Revance Therapeutics, Inc. (NASDAQ:RVNC) Q2 2024 Earnings Call Transcript

Revance Therapeutics, Inc. (NASDAQ:RVNC) Q2 2024 Earnings Call Transcript August 9, 2024

Operator: Welcome to the Revance Therapeutics Second Quarter 2024 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, August 8, 2024. I will now hand the call over to your host, Laurence Watts with Revance Therapeutics. Please proceed.

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, Tobin Schilke. During this call, management will make forward-looking statements including statements related to expectations related to product adoption and reorders, consumer needs, preferences and behavior, the benefits and value to us practices and consumers of our products, including the efficacy duration skin quality and safety of our products, future therapeutics expansion, 2024 guidance, positive adjusted EBITDA, future capital expenditures and anticipated revenue, our strategic priorities, our anticipated success, our ability to grow and take share and market opportunity and expectations and our strategy planned operations and commercialization plans 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 our annual report on Form 10-K and a 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. Reconciliation to 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, Laurence. Good afternoon everyone and thank you for joining our second-quarter 2024 financial results conference call. The second quarter of 2024 was another period of continued progress for Revance, led by our aesthetics division and the implementation of our strategy to bring DAXXIFY to a broad audience based on strong product attributes and competitive pricing. DAXXIFY continued to show strong growth in the second quarter with a aesthetic units sold up 65% year over year and net product revenue $28.7 million, which was up 27% year over year. Importantly, feedback from the field continues to be positive and reveals that not only our existing practices reengaging with DAXXIFY, but the new account adds are accelerating due to DAXXIFY’s price comparability and appealing product attributes, namely increased duration, fast onset and improved skin quality.

Importantly, now that consumers have been through several treatment cycles, we are starting to see patient preference drive both injector utilization and new account interest. In the second quarter, we were encouraged by strong reordering activity as existing aesthetic accounts represented more than three quarters of DAXXIFY revenue in the quarter and consumer pricing coming in line with competitor prices and a meaningful uptick in unit sales on both an annual and quarterly basis without the benefit of couponing. Turning to our filler offering, the RHA Collection also experienced healthy growth compared to last year, despite overall filler market softness. Starting in April, we launched our RHA3 for lip augmentation and fullness, the number one filler procedure performed in the US.

To support the launch of the lip indication, we activated consumer and beauty editor experiences, conducted HCP training events and introduced RHA3 promotions. Along with these activities, we rolled out a campaign around lips worth framing, as well as beauty of savings promotional activities. We continue to believe that the quality and differentiated performance profile of the RHA portfolio combined with our commercial team’s ability to execute provides a stable foundation for our ongoing growth initiatives. RHA Collection net product revenue was $36.6 million in the second quarter of 2024 representing a 15% year-over-year increase. Lastly, at the end of the second quarter, accounts across Revance’s aesthetics portfolio totaled over 7,500. The company also ended the quarter with over 3,700 accounts that have ordered DAXXIFY, which leaves us with significant runway to further expand our number of accounts and ordering base going forward.

Further in the quarter, we were pleased to launch our first portfolio initiative to beauty of savings program which was designed to provide additional incentives to accounts that purchased both RHA and DAXXIFY. This program has been well received and we look forward to continuing to not only grow our account base but use programs like these to deepen our penetration in existing accounts. Now, let me turn to our therapeutics franchise. In May, 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. As such DAXXIFY for cervical dystonia provides a significant opportunity for Revance and marks the culmination of our decade-long mission, to bring our unique innovation to the therapeutics market.

Although, toxins remain the 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 to work. DAXXIFY is the first and only peptide-formulated, long-lasting neurotoxin that offers the potential to improve the 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.

Following our CD approval in August 2023, we launched a PrevU early-experience program with the objective of optimizing treatment outcomes and ensuring smooth practice integration. In May, we announced our full US commercial launch. Initial market response has been encouraging and supportive of our hypothesis that there is an unmet need for a long-lasting neurotoxin to address the large percentage of patients with symptom breakthrough on current toxin regimens. Furthermore, PrevU practices continue to treat patients and importantly continue to report compelling clinical results with DAXXIFY. To that end, physicians report that patients in their second and third treatment cycles are experiencing long duration and a safety profile consistent with our Phase 3 ASPEN program.

In PrevU, DAXXIFY was shown to deliver 12-plus weeks of sustained symptom control for patients that previously had experienced early symptom breakthrough with conventional toxins and up to 16 weeks or more for many other patients. The majority of these early PrevU accounts are also now purchasing DAXXIFY. In the second quarter, we also added a greater number of new accounts to our existing PrevU injectors. And of the total number of accounts that have ordered to date over 40% have already reordered DAXXIFY second time. On the payer and reimbursement front access to DAXXIFY continues to increase reaching more than 240 million lives covered with commercial coverage increased to 84% of total lives. Additionally, DAXXIFY is in place on the national formulary for the Department of Veteran Affairs and Department of Defense.

