Revance Therapeutics, Inc.
Q4 2015 Earnings Call Transcript

Published: 3 Mar 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to Revance Therapeutics 2015 Fourth Quarter Financial Results. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference Ms. Jeanie Herbert, Senior Director of Investor Relations and Corporate Communications for Revance. Ma’am, please begin.

[Jeanie Herbert:]

Thank you, Vince. Joining us on the call today from Revance is President and Chief Executive Officer, Dan Browne; and Chief Financial Officer and Chief Business Officer, Lauren Silvernail. Earlier today, Revance released financial results for the quarter and full year ended December 31, 2015. If you have not yet received this news release or if you would like to be added to the company's distribution list, you can do so on the Investor Relations page of the company's website at www.revance.com. During the course of this conference call, Revance’s management will make forward-looking statements including, but not limited to, statements relating to Revance’s 2016 financial guidance, clinical development of our product candidates, business strategy and goals, plans and prospects, the markets in which we compete, potential product candidates and benefits of our current and future product candidates and our technologies, regulatory risks and ability to obtain regulatory approval, and uncertainties in future performance. These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include factors the company describes in the section entitled Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the SEC on March 4, 2015 and subsequent quarterly reports on Form 10-Q, and current reports on Form 8-K. Revance cautions you not to place any undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations. I will now turn the call over to Dan Browne. Dan?

[Dan Browne:]

Thank you, Jeanie. Good afternoon, and thank you for joining our fourth quarter and year end 2015 conference call. Last year we initiated and reported on a number of significant clinical trials establishing Revance as a highly viable future competitor poised to enter and redefine the $3 billion neurotoxin market. We executed on our plans and delivered positive clinical results for both investigational drug candidates RT001 topical and RT002 injectable. If you’ve been to our website, you may have noticed we have refreshed our corporate branding to reflect our broader aesthetic and therapeutic positioning as our new tagline asserts, Remarkable Science Changes Everything. Enabled by our novel TransMTS peptide delivery technology, we are out to change the landscape of the neurotoxin market. We plan to provide physicians and patients the first differentiated botulinum toxin in nearly 30 years. We currently have four active clinical development programs well underway targeting both aesthetic and therapeutic indications. We see many more opportunities on the horizon as we work towards our goal of becoming a global leader in both aesthetic medicine and underserved therapeutic specialties. On our call today, I'll first cover our recent business highlights, Lauren will review the financials and 2016 guidance and then I'll close with our clinical plans before opening up the call to your questions. One of the most encouraging highlights in 2015 was the positive six month results achieved in our BELMONT Phase 2 active comparator trial for glabellar lines. In the study, RT002 demonstrated longer duration than BOTOX cosmetic and appeared to be generally safe and well-tolerated. The data showed RT002 achieved its primary efficacy measurement for all three doses at four weeks and demonstrated six month duration of effect. We saw zero ptosis for both the 20 unit and 40 unit doses. Efficacy results were aligned and supported by both investigator and patient assessments. The efficacy results were not simply a dose response as our 20 unit outperformed BOTOX 20 units particularly on the measurement most important to patients, none or mild wrinkles. On this clinically meaningful endpoint of none to mild wrinkles at most time points RT002 40 units was statistically significant versus BOTOX. About a third of patients treated with RT002 40 units still had none or mild wrinkles at six months compared to the same results at only four months for BOTOX. And finally, RT002 showed better efficacy and 2 point improvement than BOTOX at the key efficacy time point week four, all with better durability and what appears to be excellent safety. Although some have speculated that a higher dose of BOTOX might result in longer duration, published evidence by doctors Jean and Alastair Carruthers, two of the foremost experts in neurotoxins shows that a higher dose of Botox does not lead to meaningful longer duration. To-date, none of the commercially available botulinum toxins have demonstrated in published medium duration of six months. While it may seem obvious to most of us, seriously, who looks forward and just can’t wait to being injected or to greater frequency of injection, market research has shown that six months of duration would be a substantial improvement over commercially available botulinum toxins. It is meaningful to physicians and to patients alike. We are now busy preparing for an end of Phase 2 meeting with the FDA. The six month BELMONT data has been accepted for a late-breaking research presentation at this week’s annual meeting of the American Academy of Dermatology in Washington D.C. It will be presented by Dr. Jean Carruthers, the lead BELMONT investigator on Saturday at 1

[Lauren Silvernail:]

Thank you, Dan. Starting with our cash and investments balance, we ended 2015 with $254 million. Our operating cash burn was approximately $18 million for the fourth quarter and approximately $65 million for fiscal year 2015. At this point, we believe we have more than two years of cash and investments on hand. Turning to the P&L, consistent with the financial guidance issued during our November 15 earnings call, non-GAAP operating expenses for fiscal year 2015 were $58.2 million. Non-GAAP operating expenses exclude depreciation and stock-based compensation. G&A expenses for fiscal 2015 increased to $25.1 million from $19 million in 2014 due to increased personnel, legal and other administrative costs. Fiscal year 2015 G&A expense included stock-based compensation of $5.9 million. R&D expenses for fiscal year 2015 increased to $47.5 million as compared to $33.4 million in 2014, primarily due to our having four clinical trials underway. Fiscal year 2015 R&D expenses include stock-based compensation of $6.5 million. Net loss for the fourth quarter was $22.1 million and our year-end net loss was $73.5 million. Our common shares outstanding as of February 26, 2016 were $28.4 million. Our fully diluted shares outstanding including issued warrants and options not on a Treasury basis were $31.4 million at the end of 2015. Turning to our guidance for this year. We anticipate our cash burn for 2016 will be in the range of $105 million to $115 million. We expect 2016 non-GAAP operating expense to be in the range of $95 million to $105 million, excluding depreciation of $2 million to $3 million and estimated stock-based compensation of $15 million to $17 million. With additional clinical trials in the plan, we anticipate 2016 non-GAAP R&D expense to increase to the range of $72 million to $78 million, excluding depreciation of $2 million to $3 million and estimated stock-based compensation of $8 million to $9 million. Our fiscal year 2015 weighted average shares outstanding was $24.3 million. For modeling purposes and assuming no material issuances of equity, we expect our 2016 weighted average shares outstanding, excluding unvested restricted stock will be approximately $28 million to $29 million. And with that, I will turn the call back to Dan.

