Revance Therapeutics, Inc.

Welcome to the Revance Therapeutics second quarter 2023 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 a question at that time, please press star followed by one on your touchtone phone. If anyone has difficulty hearing the conference call, please press star zero for operator assistance. As a reminder, this call is being recorded today, Tuesday, August 8th, 2023. I would now like to turn the conference call over to Jessica Serra, Head of Investor Relations, Communications, and ESG for revans. Please go ahead.

Thank you, Operator. Joining us on the call today from revans 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 2023 guidance, cash flow break-even, operating leverage, blockbuster potential, and capital structure, our ability to draw on our debt, future revenue and expenses, the market, our growth potential, our CD approval and entry into therapeutics, our commercial success, account penetration, injector and consumer preferences and behavior, the efficacy and duration of Daxify, the benefits to us, practices, and consumers of our products and strategy, the impact of our marketing and training plans, our strategic partnerships, and our strategy and priorities, planned operations, and commercialization plans and timing. 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 annual report on Form 10-K, filed with the SEC on February 28, 2023, and our quarterly reports on Form 10-Q, filed with the SEC on May 9, 2023, and today, August 8, 2023. No duty or obligation to update any forward-looking statements as a result of new information, future investor changes, and 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 the call over to Mark Foley, Chief Executive Officer of Renance. Mark?

Thank you, Jessica. Good afternoon, everyone, and thank you for joining our second quarter 2023 financial results conference call. Q2 was a foundational quarter for the company as it represented the first full quarter of Daxify's highly anticipated launch. It also included the plan expansion and realignment of our sales force, the first expansion in more than two years, and included the fortification of our balance sheet with $100 million in equity raised through our ATM program and $50 million in debt, which we plan to draw before the end of August. Collectively, this contributed to our strong Q2 results and record quarterly revenue of $58.1 million, which reflected a 105% increase year over year. As Daxify's commercial rollout continues, we remain very encouraged by the product's performance, which includes not only duration, but also reports of fast onset and improved skin texture, as evidenced by the initial product uptake and ongoing demand. While still early in our launch, we continue to experience a very high level of interest from both injectors and consumers for Doxify's differentiated performance profile. We are executing well against our launch strategy, where the valuable learnings from our preview program have been incorporated into our full commercial launch, which is focused on accounts where we have an existing relationship. In addition, enthusiasm for our expanded and highly complementary product portfolio remains high. Given the growth trajectory of both Daxify and RHA, we believe we are on track to realize our blockbuster opportunity in aesthetics, which continues to be supported by our differentiated products, commercial strategy, and high-performing team. While we remain focused on executing in aesthetics, we are also excited about our opportunity in therapeutics, which is just around the corner, with a PDUFA date of August 19th for cervical dystonia, or CD, indication. We believe Daxify's potential in therapeutics is significant, and CD approval will serve as our entry point into the $2.5 billion U.S. therapeutic neuromodulator market. With Daxify's unique peptide formulation, we believe the product has the ability to meaningfully improve patient outcomes in therapeutics. Specifically, doxify's long duration has the potential to both reduce treatment frequency and, perhaps more importantly, minimize symptom reemergence prior to retreatment, which is a common issue for CD patients currently receiving neurotoxin injections. Today, in clinical practice, patients experience painful symptom recurrence as early as 8 to 10 weeks, yet cannot be retreated until 12 weeks. Based on a CD patient survey that was published in a peer-reviewed article in the Journal of Neurology by Dr. Comella, 88% of patients reported symptom reemergence between injections. Because of this treatment gap, we believe Daxify has the potential to provide a more durable treatment option for patients seeking improved symptom relief within their current treatment cycle. And given its differentiated efficacy and safety profile, we believe Daxify's value proposition will resonate strongly with all stakeholders, including patients, providers, and payers. We look forward to sharing more details on our plans for therapeutics at our Investor Day in September. With a number of upcoming milestones and the ongoing launch of DAXify, the second half of the year promises to be both busy and exciting. We are fortunate to be executing from a position of strength due to the recent introduction of DAXify, our expanded sales force, and bolstered balance sheet, alongside a strong and resilient facial injectables market. With that, I'll turn the call over to Dustin.

