Revance Therapeutics Inc (RVNC) 2014 Q4 法說會逐字稿

Welcome to Revance Therapeutics' Q4 2014 conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answers session and instructions will follow at that time.

(Operator Instructions).

As a reminder, this conference call is being recorded.

I would now like to turn the conference to our host, Ms. Jeanie Herbert, Senior Director and Investor Relations for Revance. Ma'am you may begin.

Thank you, Eric.

Joining us on the call today from Revance Therapeutics is President and Chief Executive Officer, 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 full year ended December 31, 2014. If you have not received this release or if you would like to be added to the company's distribution list, you can do so on the Investor Relations page of the company's website at www.revance.com.

During the course of this conference call, Revance management will make forward-looking statements including but not limited to statements related to Revance Therapeutics clinical development of our product candidates, business strategy and goals, plans and prospects, the markets in which we compete, potential product candidates and benefits of our current and future product candidates and technologies, regulatory risks and ability to obtain regulatory approval and uncertainties and future performance.

These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. 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 results to be different from these statements include factors the company describes in the section entitled Risk Factors in its annual report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on March 28, 2014 and subsequent quarterly reports on Form 10-Q.

Revance cautions you not to place undue reliance on forward-looking statements and undertakes 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, Jeanie. Good afternoon everyone and thank you for joining our fourth quarter and year end 2014 conference call. The fourth quarter capped off a productive year for the company. We've made meaningful progress, strengthening the breadth and depth of our product candidates, and we're entering 2015 with a real solid foundation.

On today's call I'll cover the business highlights, Lauren will review the financials and 2015 guidance, and I'll wrap up with our clinical milestones for the year. Then we'll look forward to answering your questions.

In 2014, major accomplishments included demonstrating significant duration effect of our injectable RT002 product candidate and secondarily successfully raising more than $230 million through our successful IPO and follow-on stock offering.

Today we have two exciting botulinum toxin product candidates, topical RT001 and injectable RT002 with four indications, all moving forward in active clinical development programs, targeted to compete in the established $3 million neurotoxin market.

We're pursuing more than aesthetics. Our drug candidates have the potential to treat a wide range of therapeutic indications, expanding our market opportunity into neurology and to other areas.

In the fourth quarter, the highlight was the initiation of our BELMONT Phase 2 Active Comparator trial to evaluate the safety, efficacy and most importantly duration of effect of our injectable 02 to treat glabellar or frown lines. The study includes three doses of 02, the labeled dose of the current market leader Botox Cosmetic and a placebo control group.

We felt an active comparator study at this stage of development was an important step in substantiating the potential for 02 glabellar Lines. Enrollment for this study is on track and we're looking forward to share an interim duration results late in 2015 as planned.

In the final cohort of our previous study results announced in April, 02 showed a medium duration of seven months for the treatment of frown lines, which was roughly double the labeled duration of the market leader. These results were highlighted in the January special supplement to dermatologic surgery, a major peer review journal.

In keeping with our commitment to enhance our team, a key recent highlight was the addition of Dr. Philip Vickers to our Board of Directors. Phil is the Global Head of R&D at Shire and has strong leadership experience in pre-clinical research, clinical development and regulatory affairs. He currently oversees Shire's growing product portfolio and plays a key role in the product development and execution of their global business strategy. We believe Phil will bring a significant value to Revance and our Board of Directors.

In terms of expanding our team Revance is committed to recruiting the best and brightest professionals in neurotoxin drug development, biologic manufacturing, clinical development and regulatory affairs as well as other areas. We are actively recruiting for additions to our team in those areas.

With that, I'd like to turn the call over to Lauren to discuss fourth quarter and year-end financials as well as our financial outlook for 2015.

Thank you, Dan. Starting with our cash balance, we ended the year with a $171 million. Our cash burn was approximately $16.5 million for the fourth quarter and approximately $70 million for full year 2014. At this point, we believe our cash on hand will last at least through 2016.

Turning to the P&L, SG&A expenses increased for the fourth quarter and full year as compared to prior periods in 2013 primarily due to personnel and administrative costs related to our operating as a public company.

R&D expenses for the fourth quarter and full-year as compared to the same period in the prior - R&D expenses increased for the fourth quarter and full year as compared to the same period in the prior year, primarily due to increases in development activities for our two product candidates.

Stock-based compensation for the three and 12 months ended December 31, 2014 was $1.9 million and $6.5 million respectively. Non-GAAP operating expenses for the three and 12 months were $11.5 million and $43.9 million respectively.

Non-GAAP operating expenses exclude depreciation and stock-based compensation. R&D expenses were lower than forecasted bringing non-GAAP operating expenses just below our guidance of $45 million to $50 million for 2014.

Net loss for the fourth quarter was $14.2 million and our year-end net loss including non-cash interest was $62.9 million. Our common shares outstanding as of December 31, 2014 were 23.9 million. Our fully diluted shares outstanding, including issued warrants and options not on a treasury basis were 25.9 million at the end of 2014.

