Revance Therapeutics - Q1 2024

Executive Summary

• Q1 2024 delivered $51.9M total revenue (+13% YoY) with DAXXIFY net revenue of $22.1M (reduced by $2.0M from a consumer coupon) and RHA revenue of $29.6M; aesthetics KPIs improved: DAXXIFY units +105% YoY, +7% QoQ, and toxin share rose to 3.7% from 3.0% in Q4’23; RHA share increased to 9.8% from 9.1% despite a soft filler market.
• FY24 guidance reiterated: at least $280M total net product revenue, GAAP OPEX $460–$490M, non-GAAP OPEX $290–$310M, non-GAAP SG&A $240–$255M; management said non-GAAP OPEX is trending to the low end and continues to target positive Adjusted EBITDA in 2025.
• Strategic catalysts: commercial launch of DAXXIFY for cervical dystonia (CD) with 78% commercial coverage and J‑Code in place; >200M covered lives; strong physician feedback from PrevU program (94% perceived longer duration vs conventional toxins).
• Balance sheet fortified by $100M equity raise; cash, cash equivalents and ST investments of $277.1M at 3/31/24, supporting execution toward breakeven in 2025.

What Went Well and What Went Wrong

• What Went Well

  • DAXXIFY momentum: aesthetic units +105% YoY and +7% QoQ; toxin share up to 3.7% from 3.0% QoQ; management emphasized faster onset and improved skin quality in addition to duration, aiding adoption.
  • RHA outperformed a soft filler market: share rose to 9.8% (from 9.1% in Q4), with RHA 3 lip indication launched in April to target the #1 U.S. filler procedure.
  • Therapies readiness: DAXXIFY CD launched with 78% commercial coverage, J‑Code secured, and PrevU physicians (94%) perceiving longer duration; infrastructure and reimbursement workflows in place.

• What Went Wrong

  • Coupon drag and seasonality: DAXXIFY net revenue reflected a $2.0M reduction from a consumer coupon program; total product revenue declined QoQ from $58.5M in Q4’23 to $51.7M in Q1’24 despite YoY growth.
  • Filler softness: RHA revenue decreased 2% YoY to $29.6M, reflecting a softer U.S. filler market in Q1, though early Q2 signs point to normalization per management.
  • Losses persist: Net loss from continuing operations was $49.5M; cost base remains high even as non-GAAP OPEX efficiencies progress.

Transcript

Operator (participant)

Welcome to the Revance Therapeutics first quarter 2024 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 ensure that we have ample time to address everyone's questions, we would ask each person to limit themselves to one question and one follow-up. As a reminder, this call is being recorded today, Thursday, May 9, 2024. I would now like to turn the conference call over to Laurence Watts of New Street Investor Relations. Please go ahead.

Thank you, Operator. Joining us on the call today from Revance are President and Chief Executive Officer Mark Foley and Chief Financial Officer Toby Schilke. During this call, management will make forward-looking statements, including statements related to the impact of our pricing and strategy on DAXXIFY and adoption, expectations related to product adoption, account activation and reorders, consumer needs, preferences, and behavior, the benefits and value to us, practices, and consumers of our products, including the efficacy, duration, skin quality, and safety of our products, access to our products, future therapeutic indications, 2024 guidance, cash flow break-even, positive Adjusted EBITDA, future capital expenditures, anticipated revenue and top-line growth, our strategic priorities, our anticipated success, our blockbuster potential, our ability to grow and take share, our market opportunity and expectations, our strategy, planned operations, and commercialization plans, including consumer offers and timing of those plans.

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 these results to be different from these statements include factors the company describes in our annual report on Form 10-K and our quarterly report on Form 10-Q. Revance undertakes no duty or obligation to update any forward-looking statement as a result of new information, future events, or changes in its expectations. Also on today's call, we will present both GAAP and non-GAAP financial measures. Reconciliations of GAAP to non-GAAP measures are included in our earnings release. With that, I will turn the call over to Mark Foley, President and Chief Executive Officer of Revance. Mark?

