Revance Therapeutics Inc (RVNC) 2016 Q1 法說會逐字稿

Welcome to Revance Therapeutics First Quarter 2016 Financial Results Conference Call.

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

Following managements prepared remarks we will do a Q&A session.

(Operator Instructions)

As a reminder, this conference is being recorded today, May 9, 2016.

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

Please go ahead.

Thank you, Nicole.

Joining us on the call today's 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 ended March 31, 2016.

If you have not yet 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 of the Company's website at www.revance.com.

During the course of this conference call Revance's management will make forward-looking statements including, but not limited to, statements related to Revance's 2016 financial guidance, clinical development of our product candidates, business strategies 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, 2015 as filed with the SEC on March 4, 2016.

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, Jeannie.

Good afternoon, and thank you for joining our first quarter conference call.

Revance is starting the year strong with plenty of cash on the balance sheet to fund operations through the end of 2017 and complete the anticipated pivotal Phase 3 studies for both our neurotoxin drug candidates, topical lateral canthal lines, or crow's feet lines, and the injectable product for glabellar lines.

We also plan to fund an expanded pipeline of other Phase 2 studies for Daxibotulinum toxin-A Topical Gel and Daxibotulinum toxin-A for injection.

Our development timelines for clinical milestones remain on track as we plan to redefine the $3.4 billion market by delivering the first unique differentiated neurotoxins in nearly 30 years.

On today's call I will cover our recent business and clinical development highlights, Lauren will review our financials and 2016 guidance, and I will wrap up with details on our upcoming clinical milestones.

Then we will open up the call for your questions.

We have four ongoing clinical development programs for Daxibotulinum toxin-A targeting both aesthetic and therapeutic indications.

Our investigational drug candidates, RT001 and RT002, are designed to offer physicians and patients and payers alike a fundamentally distinctive neurotoxin experience administered either through the skin or via injection.

With an injectable longer duration is the key unmet need in current toxin market.

And RT002 can potentially fill that gap.

However, not all patients favor an injectable and many others will not opt for injectables.

Therefore, our RT001 topical may play a role in expanding the market.

Regarding our recent highlights; we completed enrollment of our REALISE 1 Phase 3 trial for RT001 topical crow's feet, and also our first cohort of our Phase 2 dose escalating trial for RT002 injectable for cervical dystonia.

The REALISE 1 trial enrolled 450 subjects and results are expected by the end of this quarter.

The first cohort for cervical dystonia, or spasmodic neck muscle disorders, enrolled 12 patients as planned.

The safety analysis of this first cohort has been completed, and based upon the results, we've initiated the second cohort of 12 patients.

I'll cover this in detail a bit later in the call.

For RT002, for glabellar lines, we've scheduled our end of Phase 2 meeting with the FDA for this quarter and plan to emerge from the meeting with a definitive roadmap for the Phase 3 glabellar line program.

Finally, we've added Roman Rubio to our management team as Senior Vice President of Clinical Development.

Roman joins us from Avalanche Biotechnologies where he was Senior Vice President of Translational Medicine.

Prior to joining Avalanche, Roman played key leadership roles in the successful development and approval of several ophthalmic indication for Genentech Lucentis product, and has led teams that have managed line extensions, created marketing strategies and generated disease and product educational products.

We're very pleased to have Roman on the team to lead our numerous clinical activities.

During the first quarter we attended the American Academy of Dermatology in Washington DC where Dr. Jean Carruthers presented the six months results from the BELMONT Phase 2 active comparative trial.

As noted by several analysts who attended the AAD and in published notes, the results from the BELMONT study were enthusiastically received and confirm our belief that duration does matter to physicians and patients alike.

Of particular note in Dr. Carruthers presentation were the results of her previous studies that showed a higher dose of BOTOX did not lead to significantly longer duration, even when increasing the dose to 40 units.

The BELMONT study clearly demonstrated that superior patient response rate at four months for RT002 at 20 units and 40 units compared to BOTOX doses of 20 units.

