Revance Therapeutics Inc (RVNC) 2021 Q1 法說會逐字稿

Welcome to the Revance Therapeutics First Quarter 2021 Financial Results and Corporate Update Conference Call. (Operator Instructions) As a reminder, this call is being recorded today, May 10, 2021.

I would now like to turn the conference call over to Jessica Serra, Head of Investor Relations and ESG for Revance. Please go ahead, ma'am.

Thank you, Donna. 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 and Therapeutics, Dustin Sjuts; and President of Innovation and Technology, Aubrey Rankin.

During this conference call, management will make forward-looking statements, including statements related to Revance's 2021 guidance, the clinical development of our product candidates, business strategy and planned operations, commercialization plans, the timing and outcome of the FDA's inspection of our Northern California manufacturing facility, the potential benefits of our drug product candidates and technologies, the launch of the next-generation HintMD fintech platform, the timing of any potential approval of DaxibotulinumtoxinA for injection and RHA 1 by the FDA, the timing related to regulatory approvals, submissions and meetings, the market opportunity of our Aesthetics and Therapeutics franchises, aesthetics industry, milestone expectations and expected cash runway and financial 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 current report on Form 10-Q to be filed with the SEC this afternoon on May 10, 2021.

Revance undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations. Also on today's call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our earnings release.

With that, I will turn over the call to Mark Foley. Mark?

Thank you, Jessica. Good afternoon, everyone, and thank you for joining our first quarter 2021 financial results conference call.

Before I cover the results and provide commentary for the first quarter, I'd like to provide an update on the BLA for our lead product, DaxibotulinumtoxinA for injection for glabellar lines. Our standard operated procedure is to not comment on the status of our ongoing FDA review process or interactions with the agency. However, given the unique environment that the COVID-19 pandemic has created and the length of time that has lapsed since our PDUFA date, we felt that it was important to provide the investment community with an update.

As of today, the FDA has not scheduled or conducted the preapproval inspection of our Northern California manufacturing facility due to COVID-19-related travel restrictions. While we had expected to have an inspection date by now, we continue to engage with the FDA and leverage all available resources to facilitate an inspection as soon as possible.

We're also encouraged to see the FDA recently issued its most comprehensive guidance to date, which outlined the agency's planned inspection approach going forward. Combined with the ramp-up in vaccinations across the country, the decline in COVID cases, particularly in the geographic area of our manufacturing site, we anticipate that we will be provided an inspection date in the near term.

Furthermore, we will now make an announcement once we receive the official communication from the FDA regarding our inspection timing. As a reminder, the approval of our BLA by the PDUFA date of November 25, 2020 was deferred due to FDA's inability to conduct an inspection of our facility due to COVID-related travel restrictions.

Importantly, the FDA did not indicate any other outstanding review issues beyond the pending inspection, and we did not receive a complete response letter. We remain ready to support an on-site inspection as soon as the agency is able to visit our facility. And we continue to build drug product inventory in anticipation of approval and are eager to introduce this unique product into the aesthetics market.

Now let me turn to our first quarter performance. Following our successful transition into a commercial entity in late 2020, we're very pleased to see the momentum in our aesthetics franchise continue in the first quarter of 2021. We delivered strong revenue from our RHA collection of dermal fillers and saw a robust increase in processing volumes from the HintMD fintech platform, despite the COVID-19 -- despite the impact of COVID-19 and Q1 historically being a seasonally slower quarter for facial injectables. These results confirmed the market demand for innovative and premium products and services and further validated our targeted launch strategy.

2021 will undoubtedly be another exciting year for the company with a focus on ongoing successful commercial execution. That said, our playbook for the year is anchored by 5 strategic priorities. First and foremost is obtaining FDA approval on our lead neuromodulator product, DaxibotulinumtoxinA for injection and launching the product with the same targeted approach that we used for the RHA collection and HintMD platform.

Our second strategic priority is to deliver on our commercial strategy in aesthetics. We are driving market segmentation with our premium products and prestige launch strategy, targeting elite practices and partners.

Looking ahead, we are excited about broadening our aesthetics portfolio with the introduction of RHA 1 once approved, and the next version of the HintMD platform. We are excited about our progress in aesthetics, and Dustin will cover more on that later in the call.

Our third strategic priority relates to our therapeutics franchise, where we plan to bring the clinically proven benefits of DaxibotulinumtoxinA to muscle movement disorders and set the new standard of care for patients. With the expected completion of our Phase III open-label safety study in cervical dystonia and submission of our end of Phase II meeting request in adult upper limb spasticity, or AULs, this year, we have begun building the commercial foundation for our therapeutics franchise, and I'll expand on that later in the call.

Our fourth strategic priority is the continued focus on discipline in capital allocation. We entered 2021 with a strong balance sheet and cash into 2024. We continue to execute on our strategy from a position of strength and are focused on ensuring that the investments we make today will allow us to realize our near-term growth objectives while also supporting our long-term strategic initiatives.

Our fifth and final strategic priority for 2021 relates to our people initiatives, which are critical to our ability to drive sustainable growth in the years ahead. Revance more than doubled in size last year, opened offices in 3 additional cities and established a national sales organization. Our ability to build a strong culture in a working environment where all employees feel welcome, supported and empowered is critical. This is important not only for attracting and retaining talent, but also for fostering greater innovation and business outcomes. Throughout it all, we continue to lean in on our commitment to diversity and inclusion.

