Revance Therapeutics Inc (RVNC) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Revance Therapeutics 2015 fourth-quarter financial results.

(Operator Instructions)

As a reminder this conference is being recorded.

I would like to introduce your host for today's conference, Ms. Jeanie Herbert, Senior Director of Investor Relations and Corporate Communications for Revance.

Ma'am, please begin.

Thank you, Vince.

Joining us on the call today from Revance is President and Chief Executive Officer, Dan Browne, and Chief Financial Officer and Chief Business Officer, Lauren Silvernail.

Earlier today Revance released financial results for the quarter and full year ended December 31, 2015.

If you have not yet received this news 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 relating to Revance's 2016 financial guidance, 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 our technologies, regulatory risks and ability to obtain regulatory approval and uncertainties in 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 our annual report on form 10-K for the year ended December 31, 2014, as filed with the SEC on March 4, 2015, and subsequent quarterly reports on form 10-Q and current reports on form 8-K.

Revance cautions you to not 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 fourth-quarter and year-end 2015 conference call.

Last year we initiated and reported on a number of significant clinical trials establishing Revance as a highly viable, future competitor poised to enter and redefine the $3 billion neurotoxin market.

We executed on our plan and delivered positive clinical results for both investigational drug candidates RT001, topical and RT002, injectable.

If you have been to our website you may have noticed we have refreshed our corporate branding to reflect our broader aesthetic and therapeutic positioning.

As our new tagline asserts, remarkable science changes everything.

Enabled by our novel TransMTS peptide delivery technology, we are out to change the landscape of the neurotoxin market.

We plan to provide physicians and patients the first differentiated botulinum toxin in nearly 30 years.

We currently have four active clinical development programs well underway targeting both aesthetic and therapeutic indications.

We see many more opportunities on the horizon as we work towards our goal of becoming a global leader in both aesthetic medicine and underserved therapeutic specialties.

On our call today I will first cover our recent business highlights, Lauren will review the financials and 2016 guidance, and then I will close with our clinical plans before opening up the call to your questions.

One of the most encouraging highlights in 2015 was the positive six-month result achieved in our Belmont phase II active comparator trial for Glabellar lines.

In the study, RT002 demonstrated longer duration than BOTOX Cosmetic and appeared to be generally safe and well tolerated.

The data showed RT002 achieved its primary efficacy measurement for all three doses at four weeks and demonstrated six month duration of effect.

We saw zero ptosis for both the 20 unit and 40 unit doses.

Efficacy results were aligned and supported by both investigator and patient assessments.

The efficacy results were not simply a dose response as our 20 unit outperformed Botox 20 units particularly on the measurement most important to patients, none or mild wrinkles.

On this clinically meaningful endpoint of none to mild wrinkles, at most time points RT002 40 units was statistically significant versus Botox.

About one third of patients treated with RT002 40 unit still had none or mild wrinkles at six months compared to the same result at only four months for Botox.

And, finally, RT002 showed better efficacy in two point improvement than Botox at the key efficacy time point, week four, all with better durability and what appears to be excellent safety.

Although some have speculated that a higher dose of Botox might result in longer duration, published evidence by doctors Jean and Alastair Carruthers, two the foremost experts in neurotoxins, shows that a higher dose of Botox does not lead to meaningful longer duration.

To date none of the commercially available botulinum toxins have demonstrated and published meeting duration of six months.

While it may seem obvious to most of us, seriously, who looks forward and just can't wait to be injected or to greater frequency of injection, market research has shown that six months of duration would be a substantial improvement over commercially available botulinum toxins.

It is meaning to physicians and to patients alike.

We are now busy preparing for an end of phase II meeting with the FDA.

The six-month Belmont data has been accepted for a late breaking research presentation at this week's annual meeting of the American Academy of dermatology in Washington DC.

It will be presented by Dr Jean Carruthers, the lead Belmont investigator, on Saturday at 1:12 Eastern standard time.

Another 2015 highlight in November was the completion of a secondary offering raising $126 million.

We expect Revance now has two years of cash investments on hand.

