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spk03: Welcome to the Reven's Therapeutics Second Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask questions at that time, please press star followed by 1-1 on your touchtone phone. As a reminder, this call is being recorded today, Tuesday, August 9, 2022. I would now like to send a conference call to Sarah, Head of Investor Relations and ESG for REV. Please go ahead. Thank you, Bella.
spk02: Joining us on the call today from REVAN are Chief Executive Officer Mark Foley, President Dustin Stoops, and Chief Financial Officer Toby Schilke. During this conference call, management will make forward-looking statements including statements related to the regularity of the process and potential approval for daxibotulinum toxin A for injection. In globato lines and in therapeutic indications, potential indications for RO2 redensity, the effects of RO2 collection on the opal platform, consumer preferences, the benefits to us, practices and patients of our products and services, our financial performance, 2022 guidance, expected cash runway, strategic priorities, and capital allocation plans, our markets and revenue opportunity, our potential growth and our business strategy, planned operations, and commercialization plans, our actual results, and the time that events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include factors the company describes in the section titled Risk Factors in our quarterly report on Form 10Q filed with the SEC today, August 9, 2022. 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. With that, I will turn the call over to Mark Foley, Chief Executive Officer of Revance. Mark?
spk08: Thank you, Jessica. Good afternoon, everyone, and thank you for joining our second quarter 2022 financial results conference call. We're very pleased with our performance in the second quarter, highlighted by our best RHA quarter to date and solid account growth across our pillars and overall relational commerce platform. These results reflect the continued success of our launch and also the strength and resilience of the facial injectables market. We're also excited to announce the launch of RHA Redensity, the first and only FDA-approved dermal filler for dynamic perioral or lip lines. Redensity is the latest innovation to our RHA collection, which now includes four distinct fillers that meet a broad range of consumer and practice needs. As a result of the progress we made in the first half of the year, including the resubmission and acceptance of our VLA for Daxibotulinum Toxinate for injection and our strong commercial traction, We look forward to our September 8th PDUFA date and the prospect of entering the new growth phase. As a reminder, the FDA designated our BLA as a Class 2 resubmission, which has a six-month review period and includes a required re-inspection of our manufacturing facility. As we previously communicated, we did not intend to provide details regarding our ongoing interactions with the agency. However, in light of the information we received this morning regarding the likelihood that the agency could satisfy the FOIA request on our manufacturing inspection prior to our Purdue today, we would like to provide everyone with a regulatory update so that all investors have access to the same information. First, I'm pleased to report that the FDA completed their inspection of our manufacturing facility from July 11th to July 15th. Next, the corrective and preventative actions completed in response to the five observations from the previous Form 483 that we received in July 2021 related to our pre-approval inspection have been reviewed by the FDA and are considered closed. Lastly, at the conclusion of the reinspection of our manufacturing facility in July, the agency provided us with a Form 483 that included three observations. For transparency and reference, we've included a summary of the observations in our earnings press release in Form 10-Q. A couple of points I would like to make about the three observations on Form 483 we received on July 15, 2022. First, it does not include any of the five observations that were outstanding from our previous Form 483 related to our pre-approval inspection. You will recall that these observations were the focus of our resubmission and, as previously stated, are considered closed. Second, we are confident in our responses, which we have already provided to the FDA, and I'm proud of our team for the timely turnaround. We continue to expect a decision from the agency by our reduced date of September 8th, which is just one month away. Obtaining approval remains our top corporate priority for 2022, and our team is prepared and eager to launch our flagship drug product once approved. As a reminder, upon approval, we will have the opportunity to expand our access to the $3.2 billion U.S. facial injectables market, which according to the latest Decision Resource Group report, includes neuromodulator sales of $1.7 billion and dermal filler sales of $1.5 billion. Further, according to the American Society of Lastic Surgeons, neuromodulators and dermal fillers remain the top two most performed minimally invasive aesthetic procedures. Historically, the market has grown in high single to low double digits and has held up well against macroeconomic headwinds, such as the economic recession in 2008 and 2009. Even with the COVID pandemic in 2020, we saw a V-shaped