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I agree with your last post Emannow. I believe that Mark Foley has made significant changes and fired many on his team to realign their biz. This was not an easy time for him and these are tough decisions that needed to be made. I feel their pricing is very generous and exactly where it needs to be to gain market share. In my experience, every large account that is highly profitable knows how to price their NTs. We do not allow Revance, allergan, galderma, evolus, merz to dictate pricing for us. We know what we need to make to stay happy and we price it accordingly with a good feel for price elasticity and profit/injector/hour for our geography. If we get too greedy we will lose patients...we understand this dynamic. Market forces in this business tend to be efficient as word of mouth on pricing and injector skill spreads quickly. It's why all top national accounts tend to have similar unit pricing over time in each geography. With regard to Daxxify, we didn't have a feel for duration in frontalis and lateral canthal lines at the time of product launch in December 2022. We had to figure it out and we did. Pricing was initially much higher with high minimums to get to lower pricing tiers on Daxi: the lowest tier at launch was $330/vial and the highest was $420/vial.
I am using 2 concentrations of Daxi in my practice: 1 that lasts longer and runs 30 to 50% more expensive and one that lasts similar to slightly longer than Botox but is 5 to 10% cheaper. Clients have been trying out both and deciding for themselves which one they prefer. I have an 86% conversion rate of Botox patients to Daxxify once they trial it. Half of the remaining 14% that go back to Botox go back because they had a big alle coupon with cost savings for Botox or bought a botox rebate in the past. They don't go back to Botox because they didn't like Daxi. We are seeing some 7 to 10% that don't get the duration benefit of Daxxify and we see this variability across most NTs. I can't explain it.
Today, the top Daxi injectors have a much better feel for duration of action and aesthetic in all facial injection zones and also have highly competitive pricing at $275/vial since the September price drop. Injectors that are new to Daxi are benefitting from the learnings of the early adopters.
I am also hearing about rebates coming and a loyalty program launching this year that will further aid in branding and consumer marketing in addition to patient treatment cost savings.
yes sorry. Meant more than 2/3 in Q4.
compared to Q3 earnings release:
Revenue from reordering accounts represented approximately two-thirds of DAXXIFY revenue in the third quarter, the majority
of which was generated in the month of September.
I was looking to clarify that the percentage of revenue from reordering accounts increased in Q4 from Q3. If we were seeing a drop off in reorder percentage over time would confirm that daxi is not gaining traction.
was communicated on the pre-announce in early January
you keep repeating the same stuff Emmanow. Foley lowered pricing, fired old marketing team and President Sjuts. He now allows price advertising.
he has addressed all your concerns and has changed messaging. what would you change from his current course if you were CEO for a month.
my only issue is his ask for accounts to price daxi at half the price of Botox on a unit basis. This pricing will dramatically drop the profit margins to the Injector/practice. doxy should be priced at 25 to 33% lower than Botox on a unit basis. Not 50% lower on a unit basis. pricing it like Mark Foley is recommending is not sustainable as it harms the profits for practices.
most large savvy accounts I keep in contact with that are gaining traction are pricing daxi at 25 to 33% below Botox on a per unit basis. patients save money, profit per treatment is higher than botox for the practice and Revance gets increasing sales and marketshare. all three have to win in order for Daxi Sales to thrive and grow in the coming years.
mark foley message to customer accts:
https://mi-path.io/72OFUSU
correction:
revenue generated from reordering accts was over 75% in q4 and that was up from 75% in q3. that is a solid reorder rate.
at $24M q4 daxi sales of an estimated $750M in total US q4 NT sales, I have daxi at 3.2% revenue marketshare and that is despite a big price drop. guessing unit marketshare is up near 4%.
Cost/vial:
Botox: $656 before rebates which typically are 10 to 15% cash back after the quarter = $550 to $600/vial.