And DAXXIFY for cervical dystonia is also covered by each of the 12 Medicare administrative contractors with greater than 30 million Medicaid lives now covered. While we continue to make major strides in our mission to bring DAXXIFY to underserved US cervical dystonia patients we continue to anticipate that initial revenues will be modest given the conservative nature of treating physicians, reimbursement dynamics, and CD market size. Longer term, we remain bullish on DAXXIFY’s potential in the cervical dystonia market and in subsequent therapeutic indications. Now, let me hand the call over to Toby to cover our second-quarter financials.

Tobin Schilke: Thank you, Mark. Our press release and our Form 10-Q detail our financial results in full so I will only go over the highlights on this call. Total net revenue for the second quarter ended June 30, 2024 was $65.4 million, compared to $54.4 million for the same period in 2023, representing an increase of 20% due to an increase of DAXXIFY and RHA Collection volumes, despite a softer market. Net revenue for the second quarter ended June 30, 2024 included $36.6 million of RHA Collection revenue $28.7 million of DAXXIFY revenue. Additionally, we had $0.1 million of collaboration revenue amortized from our deferred revenue balance related to our VH risk [ph] collaboration. Total net revenue for the six months ended June 30, 2024 was $117.3 million compared to $100.2 million for the same period in 2023.

Total GAAP operating expenses for the three and six months ended June 30 2024 were $99.9 million and $198.7 million respectively. Excluding the cost of product revenue stock-based compensation depreciation and amortization, non-GAAP operating expenses for the three and six months ended June 30, 2024 were $74.8 million and $148.5 million respectively. Revance continues to expect 2024 total net product revenue which includes sales of DAXXIFY and RHA Collection to be at least $280 million. Revance now expects 2024 GAAP operating expenses from its continuing operations to be between $430 million to $460 million down from $460 million to $490 million. This updated outlook is primarily driven by lower actual and projected stock-based compensation.

Revance expects our non-GAAP operating expenses from continuing operations to be in the lower end of a range of $290 million $310 million. Revance continues to expect non-GAAP SG&A expenses from continuing operations to be between $240 million to $255 million. On the balance sheet side, our current cash position $232.2 million of cash, cash equivalents and short-term investments as of June 30, 2024 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 July 31, 2024 were approximately 104.8 million with approximately 113.8 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 the second half of 2024, we remain focused on delivering net product revenue of at least $280 million, whilst managing spend to reach positive adjusted EBITDA in 2025. We are encouraged by the unit and sales gains across both DAXXIFY and RHA Collection and by the early response we are seeing to our cervical dystonia launch in therapeutics. In short, we are focused on execution and on delivering on our stated goals. With that I will now open the call up for questions. Operator?

Operator: We’ll now begin the Q&A session. [Operator Instructions] The first question comes from the line of Seamus Fernandez with Guggenheim. Please proceed.

Q&A Session

Seamus Fernandez: Thanks for the question. So I just wanted to get a sense for how you see us advancing towards the at least $280 million guidance number. Third quarter historically has been a challenging quarter for aesthetics, but we’re a good way through the third quarter. So just trying to get a sense of how you think the third quarter, how we should be thinking about that kind of a flat quarter-over-quarter with the second quarter or should we anticipate that it could be down somewhat and which certainly would imply a robust step-up in the fourth quarter to make that $280 million revenue number on the basis of the regular way business. So just trying to get a better sense of what portion of that or how we should be thinking about that sequentially?

And then separately, can you just help us understand a little bit better how we are likely to see with the additional coverage the VA coverage? Do you see that as an opportunity to accelerate the therapeutic opportunity into 2024? Or should we still be thinking about 2024 as a very modest contribution? Thanks.

Mark Foley: Great. Thanks, Seamus. So on your first question in terms of how to think about the $280 million and sort of how to model that, as you know, we don’t give quarterly guidance. But as we sit here today through the end of Q2, we’ve delivered roughly 40% of that number. And so we’re looking to deliver 60% in the back half. I’d break it into components. The RHA is a little bit more mature product line for us. And so that’s going to move a little bit more consistently with the normal seasonality of the business plus some growth in it. Whereas obviously, where we are with DAXXIFY and the new pricing and the messaging that we have and given that we’re in a smaller number of accounts, we would expect to see sequential growth quarter-on-quarter, Q4 seasonally being the largest quarter of the year.