Mark Foley (President and CEO)

Thank you, Lauren. Good afternoon, everyone, and thank you for joining our first quarter 2024 financial results conference call. Q1 2024 was the second full quarter reflecting DAXXIFY's strategy change, and we are encouraged by the ongoing traction and momentum that we are seeing related to this change. Specifically, DAXXIFY's aesthetic units sold were up 105% year-over-year and notably up 7% on a quarter-over-quarter basis, despite Q1 traditionally being a seasonally down quarter when compared to Q4. Moreover, DAXXIFY grew its market share from 3% at the end of Q4 2023 to 3.7% at the end of Q1 2024, highlighting not only its ability to grow but also take share. In the first quarter, DAXXIFY net revenue was $22.1 million after a reduction of $2 million related to our consumer coupon program, which functioned like a rebate.

While we were encouraged by the feedback we received on the consumer coupon program, we will look to structure future offerings in a way that doesn't require a full revenue offset and that is more consistent with competitor programs from a revenue treatment and sales and marketing expense perspective. Importantly, feedback from the field continues to be positive and reveals that practices are reengaging with DAXXIFY not only because of its duration profile but also because of its fast onset and improved skin quality, which is made possible by its unique and differentiated peptide formulation. To that end, in the quarter, I was able to personally meet with over 200 injectors across a variety of regional dinners and office visits, and I was very encouraged by the receptivity, feedback, and support we are getting as a result of our new strategy.

With our reduced price to the practice, we are encouraged to see that accounts are passing along the savings to their patients, thereby allowing them to experience DAXXIFY's performance benefits at a price that is in line with other toxins. At the end of the day, customers are reporting that they are choosing to lean in with DAXXIFY because they feel it is a better product. In the quarter, we also launched a new DAXXIFY messaging campaign titled The DAXXIFY Difference: Fast, Lasts, and the Look, and we removed the no-advertised price limitation, which has allowed accounts to more easily promote DAXXIFY to their customers and which will help further amplify DAXXIFY's voice in the market. Consistent with prior commentary, our last two quarters were focused on existing DAXXIFY accounts in order to reestablish confidence and a more positive relationship going forward.

We believe that this focus was necessary to build the right foundation for long-term success. Now that we have concluded this phase, we expect to return to a more normal new account cadence and portfolio focus. In the quarter, we were also encouraged by the strong reordering activity as existing accounts represented more than two-thirds of DAXXIFY revenue in the quarter, the higher average order size per account representing deeper penetration, consumer end pricing coming in line with competitor prices reflecting that the strategy change is having the desired effect, all of which has contributed to a meaningful uptick in unit sales on both an annual and quarterly basis as well as a healthy gain in market share.

Turning to RHA, despite filler market softness in Q1 and outsized DAXXIFY focus, we continued to grow our filler market share and ended Q1 with a 9.8% share up from 9.1% in Q4. While RHA revenue declined 2% year-over-year, our ability to take share in a soft filler quarter positions us well going forward, particularly as the market returns to more normal growth. We launched some of our new initiatives and as our focus shifts to a more balanced portfolio approach. Underpinning our ongoing market share gains and traction in the filler market is the quality and differentiated performance profile of the RHA portfolio combined with our commercial team's ability to execute. As we move into Q2, we are excited to be launching RHA 3 for lip augmentation and fullness as lips are the number one filler procedure performed in the U.S.

While Q1 revealed some softness in the U.S. filler market, we expect the market to return to historic high single-digit growth through the balance of 2024. To this end, we are encouraged by the early traction and momentum we are seeing in Q2 related to both the filler and toxin markets. Lastly, at the end of the first quarter, there were over 7,500 aesthetic accounts, of which 3,500 have ordered DAXXIFY, which leaves us with significant runway to further expand our number of accounts and ordering base going forward. Now let me turn to our therapeutics franchise. This afternoon, we announced the commercial launch of DAXXIFY for the treatment of cervical dystonia, marking our entry into the $2.7 billion U.S. therapeutic neurotoxin market, which is projected to grow 8% annually over the next five years.