Daxi: $275 lowest price point ($320/vial is avg)
Jeuveau: $370 lowest price but must buy 300 vials to get this price or $111K order. Very few accounts get this price. Most accounts getting Jeuveau at $410/vial
Xeomin: $241/vial (need 1.5Units Xeomin to get the results of 1 unit of Daxi = $360/vial dose equivalent cost.
Dysport: $500/vial after rebates.
Daxi 1.25U is my estimate of dose equivalence to 1U Botox on a duration basis so $3.43 of Daxi gets the same effect as $5.50 of Botox in my injecting hands and I don't have to wait 3 months to get that pricing via rebate.
I charge 25% less per unit of Daxi compared to Botox.
Mark Foley Rule 10b5-1 Trading Arrangements. I was not aware that Mark Foley terminated his 10b5-1 late August. Don't think any of us saw this to be honest. Spoke to some securities attorneys about what is considered "in the clear" to buy back shares after terminating a 10b5-1 and they said 3 to 6 months although I see no real formal legal guidance.
The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our Section 16 officers and directors for the three months ended September
30, 2023, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, were as follows:
Name and Title Action Date of Action Total Shares to be Sold Expiration Date
Mark Foley, Chief Executive Officer Terminate 8/28/23 442,576 5/31/2024
Olivia Ware, Director Adopt 8/31/23 9,593 8/30/2024
(1) Mr. Foley entered into this 10b5-1 Plan on March 10, 2023
During the three months ended September 30, 2023, none of our Section 16 officers or directors adopted or terminated a non-Rule 10b5-1 trading arrangement.
go to page 50: https://investors.revance.com/files/doc_financials/2023/q3/127ca7aa-db59-4fc9-a6f8-4392dbe6cf10.pdf
I can't wait to read analyst downgrades next 72hrs. There is no way a secondary will be done at these price levels. Will have to rise much higher for them to consider a secondary offering. The debt facility should be enough to get them to cash flow break even by 2025.
New non-GAAP opex midpoint is $300M which is $75M/qtr for 2024. Assuming 70% GMs for 2024 then we are looking at $100 to $110M/qtr in revenue to get us close to cash flow breakeven on a non-GAAP basis. I assume doubling in Daxi aesthetic revenue to $50M by Q42024 and flat to slightly up RHA at mid $30Ms and then add CD sales and we get close to cash flow break even on a non-GAAP basis.
Q4 Disappointing Daxi Sales.
Significantly below my Daxi targets on both unit and revenue growth. I was hoping for more price elasticity. I am hearing that many accounts have moved away from 2:1 Daxi: Botox dosing and injecting lighter dosing which could contribute to lower unit growth usage and force clients to come back sooner for retreatment. The lower strength Daxi dosing using a 2.5cc reconstitution (instead of 1.25cc) spreads more and makes frontalis injection pattern similar to Botox pattern and thus easier to learn and higher client satisfaction, just not as much duration as the double dosing.
RHA sales $2M below my estimates but this year RHA sales were not tied to getting access to Daxi like last year. So RHA sales in Q42022 had incentive that is no longer there.
2024 revenue guidance is very disappointing at $280M total and I can only hope that Mark Foley and team is looking to lower the bar so low that they beat on all fronts in 2024.
$280M total sales implies $70M/qtr and that includes all therapeutic CD sales. This quarter was almost $60M in combined sales x 4 qtrs in 2024 = $240M in sales run rate assuming we stay flat all year on RHA/Daxi aesthetic and add only $40M in CD Daxi sales in 2nd half of 2024. This is bearish sales growth forecast any way you look at it for a cutting edge neurotoxin that I am having great success with in my practice. What I am seeing in my own practice with a total of 5 injectors since early Q3 growing to 10 injectors this past quarter is not consistent with these guidance estimates.
Significantly lowered expense guidance hints at some sales force reduction and territory consolidation. I expect $50 to $100M of the remaining debt facility to be accessed by end of March. Perhaps they negotiate $50M then and remaining $50M by June. They will not want their cash to get below $100M. They will not issue secondary at such low prices.
