RVL Pharmaceuticals PLC (RVLP) 2022 Q3 法說會逐字稿

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Since Q2 or at least once by the end of the quarter, an increase from almost 600 exiting Q2. More recently, we have further expanded our points of sale to just over 3,900 while expanding points of sale is growing enthusiasm we are seeing from our provider partners. Beyond the growing presence at the many multi-specialty aesthetic meetings representing another indication of acceptance and excitement for Upneeq within this channel.

As we move forward with our launch, the playbook market and establishing up as a routine part of the noninvasive and minimally invasive. Of note, we are also planning to significantly enhance our technology ecosystem in Q1 of next year patient portal. Harnessing technology to further support growth, this platform will enable a full suite of expanded functionality and end patients, including subscription and auto refill capabilities, which notably will serve to reward patients for frequency of use while enabling providers to earn an ongoing revenue stream from refills after initiating treatment without any direct patient interaction required.

We are excited about this upcoming launch but also believe the platform will provide another compelling and differentiated asset, which can serve to support additional products and opportunities downstream. Moreover, our progress within the aesthetic channel has led to the recent deployment of a strategic account capability.

Beginning in Q3, we have started to engage with a number of larger strategic accounts. many of which carry a national reach, along with several that maintain e-commerce and/or telehealth capabilities as well. This expanded reach has created further momentum within the aesthetic universe, along with the opportunity to expand access to patients within the telehealth universe.

All in, we are proud of the recent progress and execution and excited about the growth opportunity in front of us. The eyes remain at the center of how we interact and see 1 another and Upneeq represents a novel and differentiated way to deliver a simple yet elegant enhancement for appropriate patients. You don't know you need it until you try it. And with that, I'd like to turn the call back to Brian for any closing remarks.

Thanks, J.D., and thanks, everyone, for participating today. We're extremely excited about the prospects for Upneeq in our organization. And operator, we are happy to turn it over to questions.

(Operator Instructions)

Thank you, sir. At this time, if you on your touchtone phone. You may remove yourself from the queue at any time by pressing STAR 2. Once again, Our first question will come from Louise Chen with Cantor Fitzgerald.

Congrats on all the progress this quarter. So I had 2 for you. First question I had was could you tell us more about your e-commerce platform? Is this for doctors or for patients? And then the second question I had was thoughts on expanding your product portfolio. What are you thinking here? When do we think that you might see more products? When do you think you might see more products in your pipeline or just in your commercial portfolio?

All right. Thanks, Louise. And I'll start with the answer to number 2 and let J.D. take the first part of your question. But right now, we've built out the team. They're all exceptional sales leaders in their own right, and we are fortunate enough to attract them from other companies that have deep roots in the space. I don't have to name them, but we're pretty much very receptive right now to bringing in additional products. We are really, when you think about it, unaffiliated, we don't have a toxin, we don't have a filler. We have a product that is not competitive with those agents. So we are ready to go, and we also have opportunities for collaboration in eye care. So now that the team is set, our systems are really solid, we will look to enhance capacity. J.D., do you want to do the e-commerce question?

Yes. So the platform for us, I mean, this is really the next evolution for our technology stack, and it will serve both providers and patients. And so as it relates to the providers, I think more simplistic enhancements, creating a frictionless ordering platform, some bells and whistles in terms of their ability to create auto shipments on a routine cadence, the level of visibility that they have to productivity, things like that.

But what I think is really unique is the patient part of this ecosystem is going to serve the practice as well. So effectively, this iteration of technology is going to connect the patient when they go on therapy in a practice to our pharmacy so that we can continue to fulfill an auto refill or subscription too Upneeq for the patient and the providers will continue to earn margin as that patient stays on therapy without having to interact with the patient on an ongoing basis.

So we're excited about the iteration a lot of work across the organization, and it should be a really unique product launch that serves both a near-term purpose, but also additional opportunities as we're able to add things to the business moving forward.

Our next question will come from Douglas Tsao with HC Winright.

Can you hear me?

Yes, we got you.

So first, as a starting point, maybe, Brian, can you provide some color on how the quarter progressed from a seasonality standpoint and how the momentum you've seen exiting 3Q going into 4Q. And then also in terms of the subscription model, I'm just curious, do you have a sense or an initial perspective on what percentage of the patient base ultimately would be for subscribers?

Yes. I think on the prescription model question, it's a little bit difficult to answer that without actual experience in the market. I mean J.D., feel free to hop in. But we have pretty good data from our pharmacy on, if you will, the stickiness of the product. So on average, from when we launched originally, patients have been on product somewhere between 90 to 100 days on average.

And we believe that once we get them into our ecosystem, we'll be able to certainly enhance our refill and reorder rate across the board, but J. D., maybe you have more color on that?

Yes. I think, Doug, I would think historically, what we see in the pharmacy, and I'm not sure it's directly related to the patient population that's churning through the aesthetic channel, but I think it's the data that we do have. Some of the tests we've done, probably north of 50% would be an early kind of gauge for the level of subscription opting.