Other major accomplishments in 2015 included initiation of two phase II trials, one for the treatment of axillary hyperhidrosis for underarm sweating and the other a neurology for treating cervical dystonia.

We also started our RT001 topical phase III program for crows feet, and finally we ended the year reporting positive interim results from our phase II trial for hyperhidrosis.

The safety profile indicated that RT001 appeared to be safe and well tolerated in this hyperhidrosis study.

The quantitative gravimetric result was a meaningful sweat reduction at week four.

Although sample size in the small early trial was not powered to demonstrate statistical significance, clinically meaningful efficacy was seen on gravimetric assessment for a higher dose group versus the placebo at week four.

These gravimetric measurements demonstrated that RT001 successfully delivered the toxin through the skin to the sweat glands.

Using the qualitative hyperhidrosis disease severity scale, or HDSS, RT001 showed a strong efficacy trend for both one point and two point improvement across multiple time points.

It did not achieve statistical significance at week four as patient reported outcomes in hyperhidrosis studies can be impacted by many factors including diet, weather, exercise, environment and hormonal variations.

Any changes in these parameters can affect sweat and impact placebo rates thus larger studies are commonly required to show a statistically significant treatment effect using HDSS scale to assess changes in hyperhidrosis, which is exactly our next step, a larger hyperhidrosis trial.

In addition to the substantial clinical progress last year we added Abhay Josshi to our management team as Chief Operating Officer.

Prior to joining Revance, Abhay managed commercial and development stage biotech firms and spent 18 years with Allergan where he was responsible for expanding Botox operations globally.

Abhay brings the perfect combination of technical and management skills to help prepare our operations for commercialization.

In addition to Abhay, we've made a number of key hires in our clinical, R&D and manufacturing staffs.

You will note in the materials that we received the official international nonproprietary name for our active pharmaceutical index as authorized by the United States adopted name.

Thus our specific botulinum toxin models will now be refer to as [dacsy] botulinum toxin A.

Entering 2016 we are advancing from a foundation of great strength.

Our TransMTS technology is proving effective in delivering a differentiated botulinum toxin result both through skin and via injection.

With four major programs underway and two indications in phase III trials, this year's management focus is twofold.

One, advancing commercialization plans for both RT001 and RT002.

And, two, evaluating the 100 plus other applications for botulinum toxins to determine which are the most beneficial to pursue next.

With that I'd like to turn the call over to Lauren to discuss fourth quarter year-end financials as well as our financial Outlook for 2016.

Lauren?

Thank you, Dan.

Starting with our cash and investments balance, we ended 2015 with $254 million.

Our operating cash burn was approximately $18 million for the fourth quarter and approximately $65 million for FY15.

At this point, we believe we have more than two years of cash and investments on hand.

Turning to the P&L, consistent with the financial guidance issued during our November 15 earnings call, non-GAAP operating expenses for FY15 were $58.2 million.

Non-GAAP operating expenses exclude depreciation and stock based compensation.

G&A expenses for FY15 increased to $25.1 million from $19 million in 2014 due to increased personnel, legal and other administrative costs.

FY15 G&A expense included stock based compensation of $5.9 million.

R&D expenses for FY15 increased to $47.5 million as compared to $33.4 million in 2014, primarily due to our having four clinical trials underway.

FY15 R&D expenses include stock-based compensation of $6.5 million.

Net loss for the year was $22.1 million, and our year end -- excuse me, net loss for the fourth quarter was $22.1 million and our year end net loss was $73.5 million.

Our common shares outstanding as of February 26, 2016, were 28.4 million.

Our fully diluted shares outstanding, including issued warrants and options not on a treasury basis, were 31.4 million at the end of 2015.

Turning to our guidance for this year.

We anticipate our cash burn for 2016 will be in the range of $105 million to $115 million.

We expect 2016 non-GAAP operating expense to be in the range of $95 million to $105 million, excluding depreciation of $2 million to $3 million and estimated stock-based compensation of $15 million to $17 million.

With additional clinical trials in the plans, we anticipate 2016 non-GAAP R&D expense to increase to the range of 78 -- excuse me, $72 million to $78 million, excluding depreciation of $2 million to $3 million and estimated stock-based compensation of $8 million to $9 million.