Hoping this news marks the last of the bad sales guidance. If I were short RVNC, I would definitely be using any increase in trading volumes to cover and take gains. If this is the case, we should expect RVNC to hold near this price level and not revisit the prior lows in the $5.80 zone.
Stock price today says Q4 Sales did matter to the market. You should be buying at 15% discount today to Friday's price if you were truly LT bullish.
Disagree on Q4 revenue not being that important for long term valuation. the stock tanked when q1 2023 numbers came in below estimates and the converse will also hold true and allow for more accurate growth modeling by wall street which can signif impact share price in both the short and long term. Any signif reduction in cash burn in addition to a show of fiscal discipline will be viewed positively as it alleviates the need of further capital raise and/or share dilution.
Your targets are significantly above analysts Dew and would be a huge catalyst if they were achieved as they would dramatically lower cash burn and counter the need for further share sales or financing.
My estimate is Daxi: $34M (up 50% q/q) and RHA: $38M (20% q/q growth) = $72M. I believe this is slightly above analyst estimates.
How long after a 10b5-1 selling plan is terminated is it considered appropriate for insiders to initiate share purchases? wondering if that may be the reason we are no longer seeing share sales.
I don't know of any large volume Daxi injectors charging this much per unit. Most of my competition is charging the recommended 25% less per unit for Daxi. I consider this the right price for cost vs duration/performance that we are seeing in our practice. I am not discounting Daxi by 50% to Botox on a per unit basis, as you suggest, as Daxi is lasting significantly longer than Botox and that would reduce my annual profit per client.
Profit breakdown at 2:1 Daxi/Botox dosing:
40Units Botox at $12/unit for 3 to 4 months of duration - $1650/year patient cost. Injector profit: $890/year. Profit/Treatment: $260
80 units of Daxxify at $9/unit for 4 1/2 to 6 months duration - $1650/year patient cost. Injector profit: $1140/year. Profit/Treatment: $500
80 units of Daxxify at $6/unit for 4 1/2 to 6 months duration - $1100/year patient cost. Injector profit: $594/year. Profit/Treatment: $260
The value to the practice is at 25% unit discount to Botox. The client pays the same for the year, less visits save time and travel costs to practice because of fewer treatments each year. The injector generates more profit each year and almost twice the profit per treatment.
Too early still for clear trends by institutional investor channel checks is my thinking. The recent price drop should get significant new injectors on board this quarter and these injectors should start to place substantial reorders in Q1. Assume management will want to track price elasticity with the lower pricing tiers and why they have delayed formal revenue guidance until 2024.
My experience: On an apples to apples cost comparison: $50 of Daxxify (product cost: $50/$2.75/unit = 18 units Daxi vs $50/$5.50/unit = 9 units of Botox) injected in half the face will outperform the duration of $50 of Botox or other NTs injected in the opposite side of the face (when injected in a similar reconstitution and injection pattern). Do not let confusion on pricing/unit, number of units used, etc taint this discussion. Practices that are charging a large premium for Daxxify will lose business over time to those that price Daxi competitively and get great outcomes. We are starting to see new clients from practices that don't offer Daxxify and I expect this trend to accelerate over the next 2 years.
Disclosure: I have a significant share position in Revance and have more than doubled my share ownership the past 2 months based on the Daxxify sales trends we are seeing within my company.
your thoughts Emannow?
I don't know of a single top 250 National Allergan account that is not aware of Daxxify. Smaller, low volume accounts, which many dermatology offices tend to be (especially those with a big clinical derm focus) have managers making the key purchasing decisions. I suspect her doctor is unaware of their Botox or Daxxify vial pricing whereas all large account purchase managers can pretty much recite their pricing by heart.
Based on daily volumes the past week or two, I doubt any significant short covering has occurred and last reported short interest for Nov 15th showed rise in short interest of over 1M shares.
