Revance Therapeutics Inc (RVNC) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Revance Therapeutics 2015 Second Quarter Financial Results conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference call may be recorded.

I would now like to turn the conference over to Jeanie Herbert, Senior Director of Investor Relations for Revance.

Ma'am, you may begin.

Thank you, [Sonya].

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 ended June 30, 2015.

If you've not received this news release or you would like to be added to the Company's distribution list, you can do so on the investor relations page, 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 angles, plans and prospects, the markets in which we compete, potential product candidates, and benefits of our current and future product candidates and our 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 are inherently involved 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 our annual report on Form 10K for the year ended December 31, 2014, as filed with the SEC on March 4, 2015.

And subsequent quarterly reports on Form 10Q.

Revance cautions you not to place any 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 and thank you for joining our second quarter conference call.

I will start the call with an update on our clinical programs and milestones, followed by Lauren's review of our key second quarter financials and updates to the full year 2015 guidance.

We will then open up the call for your questions.

As a company, we continue to advance in development of both our topical and injectable versions of botulinum toxin, which are targeted to penetrate and grow the $3 billion aesthetic and therapeutic markets for botulinum toxin.

While topical RT001 is designed to operate needle-free expansion of the market, it could be an excellent complement to fillers and injectable toxins.

Our current RT002 injectable goes at the heart of the botulinum toxin market with potentially longer duration of effect and less diffusion.

We've had a very productive first half of the year and expect to report on several significant clinical milestones for our investigational drug products in the second half.

The primary highlight of the second quarter was the announcement that we planned to move forward with our clinical trials for two exciting topical RT001 indications, crow's feet lines and hyperhidrosis or excessive sweating.

In the second quarter, we completed an open label study of RT001 for the treatment of crow's feet lines.

We designed the study to evaluate the attributes of different RT001 drug products.

In this study, we also tested new clinical methods using electromyography, or EMG, and ultrasound to try to demonstrate the ability to -- of RT001 to effectively cross the skin and paralyze the orbicularis oculi target muscle.

We believe that these clinical methods have the potential to offer quantitative data that can augment other clinical endpoint data and demonstrate that the drug is achieving its intended paralytic effect.

Following analysis of this open label trial taken together with our analysis of prior studies and early data from our clinical methods, we decided to proceed into phase III trials for RT001.

We believe we have a strong opportunity to achieve clinical and statistical significance in both our phase III clinical -- excuse me -- phase III crow's feet lines and phase II hyperhidrosis clinical studies.

In the second half of 2015, we plan to have 4 late-stage phase II or phase III clinical programs under way.

We look forward to these catalysts demonstrating the power of our patented transmits, peptide technology in delivering a differentiated experience with botulinum toxin.

Let me give you a brief overview on the status of our four clinical programs, starting with topical RT001 for the treatment of crow's feet lines.

With regards to our US phase III pivotal study, we are in the process of preparing and conducting investigator training and plan to start the trial in this third quarter of this year.

The phase III study will be randomized placebo-controlled study to evaluate the safety and efficacy of a single topical application of RT001 in adults with moderate to severe crow's feet lines.

At the time, we announced the first patient dosing.

We plan to provide an updated timeline and describe the final trial design in more detail, but for now, depending on the first dosing, the size, and speed of enrollment as well as other factors, we expect to report results in the first half of 2016.

Topical RT001 is designed to offer patients a natural-looking aesthetic result with no needles, no downtime, no bruising, and no pain.

In addition, we're very excited about another potential aspect of the skin effect from treatment.

Visible improvement in the quality and the texture of skin which could -- which could be a desirable outcome for patients not only for crow's feet, but for potentially other indications across areas of the face and decolletage.

As for the phase II study of topical 01 for the treatment of hyperhidrosis, we expect to initiate dosing in the second half of this year.

We are excited about the prospect of a topical painless, long-lasting treatment for excessive sweating.

