Revance Therapeutics Inc (RVNC) 2019 Q4 法說會逐字稿

Welcome to the Revance Therapeutics Fourth Quarter and Full Year 2019 Financial Results and Corporate Update Conference Call.

(Operator Instructions) As a reminder, this call is being recorded today, February 24, 2020.

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

Please go ahead.

Thank you, Joelle.

Joining us on the call today from Revance is President and Chief Executive Officer, Mark Foley; Chief Financial Officer, Toby Schilke; Chief Operating Officer and President of R&D and Product Operations, Dr. Abhay Joshi; Chief Commercial Officer, Aesthetics & Therapeutics, Dustin Sjuts.

Earlier today, Revance released financial results for the fourth quarter and full year ended December 31, 2019.

If you have not received this news release or would like to be added to the company's distribution list to receive future releases, please go to the Investor Relations section of Revance's website, which can be found at www.revance.com.

During this conference call, management will make forward-looking statements, including statements related to Revance's 2020 financial results and guidance, the clinical development of our product candidates, business strategy and planned operations, anticipated pre-commercial and launch plans, financial estimates with respect to the TEOXANE distribution agreement and potential product candidates and technologies.

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 current report on Form 8-K as filed with the SEC on February 10, 2020.

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.

With that, I'll now turn the call over to Mark Foley.

Mark?

Thank you, Jeanie.

Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2019 conference call.

In 2019, Revance made significant progress in the initiation and enrollment of several important clinical trials while also submitting a Biologics License Application to the U.S. Food and Drug Administration for our neuromodulator, DaxibotulinumtoxinA for Injection, or DAXI for short, for the treatment of glabellar lines.

This year has set us up for a transformational -- this progress has set us up for a transformational 2020, a year which we believe will be characterized by excitement and execution.

2020 contains no less than 12 transformative clinical, regulatory and commercial events that could generate significant value for our company and position Revance to be an innovation leader in both aesthetics and therapeutics.

We kickstarted the year with the signing of an exclusive U.S. distribution agreement for TEOXANE's range of FDA-approved dermal fillers, the first and only approved for the correction of moderate-to-severe dynamic facial wrinkles and folds.

TEOXANE's modern resilient hyaluronic acid, or RHA, range of dermal fillers are highly complementary as we look to build out our facial aesthetics franchise.

Together with our next-generation neuromodulator, DAXI, these high-quality pillars create a synergistic portfolio of products to address the needs of physicians and patients alike.

With this distribution agreement, we get: access to the $1.1 billion U.S. filler market, which is growing 10% annually; the ability to pull forward the build-out of our U.S. aesthetics field force; the opportunity to shape a whole new premium category in the facial injectables market; and perhaps, most importantly, TEOXANE's RHA fillers provide Revance with a portfolio of facial injectables that will help optimize the DAXI launch, assuming approval later this year.

Beyond the 3 dermal fillers that are already FDA-approved, RHA 2, 3 and 4, we also have rights to further innovations in the dermal filler space.

This includes RHA 1 for perioral rhytids, which are fine lines around the mouth, expected to receive FDA approval in 2021.

Based on early internal projections and the anticipated launch timing of DAXI, we estimate breakeven for the filler distribution agreement within 18 to 24 months after launch and payback of our filler launch investments by 2023.

Following on the heels of our TEOXANE deal, we were notified that our BLA for DAXI for glabellar lines was accepted for review by the FDA.

In its correspondence, the FDA stated that no potential filing review issues were identified and that there are currently no plans to hold an Advisory Committee meeting.

The FDA also set the PDUFA target action date of November 25, 2020.

We remain focused on ensuring a successful FDA review process and have confidence in the quality of our submission and the experience of our team.

From a clinical trial perspective, we will continue to bear fruit from the investments we've made in our development pipeline with 5 trial readouts planned for DAXI in 2020.

These include 3 Phase II open-label clinical readouts for facial aesthetics: in forehead lines, crows feet and a new trial initiated in December in upper facial lines; the Phase II readout in plantar fasciitis; and perhaps most notably, the clinical readout for our ASPEN-1 Phase III pivotal trial in cervical dystonia.

In terms of executive management, during the fourth quarter, I stepped in as President and Chief Executive Officer, and we promoted Dustin Sjuts to Chief Commercial Officer.