recovery in the following year when practices reopened. Over the mid to long term, the U.S. market is expected to grow at a compound annual growth rate of 8% to $4.7 billion by 2026. Given the current economic environment and questions surrounding its potential impact on the facial injectables market, I'd like to make a few comments. To date, based on the accounts that we are calling on, we haven't seen an impact on activity that would be beyond typical seasonality trends. You'll recall that the second and fourth quarters are usually the busiest times of the year for procedures compared to the first and third quarters. However, should macroeconomic factors begin to impact consumer spending in our target accounts, we take comfort in the resilience of the facial injectables market prior to downturns, and more importantly, are uniquely positioned in the market versus other manufacturers. First, we are still in our launch phase with the RHA collection. Second, we are bringing new innovations to the market, including today's launch of RHA Redensity and the launch of our next-generation neuromodulator for PRUDE. And third, we have a differentiated go-to-market strategy that is focused on the Prestige segment. Now let me turn to therapeutics. The approval of daxibotulinum toxin A for injection for glabellar lines would allow us to unlock our opportunity in multiple movement disorders. We have a strong pipeline in this category with our completed Phase III program for cervical dystonia and our completed Phase II program for upper limb spasticity. The clinical data in both of these programs demonstrated dacribotulinum toxin A for injection efficacy and median duration of effect of up to 24 weeks. We will be ready to file supplemental BLA for cervical dystonia shortly after the FDA's approval of our long-acting neuromodulator in glabellar lines. As a reminder, cervical dystonia would be our entry point into the over $900 million U.S. muscle movement disorder category that is expected to grow to $1.4 billion in the U.S. by 2026. In summary, we feel very good about the growth of our base business, our expanding RHA collection, and our pipeline in aesthetics and therapeutics pending approval of daxibotulinum toxin A for injection for glabellar lines. With that, I'll turn the call over to Dustin, who will cover our performance in the second quarter. Dustin?
spk09: Thank you, Mark. We're very proud to have delivered our best quarter of RHA sales in Q2, totaling $25.5 million, a 50% increase year over year. This brings our first half 2022 RHA sales to $46.3 million and cumulative sales since launch to over $130 million. These are solid results independent of a neuromodulator, telling us that RHA is a product that stands on its own. During the second quarter, we saw healthy demand and productivity across our accounts. Awareness and adoption continue to be driven by our targeted sales and marketing initiatives, world-class training and education programs, and most importantly, high injector, and consumer satisfaction. At the quarter end, we have over 4,000 accounts across our portfolio, representing a strong race of practice partners, all anticipating the PDUFA date of September 8th for Daxibotulinum Toxin A for injection. We are also excited to continue to bring new innovation to market with the launch of RHA Redensity. Redensity was approved by the FDA through our partner, T-Octane SA, and is the first and only FDA-approved dermal filler for both superficial dermal and dermal injection of perioral rites or lip lines. It has the most stretch compared to RHA 2, 3, and 4, and the shallowest injection depth, allowing it to adapt to the highly dynamic movement areas of the lip. With Redensity, injectors can soften or fine-tune the appearance of lip lines, a challenging area to treat prior to the introduction of Redensity. And like the rest of the RHA collection, the product is designed to closely resemble the natural HA found in the skin. Results look natural and can last through 12 months. With Redensity now in the market, we have four dynamic formulations of fillers that offer a wide range of injection depths across the continuum of consumer needs. RHA Redensity for fine-tuning lips, RHA 2 for softening facial lines, RHA 3 for refined smoothing of wrinkles and folds, and RHA 4 for natural volume for severe folds and deeper deficits. In fact, we are the only company to have introduced four fillers to market within two years. Consistent with the launch of RHA 2, 3, and 4, we completed Preview, our early training and education program with practice partners, and we're very encouraged by the positive feedback we've received. Injectors said Redensity is different than anything they have had on their cells, it's easy to inject, and its ability to correct very fine lines around the mouth fills the void in existing products. They believe the product is essential and are excited to have Redensity complement their filler lineup. Consumer feedback has also been very positive. They love the smooth and natural look with Redensity. RHA Redensity is also currently being evaluated in a clinical trial by our partner, Tioxin SA, for the correction of infraorbital hollows or tear troughs. This is another delicate area of the face that is challenging to treat, and we're excited about the prospects of a potential label expansion of RHA Redensity. Turning to Opal. We continue to make progress in driving