Dustin? Thank you, Mark. I'm very proud of the team's strong execution in the second quarter. Our strategic priorities for Q2 were twofold. First, ensuring that we have the necessary commercial infrastructure to support both Daxify's launch and the ongoing growth of the RHA product line. And second, leveraging strong provider engagement to drive deeper account penetration across our portfolio. For Daxify, this entailed building provider confidence and ensuring smooth practice integration through our training and education initiatives. For RHA, this involved driving growth in the collection through advanced injection trainings that highlight the dynamic and adaptable rheologic properties of the four different fillers. We are very pleased to have executed on all fronts. On commercial infrastructure, we successfully completed the onboarding of our 50 additional sales representatives, bringing our total sales force to more than 150. This is a foundational undertaking executed in an accelerated timeframe, and I'm very proud of the team for all their efforts in executing against our plan. The team is strong, with deep sales experience balanced across aesthetics and other high-growth verticals with a key focus on product launches. We provided intense training on both DAXify and the RHA collection and realigned territories across the country to optimize coverage for our targeted accounts. Heading into Q3, the team is settling in their new territories and forming new relationships while also supporting the transition of previous accounts. Importantly, they are focused on driving adoption across both products. Our next priority was to continue to drive deeper account penetration through provider engagement across several areas. For Daxify, we continue to leverage the training and education across live and virtual formats. Our programs focused on optimizing aesthetic outcomes, informed by real-world clinical experience. Education also focused on practice integration, including product performance, value proposition, pricing, profitability, and expectation setting. Our engagement efforts were also underscored by the launch of our first direct-to-consumer campaign. In June, we initiated an unbranded Breakup with Botox campaign targeting experienced female users between the age of 25 and 55. The campaign was designed to highlight the unmet needs and innovation gap across the neuromodulator category and that existing consumers now have a choice to try a new treatment option. Since the campaign's initiation in June, the targeted, unbranded campaign delivered strong KPIs with a reach of 57 million impressions and more than 9 million views across key channels and platforms. Combined with our branded It's About Time Daxify digital campaigns and our first live influencer event in Nashville, we activated strong social buzz across our platforms increased product website traffic, and drove increased searches for Daxify's availability via our practice locator. We believe all these metrics should translate into greater consumer awareness and demand for Daxify, which in turn allows us to drive deeper partnership with the accounts that carry our product. While our marketing efforts will continue to focus on the provider, as we believe that that generates the greatest return on investment, we also expect to leverage targeted consumer campaigns to augment our launch going forward. Turning to RHA. Engaging with customers on the broad utility of the collection is very important for growing our share of wallet. Needle of skin training continues to be the strongest interest to our customers as they learn and perfect RHA injection techniques. In Q2, we organized a group of our key US faculty to attend an immersive training session in London with top international injectors. We look forward to having their learnings be shared with our practice partners through a series of upcoming training programs. Further, we're very excited to see the expansion of RHA4's label to include cannula use. The addition of cannula will provide injectors with another option to advance aesthetic outcomes, allowing RHA4 to have even greater utility in delivering natural volume for moderate to severe dynamic folds and deeper deficits. Overall, we believe our robust engagement activities in Q2 and to date have been essential in supporting Daxify's launch and the continued growth of the RHA collection. As a result of our strong execution on Q2 priorities, Daxify sales increased 47% over the previous quarter to $22.6 million. Having recently completed our first full quarter of launch, we continue to be encouraged by the product's performance, which is consistent with the data from our clinical trials, and by our revenue results, which are in line with our internal operating plan. With our total sales through Q2, we've already surpassed the total sales generated by any competitor to Botox Cosmetic in their first launch year. We also saw solid revenue growth for the RHA collection in Q2 of 25% year over year to $31.8 million. The team has done an outstanding job in growing the collection while navigating through our Salesforce expansion and launching DAXify. Further, we ended the quarter with over 6,000 accounts across our aesthetics portfolio, demonstrating the continued momentum of our commercial efforts. Looking at the back half of the year, we remain well positioned to execute on our plan. To achieve this, our priorities are, one, leveraging Daxify to drive greater account adoption and engagement, two, increasing Salesforce productivity, and three, leveraging the value proposition of our full portfolio to grow share. These efforts will continue to be reinforced by the support we provide to injectors in optimizing outcomes and enhancing practice integration. Before I turn on the call to Toby, I'd like to provide another positive development in our partnership with Fosun Pharma and the expansion of Daxify in international markets. In July, Fosun announced the BLA for Daxify for the treatment of cervical dystonia was accepted for review by China's National Medical Products Administration, or NMPA. The action follows the NMPA's acceptance of Daxify for Gabella lines in April. We're very pleased with the steady progress our partner is making in commercializing Daxify in China, which remains the second largest market globally for neuromodulators, valued at over $740 million for aesthetics alone. With that, I'll turn the call over to Toby to cover our second quarter financials.

