Evolus - Q2 2023

Transcript

Operator (participant)

Good evening, and welcome to Evolus second quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. David Erickson, Vice President, Investor Relations.

David Erickson (VP of Investor Relations)

Thank you, operator, and welcome to everyone joining us on today's call. With me today are David Moatazedi, President and Chief Executive Officer, Rui Avelar, Chief Medical Officer and Head of R&D, and Sandra Beaver, Chief Financial Officer. Our prepared remarks today will include forward-looking statements within the meaning of United States securities laws, and management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business, strategy, operations, or financial performance. A detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Actual results may differ materially from those expressed in or implied by the forward-looking statements.

The company undertakes no obligation to update or review any estimate, projection, or forward-looking statement. Additionally, today's discussion will include non-GAAP financial measures, which should be considered in addition to, and not as a substitute for or in isolation from, our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and on our investor relations website at evolus.com. Following the conclusion of today's call, a replay will be available on our website at evolus.com. With that, I'll turn the call over to David.

David Moatazedi (President and CEO)

Thank you, David. We're pleased to report another quarter of continued above-market sales growth that reflected record sales and accelerating growth over the first quarter. In the second quarter, we achieved all-time highs across several leading indicators, including expansion of new accounts and increased consumer usage of Jeuveau through our Evolus Rewards consumer loyalty program. On top of an above-market Q1, second quarter growth accelerated by 10 points, resulting in an increase of one full share point for Jeuveau in the front half of the year, exceeding our internal goal by already achieving our full-year share target. The combination of continued strength in execution and increasing momentum gives us the confidence to raise our 2023 sales guidance to between $185 million and $195 million.

This updated guidance equates to over 30% growth at the upper end of our range and is more than triple the estimated category growth rate. While we continue to concentrate on strong execution, we remain focused on our 2028 sales goal of $700 million, driven by the continued expansion of Jeuveau in the U.S., the international expansion of Nuceiva, and the introduction of Evolysse. Moving to Evolysse, we are rapidly advancing the clinical programs to support the regulatory approval for the first two Evolysse filler products in 2025. We expect to complete our FDA filing in approximately 12 months. Additionally, we recently completed our phase II extra-strength study for Jeuveau and look forward to the presentation of those results in the fourth quarter. From an operating standpoint, we continue to exercise disciplined operating expense management and remain committed to reaching sustained profitability.

Our operating leverage is evident by our 28% increase in top line in the front half of the year, which was nearly double the rate of non-GAAP operating expense growth. This is a continued trend of increasing operating leverage. Overall, Evolus is delivering on our goals for growth and operating performance as we advance our mission to become a global multi-product aesthetics company. Now I'll get into some of the details. Second quarter sales grew 33% year-over-year, as broader adoption of Jeuveau continued to drive market share gains. Our above-market performance is evidence of both our accelerating momentum and a resilient U.S. toxin market. Our key performance indicators continue to reflect increased market penetration. During the second quarter, we added nearly 800 new accounts, bringing our total customer count to approximately 11,000.

This record number of new accounts validates the compelling value that our unique business model offers to both new customers and existing clients who are purchasing greater quantities of Jeuveau, enabling access to additional loyalty program benefits. These benefits include co-branded media opportunities targeted to the younger generation, such as streaming TV ads, billboards, and digital advertising. We expect to continue adding new customers at a robust pace in 2023 and beyond as we penetrate more deeply into the total U.S. market of 30,000 accounts. Of note, Jeuveau has only penetrated about one-third of the account base currently offering neurotoxins. The durability of Jeuveau can be measured by consumer activity through our consumer loyalty program. There are two key metrics we view as predictive of future growth.

The first is new members who enroll in our program, and the second is the total number of consumers, which includes a combination of new and existing members. In this quarter, we added 64,000 new members to our Evolus Rewards consumer loyalty program, bringing our total Jeuveau user base in the program to 638,000. Enrollment in our text-based Evolus Rewards program is simple for members. Once enrolled, members receive $40 off each Jeuveau treatment. This drives these members back into the practice more frequently, allowing our customers to cross-sell additional treatments. Importantly, the majority of new to toxin members in our rewards program are millennials or younger, which is a highly desirable demographic that will represent the majority of users in the category over the next several years.

