Revance Therapeutics Inc (RVNC) 2018 Q1 法說會逐字稿

Welcome to the Revance First Quarter Financial Results Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded today May 8th, 2018.

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

Please go ahead.

Thank you, Andrew.

Joining us on the call today from Revance is President and Chief Executive Officer, Dan Browne; Chief Financial Officer and Chief Business Officer, Lauren Silvernail; Abhay Joshi, Chief Operating Officer; and Todd Zavodnick, Chief Commercial Officer and President of Aesthetics & Therapeutics.

Earlier today, Revance released financial results for the first quarter ended March 31st, 2018.

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 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 2018 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 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, 2017, as filed with the SEC on March 2, 2018.

And subsequent quarterly reports on Form 10-Q and current reports on Form 8-K.

Revance cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations.

I will now turn the call over to Dan Browne.

Dan?

Thank you, Jeanie.

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

Revance is on solid footing and moving closer to filing the BLA for our first commercial aesthetic product, DaxibotulinumtoxinA for Injection, better known as RT002.

We have a unique neurotoxin and stabilizing peptide formation with long-term patent protection, unparalleled clinical results and a deep highly differentiated RT002 neruomodulation pipeline.

Our key catalysts for 2018 will be SAKURA 3 open-label safety study readout in the second half of this year.

The results of the Phase 3 safety study will represent 1 of the largest databases gathered for glabellar lines covering more than 2500 patients evaluated for over 2 years at 66 prominent sites in North America.

We remain on track to file the BLA in the first half of 2019.

And if approved, commercialized RT002 in 2020.

We believe that based on our consistent strong results in 2 SAKURA pivotal trials we can obtain 6-month duration on our label for RT002.

We also believe that once approved and in use patients and physicians will experience the performance which is what truly matters.

Our next major clinical milestone will be the initiation of the ASPEN Phase 3 program with RT002 for the treatment of moderate to severe cervical dystonia.

Enrollment is expected to commence before the end of this quarter.

And is anticipated to include 1 pivotal trial plus an open-label safety study covering a total of approximately 300 subjects at 75 sites in the United States, Canada, and Europe.

It is expected to utilize 2 doses of RT002 versus placebo.

And will have the same primary endpoint as our Phase 2 study based on the change in the TWSTRS-Total score from baseline.

In the second half of this year, we plan to initiate a follow-on Phase 2 trial with RT002 for the treatment of planter fasciitis.

This study is expected to be double blinded, placebo controlled utilizing 2 doses of RT002.

The primary endpoint will be based on the BASS pain score.

As we outlined at our investor day in April due to the highly positive clinical results to date with RT002 and the significant market opportunity for RT002 in the largest therapeutic indications for neuromodulators we're expanding our pipeline to include 2 new neuroscience indications.

Adult upper limp spasticity and chronic migraine.

Both indications have defined clinical and regulatory paths.

Our goal is to bring the promise we saw in the use of RT002 for cervical dystonia in terms of high response rates and long-lasting relief to these additional neuroscience indications.

Adult upper limb spasticity is part of the $1.1 billion global opportunity for neuromodulator muscle movement treatments.

We believe we can leverage our learnings in cervical dystonia to initiate a Phase 2 study in upper limb spasticity this year.

Chronic migraine is a $625 million global neuromodulator opportunity that continues to grow.

Migraines can be highly disabling lasting 4 hours or more and in case of the chronic migraine occur more than 15 days per month.

In the past, patients typically undertook treatment after migraine was already in progress.

Newer prophylactic treatments such as neuromodulators are aimed to reduce the frequency and severity of migraine attacks.

For our treatment regimen we're targeting fewer injections around the head and neck and potentially longer time between treatments as we observed with RT002 in the Phase 2 cervical dystonia trial.

We plan to commence a Phase 2 study in 2019.

Despite the emergence of CGRPs as a new potential migraine therapy, we still see a sizeable opportunity for neuromodulators and believe neuromodulators at CGRPs can coexist.

CGRPs have different treatment regimen and are expected to have very different patient economics.

We expect the migraine and headache market will continue to grow as migraine is one of the most prevalent afflictions in the world with 40 million sufferers in the U. S. alone.