Thank you, Dustin. Total revenue for the second quarter 2023 was $58.1 million, representing a 105% increase from the same period last year due to increased sales of the RHA collection and the launch of Daxify. Revenue in the second quarter included $31.8 million of RHA collection revenue, $22.6 million of DAXify revenue, and $3.7 million of service revenue. Turning to the cost of product revenue, I would like to remind everyone that in accordance with GAAP, we were expensing DAXify manufacturing costs incurred at our Northern California facility as a period R&D expense item until the product was approved. Similarly, with AGI's approval, we began capitalizing DAXify manufacturing costs incurred at that facility. When our DAXify inventory produced prior to approval, also known as zero-cost inventory, is depleted, we expect our cost of product revenue to increase. Turning to OPEX, GAAP OPEX for the second quarter was $123.6 million compared to $86.2 million for the same period in 2022, excluding costs of revenue, depreciation, amortization, and stock-based compensation, non-GAAP OPEX was $83.2 million for the second quarter compared to $62 million for the same period last year. For the six months ended June 30, 2023, non-GAAP operating expenses were up 27% compared to the same period last year, while total product revenue increased 116% during the same period. continuing to improve the operating leverage in our business. As we previously stated, we expect our 2023 GAAP OPEX to be $460 to $480 million, and non-GAAP OPEX, which exclude costs of revenue, depreciation, amortization, and stock-based compensation, to be $320 to $340 million. Our 2023 non-GAAP research and development expense is expected to be $80 to $90 million. Turning to our balance sheet, we successfully completed several financing activities to support our commercial growth in aesthetics and anticipated entry into therapeutics. During the second quarter, we raised $100 million in net proceeds through our ATM program bringing our cash, cash equivalents, and short-term investments to $319.7 million at quarter end. We also recently amended our notes purchase agreement with Ethereum Capital and revised our committed 8.5 fixed $100 million second tranche notes available for issuance to $50 million and revised our uncommitted $100 million third tranche note to $150 million, both at similar economics. We plan to issue our second tranche notes of $50 million at 8.5% fixed interest rate shortly, provided that certain conditions are met. With the modification to the Ethereum agreement and the proceeds from our ATM program, we have taken a prudent approach to managing our capital structure. Combined with our current cash position and anticipated revenues and expenditures, we believe our business will be funded to cash flow breakeven. Finally, Revance's shares of common stock outstanding as of July 31, 2023, were approximately $88 million, with 95.6 million fully diluted shares excluding the impact of convertible debt. And with that, I'll turn the call back over to Mark.

Thank you, Toby. In closing, we are very pleased with how Daxify's launch is going thus far and are encouraged by the trajectory of our U.S. aesthetics portfolio. The second half of the year promises to be very eventful as we look to continue our share growth in aesthetics, gain entry into therapeutics, and host our Investor Day in September at our Nashville headquarters, where we expect to provide a deeper dive into our business along with our planned financial guidances. I'd like to thank the entire Revance organization for their tireless efforts and unwavering commitment to bring the latest innovation in aesthetics and therapeutics to the market while supporting our valued customers along the way. With that, I will now open the call up for questions. Operator?

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. Your first question comes from a line of Seamus Fernandez from Guggenheim. Your line is open.

Oh, great. Thanks for the questions, and congrats on the continued progression with DAXify. Just wanted to get a better sense of how we should be thinking about the third quarter trajectory, you know, just because typically it tends to be a seasonally weak quarter, and then how we should be thinking about, you know, kind of the trajectory for DAXify in the fourth quarter along those lines, just trying to get a better sense of maybe a little bit of the rhythm of how the rest of the year is likely to shake out. And I just have one follow-up question.

Sure. Thanks, Seamus. So in terms of, you know, the overall trajectories, you know, we're not in a position to guide at this point. And if you look at where our two different products are at in their life cycle. RHA is more mature and it's more likely to follow the typical seasonality in the aesthetics business, whereas Daxify, we're in launch mode right now. And as we've talked historically with the addition of the reps and the realignment of territories and selling two products, the newness of DAXify and the relationships, you know, it's a little early for us to be forecasting what the rhythm is going to be from a quarterly perspective on that. We do expect at our investor day in September to provide more clarity about what our plans are for financial guidance going forward. But, you know, right now, as we talked in Q2, we continue to be encouraged with the overall trends that we're seeing in the market and the resilience that we're seeing in the accounts that we're calling on.

Perfect. And then just one quick follow-up as it relates to RHA. Are you discounting RHA at all, or are you still kind of managing them as two, you know, sort of dynamic and completely separate brands? And I know folks are very interested to know if you're willing to provide some color on the number of accounts that you're in. I suspect the answer is that you guys are keeping that close to the vest for competitive reasons, but Just wanted to ask that as well. Thanks.

Sure. Yeah, maybe I'll start with the second part first. Yeah, so we talked about being in, you know, over 6,000 accounts collectively. It costs all our products and services at the end of Q2. And consistent with what we've communicated on the RHA product line, we think right now that's a metric that, you know, we're comfortable continuing to put out there and make sense. Certainly, as we get deeper into the DAXify launch and we go forward, we'll continue to look at what are different metrics that we have confidence in that we think are worth sharing on that side of it. In terms of discounting, at this point, we believe due to the innovation of both our RHA product line and DAXify that we've looked at this point to look at them independently. We've got a very simple, straightforward pricing structure for both RHA and And for Daxify, where at any point in time that an account purchases from us, they can take advantage of one of four different price levels based on how much they purchased in that given point in time. So at this point, we haven't deviated from that overall pricing structure. Certainly, as we go forward, we will continue to look at ways that we can you know, leverage the portfolio to create win-win scenarios for our accounts. And that's, you know, one of the things that our team is actively working on. But at this point, we continue to primarily be focused on each product standing on its own from a discounting tier perspective.

Thanks, guys, and congrats on the good quarter. Thanks, Janice.

And your next question comes from the line of David Anselm from Piper Sandler. Your line is open.

