Revance Therapeutics Inc (RVNC) 2017 Q2 法說會逐字稿

Welcome to the Revance Second Quarter 2017 Financial Results Conference Call.

(Operator Instructions.] As a reminder, this conference is being recorded today, August 3, 2017.

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, James.

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 ended June 30, 2017.

If you have not 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 related to Revance's 2017 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 titled Risk Factors in our quarterly report on Form 10-Q for the quarter ended March 31, 2017, as filed with the SEC on May 9, 2017.

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.

Revance is currently in Phase III studies with DaxibotulinumtoxinA for Injection or RT002, our highly differentiated neuromodulator that has the potential to offer better aesthetic and therapeutic outcomes.

Thus far, our Phase II trials for RT002 injectable in both cervical dystonia and glabellar lines have achieved a trifecta of positive results.

RT002 appears to be safe and well tolerated, showed high response rates and achieved long duration of effect.

We are rapidly advancing this potentially market-disrupting product candidate to fill needs not met by currently available toxins.

With regard to clinical progress, in second quarter we reported positive 24-week Phase II results in cervical dystonia.

Not only did RT002 appear to be safe, our response rates were high and the duration of benefit was at least 24 weeks.

Currently marketed neurotoxins average a treatment schedule of 3 to 4 times per year.

RT002 has the potential to manage these debilitating disease with at most 2 treatments per year, which matters to patients, physicians and payers alike.

Through interactions with investigators and key opinion leaders at the Muscle Movement Congress and other medical meetings, we've gained valuable feedback on the design of future trials in cervical dystonia.

We are moving forward aggressively.

Revance plans to obtain input from the U.S. and European regulatory authorities in the second half of this year to finalize the design of our next clinical studies in cervical dystonia.

As a precursor to our glabellar line Phase III results expected in the fourth quarter, we are pleased to see the final BELMONT Phase II data published in a peer-reviewed journal, Dermatologic Surgery.

Acceptance in such a medical publication validates the significance of our BELMONT results and underscores the confidence we have in our SAKURA Phase III program using RT002 injectable to treat frown lines.

As the BELMONT publication concluded, the 40-unit dose of Daxi had the most had the most favorable risk-benefit profile and when compared to BOTOX, exhibited a significantly greater response rate and duration of effect.

Between the BELMONT data and the recent cervical dystonia results, the totality of evidence is building.

Our completed Phase II trials demonstrate that RT002 is unique and has the potential to become the best-in-class neuromodulator.

As we look ahead towards commercialization of RT002, we are pleased to announce the addition of Todd Zavodnick as our new Chief Commercial Officer and President of Aesthetics and Therapeutics.

Todd will lead Revance's sales and marketing efforts in preparation for our differentiated market entry.

Throughout his careers at ZELTIQ, Galderma and Alcon, Todd has shown significant capability to lead both domestic and international organizations in creating world-class aesthetic and therapeutic product lines.

He has built and managed winning sales forces.

Todd has led innovative marketing campaigns targeting both consumers and physicians, and he has successfully directed highly effective commercial organizations.

Todd will hit the ground running in September, leading the team in preparing for the launch of RT002 and developing a compelling commercial product positioning for RT002 in therapeutic indications.

We look forward to having him on our executive team.

Those are the recent highlights.

Now let me turn the call over to Lauren to cover second quarter financials and outlook for 2017.

Lauren?

Thank you, Dan.

The earnings release issued today details our financial results and reiterates our 2017 guidance, so I will not go through all the details on this call.

Our non-GAAP operating expense during the second quarter was $23.0 million.

Our cash burn for the quarter was $26.7 million and our quarter-end cash and investments balance was $165.5 million, which is enough to fund our operations into the first quarter of 2019.

Both R&D and operating expenses in the second quarter were higher over the prior year, primarily due to the ongoing SAKURA Phase III program and Phase II plantar fasciitis trial.

Today we reiterated our 2017 financial guidance originally given in January.

Specifically, we continue to expect cash burn for 2017 to be in the range of $102 million to $112 million.

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

Thank you, Lauren.

In the fourth quarter of 2017, we plan to achieve two significant RT002 clinical milestones with the reporting of the results for our SAKURA 1 and SAKURA 2 Phase III pivotal trials for glabellar lines and top line Phase II results for our new indication, plantar fasciitis.

With regard to our SAKURA glabellar lines program, we plan to release Phase III pivotal trial results covering safety before we composite primary endpoint and the secondary endpoints including duration.

Based on the BELMONT data, we feel confident we can deliver meaningful duration beyond the 3 to 4 months typically seen with the currently marketed neurotoxins.

With regard to our plantar fasciitis program, we are busy enrolling patients and consider the indication a real diamond in the rough.