With the addition of upper limb spasticity and chronic migraine, our RT002 pipeline now includes 5 indications.

Along with RT002, we are moving forward with our Mylan collaboration on a biosimilar to Botox.

As announced in the first quarter, this partnership allows Revance to monetize an idle R&D asset and utilize Mylan's experience in biosimilars to pursue approval and commercialization.

All while we remain intensely focused on the continued development and launch of our next generation RT002 pipeline.

That covers the recent company highlights.

Let me turn the call over to Lauren to summarize our first quarter results.

Lauren?

Thank you, Dan.

Starting with our cash investments balance we ended the first quarter with $269 million.

Our cash burn in the first quarter of 2018 was $38.4 million offset by the receipt of the $25 million upfront payment from our Mylan collaboration resulting in a net $13.44 million cash burn for the quarter.

Revenue for the first quarter of 2018 consisted of $200,000 recognized from the Mylan upfront payment.

In future quarters, we expect we will recognize additional revenue as we advance the biosimilar development program.

The earnings release we issued today details or financial results so I will not go through the in detail on this call.

Today we are reiterating our 2018 guidance.

We expect our cash burn for 2018 to be in the range of $117 million to $137 million excluding the $25 million received from Mylan.

We continue to expect our cash investments to fund our operations through 2019.

This guidance includes the cost of new neuroscience trials we intend to start in late 2018 for upper spasticity and in 2019 for chronic migraine.

Revance's shares outstanding as of March 31, 2018, were approximately $36.7 million.

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

Thank you, Lauren.

At our investor day last month we shared our science, the supporting nonclinical and clinical data.

Our expanded clinical pipeline and our product launch velocity preparations.

As we look at our unique neuromodulator formulation and go to market strategy.

We have confidence we can enter the market from a position of strength.

We recognize that moving physicians and patients away from a recognized brand is challenging, but we believe next-generation high-performance entrance like RT002 can successfully lure patients from their current brand and entice others to try a neuromodulator for the first time.

Duration truly matters.

In our clinical studies today, RT002 has delivered high response rates and long-lasting results.

Six months for frown lines and at least 6 months for cervical dystonia.

Both physicians and patients have indicated that longer duration neuromodulator is highly desired.

The twice a year treatment regimen to make annual frown line correction along with the coordination of care with fillers could make RT002 a real homerun with aesthetic patients.

We've recently hired the commercial leadership to finalize our sales and marketing strategies to raise awareness to RT002's clear differentiation and to drive market adoption.

We plan to continue to share our significant clinical results throughout 2018 at major medical conferences and in publications building awareness around our SAKURA and cervical dystonia data.

The response we're getting thus far from physicians to the clinical data is extraordinary.

They believe our next generation neuromodulator made very well translate into higher patient satisfaction carried over a longer period.

And aesthetic indications and in therapeutics RT002 could be the source of improved patient outcomes and better pharmacoeconomics.

We're truly excited about where we are today and where we can take this company in the future.

That's all for this quarter's update.

In terms of our travel schedule, we plan to be at the UBS Healthcare Conference in May.

In June, we plan to attend the Jefferies Healthcare, William Blair Growth, and Goldman Sachs Healthcare Conferences.

Plus the Cantor Dermatology and Aesthetics Summit, and the J&P Securities Life Science Conference.

We look forward to seeing you at 1 of those events.

With that, thank you all for joining us today.

I will now open up for questions.

Operator?

(Operator Instructions) And our first question comes from the line of Tim Lugo with William Blair.

We've spoke to a number of KOLs around the AAN Conference and there seems to be a belief that the efficacy of Botox wanes towards the end of the 12-week dosing schedule in migraine.

I guess given the data for [doctor] to date, can you talk about what the next trial will look like in terms of duration and dosing?

And I assume you're going to at least maybe have a 16 week or a 20-week dosing schedule or are you going to push into a 6 months as well?

This is Dan.

I'm going to turn that over to Abhay for a comment.

Tim, thanks.

Abhay here.

So as you know that definitely when you compare our data with cervical dystonia a similar comparison where you have 12-weeks duration in CD.

And when we use RT002, we get at least 24 weeks.

So based on the same analogy, we expect that for migraine.

But the current regimen calls for about 12-week duration.