In summary, we feel very good about where we are positioned and where we are headed. We have delivered 2 consecutive quarters of solid commercial results through our targeted launch strategy, a master growing body of clinical data supporting the consistent and differentiated performance profile of DaxibotulinumtoxinA, maintained a strong financial profile and lastly, built an incredibly talented and dedicated team.

Coupled with the key catalysts for this year, most notably the anticipated FDA approval of our lease neuromodulator product, we look forward to delivering another year of significant growth.

With that, I'll turn the call over to Dustin, who will cover the performance of our aesthetics business in the first quarter.

Thank you, Mark. We started off the year squarely focused on executing our commercial strategy and optimizing our aesthetics infrastructure to support growth at scale. Our heads down mentality paid off as we exceeded our internal expectations for both RHA and HintMD, reporting $11.6 million in total sales and exiting the first quarter with a run rate of over $400 million in processing volume. We ended the quarter with over 1,500 accounts across RHA and HintMD, which is a substantial increase from the approximately 1,000 accounts we reported at year-end 2020.

These results were driven largely by our efforts to forge strong inroads with key elite practices and partners. More and more elite practices are embracing the opportunities to provide their clients with added value through innovation, elevated outcomes and superior service. We're very encouraged by the early credibility we are establishing with the Revance aesthetics brand through the launch of RHA and HintMD.

Our strong results for the quarter were also supported by a ramp-up of injector education programs through REVANCEU. With increased vaccinations across the country, we were able to conduct more face-to-face trainings, while also leveraging our robust virtual training platform. In fact, we began conducting training inside doctors' offices for the first time last month and attended our first in-person medical conference, The Aesthetic Meeting in Miami. These trends all point to the recovery of the aesthetics industry, which we believe will serve as a tailwind to our commercial story in the months ahead.

During the quarter, we also prioritized consumer activation in multiple ways. We created and distributed a suite of content to be used by practices and across their social media, website and CRM platforms. We also continued our Flawless in Motion consumer initiative through and targeted digital campaign across channels with the goal of driving more clients to practices that carry the RHA collection.

Turning to HintMD. We are very pleased to see the processing volume run rate more than double in the quarter. This was largely due to the increased account penetration, complemented by a rise in cosmetic and aesthetic procedures as the broader economy opened up. The adoption rate for HintMD benefited from the cross-selling opportunities generated by our sales team. Many practices that adopted RHA are recognizing HintMD as a complementary aesthetic service that not only optimize payment solutions, but also has the potential to increase practice economics with future features such as subscription services, patient wallet, white-label loyalty and data analytics.

HintMD is the first and only aesthetic-focused fintech platform. And unlike current loyalty and promotional programs offered in the aesthetic markets today, HintMD has the potential to build customer loyalty with a practice as opposed to a specific brand. For these reasons, practices are leaning in.

Our near-term focus is to further increase the number of accounts on the platform and launch the next release of HintMD. We're in the beta phase of this release and are on track for launch in the coming months. We believe the integration of PayFac will unlock tremendous value for both Revance and our customers' life. As a payment facilitator, we will be able to participate in more of the credit card processing value chain, thereby increasing our margins on the transactions processed over time. Further, since PayFac sits right at the transaction level, we will be able to leverage the source data to build new features and functionalities and enhance practice economics and customer loyalty.

We also strengthened our commercial infrastructure during the quarter so that can support our growth at scale. We are near the final stages of building out our Nashville corporate headquarters and experience center, which will serve as a key training and education hub for employees, practices and partners. Our experience center will be the first of its kind in the industry, and we're excited to showcase our differentiated approach to enhancing learning and expanding access to our brand and product portfolio.

In April, we successfully and safely hosted our second live national sales meeting. The meeting included in-person training for our sales force, further equipping our team with the tools and resources needed to continue to grow the aesthetics franchise. Overall, a very active first quarter on the commercial end as we continue to focus on execution.

Now I'll turn the call over to Mark to discuss our therapeutic franchise. Mark?

Thanks, Dustin. We are pleased to see our therapeutic opportunity in muscle movement disorders continue to advance this quarter. In February, we reported positive results from our JUNIPER Phase II trial, DaxibotulinumtoxinA for injection, for the treatment of adult upper limb spasticity. The study provided us with the necessary data to support our dosing strategy for a Phase III program. It also showed the consistent 24-week duration profile of DaxibotulinumtoxinA for injection as seen across our cervical dystonia clinical program and our aesthetic clinical trials.

With the completion of our Phase III open-label safety study in cervical dystonia and AULs end of Phase II meeting planned for the second half of this year, the commercial path for our therapeutics franchise is beginning to take shape. For our cervical dystonia program, which is the furthest along in development, we plan to complete our regulatory filing with the FDA in 2022 and anticipate approval in 2023. There is meaningful value to be unlocked in the muscle movement disorders category. The global market for cervical dystonia and spasticity, which includes upper and lower limb spasticity, is currently valued at over $1 billion and is projected to exceed $1.5 billion by 2025.

