Revance Therapeutics Inc (RVNC) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to Revance Therapeutics' 2013 fourth-quarter financial results conference call. (Operator Instructions). As a reminder, this conference call may be recorded. I would now like to hand the conference over to Ms. Ana Petrovic. Ma'am, you may begin.

Thank you. This is Ana Petrovic with Westwicke Partners. Joining me from Revance Therapeutics is Chief Executive Officer and President, Dan Browne and Chief Financial Officer and Executive Vice President of Corporate Development, Lauren Silvernail. Earlier today, Revance Therapeutics released financial results for the quarter and year ended December 31, 2013. If you have not received this news release or if you would like to be added to the Company's distribution list, please sign up at the Company's website, Revance.com or call Westwicke Partners at 415-513-1281.

During the course of this conference call, Revance management will make forward-looking statements, including but not limited to statements related to Revance Therapeutics' financial performance, clinical development, business strategy and goals, plans and prospects, potential benefits of product candidates or technologies and future financial performance. These forward-looking statements are based on the Company's current expectations and inherently involve significant risks and uncertainties. Our actual results and 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 results to be different from these statements include factors the Company describes in the section entitled Forward-Looking Statements in its press release of today. Revance cautions you not to place undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations. I will now turn the call over to Dan Browne. Dan?

Thank you, Ana. Good afternoon, everyone and thank you for joining our fourth-quarter call. Before commenting on our results and accomplishments in the fourth quarter and 2013, I wanted to take time to thank the Revance Therapeutics team for their focus, dedication and efforts over the past several months. Not only did we together continue to execute and build our business, but we also completed a successful IPO bringing in just under $99 million in net proceeds to the Company. We believe this capital will enable us to continue to develop our late-stage programs by executing on our strategy and achieving the many milestones that lay ahead for the Company. I am extremely proud to work with such an outstanding group of individuals.

Before I turn to the quarter and year-end 2013 results, I wanted to make a few introductory comments. Our strategic goal is to build Revance into a global botulinum toxin platform company by leveraging our proprietary technology across multiple indications and dose forms. We believe we will be the first company with a topical neurotoxin on the market, which we will develop in multiple aesthetic and therapeutic indications.

Starting with dermatology and then expanding to other specialty areas as we grow our business. We are also developing a novel injectable botulinum toxin that is designed for longer duration compared to the injectable products on the market today. We have all the rights to our assets across all geographies and all indications for both topical and injectable dose forms. As most of you know, the current botulinum toxin market is large and still growing with expectations that the market will exceed $4.3 billion by 2018. We believe this is a long-term trend that's a result of heightened attention and importance paid to dermatology, but also being driven by the role of botulinum toxin products to be approved for an expanding number of therapeutic indications.

Our platform technology combines a portfolio of novel cell-penetrating peptides that are able to carry botulinum toxin and other macromolecules of interest across skin and other barrier membranes. We currently have three late-stage assets. Our lead product is RT001, a novel topical botulinum toxin drug being studied in Phase 3 for lateral canthal lines commonly referred to as crow's feet lines. RT001 is also being studied in Phase 2 for the treatment of hyperhidrosis or excessive sweating, a dermatologic condition which typically presents in the underarms, hands, feet and face. Other potential indications for RT001 are also being considered.

Our injectable toxin product, RT002, is currently being studied in a Phase 1/2 as a potential longer-lasting toxin for the treatment of glabellar lines commonly known as frown lines. This focuses our clinical development squarely in aesthetic and therapeutic indications. However, potential indications for RT002 where longer duration and greater control of diffusion are also being studied for therapeutic indications. We believe RT001 represents a large commercial opportunity supporting three product launches beginning in 2017 and a long-term potential to reach annual sales over $500 million in the United States. Importantly, we expect to achieve our potential through a targeted specialty selling organization in North America.

This afternoon, we will break down our comments as follows. First, I wanted to touch on the highlights from our fourth quarter and 2013 followed by an update on our clinical programs. Then I will turn the call over to Lauren to give a more detailed analysis of our financial results and expectations for 2014. We will wrap up the call with closing remarks and open the call up for questions.

Our achievements in 2013 in the first quarter positively impacted our prospects for long-term commercial success in multiple ways. Based on our clinical progress in 2013 for topical RT001 for crow's feet lines, we plan to enter Phase 3 pivotal trials in the coming months. In addition, we have also added Angus Russell, former CEO of Shire Pharmaceuticals, as Chairman of our Board of Directors. Angus brings a wealth of strategic and operational experience in leading companies through high growth in both sales and earnings. We look forward to his leadership and his contributions to Revance and warmly welcome him to the Revance Board of Directors. And finally, we are very pleased with the results of our recent successful IPO and enjoyed meeting many of you while on the road. We are well-funded and have the necessary capital to enable meaningful clinical development.

Now turning to the clinical programs specifically, I wanted to extend my appreciation to our clinical investigators, many of whom we were able to meet with during the annual American Academy of Dermatology meeting, which was held last weekend in Denver, Colorado. I also wanted to thank the clinical trial teams, clinical study organizations and the Revance team for their continued dedication and hard work in advancing our clinical development programs.