adoption and building membership capabilities during the second quarter. Gross processing volume, or GPV, for Q2 was $166 million of 23.2% year-over-year. On a trailing 12-month basis, GPV totaled over $600 million at the end of Q2. As a reminder, we believe GPV is an important indicator of our future revenue potential in the U.S. aesthetics payment processing market. an opportunity that exceeds half a billion dollars per year. We will continue to focus on new features and account growth for OPAL to not only deepen our relationships with our practice partners, but also unlock additional revenue potential for events. In summary, we feel really good about how our aesthetics portfolio is poised for additional growth, particularly with the addition of Daxi Botulinum Toxin A for injection in Gabella Line, if approved. Our attention is focused on our September 8th PDUPA date, and we are very much looking forward to introducing a differentiated performance profile of our next-generation neuromodulator to the U.S. aesthetics market. Consistent with our approach to the launch of the RHA collection, the commercial launch of Daxibotulinum Toxin A for injection will be preceded by our preview program with elite practice partners. Finally, we recently participated in the 2022 Toxins International Conference, where we presented data on daxibotulinum toxin A for injection that included new data demonstrating the unique properties of our novel excipient peptide. Our poster showcased how the positively charged excipient peptide can bind directly to the core neurotoxins and can enhance the binding of the neurotoxins to intact neuronal cells. The new data underscored Daxibotulinum Toxin A for Injection's innovative formulation and our commitment to the advancement of research of neurotoxins in both aesthetics and therapeutic indications. With that, I will turn the call over to Toby to cover our second quarter financials.
spk05: Thank you, Dustin. Total revenue for the second quarter of 2022 increased 51% from the same period in 2021 to $28.4 million, primarily driven by increased sales of the RHA collection. Revenue for the second quarter included $25.5 million of product revenue, $1.7 million of collaboration revenue, and $1.2 million of service revenue. Turning to operating expenses. We continue to execute on our corporate priority of disciplined cash capital allocation, in addition to our ongoing cash preservation measures. GAAP operating expenses for the second quarter were $86.2 million, compared to $89.1 million for the same period last year. Excluding depreciation, amortization, and stock-based compensation, our non-GAAP operating expenses were $62.0 million. an 8% decline over the same period last year due to lower SG&A expenses and lower R&D costs related to clinical trial and regulatory activities. For the six months ended June 30, 2022, non-GAAP operating expenses were down 7% compared to the same period last year. As a reminder, We project R&D expense in 2022 to be primarily driven by manufacturing costs for daxibotulinum toxin A for injection, which according to GAAP accounting standards are expensed as a period cost until the drug product is approved. As for our operating expense outlook, we maintain our previously announced GAAP and non-GAAP expense guidance for 2022. Turning to our balance sheet, our total cash, cash equivalents, and short-term investments as of June 30, 2022, were $233.8 million. Recall that we enhanced our financial flexibility earlier this year with the closing of a $300 million note purchase agreement with Ethereum Capital. We issued the first $100 million note payable on the closing of the agreement in March 2022. Pending the approval of Daxibotulinum Toxin A for injection, we will have the option to issue another $100 million note until September 2023. An additional option of uncommitted borrowings of up to $100 million is available upon commercial revenue target achievement. We believe we have the cash runway into 2024 with the additional $100 million in committed notes available, subject to the FDA approval of our neuromodulator. Finally, revances shares of common stock outstanding as of July 29, 2022, were approximately $73.1 million, with $80.7 million fully diluted shares, excluding the impact of convertible debt. And with that, I'll turn the call back over to Mark.
spk08: Thank you, Toby. Our commercial track record since launching two years ago continues to give me confidence in our people, strategy, and our innovative portfolio of products and services. Importantly, it also gives me confidence in our ability to successfully launch dacubotulinum toxin A4 injection, if approved, and to begin realizing our therapeutic potential post-approval. I'd like to thank the clinical, manufacturing, operations, and regulatory teams for the successful resubmission of our BLA and for their hard work in preparing for the recent re-inspection of our manufacturing facility. I'd also like to thank the commercial team for the excellent performance in the first half of the year. We look forward to the tremendous opportunities ahead and to updating you on our progress along the way. With that, I will now open the call up for questions. Operator?
spk03: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. please stand by while we compile the Q&A roster. And our first question comes from the line of Seamus Fernandez with Guggenheim Partners. Your line is now open.