And with a median duration of six months for RT002 at 40 units, we're excited by the potential of RT002 to be a game changer in the neurotoxin market.

The upcoming period has a number of pivotal clinical and regulatory events that will help us finalize our course to commercialization.

I'll return to discuss them in detail after Lauren covers the first quarter financials and the financial outlook for the year.

Lauren?

Thank you, Dan.

Starting with our cash and investment balance, we ended the first quarter with $237 million.

Our cash burn for the quarter was approximately $17 million.

We continue to believe we have enough cash to take us through the end of 2017.

Turning to the P&L non-GAAP operating expenses for the first quarter 2016 were $16.5 million.

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

SG&A expenses for the first quarter increased $7.5 million from $6 million in 2015 primarily due to increased personnel, legal and other administrative cost.

R&D expenses for the first quarter 2016 increased to $12.4 million, as compared to $9.3 million in 2015 primarily due to the number and size of clinical trials underway.

Stock-based compensation for the three months ended March 31, 2016 was $3 million, consisting of $1.4 million for R&D and $1.6 million for SG&A.

Net loss for the first quarter was $19.9 million.

Our common shares outstanding as of March 31, 2016 were $28.5 million.

Our fully diluted shares outstanding, not on a treasury basis, at the end of the March were 31.4 million shares including $2.9 million grants of options and warrants.

Turning to our guidance for 2016, we're pleased to reiterate our guidance for the fiscal year 2016 from our recent year-end earnings call.

Cash burn for 2016 is estimated to be in the range of $105 million to $115 million.

Again 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 total stock-based compensation of $15 million to $17 million.

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

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

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

Thank you, Lauren.

Here at Revance, we expect our remarkable science will disrupt the neurotoxin field.

Let me be clear; our goal is not just to participate but to revolutionize the neurotoxin landscape.

We plan to compete from a position of strength, to become both the market and innovation leader for neurotoxins.

So what's ahead for rest of this year?

Let's start with aesthetic indications.

With the REALISE 1 Phase 3 crow's feet trial fully enrolled, we expect to report 28 day top line safety and efficacy results before the end of second quarter.

With that data in hand, we plan to meet with the FDA to share the Phase 3 results including the objective electromyography or EMG outcome.

EMG is an objective tool to measure the paralytic effect or contraction of the muscle.

Our goal with EMG is to provide an alternative, quantitative, assessment of the paralytic effect of neurotoxins, delivered topically or via injection and correlate the EMG results to the change in wrinkle severity.

Once we have the FDA's feedback, we plan to initiate the long term safety study needed for registration in the second Phase 3 pivotal trial.

We plan to file the BLA in 2018 and launch the first topical botulinum toxin in 2019.

In terms of RT002 for glabellar lines, our end of Phase 2 meeting is scheduled for later this quarter.

The meeting will be used to confirm the clinical development plan and Phase 3 study designs.

Upon completion with the FDA, we expect to start our global Phase 3 program in the second half of 2016.

On the therapeutic side, the first cohort of 12 patients from the Phase 2 dose escalating clinical trial of RT002 injectable for cervical dystonia is completely enrolled, and we have completed the planned six week safety review.

Following the analysis of this data, we are pleased to announce encouraging preliminary unaudited safety results.

In the first cohort of dosage up to 200 units, RT002 appeared to be safe and well tolerated.

The majority of adverse events were noted to be mild or moderate with no serious adverse events or evidence of any systemic exposure observed.

In this cohort, the most common adverse events included injection site redness, cervical muscle weakness, neck pain and dysplasia and bruising at the base of the neck.

All treatments related to adverse events observed were noted to be either resolved or resolving at the time of the six week safety analysis.

The primary efficacy endpoint of the study is improvement in dystonia symptoms as measured by the change or reduction from baseline in the TWSTRS, which is the Toronto Western Spasmodic Torticollis Rating Scale, total score at four weeks.

At four weeks this first cohort saw encouraging signs of activity.

In terms of duration, all subjects in cohort one have yet to reach the 24 week visit, at which time duration of effect can be assessed.