We also promoted Abhay Joshi to the position of Chief Operating Officer and President of R&D and Product Operations; and Azita Nejad to Senior Vice President, Technical Operations.

To continue to build our team of leaders with extensive commercialization experience, we recently appointed Dwight Moxie as the company's Senior Vice President, General Counsel and Corporate Secretary.

Dwight joins us from Ultragenyx, where he was Vice President, Deputy General Counsel, overseeing global commercial operations, litigation, research, development and regulatory matters.

Prior to Ultragenyx, he served in general and legal counsel positions at Allergan and GlaxoSmithKline.

We're thrilled to welcome Dwight to the Revance Family, and Dwight will report to me and will serve as a member of the senior executive team.

Now to give you an update on our progress in aesthetics and the RHA dermal filler launch, I will hand the call over to our Chief Commercial Officer, Aesthetics & Therapeutics, Dustin Sjuts.

Dustin?

Thanks, Mark.

As you can imagine, we're busy completing our commercialization activities for the planned U.S. launch of our RHA dermal filler line in the second quarter.

As to the high-level progress on our launch plan, at the recent 22nd Annual International Master Course on Aging Science World Congress, or IMCAS, in Paris, figures from both Revance and TEOXANE were part of multiple demonstrations and discussions, allowing us to showcase our differentiated and innovative portfolio of facial injectables.

TEOXANE presented 2 posters: one, focused on the U.S. registration trial results for RHA 1 in perioral line; and two, a comparative study in the physical properties of the RHA line of dermal fillers.

TEOXANE also ran a standing-room-only educational symposium on the science and clinical application of the dermal filler portfolio.

Overall, more than 500 U.S. aesthetic physicians attended the conference and were introduced to the RHA range of dermal fillers, along with the compelling results generated from the Phase III SAKURA program on DAXI.

Since the TEOXANE distribution agreement announced, we have received over 2,500 resumes, further demonstrating the unique opportunity Revance presents in this growing marketplace.

We have nearly completed a thorough vetting and selection process for our sales leaders.

Once on board, we'll turn our attention to the aesthetic account executive positions, which will be selected and in place for a launch in second quarter.

We see an opportunity to serve a physician and consumer who value a better experience.

Our marketing strategy will be focused in these key areas: first, providing quality products that deliver a compelling value proposition; second, aligning a select network of aesthetic health care professionals with discerning consumers; and finally, delivering a differentiated and improved outcome for the consumer and the physician.

Turning to our operational side.

We are nearing the completion of 2 key infrastructure projects: one, a high-touch customer service function with the right mix of people, technology and processes; and two, end-to-end technology infrastructure built with the customer experience in mind to enable our customers and sales teams to focus on what they do best.

The strategic logic of combining Revance and TEOXANE is compelling across all constituencies.

TEOXANE's RHA dermal fillers along with DAXI, once approved, will give us a powerful aesthetics portfolio and allow us to create a new premium category in facial injectables.

The RHA dermal filler launch will put Revance representatives in physician offices for the first time, building relationships, introducing the concept of premium facial injectables ahead of the potential approval of our next-generation neuromodulator product, DAXI.

This will help us optimize the DAXI launch and put us well on the road to significant market share in facial aesthetics.

Our team is excited and enthusiastic about our plans for Revance's exceptional entry into the booming facial injectable marketplace.

With that, I'll hand the call back to Mark.

Thanks, Dustin.

With our BLA acceptance and our announced PDUFA date of November 25, 2020, our organization is focused on supporting the DAXI approval process.

Our clinical team is also gearing up for the substantial amount of clinical data that will become available once the follow-ups in our Phase II and Phase III trials have been completed.

In facial aesthetics, the data we are generating will enable us to compile a comprehensive information package for potential DAXI practitioners, with all 3 Phase II open-label upper face studies to be completed and available before DAXI's expected end-of-year launch.

These results will be shared at key medical conferences.

As to clinical data for therapeutic indications, enrollment is complete in our cervical dystonia, ASPEN-1 Phase III pivotal trial, and we expect to report top line results in the second half of 2020.

Our plantar fasciitis Phase II trial is likewise fully enrolled, and we expect to also announce these top line results in the second half of 2020.

Finally, our JUNIPER Phase II trial in upper limb spasticity continues to enroll patients.