Total Jeuveau treatments in our loyalty program exceeded 147,000, an all-time quarterly high, as existing members continue to return for repeat treatments of Jeuveau, demonstrating sustained brand loyalty. During the quarter, we reached an important milestone by completing the 1 millionth treatment in this program since launching it three years ago. Turning to our international operations, we are now commercial with Nuceiva in five major countries. We are continuing to build momentum in Great Britain, Germany, and Austria, are excited to have recently initiated the launch of Nuceiva in Italy, the fourth largest aesthetic neurotoxin market in the $500 million European region. Europe remains an important part of our overall growth strategy, representing an estimated high single digit millions in sales in 2023.

Longer term, we continue to expect total international sales to represent 10%-15% of our 2028 revenue target of $700 million. Now I'll turn it over to Rui for a product development update.

Rui Avelar (Chief Medical Officer and Head of R&D)

Thank you, David. I'd like to provide you with an update on our five new HA fillers, currently in late stages of development. The Evolysse product line covers a broad spectrum of indications, including mid-face volume restoration, nasolabial folds, lip volume, and an eye product to address the hollows under the eyes that can lead to those dark circles. This is a next-generation filler line, one that utilizes cool technology. As mentioned on the last call, our partner, Symatese, developed a first-in-class manufacturing process that helps to preserve the natural complex of the hyaluronic acid molecule. This is key to creating a gel that is dynamic, to ensure it moves naturally with tissue, and able to withstand repeated shear and stress to last over time. The first two products, Smooth and Lift, are currently undergoing clinical investigations. 140 patients were enrolled at six clinical sites.

The study is one year long and uses Restylane-L as the active control. It's a non-inferiority design and looks at the change from the baseline using a validated nasolabial fold scale compared to Restylane-L at six months after treatment. The one-year follow-up ends in Q4 this year. Patients will receive a repeat treatment. We continue to be on track for approval of these tow products in 2025. The study for the third product, a midface cheek volumizing filler, Sculpt, is a longer trial. 308 patients were enrolled at 11 sites. This study is two years in duration and uses Restylane-Lyft as the active control. This is also a non-inferiority design, with the primary endpoint at six months, comparing Evolysse to the active control. We expect the last patient to complete the study in 2025, leading to an approval in 2026.

Regarding the lip filler, we plan to submit the IDE in Q4 of this year, followed by the eye product in Q1 of 2024, and expect to have the approval for both products in 2027. We'll provide further details about these trials in the near future. The two initial products, Smooth and Lift, will be the most versatile and we expect will represent the largest volume. The next product, Sculpt, used for the mid-face volume, represents the premium priced filler segment. The lip and eye products address more specialized market segments. This is a complete portfolio positioned to be highly competitive in this growing market. Turning to our extra-strength Jeuveau program. During the quarter, we completed our phase II clinical study.

The interim data provided halfway through the study demonstrated 26 weeks or six months of duration across various parameters as we followed patients back to their baseline after being treated. We look forward to having the final data set presented in the fourth quarter of this year. We continue to receive positive feedback from customers who are interested in combining the unique precision profile of Jeuveau with the option of a longer duration formulation. This, in combination with our final extra-strength data and the input from advisory boards, will help guide us with respect to our next steps with this program. With that, I'll hand it back to you, David.

David Moatazedi (President and CEO)

Thanks, Rui. We remain very excited about the differentiation of the Evolysse portfolio and its potential to become one of the leading HA fillers in the U.S. Our cash-based focused platform was designed for scale, there are tremendous synergies we can achieve by leveraging our seasoned sales force and our rapidly growing customer loyalty program to launch this innovative new technology alongside our flagship, Jeuveau. We continue to believe the combination of a highly competitive filler line and our growing customer base provides a unique opportunity to build a durable brand that adds tremendous value to Evolysse and our shareholders. I'll turn it over to Sandra, who will cover the financials.

Sandra Beaver (CFO)

Thank you, David. I would like to echo David's earlier comments and congratulate the Evolus team for another quarter of above-market overall performance, including record highs in sales and our key metrics, and for their continued focus on operating expense and cash management. Turning to the results. Global net revenues for the second quarter were $49.3 million, up 33% compared to net revenue in the second quarter of 2022, with U.S. sales comprising more than 95% of the total. Once again, U.S. sales this quarter were driven primarily by higher volumes. Pricing in the U.S. remains strong overall. Our average selling price in 2023 is running in line with the same period last year, while our customer reorder rate continues to track above 70%.