In this Phase 2 study, each of the three cohorts continue until patients return to base line or up for a total of 24 weeks after treatment.

We believe that any duration beyond 12 weeks for cervical dystonia may be a significant benefit for patients with this serious medical condition.

Upon review of the six week safety data by the independent data monitoring committee, the committee unanimously approved initiation of a second of three cohorts in this dose escalating study.

Enrollment of cohort 2 is already underway.

It will evaluate doses of RT002 between 200 and 300 units.

We plan to share additional cervical dystonia safety, efficacy, and duration results in the second half of this year.

Once Revance has the data to support longer duration in treating glabellar lines and cervical dystonia, our belief is that RT002 product has the potential to outperform the current market leaders for every indication for neurotoxins plus expand into new indications.

As to our therapeutics opportunities, we completed the Phase 2 trial for RT001 topical gel for excessive underarm sweating for axillary hyperhidrosis.

We were encouraged with the quantitative gravimetric results and are working to finalize the qualitative patient assessment for the next trial.

We believe the convenience of a single dose, topical treatment for hyperhidrosis will be a distinct offering for patients.

Other treatments currently in market require daily application or numerous injections, and may have unpleasant systemic side effects.

We believe RT001 topical may deliver the efficacy and duration advantages of an injectable toxin with a convenience of a topically administered compound.

We plan to start Phase 2 trial in the second half of 2016.

Needless to say, the coming months are an exciting time for Revance.

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

In terms of travel, this week we'll be in Las Vegas to participate in one-on-one investor meetings at the Bank of America Merrill Lynch Health Conference.

And in June, we planned to about the Jefferies' Healthcare Conference in New York and the William Blair Growth Conference in Chicago.

Please let us know if you'd like to meet when we're in your city.

With that thank you all for joining us today.

I will now open it up for questions.

Operator?

(Operator Instructions) Louise Chen of Guggenheim.

I had a few here.

So first question I had here, a question I get a lot is would doctors welcome a longer duration product?

Doesn't that mean patients go see their doctors less?

Second thing here is what is the market opportunity for your hypohidrosis product if you give more color on that, and what's the competitive advantage of your product versus what's on the market?

I think my understanding is there is also some over-the-counter-products available as well, may not be in the US.

And then last thing here that we get a lot of questions on is confidence in your trial design for your tropical toxin.

I know there is been some debate with respect to what the FDA is looking for.

If you can give more color here that will be helpful.

I'll take the last question on the study designs for both the tropical and the injectable and I'll let Lauren provide the commercial orientation on longer duration.

The value to physicians, patients and payers as well as the market opportunity for hypohidrosis.

But in the case of the topical, lateral canthal lines, we specifically are looking at a two point composite.

The regulatory authorities in the US have looked for this two point composite.

And as then opined by many constituencies the American Society of Dermatologic Surgery, Revance, other competitors in the space in response to the draft guidance, there is multiple ways to look at assessing medical severity either by at rest or at max contraction.

We will look for the case of lateral lines to areas around the eye where you want some inherent natural look, the ability to express emotion, that rest is the best way to assess that endpoint.

We will also secondarily assess the change at max contraction used in EMG.

We're essentially taking that historical use of a qualitative endpoint in either smile or frowning and now we're putting together quantitative data that shows that as you look at assessing the wrinkle, correlating that to a change in efficacy to a quantitative amount of paralytic effect.

And so, we think the EMG will be a tool or an instrument that would be surrogate for assessing wrinkle's qualitatively at rest.

What we would like to do with this first pivotal Phase 3 trial is generate the data, if positive, obviously, get back in front of the agency to make sure that they have any question on the instrument and then we would implement that in the second Phase 3 trial with the expectation that EMG would satisfy of the paralytic effect that is today being done at contraction.

On the ATH market today, that part that is treated by toxin; we estimated probably less than the $100 million US a year.

And the reason for that really is the difficulty of making 10 to 15 injections per axilla or underarm.

And the fact that reimbursement is very, very low.