Hey, thanks. So, Mark, I think over the past few weeks at various presentations, you talked about the sales cycle for Daxify being somewhat longer than what it was in preview. And I guess the question here is, maybe I know you're not in a position to guide, but How should we think about training and onboarding of accounts and what that means for business that might spill over into 3Q and even 4Q? So how should we think about that? And then I have a follow-up. Thanks.

Sure. So let me take you back in terms of the overall training. As you know, we were pleasantly surprised with the strength of the orders that we saw in December when we started with our preview group. We sort of expected them to follow a more normal cadence where they get exposure to the product, they treat a series of patients, and then they look for feedback and follow-up on those patients to inform next steps. I think partly because of the limited number of accounts that had access to Daxify at that early phase, the clinical trial data, and their early experience, they leaned in very heavy. We learned an awful lot from that preview phase, which has been very helpful in terms of optimizing our training program for our full commercial launch, which we kicked off in March. We've seen that the March group and the full commercial launch group behave in a fashion that we would have expected from the beginning, which is the first step is they attend a training program. Our bias is Nashville, but we also have a virtual option for accounts to make sure that we can meet them in a place that makes the most sense. That's step one. The next step is then the rep schedules a time to bring sample product into these accounts so that they can treat a series of patients, whether they're staff or some of their customers. And that logistically takes some coordination, both on the reps part and on the practices part and the scheduling of patients. So if you look at kind of the bottleneck, that's probably got more of a impact on the onboarding of an account than the actual training program itself. And then we'll see a range of behaviors by these accounts that onboard. Some are convinced and are leaning in or all in on DACSI early on trying to figure out which of their patients does this best fit for. Some accounts are going to be a little more measured and are going to treat some patients. They're going to follow them up in the short term. And given that the main benefit that a lot of these accounts see with Daxify is the duration profile. Some are then going to want to wait longer also to see the duration profile to inform. And then we have a group that are going to be a little bit more cautious. They'll treat some patients and then they're going to wait and maybe ask for them. So given that we didn't kick off our full commercial launch until March, we are seeing those accounts move through that cycle in a way that we would have predicted from the beginning. And so we're seeing them in these different phases. Our current focus is on those accounts that we have an existing relationship with, given that we, again, know them and have that relationship. And so as we go forward towards the back half of the year, we'll see those accounts start to play out in terms of their experience with the product as we continue to onboard new ones as well.

And just a quick follow-up, what portion of your accounts on Daxify are coming down to Nashville these days for training versus the reps actually going on site to the practitioner to get trained? What's that mix look like?

Yeah, we haven't said specifically the mix, but it's definitely, I would say, starting to shift more towards the virtual side of it. In the early phases, it was much more Nashville-based, but I think because of the virtual options and the flexibility that we're providing to both the sales reps and the accounts, we're seeing that tip a little bit more towards the virtual side now.

Okay, that's helpful. Thanks. Great.

Thanks, David.

Your next question comes from the line of Chris Shibutani from Goldman Sachs. Your line is open.

Chris? Chris?

Yeah, sorry about that. I was on mute. On the ordering pattern, obviously you kicked off in December with an unprecedented level of pre-orders. Can you talk about that particular tranche, those folks who are part of the initial target group, and whether you're seeing reordering now? We are now six months post, you know, and I used that time frame to think about sort of potential utilization during the first quarter and durability. Anything to help us comment to sort of get a sense for whether that initial group that you were targeting is reordering? And then a second question, maybe can you comment more broadly about the tone of market in general, both for neurotoxin and for fillers? Some competitors have talked about a more sluggish filler market dynamic, given the higher price point for that and maybe a little slower to recover. What is it you're seeing in particular with your prestige target customer base or the market tone for both of those segments, toxins and fillers? Thanks.

Sure. Thanks, Chris. So first off on the ordering patterns, if you go back to our Q1 last quarter, we talked about preview accounts making up a majority of the revenue in Q1. And we made that commentary because in Q4, because of the large amount of purchases that people made at the very beginning of their experience with Daxify, we wanted to address some of the concerns around stocking. And so we did see in Q1 that that represented a majority of sales in the first quarter. And as we said, we trained a little over 400 in that preview account, but that was to put sort of that stocking order into context. Now that we've gone into full commercial launch, You know, the preview accounts no longer make up a majority of our account base and they don't make up a majority of our revenue base at this point. But again, in that preview group, we're seeing a mix of behaviors. We're seeing some who are all in where Daxify has become their primary toxin. We're seeing some where it fits into their ecosystem along with other toxins, which frankly is the beauty of what Daxify offers. The great thing about our business model is it doesn't have to be everything to everybody. We know from our market research that duration is the number one unmet need. and that this will definitely resonate with a healthy portion of their consumer base. And so we're seeing a group that's in the middle that's still trying to figure out, even in the preview group, where does this fit in terms of what percentage of their practice is going to make up. And then we see some that are a little bit more conservative that have used it, thought the results were great, and then have sort of said, hey, I'm going to offer it to a certain subset of my patients that might be smaller and patients that ask for it. And so that group no longer represents the majority as we move into this full phase. I think it's early to start to getting into reordering trends and stuff because the full commercial cohort might behave a little differently than the preview group, but we've been able to refine those learnings from the preview group with this launch and we feel very good about how we streamline the messaging, the feedback around pricing, expectation setting in terms of this new group. And then on your second question about the tone of the market, again, given that we are focused more on the prestige segment, we continue to feel very good about, you know, the overall health of the market. Certainly RHA and our business model is more advanced. And as you said, I do think that, you know, we have heard from some of the accounts that they are seeing perhaps maybe a little bit more measured approach in some cases with consumers on the filler because of the cost. and the lack of frequency of that, whereas the toxin appears to continue to be very robust and a little less effective. But again, given where we are in our launch trajectory, it's going to be less of an issue, but we have heard a little bit of that narrative out there. I think there's optimism for the back half of the year, and that's still to be seen.