Our reported gross margin for the second quarter was 68.7%, and our adjusted gross margin, which excludes the amortization of intangibles, was 70.2% and in line with our guidance. Our GAAP operating expenses for the second quarter were $64.5 million, compared to $53.8 million in the first quarter. Non-GAAP operating expenses for the second quarter were $42.7 million, which included a $4.4 million milestone payment related to our new U.S. filler license. Excluding this, non-GAAP operating expenses were $38.3 million, compared to $35.5 million in the sequential quarter. This represents an 8% increase in non-GAAP operating expenses, while revenue increased 18% compared to Q1. As a reminder, non-GAAP operating expenses exclude product cost of sales.

Reported selling, general, and administrative expenses for the second quarter were $41.2 million, compared to $37.4 million recorded in the first quarter, with the increase mainly attributable to higher commercial costs. This quarter, SG&A expenses included $4 million of non-cash stock-based compensation, compared to $3.3 million in the first quarter. As I mentioned, this quarter, we recorded a $4.4 million expense related to the first milestone payment to Symatese. As a reminder, our next milestone payment of EUR 1.6 million is not due until 2025, after the planned launch of our first filler product. Our non-GAAP loss from operations in the second quarter was $8 million, compared to $5.9 million reported in the first quarter. Non-GAAP loss from operations this quarter includes the $4.4 million license milestone expense.

Net of license expenses, non-GAAP operating loss declined $2.3 million as compared to Q1 and $10.5 million as compared to Q2, 2022. Continuing our trend toward profitability and consistent with our initial 2023 guidance, we continue to expect to achieve non-GAAP operating profitability in the fourth quarter, excluding our investments related to Evolysse. Both non-GAAP operating expenses and non-GAAP loss from operations exclude stock-based compensation expense, revaluation of the contingent royalty obligation, and depreciation and amortization. To further elaborate on the investment related to the U.S. filler, as previously announced, we will fully fund the filler launch cost, which takes the combined business to sustained profitability in 2025, by drawing on the available $50 million tranche of debt from Pharmakon, with $25 million in Q2 and $25 million in Q4 of this year.

Last quarter, we raised our 2023 OpEx guidance by $8 million, solely to account for the addition of filler launch costs, including the upfront $4.4 million milestone payment. Net of this $8 million in 2023 and an estimated $15 million in interest expense, that leaves $27 million available to be invested until the filler is profitable. This investment will be concentrated over the back half of 2024 and the front half of 2025. Considering the high leverage we achieve on our existing infrastructure, launching the filler line is highly synergistic, which gives us the confidence this additional $50 million fully funds the launch. With sustained profitability on the toxin achieved this year, we're confident that we are fully funded to sustain profitability on the combined filler and toxin businesses. Turning to the balance sheet.

We ended the second quarter with $41.7 million in cash, compared to $31.5 million on March 31st, 2023. The sequentially higher balance included the drawdown of $25 million from our Pharmakon credit facility. In the second quarter, net cash used for operating activities was $13.3 million, which included the $4.4 million milestone payment. Net cash used in the second quarter of 2023 declined sequentially as compared to the first quarter of 2023, representing our continued progress toward cash flow breakeven. Before I turn it back over to David, I would like to summarize our 2023 guidance. Based on our strong year-to-date performance and confidence in the resilient toxin market, we now expect total net revenues for the full year of $185 million-$195 million.

The third quarter is typically our seasonally lowest of the year. An adjusted gross margin in the range of 68%-71%, unchanged from last quarter. Full year 2023, non-GAAP operating expenses between $153 million and $158 million, also unchanged from last quarter. Other modeling assumptions for 2023 include quarterly interest expense of $3.5 million and full year weighted average shares outstanding of approximately 57 million. Looking beyond 2023, we continue to target total revenue of $700 million in 2028, driven by continued growth and share gains in our neurotoxin franchise in the U.S. and international markets, along with the growing contribution from our Evolysse line of fillers that begins in 2025. This equates to a compounded annual growth rate of 29% on a total addressable market that is 70% greater with the addition of a filler product line. Back to you, David.

