Biotech Values

[DewDiligence]

Re: RVNC valuation

RVNC is a compelling buy for long-term investors, IMO. Here’s why:

• In the phase-3 results from the SAKURA-1 and SAKURA-2 studies reported in Dec 2017 (#msg-136643306, #msg-136644001), RVNC showed that RT002 was a safe and effective product for treatment of glabellar lines, with a longer duration of action than Botox—or any other botulinum toxin on the market.

• In the phase-3 results from the SAKURA-3 study reported in Dec 2018, RVNC corroborated the safety, efficacy, and duration of action seen in SAKURA-1 and SAKURA-2 (#msg-145245523, #msg-145245675, #msg-145245803). SAKURA-3, which included 2,700 patients and 3,800 total injections, was the largest study of its kind ever conducted.

• As RVNC prepares to submit its BLA for glabellar lines in the next few months, RVNC is almost assured to launch a best-in-class product in a fast-growing market within the next 15-18 months.

• RVNC has also shown that RT002 is safe, effective, and long-lasting in a phase-2 trial in cervical dystonia (#msg-136558193), and is now conducting two phase-3 trials in this indication (https://www.clinicaltrials.gov/ct2/show/NCT03608397, https://www.clinicaltrials.gov/ct2/show/NCT03617367 ). Compared to aesthetic indications, therapeutic indications such as CD have outsized economic value to RVNC because the dosing levels are so much higher.

• The current worldwide aesthetic and therapeutic market for botulinum toxins is >$5B annually, and market researchers expect this figure to reach $10B in the next four years.

• The addressable market for botulinum toxin is truly global. As emerging middle classes in formerly poor countries gain disposable income, one of the things they want to spend it on is looking good.

• I previously estimated that AGN’s Botox franchise (including aesthetic and therapeutic indications) had a net present value of $24B (#msg-127654469) and, based on the passage of time, that figure is already too low. As I’m typing this message (RVNC share price=$17.13), RVNC’s enterprise value on a fully-diluted basis is only $550M (#msg-147253991). Plainly, there is considerable headroom for RVNC at the current valuation.