Our FY15 weighted average shares outstanding was 24.3 million.

For modeling purposes and assuming no material issuances of equity, we expect our 2016 weighted average shares outstanding, excluding untested restricted stock, will be approximately $28 million to $29 million.

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

Thanks, Lauren.

As the innovator in the neurotoxin field, we continue to focus on three things: to deliver rich clinical data and make every effort to make it available for peer review and presentation at major medical conferences; two, to develop relationships with the brightest investigators and key opinion leaders in dermatology and neurology; and finally, to building a deep portfolio of indications for our topical and injectable product candidates.

As we outlined in our January clinical milestone press release, we have the platform for another great year to drive value for Revance.

We expect to have both RT001 topical and RT002 injectable in active phase III programs moving the Company closer to potential commercialization.

We are confident in our focus, our strategy and our ability to execute on our plans.

Late spring to early summer is a catalyst rich time for Revance and its shareholders.

Let's start with the aesthetic indications.

Our topical RT001 topical REALISE 1 phase III crows feet trial is nearly fully enrolled so we should have the 28 day topline results by the end of June.

In the second half of 2016, we plan to initiate a second phase III efficacy trial and start the phase III long-term safety study needed for registration.

In terms of RT002 for Glabellar lines, as I mentioned earlier, Dr Jean Carruthers will be presenting the six month Belmont data at the American Academy of dermatology this Saturday in Washington DC.

We are also working to get the full study published.

We plan to conduct an end of phase II meeting with the FDA by the end of the first half of this year, and afterward, assume we will initiate a phase III program before the end of 2016.

We expect the end of phase II meeting to confirm the remaining course of development through BLA approval.

We believe the next steps in RT002 development are very straightforward and well aligned with current draft guidance for neurotoxins to treat Glabellar lines, so we feel like we have a very strong foundation going forward.

On the therapeutic side, RT001 topical for excessive underarm sweating will enter an additional larger phase II trial in the second half of 2016.

Our phase II dose escalating trial of RT002 injectable for the treatment of cervical dystonia is well underway.

The investigators in this study represent many of the best neurologists in the United States.

This will be our first RT002 data set for a therapeutic indication.

I am pleased to report that enrollment in the first cohort of 12 patients is now complete.

We expect to read out safety, efficacy and duration for the first 12 patients in the first half of this year.

We took a very similar approach previously in the open label RT002 Glabellar lines study in Mexico which was highly informative and significantly longer duration of effect than the performance in the Belmont trial.

As this was a dose escalating trial, we expect that it will be followed by results for two additional higher dose levels as the trial progresses.

Our goals for this trial, are to do three things: one, verify efficacy in the therapeutic indication; two, see if we can improve the safety profile for lowering dysphasia and muscle weakness; and, three, determine the duration of effect which currently for Botox in real life often falls well short of the 12 week treatment protocol.

Thus extended duration for cervical dystonia patients could have a profound impact on their quality of life and guide additional trials in other muscle movement disorders.

We have some exciting and important milestones ahead in 2016.

I am proud of the tremendous progress the Revance team has made as we move towards a precommercial stage for both our neurotoxin product candidates in four very unique indications.

As a precommercial biotechnology company, we aspire to be a global category leader in both aesthetic medicine and underserved therapeutic specialties such as dermatology, plastic surgery, neurology and other such as urology.

Our goal is to provide new therapies for physicians practice and improve patient outcomes.

If approved, we believe our unique topical and injectable neurotoxin products can capture, retain and significantly grow the current botulinum toxin market.

We're very excited about our prospects.

Lauren and I look forward to updating you on our progress on future calls.

In terms of our travel schedule in the coming weeks, on Friday, we plan to meet with investors in the DC, Baltimore area during the American Academy of dermatology meeting followed by next week at the Cowen healthcare conference in Boston.

On March 15, we will be at the Barclays healthcare conference in Miami.

Please let us know you would like to meet when we are in your city.

With that, thank you all for joining us today.

I will open it up to questions.

Operator?

(Operator Instructions)

Ken Cacciatore, Cowen and Company.

Congratulations on all of the progress to date.