We anticipate enrollment to be complete in mid-2020.

This means that by the year-end -- by the end of the year, we could have a positive Phase III program in one of the major muscle movement disorders and data on another Phase II program for pain disorder, both of which could materially inform the opportunity that exists for DAXI in therapeutics.

Turning to our biosimilar asset.

We are waiting for Mylan to decide whether they plan to move forward with us on the biosimilar to BOTOX development program.

Mylan has up until April 30, 2020, to indicate whether or not they plan to opt in.

That covers the bulk of our recent corporate highlights.

Now let me turn the call over to Toby to summarize our financial results.

Afterwards, I'll have a few closing comments before we begin today's Q&A session.

Toby?

Thank you, Mark.

For the full year, the company tightly controlled expenses.

And as a result, we spent below our 2019 financial GAAP OpEx guidance of $173 million to $185 million, with GAAP operating expenses of $165 million and non-GAAP operating expenses of $144 million as compared to the guidance range of $148 million to $158 million.

Revenue for the full year 2019 consisted of $413,000 recognized from the upfront and incremental payments from the Mylan under the biosimilar to BOTOX program.

Please see the earnings release for the full fourth quarter and year-end results.

With the financing we just concluded on February 14, we had cash, cash equivalents and short-term investments of $533.3 million, enough to fund the company into 2023.

Today, we are issuing our guidance for 2020.

We expect 2020 GAAP operating expense to be in the range of $270 million to $280 million; and non-GAAP operating expense, which excludes depreciation and stock-based compensation, in the range of $220 million to $230 million.

The increase over 2019 is driven primarily by launch activities, including the hiring of a field force in the second quarter.

Revance expects 2020 non-GAAP research and development expense to be $95 million to $100 million.

In terms of revenue, we will not provide sales guidance until we can determine the launch trajectory of our RHA filler line.

We will, however, provide updates on our progress as we approach the market.

Revance's shares outstanding as of February 13, 2020, were approximately 56.9 million, with 62.2 million fully diluted shares.

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

Thank you, Toby.

2020 is truly a pivotal year for Revance, and I'm pleased with the significant number of potential value-creating events ahead of us.

With the TEOXANE dermal filler deal and the anticipated approval of DAXI, we are well positioned to become an innovation leader in facial injectables and therapeutic neuromodulators.

Also with our recent capital raises, we are very well funded as we prepare for 2 significant product launches and await important clinical data readouts.

With more than $0.5 billion in cash and investments, we will launch from a position of strength and with an ability to be laser-focused on execution.

With the TEOXANE agreement and BLA acceptance, we've achieved the first 2 of 12 catalysts for 2020.

We look forward to keeping you updated on our launch activities and the 10 remaining catalysts throughout the year.

With that, I will now open up the call for questions.

Operator?

(Operator Instructions) Our first question comes from Annabel Samimy with Stifel.

So I just wanted to ask you, since the TEOXANE launch is coming up shortly, any thoughts around the pricing of TEOXANE?

And you're talking about creating a premium category.

What do you think you need to do there to essentially establish yourself as that premium other than possible price given the increasing noise of Juvéderm again in DTC?

The second question is, I guess, none of us should be surprised by the increasing cash burn given the launches coming up and the continued therapeutic development.

But I'm wondering if you can maybe frame for us how much of the spend in sales and marketing you could potentially leverage into next year so that you don't necessarily have the same repeat of some of these launch expenses.

And then finally, if I may, one more question on the guidance on 2023, on cash bringing you to 2023.

You didn't give any guidance on numbers but -- on revenues, but is there some implicit revenue assumption in that 2023 guide on the cash?

Thanks, Annabel.

This is Mark.

I'll take the first one.

In terms of the pricing of the TEOXANE RHA filler line, we're going to hold on giving specific pricing until launch, probably for competitive reasons, too.

But we do think it's a premium product.

If you look at the differentiated label claim around dynamic wrinkles and folds, I think they've done a nice job to position themselves in a unique way in the market.

And if you look at how that product has performed in the top 5 markets in Europe, it's a great product.

And so we believe that it will stack up very favorably against the other fillers, and we think it will fit very consistently with DAXI and sort of the premium nature of that product.

But we're going to hold on the specifics around the pricing until we get into the market.