And so we like where we’re positioned. We’re very pleased with the Q2 that we delivered. And so that’s how we think about moving through the balance of the year. Also we’ve got CD, which is starting to come online, which gets to your second question but that will always start to contribute more as we move to the back half of the year. And that’s something that we didn’t have in the first half of the year. In terms of additional coverage and you talked about sort of the VA and the Department of Defense, I mean all this is going to help. But yeah, we would expect the revenue to be modest for therapeutic this year. Even though we’ve made great strides on the reimbursement side, the priming of the pump and pulling that through on the back end just takes time.

And it’s a conservative user group that tends to treat a few patients watch, make sure that they can get paid because it’s buy-and-bill. And so again, we really like what we’re seeing clinically but we think the commercial impact from a revenue standpoint will be modest. But obviously, as we move through the balance of the year we’ll start to step up.

Seamus Fernandez: Great. And if I can just have one additional question, where Galderma is talking about bringing competition into the international markets, international marketplace and you have an approval in Australia. Trying to get a sense of how you see the competitive landscape evolving with longer-acting botulinum toxins in the next couple of years. And do you see a path towards potentially monetizing your asset in international markets as the right approach? I know historically, we’ve talked about keeping this as a global brand as for potential sale should an outside acquirer be interested. But just wondering if non-dilutive efforts are under consideration at this point. Thanks.

Mark Foley: Yes, so why don’t I start with the second one first in terms of how we think about growth opportunities outside of the US. Listen, we’re going to continue to be pragmatic and make what we think are good business decisions. We think that there’s certainly huge opportunity outside of the US. We’ve filed for approval in Australia and we’ve demonstrated that with for example our Fosun partnership that having the right partnership might make sense. And so we will continue to actively evaluate options on that side of it. And if it turns out that going down that path, we think makes more sense for the business then that’s an option for us, certainly on that side of it. And again, as we kind of get a little bit more mature in the US market we think it’s also going to enhance sort of the value and the opportunity internationally.

In terms of competition on the long-acting side listen, we think that right now anything that raises visibility to the opportunity to have a longer lasting product is going to sort of lift all boats on that side of it. So we would welcome that dialog and discussion. The great thing about DAXXIFY is it’s more than – there’s a lot more about the product than just duration. Given the peptide formulation, what we’re seeing is not just fast onset but really the skin quality effect that we think is unique. And as we’ve described before, we’re able to get the extended duration with the same amount of core toxin. And why is that important? Well it’s important, because as you start to increase the amount of toxin that you deliver in order to get extended duration, you have the ability to potentially lose control over where it goes and the look that you’re going for.

And so the nice thing with DAXXIFY is of those that are working on longer acting, we’ve not heard anything fundamentally different about the actual formulation itself. And so again, we think it’s going to help grow that overall category. And given our novel peptide formulation, we think we’re going to be really well positioned. So yes, international provides a good opportunity for us in terms of the different ways that we think about it. And we actually think that more people talking about long duration is going to be a good tailwind for us.

Seamus Fernandez: Great. Thanks, guys.

Mark Foley: Thanks, Seamus.

Operator: Thank you. The next question comes from the line of Chris Shibutani with Goldman Sachs. Please proceed.

Q – Chris Shibutani: Great. Thank you very much. A couple of questions in terms of your margins and spending. On the margin front, can you just give us a sense it looks to see if you’re trying to be very mindful of operating expenses, because I think going to that EBIT breakeven line, maybe just helps us understand how gross margins are progressing and what factors perhaps might be in there as you’re increasing, I would presume, some of your volumes in anticipation of therapeutic launch. And then secondly, on the marketing effort and spend, your commentary included the launch of what seems to be sort of more of a bundling-type approach. Can you help us understand whether that is influencing the shape of spending, as we think about the next several quarters going forward?

Obviously, there would theoretically be a good return on that as a strategy familiar to the marketplace. But help us understand, some of the push-pulls across that achieving the EBITDA breakeven at the gross margin level and then the spending on the marketing. Thank you.

Mark Foley: Great. Thanks, Chris. Toby, why don’t I turn it over to you to talk about the margin and spend gross margin, a little bit on the marketing? And then, I can build on that on the marketing in terms of the programs and what we’re seeing.

Tobin Schilke: Perfect. Thanks. Great question, Chris. So, we reported about 73% gross margin and about 72% for the first half of 2024. When you take into account the zero-cost inventory associated with DAXXIFY that was expense prior to approval, gross margin profile is within sort of around 70% combined for RHA and DAXXIFY. And as you think about the levers to improve that margin, which we’ve long term guided to over 80%, it’s twofold. One is, the volume shift towards DAXXIFY, which is a higher-margin product than RHA. RHA, we partner with Teoxane SA. And so that is generally at a fixed gross margin, because that’s how they get their economics for the innovation that they have brought in the RHA collection of fillers. So, as the mixed shifts and DAXXIFY continues to grow in terms of volume, you will see that margin increase that way.