From what I have seen: FDA revisit/review happens 4 to 6 months after they remediate the CRL issues. They typically request a formal FDA meeting, then make a plan of action for remediation, then remediate, then FDA schedules a site visit 4 to 6 months later with a date given for approval of BLA. Why I stated 2nd half of 2024 with commercial launch in the ensuing 3 months so late 2024/early 2025 would be my guess.
Agree with Dew. Data look good. Quick onset of action like Daxxify. Don't see commercial launch until 2nd half of 2024, what happens to Dysport?, Pricing, how will it perform in Frontalis?, manufacturing details, their disagreement/arbitration with Ipsen? Revance controls all of Daxxify. Not sure what royalties Galderma will be paying Ipsen.
Galderma remains responsible for development, regulatory filing and strategy, manufacturing, and commercialization. Interactions with regulatory authorities remain the responsibility of Galderma. Regulatory approval submissions and issued certificates will ultimately be in the name of Ipsen.
The ICC award has no impact on the ongoing European decentralized procedure for the filing of RelabotulinumtoxinA nor on the commercialization of Galderma’s neuromodulator portfolio. Regulatory submissions in other territories are ongoing and remain on track.
Furthermore, in a press release dated July 27, 2023, Ipsen made statements about the purported termination of the Galderma-Ipsen Research and Development (R&D) partnership. Galderma contests those statements and remains committed to resolution with Ipsen.
I was unaware of the $285 for 100 vial price tier
Yes, hearing the $320 for 25 minimum was being offered to help out practices that couldn't quite afford the 50 vial order while not penalizing them with $420 per vial pricing. $420 per vial price is not price competitive to Botox when taking Alle coupons into consideration. Also, injectors that run through 25 vials get enough experience and client feedback to better assess the price/performance of Daxxify before deciding to re order. 25 vials is enough to treat 30 to 50 patients depending on if the injector is using 2:1 full strength vs 1:1 or 1.25:1 Daxi light dosing.
Hearing and seeing a 4 to 6 month learning curve and 25 to 75 vials of Daxxify to develop confidence in Daxi and perfect injection technique (6 months have now passed since the full commercial launch in April/May). Daxi 1:1 with 2.5cc reconstitution injecting more like Botox but Daxi 2:1 at 1.25cc reconstitution is a little more tricky in the frontalis because of less diffusion and more compensatory frontalis activity which is perceived as treatment did not last long so this is where word of mouth from other injectors is helping to educate newbies and shorten the learning curve.
NT Pricing:
Daxxify:
$275 (min 150 vials)
$295 (min 50 vials)
$320 (min 25 vials)
$420 (min 10 vials)
Botox:
$635 (no min) but Allergan gives quarterly rebates that typically range from 8 to 15% depending on how much overall volume the practice buys. This rebate is paid in arrears some 2 months after the quarter.
Therefore, cheapest Botox vial is in the $530 range. This does not include Botox sampling as Emmanow has discussed or Daxxify sampling. Both cos are sampling in varying amounts.
Assuming you are injecting Daxi at 2U to 1U of Botox and Daxi is lasting 50% longer than Botox. This is my Daxi full strength treatment.
$2.75/unit x 2U to 1U of Botox and Daxi bill of materials is $5.50/unit for a treatment that will last 50% longer than Botox. I bill 50% more for this treatment than Botox treatment because of the longer duration and the treatment makes me double the profit compared to a Botox treatment. Client gets 50% or more duration than with Botox at 50% higher treatment price, kicks in quicker and feels stronger and smoother.
My Daxi light treatment is slightly cheaper to Botox and uses 20 to 30% more units than Botox and this typically lasts slightly longer than Botox with quicker onset. The bill of materials is 35% cheaper than Botox so I make 25% more money per Daxi light treatment than Botox treatment.