DAXXIFY is the first and only peptide-formulated long-lasting neurotoxin that offers the potential to improve duration of symptom control with a favorable safety profile, providing patients and physicians with a compelling new treatment option for a painful and disabling chronic condition. DAXXIFY for cervical dystonia provides a significant opportunity for Revance and marks the culmination of our decades-long mission to bring true innovation to the therapeutics market. While toxins are the gold standard of care for cervical dystonia, patients struggle to achieve sustained symptom relief in between treatments. This is due to the fact that toxin treatment can only occur every 12 weeks based on product labeling and reimbursement guidelines, even though the therapeutic benefit of current toxins typically wears off 8-10 weeks after injection.

As a result, this frequently leaves patients with unmanaged symptoms that can lead to significant pain, social stigma, and the inability to drive or work. DAXXIFY has the potential to offer CD patients more good days and better symptom control in between treatments, ending the roller coaster ride that many cervical dystonia patients experience. Following our CD approval in August of 2023, we launched the Preview Early Experience Program with the objective of optimizing treatment outcomes and ensuring smooth practice integration. To date, real-world clinical results from Preview, which has now ceased enrollment as we move into our full launch, are in line with our prior ASPEN clinical program, providing us with a strong foundation for commercial success. The program enrolled over 300 patients, most of which are now on their second treatment cycle.

Based on a survey we conducted, which included all 17 physicians who participated in the Preview program since inception, 94% indicated that they perceived DAXXIFY to last longer than what they had seen with conventional botulinum toxins based on just their first treatment cycle experience and prior to dose optimization. Additionally, we've been pleased to see that DAXXIFY's safety profile continues to be encouraging over a broad range of doses. We look forward to sharing some of our Preview insights at upcoming medical meetings. Post-approval, we established our therapeutics commercial infrastructure in preparation for launch and received our permanent J-code, which will streamline the reimbursement pathway for providers. Also, we operationalized our Access DAXXIFY reimbursement support services in order to minimize potential hurdles to adoption.

Within that platform, we have tools and resources to support practices, including our patient affordability programs, a copay program for the underinsured, and a patient assistance program to ensure out-of-pocket costs do not impede access to therapy. Currently, DAXXIFY is covered for over 78% of commercial lives, which, when combined with our government coverage, represents over 200 million lives and includes the top health plans in the U.S. We are energized by our mission to positively impact the lives of cervical dystonia patients and believe that we have the right payer infrastructure in place to facilitate a smooth switch process. That said, given the conservative nature of the treating physicians and CD market size, we anticipate initial revenues will be modest.

However, we remain bullish regarding DAXXIFY's potential in the cervical dystonia market and subsequent therapeutic indications, and our Preview results have only helped to further increase our confidence in DAXXIFY's long-term potential in the therapeutics market. Before I turn the call over to Toby to cover our first quarter financials, I want to highlight the progress we're making on one of our other 2024 strategic priorities, namely focus and discipline capital allocation. In conjunction with our DAXXIFY strategy change, we've implemented a number of OpEx efficiency measures designed to both streamline and lower our overall operating expense profile while also ensuring that we can free up the necessary capital to invest in both our aesthetics and therapeutics franchises. I'm pleased to report that we are ahead of plan with respect to these efforts, and Toby will touch on that shortly.

With over $275 million in cash, cash equivalents, and investments at the end of Q1, the ongoing growth and opportunity we have with DAXXIFY and RHA, and initiatives in place for the second quarter and balance of the year, we are reiterating our guidance, which includes net product revenue of at least $280 million, non-GAAP OpEx of $290 million-$310 million, which is currently trending to the low end of the range, and our goal of reaching positive Adjusted EBITDA in 2025. With that, I'll turn the call over to Toby to cover our first quarter financials.