Looking at the topical RT001 candidate, we are pleased to share that we have started our Phase 3 open label safety study for RT001 in crow's feet lines. The open label safety study will enroll up to 1,800 patients and it is a critical path for filing our BLA, which we still expect to file in late 2016. We expect to release interim data from our open label study next year, 2015 and final data in 2016.

Additionally, we anticipate starting our first US pivotal trial for RT001 for crow's feet lines in the coming months. The first Phase 3 trial will enroll approximately 170 subjects and we expect to report the efficacy results during the second half of this year. Our plan to initiate our second US Phase 3 trial remains on track to start and we expect to report data in 2015. The European Phase 3 trial is also on track and initiated at a comparable timeframe.

Moving on to RT002, our injectable product candidate, we are making significant progress to completing the Phase 1/2 study for glabellar lines. We are on track to complete the analysis of the study and report results within the next few months. Importantly, this Phase 1/2 result will be informative in demonstrating that RT002 may be the first longer duration botulinum toxin and will guide our trial comparing RT002 to one of the leading commercially available injectable toxins.

I would mention that several of the seminal thought leaders on botulinum toxin neuromodulators will be investigators in this upcoming trial. We believe our RT001 and RT002 product candidates once approved will bring innovation to the field and satisfy a significant unmet need for patients and physicians in the aesthetic and therapeutic dermatology space. We are looking forward to updating you on important milestones across our portfolio throughout the remainder of this year. I will now turn the call over to Lauren to discuss the financials and 2014 outlook.

Great, thank you, Dan, very much and good afternoon, everyone. Since you have the relevant fourth-quarter and year-end financials in the press release, I am going to only make three quick comments today. First, looking at our cash balance, in February 2014, the Company closed its initial public offering resulting in net proceeds after deducting the underwriting discounts of about $102.7 million. In February 2014, just to give you some color on the first quarter, we paid out cash for normal and ongoing operations, expenses related to the IPO and we also made a payment of $7.1 million to Valeant or Medicis.

Now turning to our outlook for 2014, based on our current operating plan, we expect our cash burn to be in the range of $75 million to $85 million for the full fiscal year. Cash burn in 2014 is anticipated to include the $7 million paid to Medicis I just mentioned, debt service of $10 million to $11 million, costs related to Revance's IPO and other incremental costs of being a newly public company. We believe we have sufficient cash to fund our operations for at least the next 15 months, if not longer. For operating expenses, we are expecting full OpEx, excluding amortization, depreciation and stock-based compensation, will be in the range of $55 million to $60 million for the full-year 2014.

And third, to answer any questions you may have on how many shares we have outstanding after the IPO, the details are as follows. Our common stock outstanding today is 18.65 million. We have issued options in the amount of 1.24 million and we have warrants issued after all the conversions that occurred with the IPO. The remaining options are about 0.15 million, 150,000. We also have -- excuse me -- the total then becomes 20.0 million for common stock outstanding plus issued options and warrants. We have two additional pools that have been mentioned in the S-1 and on our roadshow. Our employee stock purchase plan pool is about 200,000 shares and our 2014 option pool is about 1 million shares. Both of those pools are ungranted. If we add the ungranted into the common issued plus -- the common stock plus issued warrants and options, our fully diluted inclusive of the ungranted pools is about 21.2 million common stock equivalents. And with that, I would like to thank you and turn it back to Dan.

Thank you, Lauren. Our business has made substantial progress in 2013 and I believe we have entered 2014 with strong momentum and confidence in our clinical program. We are very well-positioned to achieve many milestones over the upcoming several quarters, positioning us for long-term success and the ability to deliver significant shareholder value.

I wanted to reinforce our focus in 2014 and that is to build value by reaching two fundamental milestones. First, RT002, we expect to report the Phase 1/2 duration of effect data for the treatment of glabellar lines in the next several months. And secondly, for RT001, we expect to report Phase 3 efficacy data for the treatment of crow's feet lines in the second half of this year.

With those two milestones achieved, we believe Revance is well-positioned for clinical success going forward and more importantly for long-term commercial success by expanding the market for botulinum toxin. We have many milestones beyond that for the Company and we look forward to executing our strategy. With that, thank you for joining us today. We look forward to updating you on our progress in future calls. We will now open it up for questions. Operator?

(Operator Instructions). Tyler Van Buren, Cowen and Company.

Hi there. With the RT002 data to read out by the end of the first half of this year, could you please just provide a brief overview of the study, the status of it currently and what exactly we should expect to see with the data?

So this was a Phase 1/Phase 2 study, Tyler. It was a dose-escalating study at four doses. Those were 48 subjects in this study and we have reported the early efficacy data at 30 days as part of the IPO roadshow and we are in the process now of collecting duration. That duration will extend up to nine months. Once we have all the patients who have completed follow-up, we will report the duration data and we expect to have that data here in the next few months.

Okay, great. Thanks.

David Amsellem, Piper Jaffray.