Got it. Thank you.

Thanks, Chris.

Your next question comes from a line of Stacy Koo from TD Cowan. Your line is open.

Hi all, thanks for taking our questions and congrats on the quarter. So we have a few questions. First, so if you'd be willing to share as a teaser for the September R&D day, what might be some potential metrics that you might provide as we track the Daxify launch? That's the first question. And then if we could, would you be willing to disclose how many patients have been injected with Daxify right now? Maybe some anecdotal feedback on retreatments or patients returning? just as we are trying to kind of get some measurement for the launch. And then finally, regarding cervical dystonia, the upcoming approval, how should we be thinking about early payer discussions just in terms of the flexibility regarding frequency of retreatments and potential range of doses? So just help us understand the potential positioning of the product. Thanks so much.

Sure, Stacey. So maybe I'll take the first two and then hand the third one off to Dustin on the CD question on the payer side of things. On September day, we talked in our scripted remarks about our ongoing confidence in the blockbuster potential in aesthetics. And we talked about with the recent $100 million capital raise plus the additional $50 million in notes from Ethereum that we can fund our broader business to break even. And so we feel those are important mileposts to put out there in terms of how we're thinking and feeling about the business overall. So at the September investor day, our goal is to really provide more details behind what's given us the confidence in the business. You'll hear from physicians who have real world experience with the product and there'll be some good Q&A there while we spend a lot more time on the therapeutic side of it. And then we'll talk a little bit about kind of, you know, what our planned financial guidance is going to be in terms of revenue and timing and those types of things. And so, you know, our goal is to provide more of the building blocks as to why, again, we have the confidence in the business that we do. In terms of patients treated, I think that's, you know, you can align that up with revenue. You know, and for the most part, physicians aren't ordering a lot of product that's going to sit on the shelf. And so you can kind of back into, you know, the revenue and the number of vials and the assumed amount of product per patient. We don't have a really good way to know number of patients treated because, you know, somebody might use a couple of vials on one patients and somebody might use half a vial. So it really depends on how much product they're giving on a per patient basis. But I think, you know, revenue at this point, we think is probably the best indicator to look at overall demand and use. And, you know, as Dustin mentioned in his scripted comments, we feel very good about the first three quarters of our launch and that from a revenue standpoint, it's outpacing any of the other toxin launches outside of Botox, cosmetic in the market. So even with our very measured and disciplined approach to how we're rolling this out, we feel very good from a revenue standpoint in terms of how the first three quarters have played out. And Dustin, I'll turn it over to you on the CD side of things.

Yeah, thanks, Mark. Stacey, I think we're really excited about the opportunity to kind of get our feet into the therapeutics market with this unique formulation in Daxify. It's been more than 10 years since another treatment option has happened and been available in cervical dystonia. And so these patients have significant desires for an improved treatment paradigm. Quite different than what you kind of see in the aesthetic side in terms of there's certain satisfaction levels and things of that nature on the aesthetic side, but in cervical dystonia, there's certainly room for opportunity here to improve the patient dynamic. Our team has been having preliminary conversations with payers. Ultimately, the desire to improve patient outcomes is key. And we believe that we'll have the same flexibility that you typically have in this market around dose titration, other things. I think one of the things you mentioned was retreatment intervals. We believe that we'll have that flexibility to have patients to retreated at 12 weeks where they need and able to extend that retreatment interval as the kind of patient and the provider desire. So we'll provide more information on that in the upcoming investor day, as Mark mentioned. But from an economic perspective, we feel like we're in a really good position to provide really good benefit to patients at potentially a cheaper cost to payers. and then also just overall improving lives for the patients across both the efficacy metrics in that 12-week window, as Mark mentioned in his remarks, and then potentially an option to extend the retreatment interval.

So more to come on that. Great. Thanks, Stacey.

And your next question comes from the line of Balaji Prasad from Barclays. Your line is open.

Hi, everyone. This is McKayla on for Balaji. Thanks for taking our questions. I wonder if you could just talk a bit more about your sales messaging now that you're further into launch and have completed the expansion of the Salesforce. I guess just how has messaging changed from sales, if at all, and what are the main goals and KPIs? Thanks.