Importantly, nearly 80% of that opportunity resides within the United States, representing a significant opportunity for Revance. We're excited about the prospects of leading this market with our next-generation neuromodulator, given the drug's safety and efficacy in providing symptom relief and its unique duration profile, that has the ability to cut the number of required treatments by half. In short, DaxibotulinumtoxinA has the potential to not only provide a better treatment to patients but also brings substantial pharmacoeconomic benefits to the health care system.

Based on our progress, we are beginning to focus on our go-to-market strategy, while strengthening our internal infrastructure to support our transition from clinical stage to commercial and therapeutics. To that end, we have been focused on building out our therapeutics leadership team and have made several key hires and promotions, including our newest appointment, Angela Willis, who will serve as our Vice President of Market Access. Angela has more than 20 years of experience in biopharma market access and pricing strategy across multiple therapeutic areas, including neurology and migraine. We're excited about the strong team we have in place, which will support our growth in therapeutics in the years ahead.

Before I turn the call over to Toby, I would like to briefly touch on the recent advancements in our partnerships. In April, we announced that Shanghai Fosun Pharmaceutical Industrial company enrolled and injected their first patients in their Phase III trials of DaxibotulinumtoxinA for glabellar lines and cervical dystonia in China. China is the second largest neuromodulator market in the world, and we are excited about our potential to establish a foothold in this attractive market through a great partner like Fosun.

Finally, we are pleased that our biosimilar collaboration with Viatris is also progressing nicely. We recently submitted the briefing package for our biosimilar to BOTOX to the FDA for agreement on a Phase III program. This is an encouraging development in our ability to participate in the short-acting neuromodulator category, while we are prepared for the launch of our longer-acting neuromodulator in both aesthetics and therapeutics.

With that, I will now turn the call over to Toby to cover the first quarter financials.

Thanks, Mark. The earnings release we issued today outlines our financial results in full, so I will touch on the highlights on this call. Total revenue was $13.3 million for the first quarter, which included $11.6 million in RHA collection revenue, $1.5 million from our partnership with Viatris on the biosimilar to BOTOX and $0.1 million from our HintMD fintech platform. As Dustin mentioned earlier, HintMD's processing volume run rate increased to over $400 million during the quarter. Revenue growth for the quarter lagged processing volume growth primarily because new practices received payment devices that were accounted for as a contra revenue. As we have indicated before, processing volume is the best way to measure the growth and performance of the HintMD platform. It is the leading indicator for both account penetration and account processing activity, which directionally translates to our revenue potential.

Turning to operating expenses. Selling, general and administrative expenses for the first quarter 2021 were $49 million, reflecting sales and marketing expenses related to the RHA collection of dermal fillers, pre-commercial activities for DaxibotulinumA and headcount-related expenses for HintMD. SG&A expenses include depreciation and amortization and stock-based compensation. Excluding these expenses, non-GAAP SG&A expenses were $40.8 million for the first quarter 2021.

Research and development expenses for the first quarter 2021 totaled $27.3 million, reflecting costs related to clinical trials, regulatory support for ongoing biologics license application and other developmental efforts. R&D expenses include depreciation and amortization and stock-based compensation. Excluding these expenses, non-GAAP R&D expenses were $23.5 million for the first quarter of 2021.

Total GAAP operating expenses were $83.3 million for the first quarter. Excluding stock-based compensation, depreciation and amortization and cost of revenue, non-GAAP operating expenses were $64.2 million for the quarter. We continue to be in a strong financial position from a balance sheet perspective. Cash, cash equivalents and short-term investments as of March 31, 2021 were $386.8 million, which we believe is sufficient to fund our operating plan into 2024.

In terms of outlook, we are confirming our previously announced 2021 GAAP operating expenses of between $375 million to $390 million and non-GAAP operating expenses between $270 million to $285 million.

We expect 2021 non-GAAP research and development expense, including HintMD to be $95 million to $105 million. Finally, Revance's shares outstanding as of April 27, 2021, were approximately 71.5 million, with 66.5 million fully diluted shares excluding the impact of convertible debt.

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

Thank you, Toby. In closing, we delivered a strong start to the year in both aesthetics and therapeutics franchises and believe we are well positioned for continued growth with a number of important upcoming catalysts. 2021 will be another pivotal year for Revance, and we look forward to updating all of you on the progress we are making on our key priorities throughout the year.

Lastly, I want to take this opportunity to thank our team for their tireless commitment to the company and efforts in the support of each other. The COVID-19 pandemic has placed a tremendous strain on so many employees and their families, yet they have found a way to not only persevere but successfully adapt to allow us to achieve our goals.

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

(Operator Instructions) Your first question comes from the line of Ken Cacciatore from Cowen & Company.

Just really wonderful performance, just unexpectedly strong. So congratulations to you all. Just wondering as we're clearly a little bit delayed further on DAXI than we would have hoped. You're obviously able to establish relationships with the clinicians in a way differently than you probably thought when you were originally going to be introducing the products. So I was just wondering how does that help you accelerate any part of your original game plan? Does it allow you to maybe accelerate DTC once you get to a certain level of training? Just trying to understand how the connectivity maybe changes the way when we finally do get DAXI, you'll approach it? And then wondering on the inspection, you've had a little bit of time now, more time to prepare. Just can you talk about what you've done behind the scenes? Are you having consultants do mock walk-throughs? Is there any kind of corrective action you've been able to take just to really make sure that we nail it the first time around?