Regarding sort of the makeup of the spend on that, why don't I turn that over to Toby, and he can comment a little bit on sort of what are the key buckets as we look at the guidance that were given for 2020.

Thanks, Annabel.

Great questions.

In terms of the drivers year-on-year, obviously, you're seeing an increase because of the acceleration of our plan to bring in the field force and then the variable marketing associated with launching both a filler and DAXI in 2020.

Your question was about sort of are we going to have some additional onetime expenses that were shifted from the year 2021, it sounded like, into 2020.

And the answer is yes.

They're mainly on sort of the infrastructure investments that we're making in sort of the field-based information technology and sort of ERP systems.

But kind of on the overall context, that will be hard to sort of discern from sort of year-to-year numbers, especially as we have a full year roll on in 2021 for the full year effect of the field force.

Maybe just to pile on to that a little and answer that a little more.

I mean the great thing about these 2 products is that there is great sort of overlap in synergy between the sales forces of both.

And so while we are pulling forward sales and marketing expenses to support the filler launch, by the time that DAXI gets approved, there's not going to be a whole lot of incremental costs that go into supporting that.

There will be obviously some marketing that's dedicated to that.

We might add some additional reps, but a lot of the infrastructure investment and the big sort of sales force add isn't going to need to be duplicated later.

It's more of a pull forward this year, and that's what sort of this number is reflecting.

Great.

And then I think you had one last question, Annabel, on 2023 and the cash guidance there.

And we have sort of baked in revenue forecast because we're launching 2 products there.

And obviously, there's a balance there with higher revenue, you have higher investment.

With lower revenue, you take different decisions about that.

But we feel pretty confident on the 2023 number.

Our next question comes from Ken Cacciatore with Cowen and Company.

Just a question on how we should be thinking about the pacing of the launch.

And I know you don't want to give any specific revenue, but are there -- can you talk about metrics we should be looking out for or things that you're going to be measuring the sales force when they get out there on TEOXANE?

And then obviously, DAXI seems more of a 2021 event.

I don't know if you want to give us any sense, should we expect any revenues for DAXI in 2020?

So just things that you're holding yourself to and the team accountable to in terms of metrics that we can be paying attention to and monitoring.

And then any thoughts on sales force size?

Or is that -- you're going to hold that tight for competitive purposes?

Ken, great question.

So I'll take the latter one first.

I think we've been pretty consistent saying that kind of roughly 100 reps is what we plan to start with.

And we've talked about DAXI launch.

We might grow that up to sort of 120 to 130, but we'll kind of wait to see how we're phasing into this.

But we do plan to start out of the gate with roughly 100 reps.

In terms of the launch cadence and metrics and what to expect there, I think that since we'll be launching in Q2 and we're bringing on a whole new sales force, I would expect the first phase to be heavy sampling and targeting and getting those right sort of physicians.

So I think that any kind of revenue on the filler line is going to be more towards the latter part of the year because of the way we're going to start to phase this.

And I think the same with DAXI as well.

When we finally get approval for DAXI, this will be the first time that it's used commercially outside of clinical trials, and I think it's going to be really important that we are partnered with a select group of physicians to make sure that we're optimizing the launch.

And so we really don't expect any meaningful contribution on the DAXI portfolio until next year.

And then again, on the filler side of it, we just want to make sure that we're being really thoughtful about the physicians that we're partnering with, establishing this premium brand that we're talking about.

And since we're just coming online in Q2 and expect some sampling, again things will be kind of more weighted towards the back part of the year.

Our next question comes from Terence Flynn with Goldman Sachs.

This is Holly Barra on for Terence.

Two for us.

One, can you provide updated thoughts on potential bundling strategies, assuming DAXI is approved later this year?

And are you planning to target a broader base of physicians now that you have fillers in the portfolio than you were initially just planning with DAXI?

Yes.

So great question.

So on the bundling strategy, again, I think we're going to hold on sort of any of the specific tactics and pricing until we're actually in the marketplace.

Clearly, by having both toxins and fillers in the bag, it does give us sort of greater flexibility to meet the needs of both the consumers and the injectors themselves.

And we think by having both of them, it will give us an opportunity to offer incentives to practices that utilize both of them.

But again, the specifics of that, we're going to hold on until we get into the market.

And then in terms of whether or not the fillers are going to allow us to target a broader base, again, I think that will get into sort of the execution side of it.