David Moatazedi (President and CEO)

Thank you, Sandra. The results of the second quarter clearly demonstrate the continued above market progress the Evolus team is achieving in their execution of our long-term growth strategy. With record quarterly revenue and all-time highs in our key metrics, we continue to build momentum, outpacing both the underlying growth of our markets as well as the competition. As we mentioned, we believe that we gained another point of market share year to date, bringing us to 11% market share of the toxin market in just two years since the relaunch of Jeuveau. While we are very excited about the continued momentum in our toxin business, we know that adding the filler lines will expand our total addressable market by 70%, driving us towards $700 million of revenue by 2028, a 29% CAGR on the top line.

Simply put, we have a clear path to exceptional growth. We are fully funded to achieve that growth, and we have an experienced team in place to execute our growth plan. With our business model focused on the cash pay market, we have built a moat from our competitors. This category is transitioning from pharma to beauty, and our cash pay focus enables us to partner with practices through first-in-class programs like our co-branded media, which helps accelerate practice growth and to do so more profitably. This is a unique and sustainable competitive advantage for Evolus, the benefits of which are evident in our pace of growth and strong financial results. We're excited to report Q2 results above our expectation and to raise our outlook for the balance of 2023. We look forward to keeping you apprised of our progress as the year unfolds.

Now, let me turn the call back to David briefly before we go back to Q&A.

David Erickson (VP of Investor Relations)

Thank you, David. Before we go to Q&A, I want to mention that Evolus will be participating in three upcoming investor conferences. First is Canaccord Genuity's Growth Conference on August 9th in Boston, the HC Wainwright Global Investment Conference on September 12th in New York, and Cantor Global Healthcare Conference on September 26th, also in New York. We invite interested investors to reach out to us or to their salesperson at these banks to schedule a meeting with our leadership team. With that, we're ready to take questions.

Operator (participant)

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Marc Goodman with Leerink. Please proceed with your question.

Rudy Li (VP)

Hey, thanks for taking the question. This is Rudy on the line for Mark. Congrats on the strong quarter. I just have a question regarding the market dynamics. I think you mentioned that you already reached over 10% market share. Maybe can provide more color on the market dynamics, given the U.S. toxin market declined in single digits in the same quarter, and how the trend looks like in moving into third quarter? Thanks.

David Moatazedi (President and CEO)

Hi, Rudy. This is David. Thanks for the, the question on the market. You know, just stepping back, overall, the market continues to be strong. We see, whether it's conversations with our account base, or the data we're seeing within, our research, is that the toxin market continues to grow at a healthy clip. Now, we recognize you're reconciling different reports that are gonna be published from the different manufacturers, and you ultimately have to triangulate to what your growth assumptions are. I think they all point to a market that continues to be favorable through the front half of the year, and also point to the fact that we're coming up on a back half of the year that will wrap around on a relatively depressed base.

We do expect the back half of the year to also be very strong, if not pick up a tick from what we've seen in the front half.

Rudy Li (VP)

Got it. It's very helpful. Sounds good.

David Erickson (VP of Investor Relations)

Next question.

Operator (participant)

Our next question comes from Annabel Samimy with Stifel. Please proceed with your question.

Annabel Samimy (Managing Director)

Hi. My questions were kind of along the lines of that. I guess we used to use Botox as somewhat of a proxy for market growth, given they're the largest player, and you certainly seem to be bucking that trend. I, I guess, you know, clearly you're grabbing market share. You're now at 11%, but can you give us a little bit more color of some of the market share that you're experiencing within the practices that you have partnered with or are, are, are, are within your Evolus program and how that might look. I think the 11% that you're talking about is for the broader market. Maybe you can just give us a little color there. Then I have some follow-ons. Thanks.

David Moatazedi (President and CEO)

Great. Annabel, thanks for the question on, on growth. Yeah, look, in, in this market, it's always challenging within a quarter to tease out exactly what's taking place. I can tell you first anecdotally, in conversations with large medical spas that are chains or individual practices, I consistently hear that practices are growing. Of course, they're not growing at the post-pandemic rate that we saw. That was a significant boom. We're back to growth rates that are in line with where they were prior to the pandemic. That's pretty consistent that we're seeing geographically across the country. As we stratify our customer base this quarter, the majority of, of our growth came from our existing customers. We see that the larger customers, as well as the smaller ones, are continuing to grow at a healthy clip.