Yeah, so on the messaging side of it, you know, it's more or less around the Salesforce expansion. I mean, we added the 50 reps and we were We had sort of telegraphed our plan to expand that field force for quite some time, given that we've been at 100 reps for the last two years, and that team has done a really good job of selling the RHA collection. But we knew that with the addition of DAXify that the sale was going to become more complicated for the reps. They were going to have to sell both RHA and DAXify. while also looking to expand accounts. And so we felt the best way to prepare for that was to increase the number of reps. The great thing about a differentiated product is that there's plenty of opportunity to drive share adoption and growth, but it takes a little bit more handholding and work on the front end to educate practices about all the differences with that product. So really, there hasn't been a change in messaging due to the Salesforce expansion. If anything, it's trying to make sure that they're armed to be able to sell both products and not get pulled too far in one direction. Obviously with the Daxify launch that's generating a lot of excitement and enthusiasm in the market, but obviously they've got to sell RHA as well. And we had talked a lot about sort of the headwinds, tailwinds as we ultimately got into that, you know, expansion that there were going to be some things that we think are going to be tailwinds over time. But that in the near term, in terms of handing off relationships and passing over one relationship from one rep to another, we knew was going to take a little bit of extra effort on that side of it. And so that's really on the messaging side, but nothing's really changed there.

And on the metrics, I think you would kind of envision that it's really a revenue target metric for each rep, right? They're built off of quotas. And ultimately, what are good health metrics for them to look at? How many accounts are ordering with them in each territory? And that's different per territory, different geographic territories. They look at what's the kind of crossover with the Axiom RHA. And so it's early, but they're looking at those traditional metrics. and roll up quite differently now because we have 150 geographies that we're looking at versus 100. And so some of those metrics are going to be different. And so that's why we're looking at those things, and we'll be able to kind of continue to watch those.

But we feel good about our progress.

Great. Thanks so much.

Great. Thank you.

Your next question comes from the line of Annabelle Simimi from Stiefel. Your line is open.

Hi, thanks for taking my questions. I have a few as well. So clearly your product has grown from the 400 initial focus accounts, but as you broaden out, maybe not yet in the full 6,000, would you say that you've gone deeper in some of the initial accounts or broader with Daxify? And I guess also as you broaden, how are you able to control, I guess, both the injector experience and the message in these first quarters where people are still trying to understand how to use it, what the product characteristics are with Daxify. And then you had noted specifically that you've gotten some learnings from the initial batch of physicians. How has your messaging changed specifically with regard to these learnings from the first injectors? That's, I guess, 20 questions in one.

All right. Thanks, Annabel. Yeah, so in terms of the deeper versus broader, I mean, the nice thing is, even if you look at where we're at with RHA, it's 6,000 accounts. It's a smaller subset of the 40,000 accounts. So we're already prioritizing those accounts where, you know, we're going at it in a targeted fashion. And because we've added another 50 reps, we've tried to break down these territories into manageable pieces so that the reps are able to spend the necessary time to make sure that when they onboard an account, that they're able to provide them with the necessary resources to be successful. And again, we've got a very thoughtful process from the training we talked about to how they treat patients out of the gate with the rep there providing samples, and then what the follow-up and the activities are. And so just like with RHA, we believe that this targeted strategy is the right approach. And the reps have to continue to manage through the onboarding of new accounts while they also schedule and allocate time to go back and circle up with existing accounts that have, you know, an experience with it. And this is going to be an ongoing focus for us. Training and education isn't going to start and stop with their first use of the product. There's going to be an ongoing follow-up and passing on tips and tricks, which gets to your second question of, you know, what were those key learnings from the preview program? And I think we've talked about some of these, but we knew that people were going to, you know, reconstitute a little differently. Obviously, we've got an on-label recommended reconstitution, but people reconstitute differently, even with other conventional toxins. And so they were going to experience an experiment with some of that. Pricing, how were they going to price it to the consumer? Obviously, the higher the price, I think the expectation of the consumer goes up. So what's that sweet spot for the practice where there's more margin opportunity for them, but also a good experience with the patient. And, you know, just kind of their experience in different areas on the dosing side of it as well. We did find that some of these early practices, just out of conservatism, were dosing at a level that was delivering less than the amount of neurotoxin that they would be giving with a competitor. And so we're trying to make sure that they are appropriately dosing. So all these things have led to a refined approach around patient and expectation setting, pricing, kind of, you know, what people are seeing from a dosing standpoint in the Glabella area to make sure that they are dosed in the right way. And we believe that all of this has helped us, again, with a more streamlined approach to onboarding accounts.

Okay. And just to follow up on the 50 sales reps, when exactly did they come on board and get fully trained? And should we have seen an impact yet, or is it... going to be more measured just based on the time that they have to spend with the accounts and onboard the, you know, onboard these accounts. You know, it's a 30, you know, a 50% increase in your, in your sales force. I would imagine it would have had an impact as more significant impact.