But remember, we have a split. Today, it runs between 85-15 and on patients filling 30 count versus 90 count as their first subscription. So I think what's part of the opportunity here is this system not only allows the friction to be reduced on refills, but it gives us an opportunity to create the customer reward program for increasing utilization, which today we don't have any of that optionality to drive increasing utilization.

So I think we're excited about the prospects and the way in which we can now connect with patients and keep them on therapy for even longer than we've seen which I would still think north of 100 days on average is pretty encouraging thus far.

Right. In a single year. And we have yet to establish lifestyle value for patient. And then, Doug, back to your question on the quarter, July was a bit of a reset for us. And since we reported top line sales ahead of the rest of the industry, for the quarter anyway, we kind of led with our chin. But I think our 19% growth regardless is pretty remarkable.

And we came out of it pretty strong as we began to ramp in August and September. And right now, in the fourth quarter, we're very happy with what we're seeing. So we set a little bit with July because we did not anticipate that level of seasonality. And it's very clear now what else did either. The recession is there. I'm not going to begin to comment on macros. I'll leave that to smarter people than me. And I think we like what we're seeing, and we're pretty encouraged by the ramp.

Yes, I think the only thing I would add, Doug, to that is our revenue is largely demand based. I mean certainly, the addition of new accounts is a modest kind of stocking, if you will, but it's not as if we're loading tons of product into accounts and churning. So I think the growth that we saw sequentially in what was a quarter more like what I think we've seen 2019 and earlier in aesthetics, where there is a drop in patient being in August was quite strong. And the rebound in September and as we've moved into the fourth quarter has continued quite nicely.

And if I could ask one follow-up on the subscription model. I'm just curious. From a pricing standpoint, is there an incentive or you incentivize to enroll in this way?

So I think that's one of the great benefits of being able to deliver this through technology is rewards and lower cost per day based upon the level of utilization. And do it in an automated way that doesn't create -- a lot of times, if you see these e-commerce, you can opt in for a subscription and take a 5% discount on a single purchase and then get it every month, but you can cancel right away, so you basically just lost 5% on a single purchase that kind of as you go, you kind of contribute to reducing your annual period of time.

So again, I think unique in a lot of ways, but also an opportunity to further create opportunity with the BDMs in a practice to deliver value because by diagnose and treat patient patients will now pay dividend moving forward without having to continue to remember to ask if patients need more when they're in for whatever other services they're getting in a perpetuity cycle.

Next question will come from Balaji Prasad with Barclays.

You previously mentioned about 8% to 20% split of your revenue from aesthetic versus eye care by the end of the year as there are recent market concerns around, is there any changes to this view?

No. We feel it's rock solid with our business. Eye Care is really steady. We keep adding new prescribers every week at aesthetics is ramping quite nicely. So we're very comfortable with that split in the business.

Got

Our next question will come from John Vandermosten with Zacks.

I was going to follow on Doug's questions about sales and ask what would drive the lower end versus the higher end of your fourth quarter guidance. Anything out there specifically that one of those extremes? No, I don't think anything in particular, John, this is J.D. I think we feel pretty good rig continue to build. And I don't think there's any big driver just trying to be consistent and thoughtful about the data points that we do put out for the investor community.

And John, run the playbook right now with the full complement in the field and aesthetics, and we love the energy from that group and what we're seeing.

Yes. And then kind of last question on the sales team. You said you had about 75 sales reps out there. Target revenues per rep are you at? I mean is there a lot of excess capacity there? And will there need to be expansion to drive further growth?

Yes. No, we're not planning to -- yes, we're not planning to expand the sales team. But when we talk about capacity, while our reps in an account -- they certainly have the ability to pivot from Upneeq. Hopefully, after their job is done with Upneeq and talk about other products that surround the product. And again, in the aesthetic business, it's very few products are really administered on an island, right?

So we believe that Upneeq is an extraordinary asset that makes everything else look better, starting with the eyes. So our ability to talk about other technologies is going to be pretty seamless.

And I think the operating leverage from the existing group is still largely untapped. I mean, we've really just gotten the full complement of the core team running in the same direction. We started an expansion in the middle of the summer, I think, have come out of the quarter right about 100% capacity. And there's a lot of leverage that can come from the effort of that team right now to drive growth without contemplating an expansion to achieve more growth.

And those -- that portfolio of products, I guess, that you're talking about, would that be the revision partnership that you're referring to there?

No, I'm on purpose, John. Just the opportunity that we have.

Okay. Got it. And another question kind of on the different nodes. Any evidence anecdotal tenants, know it's very, very some of the need for other treatments like piroplasty or things like that. Do you think you're taking share from that nonsurgical options?

No. In fact, I think we're bringing a lot more attention. And usually after plates, the true since we have a pretty meaningful group. I'm not talking about ilitoxoplastic surgery and the reduction of fatty lids. And now what we have is a lot of plastic surgeons, quite frankly, giving Upneeq to their patients, as a proxy for the surgical result. And the patients aren't going to go away. So if anything, we're probably bringing more attention to the eternal didn't see.

Question will come from David Diamond with Rovida Advisors.