So when you contrast that with the potential that would be offered by essentially a pain free topical application in the axilla and the fact that it could well be a physician helper rather than a physician administering it, we think it's something that is really poised to take off in hypohidrosis.

So much of that market will be a cash pay market and we're very excited about it.

And some of it, obviously, will be reimbursed as well.

On the longer duration, we get that question a lot.

It's an excellent question.

You have to stop and think about it from the physician and the patient perspective.

We haven't found any patients in our market research that would like to get more injections every year in their heads.

There just aren't any.

And what we find on the physician side very much is they don't realize today how infrequently their patients come back even though the label says three times a year.

If you look at the data from ASAF, they are really coming back a little over two times a year.

So not actually seeing that same revenue from the patients that perhaps they think they do.

And as we take a look at it and as we do market research with physicians, we did a study last year and about 80 community derms, and what we found is even though six out of seven are highly satisfied with their current injectable toxin, when asked what their unmet need was 60% said duration.

So we know physicians are absolutely looking for duration.

And if I could add to Lauren's comment, Louise, is we typically think the duration is critically important in the case of therapeutics.

These are large doses for serious medical conditions.

And we really do believe in that not only does duration matter to the patients and physicians, but it will also matters to payers.

And this is a product that we think all three of those constituencies should be well aligned on the matter of duration.

David Amsellem of Piper Jaffray.

So first, and I apologize if I missed this on 002 and the design of the Phase 3. Can you just talk about your level of confidence that it will be a conventional placebo-controlled design and that you won't need to do any sort of active comparative work in glabellar line for the Phase 3 program?

So that's number one.

Number two is, have you given additional thought or have additional color on other therapeutic indications that you're looking to explore in the next year or so for the 002?

We've designed, at this point in preparation for the end of Phase 2 meeting, the phase 3 program, it's a global program based on the current draft guidance for neurotoxins in glabellar lines.

So we don't anticipate any pushback with the placebo group being the control group to RT002.

It's very straight forward.

What will be working with the agencies to make sure we capture the duration component in a way to inform our label.

We think this six month duration is so meaningful.

We just want to make sure that we confirm with the agency.

But as far as control there it's very straightforward with placebo being the control.

The challenge that we have, as clinical developers is which will be the next indications for RT002?

There is no shortage of indications; right now with dermatology, and neurology, and we'll be looking at ways to complement those indications.

We haven't made a final decision on which that indication will be, but we will be moving forward with an additional therapeutic indication for RT002 this year.

(Operator Instructions) Tim Lugo of William Blair.

I know you've only treated the first cohort in cervical dystonia, but are you expecting lower rate of dysplasia as people kind of compare the results from 002 at higher doses versus what we see on the Botox label?

Is that kind of the ptosis in cervical dystonia?

Tim, that will be our design goal.

We'll be trying to look at the technology much in the case of glabellar, of reducing ptosis.

We'll try to look at the drug to reduce the incidence of dysplasia and muscle weakness.

And we'll be tittering up doses.

I think we're very encouraged with the safety data that was presented in this first cohort.

And we'll look to titer up from that.

And if it's like the BELMONT data it will be a very encouraging step forward from the potential safety advantage of the product beyond just duration.

All right, that's interesting.

And I'm seeing on the Botox label that 236 units were the most common dosing in one of the trials.

And I believe you said you're going from 200 to 300.

Is there going to be anything in between if you dose-up patients?

Yes.

So, we started up to 200.

As we mentioned in the earnings call, we'll be moving up to 200 to 300, and that will go up a dose from there.

So we'll bracket it much like what we did in the glabellar lines, through both of those programs.

And we really want to sort of look at this duration, getting beyond 12 weeks in the routine dosage is really part of our target product profile.

And then we'll also be looking at those higher doses to see if we can improve the safety profile associated with neurotoxins to treat this medical condition.

It's really two fold in that and that's really our target product profile and that's what we're setting out to come back in the second half of this year with more information on how the product is performing.

And maybe one more for the LCL trial.