Today, topical injection -- excuse me -- toxin injections make up approximately $75 million of the hyperhidrosis treatment market.

We believe eliminating the large number of injections in the underarms with a topical treatment could bring new patients into the physician's office and dramatically expand the toxin market for excessive sweating.

While our first focus will be on underarms, excessive sweating is often experienced in the palms and feet, which potentially could be treated with a topical gel like RT001 allowing for targeted delivery without daily application of systemic side effects.

The trial will be a US phase II randomized dose ranging placebo controlled study to evaluate the safety and efficacy of a single topical application of RT001.

Two doses of 01 topical gel will be tested.

Depending on the start of the trial, speed of enrollment, we anticipate reporting preliminary efficacy results late in 2015.

Moving on to our injectable RT002 and the aesthetic indication for frown lines, as we announced in May, we completed enrollment of more than 250 patients in our Belmont Active Comparator Trial and expect interim duration results in the fourth quarter of 2015.

At that time, we'll release the safety efficacy in 24 weeks or 6-month duration results for both Botox Cosmetic and the 3 doses of RT002.

Quantitative market research conducted with 50 physicians -- excuse me -- 100 physicians, a mix of plastic surgeons and dermatologists, showed that respondents regarded duration beyond four months as a significant improvement over Botox Cosmetic.

We believe the six-month interim duration results later this year will be an important indicator as to the commercial potential of RT002.

After patients returned to baseline and the study concludes in 2016, we'll share the full duration results for RT002.

Turning to the therapeutic indication for injectable RT002, as we noted last quarter, we selected the muscle movement disorder, Cervical Dystonia, as our first indication.

During the second quarter, we filed an IND with the FDA and we are on track to initiate a phase II study this quarter.

It will be a dose-escalating study to evaluate the safety and preliminary efficacy of injectable RT002 for the treatment of Cervical Dystonia.

We believe the prospects of an improved safety profile due to less confusion combined with longer duration could make RT002 a viable treatment option for Cervical Dystonia, as well as, other muscle movement disorders such as upper limb spasticity.

Depending on the actual start date of the trial and the speed of enrollment, we plan to have preliminary data by the end of 2015.

Positive safety and efficacy and duration results for Glabellar lines and Cervical Dystonia would bode well for RT002's potential to work in other indications such as spasticity, overactive bladder, Cerebral Palsy and other indications where a longer duration of effect would be highly desired outcome for those patients.

As we continue to gain momentum, we look forward to sharing some potentially powerful clinical data by the end of this year.

Let me turn the call over to Lauren to discuss second quarter financials in the 2015 financial outlook.

Lauren?

Thank you, Dan.

Starting with cash, we are running favorable to our prior year cash -- excuse me -- to our prior cash burn guidance.

We ended the second quarter with cash of $149 million compared to $154 million at the end of first quarter.

Our overall cash burn for the second quarter was only about $5 million due to the receipt of $10 million in cash from the close of the sale and lease-back transaction on commercial manufacturing equipment we had previously purchased.

We continue to believe our cash on-hand will last through 2016 and potentially into early 2017.

Net loss for the quarter was $16.8 million compared to $13.3 million for the prior year quarter driven by higher R&D expenses relating to ongoing clinical trials and increase personnel, legal and other costs related to our operations as a public company.

Our common shares outstanding as of June 30, 2015 were 24 million.

Our fully diluted shares outstanding not on a Treasury basis were 26.5 million.

Fully diluted shares include 0.2 million issued warrants and 2.3 million issued options.

Turning to our guidance for 2015, we are reducing our 2015 full-year cash burn guidance provided on May 13.

We now expect cash burn for 2015 will be about $8 million lower and in the range of $66 million to $76 million.

This is primarily due to the net financial impact of the second quarter 2015 sale leased back transaction on our manufacturing equipment.

We reaffirm the balance of our 2015 full-year guidance.