Yes. Thanks, Ken. So first off, in terms of the delay in our neuromodulator and the impact, yes, as you point out, the great thing about having the suite of products and services that we have is that our strategy is based on the combination of our portfolio. So with the RHA line of fillers, I think if anything, it's allowed us to lean-in more on the fillers and really do a good job of highlighting the benefits of the product line versus sort of leaning on our neuromodulator to be the lead there. So we're obviously very encouraged by the traction that we're getting and the feedback that we're getting on the overall portfolio.

And as you point out, obviously, with an expanding group of relationships that we're establishing in the market, by the time that we do ultimately kind of broadly launch our neuromodulator product, we will certainly be doing that with a broader set of relationships and entrenched partnership. So we do think that over time, certainly, we'll be able to leverage the traction that we're seeing in the market today.

On the overall preparation side of it, absolutely. Our team has done a great job of taking sort of advantage of this downtime where we have been engaged with outside consultants and experts to do mock audits to pressure test our systems. And we are actively building inventory in preparation for our launch. So things are changing there. We've actually trained our sales force as well. And so we continue to be leaning in, and we'll certainly be ready once approval comes.

Your next question comes from the line of Seamus Fernandez from Guggenheim.

So just a couple of quick questions, guys, and congrats on a great quarter as well. On the share market that you guys are seeing at this point in terms of the uptake in the practices that you're in. Can you just maybe give us a sense of directionally how the RHA fillers are performing within that bucket? And really where you're seeing the use of the product have its biggest impact?

And then the second question, just as we think about the opportunity for DAXI, obviously, your execution has been very impressive. What really would you say are kind of the biggest headwinds from a competitor perspective? Is it -- do you feel like it's pricing? Is it just feet on the ground? Obviously, I know you guys are going to be fully resourced to get after this. But given the launch of the fillers, it would seem like the opportunity is quite significant once you actually have the product available?

Great. Thanks, Seamus. So maybe I'll take the first part of the first one and then have Dustin comment on sort of the use of products and kind of where we're seeing it. I would break it down in kind of 4 buckets. We're still obviously early in our overall ramp and better understanding what the overall account adoption profile is going to look like. So we've got some accounts that are leaning in heavy. They like the product. They think it's the best product out there. And so we're getting a majority of their filler share because they've made the decision, either through the product, the relationship, the strategy, they now advertised pricing, the prestige approach that, this is kind of really going to be the main sort of workforce line of products for them.

The second group are those that have leaned in. They really like the product, but they're only going to give us so much share until our neuromodulator product comes into the market because they don't want to break up the bundle and incur higher pricing across the other products. And so in that, we are -- if they like the products, they will definitely use it, but they will cap limit the usage until we have their neuromodulator. We did have the next group of customers who are using it, and they found sort of where it fits for them independent of pricing. I like it for this, and here's where I'm using it.

And then we have some of those other accounts that have tried it for whatever reason, it's not the right product for them, either, "Hey, come back and talk to me when your neuromodulator is approved because the pricing, I don't want to break up the bundle. I like it here, but I feel I've got alternatives."

And so we've got a broad range, but obviously, with the performance that we've had now for 2 consecutive quarters, the strategy is working. The story is resonating. We're disciplined in sort of the accounts that we're going after that really see value in the prestige category. And so as we get further into the launch, I think we'll have a better sense for kind of how those buckets are shaking out. And then I think it has the ability to morph again once we have the neuromodulator in the market. I don't know, Dustin, if you want to talk about kind of where we're seeing product usage and more particularly?

Yes. I think you hit it on the head that there's variability, right? You've got some accounts using it more than the others. But what's nice is, while we're the first company to launch an entire range at one time, the halo framework for the technology is resonating. In fact that we are the most natural least modified hyaluronic acid allows the practices to have a nice story for consumers. I'd say they're deciding what is -- fits their practice best, whether it's 2, 3 or 4. And then once they get started with that, we've got an opportunity to expand. So I really think it varies based off of the needs of the practice, but we haven't found a situation where it just doesn't fit. There's opportunities for us to continue to grow. And even build on the foundation that we've started so far.

Yes. In terms of the headwinds and opportunity for DAXI, I mean we're going up against some formidable competitors who have long-standing relationships in the business. But again, I think we've stated our strategy. We're coming at it with leading products and services. We're going to be exclusive. We're going to deal with leading practices. So we expect that we'll continue to see our competitors try and create incentives for customers to put a lot of product on the shelf, to make it harder to pull our product, building in heavily with DTC efforts to drive more consumer awareness and demand.

But at the end of the day, I think that our strategy is different, and it's going to resonate with some customers and not all. But again, we're not trying to be everything to everybody either. And so we're encouraged by the traction we're seeing. I would also say that we're also seeing a return to sort of normal volumes, and this is a very healthy market. And so at some level, we're all winning in the marketplace out there. Procedures are growing, more consumers are engaging. So kind of everybody is benefiting from that lift, too. And so it's not necessarily just a zero-sum game either.

Your next question comes from the line of Terence Flynn from Goldman Sachs.

Great. I was just wondering, maybe if you could comment or speculate with respect to the timing of the manufacturing inspection, if you think that might occur this year? And then just broader, as you think about the recovery here in aesthetics, maybe you guys could tell us what you're seeing out there in the marketplace, maybe March trends versus earlier in the quarter? And then any update on how you're thinking about the international opportunity for DAXI?

