Revance Therapeutics Inc (RVNC)

[soma2022]

Revance History and Where We Stand (My post from Nov 2023 is linked here: https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173214109)

For what it is worth: EV back in Nov 2023 was $650M and EV of current TO is around $585M at Tender price of $3.10 and 105M shares, $427M debt, and my estimate of $165 to $170M cash at year end.

I am very surprised by the significantly lowered price and disappointed.

25 years of human work/effort to get here and develop a differentiated Neurotoxin that is superior on a price/performance/duration basis. Zero approval risk. Over $1B invested to get here, now approaching year 2 post commercial launch with continued and significant market uptake and injector growth while gradually closing in on the more rapid upswing phase of their growth curve from 2026 to 2030. I estimate forward 12 month Daxxify sales of over $150M (despite the transition to Crown) and over $140M annual sales of RHA past 12 months at 60 to 65% GMs. Sales force and mid levels being right sized and messaging and training and injection patterns getting optimized and perfected with high satisfaction rates for Daxxify and strong word of mouth. The product works well! Then add in the potential of therapeutic revenue once they have cash to restart trials in spasticity and support the CD launch in 2025 onward.

Crown is paying 60% below invested capital on a real basis while saving over 10 years of human drug development capital. Backing out the value of the RHA agreement, I feel Crown effectively paid around $400M for Daxxify. Let that sink in, and they have over $1B in carry forward losses on the books.

For a new NT competitor to come along and compete against Revance, they will have to spend over $1B in drug development costs and need at least 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.

The implications are significant, and the Daxxify story is far from over. If anything, Daxxify just gained even more superiority on a cost/performance basis because of this. Kudos to Crown and their PE backer. This will go down as a master class in Vulture capital. A private Crown with no reporting requirements, running much leaner than Revance ever did, and having acquired their NT at 30 cents on the dollar on a real basis will wreak some havoc on the $2.5B US Neurotoxin market. For Allergan, Galderma, Evolus, Merz, etc to sit idly by and allow this acquisition at such a low price will come back to haunt them in ways they have not yet considered. Crown will almost certainly cannibalize pricing in the coming years. I predict that a $400M Daxxify acquisition price today will destroy over $150M a year in profit margins for the entire US NT market in the coming years. For this reason, Allergan and the others should have made sure to force Crown to pay up. The original $6.66 TO price = EV: $950M, IMO was the right price to keep Crown from causing too much damage to industry pricing.

I see Crown growing their Daxxify business over the next 2 to 3 years and then taking the company public again at a value 3 to 5x greater. Congratulations to the Crown team.

Though I am not optimistic, now that the low ball offer of $3.10 has printed, perhaps we get a competing bid from someone from a defensive strategy. Allergan paid over $2B for Coolsculpting and Kybella and those products had no significant market potential. Daxxify at this price to Crown stands to harm Allergan and the other NT cos significantly.