Yahoo Finance Revance Therapeutics, Inc. (NASDAQ:RVNC) Q1 2024 Earnings Call Transcript
Revance Therapeutics, Inc. (NASDAQ:RVNC) Q1 2024 Earnings Call Transcript May 9, 2024
Revance Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to the Revance Therapeutics First Quarter2024 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this call is being recorded today, Thursday, May 9, 2024. I would now like to turn the conference call over to Laurence Watts of New Street Investor Relations. Please go ahead. Laurence Watts Thank you, operator. Joining us on the call today from Revance are President and Chief Executive Officer, Mark Foley, and Chief Financial Officer, Toby Schilke. During this call, management will make forward-looking statements, including statements related to the impact of our pricing and strategy on DAXXIFY on adoption; expectations related to product adoption, account activation and reorders; consumer needs, preferences, and behavior; the benefits and value to us, practices, and consumers of our product, including the efficacy, duration, skin quality, and safety of our products; access to our products; future therapeutic indications; 2024 guidance; cash flow breakeven; positive adjusted EBITDA; future capital expenditures; anticipated revenue and top line growth; our strategic priorities; our anticipated success; our blockbuster potential; our ability to grow and take share; our market opportunity and expectations; our strategy, planned operations, and commercialization plans, including consumer offers and timing of those plans.
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. Factors that could cause these results to be different from these statements, include factors the company describes in the section called Risk Factors in our in our annual report on Form 10-K and our quarterly report on Form 10-Q. Revance undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations. Also on today's call, we will present both GAAP and non-GAAP financial measures. Reconciliations of GAAP to non-GAAP measures are included in our earnings release. With that, I will turn the call over to Mark Foley, President and Chief Executive Officer of Revance.
Mark?
Mark Foley: Thank you, Lawrence. Good afternoon, everyone, and thank you for joining our first quarter 2024 financial results conference call. Q1 2024 was the second full quarter reflecting DAXXIFY's strategy change and we are encouraged by the ongoing traction and momentum that we are seeing related to this change. Specifically, DAXXIFY aesthetic units sold were up 105% year-over-year and notably up 7% on a quarter-over-quarter basis, despite Q1 traditionally being a seasonally down quarter when compared to Q4. Moreover, DAXXIFY grew its market share from 3% at the end of Q4 2023 to 3.7% at the end of Q1 2024, highlighting not only its ability to grow, but also take share. In the first quarter, DAXXIFY net revenue was $22.1 million after a reduction of $2 million related to our consumer coupon program, which functioned like a rebate.
While we were encouraged by the feedback we received on the consumer coupon program, we will look to structure future offerings in a way that doesn't require a full revenue offset, and that is more consistent with competitor programs from a revenue treatment and sales and marketing expense perspective. Importantly, feedback from the field continues to be positive and reveals that practices are re-engaging with DAXXIFY not only because of its duration profile, but also because of its fast onset and improved skin quality, which is made possible by its unique and differentiated peptide formulation. To that end, in the quarter, I was able to personally meet with over 200 injectors across a variety of regional dinners and office visits, and I was very encouraged by the receptivity, feedback, and support we are getting as a result of our new strategy.
With our reduced price to the practice, we are encouraged to see that accounts are passing along the savings to their patients, thereby allowing them to experience DAXXIFY's performance benefits at a price that is in line with other toxins. At the end of the day, customers are reporting that they are choosing to lean in with DAXXIFY because they feel it is a better product. In the quarter, we also launched a new DAXXIFY messaging campaign titled, The DAXXIFY Difference – Fast. Lasts. And the Look. And we removed the no advertised price limitation, which has allowed accounts to more easily promote DAXXIFY to their customers and which will help further amplify DAXXIFY's voice in the market. Consistent with prior commentary, our last two quarters were focused on existing DAXXIFY accounts in order to reestablish confidence and a more positive relationship going forward.