He took novel yet below average technology (Coolsculpting) at Zeltiq, from being on the verge of BK, to being sold off to Allergan for $2.5B in 4 years. I could care less what his colleagues at Zeltiq thought of him. His investors were ecstatic. I feel like he has course corrected and its only a matter of time now.
this video is making the rounds in Southern California the past 3 days with a lot of name drops including Daxxify. She has almost 1M tik tok followers and this video has over 500K views. She cracks me up.
https://www.tiktok.com/@amandamccants/video/7305108831866998058?lang=en
Agree with flawed launch strategy with wrong pricing and exclusivity and significantly higher pricing for low volume purchases, but I feel they shifted their stance in a reasonable time after getting pushback and getting clearer data on duration for Frontalis. Daxi def showed and continues to show median duration of action of 5.5 months for Glabella so they were justified in pricing in the premium for Glabella at first, but when initial feedback for Frontalis duration came in less than anticipated (much of this due to injection technique rather than potency issue IMO), they had to make aggressive pricing cuts to entice injectors to bring it on and take the time to perfect their injection pattern. Mark Foley took over Daxi aesthetics from Dustin Sjuts, cut pricing, changed incentive bonus structure, and redirected the sales team toward Daxi and away from RHA which was the right thing to do to course correct.
I also fault his launch strategy for not being more methodical in addressing the frontalis injection pattern and they should have had a plan in place where KOLs that got access to Daxi in Sept 2022 should have performed various frontalis injection patterns with varying dilutions, and varying unit ratios to Botox (1 to 1, 1.5 to 1, 2 to 1, etc). 100 patients injected objectively by 10 KOLs and followed out 3 to 5 months would have given new injectors a 3 month lead on this learning curve. So I see this as a 3 to 6 month sales drag that should now start to correct. The reputational harm from the launch is hard to quantify, but if the product is truly superior, all will soon be forgotten as long as Revance stays humble and keeps on engaging with customers and pushing for the best outcomes at the best price.
We have shorts who are betting heavily that a dilutive capital raise will be needed by mid to late 2024 because cash burn will stay at $50 to $70M per quarter through much of 2024. We have Revance's CEO, Mark Foley stating otherwise. Revance has $150M of credit remaining on the Athyrium 8.5% int credit facility.
The current share price has fully priced in a dilutive raise and slow revenue growth next year IMO (e.g. Total Daxi annual sales growth of less than 100% from 2023 to 2024). Revance is trading like a commodity NT that will never get to much more than 10% US market share in Aesthetics and will be forced to compete on price to achieve that share.
A binary outcome is thus pending in the not too distant future.
A $12M to $15M Daxi sales shortfall the last 2 quarters (by my estimates) has decimated $2.5B in market cap: that is a $170M hit to market cap for every $1M in revenue miss. The converse may also hold true in the event that Daxi sales materially beat and accelerate going forward.
The January 9th, 2023 pre release: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001479290/8429c6d6-858e-445e-a255-ccdb265540f8.pdf
Revance Provides an Update on DAXXIFY® Commercial Launch and
Preliminary Fourth Quarter and Full Year 2022 Financial Results
• DAXXIFY® PrevU program off to strong start with ~400 select practice partners and thousands of patients treated, generating positive
feedback and strong, early uptake
• Preliminary unaudited Q4 DAXXIFY® revenue from PrevU of between $10.5 million and $11.5 million
• Preliminary unaudited Q4 RHA® Collection revenue of between $34.0 million and $35.0 million, a YoY increase of approximately 45%
With regard to the above preannounce, the street clearly didn't expect PrevU sales to come in at $11M from such a small number of accounts and the stock rose to close at $30.41 on Monday after having closed at $19.71 on Friday (up 54% in a day) It gapped up $3 on the opening trade and then jumped up $8 soon after leaving no time to buy anywhere near where it closed the prior trading day. In this case a $5M Daxi revenue beat led to a $900M gain in market cap in a single day: coincidentally: also a 180:1 ratio of market cap gain to Daxi revenue upside.