Yeah, well, we onboarded them late Q1, early Q2. And so some of these folks come from the aesthetic industry. Others come from, you know, other types of medical technologies where they understand the sale at the physician level. And so you can imagine some of them are going to need a little bit more training and education to come up to speed in the market. So late Q1, early Q2, you start cutting territories, they start going out there, having to make sure that they're servicing existing accounts. So there's a handoff process with some of our existing accounts. In terms of fully productive, we talked about Q3 is when we would expect to start to see them fully productive. Obviously, some hit the ground running in Q2 and others are going to take a little bit longer to get up and running because they're newer to the overall industry. But, you know, that's sort of the cadence of the starting and what we would expect from them.

Okay, got it. And then if I could squeeze in one about cervical dystonia, have you had labeled discussions with FDA and what what you might be able to include there outside of just clinical study data regarding either durability effect or maybe, you know, can you make specific durability claims or specific retreatment claims in the label to differentiate from the current products?

Yeah, so just like with, you know, our glabellar lines approval, we didn't get into the specifics of where we were with our agency discussions, but what we did say with glabellar lines is that Given the effort and the thought that went into designing the clinical trial program, that we did expect the data from the clinical trials to be in the label, as we believe that that's the most comprehensive way to represent the product's performance to clinicians so that they can make sure they can give the patients the best experience. As you probably recall from our cervical dystonia trial, we saw, again, consistent duration of effect, similar to what we saw in our glabellar lines trial. and also we saw very encouraging safety results in the trial as well. And so we would expect the data from the cervical dystonia clinical program to be in the label, and that would ultimately underpin what we can say about the product in the market. Our PDUPA date is coming up August 19th, so we continue to feel cautiously optimistic about the FDA meeting that timeframe. Again, we can't control that for sure, but we feel good about where we are in that process.

Got it. Thank you.

Great. Thanks, Annabelle.

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

Thanks for taking the question. And maybe just to dig a little bit deeper into earlier comments, can you just explicitly address some of the noise that we're hearing on the market around the duration of Vaxify might not be six months? And as you mentioned, Mark, the

data expected in the cd approval will be is you know has been similar to go by airlines to date are you confident that there will not be major differences in how duration is viewed in the therapeutic market versus the aesthetic market yes so thanks tim so first on the noise on the duration side of it i think we'd say first and foremost the the experience that we're seeing play out in practice in the aesthetic market is very consistent from the clinical trial data so if you look at our trial data Median duration was six months, which meant some patients got less than six months and some got more than six months. And I think this gets to expectation setting and finding the cohort of patients that this is going to resonate the most with. And I come back to it. So I guess it's not surprising if somebody has promised a patient six months and they don't get six months that there could be some level of disappointment. But the great news about this is that we know that there's a large group of patients out there who would like to get more duration. and where this is going to resonate. And so I think it's quite possible you'll have a practice where Daxify resonates with a large portion of the patients, but yet there'll be some that for whatever reason, either for pricing or expectations, it might not be the first choice, but that's great because we think there's a great market that we can build out there with a differentiated profile. And so, again, we continue to feel really good about the performance of the product and the fact that it's performing very consistent with what we saw in the clinical trials. On the cervical dystonia side of it, we have no reason to believe that the outcomes in cervical dystonia would be different from what we saw in the clinical trial. We saw both the 125 and the 250-unit dose, very encouraging duration results, and as I mentioned before, a very encouraging safety profile as well. As we talked earlier, it's not only an opportunity for perhaps more duration for these patients and longer symptom relief, but perhaps even equally important is making sure that in this 12-week window where patients cannot get retreated, that they see as much symptom relief as possible. And in the survey that we referenced in our prepared remarks, over 80% of patients see symptom reemergence within that 12-week timeframe. And so we think that Daxify could represent a really compelling treatment alternative for a number of CD patients. And again, sitting here today, we would expect that the product will perform similar to how it did in clinical trials.

Great. Thank you.

Thanks, Tim.

Your next question comes from a line of Terrence Flynn from Morgan Stanley. Your line is open.

Great. Thanks so much for taking the question. I was wondering if there's any reason why DAXify growth won't, at a minimum, be linear through the third quarter and fourth quarter of this year. Thank you.

Yeah, great question, Terrence. I mean, I think it's hard to predict. We feel really good about the overall trajectory of the business and the opportunity and feel very good about our statements that we made about the a blockbuster potential in aesthetics, which is obviously going to be significantly underpinned by Daxify's performance. The path and the direction that we get there is difficult, given that, as I pointed out earlier, accounts are going to engage at different levels. Some are going to engage and be on board from the beginning, and others are going to treat some patients and then wait. And so it's really hard to know what the overall cadence of that is going to be. And as you know, we're not at a point where we are guiding yet. But, you know, we do feel very good about our ability to drive, you know, good growth over time.

And your next question comes from a line of Navanti from BNP. Your line is open.

Hi, thanks for taking my questions. A follow-up on duration, so we heard that some peers have mentioned that mixed dexamethasone duration feedback, so is that isolated feedback in your view, and is that only due to practices using lower doses? Thank you.