Turning to our guidance for 2015, we are reiterating the guidance we provided on January 12. This included cash burn for 2015 in the range of $74 million to $84 million. We expect 2015 non-GAAP operating expense to be in the range of $72 million to $80 million, excluding depreciation of $2 million to $3 million and estimated stock-based compensation of $10 million to $12 million.

With clinical trials planned for 2015, we anticipate 2015 non-GAAP R&D expense to be in the range of $52 million to $60 million excluding depreciation of $2 million to $3 million and estimated stock based compensation of $5 million to $7 million.

Our fiscal year 2014 weighted average number of shares outstanding was 19.4 million. For your modeling purposes and assuming no material issuances of equity, we expect our 2015 weighted average shares outstanding excluding restricted stock will be in the range of 23.4 million to 24.5 million shares.

And with that, I'll turn the call back to Dan.

Thank you, Lauren. As we announced in January, we plan to conduct four significant clinical studies in 2015 to demonstrate the power of our patented transmits peptide technology in delivering a differentiated experience with botulinum toxin.

I'd like to spend a few minutes discussing each of those milestones and how we're tracking for 2015, starting with topical RT001 for the treatment of lateral canthal lines or crow's feet lines.

Over the last few months, we've made progress with our 01 drug product and related manufacturing process. Today, we better understand our drug product as we've characterized it extensively and evaluated the clinical performance. We've made adjustments designed to enhance the interaction of the peptide and the toxin, beyond that we continue to deliver, develop and implement new analytic methods.

We believe these changes have the potential to lead for better clinical outcomes, enable us to deliver the results we need to gain regulatory approval of crow's feet lines.

We expect to start the new open label study incorporating these adjustments imminently and conclude it by mid this year. Upon successful completion, we plan to initiate a Phase 3 pivotal study in the U.S. in crow's feet, and expect to report efficacy results in the second half of 2015.

In terms of topical 01 for the treatment of hyperhidrosis or excessive sweating, we plan to initiate a Phase 2 clinical trial, mid-2015 and report preliminary efficacy data from this trial in the second half of this year.

We believe hyperhidrosis in the exterior underarms is a highly underserved market and represents the most significant near-term therapeutic opportunity for topical 01. In the United States, hyperhidrosis affects approximately 9 million people with about suffering per maxillary hyperhidrosis, excessive sweating has a debilitating psychosocial and emotional consequence as well as significant medical dermatologic impacts.

Despite a substantial impact on quality of life, low satisfaction with current treatments has left a large unmet need for effective treatments.

Injected delivery of botulinum toxin has already been validated as an effective treatment of hyperhidrosis. However, one reason it is not been widely embraced by patients is because of the significant pain and trauma caused by the large number of required injections. A topical solution has the potential to encourage more patients to seek treatment.

Moreover, from physicians' standpoint, injections are time consuming and reimbursement is low. Treatment with our topical 01 could decrease procedural time and potentially make it more profitable for the physicians' practice.

That's the update on RT001. While we currently focus on crow's feet lines and hyperhidrosis, we feel 01 has the potential to be viable product candidate for other indications where topical delivery of the toxin could improve patient comfort or whereas needles are impractical.

Moving on to the injectable 02 product and aesthetic indication for glabellar or frown lines, we're on track with our BELMONT Phase 2 Active Comparator trial. Market research among key opinion leaders indicates that an injectable toxin with roughly double the duration of effect in frown lines and potentially in other aesthetic and therapeutic indications could prove to be transformational in the neurotoxin market. We expect to report interim duration results in late 2015.

Now turning to injectable 02 for therapeutic indications. Injectable 02 has the potential to treat a number of therapeutic indications and botulinum toxin is already approved for eight medical conditions in the United States. Globally, therapeutic use of botulinum toxin represents a larger market than the aesthetic market and it is predicted to grow faster over the next six years.

Muscle movement disorders account for roughly half of the $1.7 billion in therapeutic neurotoxin sales globally. They include conditions that affect a person's ability to control muscle activity, often due to nervous system damage caused by stroke, disease or trauma.

While not life threatening, muscle movement disorders can be painful and significantly impact quality of life. From a market access standpoint, similar to dermatology, neurology has a targeted manageable physician base which we believe can be easily accessed by a small specialty sales force.

As we look at the various muscle movement indications, we're focused on conditions where deeper, more targeted delivery is required and the longer duration is desired. Examples include cervical dystonia, characterized by excessive pulling of the muscles in the neck and shoulder, and upper limb spasticity which affects muscles in the arms and can cause stiffness in the fingers, wrists and elbows.

While we are in the process of finalizing our clinical plans and currently expect to initiate a Phase 2 muscle movement disorder clinical trial and report clinical results in the second half of 2015.

In summary, we've made progress towards commercializing both of our neurotoxin product candidates in four unique indications. With expanded board expertise, enriched capabilities of our leadership team, and the extended breath of our resources, we are well positioned to advance clinical trials in 2015.