We believe that this focus was necessary to build the right foundation for long-term success. Now that we have concluded this phase, we expect a return to a more normal new account cadence and portfolio focus. In the quarter, we were also encouraged by the strong reordering activity as existing accounts represented more than two-thirds of DAXXIFY revenue in the quarter, the higher average order size per account representing deeper penetration, consumer end pricing coming in line with competitor prices reflecting that the strategy change is having the desired effect, all of which has contributed to a meaningful uptick in unit sales on both an annual and quarterly basis as well as a healthy gain in market share. Turning to RHA, despite filler market softness in Q1 and outside DAXXIFY focus, we continued to grow our filler market share and ended Q1 with a 9.8% share, up from 9.1% in Q4.
While RHA revenue declined 2% year-over-year, our ability to take share in a soft filler quarter positions us well going forward, particularly as the market returns to more normal growth, we launch some of our new initiatives, and as our focus shifts to a more balanced portfolio approach. Underpinning our ongoing market share gains and traction in the filler market is the quality and differentiated performance profile of the RHA portfolio, combined with our commercial team's ability to execute. As we move into Q2, we are excited to be launching RHA 3 for lip augmentation and fullness, as lips are the number one filler procedure performed in the US. And while Q1 revealed some softness in the US filler market, we expect the market to return to historic high-single-digit growth through the balance of 2024.
To this end, we are encouraged by the early traction and momentum we are seeing in Q2 related to both the filler and toxin markets. Lastly, at the end of the first quarter, there were over 7,500 aesthetic accounts, of which 3,500 have ordered DAXXIFY, which leaves us with significant runway to further expand our number of accounts and ordering base going forward. Now let me turn to our therapeutic franchise. This afternoon, we announced the commercial launch of DAXXIFY for the treatment of cervical dystonia, marking our entry into the $2.7 billion US therapeutic neurotoxin market, which is projected to grow 8% annually over the next five years. DAXXIFY is the first and only peptide-formulated long-lasting neurotoxin that offers the potential to improve duration of symptom control with a favorable safety profile, providing patients and physicians with a compelling new treatment option for a painful and disabling chronic condition.
DAXXIFY for cervical dystonia provides a significant opportunity for Revance and marks the culmination of our decades-long mission to bring true innovation to the therapeutics market. While toxins are the gold standard of care for cervical dystonia, patients struggle to achieve sustained symptom relief in between treatments. This is due to the fact that toxin treatment can only occur every 12 weeks based on product labeling and reimbursement guidelines, even though the therapeutic benefit of current toxins typically wears off 8 to 10 weeks after injection. As a result, this frequently leaves patients with unmanaged symptoms that can lead to significant pain, social stigma, and the inability to drive or work. DAXXIFY has the potential to offer CD patients more good days and better symptom control in between treatments, ending the rollercoaster ride that many cervical dystonia patients experience.
Following our CD approval in August of 2023, we launched the PrevU early experience program with the objective of optimizing treatment outcomes and ensuring smooth practice integration. To date, real-world clinical results from PrevU, which has now ceased enrollment as we move into our full launch, are in line with our prior ASPEN clinical program, providing us with a strong foundation for commercial success. The program enrolled over 300 patients, most of which are now on their second treatment cycle. Based on a survey we conducted, which included all 17 physicians who participated in the PrevU program since inception, 94% indicated that they perceived DAXXIFY to last longer than what they had seen with conventional botulinum toxins based on just their first treatment cycle experience and prior to dose optimization.
Additionally, we've been pleased to see the DAXXIFY safety profile continues to be encouraging over a broad range of doses. We look forward to sharing some of our PrevU insights at upcoming medical meetings. Post-approval, we established our therapeutics commercial infrastructure in preparation for launch and received our permanent J-code, which will streamline the reimbursement pathway for providers. Also, we operationalized our Access DAXXIFY reimbursement support services in order to minimize potential hurdles to adoption. Within that platform, we have tools and resources to support practices, including our patient affordability programs, a copay program for the underinsured, and a patient assistance program to ensure out-of-pocket costs do not impede access to therapy.