Secondly, drilling down into DAXXIFY, we’ve taken steps and invested over the last several years to move DAXXIFY to more efficient production method. So as we scale our production in Aji in the US, our contract manufacturer. And then also further on as we get approved in LSNE PCI facility in New Hampshire, we’ll be able to further improve our gross margins with DAXXIFY with the size and scale from those facilities that they’re able to produce versus our facility in New York.

Mark Foley: Yeah. And then on the marketing side, Chris, I mean we sort of have a steady state spend right now in the marketing. And I think programs like we ran in Q1, around the coupon and what you’re seeing now with the beauty of savings around portfolio designed to create more leverage in accounts where we already have a relationship, we think is going to help us drive deeper and create more stickiness in the brand. And so we obviously, can flex that we’re using some of these programs to better inform where we want to lean in more. But we like what we’re seeing, and we’ve got a variety of things that we’re doing independent about around social digital. Because one of the things that we’re also starting to see with DAXXIFY is, in the beginning it was really incumbent around the injector to do a lot of the promotional work, but now as consumers are getting more experiencing the benefits of the product, they’re asking for it by name.

And so from a KPI standpoint, we’re seeing good healthy growth and awareness. We’re seeing good healthy growth in terms of media share of voice. And so, we’re seeing a lot of the desired results. And so we’ve got amount of sort of steady state marketing built into it that, we think is sufficient to drive the revenue growth targets that we have. And we’ll continue to optimize that as we move out through the balance of the year.

Q – Chris Shibutani: Thank you. That’s helpful.

Mark Foley: Thanks.

Operator: Thank you. The next question comes from the line of Stacy Ku with TD Cowen. Please proceed.

Q – Stacy Ku: Hey, thanks so much for taking our questions. We have a few. So first can you characterize those 3,700-plus accounts that you added for DAXXIFY? That’s up from what we believe around 3,500, in Q1. So as you’re broadening accounts, are you just focused on getting lower accounts that are more high quality? Or is it just the sales force was launching both the new filler option and DAXXIFY as well? So just help us understand, the accounts added for Q2. And then, a follow-up on that, as you’re broadening the DAXXIFY launch you talked last quarter about the expectations and targets for new accounts. How do you feel about the expectations you’ve set? Where are you there? Obviously, can’t disclose them guessing you’re not going to disclose your own KPIs, but just help us understand how the broadening of the DAXXIFY launch is going in your view?

And then last for RHA is the Q2 performance mainly ascribed to the lip launch? And is that why you might expect some growth into Q3 and Q4? Just help us understand the cadence of RHA launch for the rest of the year. Thank you.

Mark Foley: Sure. So let me just make notes here. So really in terms of new account ads we actually I believe and Toby, keep me honest on this, I think we’re around 3,000 DAXXI at the end of Q1. And so we’re saying now that we’ve got 3,700. So, actually we’ve seen good nice acceleration in new accounts on DAXXIFY and we think it speaks to the change in strategy. So we’re encouraged with what we’re seeing and that is a part of our strategy to drive the necessary revenue through the balance of the year. Again, it’s a combination of going deeper as people experiment and get comfortable with where DAXXI fits in their practice to go deeper and then drive some of these new ones. And so actually we were very encouraged with sort of the new account ads that we saw.

In terms of the target for new accounts, obviously, with kind of the growth initiatives that we have in place it will be an important part of our strategy. But where we said, we’re roughly 7,500 aesthetic accounts is the end of Q2 3,700 accounts in DAXXIFY. We still have a long ways to go in terms of market penetration. And so we think the nice thing is we’ve got again a long runway. And so right now we’re tracking where we want to be in terms of that mix of new accounts. But we also saw good strong volume in reordering accounts. We said that roughly three quarters — over three quarters of our revenue came from reordering accounts. So that’s how we think about the phasing in the target for new accounts. In terms of RHA and the lip launch and the impact that that had I think that part of it is Stacy as you’re aware that when we made the change in the DAXXI strategy, we indicated that we were spending more time doubling back with accounts to go deeper.

And so now that we’ve sort of moved beyond that phase we’ve been able to focus more now on the lip launch in RHA 3 and the portfolio. So we think that we’ve got a very good foundation of RHA. We’re doing a lot more on the clinical training. And actually there’s some noise out there in the market around people not wanting to look artificial. And one of the great things about the RHA portfolio is that it’s the least modified of the different hyaluronic acid fillers out there. It’s designed to leave a very natural look. And so we think that that’s feeding into this as well. So I think it’s just we’ve hit our stride with DAXXIFY in terms of the messaging and the pricing. Certainly, this helped. And now that we think that we can start to leverage the synergies between the two that’s how we think about the back part of the year.