I expect algorithmic trading will continue to dominate and drive large volatility in share price for the foreseeable future based on Daxi revenue beats/fails.
Let's assume 150 sales reps bring on 800 to 1000 new accounts in Q4 due to the big Daxi price drop: 40 vials/account at $310/vial = $10 to 12M of additional quarterly revenue that is stacking on reorders from the existing 2500 accounts. They stated on their last CC that the average reordering account last quarter ordered 43% more vials than their previous order so if reordering accounts generate $20 to $28M of sales and new accounts add $10 to 12M we can see Q4 Daxi sales coming in around $35M plus/minus (60% Q/Q growth). Add another solid RHA quarter with growth above Q3 at $36M and we get to revenue in the low $70Ms. Current mean analyst estimate is $67M (range of $63M to $77M).
a 180 to 1 leverage ratio on Market cap gain to quarterly Daxi sales beat must be piquing the interest of some hedge fund managers as well as pushing some shorts to cover soon. We could sure use some help from the wallstreet bets reddit crowd right about now. 😀
spot on with regard to frontalis commentary and sounds like she too figured out Daxxify and is now on board with it after having had to make changes to her injection pattern. this has been mentioned numerous times on this board. 6 months for most injectors to figure it out and being that commerical launch didnt happen until last April implies that positive social media posts should start to ramp right about now. 2100 of 2500 Daxxify accounts launched the past 7 months with less than 800 or so getting to the 6 month mark right about now. also, messaging now better and more accurate with very few accounts stupid enough to promise 6 to 9 months duration. finally, pricing has largely been figured out and many accounts trialing both full strength, low strength, and in between dosing to titrate to each patients preference.
headache is common if you have compensatory muscle movement and I equate it to tension headache triggered by only treating a portion of frontalis while leaving lower portions of frontalis untreated. They then have to work harder to make up for the loss of upper frontalis muscle assistance so they fatigue and headache ensues.
Dysport injectors have fear of injecting low on frontalis because of their fear of brow ptosis with Dysport so they inject too high.
My recs to your injector: inject the frontalis with Daxi recon 2.5cc bacteriostatic saline and inject 2 rows of injections and more injections spread out more making sure to hit upper and lower frontalis. You will get more spread of Daxi and a more complete paresis and better result while still minimizing ptosis risk.
I would say that less than 1/3 of clients feel it hurts slightly more than Botox (more when treating the concentrated 1.25cc reconstitution full strength rather than the 2.5cc recon for my Daxi Lite patients), and 5% feel it is more significant, but a non-issue and still much less pain than compared to dermal fillers. It has not impeded uptake in my practice with over 300 patients treated since last December.
Exactly. ATMs are not looked upon fondly by institutional funds, but I suspect that Foley will get the credit he deserves for that decision in the future.
Revance Total Debt: $438M
1) 2027 Convertible Notes: $287.5M (fixed rate 1.75%). Revance purchased capped Call option for $29M on this debt to hedge against dilution from convert up to $49 per share. Convertible at $32.
2) Note Purchase Agreements: $150M drawn so far at 8.5% interest (lender: Athyrium). Additional $150M available by March 31st, 2024. All covenants appear to be ok.
Question: What is the source for your statement that Allergan “kicked the tires” between 2014 and 2016?
My industry contacts Dew.
Revance History:
founded 1999
Friends and family and VC funding from 1999 to 2014: $250M (My estimate based on SEC filings prior to 2014)
First S1 in early 2014: $80M raise followed by 2nd in 2014 to develop transdermal NT for topical botox competitor.
Stock hit $40 per share soon after 2014 IPO then transdermal drug candidate failed and Revance moved quickly to develop injectable drug candidate that they felt had significantly longer duration because of proprietary peptide technology. Allergan kicked tires but passed on investment around this time.
Continued trials of Daxi until first aesthetic indication approval in Sept 2022 after Covid delays and CRL in fall 2021. Followed by first therapeutic approval in CD August 2023.