Sure. Thanks, Terence. So first off, the inspection timing, again, we continue to expect that we'll be approved and on the market before the end of 2021. As I mentioned in my prepared remarks, we do expect that we'll receive an inspection date in the not-too-distant future. Again, if you look at the COVID numbers are trending down certainly in the Northern California area where our manufacturing facility is. The agency just recently, last week, put out updated guidance, which is our most comprehensive to date in terms of their stated goals about how they're going to approach things.

And based on our ongoing engagement with the agency and leveraging other resources, we continue to feel that we will be provided with an inspection date, again, in the not-too-distant future. And while typically, we wouldn't be making these comments given the unique COVID environment, we will announce publicly once we get a date from the agency. So we'll have that to be able to share. And then maybe I'll let Dustin talk a little bit about sort of the recovery trends and what we're seeing there.

Yes. I think overall trends in the aesthetic industry are always a bit complex, right? You've got seasonality from Q1 to Q4. You've got different pricing programs or loyalty discount programs that drive certain purchase behaviors. And so it's a bit complex to trend out and then layer on top of the COVID environment, it makes it even more complex.

However, as it looks to the recovery, looking at how well the market is trending, I think you're seeing that we reported volumes are up from our processing volumes. So that speaks to the health of the overall practice. Leveraging that data, we can see that practices are growing, not just in injectables. We talked about more live meetings. We went to the first live meeting in Miami, that was held. So live education has begun again as well as travel. You're starting to see increase in travel. So we feel like we're in a real good position for the recovery of the aesthetic market today.

Yes. And then on the international opportunity, we clearly think that the value story in the U.S. will play internationally as well. So we believe that this is a product that we can take into all international markets and drive real value and pick up sort of our fair share of the market.

Having said that, given the size of the U.S. market, the favorable pricing dynamics and our focus with the RHA fillers and HintMD platform, we really feel that it's the best return for us right now to focus our efforts in North America.

Going forward, we'll give more context and color because we certainly do plan to expand in other markets. Obviously, with our partnership with Fosun, we're heading down that path towards China. Canada is an obviously -- an obvious one for us given the contiguous nature in sharing of KOLs with the U.S. But we'll provide more of a comprehensive update later in the year, early next year with regards to our international plans, but we do plan to go global over time.

And your next question comes from the line of Annabel Samimy from Stifel.

I had a few. First, on RHA fillers, is there anything you can share in terms of reordering patterns? You gave us a nice outline of the various buckets of clients. But within those, do you have a reordering rate? On market growth that you commented on earlier in the market opening up and travel starting to sort of come back, I guess there's some commentary that there was extra disposable income because people are traveling less. Do you think this might have any impact going forward on demand in the aesthetics market?

And then finally, if you can talk a little bit about the therapeutics side. After the data in cervical dystonia and upper limb spasticity, it seems to be that the safest area of study are areas in which neuromodulators have already been validated. So I guess, does that lend any thoughts as to what your next move is here? Are you going to still explore any new avenues of study? Or are you going to stick with the areas where neuromodulators have been validated and anything to update on new programs there?

Thanks, Annabel. We'll try and take these off in order. So on the RHA filler side. It's just -- it's still a little early for us to provide context to the reorder rates because when they started on board, how they purchased it, some lean and early, some kind of use it and they want to see a little bit before they make their decision. So it's early. Clearly, with the growth we're seeing in Q1, which is historically a seasonally slower quarter, we're encouraged. And as we feel like we've got a good handle on that information, we'll be happy to share, but I think it's just still a little bit too early for that.

In terms of the market growth, yes, I think as Dustin mentioned, we're seeing good, healthy trends overall, for sure. And I think some of our competitors are reporting a very healthy market as well. Certainly, extra disposable income isn't going to hurt that and would certainly be a tailwind. But if you think about it, we're much more focused on a select part of the market. We're going after these higher-end prestige practices, and they're probably a little less susceptible to disposable income. But clearly, there's a very healthy trend right now in the aesthetics market.

There still are marquee pockets that are a little slower than others that are taking a little longer to open up where certainly, for example, like New York City, a lot of people sort of got out of the city. But we expect that those will also start to rebound in a healthy way as we kind of move into the middle part of the year. But again, based on the accounts that we're calling on, we're seeing very healthy procedure volumes there.

And then last one on the therapeutic side of it, given the plantar fasciitis results, where we saw an encouraging trend, but not a statistical difference in terms of the improvement in pain there, we sort of huddle back up. And we think our best return is to go after those indications where there is already an established market. The duration benefit that our product offers is pretty clear. And in those markets, there's also significant pharmacoeconomic savings. So we're in CD adult upper limbs spasticity. Obviously, we've historically talked about migraine due to its size is something that if it's a win. But I think our approach right now is going to be more focused on those established market indications. Obviously, as we mature in that market, we might evaluate some other alternatives. But right now, that's where our focus is.

(Operator Instructions) Your next question comes from the line of Balaji Prasad from Barclays.