Tobin Schilke (CFO)

Thank you, Mark. The press release and the 10-Q we issued today details our financial results in full, so I will only go over the highlights on this call. Our fintech platform business, which was our legacy service segment, is now a discontinued operation and is reflected as such on our financial statements. Consequently, the results that I will discuss exclude discontinued operations. Total revenue for the first quarter ended March 31st, 2024, was $51.9 million compared to $45.8 million for the same period last year, representing a 13% increase in revenue due to DAXXIFY. Net revenue for the first quarter included $29.6 million of RHA Collection revenue, $22.1 million of DAXXIFY revenue, and $0.2 million of collaboration revenue related to our biosimilar-to-Botox program with Viatris. Total operating expenses from continuing operations for the first quarter were $98.8 million compared to $92.5 million for the same period in 2023.

Excluding cost of product revenue, stock-based compensation, depreciation, and amortization, non-GAAP operating expenses from continuing operations for the first quarter were $73.6 million compared to $64.5 million for the same period in 2023. As Mark alluded to, we are reiterating our guidance for 2024, and specifically related to our non-GAAP OpEx guidance of $290-$310 million, we are currently trending to the low end of that range due to cost savings and other efficiency initiatives. On the balance sheet side, our current cash position, bolstered by an equity offering in the first quarter, which resulted in gross proceeds of $100 million, in combination with our operating plan, provides us with multiple levers to achieve positive Adjusted EBITDA in 2025. Finally, Revance's shares of common stock outstanding as of April 30th, 2024, were approximately 104 million with approximately 113.5 million fully diluted shares, excluding the impact of convertible debt.

With that, I'll turn the call back over to Mark.

Mark Foley (President and CEO)

Thank you, Toby. For the rest of 2024, we will remain focused on delivering at least 32% top-line growth while effectively managing spend to reach positive Adjusted EBITDA in 2025. We believe this is achievable through successful execution on our DAXXIFY and RHA growth initiatives in aesthetics, our launch of DAXXIFY in cervical dystonia, and through maintaining discipline capital allocation while ensuring we have the necessary resources to fund our two franchises. We remain encouraged by our ongoing market share gains across both DAXXIFY and RHA and the positive response we are seeing to DAXXIFY's strategy change, as reflected by the significant increase in unit volume on a year-over-year and quarterly basis. As a result, we continue to have conviction in our blockbuster potential in the US aesthetics market. With that, I will now open the call up for questions. Operator?

Operator (participant)

We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If by any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a quick reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question comes from Seamus Fernandez with Guggenheim. You may proceed.

Seamus Fernandez (Analyst)

Great. Thanks for the question. So, Mark, I just wanted to get a better sense of the trajectory that you're already seeing in the second quarter so far. Obviously, the $22 million would have been $24 million without the couponing program, but presumably you knew about the couponing dynamics. So just trying to get a better sense of the trajectory that you're seeing. I know that the plan was to accelerate, to expand the number of injectors in the second quarter with a full push after you had really reestablished the pricing. So just wanted to get a better sense of what you're seeing so far in these first five weeks of the second quarter to give you confidence that that $280 million minimum guidance threshold is achievable. And then the second part of that question, also related to guidance, is just the filler dynamics.

Obviously, we're seeing a lot of pushes and pulls there, but you do have the launch of the new sort of lip formulation, RHA 3. So can you just help us understand what you see as the incremental revenue opportunity there, just given the sort of high frequency of lip filler use? Thanks.

Mark Foley (President and CEO)

Sure. So, Seamus, let me start with the first one in terms of our confidence in the product revenue guidance of at least $280 million. As you noted, we were very pleased with the DAXXIFY performance in Q1. And as we've made the shift and the pricing change, it's all about getting trial usage and experience because we believe that the more accounts and consumers that get exposed to DAXXIFY and its performance attributes, not just duration but skin quality in onset, that's where the stickiness creates. And obviously, we're trying to build a growing base of accounts and customers, and we saw that pull through at the account level where we saw more accounts ordering larger quantities, which is a good early sign for us.