spk11: Great. Thanks. And thanks for all the detail on the manufacturing and FDA updates, guys. So just a couple of quick questions there. You know, as you've reviewed the additional observations and, you know, first off, congrats on closing The five observations, I'm sure that was challenging and a great relief to see that closed out. But on the three additional observations, they strike us as minor as we kind of read those observations. But what did your consultants kind of say about those observations? And can you just give us any color on your thoughts? It obviously seems like you feel quite good heading into the PDUFA date on September 8th. And then the second question, just wanted to get a little bit of the color, you know, as we speak with physicians, some experts basically talk about their experience in clinical trials with Daxi, you know, citing a little bit of a different sort of spreading dynamic versus what one might experience with Botox. How are you guys, you know, how do you think about that? Is that, you know, sort of a clinical advantage from your perspective? Or is it something that, you know, it'll become a clinical advantage once the physicians are actually experienced with the product? That's all. Thanks so much.
spk08: So, first off, you know, as you mentioned, we're very pleased with our ability to retire the five observations from the original Form 43 observations. And to your point, it was, you know, great work by the team to, you know, put the resubmission package together to address sort of the outstanding items that were agreed upon with the agency where we needed to requalify that cell bank. So, again, it was certainly heartening to us and the team to close out those five observations. It's probably not appropriate for us to comment kind of on the three observations that we got this latest go around just because of where we are with the agency. And as we said, normally we wouldn't be commenting on these things, but given the You know, news that we received this morning that a redacted version of our Form 483 may become public prior to our produce date. We thought it was important that all shareholders had the same information. But, you know, we feel very good about the responses that we pulled together. They were complete. They were comprehensive. There's nothing else that's outstanding related to the responses to those three observations. And we continue to feel very good that we'll get a response from the agency on our application by the due date of September 8th. In terms of your second question regarding color on Daxi and does it spread differently or anything like that, we've long talked about sort of a staged rollout that we're going to go through, but I'd like to hand it over to Dustin so he can provide a little bit more commentary on that.
spk09: Yeah, thanks, Seamus, for your question. I think if we look at the majority of the study work that was done with Daxi, it was in Gabella lines, and it was very, very well received by those injector sites. we've got to remind that Daxi is the first and ever unique formulation that is stabilized with our proprietary peptides. So it will act a bit differently than other products. As it relates to specific spreading or different characteristics relative to that, I'm not aware of any data that's able to compare that. If actually some of the data that we actually just released at Toxins talks about the positive charge and the binding and the anchoring of how that peptide stays attached to the boxylinum toxin molecule once it's been reconstituted. So you ultimately would think that there's actually a different effect and that you'd have more of an anchoring effect around those areas. Obviously, as Mark mentioned, this is a different product, and it will take a little bit of time for the practices to find their specific recipe. We're really happy with the results that they have in clinical trials. Once they go into you know, real-world settings, they'll like to tweak things based off of the look that they have. And so, we look forward to providing them that opportunity with our preview program. But all in all, we've been very pleased with both the efficacy, duration profile, and the safety profile of Daxi across both Traveller lines, and then with our upper facial lines, lateral canthal lines, and ultimately forehead lines Phase II data.
spk04: Great. Thanks, guys. Great. Thank you.
spk03: And your next question comes from the line of Ken Cacciatore with Cohen. Your line is now open.
spk07: Thanks. As Seamus said, thank you for the transparency here. We really appreciated Mark and team on the observations. But maybe I'll just try to follow up and see if I can get a bit of a different answer. Is there any sense, as you look at these observations, whether there would be a need to actually on-site inspect? And then maybe part of that, Can you talk about whether we're engaged in labeled discussions? Just wondering if you'll give any more detail. And then in terms of the rollout, I know previously we talked about wanting to be a bit selective as we rolled out DACSI with the hopeful approval. Mark, if you can give us a little bit of sense, is it going to be necessary for you to actually train a clinician? Do they have to kind of get through a bit of a process? Can you just talk about how you're going to roll this out? And the 4,000 accounts that you currently have, if you can give us any sense about the volume that they do. Is this a situation where these accounts are 50% of the botulinum toxin volume? I'm throwing out a random number to see if you'll contextualize for us kind of the initial account base and what their current volume is in terms of botulinum toxin. Thanks so much.