Stacy Ku : Okay. That’s incredibly helpful. If I could ask just a quick follow-up then based on your responses. Just for that relaunch, I think, many investors are looking for a signal that there is a recovery that things are going the right way now that you’ve changed your pricing strategy. So do you think that Q3 you’ll still see some signal of the recovery or is it really going to be a Q4 event where it’s seasonally strongest? Thanks so much.

Mark Foley: Thanks Stacy. No, I mean, I think, we commented earlier that we would expect RHA product line to follow more seasonality with some growth whereas with DAXXIFY given where we are that we’ll see sequential growth through the balance of the year. We saw pretty meaningful growth on a year-over-year basis 65% even though Q2 last year was a launch order for us. And as we look at coming into Q3 and Q4, we’re now going to be starting to look at an ASP level to that’s going to be comparable. And so I think that that will even show stronger performance on a year-over-year basis. So we would expect again quarterly sequential growth with DAXXIFY. But as we saw that the quarter-over-quarter and the year-on-year growth both in units and in revenue we’re encouraged with the trend that we’re seeing.

Stacy Ku : Okay. Thanks so much for the color. Thanks.

Mark Foley: Thanks Stacey.

Operator: Thank you. The next question comes from the line of Balaji Prasad with Barclays. Please proceed.

Q – Unidentified Analyst: Hello good afternoon. This is Sean on for Balaji. Thanks for taking our question. First of all, could you give us a timeline for the upcoming Fosun approvals in China and the expected milestone payments associated with approvals? And what’s your follow-on commercialization plans? Thank you. And the additions for that, could you also talk about the pricing dynamics for DAXXIFY between the aesthetic and the therapeutic pricing? Because on the therapeutic end you have to do the pricing and that price goes to negotiation with the payers. And on the aesthetic end you will give the discounts to the cash discount. So how would you balance the aesthetic pricing and therapeutic pricing? Thank you so much.

Mark Foley: Thanks. Toby, do you want to take the post-in and the milestones?

Tobin Schilke: Yes Mark. I’m sorry about that. So, on the Fosun, we submitted — well, Fosun excuse me submitted the GL indication for the Chinese regulatory authorities in April of 2023 and cervical dystonia indication in July of 2023. Post-in was guided the markets to say that they expect a 14- to 16-month approval timeframe for both of those indications. So we expect that that will be happening and we’re working hard with Fosun to support them for approvals of both indications in this calendar year. In terms of upfront payments since the history we signed the contract in December 2018. We received a total of $38 million subject to Chinese withholding tax of 10%. And we have additional $222 million of contingent milestone payments. So we would expect that there would be some milestones. We haven’t given the exact figures per company policy of what we would expect for approval in China for both the Glabellar Lines and the Cervical Dystonia approval.

Q – Unidentified Analyst: Thank you.

Mark Foley: And then for your question regarding the pricing linkage between therapeutics and aesthetics yeah, I mean, even though it’s the same BLA the pricing will be the same with different price as we launched in aesthetics first. And so the ASP that we’re driving in aesthetics is going to form the basis for what we charge in therapeutics. And so we’ve already taken that into account and we’ve set up our different reimbursement contracts and everything around that. And so there will continue to be linkage between the two.

Q – Unidentified Analyst: Thank you.

Operator: Thank you. The next question comes from the line of David Amsellem with Piper Sandler. Please proceed.

David Amsellem: A couple of quick ones for me. First, can you talk about the competitive landscape in the filler space particularly with another entrant coming in and just how you see things evolving overtime? Do you think that the market ultimately is going to be able to accommodate a more crowded competitive landscape? So that’s number one on the fillers. And then, turning over to DAXXIFY and therapeutics, just going back a few years where you had I think cast more of a wide net in terms of different development programs in the therapeutic setting obviously you’re looking to balance that out with control and spend. But I’m wondering overtime particularly as you get profitability how you’re thinking about other indications for DAXXIFY in therapeutics setting and how much of a priority that is. Thanks.

Mark Foley: Sure. Thanks David. So on the competitive entrance side particularly on fillers, I think this is where the product profile really matters the breadth of indications and again the breadth of the product itself. And so we’ll continue to see competition there but I think there’s a reason that some products stand out more than others in terms of the performance. And as we talked earlier given the way that the RHA products are constructed and more natural we think it fits really well in for what people are looking. And there’s some differences in the product line particularly with like RHA Redensity and others that we’re hearing a strong brand preference for. So we think that not only having the filler line but having a toxin to partner with it are also going to be really helpful in terms of going into accounts and providing a compelling bundle that works for them.

And so we feel very good. And again we’re still early innings in terms of penetration. In terms of DAXXIFY and therapeutics, you’re right. We’re trying to be thoughtful about how we invest in the therapeutic category, what’s the right timing to launch additional indications given that it takes a while from start to finish. So we think really CD is a great entryway into that to lay the foundation for further growth. And in the muscle movement category, which is upper and lower limb spasticity and cervical dystonia that’s collectively $1 billion market opportunity in the US. And so we believe we’re going to learn a lot in the cervical dystonia launch, and we’ll be able to partner with these clinicians in terms of next steps. We have completed as we talked about before our Phase 2 program for upper limb spasticity.