Thanks. I had a few questions. First, on RT001, can you say definitively if you will have duration of effect data on the first Phase 3 study before the end of the year or is that something that might be an early 2015 event?

That will most likely be an early 2015 event if our duration is as long, if not longer, than what we saw it in Phase 2B, which was 113 days on a median basis.

Okay, that's helpful. And then secondly, on the endpoints, I wanted you to just give us a little refresher on the debate versus assessment at smile versus at rest and just remind us again where your primary assessment is on one of those two and what you believe to be and what importantly KOLs believe to be the more relevant or more real-world assessment, if you will. Thanks.

Through the end of Phase 2, we collected efficacy at both rest and at smile for RT001 for the treatment of crow's feet lines. Our Phase 2B primary endpoint was a 2 point in composite improvement in the investigator's global assessment scale, as well as the patient severity assessment. We will also be conducting 1 point movement, 2 point movement on each of those scales as secondary instruments.

In the early Phase 2 trials, we did collect efficacy at smile. In Phase 2, we saw efficacy at both rest and at smile. Going forward in Phase 3, we will be using the identical composite 2 point improvement in the investigator's global assessment and the patient severity assessment at 30 days in both the left and right eye assessed at rest. We will also be collecting efficacy as an additional endpoint at smile as well. So when we file the BLA, we want to be able to have achieved our composite endpoint as many of the secondary endpoints as we achieved in the Phase 2 studies, both 1 point and 2 point improvement. The 2 point composite is very much a regulatory endpoint to satisfy the agency that you are getting consistent efficacy and that you have not changed anything between what the patient sees what the physician sees. We will also be providing the smile data to show that mechanistically that RT001 behaves just like botulinum toxin when it is injected for the treatment of lateral canthal lines.

Okay. And then last one if I may, this is more of a commercial question, but one of the things that one of your future competitors has mentioned regarding RT001 is the chair time for the patients. In other words, the patient has to, for lack of a better term, hang around longer before leaving the doctor's office. So I guess the question here is do you believe that that is something that could be an issue competitively and how would you address any concerns that lengthy chair times might make it difficult for doctors to traffic through as many patients as possible?

David, over the many years of the development of this program, we have spent a lot of time with the key opinion leaders, as well as the dermatologists and plastic surgeons around the country that have a wide distribution of aesthetic practices to -- first and foremost is to look at our clinical endpoints to making sure that the efficacy and safety meets those requirements for a botulinum toxin drug product. And I think we are very encouraged with both the safety and efficacy that has been shown now with over 1,000 patients. We are a very data-driven organization and as we sort of take that data and look at the chair time, we've looked at making sure that we don't economically consume any more of the physician's time that is being allocated today for the injectable products.

This product is really configured to be used in the treatment office, to be able to be used with other treatment modalities at the time of treatment and we haven't found, even in the busiest practice, that the 30 minute procedural time is problematic, that it allows the physician to provide the patient with a portfolio of potential treatment options and as long as it is not consuming their time, that it is minimal impact on their sort of practice real estate in the clinic. So we have not found that it has been a problem.

Okay, great. Thanks, Dan.

David Maris, BMO Capital Markets.

Good afternoon. First, Dan and Lauren, congratulations on the IPO. I know it was a long process, but great turnout, so thank you. On the commercialization strategy, I know you are planning on going to market yourself in the US. Is that 100% set in stone or something that as you make your way through Phase 3 that you will look at other options? And then outside of the US, what are your thoughts there and what is the process on the business development front outside of the US?

Thank you, David. I appreciate your comments on the IPO. It was a long process and it felt good to get that done and have it so well-received. I think in North America, particularly in the US, we are very focused on building a selling organization because we think it is the best way to bring this product to market and capture the appropriate attention of dermatologists, plastic surgeons and the core constituents who are using these neurotoxin products. And that we can add to that as we expand the portfolio with RT002 in the hyperhidrosis indications.

Having said that, we really see this as an expansion to the existing market on the topical side. On the RT002 side, looking at something that is fundamentally different. To date, most of the current injectable products have comparable duration of effect. Our ability to sort of extend that duration, our target product profile by as much as 50% really gives us a unique position in the marketplace to add that product to the topical and maximize that value with our own selling organization. So are we 100% adamant that that decision to build a sales organization will live forever? I think we will just have to cross that bridge later in the year when we are closer to a commercial landscape. But at this point, we feel very strongly that that is the most appropriate commercialization path.

In Europe, I think we are a little more opportunistic that we will look for opportunities to partner. We really see three fundamental geographies -- Europe, South America and Asia. It is not a question of whether we are open to partnering; it is more of a question of when and I think as we complete these Phase 3 trials that we expand the total patient population to ensure safety and efficacy has been well-demonstrated, it is in position for an approval. We will look at those gates as an opportunity to partner with an opportunity to maximize the value of that partnership at that time. We don't necessarily think that that is today, but one never knows when those opportunities present.

Great. Thank you very much.

I would like to hand the conference back over to Mr. Dan Browne for any closing remarks.

We thank you for joining us on our first quarterly call and we look forward to keeping all of you abreast of our progress as we move through 2014. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.