spk08: Thanks, Ken. So, you know, in regards to your first question, you know, do we expect the three observations that we summarized in the recent Form 43, do we expect a re-inspection? You know, we provided comprehensive responses to the observations. There's no additional data that we're waiting on. You know, it's probably not appropriate for us to comment exactly on how the FDA will receive the responses, but we feel very good in terms of you know, what we were able to put in the responses and, you know, felt that we were able to provide a comprehensive response to the items that were identified. And so, we continue to believe that the September 8th PDUPA date is a good date. And again, going back to kind of the comment earlier, it felt really good that we were able to close out the five observations from the original Form 483. On the label itself, again, you know, when we received sort of the CRL last time, we communicated at that point in time that we, everything else had already been wrapped up at that point in time. The only thing that was outstanding was the inspection of our facility. And so, you know, there's no new updates there. You know, we believe that the FDA label negotiations were already concluded, and so there's no update to that. The last one in regards to sort of the rollout of DAX, and I'll hand this over to Dustin in a second, but, you know, we often sort of characterize the market as roughly 40,000 accounts, of which, you know, we're targeting the top third as part of our prestige strategy. So this is called, you know, 13,000 to 15,000 accounts, really in 4,000 of those stores. have a ways to go. So I don't know that we're in a position to be able to comment in terms of the percent of the toxin market that those 4,000 accounts occupy, but I'll let him speak to sort of the rollout
spk09: Thanks, Mark. So as it relates to DACSI, we're going to follow the proven track record we've had for rolling out products with our preview program. What we'll do is we'll bring some of our providers here to our Nashville headquarters where we're able to roll out a significant training program focused really on three areas. First, clinical. As you know, we need to go through the clinical duration profile of vaccine from an efficacy perspective and a safety perspective, both across all of our clinical trials, phase three and phase two. We'll also talk about our formulation. I mentioned earlier, this is the first and ever formulated product with a peptide that delivers efficacy and duration with similar amount of API than other products on the market. So we'll go through that. And then lastly, practice integration. You see often it's important for practices to understand not only the profile of how to inject the product, but how to actually integrate it into practice, how to charge, and how to convince consumers that's the right product for them. So we'll focus on all of that while also getting those key learnings through that period of time around the minor tweaks that injectors will make around kind of their recipe for exactly how they like to utilize DAXY in a real-world setting. And then we'll go broader into our practice partners, the RHA folks that have leaned in with us, the RHA, as well as with Opal. And then just to comment on your final question, we felt like the prestige category represents roughly 50% of the aesthetic marketplace. And so we feel very good that the foundations for the accounts that we're in will be a great foundation to start for daxibotulinum toxin type A projection.
spk04: Thanks so much. Thanks, Ken.
spk03: And your next question comes from the line of Anna Balsamini with TFL. Your line is now open.
spk01: Hi, thanks for taking my question. Just to follow up on the rollout, can you just confirm that the rollout that you plan, is it already full overlap with those accounts that are using the RHA filler, or are you reaching out to different accounts who may have not adopted the RHA filler, but were very, very close, like KOLs or, you know, clinical trialists who had already used Daxi. So I'm just curious about that. And the second question I have is, you know, we've all done surveys regarding reception to long-acting products, and clearly they're viewed as very differentiated, and they would have strong reception, strong penetration. But there's some views still in the market that just would still be niche because if you drill down a little further, they may not use it as broadly as, you know, in their broad populations as typical. So what are you finding when you drill down with your – in your market research? Do they receive it and expect penetration as broadly as what we're receiving in our surveys that we do probably – in less detailed fashion than you do. Thanks.
spk09: Great, Annabelle. This is Dustin. I'll take those and Mark can add on as he feels appropriate. So, on the rollout, you know, I'm not in a position to go specific, you know, position by position or injector by injector, but our first and primary focus is on outcomes. Who are going to be those that are going to help us through this process and focus on getting great outcomes? And also, those that have leaned in with us. So, it'll be a combination of those groups. it's important to look at how providers learn from each other in today's environment both from a podium perspective but also from a hands-on perspective and also those that are willing to work with us on this journey of how do we maximize that practice integration and learn from those those launches that have happened previously so it'll be a combination of those groups As it relates to kind of our market research, we feel very good that the consumer uptick and the practice uptick of this product will be well received. It's got a unique value proposition in that it is the first product that offers something different to the botulinum toxin patient, both from an efficacy perspective and a duration perspective. All others are formulated more similarly to the same. With this peptide and our clinical profile, we believe that whether they're getting toxins four times a year or, more likely, most of them getting toxins 1.8 times a year, this is going to have a value. If they get injected with DAXY botulinum toxin type A for injection twice a year, that aesthetic look that they'll receive with DAXY will be different than anything that they have had with other toxins. And so we feel really good that it can add value across a variety of segments.