When you release top-line data, specifically, I guess, the EMG data, is there going to be a P value associated with that, or is it merely expected to descriptive in this trial?

Yes, it will be descriptive and exploratory and really trying to look at the EMG across those patients and trying to correlate it to a change in efficacy.

What we really are trying to do, Tim, is capture the amount of paralytic effect and then back that into the efficacy much like the qualitative assessment, in this case a smile, but we'll be using the EMG as that tool to assess that paralytic effect.

John Boris of SunTrust.

Just on the REALISE program, just the timing for release of the results and timing around publication of the results.

And then second question in cervical dystonia for RT002, in the second phase of the cohort you're using 200 to 300 units.

Can you just remind us what dose you plan on using in the third cohort of the study?

On the dose in the third cohort we will be up to 450.

So we'll be really trying to push the dose, trying to look at safety predominantly and the efficacy that's associated with that.

John as far as REALISE reporting the top line safety and efficacy data, that will be the second quarter.

No additional timing on that at this point.

But we're into the quarter.

So we'll be coming back later to report that.

And publications we are working very aggressively to get the BELMONT data into the published literature.

We think it's really going to be a wonderful contribution to neuro-modulation.

Duration has been evasive for so long, we're hopeful that, that will get published as soon as they can and then we'll also try to get the CD data summarized, either present at one of podiums next year or publish as soon as we can.

It's, much like we said in the script, once we've got the data on glabellar lines and cervical dystonia then I think it's a very open forum to see where else the indications for neurotoxins duration or potentially improving safety can play a key role in helping those patients, whether they be aesthetic or therapeutic.

And then one final question, Dan; your competitor, Allergan, had made an acquisition of both a topical and an injectable product.

Can you contract the topical that they acquired with yours and also the injectable relative to yours, based on the available data?

Well, look, you'll have to ask Allergan about those particular products that they've acquired.

I think for us, John, is we put all the data we can out in to the published domain; we published our work mechanistically on the peptide, the self-penetrating peptides, they are book chapters.

Where we had data we tried to put it in the publications as quickly as we could.

I think probably a large of it is, and the rest of it is forthcoming.

And we think this is all about data and the data in aesthetic and therapeutic indication, in taking on such a strong profile of products is really important to us and that's been a philosophy.

There are some things that have broken our way there are some things that have happened over the course of development.

We've been very transparent on that.

We'll continue to be that.

But I think the data speaks for itself and we'll let competitors sort of respond to why they made those acquisitions and the data that drove those acquisitions.

And then, Lauren, in the $105 million to $115 million cash burn that you reiterated within the guidance, does that include an additional injectable program and another therapeutic or cosmetic-type area?

It does.

It includes all of our work for the rest of the year.

Difei Yang of Bream Capital.

Just a quick one on RT002.

Is there a scenario you might do an active comparator arm just to get the labeling, not so much for primary endpoint, for the approval?

At this point, we don't believe it's necessary.

We did the active comparator trial to answer a scientific, a clinical question as a basis to move forward with clinical development.

Was there anything meaningful about RT002 compared to the programs and products that were out there?

And we were very pleased with the data that came out of Mexico, and as a Board, as a management team, as a group of key opinion leaders around the globe, we decided the best way to answer that question was to do an active comparator trial.

Now that we have that, it well informs our Phase 3 plan.

We're going to follow the draft guidance in the US, which could be a placebo, and we'll make sure with the regulatory authority that as we're capturing duration.

We want to see our design goals to have six month duration in the label.

We think that that can be done with the placebo, you don't need an active comparator in that trial design to get meaningful improvement that a physician will accept, patients will see.

And as we move into longer duration on the therapeutic side it will be even more important to payers and physicians and patients alike.

But at this point, follow the guidance, do what is done before inform your label for duration, develop a competitive superiority in the areas that matter and we think duration is one of them.

Thank you, and at this time I'm showing no further questions.

So that is the end of our call.

Thank you for joining us.

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

That does conclude today's program.

You may all disconnect.

Have a great day everyone.