So firstly, on biosimilar BOTOX. So your partner commented this morning that they've submitted their FDA data package. What does this mean in terms of submission time lines? And any updated thoughts around there? And on the same topic, it's been a while since we had an update on the topical biosimilar program, topical program. So what steps are needed to be done before you can consider moving that to Phase I?

Thanks, Balaji. Maybe I'll take the second one first and then ask Abhay to comment on the biosimilar program. But on the topical side of it, we've really focused our efforts on the injectable formulation because that's where we've got the clinical data to support it, a healthy, differentiated product profile. And so we're leaning in on that. Obviously, with all the work that we did in the topical program, that is something that we may go back and revisit as we go forward. But right now, our primary focus is on DaxibotulinumtoxinA for injection. So if and when we lean into that a little bit more, we'll certainly come back to the investor community and provide an update.

And then, Abhay, you want to take the biosimilar question.

Yes. So Balaji, since our last initial bio advisory meeting with the FDA, we continue to make progress and with great cooperation from our partner, Viatris. We are making steady progress towards the biochemical characterization work and have adequate data to share with the FDA. And with the filing of the recent book, our focus is on seeking agreement on the Phase III program. And after our meeting with the FDA, we'll be in a position to assess more in terms of timings for IND and approvals.

Great. If I could just have a follow-up on RHA 1. So you gave expectations around getting an approval in H2. So realistically, could we see a launch at the end of this year for -- with RHA 1?

Yes. So TEOXANE, our partner, has already filed the submission on the RHA 1. Again, we don't control sort of that process. They're the ones that drive the regulatory process. But based on that filing and the time line, we've indicated that we would expect an approval sometime in the second half, assuming everything is straightforward there. And so that's what we're planning for, would be an approval and introduction in the second half of this year.

Your next question comes from the line of Tim Lugo from William Blair.

Congratulations on all the progress in kind of difficult macro environment, which is hopefully improving. But -- and thank you for talking about communicating with The Street about the inspection date. So when can you share the data with us? I guess, how long from the date of inspection, if it is clean? Do you expect the FDA action? Is there any sense you're getting from your interactions with the agency, is it roughly weeks? Is it months?

Yes. So Tim, on that, I think as we said, we typically wouldn't be commenting on this. But given the unique environment, to your point, we thought it was appropriate to level set everybody on that. So I don't know that it's appropriate to be getting into speculating kind of time frames post inspection and everything else. Again, we are prepared. We're ready to support an inspection, as we stated. We would -- we're hoping that we'll get an inspection date in the not-too-distant future. And once we do, we'll communicate that. And then the process will take its course from there.

Okay. Understood. And given the HintMD product offering, are you able to see -- or what's kind of a rough penetration you're getting right now in accounts with your filler line? You kind of gave us the buckets earlier, and it seemed like maybe the second bucket of those who are using RHA and happy with it and kind of waiting for the neuromodulator to come, so they don't have issues with their bundle, it seems like those would be people that kind of rapidly increase the use of both products once available.

Yes. Well, I think with the HintMD system, it's still early, recognize that there's not 100% overlap between our HintMD accounts and our pillar accounts. So we're in a subset of our filler accounts with the HintMD platform. And again, it's just -- it's still early to kind of talk about trends and market share and everything, given that we've got a wide range, and some people are still working their way through their process of trying to figure out where it does fit in the practice. So I think as we get more towards the back part of the year, we'll have better metrics and more data that will help sort of inform our view on this and what we're comfortable sharing.

Your next question comes from the line of David Amsellem from Piper Sandler.

So on the RHA 2, 3 and 4, and I apologize if I missed this in your prepared remarks or other questions. Can you just talk about which of the SKUs, you're seeing the greatest amount of usage? And just talk about, is there any sort of one that predominates or has gotten out of the gate the fastest? So that's number one.

And then number two is on RHA 1. I know you talked about it being filed and the potential approval. I guess, whether you think RHA 1 adds to the overall portfolio? And specifically, where does it make the franchise more competitive? Or what competitor products is the most analogous to in terms of where you think it can gain a footprint -- a foothold, if you will?

Thanks, David. I'll maybe provide a couple of framing comments and then ask Dustin to add a little bit of additional color. In terms of the mix of the products, we did not cover that in the prepared remarks, but it's relatively evenly split between all of them. And again, what's interesting is you don't find a consistent pattern where all accounts use the same amount. Some people will say, I like 3 for this area or I like 2 for this area. And it can vary based on kind of how the practice approaches things. What look they're going for, their mix of patients? Are they younger, they older? And so right now, it's pretty evenly split. Over time, I would imagine that will separate a little bit.

RHA 4 being sort of the heaviest of the gels is used deeper. And so in cases, you sometimes see that when used, there's more volume that's used. Whereas 2 being a little more superficial. It's a really nice product and that it moves very naturally and maybe not as much on a per patient, but might have sort of broader adoption on that.

And then on the RHA 1 side of things, it will be a smaller market. It's for sort of perioral lines. So sort of fine line is very superficial. But there's not really another product out there right now that is as unique as it is. And so while it will be a smaller part of the market, it's a differentiated offering that will certainly, I think, enhance the different products that we can offer. And frankly, will give us a foot in the door too for some accounts where if they don't feel like the 2, 3 and 4 give them something that they can't do today, it will do that.

And I don't know Dustin, if you want to add color on what's closest to our RHA 1, and then any other insights on 2, 3 and 4?