spk08: Yes, and I'll just build on that, Annabelle. So we certainly don't see this as a niche market. Certainly it will have its place, and we've long talked about, you know, the nice thing about having a long-acting alternative is it gives practices and consumers a choice. And so it doesn't need to be a one-size-fits-all, but it will provide, we believe, a valuable alternative for both patients and practices. Our market research suggests that both consumers and injectors identify the lack of duration as being the number one unmet need, and that's reported out at over 80% in both of those categories, which is kind of amazing that you've got these procedures that are being done millions of times a year, and despite that, they continue to express disappointment with the duration of the procedure. products. And so, you know, we believe that this will be a really nice add to the armamentarium of the practices and the providers and an alternative for consumers. And, you know, again, we don't expect it to be everything to everybody, but we do expect it's going to resonate and that there will be a large portion of patients and injectors that look to this as an alternative.
spk01: Okay, great. Thank you. Thank you.
spk03: And your next question comes from the line of David Amselon from Piper Sandler. Your line is now open.
spk00: Thanks. So just a couple questions. So just going back to the Form 483, I guess maybe I'll sort of take a different angle and ask you, Mark, if you were surprised at getting additional observations. Is this something where you know, you were caught flat-footed or there's something that you had an inkling might happen. Just wanted to see if I can gain any insights there. And then secondly, on RHA, you talked about consumer behavior and you're not seeing anything beyond, you know, seasonality. And I guess the question is, you know, going forward, you know, as the footprint of the product, you know, grows to the extent there's still these macroeconomic pressures, do you look at 4Q, which is the strongest season in this space, as potentially a trouble spot, if you will? I'd like to get your thoughts on how you think that part of the year might play out given the backdrop that we've been talking about. Thanks.
spk08: Yeah, thanks, David. So, you know, first question, were we surprised or disappointed? I mean, clearly when you prepare for an inspection, you're hoping that you aren't going to have any observations, right? So, you know, but I will say I thought the team did an amazing job. And, again, I come back to the fact that we closed out early. the five observations from the first form 483. So, I think the team did a great job there. You know, as you'll see from the summary that we provided, you know, items one and two related to, you know, single development batches where we didn't follow kind of a procedure or an SOP, since you're talking about, you know, a single batch where that was the case. We provided very comprehensive responses. There's nothing else that's outstanding. And so certainly everybody would have loved not to have had any observations, but we liken it sometimes to home inspection. You kind of get prepared and you're ready and sometimes they find things. But again, I think our team did a great job. And again, I'll come back to I'm very proud and pleased with sort of the timeliness and the comprehensiveness of the response that was put forward. In terms of consumer behavior, I think there's a few things that are worth noting. First off, going into Q4, we'll have to wait until we get closer to that to make any commentary on the Q4 side of things. But as you're aware, this is a market segment that has proven to be fairly resilient through other economic downturns, 2008, 2009, coming out of the pandemic. These are procedures, certainly the facial injectables, that start to become a little bit more integrated into lifestyle. And so they're less sort of discretionary and more habitual for these patients. You know, maybe it's that we're calling on a smaller subset of practices that we're kind of lumping into this prestige category, but thus far, or at least today, you know, we've just not seen sort of a softening. And even if you go back over time and you look at periods in time where macroeconomic conditions did play in, it did have an impact, but it was certainly more muted than other discretionary spending items. And as we pointed out before, You know, we're also in kind of a launch phase with, you know, Redensity having just launched on the R8J side. We're still only in 4,000 accounts. And, you know, for a neuromodulator, if approved, that's going to give us yet another new innovation to bring into the market. And so we're going to have some things that counterbalance any macroeconomic conditions should they tend to be more pronounced in Q4 going forward.
spk04: Okay. Thank you. Great. Thank you.