Yeah, thanks, Navan. You know, I mean, it's hard. As I mentioned in kind of the response to Tim's question, We're seeing performance that's very consistent with the clinical trial data. So again, if a patient is promised six months and they get something less than six months, particularly if they're paying a healthy premium, there could be disappointment. And so I think it all comes down to patient expectation, how much of a pricing premium that they're asking for, and ultimately what they get. But we believe that based on the data that we're seeing and the experience with the preview group, that a healthy portion of patients are getting the value that they are paying for. And that doesn't mean that they can't coexist where you have some patients who, for whatever reason, feel they didn't get the duration or the duration wasn't worth the money. But yet you have a large and healthy group that did get there. And that's part of working with these practices around the expectation setting. Again, the product's performing very consistent with what we've seen in the clinical trials. I don't know that you can kind of limit it to any specific group, but again, we're very encouraged with what we're seeing in the market.

Thank you for that. And then just a quick one on the Ethereum. So, why did they reduce the second tranche to 50 million for any change in the amendment?

Yeah, thanks, Navon. This is Toby. We took prudent steps, as we mentioned on the prepared remarks. So in Q2, we had raised $100 million through our ATM. And then we looked at sort of our capital structure, and we thought it would be prudent to work with Ethereum to find a reasonable amount that sort of manages that debt-to-equity ratio in our cap structure. And so they're very constructive to find a way with that still 8.5% fixed capital great for our second front. So we feel really pleased with the partnership with Ethereum.

Thank you very much.

Thanks.

And again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question comes from the line of Charles from Mizuho. Your line is open.

Hi, this is Charles. I just had one question on the if your strategy has changed in terms of targeting the prestige accounts Because some investors have pointed out that metaspas have been offering Daxify recently more so. Thank you.

Thanks, Charles. No, our strategy has not changed. Again, if you look at our prestige strategy, one of the things that underpins the prestige strategy is the no advertised pricing. And so it's really accounts that are not looking to use solely price as the way to drive new patient traffic, particularly with our products. that ultimately gets adjudicated at the rep level. And so we trust them a lot to make good choices. And in today's growing aesthetic market, you also have a number of accounts that might have a medical director who is a physician at one practice, but yet is a medical director at another practice. And in those cases, you can find that product makes its way from one of these practices to another. And so without the specifics, it would be hard to know. But no, our strategy has not changed. We continue to focus on accounts that are comfortable with our no advertised pricing policy for our products, which we think ultimately forces patients to make a decision around who do they want to go for our products in any given market and not just have price be the driver. But ultimately, it's the rep that makes those decisions at the local level. And again, as I said, in many cases, you'll have a medical director or a physician or an injector that might cross over a number of different accounts and relationships where you can see some cross-pollination there as well.

All right, thank you. Great, thanks, Charles.

And your next question comes from the line of Douglas Sale from HC Wainwright. Your line is open.

Hi, good afternoon. Thanks for taking the question. I'm curious, in terms of the accounts that are right now really leaning into DAXify, Are you finding that those are accounts that were already sort of open to switching away from Botox and embrace Juvo? Or, you know, is it that they are just simply adding, you know, are you finding that it's Botox accounts looking for, you know, Daxify as, you know, to add to their practice just given the differentiated profile? Thank you.

Doug, it's Dustin. I'll take a stab at that one. You know, we really haven't seen a specific type of account that's going to lean in to DAXify more than others based off of the competitive landscape. I think we've seen there's certain providers that got a really good experience, whether it be preview or on the early side of our launch trajectory. It fits their practice in terms of their pricing dynamics. They've had good results. They're continuing to drive that through. And so we've seen some that have switched significant patients off of a Dysport or a Juveau or a CMN. We've also seen that happen with Botox. Now, certainly, obviously, Botox has the largest share and obviously has the largest kind of, I'd say, moat around them as it relates to their loyalty programs and coupons and things. And so I'm sure we'll be dealing with some of those pieces over time. But no, we haven't seen kind of a specific type of practice yet. that ultimately leans into Daxify. It's really early, and so we've got equal opportunity across the landscape because despite whatever product they're using, Daxify has an opportunity to provide that patient something different.

And as a follow-up, are you finding, or when you talk to injectors, are they sort of waiting for the patient to bring it up or Are they selecting certain types of patients who they feel would most benefit from Daxify? Thank you.

Yeah, Doug, as you realize, in most of the launches, it's pretty similar. So you've got some practices that are bringing it up to every single patient. They believe in it. They believe that value proposition, and they have a high conversion rate. Some practices are more the wait and see type and are waiting for some of those activities around the consumer awareness, which obviously we talked a little bit about and we're activating some of those. And you've got others that are kind of even sitting on the sidelines waiting to kind of see how others approach the product. It's pretty typical in aesthetics. And you also see that that's why, you know, it's not maybe a yes or no today. It's kind of how this overall progresses. So, you know, I think that's kind of how we're seeing it break down. And as we get more and more customers in there in different stages, it'll help us kind of determine how to segment those.

Okay, great. Thank you.

Thanks, Doug. There are no further questions. This concludes today's conference call. Thank you for your participation. You may now disconnect.