We had our Phase 2 meeting so we know what the program would look like to activate the Phase 3. And so it’s just a function of when do we think it’s the right time to lean in on that. And then we’ve done also an IIT in migraine to generate some of the early data there to inform that strategy. And so we think long-term there’s a very healthy opportunity. It’s just a matter of to your point earlier what’s the right timing and we’re continuing to evaluate that.

David Amsellem: Very helpful. Thank you.

Mark Foley: Thank you.

Operator: Thank you. The next question comes from the line of Annabel Samimy with Stifel. Please proceed.

Annabel Samimy: Hi. Thanks for taking my questions. So I just want to confirm, have you washed out all of the accounts that had purchased under the prior price change? Is there still any impact lingering I guess from the, sort of, I don’t know so-called coupon that you offer them to make them whole on that? So that’s the first question. Then the second is, can you talk a little bit about the loyalty program the beauty of savings? Is this volume-based, or is it as soon as they order the products together? How exactly are they incentivized here? And then anything on the consumer side in terms of more comprehensive couponing for the actual patients. Thanks.

Mark Foley: Thanks, Annabel. So in terms of where we are with the coupon that we ran in Q1 that sunseted at the end of April. And so that’s done. And so there’s no lingering effect there, because of the timeframe for redemption on that. So that’s fully pulled through and done. And we recognize primarily the offset of that program in Q1. And it was effective. People really liked the program. It did what it was intended to do, which is to drive more patient trial and experience and engagement from the injector side of it. It was obviously less than optimal from a revenue perspective because we had to take the pull offset but we’ll take those learnings forward in terms of how we think about subsequent programs. The beauty of savings was kind of a halo program that cut across RHA promotions, DAXXI promotions and bundling promotions.

And a lot of what we’re doing right now is we are linking purchases to training events since we found that a lot of the injectors particularly given the unique performance profile of our products, really appreciate and find a lot of value in training and education particularly when we can bring in leaders in the industry that they can spend time with. And so that’s been a big part of the beauty of savings. And then certainly on the bundling side there’s some additional economic advantages to folks that lean in at certain levels across the portfolio. And we like what we’re seeing and we’re seeing additional share in those accounts where we’ve been able to roll that out. In terms of how we think about go forward couponing and what we’re going to do, we’re continuing to evaluate what the return is.

We don’t have anything right now that’s planned to be rolled out, but we’re continuing to evaluate other ways that we might want to incentivize, consumer engagement and programs and that’s sort of stay tuned on that.

Annabel Samimy: Okay. And if I could just squeeze one more in on the therapeutic side, you have stated a number of very positive statistics. You have your 84% commercial coverage. You’re working with Medicare plans or Medicaid plans. You have the foreign defense veterans and then you have even stated a reorder rate. So I guess I’m curious if there was any residual revenue for therapeutics in the DAXXIFY number. I’m just a little surprised that you have all these progress and you’re not reporting any revenues at all?

Mark Foley: Yeah. Well I think first off when you look at the metrics we gave around the aesthetic side we saw 65% year-over-year unit growth. So almost all of the DAXXI revenue is being driven by aesthetics. We didn’t launch until May. And so there was a limited amount of time. And again the way that these practices by given that CD is still a pretty small market it’s $340 million in the US these practices don’t buy in volume. They buy to treat patients on the buy-and-bill. And again even though you’ve got reimbursement in place they want to make sure that when they run it through their own system that they’re getting paid. So they’ll tend to treat one, two, three patients and then wait the full reimbursement cycle before they see if they’re going to get paid.

And so while we like what we’re seeing clinically we like the progress that we’re making on the reimbursement side it’s a conservative group. And a lot of these practices only see a certain number of these. And so again we just think it’s going to take us time. I think we’re pointing to sort of the clinical utility and value that DAXXIFY brings but it’s just going to take a little while to unlock some of the revenue that’s going to be associated with it.

Annabel Samimy: Okay. Great. Thank you.

Mark Foley: Thanks, Annabel.

Operator: Thank you. The next question comes from the line of Tim Lugo with William Blair. Please proceed.

Lachlan Hanbury: Hey, guys. This is Lachlan on for Tim. Thanks for taking the questions. So Mark I was wondering can you talk about any changes in how DAXXIFY is being used by the existing accounts since the price change? I mean beyond just using it more have they changed the way they use it used it more off label or different doses or anything? And second, Toby you mentioned the soft filler market and I think we’ve seen that sort of some softness across aesthetics with competitor reports as well. So just wanted to get your latest thoughts on sort of the state of the market for both toxins and fillers. And if there’s anything in particular either driving the weakness or that you think could bring an end to it. Thanks.