Just a question on 001, after you complete the Phase 3 and with the assumption that it is successful, can you discuss the process going forward given the draft guidance and maybe a little bit of discussion of any changes in the community or at the FDA in terms of that draft guidance.

And then maybe also a re-explanation or just an update on your EMG objective measurement, just talk about what you are doing differently and how you are measuring it.

And then potentially about timing from that point forward in terms of registration.

And then last question would be, for the 002, can you talk about if you are successful in cervical dystonia exactly where we would potentially be going in terms of other therapeutic studies, what we could expect by the end of the year or maybe talk aloud about the direction you're looking to go and some of the different indications.

Ken, thank you very much.

Quite a few questions.

I will hopefully get through all of those, and if I don't -- if I miss any please, we will follow up again.

I think we are really excited about this Phase 3 study, and the next step after completion assuming it is successful is to really have a dialogue with the agency on the outcome, the use of this composite assessment at rest and as you mentioned to integrate the EMG.

This is a quantitative assessment to measure the underlying amount of muscle paralysis to really become the next generation assessment to, in many ways look at that archaic endpoint of at contraction, and truly have a quantitative measurement.

We would like that to be a very data-driven discussion, provided that to the agency, have a very open form of correspondence.

That would be the next step.

If there's any learning we would certainly incorporate that into the next trial, but we're really excited about this EMG assessment.

It really is the next generation as you look at facial aesthetics to look at changes in muscle function whether that toxin was delivered via needle or whether it was delivered topically through the skin.

As far as other indications for RT002, I think that the CD indication becomes the work horse indication much like OBella.

Once you've demonstrated safety efficacy and duration, our working hypothesis is that mechanism should hold true in every other botulinum toxin indication.

And what we're going to now is an analysis of which indication would really benefit from longer duration or potentially greater safety if you can really address this diffusion issue.

We do not have a specific guidance to give you on today's call, but we are very active in looking at indications that are currently on label for the existing botulinum toxins and potentially new ones.

Our challenge is not what we work on.

I think there is general acceptance that before indications both topical and injectable make sense; what are we going to add on?

Chronic migraine headache, urology, there's an endless number of exciting potential, and we think RT002 and RT001 really are the innovation that has been lacking for nearly 30 years, and we will prioritize those and move forward with ones that make the most sense.

David Amsellem, Piper Jaffray.

This is Michael on for David.

A few quick ones on RT001 can you talk about the details of the second HH trial you are running?

Besides being larger, are there any other major changes in design?

Then for RT002 maybe can give us some color in terms of what you expect from the end of Phase 2 meeting with the FDA later this year and maybe some details on the design of the Phase 3.

We haven't totally finished the current HH study, Michael, but what we would do is look at that data, and we would look at the use of the HDSS scale, and we would look at other patient recorded outcome instruments.

As you know there other sponsors looking at different scales.

We will look at the FT indication and move forward not only with the larger trial but look at what has been done with neurotoxins and other molecules and certainly have those communications with the agency as far as the most appropriate study to do to allow us to move into Phase 3.

You will see much of what has been done before looking at a quantitative assessment which is gravimetric and a patient reported outcome it could be one or two in those outcome measurements in the next Phase 2 trial.

As far as the end of Phase 2 meeting, we would look at essentially using the current draft guidance for neurotoxins in glabellar lines as the foundation using our data, and what would like to do is come out of that end of Phase 2 meeting with a very clear road map of what we need to do in Phase 3 to have the strongest possible label once approved, using a composite endpoint as the guidance suggests and also being able to look at what we need to do to confirm on our duration so we have the most compelling label on duration.

Right now the neurotoxins are labeled up to four months.

We really want to do in -- as part of that discussion with the agency make sure that we are capturing six months or longer duration.

That is meaningful duration and we really want to work with the agency to get that into our labeling and much of that thinking would come out of the end of Phase 2 meeting, and it would be up to us as a sponsor to demonstrate that is part is our Phase 3 program.

That's helpful.

Thanks, guys.

Thank you for joining us for our conference call.

Good night.

Ladies and gentlemen, that does conclude our conference for today.

You may now disconnect.