As an emerging specialty biopharmaceutical company, we strive to develop technology and product candidates which will potentially transform today's botulinum toxin market. Lauren and I look forward to updating you on our progress on future calls.

In terms of travel schedule in the next few months, we plan to meet with investors this week at the Cowen Healthcare Conference in Boston, connect with investors in Chicago at the end of March and attend the American Academy of Dermatology Meeting in San Francisco from March 20 through March 24, and the American Academy of Neurology Meeting in Washington DC in late April. Please let us know if you'd like to meet during those events.

With that, thank you all for joining us today. I will now open it up for questions. Operator?

(Operator Instructions). David Amsellem, Piper Jaffray.

Thanks, just a couple. So first on 001, I was hoping you could provide some specific, some details on some of the improvements you've tried to make to the manufacturing process in order to get to data that is acceptable to move into pivotal trials in lateral canthal lines?

So, that's number one. Number two is, on 002, I guess the question here is, what do you think you need to see in terms of a benefit on duration of efficacy above and beyond Botox in order for this to be commercially viable? Is it a two-month or three-month benefit, do you think you can get away with just a one-month benefit? How should we think about that? Thanks.

We've worked really hard as we've tried to share on previous updates. And we've learned a lot as we worked through the manufacturing process. And we have extensively characterized the drug API drug product and evaluated the clinical performance. And as part of that process we've identified that it's an important characteristic to have significant integration between the toxin and the peptide, one without the other limits its effectiveness in the clinic.

And that's really been our process here over the last several months is, how do we adjust the process to ensure that we're maximizing the concentration of the toxin and peptide? And that work takes time and repetition. I think going into this open label trial, we feel very confident that we've identified those process parameters that gives us the product that will give the efficacy to meet the regulatory end-points and the clinical end-points that we've shown before.

Relative to RT002 and duration of action, in the case of glabellar lines, as we've spoken to the marketplace and clinicians, we find this doubling of the duration is potentially game changing. It's expressed to us as the golden, the golden goose if you will, for showing very clear differentiation to the current injectable products.

As you start to look at some of the other therapeutic indications in the case of cervical dystonia, you're also beginning to look at not only extending the duration over the existing injectable products, but you're potentially also trying to look at safety. By controlling the diffusion you're looking at opportunities to reduce the adverse event rates as part of those.

But right now we're really focused on the most significant differentiation on duration and right now we're at roughly seven months on the glabellar lines and as we move into this muscle movement disorders later this year, we'll start to get a look at safety and efficacy and ultimately with duration.

We think that it has to be meaningful, and we'll certainly include that in our cost effective arguments for supporting RT002.

Thank you.

(Operator Instructions).

Tim Lugo, William Blair.

Hi guys, this is [Raj] in for Tim, thanks for taking my question. Would you mind updating us on the enrollment for BELMONT and maybe just briefly discuss the idea of running the trial in Canada versus another geography, just basically how reproducible are these -- are Canadian studies versus U.S. studies?

Sure. The trial is tracking as we expected, as you recall it's 250 subjects, roughly 50 subjects into each of five groups. If we assume seven months duration, we would report that late this year. We are tracking to complete enrollment here right around the first quarter. And that's tracking as we expected. The feedback from the sites continues to be quite good.

So, relative to Canada, it's not an unusual step. The other injectable products have done that initial work outside the U.S. We felt with this active comparator to Botox, we wanted to do it early, we wanted to demonstrate that differentiation early in the process. And we felt that using some of the seminal thought leaders in botulinum toxin injections would help us do that using one regulatory jurisdiction.

We would take that data from really some of these top injectors and bring that back into the U.S. for Phase 3 pivotal trials. That's been our development plan and we're continuing to track to that plan.

Great. And regarding the manufacturing process, is there anything that you've learned from the 001 manufacturing process that you can take over to 002 now regarding like you said the peptide and Botox combining?

I think as part of this platform technology we continue to learn. We have learned a lot. We've gone through similar learning as one or more of the other injectable toxin products. And of course the things that we learn in 001 can be applied in RT002 and vice versa. The things that we learn in 02 can be applied back. This really is a commitment to a platform of neurotoxins looking at multiple dose forms.

And I think they very much compliment to each other. 001 was first and went through the hardest learning and 002 gets to pick up on some of that. But we expect the technologies are very complimentary to each other, not only in the clinic but in the manufacturing arena as well.

Great. Just one last one. I was looking at the Phase 1/2 publication and I saw that the 1.5 and 2 times concentration cohorts had a little bit lower percentage of efficacy with the investigator assessment. Is there any reason why you think that happened or and what is the dose in BELMONT for 002? Thanks.

So, we're looking at obviously the placebo. We're looking at the labeled dose of Botox. And we're looking at three doses of RT002 dose escalated up from the labeled dose. So those are the three that we put into the clinic. And we also want to tie back the highest dose to what we used in the previous trial at 60 units.

Great. Thanks for answering all the questions.

Thank you.

And there are no further questions at this time. Ladies and gentlemen, thank you for your attendance. This does conclude our conference. You may now disconnect. Everyone have a great day.