Mark Foley: Sure. Thanks, Lachlan. So in terms of DAXXI and how it’s being used I think with all these products the more familiar they get with it the more comfortable they get and that’s toxins and fillers across. And so certainly the more people use it, the more comfortable. And while we are on label for a certain reconstitution for example we know that some practices really like to adjust how they reconstitute and how they administer. And they do that with all the other toxins. And so I think we’re finding that within any given practice they are adapting what they believe is the best way to deliver to get the outcome that they want. Yeah, we run Phase 2 trials in upper facial lines. And what we hear in the marketplace is that injectors are comfortable using DAXXI in a similar fashion to the other neurotoxins.

And so I don’t know that we’re necessarily seeing much of a change in terms of where they use the products. I think they’re comfortable with where they use it but I think it’s more in the function of like how do they reconstitute, how do they dose. We’ve definitely seen some learning with the forehead for example. We’ve heard that DAXXIFY appears to be more precise. So where you deliver it stay. You see less difusion. And so for the forehead which is a broader area we hear that some accounts, for example, are doing more injection points but just smaller delivery to make sure that they get the desired outcome. And I think the forehead is one of those areas that people need to take a little bit more time to figure out. And then we’ll see range.

Some are solely the full dose. Some have moderated their dose a little bit. Some adjust their dose and maybe a little different and other lines versus forehead. And so the good news is I think that with any new product there’s going to be its own unique personality and particularly with a product like ours that has a very different formulation with the peptides. And I think universally what we’re hearing for those accounts that are seeing the positive impact and the reinforcement is that they’re saying it’s different. What I’m seeing in terms of the onset skin quality it’s different that I can’t get with the others. And that’s kind of where we see the real stickiness. And so we’ll continue to try and make sure that we do everything we can to support these accounts and get them the proper training.

In terms of the overall market dynamics in terms of the soft filler market yeah I think it’s a combination of just some of the market dynamics out there and some of the spend challenges that some consumers are having and then certainly on the filler market we’ve heard a little bit about the concern about looking artificial and not natural. And as I said previously we think that that fits really well with RHA product line because again it’s the most natural. It’s got an indication around dynamic wrinkles and folds meaning it’s designed to move naturally with facial expression and make sure it looks very natural. And we’re still in a small number of accounts so we have the benefit of being in growth mode. The toxin market seems to be pretty steady.

And I think we’ve seen that in past times with even an economic downturn in 2008. And I think it’s a lower-cost treatment procedure. And I think once people get used to the outcome it’s a little bit like hair color, where they feel now they need my wrinkles back and go. So, the toxin market feels more stable and steady. The filler market’s been a little more soft. But obviously with the print that we put up in Q2 we feel like we’ve got the product line and the strategy and the execution to continue to drive good growth.

Lachlan Hanbury: Great. Thanks a lot.

Operator: Thank you. The next question comes from the line of Uy Ear with Mizuho. Please proceed.

Uy Ear: Hey guys. Thanks for taking our questions. So, I guess my first question is would you be able to share with us the market share that you’ve gained in this quarter as you did in the previous quarter for DAXXIFY as well as for RHA? And secondly what percentage of the 15% year-over-year growth in RHA came from the lips product? And thirdly I just want to make sure did you guys add any account overall at all? Because the press release says over 7500 accounts and that was what was reported in the first quarter. Thanks.

Mark Foley: Yes, so let me let me hit that one first. Toby do you want to comment just on the account side of things? Because I think that there was an error on our side.

Tobin Schilke: Yes I think — yes, and I appreciate the question Uy and Stacy. Before I finish it, we would like to draw your attention to a numerical error on the second quarter release. We should have said that we ended the second quarter at over 8,000 aesthetic accounts and over 4,200 accounts that have ordered DAXXIFY. I apologize about that. And I speak to Stacy’s confusion earlier and your confusion Uy. So, again, it should be 8,000 aesthetic and 4,200 DAXXIFY accounts.

Uy Ear: Thanks.

Mark Foley: Thanks for clarifying that Toby. So, Uy, on your question on the market share side of it, we’re one of the few companies that reports — has reported market share in the past. So, I think it’s a little harder to necessarily compare it. And there’s always the debate about what the source is. But if you look at the unit growth that we saw with DAXXIFY, the revenue growth that we’ve seen with DAXXIFY, I mean I think it’s fair to conclude that we’re continuing to see good healthy metrics around what that looks like. And then on the RHA side, the same thing given that the market filler softness and growing 15% year-over-year, we continue to take share on that side of it. And so I think from our perspective and in discussions with investors, I think what they’re most focused on is independent of sort of what’s happening in the market are you growing and are you seeing good healthy metrics.