When you step back, right, this is a $300-$500 procedure for the consumer. It's very affordable. This is the gateway procedure in the category, and once consumers get into the space, they continue using the product. We demonstrated that in our consumer loyalty program as well, where we're seeing redemptions of existing patients hitting an all-time high. All metrics continue to point very favorably in this market, and we feel very confident in the strength of that, that continued growth.

Annabel Samimy (Managing Director)

Okay, any, any sense of the share within the practices itself, themselves that you're partnered with?

David Moatazedi (President and CEO)

Yeah. As you pointed out, clearly, we are gaining market share in the toxin category with the growth that we had, year to date, not just in this quarter. As you saw last year, we continued to pick up share as well, where last year, we grew at a very healthy clip also, with, with about 50% growth. We continue to see a very favorable trend where existing customers are willing to commit more of their business to Jeuveau as they gain confidence with our brand, and they participate in the benefits of our advertising, which is a key driver, especially when they're looking for growth. That younger generation is the growth driver. Our advertising is targeted to that younger generation, and the more they invest with us, the more we invest back into that advertising.

That benefit continues to build as you move up our Evolux tiers for our customers that purchase more. We're seeing the benefits of both the field's confidence in selling the product and the customer engagement with the company. It's a very different go-to-market strategy that we've designed because we're cash-based focused, and the market's starting to take notice of that, and we're seeing it reflected in the uptake.

Annabel Samimy (Managing Director)

Okay, great. I guess maybe switching tacks a little bit on the extra strength. You know, I know you want to consult with your scientific advisory board on next steps after the full data come out. Is there any direction that you're leaning in? I mean, we've done our own channel checks, and it seems like the injector population isn't particularly hesitant to use, or reconstitute the drug off label to get extra strength. Any directions that you're leaning in at this point?

Rui Avelar (Chief Medical Officer and Head of R&D)

Thanks, Annabel. You're absolutely right. That's exactly what we're seeing. With the presentation of the data, really, the two things that people are pointing to is publish the data, put it into the public domain, and remember, these files are already commercially available. They're basically saying, "Just finish the dataset, show it to us, publish it, and we'll take it from there." Then there's another group that basically says, "You know, you should consider doing head-to-head," but really, no one's really pushing towards taking this to full registration.

Annabel Samimy (Managing Director)

Okay, great. Thank you so much.

Operator (participant)

Our next question comes from Navann Ty with BNP. Please proceed with your question.

Navann Ty (Lead Analyst for Healthcare)

Hi, thanks for taking my question. Can you let us know the specific drivers for the Q3 Jeuveau stronger acceleration versus the growth we've seen in Q1? Also on market shares, AbbVie's Botox market share was steady in the quarter. Did Jeuveau take share from other players? Have you seen any trend of consumers switching to a value toxin like Jeuveau? Thank you.

David Moatazedi (President and CEO)

Yeah. Navann, thanks, thanks for the questions. Let me start with share. Since launch, the large majority of our share has been coming from Botox. When you speak with customers, it's intuitive. We have the only other 900 kilodalton molecule on the market. We believe that scientifically, that is the gold standard. As accounts gain experience with our brand, they're learning about the unique precision profile, which offers a unique advantage when you're injecting neurotoxin. Naturally, we continue to believe that as we gain share, not just in this quarter, but going forward, it will continue to come from the market leader.

As it relates to how we think about the back half of the year, you know, rather than comment on each quarter, I think it's, it's fair to represent it as the back half of the year has some favorable dynamics to it. You're coming up on a depressed base from the back half of last year that we'll wrap around from. You have a front half of the year where from our standpoint, we've exited with some significant tailwinds. We've obviously had very strong performance that accelerated from the first into the second quarter. We think that that, in combination with the continued strength of the market, creates a lot of momentum for us in the back half of the year.

On top of that, we continue to see very nice growth internationally. As you know, we've only been in the international markets in Europe for just three quarters now, and so we're seeing very good uptake in the early days. As Rui pointed out, the extra strength data is a topic that gets reviewed at all major medical meetings, and understanding that relationship between dose and longevity is an important one. Our phase II final results are going to be an important data set that confirms the relationship between dose and duration. Lastly, what we didn't anticipate with the announcement of Evolysse was the amount of excitement we're getting from customers that we hadn't engaged with before, that were always asking what we would be adding to our portfolio next. This really is a novel technology.