I think you hit it pretty well about our 2, 3 and 4. I think that's the uniqueness of launching them all at once. It allows us to create an opportunity for practice to utilize what fits best for them versus taking one product and kind of trying to get them to shove it down you have to use this product. So I do think, over time, 4 will likely be the larger product just based of off pure volume. But we've been very happy with how 3 and 2 have held up as well.

On RHA 1, it's a bit unique. It has the same technology platform as RHA 2, 3 and 4 being the least modified, most natural. It also has the lowest amount of cross linked RHA, lowest concentration, which allows the product to be used a bit more superficial than anything that's on the market today. That's what we're hearing from some of our colleagues in Europe. While it will be indicated in the United States for perioral lines, specifically, there's other areas in which it's being utilized as well.

So it should be a nice complementary addition. To Mark's point, that's a lower volume product. You're not going to use multiple syringes of that type of product. And so it will just add that rounding out. And it also stands alone is something that isn't kind of available today. What they use for some of those products or the main one were probably glabella is whereas probably they're using the most superficial products and then some other products like (inaudible) and others, I believe, for using in some of the superficial areas as well, too. But we feel like it will add a nice halo as well as being able to leverage what is currently resonating in an innovative technology platform being least modified.

And your next question comes from the line of Jacob Hughes from Wells Fargo Securities.

Mark, just Allergan Aesthetics announced a deal today to add to their offerings. Is there any additional areas you're looking to add to on an organic basis over the next 12 months? And then thank you very much for the additional disclosure on the inspection. Based on your interactions with FDA, has there been any additional feedback on a potential label?

Sure. Thanks, Jacob. So first, in terms of other areas, if you go back a little over a year, we were just a neuromodulator company, right? And so we've recognized that to effectively compete in the facial injectable market that having a leading filler and a services offering, which we acquired in HintMD, was going to be critical to advancing this prestige strategy. Also, when we look at the overall facial injectable market, that's a sales force -- that the same sales force that sells all those products. As soon as you start moving into other areas, skin care, breast, devices, you're talking about a different sales force.

So I think we feel right now, we've got the right assets to compete. We really like the facial injectable category. These are $1 billion-plus categories in the filler area and in the neuromodulator area in the U.S. alone. And so we feel we've got enough on our plate right now to focus and execute. And this year will be very important that we execute well. Certainly, over time, we'll continue to be open-minded. If we think that there's different products that would further advance what we're trying to build here. But for now, we sort of like how we're positioned in the facial injectable category.

And then the second one, in terms of FDA and any kind of feedback on that side of it, we continue to feel good with the discussions. I'd point you back to our scripted comments, where we are hopeful that we'll get an inspection date in the not-too-distant future and that we'll be able to turn that around and get the product on the market shortly thereafter.

Okay. Got it. And FDA given any feedback on the label...

Sorry, I missed it. Yes. So on the label, when we announced that we were not going to get approved on our PDUFA date of November 25, what we basically stated was that everything else had already been worked through with the agency, CMC, clinical, preclinical, and that the only outstanding item at that point was the on-site physical inspection as part of the PAI. So that's the last piece that we need to complete in order to get the product approved. And so by default, we feel good about where we are with all the other pieces.

(Operator Instructions) Your next question comes from the line of Vamil Divan from Mizuho Securities.

Maybe just a follow-up on a couple of topics you guys touched on. One, I guess, would be the migraine opportunity on the therapeutic side. I know for some time you guys have been saying it's sort of a matter of when you pursue that as opposed to if you can pursue it. I guess I'm just wondering what you're waiting for, what's going to just make the decision to move forward? It's obviously a pretty large market, but also competitive and maybe more competitors coming. So I think you want to get to the market sooner than later. So just maybe you can share your thoughts on how you're thinking about that opportunity?

And then the other one, just maybe more as you think about DAXI and sort of the go-to-market strategy, especially on pricing. I'm just curious if there's anything new or different in how you're thinking about? I know you've talked about potential premium product and may be a premium price, maybe anything more you could share there, given how this has been delayed a little bit, there's also a very evolving economic backdrop that you've been launching into, so any updated thoughts there would be helpful?

Yes. Thanks, Vamil. So first, on migraine, if you wind back your (inaudible) to a little over a year ago, we didn't have any products in the market. We were supporting 3 different clinical trials independent of our aesthetics and the therapeutic side with planar fasciitis, cervical dystonia, upper limbs spasticity. So frankly, it was a little bit of a capital allocation and where we were with these different things. And so we had to make choices about where we thought we could generate the best return. And so that was really the biggest influencer. We share your view that certainly, the migraine market is very large in size. And therefore, the sooner you get going, the sooner you kind of lock it, but it was really more of a capital allocation decision. And so for this year, given the launch of our aesthetics franchise and the importance of getting that right, we said migraine is not something that we're going to advance this year. And that it's not an if, it's a when.

And so obviously, that's going to be one of the key areas that gets discussed as we kind of move into the planning cycle for 2022. We'll also get the benefit of our neuromodulator product being in the market and getting some feedback on overall performance there. So I think that's something that will help us as well.

So stay tuned on that. We do like -- our therapeutics franchise is now starting to come into view. We're starting to move out of that clinical phase and are focused on commercial. So we're excited that we think we'll finally be able to start getting some traction and credit for the investments that we've made there.