spk12: and your next question comes from the line of team lugo with william bear your nine is now open uh thanks for taking the question and i guess regarding the third observation mentioned the press release about not adding a redundant size for storage of the working cell bank i think that the last forum 43 mentioned the lack of having a working cell bank. Can you kind of remind us what are the issues with having a working cell bank and how difficult is it to add this redundant site and the fact that maybe the working cell bank issue doesn't seem to be repeating again now that we can have these three new observations. Can you just kind of, I guess, talk me through this and clarify it as much as you can?
spk08: Sure, Tim. So, you know, we use sort of third-party redundant facilities to store and maintain some of our cell bank material for kind of more disaster purposes. This is a third-party site that is already registered with us that we already use. And so the issue for number three was that in our VLA filing, we had not updated that site to include the newly qualified working cell bank. So we took care of that. We did, in our filing, address the addition of the new working cell bank to that, you know, third-party redundant storage facility, which is already under registration with us.
spk12: Okay. That sounds easy enough, you know. I guess from a $10,000 perspective, I know none of this is easy when it comes to manufacturing. But the lack that kind of the unvalidated working cell bank was raised again, does that, you know, are we able to kind of jump ahead and think that that was, you know, all of those issues have been mitigated from the last Form 43?
spk08: Yeah, that's what we tried to communicate in sort of our prepared remarks. So, the lack of a qualified cell bank at the time the FDA showed up the last time was, you know, part of one of the five observations. And we indicated that after our Type A meeting, the FDA was clear in terms of what they needed to see from us in order for us to resubmit our BLA and provide them with the necessary information. And ultimately, what they wanted was the qualification of the new cell bank with three consecutive drug substance batches and one drug product batch. So, we provided all that information in our resubmission, and at the recent inspection of our facility, they indicated that we had successfully addressed the five observations in the original Form 483. So we feel very good that those have been closed out. So there's nothing open right now as it relates to the cell bank or the qualification of the cell bank. The summary that we provided of the Form 483s that were recently provided are the only things that are outstanding. And again, as I mentioned, we have provided all of the responses to those three questions with nothing that remains outstanding, at least from our end.
spk12: All right, thank you for all that clarity. Very helpful.
spk08: Great.
spk04: Thanks, Tim.
spk03: Your next question comes from the line of Douglas Chow from HFC Wainwright. Your line is now open.
spk06: Hi, good afternoon. Thanks for taking the questions. Just going back to the 43, just wanted to clarify this one point. So it sounds like both these observations were related to a single lot But it sounds like this lot was aborted. So with this lot, this lot to clarify or confirm was not used to satisfy the requirements of the original complete response letter?
spk08: That's correct, Doug. So, and these are two individual development lots. The one was aborted based on sort of the leak that we summarized there. The other one was a separate development lot. Neither of them used for any sort of clinical trials or, you know, sort of our validation process. These were independent development lots.
spk06: Okay, great. And so, they don't, just to confirm, again, they don't affect the BLA in any way or sort of the meat of the BLA besides just addressing these process issues, which I know are important, but they don't have broader implications for the FDA's evaluation of the BLA.
spk08: Yeah, I mean, I don't want to go so far as to speak on behalf of the FDA on that side of it, but yeah, I mean, these were not lots or batches that were included in our validation of our new working cell bank. These were sort of one-off observations related to drug substance, you know, single drug substance lots that were development lots.
spk06: Okay, great. Thank you. And again, I wasn't trying to ask you to speak for the FDA, and I understand that sensitivity. And then just Maybe sitting back, I just want to, you know, congrats on the performance of the RHA line. You know, your key competitor in the filler market didn't have nearly as good performance in the second quarter. You know, you were up, I think, 22% sequentially, and they were sort of down meaningfully in a year-on-year basis. So, you know, I'm just curious if you saw anything in the market. I know there's been some concerns about the sort of macro environment, just given the broader market. sort of an economic environment. I'm just curious if you saw anything and is there anything that might have spoken to what your largest competitor saw?
spk08: And I'll hit it at the beginning and then hand it over to Dustin to see if he's got any additional color to add. I can say that really, again, we're in launch phase, so really our main, you know, sort of focus is finding accounts that are willing to sort of try and evaluate the RHA filler line and then obviously trying to drive deeper penetration in those accounts. And we're doing that through training and education. uh you know peer influencers that are sharing their experiences and outcomes and i think with the methodical approach that we've taken you know we're seeing nice uptake and you know the rha collection is a great collection so i think they're seeing it as a product line that's adding something that's incremental uh to what they have due to sort of the natural way that the product moves there and i also think it's a reflection of the strategy that we've taken we've taken a very deliberate strategy focused on prestige accounts You know, we've got transparent pricing. We're trying to help make sure that they're getting the right outcomes and that this is a profitable and value-added service for us. And so, you know, we did in the quarter. We just saw sort of steady as she goes, continuing to drive more account growth and a little bit deeper penetration. But, Dustin, I don't know if you want to add anything to that.