We expect that we'll get similar duration as we get in CD program for about 24 weeks.

In terms of actual trial design, [I can give] you much more details and highlights when we start the program.

But we feel quite confident that RT002 will have a good ability to have longer duration in migraine as well.

Okay, maybe kind of a broader question, I know around the [AFPF] Conference there were some discussions around just the general commodification of the neurotoxin market.

Todd, I know you have a lot of experience in Asia.

Obviously, in the U. S. we've had 3 players for some time.

But there could be as many as 6 given looking out to 2020.

How should we think about what that market looks like?

Will it continue to be a brand market?

And you're obviously differentiated, but are there -- looking back in the U. S. with the previous 3 players, is that a useful comparison for looking forward into 2020?

Tim, it's Todd.

I would answer it the following way.

I mean I think you started it beautifully.

It's like there's been 3 players.

They're all short acting 3-month neuromodulators.

And at the end of the day, there just hasn't been anything new, right?

You know the market is underpenetrated.

And the 2 players that came second and third in Dysport and Xeomin have been discounting right now in order to take market share.

So I think when we look at the category today, there are going to be players that are scheduled to come or I don't know when they'll come.

But they're scheduled.

And there are going to be short-acting sort of branded generics into the market.

So I think you'll continue to see discounts per share.

But at the end of the day, I think what you see is the market leader remains the market leader based off quality, based off outcomes, and based off sort of a science business and relationship piece.

And so discounting hasn't driven share.

If discounting or commoditization of the market would have worked, then the 2 older entrance or the 2 most newest entrance in the short-acting category would have the majority of the share today.

And they just don't.

I think what you're going to see with us is this true innovation.

And duration is pretty much what everybody wants.

And I think Dan said it in his opening is the majority of patients are getting injected twice a year.

And this analogy with us of RT002 where patients are going to come in less just isn't true.

They're coming in twice a year now.

It's just going to simply align with their fillers.

So I don't think there's going to be a commoditization, Tim.

I think you're seeing the discount now with Dysport and Xeomin.

I think it's going to come down to innovation.

But I do think the more players in the market the more noise.

And I think there is going to be more awareness and education.

So hopefully that raises the penetration of the overall market.

Thank you.

And our next question comes from the line of Louise Chen with Cantor Fitzgerald.

This is Jennifer Kim on for Louise.

I have a couple of questions.

So first, just on the upcoming trial for planter fasciitis, could you give a bit more color on what you think drove the high placebo rate in the previous trial?

And specifically, how the trial design in this new Phase 2 study gave you confidence that those high placebo rates won't compound those results as well?

And then second, can you provide any more color on the cost of your upcoming trials, recently announced indications, and how we might think about your cash burn over the next few years?

Thanks.

Yes, Louise (sic) [Jennifer], this is Abhay.

I'll take the first question the planter fasciitis.

So as we discussed at the investor day we also talked about the 16-week data versus 8-week data and how we are seeing that placebo pretty much comparing what we saw in the 8-week analysis.

So what separates the current planned trial from the older trial is we have learned a whole lot from our failures in the earlier Phase 2A program.

As we discussed we've been doing 2 doses.

And we're announcing those 2 doses as we announce the program details later on.

But mostly it will be around injecting the product with a different treatment paradigm.

And again the data of those you will definitely see very clearly as we talk about the details of the Phase 2B program sometime in the second half of this year.

We also captured some of those differences at Investor Day in the slide where you can look at the previous trial to the new trial.

There's a table in there that will highlight some of those areas that we thought contributed to that higher than expected placebo noise.

Lauren, do you want to take the one on cash?

Absolutely.

And cost.

Thanks for the question on cash and cost.

So with regard to our R&D guidance for this year, our GAAP R&D expense is about 84 to $101 million.

So it's a significant part of our burn.

And that is really driven in 2018 by really 2 studies which is GL and CD.

Planter fasciitis in the second half is the smaller study and is a lower contributor to that.

Along with all the preparatory work to get ready to file the DLA.

For 2019, when we look at where we are we'll give our guidance at the beginning of next year.

But the big driver next year will be the cervical dystonia study followed by some of the early work in chronic migraine and ULS.

We haven't changed our guidance at all for the year as we were planning to start new indications in 2018 and 2019.