So when we kind of look through the course of the year, we would expect to have sequential growth throughout the year, certainly on the DAXXIFY side, as we layer in more accounts. Given our outsized focus on DAXXIFY the first two quarters and doubling back, we would expect that new account adds will start to elevate as we move towards the remainder of the year. In terms of what we're seeing in Q2, there's typically a cadence in terms of the quarterly phasing or the monthly phasing in a quarter. First month of the quarter tends to be the lightest, followed by the second and followed by the third. But we're seeing good volumes, at least the accounts that we are in, through April and the early part of May across both the toxin and notably the filler side of it.

It's probably hard to tell right now on the filler side of it how much of that is our launch of the lip indication because, as you mentioned, that's certainly going to be a tailwind for us. And we have some other initiatives that will be rolling out through the balance of the year around portfolio plans and other practice-based initiatives designed to reward engagement and volume. And so we like what we're seeing early on in Q2 from that perspective. Again, I do think, given that lips are the number one indication, that helps. And I do think our reps now are spending more time with a balanced selling approach, not just more DAXXIFY-focused. So it's early, but again, if you go back to the market share gains that we saw in Q1, we really like our positioning and our ability to continue to take share.

We continue to feel very good about how we think the rest of the year is going to play out.

Seamus Fernandez (Analyst)

Great. And maybe just a final question. On the therapeutic side, you continue to guide pretty conservatively in terms of how to think about the therapeutic contribution in 2024. But given all the progress that you've made with the J-code and the opportunity for reimbursement, how do you feel you're positioned? Do you feel you're positioned to perhaps do better this year from a therapeutics perspective to be able to deliver on that guidance, or is the guidance from your perspective pretty locked and loaded as it relates to the aesthetics business, and you just feel good about the trajectory of the business on aesthetics, and we should think about therapeutic as predominantly incremental?

Mark Foley (President and CEO)

Yeah, I think it's the latter. Again, we are very encouraged by what we're seeing in the therapeutics business, particularly based on the preview engagement. And taking the measured approach that we did not only gave us really good feedback from the clinicians, but it allowed us to really put in place the entire kind of reimbursement process from the J-code to the coverage at the commercial level to patient access programs. And so given that it's a buy-and-build product in these practices, that's why you don't get those sort of early stocking orders. They want to treat a few patients, make sure that they can get paid, start conservatively with dosing, and then figure out how to optimize. But we believe that once they get through that early phase, which will take a little bit, then we would expect to see meaningful share gains on that.

So I think if you time out 2024 as accounts start to work through that phase, we will certainly see some that lean in more aggressively early, but we think most are going to kind of go through that. So we would expect much more meaningful contribution as we move into 2025. But it's more, as you said, we expect aesthetics is going to carry a big chunk of this year, and that therapeutics will be incremental. And we could be surprised a little bit on the upside, but that's how we're thinking about it from our internal modeling.

Seamus Fernandez (Analyst)

Great. Thanks so much.

Mark Foley (President and CEO)

Thanks, Seamus.

Operator (participant)

Thank you. The next question comes from Stacy Ku with TD Cowen. You may proceed.

Stacy Ku (Analyst)

Hi. Thanks so much for taking our questions and congrats on the progress. So we have a few follow-ups. On the first question, so can you just talk about your evolving thoughts on the RHA contribution this year? And to ask a little bit more specifically, if we take your guidance, we do need to see strong growth over the next few quarters. So if we understand kind of how Q1 looks, it looks like it's at similar levels to last year. So just help us feel comfortable with your belief that we could meaningly grow beyond 2023 RHA sales. Is it really that RHA 3 launch that's really going to kind of increase share there? And then the second question is looking to Q2. Previously, you've discussed it takes around a quarter for an account to sample and try DAXify before ordering.

Just help us set expectations in terms of the timing of sales acceleration versus a usual seasonality lift that you'll see in the aesthetic market for Q2. That's the second question, just kind of the dynamics between broadening the accounts versus the normal time for sampling. Then the last question, just curious if you're willing to comment. As you discuss your plans of going broader and deeper of accounts that you've already onboarded for DAXXIFY, can you talk about what percentage have made it their primary neurotoxin in their practice versus just one of the offerings? Just curious how you're doing as you go deeper with some of the relationships. Thanks so much.