We expect to report top line 8-week results, including the safety details and the outcomes on both the primary and secondary endpoints, at that time.

Within the neuromodulator space, our RT002 studies are showing clinical results like no others.

By year end we expect to have demonstrated that RT002 is safe and yields high response rates and achieves long duration of effect in all three indications.

Looking ahead, we are on track to complete the SAKURA Phase III open-label safety trial next year, followed promptly with filing of our BLA.

Our plan is to enter the market with the first highly differentiated, high-performance neuromodulator.

We believe we can build a meaningful business in the aesthetics space that will fund our progress into a wide number of therapeutic indications.

In terms of our travel schedule, in September we will be at the Wells Fargo Healthcare Conference in Boston and the Cantor Fitzgerald Healthcare Conference in New York.

We are also in the process of planning potential marketing trips to Boston and New York.

Let us know if you'd like to catch up 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.] Our first question comes from Ken Cacciatore with Cowen and Company.

A question on this cervical dystonia design.

You mentioned or indicated that you're talking to experts and getting input.

Any chance you could give us a little bit of a preview of what you're hearing?

And then as we prepare for the data in glabellar lines -- tough for you to do.

I know it probably may be easier for us to do on the outside.

But can you set some expectations of what you would view as success, maybe percent of patients that are above 5 months or beyond the 3- to 4-month kind of bogey that BOTOX has set?

Again, I know it's not easy, but maybe just articulate what do you think success would be?

I think the feedback from the clinical experts relative to cervical dystonia is really one of almost awe with the length of duration.

So I think for us this is taking the work that we did in this initial trial and putting it into a what we believe will be a Phase III program.

But having that discussion with the regulatory agencies to make sure that the appropriate study designs in a global fashion, both in the U.S. and in Europe, are well represented relative to control groups, active groups and the like.

So I think the feedback from the clinicians will hopefully be very much in alignment with what the regulatory agencies will expect for approval.

So I don't think you'll see anything more than what we've already done.

We'll use the TWSTRS scale and we'll conduct those trials appropriately.

Our goal is to get that cervical dystonia therapeutic indication approved as quickly as possible and on top of the expected approval, what we believe will be approval for glabellar lines.

Relative to the glabellar line indication for duration specifically, we're -- as you know, we're following the FDA-mandated draft guidance.

We'll follow that explicitly relative to primary and secondary endpoints.

The primary endpoint will be at 4 weeks.

That is well articulated in the published manuscript in Dermatologic Surgery relative to endpoints around efficacy, safety and duration.

And I think as you look at the hierarchy of endpoints, some of which are articulated in the Dermatologic Surgery article, you can see the type of duration that we're seeing out to 6 months.

So I think from an expectation perspective, we believe that we will repeat what we saw on the BELMONT study.

And certainly, we'll be well beyond the 3 to 4 months that you see with all the commercially available toxins.

So 6 months or longer is a home run.

Something -- 5 months or less is still a superior product.

And we'll soon have that answer in the fourth quarter of this year.

But we're feeling very confident based on the totality of the data that we saw in BELMONT, but I think the data that we saw in cervical dystonia reinforces that the duration is not prone to one indication or one dose.

You're seeing this as a class across multiple indications.

Our next question comes from Louise Chen with Cantor.

I had a few here.

So first question I had is on the plantar fasciitis.

What data is there out there that supports or helps establish proof of concept for your product?

And then secondly here is why do you think your injectable toxin lasts longer than the currently approved products?

And then last thing is do you have any plans to revisit your topical botulinum toxin development program?

And if so, what are you expecting from this?

Thanks.

The confidence in the plantar fasciitis indication is based on the use of several of the commercially available neurotoxins in this indication.

There is published literature that you can pull from that use different doses -- obviously, different sponsored neurotoxins.

But there is a common theme that these neuromodulators can treat the underlying pain from the fascia and our task has been to develop a proprietary not only formulation around RT002, but a technique to address that plantar fasciitis.

Based on what's already known either about neuromodulators or about what has been reported in the treatment of plantar fasciitis, I think we not only want to follow existing indications for toxin, but new indications.

And so we think plantar fasciitis is part of a class of lower foot and ankle or musculoskeletal indications.

It takes the best of the properties of neurotoxins, the paralytic effect to relax -- in this case, the fascia in the foot -- but also the neuroceptive and pain properties of the toxin to have a single treatment setting to address the underlying pain and inflammation with the toxin.

Relative to why we believe the toxin is providing different duration and even greater response rates is the combination of the toxin and the peptide.

The peptide has been shown in several manuscripts and articulated in the clinical literature is to have a more stabilized and active form of the botulinum toxin type A to increase its residence time on the surface structures that are being treated, whether it's glabellar lines or the fascia on the foot or the cervical dystonia.