We expect 2015 non-GAAP operating expense to remain 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 additional clinical trials, we plan to initiate during the second half of 2015, we anticipate R&D expense will be materially higher in the second half of 2015 as compared to the first half.

We expect 2015 non-GAAP R&D expense to remain 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.

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

Thank you.

Thank you, Lauren.

In closing, we continue to be excited and highly confident that Revance has the potential to fundamentally transform today's botulinum toxin market with a broad range of therapeutic and aesthetic indications.

With four late-stage clinical studies under way in the back half of the year, the Company has momentum and multiple data catalysts to head for RT001 and RT002 drug product candidates.

We believe these candidates have the potential to create significant value for the Company and alter the future of the neurotoxin market.

In late September, we plan to be on both the East and West Coast meeting with investors.

Please reach out to Jeanie Herbert in our investor relations group and let her know if you'd like to schedule time to meet with us.

With that, thank you for joining the call today.

I will now open it up for questions.

Operator?

Thank you.

(Operator Instructions)

Our first question comes from David Amsellem of Piper Jaffray.

Your line is now open.

Thanks.

Just a couple of questions.

So first on the topical.

You're eluding to these new metrics, and I'm not trying to sound a note of skepticism, but I'm just wondering out loud is that potentially a way to work around the guidance documents -- the draft guidance document that came out last year and, I guess, how are you thinking about that guidance document these days as it relates to lateral canthal lines?

That's my first question.

And the second question is on RT002 and the -- and the development plan in Cervical Dystonia, and I wanted to get your thoughts here.

Is this actually risking putting the cart before the horse to do that study now ahead of duration of efficacy data from the Belmont study and I wanted to know how are you thinking about that?

Are you thinking about cosmetic and therapeutic indications for 002 completely and dependently?

Thanks.

David, let me take the first question on the -- on the guidance document.

We are really excited to start this pivotal trial.

We have great confidence that we'll achieve the statistical and clinical benefits that we've seen in prior trials, and the use of the ENG as a -- as an essay is really intended to look at quantitatively assessing the amount of paralytic effect.

The historical work of that contraction was one way.

We'll be also looking at that as part of our phase III program, but actually having a quantitative method to assess the paralytic effect and correlate it back to the clinical endpoints we think is really exciting.

It's really some of the first work that's been done to look at both of those parameters together and we'll be actively talking about that with the agency.

We continue to check back with the agency relative to the draft guidance.

We've responded to it, via the American Society of Dermatologic Surgery has responded, a number of physicians responded, and I believe one other sponsor has also.

So we think that that document is a work in progress.

We think that we know what we need to do as part of our phase III program to demonstrate efficacy, to demonstrate safety, and demonstrate the paralytic effect, and collectively when you look at all those together to get right to the heart of the risk benefit of why a topical route of administration for botulinum toxin is ideally suited for aesthetic and potentially other therapeutic indications such as hyperhidrosis.

Relative to RT002, I think that our ability to execute a well-controlled, double-blind randomized control against the market leader shows us confidence.

The Glabellar indication is the ideal indication from all the clinicians that we've spoken to to look at both safety and efficacy at duration.

There's a well-documented history with where to inject.

The Glabellar scales are well vetted and have been used historically.

So we think having that combined with the Cervical Dystonia, mechanistically if it works in those indications, it should work in other indications where you're either trying to extend your duration or whether you're trying to control the diffusion to address a potential therapeutic.

So we did that early.

The Glabellar is the first quantitative way to look at that, and then we think augmenting that with the Cervical Dystonia positions RT002 for continued development in a path to approval for both of those indications in 2016 and beyond.

Thank you.

Thank you.

Our next question comes from Ken Cacciatore of Cohen and Company.

Your line is now open.

Hey, guys.

Just a couple of questions.

