driven by solid account growth and increased productivity within our accounts. Despite the first quarter being the slowest period of the year for aesthetic procedures, we continue to drive consumer awareness and adoption to our targeted sales efforts and live and virtual training sessions at our national headquarters. Across our products and services portfolio, total accounts grew to over 3,500 at the end of the first quarter. We have a number of training and education experiences planned over the coming months to continually drive product adoption and expertise especially as we prepare the launch of RHA Redensity in Q3 of this year. We are excited to bring to market the first and only FDA approved filler for both superficial dermal and dermal injection of dynamic perioral rhytids or lip lines. Redensity has the most stretch of the RHA Collection and has a low rate of modification to deliver a natural look that’s consistent with the rest of the collection. Given its unique formulation properties, injectors can fine tune the treatment of lip lines. We believe the product will be a great addition to the RHA Collection, providing injectors with more treatment options to optimize outcomes. Turning to our fintech platform, gross payment volume totaled $154 million in the first quarter up 66.4% from the same period last year driven by account growth and higher transaction volumes processed. On a trailing 12-month basis, GPV was approximately $570 million. The team continues to work hard to enhance OPUL’s platform experience. We are currently working on building practice loyalty capabilities with memberships and improving insights with transaction data. All the new features under development are designed to help practices grow their business and in turn, allow us to deepen our relationships with our practice providers. In short, we are excited about the future of the OPUL platform and its ability to unlock additional value for Revance. With that, I’ll turn the call over to Toby to cover our first quarter financials.
Toby Schilke: Thank you, Dustin. Before I discuss the results for the quarter, I’d like to review our recent financing activities in the balance sheet. As Mark mentioned, enhancing our financial flexibility ahead of the potential approval of our neuromodulator was a key objective for 2022. And we were pleased to achieve this goal despite being in a challenging financial market. In March, we closed a $300 million note purchase agreement with Athyrium Capital as part of our long term financing strategy to support our operating plan. The agreement will not only serve as an important bridge to the FDA approval in commercialization of our neuromodulator, but also support the growth of the rest of our aesthetics portfolio. I will go into all the details on the call, but we’ll provide brief highlights of the transaction. Tranche 1 of $100 million was issued at closing, providing us with immediate liquidity. Tranche 2 of another $100 million will be available at our option subject to the FDA approval of our neuromodulator within 18 months of closing. And Tranche 3 an uncommitted $100 million available at our option within 24 months of closing and tied to revenue targets for our neuromodulator. Further details of the transaction are available in the note purchase agreement that was filed with our Form 10-Q earlier today. With the $100 million in notes issued and an additional committed $100 million available subject to the FDA approval of DaxibotulinumtoxinA for Injection for glabellar lines, our cash runway can be extended into 2022 – into 2024. In addition to our debt financing, we raised $31.8 million in net proceeds year-to-date from our ATM program. $8.9 million of which was raised during the first quarter with the total shares of common stock issued, we have effectively completed our $125 million ATM offering that was initiated in 2020. Total cash, cash equivalent and short-term investments at quarter end was $262.6 million. For the time being our cash preservation measures that are gated to the FDA approval of DaxibotulinumtoxinA for Injection remain unchanged, and discipline capital allocation will continue to be a priority. Turning to the results for the first quarter. Total revenue was $25.3 million representing an increase of 89.9% from $13.3 million in the same period in 2021. Revenue growth was primarily due to increased sales of the RHA Collection of dermal fillers. Revenue for the first quarter included $20.8 million of product revenue from the RHA collection, $3.6 million of collaboration revenue from our partnership with Viatris, and $0.9 million of service revenue from our fintech platform. Operating expenses for the first quarter were $87.5 million compared to $83.3 million for the same period last year. Excluding depreciation and amortization and stock-based compensation, non-GAAP operating expenses were $59.9 million for the first quarter representing a 7% decline over the same period last year, due to lower SG&A expenses as a result of our cash preservation measures partially offset by higher R&D costs related to pre-commercial manufacturing and quality activities related to our neuromodulator and product development for OPUL. As a reminder, we project R&D expenses in 2022 to be primarily driven by manufacturing costs for DaxibotulinumtoxinA for Injection, which according to GAAP accounting standards are expect – are expensed as a period cost until the drug product is approved. As for our operating expense outlook, we are confirming our previously announced GAAP and non-GAAP operating expense guidance for 2022. Finally Revance shares of common stock outstanding as of April 29, 2022, or approximately $72.8 million will work with $80.4 million fully diluted shares, excluding the impact of convertible debt. And with that, I’ll turn the call back over to Mark.
Mark Foley: Thank you, Toby. In closing, we are pleased with the meaningful progress we have made from a regulatory, financial and operational perspective, all positioning us for growth and opportunity ahead. We remain focused on delivering on our strategic priorities for 2022 with the top priority being obtaining FDA approval for our highly anticipated DaxibotulinumtoxinA for Injection for glabellar lines. Also, I’d like to thank all of our stakeholders for their continued support of Revance. With that, I will now open the call up for questions. Operator?
Operator: [Operator Instructions] Your first question comes from the line of Ken Cacciatore from Cowen and Co. Your line is now open.
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Operator: Your next question comes from the line of Jim [indiscernible] from William Blair. Your line is now open.
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Operator: Okay. There are no further question at this time. I will turn the call back over to Mark for any final comments.
Mark Foley: Great. Thank you everyone for joining today’s call. We have the upcoming William Blair Healthcare Conference. So, we look forward to seeing those of you there at that conference who are going to be in attendance. And we welcome your requests for meetings directly through us as well. So feel free to reach out to Jessica if you’d like to schedule some time. With that, I’d like to thank all of you for participating in today’s call.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