It's one that, through the advisory board meetings we've had in the second quarter and in speaking with investigators, there's a tremendous amount of excitement around this product. I think the combination of those things gives us a lot of confidence that the back half of the year is going to be a great, great back half for us.

Navann Ty (Lead Analyst for Healthcare)

Thank you. Actually, on the international launch, do you have any key learnings from your month-long launch in Italy? I know it's been recent, and also your other launches in Europe so far.

David Moatazedi (President and CEO)

Yeah, the, the team is doing a, a really nice job in, in the key metrics, executing against them. Clearly, it comes down to the product, which we understand the product very well from the U.S. We've taken those learnings, a number of those key opinion leaders, and we've engaged key opinion leaders in Europe that we've used as we've introduced the product in new markets like Germany and Austria, and now most recently in Italy. The more we invest in education, we do see greater confidence and better uptake resulting from that. We continue to replicate that model as we bring the product into new markets, and we establish a new company and a new brand in the space. We're pleased with the uptake we're seeing, in the markets that we've entered thus far.

Navann Ty (Lead Analyst for Healthcare)

Thank you.

Operator (participant)

Our next question comes from Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Louise Chen (Managing Director)

Hi, congratulations on all the progress this quarter, and thank you for taking my questions. I think first what I wanted to ask you about was your facial filler line. It looks like you have some opportunities where you might be first to market here, where I don't see any other additional competition. for example, from the eyes perspective, I'm just curious if maybe you could lay that opportunity out that seemed really unique and any other of these opportunities that you mentioned here, where you might be first to market or where you have a real competitive advantage. then secondly, on the $700 million, you know, where are the potential upsides to that? then also, if there's any way you can break out what you put in there.

I know that you said 10%-15% is international sales, but how do you think of all your other products that are grouped in there? Thank you very much.

David Moatazedi (President and CEO)

Great. Some great questions in there. Let me start with Evolysse. As you know, we did significant diligence on fillers around the globe before we reached an agreement with Symatese on, on Evolysse, and we felt very confident that we have a differentiated technology, both scientifically and in the initial clinical data that we had seen from Europe that we'll share in the coming future. What we didn't expect as we've done these ad boards is how differentiated it is in the clinician's hands in the trials. What we're learning is, is the product does play out, the science plays out clinically in these attributes, and we do expect this to be a first-in-class technology. No other hyaluronic acid is manufactured through this cold technology, and it does yield a different type of product that the market hasn't seen.

This product is not available anywhere else around the globe today. That is unique because generally in this market, there are products that have been available for many years in Europe, and those products migrate then into the U.S. through clinical trials. We have a unique opportunity here to introduce a first-in-class technology and introduce it into a market in the U.S., which is the largest market around the globe, which hasn't been done before, where it enters this market before it enters others. We're very excited about that.

Rui Avelar (Chief Medical Officer and Head of R&D)

Yeah, just to add, there is another product that's approved in that tear trough area right now. Just to build on, on David's side, it's interesting, if you go to a conference and listen to clinicians speak to this area, it's still an unmet kind of place where they have a good solution. You can get good results at the beginning, but typically, these gels tend to swell and create complications. The eye product here was built with the end goal in mind, and what they did was they created a balance where to swell, which is where a lot of folks get into trouble with the current gel.

It's a difficult area to treat, which is why I said it's a specialized market, and we're pretty excited about this product because, again, it was purpose-built for an indication to match a tissue interface. So in that sense, we're, you know, we think we have quite a unique product.

Sandra Beaver (CFO)

Hi, Louise, this is Sandra. Let me take your question as it relates to our, our $700 million long-range guidance. The $700 million, as David said in his script, we expect roughly 10%-15% of that revenue to come from international. As you know, our international market is, is strictly the Nuceiva product, the toxin only. Call it $75 million-$100 million of that number is going to come from Nuceiva outside of the U.S. I think we've elaborated on our sort of launch plan associated with that product and are very comfortable that we're well on track to make that number. The remaining $600 million comes from the U.S. Just to give you a sense of, you know, as we've mentioned, our market size increased by 70% by adding a filler product to the portfolio.

We're going to be looking at a $7 billion U.S. addressable market, you know, give or take. We're expecting that both markets grow healthily over the next five years, in the high single-digit numbers on a $600 million revenue number, right? That equates to toxin at about $400 and filler contributing in another $200, reflective when we raised our long range guidance with the announcement of the filler deal, there was a $200 incremental raise to that guidance.