On the DAXI pricing, nothing really new there. We've historically talked about the fact that we've invested hundreds of millions of dollars to bring true innovation into this category. And as a result, based on the duration profile and our market research, we believe that we can charge a premium, our physicians will pay a premium, and they can charge their consumers a premium too and that everybody wins in that stack.

Also, we're not trying to be everything to everybody. Our strategy of prestige category means that it will work for some consumers and some practices and not for everybody. But we think within that overall sort of pricing stack that physicians will be able to make more money, consumers will pay more and that we have an ability to charge more than the marketed products today. So obviously, more to come on the pricing details once we launch it in the market.

And your next question comes from the line of Serge Belanger from Needham & Company.

First one on the RHA fillers. Mark, I know you don't want to give guidance for this product at this time, but you had a really solid quarter in what is normally a slower weak seasonal quarter 4, the aesthetics market. So can you just give us an idea of what is the usual step down from 4Q to 1Q in aesthetic procedure volumes? And whether -- how much more depressed it was because of COVID? And how we should think about those revenues going forward?

Yes. So on the filler side, I mean, I guess it's a little hard search because you've got some headwinds and you've got some tailwinds. I mean, tailwind we're in launch mode, right? So we have the ability to grow a little bit just by opening up new accounts, right, at a more rapid pace, given the fact that we have new products in the marketplace.

As you pointed out, the historical trends, Q4 to Q1, I mean, it could be down as much as 20% from an overall procedure volume standpoint. But we've also got things that are starting to open up with the pandemic. So we're seeing some benefits there as well. And so I just -- it's hard. We're obviously working our way through our funnel, and we're also targeting those accounts that are more amenable to leaning in. And as we work our way through that and as we go towards the back part of the year, it's possible that, that gets a little harder as those folks there.

And then certainly, once our neuromodulator comes in, it's going to create yet another new opportunity for people to engage. So I know it's a big non-answer. But we were very pleased with the performance in Q1, again, it sort of outpaced our internal expectations. It's still early. We're cautiously optimistic. We would expect that given we're still in the launch phase that certainly, Q1 to Q2, that revenue will be up, and that we'll continue to drive more account activations and that we'll get the benefit of the reorder rate. So stay tuned. And again, we're happy to share some of these metrics once we have confidence that we've got enough data to tease out some trends.

Okay. Just a quick one on HintMD. As you expand your presence there, what are you displacing? And with the release of the next-gen platform, does that change the economics at all on what you can capture from the growing processing volumes?

Yes. So in terms of who we're displacing, I mean there's a lot of different credit card processing companies that are out there. So it's not like there's 3 or 4, and we're fighting the share battle. So in some cases, they might have a square device that they're using or it might be a device that's provided by a third-party credit card reseller. And so I think it's a mix of who we're displacing. And at some level, that helps a little bit because there's not sort of an organized large company out there that we're battling over and we have a bit of an unfair advantage, given our domain expertise because a lot of these companies sell credit card systems that go into a variety of different industries, and they aren't necessarily specifically designed and developed for it.

Right now, until we launch the next version, which has payment facilitator capabilities, we're really competing right now on a little bit competitive credit card pricing. So some people are saying, "Hey, I like where this is going, if you can give me competitive pricing, I'm happy to kind of get started with you."

Once we turn on the payment facilitator, then we have an ability to participate in a little bit more of the credit card stack from a revenue perspective. But we also, more importantly, will be able to turn on some functionality around -- against subscriptions, white-label loyalty, data analytics. And I think that's when the value of the platform will be more clear to some of these practices. So I would expect as we move through that back part, it will be some of these services that we start turning on. We made sort of the conscious effort not to try and do any of that until we have this next software version ready to go, that's a payment facilitator. Because on the current platform, it takes a lot of hand holding, and we think it's just not scalable. So once this new software upgrade comes in, we think we'll be better positioned for that. So again, we're encouraged to get that out there in beta right now and seeing some good results.

And your next question comes from the line of Doug Tsao from H.C. Wainwright.

Chris Bialas on for Doug. So I just wanted to see if I could get a little bit more color on the Chinese partnership. When do you -- what's your time line for this? When do you expect the study to conclude and potential launch? And as a follow-up, I was wondering, are you just planning for aesthetic indications or are you also thinking about international therapeutic indications?

Thanks for the question. Abhay, why don't I turn it over to you to answer?

Sure. Yes. So Chris, a great question on the Fosun side. We are really excited about the advancement of our program into clinicals with our collaboration in 2 indications of glabellar lines and cervical dystonia, both the clinical trials for GL and CD are run by Fosun, of which, we support the partnership. And so we will inform you about the trial completion dates and the progress as we go along further in the clinical trials program. With regards to other indications, at this point, we only plan to initiate our program for glabellar lines and cervical dystonia.

There are no further questions at this time. I'll turn the call over back to Mark Foley.

Thank you, operator. In the coming months, we plan to virtually attend the William Blair & Goldman Sachs Healthcare conferences. We welcome your requests for meetings at these events or directly through us. Feel free to reach out to Jessica if you'd like to schedule some time. With that, I would like to thank all of you for participating in today's call.

This concludes today's conference call. You may now disconnect.