spk09: So I think you hit the fact that it's a differentiated strategy not built around couponing. not built around programs at certain points in time I think you heard the commentary from that organization around you know how they had programs in certain times to drive certain behaviors and we have built our business on this product being unique and uniquely formulated, uniquely adding value to both the injector and the consumer, and we're going to continue to leverage that. And so we've got a nice opportunity in front of us with four different SKUs that allows us to go deeper into accounts, but also, as Mark mentioned, we've got an opportunity to expand our account base. So we're in a very unique and different position than some of those competitors, and we feel good about it. to leverage that. And so we've got a nice opportunity in front of us with four different SKUs that allows us to go deeper into accounts, but also, as Mark mentioned, we've got an opportunity to expand our account base. So we're in a very unique and different position than some of those competitors, and we feel good about that and poised to launch the full portfolio.
spk06: Okay, great. Thanks very much. Congratulations on the progress.
spk03: And your last question comes from the line of George Belanger from Needham and Company. Your line is now open.
spk10: Hi, good afternoon. I guess I'll get in on the topic du jour in terms of new Form 43 observations. Now that you've submitted your responses, are you expecting any kind of feedback from the FDA? close the issues out or provide additional suggestive actions to rectify these observations?
spk08: It's certainly possible. We could hear something back. At this point, we've not heard anything back. We've provided our comprehensive responses to the agency, and, you know, it's quite likely that we won't hear anything back other than sort of their final decision on the PDUCA date.
spk10: And if you hear something back, would that be something you would disclose or it depends on the nature of the response?
spk08: Yeah, I mean, you know, I hate to say never again. Our bias is towards not providing ongoing interaction with the agency. to imagine there's a variety of flavors that that takes, and that's our normal protocol. We unfortunately had to break from that a few times due to the redacted Form 483s that were put out there in our awareness this morning that we would likely get another Form 483 put out there prior to our produce today. So, you know, unless we thought it was something that significantly compromised our approvability, we would not be commenting on that.
spk10: Okay. Fair enough. And then just a broader market question. Based on the earnings reports of other toxin companies, this is a market that, at least in the last two or three quarters, has significantly outpaced its usual high single-digit to low double-digit growth rates. Just curious how that changes your pricing and bundling strategy for Daxify.
spk09: Yes, sir. This is Dustin. I think first, we're excited, right? The more growth, the more opportunity for all players here, especially one that has the first innovation in 30 years. And so we feel really good about our capitalization on that opportunity. And in any market, especially one that's growing, innovation comes at a premium. And so we feel good about our pricing strategy. We feel good about both the premium opportunity that we have in launching something this innovative that provides value to both the injector and the consumer. So I don't think anything that we've seen really kind of changes our launch strategy today. Just the more, the merrier. We're happy that the market continues to grow, and we look forward to capitalize on that.
spk10: Got it. One last one. You talked about your plans to submit the SPLA for cervical dystonia, but what about plans to reinitiate development of other therapeutic indications? Upper limb spasticity is the obvious one, but I know in the past you've also talked about migraine and migraine indication
spk08: I think, you know, we want to get through approval and into the market and then revisit that based on sort of our capital allocation and sort of where we want to focus our dollars. But clearly, you know, the filing of our SPLA for cervical dystonia will represent our first foray into therapeutics and more particularly the muscle movement disorder category, which is sizable, and we're encouraged about that. So, you know, the nice thing about this is that these are markets that continue to grow and expand, and we believe that the, you know, promise of a long-acting neuromodulator in the category will still resonate over time. And so, you know, what we'll get back to is we feel we've got more clarity around what's the right time to, you know, advance the therapeutics program beyond cervical dystonia. Okay.
spk10: Thanks for taking questions.
spk08: Great. Thanks, Serge.
spk03: That's our Q&A session and today's conference call. Thank you for your participation. You may disconnect at this time.
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