That $400 million on the toxin is a very modest share gain compared to the share we have now. We see ourselves as being very well positioned to achieve or beat that number on the back of those healthy market growth rates, knowing that we could see even further opportunity coming from the tailwinds that we even see in the back half of this year, associated with extra strength and some of the traction we're getting in the market.

As far as Evolysse is concerned, you know, we've learned a lot from launching a toxin in the U.S., and we've been very thoughtful about the launch cadence of the products as well as the revenue ramp associated with those products to get to our projections in 2028, and have taken a conservative view, as we typically do when we look that far out, on how we expect those product adoptions to occur over the course of the, the launch from 2025 to 2028.

Louise Chen (Managing Director)

Thank you.

Operator (participant)

Our next question comes from Doug Tsao, with H.C. Wainwright. Please proceed with your question.

Doug Tsao (Managing Director)

Hi, good afternoon, thanks for taking the questions. I, I guess, David, it sounds like you feel like you're taking market share, you know, across your account base. I'm curious, are there any segments where you feel like you're doing particularly well and, and over-indexing? I mean that, that by other customers or, or maybe the patient demographics. I mean, obviously, millennials have been a key target for you for some time. Just any color as to, to where you might be sort of really driving, some competitive advantage.

David Moatazedi (President and CEO)

Yeah. It's a good question, Doug. You're right. From a consumer standpoint, we continue to penetrate deeper and faster within this younger demographic. Our new-to-toxin patients in our consumer loyalty program are primarily millennial or younger. I think that bodes very well to where the practices are headed. It also aligns with our investment in advertising that we've been placing. That continues to be a key driver of how our brand is differentiated in the consumer's mind. This is very much a younger generation's brand. It's positioned as such in all of our advertising. What's also interesting, though, when you look at our business across the U.S., it's very diverse. Now we're in 11,000 clinics, so we don't heavily over-index in any one area, of course, and we continue to see broad-based adoption of this brand.

Despite all that, where we under-index is penetration in the market. We're only in about a third of the category now with this product, and we have two-thirds of the market that is currently not using our brand, Jeuveau. We see a lot of runway for the brand to continue to go wider. You saw that this last quarter, we hit an all-time high since our initial launch phase of new accounts added. There wasn't a specific incentive in the field that drove that. It was driven primarily by overall interest in what we're doing in the market and how we're doing business differently. We believe that that speaks to the differentiation of our business model, that practices are looking for ways to grow, and they're looking at other ways of partnering with companies.

Our cash pay proposition has opened up a number of opportunities to do business differently with us, and we believe that that's a continued trend that won't slow.

Doug Tsao (Managing Director)

David, just one follow-up. In terms of the two-thirds of the market where you're not currently doing business, but given your account growth this quarter, seems like you're maybe starting to make some progress. Is there, you know, anything that has limited you for those customers in the past, and is there anything that you can do to improve penetration, or is it something that you think will just occur over time? Thank you.

David Moatazedi (President and CEO)

Yeah. It's a number of things. The product is now in its fourth year in the market, and under the R&D team with Rui, the data we've generated since approval has been significant. The noise from the podium on that data between the millennial study published, the millennial data we published, the male data we published, as well as now this 40-unit dose, there's quite a bit of new data emerging on Jeuveau. That's number one. The second is, key opinion leaders are becoming more and more engaged with our brand. They're understanding the unique profile of the precision of Jeuveau, and that's being referenced from the podium. At a most recent medical meeting this summer, we were the most mentioned brand on stage as we sat in there, in that room and listened to the presenters speaking about the product.

That hadn't happened to date. I do believe the momentum is shifting at the medical meetings from the podium as well. A combination of both is a key driver. Lastly, the recent announcement of Evolysse has resulted in even further engagement with Evolus from those key opinion leaders, that one, some of them are currently in those trials. Others are aware of the fact that this really is a new generation of technology, and they want to be a part of the future of where we're taking the company. I do believe that all of these are factors that are catalysts that continue to build on the execution that we've demonstrated over the last couple of years.

Doug Tsao (Managing Director)

Great. Thank you, and congrats on the progress.

David Moatazedi (President and CEO)

Thank you.

Operator (participant)

Our next question comes from Serge Belanger with Needham & Company. Please proceed with your question.