We're going to be mindful of making sure that we're targeting the physicians that we think are going to be a good fit for both of our products.

But we think if we do the right job of educating and training and creating the right value proposition that -- whether it's a filler or a neurotoxin, we should be able to go after whoever we think is that ideal customer for us.

So I don't think either of these products changes the way that we ultimately think about this market and our go-to-market strategy.

Our next question comes from David Amsellem with Piper Sandler.

So just a couple.

So Mark, you had referenced the idea of a premium experience for the TEOXANE fillers.

And in that vein, I wanted to get your thoughts as to who the initial patient pool will be.

Is it going to be filler-experienced patients who are looking for a different experience?

Do you think you'll be able to get patients new to fillers initially?

And how we should think about that in the context of this idea of a premium product, a premium experience.

That's number one.

And then number two, switching gears to therapeutics.

And I probably asked this in 20 different ways over the last couple of years, but I'll just ask it again.

And the question is, how do you think about building out commercial infrastructure in, say, cervical dystonia or other movement disorders, or just broadly speaking, in therapeutic indications, in general?

And is that something that you're wedded to?

Or are you looking at potential partners on some or all of these therapeutic indications?

It's a great question.

So I think the first one, your question about kind of who are we targeting with the launch of the fillers, which consumers?

And I think you've heard this from other players in the industry.

This is a market that continues to be significantly underpenetrated.

And it's growing low double digits, 10%.

So I think any time that there's something new that comes into the market, it does drive increased awareness among consumers, and people like to seek out what's new.

So we do think that we will get some of our traction from new patients that either are already in the channel but haven't had fillers or those that are outside the channel that hear about sort of the next new filler that's in the market and use that as an opportunity.

So I think we will definitely get some new consumers that come in.

And then conversely, too, I think that we're going to be a really appealing alternative for consumers that are already in the channel and that are getting fillers that might be looking for a different experience or the physician likes some of the performance properties of the filler.

And as I mentioned before, I mean, TEOXANE's fillers in Europe, which is a highly competitive market, has been really strong.

And they've been able to compete very successfully in the top 5 European markets without the benefit of a neurotoxin.

And so they've solely been competing on the performance of the product.

So we think it's going to be competitive.

We think it's going to resonate with some injectors.

We think it's going to resonate with some consumers.

And we think we'll capture some existing patients and through coming into the market, we will drive some new ones as well.

In terms of your question about sort of our therapeutic strategy, no real change there.

We've always talked about controlling the distribution of our products in both aesthetics and therapeutics in North America and looking to find partners for these assets outside of it.

Obviously, as you referenced, it would be a different sales force that would sell cervical dystonia.

These would be neurologists that would be administering the neurotoxin in those indications.

We said in the U.S., if we need to build our own sales force, it's kind of 60 to 80 reps, so it's a pretty targeted effort.

And currently, we continue to think that, that strategy makes sense, which is we could look to commercialize this directly ourselves in North America, and then we could continue to look for partners outside of that.

Having said that, we're going to continue to evaluate opportunities.

CD is our program that's most advanced and furthest along.

But if you look where that is in the Phase III data reading out in the second half of this year, you're talking about an approval at sometime in 2023-ish.

So we still have some time.

And with additional clinical data, we'll certainly circle back up and reevaluate, is this the right strategy or are there other ways that we think could better unlock value for it?

But for now, there's no real change in our approach to that market.

Our next question comes from Balaji Prasad with Barclays.

Congratulations on the progress on DAXI.

Firstly, on the fillers.

So you said that you introduced this recently to the U.S. KOLs.

Were there any learnings for your team?

Were there any pushbacks that we need to consider?

And what kind of expectations does it give you around ramp dynamics?

Secondly, it's something that I asked last month.

Can you help us understand the development and competitive landscape on fillers globally?

I'm trying to understand the minimum period of dominance TEOXANE can have on this market.

Sure, Balaji.

I'm not sure I exactly understood your second question, but I'll start with the first one, and then we can always pivot over.

So in terms of what's been the physician response.

So there were obviously clinical trial sites here in North America that were involved with the trial.

And like a lot of these clinical trials, companies go to thought leaders in the industry to work with on these trials.

And so these injectors had great experience with the TEOXANE products, and they share that information with their colleagues.