So we anticipate our cash will last through 2019 fully and possibly a little bit further.

And our next question comes from the line of Morgan Williams with Barclays.

So I guess first from your interactions with the FDA, can you outline exactly what they're looking for in terms of requirements in order to get that 6 months label claim just in terms of the end points and kind of what you need to demonstrate.

And then secondly, on the chronic migraine I know, Dan, you noted that you're looking to do a fewer injection pattern.

I'm just wondering if you're also looking to get that on label and patented similar to Botox?

Abhay, you want to take the first one.

So I'll take the first question on the label question.

So as we discussed in our last month there are approximately 4 or 5 key factors that FDA looks for when you define label.

Number one, is a pre-specified endpoint in your (inaudible) and your discussion with the FDA.

So that's very important.

Secondly, it's about all clinical relevance and how meaningful your data is.

And that is a big factor in agreeing upon what [degradation] you'll get for your product.

It's also equally important that the precedent label as to what the company has got before you get approval.

And for us, I think it's important to note that the draft guidance came in 2014.

So after that, what labels were granted and so definitely that's very important for us to keep track of in terms of label grants and label claims for the subsequent product after 2014.

There's also a equal factor we talked about labeling standardization format where the labels for similar indications are likely to have similar data on those labels.

And of course, last but not least the key question is the interaction of the sponsor with the FDA.

And I can say that FDA is very fair with respect to how they look at the data.

And based on our own data we feel fairly confident that the [product] of getting a 6-month duration is feasible.

Morgan, I'll pick up on the question on the chronic migraine headache.

I think that our intellectual property portfolio has been very expansive over both aesthetic and therapeutic indications.

We do believe there is an opportunity to establish a proprietary [key] position beyond just the formulation of the neuromodulator and the stabilizing peptide drug product.

And so starting that work in 2019, we'll also be strengthening that IP work to go after the areas that Abhay addressed with longer duration to the previous question.

But to improve the tolerability with potentially reduced number of injections from the 31 on label today.

So we think that that will be proprietary and give us additional competitive advantage.

And our next question comes from the line of Bill Maughan with Cowen.

I was just wondering if you could refresh us on the gating factors for the BLA.

I know that we're still waiting for the long-term safety follow up.

But whether or not there's any other maybe manufacturing or something else besides just the compilation of the actual BLA that might be a limiting factor?

And then a second question, how big is the universe of potential ex-U.

S. partners in terms of who you think would be able to properly support RT002 for commercialization?

Thank you.

Great, so this is Abhay again.

So in regards to the BLA filing, I mean if you go back to what will be submitted are 2 largest intersections.

One is the clinical section and the other CMC section.

So for the clinical section, the good news and the bad news is that since we have longer durations of our product we have to wait for as long a duration as the patient will take to exit the open-label safety study.

And as Dan mentioned that we'll have that open-label safety study conducted toward the end of this year.

After that, I think in parallel we are working with the other sections so the CMC and nonclinical.

So all those will converge at the right time to have the BLA filed in the first half of 2018.

Bill, as a molecule these neuromodulators continue to grow across both the aesthetic and therapeutic.

You know that $4 billion threshold you've got roughly 60% now.

Approximately 60% are for therapeutic and the rest for aesthetic indications.

We think the pool of potential partners outside the U. S. is significant on both.

Particularly on the neurosciences for therapeutic in those areas that we've identified initially around muscle movement in the chronic migraine headache.

But we think there is a vast number of potential partners on the aesthetic side.

Our task as a business development is to look at the ideal partner of choice for those conditions in that geography.

And we think that we're going to have some very good choices going forward as we get closer to commercialization.

Bill, this is Lauren Silvernail.

There are very few assets in the $4 billion size, right?

Which is what this market is now today in neuromodulators.

And so when we look at our product with multi-billion dollar potential it's a nice list of folks we can partner with.

And our next question comes from the line of Serge Belanger with Needham.

This is Morgan McCarthy on for Serge.

My first question is what kind of efficacy endpoints will be part of the topline readout of the SAKURA 3 open label trial later this year in the second half.

And then my second question as a follow up is in the ASPEN Phase 3 program for cervical dystonia, do you guys have any idea how long you think [that their] patients will take to recruit?