[Dan Browne:]

Thanks, Lauren. As the innovator in the neurotoxin field, we continue to focus on three things

[Operator:]

Thank you. [Operator Instructions] Our first question is from Ken Cacciatore of Cowen and Company. Your line is open.

[Ken Cacciatore:]

Hey, guys. Congratulations on all the progress to date. Just a question on 001 after you complete the Phase 3 and with the assumption that it’s successful, can you just discuss the process going forward, given the draft guidance and maybe a little bit of discussion of any changes in the community or at the FDA in terms of that draft guidance and then maybe also a re-explanation or just an update on your EMG objective measurement, just talk about what you are doing differently and how you’re measuring it? And then potentially about timing, from that point forward in terms of kind of registration? And then the last question would be for the 002, can you talk about if you’re successful in cervical dystonia, exactly where we would potentially be going in terms of other therapeutic studies where we could expect by the end of the year, or maybe just talk aloud about direction you're looking to go and some of the different indications? Thank you.

[Dan Browne:]

Ken, thank you very much. Quite a few questions. I'll hopefully get through all of those and if I don't, if I miss any, please, we’ll follow up again. I think that we’re really excited about this Phase 3 study and the next step after completion, assuming if successful is to really have a dialog with the agency on the outcome, the use of this composite assessment at rest and as you mentioned to integrate the EMG. This is a quantitative assessment to measure the underlying amount of muscle paralysis to really become the next generation assessment to, in many ways, sort of look at that, our endpoint of app contraction and truly have a quantitative measurement. So, we’d like that to be a very data driven discussion, provide that to the agency, we have a very open form of correspondence. So that would be the next step. If there is any learning, we would certainly incorporate that into the next trial, but we’re really excited about this EMG assessment. It really is the next generation and as you look at facial aesthetics to look at changes in muscle function, whether that toxin was delivered via needle or whether it was delivered topically through the skin. As far as other indications for RT002, I think that the CD indication becomes the workhorse indication, much like glabellar. Once you’ve demonstrated safety, efficacy and duration, our working hypothesis is that that mechanism should hold true in every other botulinum toxin indication. And what we’re going through now is an analysis of which indication would really benefit from longer duration or potentially greater safety if you can really address this diffusion issue. We don't have a specific guidance to give you on today's call but we’re very active in looking at indications that are currently on label for the existing botulinum toxin and potentially new ones. Our challenge is not what we work on, I think there is general acceptance that the four indications both topical and injectable make sense, what are we going to add on chronic migraine headache, neurology there is just an endless number of exciting potential and we think RT002 and RT001 really are the innovation that’s been lacking for nearly 30 years and we’ll prioritize those and move forward with ones that makes the most sense.

[Jeanie Herbert:]

Next question? Vince?

[Operator:]

Our next question is from David Amsellem of Piper Jaffray. Your line is open, sir.

[Michael Chang:]

This is Michael on for David. Just a few quick ones. On RT001, can you maybe talk about the details of the second HH trial that you guys are running besides being larger are there any other major changes in design? Then for RT002, maybe you can just give us some color in terms of what you expect from that end of Phase 2 meeting with the FDA later this year and maybe some details on the design of the Phase 3. Thanks.

[Dan Browne:]

So we haven't totally finished the current HH study Michael, but what we would do is look at that data and we would look at the use of the HDSS scale and we will look at the other patient recorded outcome instruments. As you know there are other sponsors looking at different scales, we’ll look at the indication and move forward not only with the larger trial but look at what has been done with neurotoxins and other molecules and certainly have those communications with the agency as far as the most appropriate study to do to allow us to move into Phase 3. So you'll see much has been done before looking at a quantitative assessment which is gravimetric and eight patient reported outcome, it could be one or two those outcome measurements in the next Phase 2 trial. As far as the end of Phase 2 meeting, we would look at essentially using the current draft guidance for neurotoxins in glabellar lines as the foundation using our data and what we’d like to do is come out of that end of Phase 2 meeting with a very clear roadmap of what we need to do in Phase 3 to have a strongest possible label once approved using a composite endpoint as the guidance suggests and also being able to look at what we need to do to confirm on our duration. So we have the most compelling label on duration. Right now the neurotoxins are labeled up to four months, we really want to do as part of that discussion with the agency make sure that we’re capturing six months or longer duration that is meaningful duration and we really want to work with the agency to get that into our labeling and much of the thinking would come out of the end of Phase 2 meeting and it would be up to us as a sponsor to demonstrate that as part of our Phase 3 program.

[Jeanie Herbert:]

Vince, got our next caller? All right, well thank you for joining us for our conference call. Good night.