Just, first, going back to 001 in the open label study now that we've had a little bit of time post-moving forward, could you just give us a sense of how you determine success, kind of any perspective you could give as you -- as you look back on that data understanding you made the decision to go forward, but maybe give us a little bit more nuance.

Was it matching the successful phase II results?

So anything you can elaborate there.

That's question one.

And then question two, is there any way you can give us a little more nuance in terms of confirmation when the last 002 patient was dosed?

We understand in May the enrollment was completed.

But just wondering if you can give us a sense of when the last patient was actually officially dosed.

Thank you.

So Ken, I'll start with the last one -- last one first.

I believe we guided on the last conference call that we had completed enrollment, and so we were done before that.

So you can assume the last patients were dosed in March of that time.

So it gives us great confidence now that we're fully enrolled to come back later this year in the fourth quarter and present that duration data at that -- at that time.

So at this point, it's in the hands of the study gods and it will break our way.

We have great confidence that we'll be able to show duration, but until we get that, we all have to stand back and just wait for the data.

But very confident that we'll be able to report that in the fourth quarter.

As far as the 01, this has been a series of activities to both look at the CMC and analytics, as well as, the clinical performance.

These are open label trials, very hard to compare that directly to a double-blind randomized controlled trial, and they're relatively small.

So what we were really trying to do in these open labels is to really look at assessing the accommodation of the toxin and the peptide.

We know from prior trials the CL17 trial that in order for the technology to work, the protein and the peptide have to be together.

And so we look at as part of that open label work different conditions to look at the adequacy of those products or those conditions to optimize the efficacy.

We believe that the combination of those open label trials, as well as, some of the internal in vitro assay work, as well as, the clinical data gave us the confidence that we could move forward believing that we could achieve the necessary statistical and clinical outcomes that we've seen before, and more importantly to be a commercial viable product for crow's feet and hyperhidrosis.

So it's really the totality of those -- of those data sets that gives us confidence to move forward.

Thank you.

Thank you.

Our next question comes from Tim Lugo of William Blair.

Your line is now open.

Hey, guys.

This is [Rajin] for Tim.

Thanks for taking the question.

Regarding Belmont, can you just give us some clarity on the powering of the trial?

Is it powered to placebo or the active comparator group?

Yes.

It's powered to the active comparator group.

Okay.

And then are you guys...

For superiority.

Okay.

For superiority, you said?

Right.

And is the primary endpoint the median duration of response for investigator assessment and subject assessment or one or the other or both?

That's correct.

Okay.

That's correct.

And then are you guys planning on disclosing the dosing of -- in some of your other follow-on phase II like the hyperhidrosis candidates or the ones in phase III for RT01?

Yes.

Raj, once those -- once those trials are under way and those initial set of dosing has occurred, we'll come back and provide additional guidance on the actual study designs, the doses, number of patients, primary endpoints and the like.

Great.

Thank you.

(Operator Instructions)

Our next question comes from David Maris.

Your line -- from -- of BMO Capital Market.

Your line is now open.

Hi.

It's Katie Brennan in for David Maris.

Thanks for taking my question.

On several of these trials, we're hearing, you know, once you've actually dosed and begun the trial, then we'll get to hear more about the design, but can you talk us through what you need to do before that happens, what the timelines are for RT001 phase III and the phase II in hyperhidrosis when you expect those to begin, and what you need to do in the meantime, you know, to get those started?

Sure.

I mean, we've got it that those trials will be starting predominantly in the third quarter.

So it's the standard routine getting your (RDR) approvals, conducting your investigator's meeting.

Products are made and that we'll be really starting to dose those patients in the coming weeks.

We've got roughly six weeks through the end of the quarter, but, you know, we'll certainly provide that guidance once that -- once that dosing has happened.

And all the sites approved and set up and you know kind of which ones will be involved?

We have selected all of our sites.

That's correct.

Thank you.

Thank you.

This concludes our question and answer session.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes today's program.

You may all disconnect.

Everyone, have a great day.