Long time CEO, Browne, was pushed out for HR issues and board member Mark Foley took over CEO role in 2019. Mark Foley's big claim to fame was taking Zeltiq, the maker of Coolsculpting, from the brink of BK and a valuation below $150M to a sale to Allergan in 4 years time for $2.5B = 1600% gain.
Multiple rounds of share sales over the past 9 years to raise over $1B since it was founded in 1999. Banks have made a fortune from Revance's capital raises over the last 9 years: Cowen, GS, Piper, Sun Trust, William Blair, Barclay, Cantor, Guggenheim.
Financial Metrics:
Market cap today at $5.80/share price: $510M
Cash end of Q3: $300M
Cash burn Q3: $70M
Estimated Cash year end 2023: $238M (my estimate)
Total Debt: $438M
1) 2027 Convertible Notes: $287.5M (1.75%). Revance purchased capped Call for $29M on this debt to hedge against dilution up to $49 per share.
2) Note Purchase Agreements: $150M drawn so far at 8.5% interest: Athyrium. $150M still available by March 31st, 2024. All covenants appear to be ok.
Quarterly Opex with R&D: $100M
GMs: 65%, but will gradually rise toward 75 to 80% next 24 months as Daxi production ramps toward PCI manuf facility in NY by 2025. Daxi margin goal at full ramp by 2027 is mid to high 80s.
Therefore: needs to get to $150M in quarterly revenue to get to break even at 65% GMs. RHA: $32M, Daxi Aesthetic: $22M this past quarter. My target by Q2 2024: RHA: $40M, Daxi Cosmetic: $45M, Daxi therapeutic: $10M = $95M revenue and cash burn of $38M and cash remaining of $140M assuming they don't tap remaining $150M of Athyrium credit facility.
Current annual Revenue run rate: $225M. Goldman 2024 revenue estimate recently cut from $380M to $335M. My target is $370M.
Stock has topped near $40s several times over the last 9 years and bottomed around $12 several times. Share price has never dropped below $10 prior to its recent drop. May 2023 share price topped at $37.70.
In summary: 24 years of human work/effort to develop a novel drug, with lots of R&D, and over $1B invested and spent to get here and just now ramping up manuf/fill/finish capacity, 150 person sales force hired and trained by May 2023. Full Teoxane license with $140M annual sales of RHA past 12 months at 65 to 70% GMs. No safety issues and sales of Daxi just started in Q2 2023 and now starting to ramp as pricing model solidified, messaging getting optimized, injection technique getting optimized, and as word of mouth starts to take hold and as docs like me see client after client coming back super happy after their first Daxi treatment and not wanting to go back to Botox.
No approval risk. Sufficient cash and credit facility remaining to get us to cash flow break even by 2025. Interest expense on debt reasonable.
And with an Enterprise Value of $648M, you are now buying shares at 50% below invested capital on a real basis while saving 10 years of time/human capital, and while fully de risked and we now know the product works and is superior.
Stated otherwise: for a new competitor to come along to compete against Revance, they will have to spend over $1.5B in drug development costs and need 8 to 10 years to get to where Revance is today and you can simply buy Revance today at less than half that price fully de risked.
Damn!!
Yes. CD market is significant and I expect Revance could capture 25% of it within 9 months of commercial launch and over 50% by 2nd year.
We get that you feel the launch was botched on pricing and I completely agree that the $420 per vial pricing was way too high for small order accounts who make up most of the market and don't want to jump in 100% before testing it out. Also, the minimums to get to $330 per vial (150 vial order), were way too high and they played the premium pricing/luxury branding card to a fault which restricted sales to very large top 10% accounts.
But it sounds to me like you feel the new pricing will not be enough to repair the damage and that Foley has caused irreparable damage. Am I reading you right? or do you feel the new pricing will now set the ship straight? if so, we lost 5 months of solid revenue growth/acceleration from April commercial launch to September price cut. Likely cost us $15M in Daxi sales over 2 quarters. Still not enough to justify a $2.7B market cap collapse IMO.