It really provides a very unique stabilization of the active pharmaceutical index in the toxin that you don't get from a botulinum toxin complex from existing sponsors, or even the purified 150-kilodalton dose form that's from another toxin.

So it's really the combination of very unique, targeted stabilization technology and use of the peptides in conjunction with the toxin.

Relative to topical, I think that we put a lot of work into that, as you know.

We continue to do R&D work on the topical formulation.

We think that we will bring that back at the appropriate time and the appropriate indications.

But at this point we are very enthusiastic with the injectable indications.

We really believe we need to stay laser focused on getting glabellar lines approved, a therapeutic indication approved.

And we'll bring back topical into the clinic at the appropriate time.

Our next question comes from Tim Lugo with William Blair.

This is Ashiq Mubarack on for Tim.

I just wanted to quickly ask about if you had any shifts in the time line related to the glabellar lines program.

Assuming good data in the fourth quarter, what's your kind of expectation in 2018 regarding additional data?

What's your expectation for a turnaround on a regulatory filing?

Anything you can add there?

I think we'll stay consistent with what we've already guided to this point, that we'll complete the pivotal trials in the fourth quarter of this, both SAKURA 1 and SAKURA 2. We'll complete enrollment in the open label SAKURA 3 and finish that open label next year.

And then we will begin to assemble our BLA package and get that filed as soon as possible.

So I think getting the pivotal trials behind us this year is a significant clinical milestone for us and I think begins to inform what the label would look like and really sets the stage for a filing of the BLA in our first hopeful approved indication for RT002.

Okay, thanks.

And regarding that, what kind of steps would you need to take in 2018 to sort of ramp towards a successful launch, if you have to take any kind of that early?

Well, we've made a number of investments over a period of years on both the pharmaceutical API, on the drug substance as well as on the finished drug product.

We are at commercial scale at this moment.

We'll continue to finish our work on the registration batches for drug substance and drug product, but we feel very capable of launching this drug.

We've got the infrastructure, institutional know-how from a people perspective.

From a hardware perspective, we've got a lot of batch history behind us.

We spent a lot of time focused on CMC and the analytics to augment that manufacturing capability.

We think that manufacturing CMC will be a strength.

Manufacturing this toxin out of the United States at U.S. regulatory standards is a distinct advantage from both a technical perspective and an innovation perspective.

But from a cost of goods and an economic perspective, we think not only will the combination of toxin and peptide innovation be a distinct competitive advantage, but our manufacturing and CMC in the United States will also be an advantage.

Our next question comes from John Boris with SunTrust.

Just on your recent clinical experts that you met with on cervical dystonia, can you just give some commentary around the features of the product and what kind of commentary they gave around those features?

And then just any read through to the development of the product or their excitement about developing another muscle movement disorders?

And then second question, just on the ex U.S. opportunity, I know you're waiting for glabellar lines data.

But how are you thinking about monetizing the ex U.S. opportunity by geography?

John, I think when you speak to the clinical experts, and this is a group that's been working on this muscle movement condition for quite some time and has, quite frankly, worked with all the sponsors of neurotoxins, the first and foremost feedback we got was one around safety, that the issue around neuromodulators at high doses has been one of safety, particularly in cervical dystonia, around dysphasia and muscle weakness.

I think the fact that even at much higher doses that are being used today clinically by label, we saw the drug was very safe and well tolerated.

I think that, first and foremost, with the group of patients who have this debilitating disease is a challenge.

So I think that's the first bar we jumped over.

The second one was I think they were very struck by the response rates, that even at much lower doses than the label doses of any of three commercially available toxins, you're seeing roughly, depending on the scale assessment, twice the response rates over multiple time points, from 8 weeks all the way out to 24 weeks.

And I think finally is the one I think that is truly the one that creates the most differentiation is around duration for all the doses out to 6 months and potentially longer.

24-week duration is something that, as a sponsor, we didn't think was really in the cards when we were designing those initial trials.

All three of those doses -- and there was some flexibility in dosing to provide a duration of 24 weeks.

If we had let that study go longer, we may have been able to go beyond that and we may have started to see some type of dose-response curve between the three doses.

So I think it's the totality of that, not necessarily for just cervical dystonia where they -- the Neurology Committee starts to think of, "How is this going to apply to upper limb spasticity, lower limb spasticity, chronic migraine headache?" I think for us is it really allows us this year, with the glabellar data, the cervical dystonia data, the plantar data, to really triangulate all these hundreds of indications for toxins.

And it's much what we've guided to in our press release, using this initial glabellar line indication to fund and support a number of therapeutic indications.

And as far as other muscle movement, it's the ones that you would expect.