Currently, DAXXIFY is covered for over 78% of commercial lives, which, when combined with our government coverage, represents over 200 million lives and includes the top health plans in the US. We are energized by our mission to positively impact the lives of cervical dystonia patients and believe that we have the right payer infrastructure in place to facilitate the smooth switch process. That said, given the conservative nature of the treating physicians and CD market size, we anticipate initial revenues will be modest. However, we remain bullish regarding DAXXIFY's potential in the cervical dystonia market and subsequent therapeutic indications and our preview results have only helped to further increase our confidence in DAXXIFY's long-term potential in the therapeutics market.
Before I turn the call over to Toby to cover our first quarter financials, I want to highlight the progress we're making on one of our other 2024 strategic priorities, namely, focused and disciplined capital allocation. In conjunction with our DAXXIFY strategy change, we've implemented a number of OpEx efficiency measures designed to both streamline and lower our overall operating expense profile while also ensuring that we can free up the necessary capital to invest in both our aesthetics and therapeutics franchises. I'm pleased to report that we are ahead of plan with respect to these efforts, and Toby will touch on that shortly. With over $275 million in cash, cash equivalents, and investments at the end of Q1, the ongoing growth and opportunity we have with DAXXIFY and RHA, and initiatives in place for the second quarter and balance of the year, we are reiterating our guidance, which includes net product revenue of at least $280 million, non-GAAP OpEx of $290 million to $310 million, which is currently trending to the low end of the range, and our goal of reaching positive adjusted EBITDA in 2025.
With that, I'll turn the call over to Toby to cover our first quarter financials.
Tobin Schilke : Thank you, Mark. The press release and the 10-Q we issued today details our financial results in full. So I will only go over the highlights on this call. Our Fintech Platform business, which was our legacy service segment, is now a discontinued operation and is reflected as such on our financial statements. Consequently, the results that I will discuss exclude discontinued operations. Total revenue for the first quarter ended March 31st, 2024 was $51.9 million compared to $45.8 million for the same period last year, representing a 13% increase in revenue due to DAXXIFY. Net revenue for the first quarter included $29.6 million of RHA Collection revenue, $22.1 million of DAXXIFY revenue and $0.2 million of collaboration revenue related to our biosimilar to Botox program with Viatris.
Total operating expenses from continuing operations for the first quarter were $98.8 million compared to $92.5 million for the same period in 2023. Excluding cost of product revenue, stock-based compensation, depreciation and amortization, non-GAAP operating expenses from continuing operations for the first quarter were $73.6 million compared to $64.5 million for the same period in 2023. As Mark alluded to, we are reiterating our guidance for 2024 and specifically related to our non-GAAP OpEx guidance of $290 million to $310 million, we are currently trending to the low end of that range due to cost savings and other efficiency initiatives. On the balance sheet side, our current cash position, bolstered by an equity offering in the first quarter, which resulted in gross proceeds of $100 million, in combination with our operating plan, provides us with multiple levers to achieve positive adjusted EBITDA in 2025.
Finally, Revance's shares of common stock outstanding as of April 30th, 2024 were approximately 104.4 million with approximately 113.5 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. For the rest of 2024, we remain focused on delivering at least 32% top line growth, while effectively managing spend to reach positive adjusted EBITDA in 2025. We believe this is achievable through successful execution on our DAXXIFY and RHA growth initiatives in aesthetics, our launch of DAXXIFY in cervical dystonia, and through maintaining disciplined capital allocation while ensuring we have the necessary resources to fund our two franchises. We remain encouraged by our ongoing market share gains across both DAXXIFY and RHA, and the positive response we are seeing to DAXXIFY strategy change as reflected by the significant increase in unit volume on a year-over-year and quarterly basis. As a result, we continue to have conviction in our blockbuster potential in the US aesthetics market. With that, I will now open the call up for questions. Operator?
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