And so we feel good about sort of the metrics that we’re putting up. And even in a market that has seen a little bit of softness the overall growth there. In terms of the 15% year-over-year growth and question about how much is that attributed to the lips, that’s really hard to know because even though we have an indication for RHA 3 for lips, we do know that practices use a variety of different skews to treat the lips. They have their own sort of preference on it. And then secondly, it’s hard to know whether or not the product that they use where it’s used in the face. We saw good healthy growth across the portfolio of the RHA product line. We obviously leaned in and did some other promotions and incentives and training around RHA 3. And so while lips certainly was something that we were able to leverage to create excitement and engagement, we saw that translate into broader usage across the Phase 2.

Uy Ear: Okay thanks.

Mark Foley: Great. Thank you.

Operator: Thank you. The next question comes from the line of Serge Belanger with Needham & Company. Please proceed.

Serge Belanger: Hey, good afternoon. First one for Mark. We’re soon coming up on the one-year anniversary when you change the pricing and marketing strategy around DAXXI. So, just curious where the price per vial now stands relative to where we were a year ago? And whether you expect that will change over the second half of the year. And then similarly, again on pricing but on the consumer side, we’re one more quarter since you dropped restrictions on advertised pricing. What kind of movements you’ve seen there from your injector customers? Thanks.

Mark Foley: Yes, thanks. So, on the pricing and the year-over-year, we feel really good that we fit sort of the right balance right now in terms of the price that we’re charging our actual injectors, and so that’s settled into a nice spot. And you can see that reported in — reflected in the Q2. So we’ve seen good steady pricing right now at the new levels. It’ll move a little bit, because we still have the tiered pricing based on how much they buy that can influence sort of that range. But we like where we’re situated from a pricing standpoint to the practice. The next question is that how well is that being translated to the consumer and are they taking sort of that lower price that we’re giving to them and passing along to the consumer.

And I would say, that’s taken a little bit more time but now we do see that our pricing is coming much more in line with competitor pricing from a consumer standpoint, which is ultimately what we wanted to have happen so that we’re getting out of this whole at a premium price the product has to have a elevated set of performance expectations above and beyond sort of the attributes that it has, which are helping drive adoption. And so we’ve been encouraged by saying that pricing that we’re given to the injector have passed along to the consumers and we’ll continue to monitor that. But we like where that’s also situated. And so we’re encouraged. As we come up to sort of the annual point where we made the price change, I think that it will also allow us to show healthy year-over-year gains on that as well from a revenue standpoint.

In terms of the advertised pricing, yes, I think that if we look at our awareness trends, the promotional trends that we’re seeing I think that our injectors appreciate it, because they want to be able to talk about it. They want to be able to say, hey, I’ve got this next-generation toxin come ask me about it. And so I think that that’s also feeding into some of the increases that again we’re seeing in awareness and some of the growth trends that we’re seeing.

Serge Belanger: Thank you.

Mark Foley: Great. Thanks Serge.

Operator: Thank you. The next question comes from the line of Navann Ty with BNP Paribas. Please proceed.

Navann Ty: Hi. Thanks for taking my question. First, can you discuss the feeder’s market recovery in H2 and do you need that market recovery to reach the revenue guidance? And second a follow-up to a previous question, what is the contribution of RHA 3 for lips to RHA performing the fillers market? Thank you.

Mark Foley: Thanks, Navann. So in terms of the filler market health again even in the midst of what I would say was, a softer filler market the first half of the year and certainly Q2, we drove really healthy revenue. And so listen, we think that the RHA market is going to continue to be robust and that longer term the growth dynamics will be there. And so, we’re continuing to focus on delivering on the revenue plan independent of the market backdrop. And so we’re hoping that interest rates drop a little bit, but that will drive a little bit healthier consumer and things like that. But so far when we pulse check with the field and the customers out there we feel good about where we’re situated today. I don’t know that I have anything incremental to add on the RHA three and sort of where it was on lips.

I mean lips being the number one procedure certainly helped that we were able to lean in with that. But injectors were already treating lips with other products. And so it wasn’t like we opened up necessarily a new indication that wasn’t getting treated. It allowed us to bring a spotlight and to promote lips with the RHA 3. So it definitely helped with engagement. We had sort of a whole thing about lips worth framing that drove social media and digital opportunities and content sharing, but it’s hard for us to sort of really know given, as I said before, that some people will use other SKUs than RHA treat the lips. And we don’t always know exactly where they use it but it was certainly helpful for sure and we’ll continue to leverage that going forward.

It wasn’t just a Q2 initiative.

Navann Ty: Thank you. That’s helpful. Thanks.

Mark Foley: Thanks Navann.

Operator: Thank you. That concludes today’s conference call. Thank you. You may now disconnect your line.