It's upper limb/lower limb spasticity, plantar fasciitis, another form -- though musculoskeletals and other movement disorders.

We see a number of indications for which the toxin maybe be used today, but we could focus, coalesce around a cluster of indications to get approved indications that not only would be the most unique for existing indications, but really be innovative and really lead the space for new indications.

We don't necessarily feel like we need to follow where the existing approvals are.

Plantar fasciitis is one based on Louise's question.

There is enough literature to guide us to have a very high probability of success and confidence that we can get a labeled indication.

And the ex U.S. opportunity?

Lauren, do you want to take ex U.S.?

You bet.

We are definitely looking at how to best partner RT002 and botulinum toxin A outside the United States.

You probably saw our announcement this week that we've hired a Chief Commercial Officer to launch the drug.

We're very excited about that.

And we are actually out in discussions talking to folks.

We need to have the data and then make some final decisions next year before partnering.

Our next question is from David Amsellem with Piper Jaffray.

So I've got a couple of questions on plantar fasciitis.

So can you give us maybe a road map, if you can, on next steps?

So the study read out favorably and I guess my thinking is you would go into a more advanced Phase II study, Phase IIb study and then Phase III.

But maybe you can elaborate on what may happen going forward.

And then a commercialization question, a lot of questions about therapeutic indications.

I guess my question here is on how you would plan to commercialize a "novel" indication like plantar fasciitis, where a neuromodulator has never been approved.

Is that something where you'd like to build some type of specialty infrastructure, or is that an opportunity that you may seek to monetize through a partnership?

So help me understand how you're thinking about that.

Thanks.

I think next steps on plantar fasciitis is to report the top line out for the primary and secondary endpoints at 8 weeks and we'll at least specify all those patients out to 16-week follow-up.

I'll take a look at the totality of the data, but you're probably right.

The next step is most likely a Phase IIb type of trial using validated endpoints that we're using as part of this proof-of-concept study that's currently underway and then try to move that into a dose that would be sufficient for Phase III trials.

Plantar fasciitis has similar characteristics of what you see in some of the aesthetic trials.

There's a lot of patients out there.

I think we've been very selective on our inclusion criteria with this initial trial.

But we think that we can move from where we're at today upon a positive readout at the end of this year into a late-stage trial pretty quickly.

As far as commercialization is, plantar fasciitis is -- we see much of the characteristics of dermatology playing hold in podiatry.

It's a very targeted specialty group in the U.S. that we think that you could build around with a specialty organization that may be augmented initially by the sales force on aesthetics.

And as you organically grow your business, have something more specialized, as other sponsors have done.

But it's a very targeted group of specialists who like to do procedures, have a number of tools at their disposal and are actively looking for products.

So I think in the U.S., we'll certainly leave that to Todd and the commercial team to decide what's the best distribution and commercialization approach.

But we think that that's one that we could do ourselves initially and that we could move forward and expand that business with other complementary indications to plantar fasciitis that are musculoskeletal that use the same dose form.

Okay, that's helpful.

And if I may sneak in a follow-up.

So again supposing that readout in plantar fasciitis is favorable and realize that you have to allocate capital efficiently, but let's suppose capital was not a constraint.

Would you then pivot to other orthopedic or sports medicine indications and some sort of early Phase II study or even more?

How should we think about that?

Thanks.

Yes.

No, I think this is a molecule that doesn't suffer from a shortage of potential indications.

As we think about facial aesthetics, glabellar lines, it's obviously not just glabellar.

There will be indications around facial aesthetics that you can build in clusters, from crow's feet lines to frontalis to platysmal bands as we think about that as part of our clinical development strategy of how this drug could have an expanded label, much like other sponsors have done today.

The same is true with cervical dystonia.

That would move into upper limb spasticity, lower limb, a number of blepharospasm, several other potential spasticity indications.

Specifically to plantar, what we like about that is you've got validated endpoints that you -- could be used to support an approval.

But there are other musculoskeletal sports medicine active lifestyle that sort of use the consumer biotech properties of botulinum toxin for aesthetics in those indications.

And we've got a clinical development team.

And now, with Todd onboard to sort of look at what indications 4, 5 and 6 would be and bring those in appropriately, whether they're injectable or topical.

But I would come back to what we said at the start.

We want to stay focused on getting glabellar approved, an aesthetic indication, a therapeutic approved.

Getting those in market, generating sales and then we'll begin to bring on other indications.

But I would expect by the time that glabellar indication is approved, you will have a pipeline of probably overweight to therapeutic indications that we can build around and support, either by ourselves or in partnership internationally with someone else.

Thank you.

I'm showing no further questions in queue.

That does conclude today's conference.

Thank you very much, ladies and gentlemen, for your participation.

You may now disconnect.