And then should we expect those results in 2019 or 2020?

Great, so I think there are 2 questions that you asked.

One was about how long does it take for the [CB improvement] and the duration?

So we will be starting our program some time the end of this quarter as Dan mentioned.

So roughly given the number of patients we would like to recruit about 300 in total.

It will take us about 24 months [to complete] the whole program.

And based on our past experience we feel pretty strong that we can get it done in 24 months.

And the first question was about

SAKURA 3 [with respect].

SAKURA 3, so that's a open-label safety study.

It's a strong database over now to 1500 patients.

That includes patients who receive the treatment and multiple treatments, cycle and single cycle.

So we believe that the largest part of that output would be the safety of the (inaudible) in RT002 as injections on a single or a multiple treatment cycle.

(Operator Instructions) And our next question comes from the line of David Amsellem with Piper Jaffray.

I may have missed this, but just wanted to get some additional color on your thought process in migraine here.

So really 2 questions.

One is how do you see the market evolving with the CGRPs on the market?

And then just wanted to pick your brain on that.

And then secondly, it sounds like you're going to be doing a head-to-head trial I guess similar to what you did with the BELMONT Study.

But is it safe to say if it does go to pivotal study it'll be sort of your standard migraine prophylaxis placebo controlled program?

So help us understand pivotal trial designs to the extent we get there.

Thanks.

David this is Dan.

It's good to chat with you again.

I think our challenge over the last year was to take this plethora of potential therapeutic indications and very thoughtfully and rigorously go through that selection process.

Which led us to spasticity, the largest of the validated markets that there is very few alternatives.

And I think based on the CD data it gave us a very strong positive that we could move forward on a differentiation.

I think on the chronic migraine headache we not only had to look at the current products but look at the emergence of new CGRPs.

Based on the key opinion leaders and our assessment of both the clinical data and the opportunity, we think there's an opportunity for them both to coexist.

I think we'll certainly know more by the end of this year with a number of those CGRP readouts.

But I think our ability to extend the shoulders where the neuromodulators are dropping off at 12 weeks now and is 16 or 20 weeks longer.

We think there is an opportunity mechanistically to work on the neuroscience as well as the muscular mechanisms.

And we think there's an opportunity to improve the tolerability.

So as we look at this prophylactic treatment of chronic migraine headache we thought it was certainly looking for a new alternative in treating those patients.

An ability to sort of bundle on both the acute and chronic.

And that's what gave us confidence that we could move forward and have something unique and take that a little further than what's been done to date.

And then pivotal studies?

As far as pivotal studies we're looking at those designs.

We haven't commented whether that would be placebo controlled [tribe] or some type of additive comparator trial.

I think if you're looking at different treatment sites and different injection patterns, it poses some challenges.

But we're looking at that very critically.

It's part of one of the reasons we're not starting that until 2019.

Until we can adequately go through that process.

So we'll continue to ask you to stay tuned and we'll come back once we start dosing patients.

And our next question comes from the line of Difei Yang with Mizuho Securities.

This is [Alex] on for Difei, thank you for taking the question.

I had one on chronic migraine.

I was wondering if you could talk about the difference in economics from a physician's perspective with neuromodulators versus CGRPs.

This is Abhay again.

Broadly speaking, I think if you talk about economics you can look at how these are administered.

What we know so far is for Botox and neuromodulators you inject the product every 12 weeks in terms of duration.

And you get treatment benefit by injecting at 31 sites around the forehead, around your head.

So in terms of CGRPs, I think there's some differentiation because as you know very well now that in general, these are not more convenient.

They're not more effective.

And they're not economical simply because from the treatment paradigm they are given the SubQ monthly, IV, oral, or IV quarterly, or even oral daily.

So overall what will happen is even though you'll increase the total patient pool, but only about 50% are expected to respond to CGRPs.

So in terms of economics, I think we cannot comment on the pricing, but as other companies have commented this will be certainly different than what neuromodulators are used for.

And probably the best way is to approach the companies who are pursuing CGRPs for the pricing structure.

And I'm showing no further questions at this time.

So with that, I would like to thank everyone for joining today's conference.

And you may all disconnect.

Have a wonderful day.