Serge Belanger (Analyst)

Hi, good afternoon, and thanks for taking my questions. First one is on the pricing of Jeuveau. Just curious if there's been any pricing changes on the product during the first half of the year, and maybe where those pricing stand relative to your competitor products?

David Moatazedi (President and CEO)

Sure. well, pricing has continued to be very stable in this market. it, it certainly hasn't evolved significantly. We continue to benefit from a very favorable market from that standpoint. I don't, I don't think you're seeing any, any pricing wars amongst the manufacturers. On the flip side, though, you're not seeing price increases yet either in the market, at least year to date. It's a favorable environment, and we're not seeing much evolving there.

Serge Belanger (Analyst)

Okay. Then going back to the ongoing European launch. Obviously, you've been successful in the U.S. at outperforming the overall market trends. How do you look at doing that in Europe? Do you think the same opportunity exists to repeat what you've done in the U.S.?

David Moatazedi (President and CEO)

Yeah, we, we really do. Having spent some time now in, in Europe, in the markets as we've launched, there's a tremendous amount of interest in trialing a new neurotoxin. I would say, look, to be realistic, we're only three quarters in to the first market, which is the U.K. That trial stage is an important stage for any new neurotoxin entering. The experience they're getting with the product has been the same experience that they're getting in the U.S., which is very favorable. We expect that as in Germany and as well as Italy.

Now, of course, building a business like we have in the U.S., it takes a little bit of time, and so it takes the right talent, the right focus, and continuing to do that over time, and you start to see meaningful value that gets created from it. I think we're on the right track in Europe, albeit three quarters into our first market, two quarters into our second market, and less than a quarter into our third. It's still early days, but we, we feel very good about the team and what they're accomplishing there.

Serge Belanger (Analyst)

Thanks.

Operator (participant)

Our next question comes from Balaji Prasad with Barclays. Please proceed with your question.

Mikaela Franceschina (Assistant VP of Equity Research)

Hi, this is Mikaela on for Balaji. Thanks for taking our questions. Just following up on the filler line, how would you compare Evolysse to that of competition like RHA fillers? Thinking, looking ahead, how are you thinking about how this filler line will fit into your portfolio once you reach commercial stage? Thanks so much.

David Moatazedi (President and CEO)

Look, let me have Rui comment on, on the product side differences. I think as it relates to, to the filler overall, as you know, we just announced the deal within the quarter, in the second quarter. We're in the process now of Rui and his team taking over all of the clinical development and the exchange with the FDA, and we're really pleased with the progress that team has made, and we feel very confident in our ability to deliver on an approval, in 2025. Secondly, we're in the early stages of preparing our plans, right? With a launch expected in 2025, we still have a lot of work to do of establishing, the scientific story, the data itself, and, and capturing that, working with the investigators on how to present that data.

There's quite a bit of work that we have to do in order to develop it. Importantly, we do have the infrastructure, and the infrastructure is what we will be leveraging, the sales force, the digital footprint, and the consumer loyalty program. You can look forward to us apprising you of further commercial details of how we bring this brand to market as we enter next year and closer to commercialization. I'll let Rui talk a little bit about how the market thinks about differences in the products.

Rui Avelar (Chief Medical Officer and Head of R&D)

Sure. In terms of when you ask about how does it compare to RHA, you know, the appropriate answer is you, you shouldn't compare unless you have data to compare it. We haven't compared our product to RHA. We have, however, compared our product to one of the market leaders, which is Restylane, and though the two market leaders are represented by Juvederm and Restylane. In Europe right now, we have some preliminary data that's going to be used for the submissions in Europe, and what we find is it compares really well. In head-to-head studies, for instance, in the NLF, we're seeing statistical superiority at three and six months, and then there is a lip study that's also showing that it's almost 2x as long to go back to baseline. That's the early European experience.

Then the U.S. trials are large trials that outlined with active controls against one of the leaders right now, Restylane.

Mikaela Franceschina (Assistant VP of Equity Research)

Thanks so much.

Operator (participant)

We have reached the end of the question and answer session. I'd now like to turn the call back over to management for closing remarks.

David Moatazedi (President and CEO)

Thank you, operator. If you missed any portion of this call, a replay will be posted to our website later today. Thanks to everyone for joining us. We appreciate your interest in Evolus, and we'll be available if you have additional questions.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.