And so we come into the U.S. market with a group of KOLs that had very favorable experience with it.

Secondly, there's a number of international meetings where a lot of these KOLs attend, and they share information.

So a lot of these U.S. physicians have seen the data on the TEOXANE fillers at some of the meetings, they've talked to some of their colleagues that have been injecting the products outside of the United States, and they're anxious to get their hands on it.

I think the performance of the product is very good in terms of how it performs, but also the softer side of it: how easy is it to inject, how easy is it to massage, what's sort of the patient feelings on it.

And so at the recent IMCAS meeting that we talked about, because of the announced partnership, there were more U.S. physicians that paid attention to it.

And we sense a lot of excitement.

And certainly, with the number of the physicians that we had already been engaged with on our neuromodulator program, they're certainly excited to get experience with this new filler line.

And so think as we come into the U.S., we're going to have a large number of physicians that are going to be very interested in trialing the product.

And we also think that the performance of the product and the customer experience is going to drive good usage on the product.

We also think that from a marketing standpoint that their ability to get a unique labeling claim around dynamic wrinkles and folds gives us an opportunity to certainly position us in a way that other fillers can't.

And so we feel good about that.

And then again, maybe you could clarify for me again your second question because I wasn't exactly sure what you were looking for there.

Sure, Mark.

So what I was asking was to kind of understand the development and competitive landscape on fillers that could end up being material threats to TEOXANE in the future.

And at what life cycle they could be.

And as I said, what I'm trying to understand is the minimum period of competitive dominance TEOXANE can have on this market.

Great.

It's a great question.

So obviously, we're -- it's a U.S. agreement, so I'll focus on the U.S. market.

There are some other fillers that are working their way through the FDA approval system.

And so we do expect to see some other hyaluronic acid fillers come into the market sort of in the next 2 to 3 years, probably closer to 3 years.

So we feel like we certainly have several years to get into the market.

And then we do believe, obviously, because we did this distribution deal that partnering a filler with a neuromodulator is really important in order to meet the needs of the injector and the patients.

And so most of these new ones coming in are going to be filler only, which we think is going to create sort of a higher bar.

But if you look at Europe, where all of these products are already approved, and so there's much more competition, TEOXANE has performed really well.

They're the #4 market shareholder in the top 5 EU markets.

And this is with sort of the latest technology and all the competition.

So we think that this is a filler line that's going to perform really well.

And for the next several years, there won't really be any new competition.

And then even when competition does show up, which is several years away, we think the quality of the product and the fact that it's partnered with our neuromodulator is going to help us continue to have a good position.

Our next question comes from Tim Lugo with William Blair.

Congratulations on all the -- on all you've done through the Q1 as well as in Q4.

Specifically for Europe, how should we think about that 9% penetration number, which has been cited by the -- for the TEOXANE fillers without a neurotoxin paired with them?

Is that sort of a floor penetration we can expect in the U.S.?

Or is there something unique in Europe that I'm not appreciating?

No, I mean, obviously, it's hard for us to sort of forecast what we think that means.

We look at it, and we think it bodes well in terms of the usage largely being attributed to the quality of the product.

And if you look at how the TEOXANE fillers came into the market, Valerie Taupin, the founder there, was involved in the early days of Juvéderm in creating that, and I think learned a lot around not just the science of making HA fillers, but the art, which comes down to the manufacturing process and everything else.

That then translates into how easy it is to work with and how easy it is to use.

So we think it speaks to the quality of it.

I think it's really hard for us to say that 9% there translates to a certain percentage here.

And then when you pair it with the neurotoxin, what that means.

I just don't know that we're at a point where we can give sort of that level of guidance on it.

Obviously, we're optimistic.

We need time to get into the market and make sure that we've got the right relationships established and that we're also properly prepared for DAXI, but we think it's a good indicator as we move into the U.S. market.

Understood.

And with the Mylan biosimilar decision coming up, if your partner decides not to continue with the program, remind me again, are you looking -- would you look to repartner that program?

Or were there something unique to Mylan that made them a preferred partner?

Or maybe the market dynamics have changed a bit, where now even pursuing a biosimilar has changed a bit?

Great question.

We've talked about this before.

Before entering into the agreement with Mylan, there were other parties that we were talking to at that time.

So there was interest from others.