You want the top CD injectors fully trained and ready to launch Daxxify in their practices asap (Q1/Q2 2024, not Q3): 200 to 400 CD docs trained and ready to go by early Q2 2024. 1000 CD docs do 80% of the US Volume. Very important to have 200 to 400 trained Daxxify CD docs by March and then the J code coverage allows them to get a rolling start as soon as payor coverage formalized. launching into a $350M market where Daxxify will dramatically reduce the cost and inconvenience of treatment will have a big impact on cash burn and help this ship course correct to cash flow breakeven without a secondary or ATM.
Moving parts:
1) Daxxify cosmetic sales acceleration: better messaging, better pricing, and better training for frontalis. Pricing was the big issue and that has now been taken care of in a big and aggressive way. Large national accounts kicking Daxi tires since price drop. Promising 1 to 2 months longer duration than Botox at 2:1 dosing rather than saying "lasts 6 to 9 months total duration". "If botox gets you 3 to 4 months, we want Daxxify to get you 4 to 6 months at 2 to 1 unit dosing". Pricing it at a slight premium to Botox for the 2:1 unit dosing but making sure it is not more than 25 to 50% more than their typical Botox treatment. My patients pay 30 to 50% more for Daxxify but gets 30 to 75% more duration and that is an easy sell for experienced injectors. I get zero pushback on this with my clients.
2) CD Launch: TBD. Hoping they are being conservative and that CD sales will materialize 2 to 3 months ahead of plan in early Q2.
3) Cash burn: $300M of cash remaining at end of Q3. Cash burn of $70M in Q3. Assuming total sales grow to $70M in Q4 25% growth q/q from $56M in Q3 and the burn should decrease to $60M and total cash will decrease to $240M by year end 2023. hope to see them finish Q2 2024 with $150M cash.
4) Will they need to access $150M credit facility by March 2024? I hope not, but nice to know they have access to more capital in case a bigger price war materializes among all the NT competitors.
futhermore, to Dew's comment which I agree with. The market size when Dysport launched was 1/4th the size what it is today, was 1/3rd the size when xeomin came out, and 25% smaller 4 years ago when Jeuveau launched. A better comp would be what percentage of total USA NT market revenue does Daxxify control at 12 months post commercial launch (Q2 2024 by my dates) compared to where Dysport/Xeo/Jeuv were at 1 year post launch.
agree. big diff with writing a script vs injecting a NT, but do agree that 10 months to full commercial launch for CD is excessively cautious. You have nothing to lose at this point with your stock down at $7. The FDA trial on CD was successful...have confidence and launch full speed ahead is what I would do if I was CEO. The prevu docs injected their first CD patients in September. These patients will return in December for maintenance treatment which will give the prevu docs sufficient feedback on outcomes and success to optimize their 2nd treatment dosing/pattern and once they get feedback from these patients by Jan they should be training a larger group of CD docs by Jan/Feb with a much larger launch to the top 200 to 500 CD docs in the USA by late Q1/early Q2. I am worried that mid 2024 means no real CD revenue contribution until Q3 2024
EOLS conf call slide deck 11/7/2023
https://s29.q4cdn.com/603291515/files/doc_presentation/2023/11/07/Q3-Earnings-Deck-vFINAL.pdf
slides 13-15 are Daxi/Jeuveau graphs
the 40U jeuveau appears to buy patients 23% longer duration for double the units 149 days to 183 days. So twice the cost for 23% longer duration.
Evolus is worthy of mention on this board as it is a pure play NT competitor that has 4.25 years of sales history that we can use to gauge Daxxify's growth trajectory in the coming years: https://stockanalysis.com/stocks/eols/revenue/
disclosure: I own shares of Revance and have continued to add.
I do not own shares in Evolus