We've done a lot of due diligence on the company, and we're big believers. But there seems to be 2 sort of issues in the market. I think I know the answer to my question, but I thought it might be useful for you and JD to address sort of the 2 issues that many investors have, and they sort of fall into 2 buckets. I would say the first bucket would be in terms of getting traction. And you've mentioned on the call 3,500 locations out of the total point of sale for ocular aesthetics of 30,000-plus going to 3,900 with 1, 100 reorders, which is all great.

But can you give us a sense of sort of your only roughly 10% of the market, where you think you might be in the short to medium term? And what's sort of the cadence or trajectory of that? Have you just scratched the surface? Do you feel -- where do you feel you are in terms of that sort of growth trajectory? That's kind of the first sort of uncertainty that some people have.

And then the second I would characterize the second area I would call it sort of brand awareness, niche use -- as much as everyone on this call knows what Upneeq is and RVL, you still -- if you talk to a aesthetic people or even I doctors, many don't even know what Upneeq is yet or if they do, they vaguely know.

So I'm just curious sort of where do we stand in terms of brand awareness. You've done a lot of great work in terms of social media, et cetera. But what -- where do you think we are for brand awareness? And where will that be sort of going forward? And then that sort of ties into the last part of that, which is frequency of use.

There's sort of a misguided view, I think, by some analysts that this is just something that's used to go to a wedding or to fix the bad botox. And obviously, it's a lot deeper than that. So maybe you could just talk to that, obviously, your subscription model will address that because that sort of goes against that thesis. But I'm interested in maybe giving us some insight into where you think frequency of use is and will be in the short in term.

So 2 issues sort of the launch -- the traction, launch trajectory in terms of point of sale and then also frequency of use and brand awareness.

Yes. All right, David, thank you. And J.D. and I will try to tackle the list together. But with frequency of use, we have a group of patients that use the product every day. We've got some that use it intermittently as you suggest. But I think the majority are somewhere around 3 to 4x a week, perhaps a little bit less with some. But I think that's the best we've got right now in terms of field because in the pharmacy, we know we're getting around 100 days of therapy out of a patient. In aesthetics, once we have the e-commerce platform in place, we'll have much better insight as to the sort of stickiness with that population throughout the year. I think J.D., if you want to add to that?

Yes, I think important specific to the early days of the aesthetic launch and some of the anecdotes. It's a big part of the messaging and the effort from an educational standpoint. This is a daily use product. It is safe to use every day. And I think the path of least resistance with anything new is kind of feel it out, try it. Oh, this is nice, special events, photo opportunities, et cetera. That's all well and good because it creates brand awareness and opportunity.

But our efforts are centered around, you want the result, you use it every day and it's safe to use every day. And I think that's something we're going to stay true to. I think that's part of the investment in the next technology platform to really make it a seamless experience and create the opportunity, to increase daily utilization.

And I think you're starting to see more and more comfort with providers as the product has been in the market and they talk to one another and they share their experiences with it that it really is a safe drug to use every day. And I think I would expect that to continue to unlock and drive utilization beyond the, hey, here's something if you want to pop it in because you have a special event, half a dozen times a year.

I think with brand awareness, so still working backwards, David, on your questions, agreed, it is early. It is growing. I think our focus now is in the aesthetic channel. I think we've started to get out to these multispecialty conferences that has begun to introduce. I was just at one a couple of weeks ago. And there's no doubt there's still providers where it feels very new. They've heard about it, which is a good thing but we've got 75 people out there.

And I think that's a big part of how we continue to expand not just awareness but utilization and overall share of voice within these practices. And that will be something that we focus on here through the holiday season. big event time, lots of patient demand, et cetera, but also moving into next year and a full year with a full complement of a 75-person team.

So feel really good about it. in terms of where we are. But look, you'r never too short on brand awareness when you're trying to build a new category.

I think the other thing, David, is -- about a month ago, we came out with top line, and we were at 3,500 new accounts or locations in aesthetics. Now we're at 3,800, rapidly moving to 3,900 and we'll easily surpass that with 1,100 reorder locations. So I think we've scratched the surface in terms of order locations practices. If there's a lot of loose conversation around how many points of sale there are in this market, we would imagine that Allergan, the leader has close to 40,000 Galderma 30,000.

So if we pick something like the Galderma 30,000 that's referenced. Now we're in slightly over 10%. So there's a lot of ground for us to cover. It's a boots on the ground operation. right now. But our social media initiative with our provider partners is really beginning to take off, and we're excited about it. And this has nothing to do with us. But if you go on Instagram, #Upneeq all the time the providers are posting the results with our product on themselves. And it's just exciting to see. And if you go there, make sure you hit the light button on a few of them.

Great. Thank you very much. You got to go.

Thank you. And at this time, we have no further questions in the queue. So I would like to turn the call back over to Brian for any additional or closing remarks.

Thank you, operator, and thank you, everyone, for listening in today. We are extremely excited about our prospects. We love this brand and what it's doing and what it can do for its patients, and we will be back. Thank you.

Thank you, ladies and gentlemen. This does conclude today's call, and we appreciate your participation. You may disconnect at any time.