We felt Mylan was the best partner for us, and it's been great working with them.

They've obviously got a lot of experience in that space.

When we entered into the agreement, there were 2 unknowns that were kind of looming large.

One was whether or not the 351(k) pathway was available to us.

And based on our meeting with the agency there, they -- their meeting minute notes did say that there was a 351(k) pathway that is available, not that it doesn't have risk, but we do feel like there is a pathway.

And the second thing was there was more characterization work that was needed to be done, and we feel like we've made pretty good progress on the characterization side.

So if for whatever reason Mylan decides not to opt in, we feel like we'd be back at that same decision point, which is, okay, where do we go now?

We feel like the asset has been derisked based on some of the progress that's been made on those fronts.

And so I think if they choose not to opt in, we'll take a pause and step back and reevaluate sort of where do we go from here.

Our next question comes from Seamus Fernandez with Guggenheim.

So just a couple of quick ones.

If you guys wouldn't mind, can you just update us on the kind of supply that you're prepared to launch with in the U.S. market with the TEOXANE fillers?

And then second thing is, what are you hearing from physicians?

We've -- as we talk to physicians about the opportunity for the TEOXANE fillers, we're hearing 2 things.

And in fact, one is the sort of problems with Juvéderm, which includes formation of nodules.

And then separately, there's also just sort of some service complaints that we're starting to hear about on the margins.

Just love to hear your thoughts on the opportunity there.

And then the last question, can you just update us on what your learnings were from the plantar fasciitis clinical trial that gives you confidence to move forward into the Phase II?

Just give us a general sense of how we should be thinking about those data as they approach since that seems like a unique opportunity.

Great.

Well, great questions.

Thanks.

So first off, on the supply side of it, we haven't given sort of any color or guidance around sort of sales forecast or minimums on that.

The agreement does contain those, and we have worked closely with TEOXANE to make sure that they have the adequate amount of product to support our launch needs and our forecast.

So we feel very good about the position that we'll enter the market with.

In terms of the second question, you want to hit that on nodules and sort of what's going on in the market?

I'm looking to Dustin here.

Yes.

I think you're hearing a little bit about that.

As it relates to the Vycross technology that was introduced in 2003, I think it's important to understand the dynamics of the filler market has changed.

Vycross was introduced 2003 worldwide, but it didn't come to the U.S. until more recently.

While Valerie and TEOXANE introduced RHA in 2015.

So they had an understanding of kind of how that product was made, how is it engineered to try to drive different characteristics and really took that into account when they created the RHA technology.

So we are hearing that as well.

I think we don't have specific information directly to Voluma, however -- or excuse me, Vycross, but the safety profile of the RHA fillers is well known.

TEOXANE itself has sold more than 10 million syringes worldwide.

I think it's important to understand that this is something that we have a very large data set as to its properties both from an efficacy standpoint and safety.

So we'll definitely bring that information to bear.

Some of those conversations around publications happened at IMCAS as well, where there was data published on different types of safety characteristics of different products.

And on the service side of things, I think it's really important to understand that there's data out there now that there's 30,000 to 50,000 accounts in aesthetics.

And so most companies are out there trying to call on all of those with different sizes of sales forces.

We're making a very strategic decision to create a new marketplace, which is allowing kind of a premium experience both on the product side and from the company, which will allow us to have a much higher level of service within the certain type of accounts that are going to partner with us.

So we do think that's a great opportunity as well.

Great.

And for the plantar fasciitis question, why don't I turn it over to Abhay and see if he'd like answer that.

Great, Seamus.

I think on the plantar side, we have made a number of changes to the clinical trial design that I described earlier because we learned a lot from our fourth study.

Notably, what we did was we have 2 doses here instead of 1 dose.

So we have a low dose and a high dose.

Secondly, we changed our primary end point, which is based on a numeric pain rating scale compared to a visual analog scale, where you have less of a distinction between how the patient talks about their experience.

We also included a 10-day run-in period.

That means we analyze how the patient feels like for first 10 days prior to entering into a trial just on day 1. And that gives us an idea around how the patient is feeling and what is the overall psyche behind pain for that particular patient.

We also changed the duration of trial for 6 to 12 months versus 3 months what we had for our first study.

And with regards to the numeric pain rating scale, we are now evaluating over 5 days versus 1 day because that gives you an average score, and that is at week #8.

And last but not least, we had a very significant change where we have changed the location of injection only at the plantar surface as opposed to plantar and calf.

So we believe that with all these changes based on our learnings, there is significant opportunity, as you said, and we look forward to our data.

Our next question comes from Difei Yang with Mizuho Securities.

This is Dan Clark on for Difei Yang.

I have 2, if you don't mind.

First, are you guys changing your potential market share assumptions for DAXI, given that you now have TEOXANE in the portfolio?

And then as a follow-up, how much of an incremental benefit with the approval of RHA 1 be for the filler line?

Great question.

So in terms of sort of penetration assumptions, no, we haven't really put any penetration assumptions out there.

But obviously, having the 2 together, we feel like it will allow us to be more competitive in the accounts that we're targeting.

So overall, it's probably an efficiency play because it's the same reps calling again on the same injectors, and in many cases, treating the same consumers.

But it certainly will give us more flexibility to compete in a bundled nature if that's what we need to do.

And then on the -- what was the second question?

RHA.

Yes, so on the RHA 1 side, the RHA 2, 3 and 4, we feel, meet most of the needs today.

So the RHA 1 pillar is being designed for perioral sort of fine lines around the mouth.

So we actually think that this is going to be a bit more of a unique product when it comes into the marketplace.

We're expecting approval in 2021, so we're really excited to get that product in the market.

But again, it's for sort of much finer lines, more superficial.

And we're excited to get that one in.

Anything you want to add to that, Dustin?

No.

I think you covered it.

Our next question comes from Serge Belanger with Needham & Company.

The first one, Mark, I wanted to go back to some of your comments in your prepared remarks.

I think you mentioned that you were expecting breakeven on the TEOXANE dermal launch within 18 months and maybe a positive ROI on that investment by 2023.

Do I have that correctly?

And can you talk maybe of some of the assumptions behind that?

Thanks, Serge.

I'll take this one, this is Toby.

So in our prepared remarks, we said 18 to 24 months after launch, we would break even on the filler distribution agreement.

So what we meant by that is when you look at the economics of selling that filler line while we also have DAXI in the U.S. So that's what we mean there.

And then, obviously, as that starts to break even, then payback of the investments that we made over that 18 to 24 months would be by 2023.

Got it.

My next question is on the couple -- I think there's 2 or 3 open-label Phase II trials reading out this year in various facial areas.

I just wanted to know what the strategy is here.

I know they were initially to inform dosing as well as injection patterns.

But is there a longer-term strategy to advance these to Phase III trials and kind of replicate the BOTOX aesthetic label?

Yes, so great question there.

I think we'll kind of wait as we get through the completion of the Phase II trials.

But obviously, the nice thing is that we will have the Phase II top-level data on these facial trials to inform sort of injection pattern technique and dosing.

These are not -- at the time that we will read these trials out, we won't have duration data.

So it's more of a kind of an acute efficacy and a dosing strategy -- study.

And then we'll evaluate after these Phase II studies kind of the timing and whether or not we move into Phase III on those.

Okay.

I'll squeeze one last one.

AAD is next month.

I'm sure it's kind of going to be the launch of the TEOXANE fillers.

But is there any other data that we should be looking for at the meeting?

Yes.

So we're not prepared to talk about sort of launch timing and date yet.

We said Q2, thus far, and so we'll be launching at some point in Q2.

In terms of what else to expect at AAD, let me turn it over to Dustin.

Any...

No.

I don't think there's anything new that we'll be bringing to AAD at this time.

As you know, the lead time for those meetings, typically, is relatively long.

And so we'll be bringing new information at other meetings, but likely not at AAD this year.

Our next question comes from Douglas Tsao with H.C. Wainwright.

(Operator Instructions)

I am not showing any further questions at this time.

I would now like to turn the call back over to Mark Foley for any closing remarks.

Great.

Thank you, operator.

Our travel schedule over the next several months include attendance at the Cowen, Barclays and Needham Healthcare Conferences and also involves road shows in Los Angeles, the Midwest and New York.

Please reach out to Jeanie if you'd like to meet with us when we're in your area or if you would like to schedule a call.

With that, I would like to thank you, all, for participating in today's call.

Ladies and gentlemen, this concludes today's conference call.

Thank you for participating.

You may now disconnect.