Mark Foley (President and CEO)

Sure. So thanks, Stacey. Let me kind of walk through these. So first, in terms of kind of how we think, again, about the cadence of revenue and what you'd need to see in terms of growth and what's going to drive that, you'll see, Q1 was softer on the filler side than what we expected. If you look at it, we actually had pretty healthy share growth, even with, again, an outsized focus on DAXXIFY. So I think we're continuing to take share based on the quality of the product. We expect the market will return to more normal, high single-digit growth. And so we believe that will also be a tailwind for us as we continue to take share with RHA.

Previously, when we've given contextual guidance to our $280 million, more than $280 million in product, we said a little more than half of that's going to be RHA. And so if you kind of look at what that means from a year-over-year growth perspective, you can kind of get there in sort of a teens growth on RHA, which we think is manageable, particularly when you start layering in the RHA 3 for lips, some of the promos that we're going to run around that, the fact that it's the number one performed filler procedure. And then we do expect to start to benefit from some portfolio programs based on our broader account base and ways that we will be able to leverage one product with the other to incentivize further leaning in. And so that's kind of how we think about that.

As I said, I know it's early, but we like what we're seeing in April. And I'm sure some of that is the lips, but I think some of that's the team, again, turning their focus to broader portfolio as well. In terms of, let's see, Q2 and how we think about the time it takes for a new account to fully get up to speed and onboard, yeah, it's probably a quarter or two. There's still some that are going to want to see a duration signal with DAXXIFY before they fully decide where that fits into their practice, even though we've softened the duration message. And what we continue to hear from accounts is, "Well, duration is great." Onset and particularly the skin quality continue to be really important differentiators for them.

And so it's hard for me to say with certainty how those things are all going to knit together when you think about Q2 being a stronger quarter compared to Q1. But when we step back, we have a certain account target of new accounts that we want to add and total accounts that we want to get to by the end of the year using similar utilization metrics. And frankly, we've continued to grow the utilization per account Q4 to Q1. And so if we can continue that trend and add the new accounts, which we think are very reasonable, that's how we come up with the numbers that we feel comfortable with. In terms of the broader versus deeper and how we think about adoption, I would say that it's evolving right now.

I'd say it's certainly a minority of our accounts that have made DAXXIFY their leading and primary toxin, more than 50%. I think it's a good, healthy number where we're in those accounts. We occupy a decent spot. And our goal is, as they get more familiar and more comfort with it, that we can lean in more and continue to increase that penetration, particularly as they get more familiar. And so, again, we have some different initiatives about that. But I would say it's a small percentage of the accounts that have sort of said DAXXIFY is our primary toxin.

Stacy Ku (Analyst)

Okay. Wonderful. Just to follow up, sounds like you are this year, 2024, thinking about maybe implementing when you say portfolio programs, is that bundling?

Mark Foley (President and CEO)

That is. That is correct. We do plan to do that this year in 2024.

Stacy Ku (Analyst)

Okay. Wonderful. Thank you so much.

Mark Foley (President and CEO)

Great. Thanks, Stacey.

Operator (participant)

Thank you. The following question comes from Annabel Samimy with Stifel. You may proceed.

Annabel Samimy (Analyst)

Hi. Thanks for taking my question. Just following up on the portfolio programs. I guess in terms of the plans that you have in place right now, the coupon that you treated as a rebate, are you planning on having portfolio programs as a rebate as well? And I guess what was the, or rather, direct savings for those accounts? And then just as we think about the portfolio, have you begun to see more filler ordering from accounts that now have DAXXIFY and vice versa? And are you starting to see that, I guess, account leverage now that you have a portfolio to offer rather than just one product? And then switching to therapeutics, in your preview program, I was just wondering if the injection frequency—have you noticed whether the injection frequency for these physicians would change?

Is it still on? Do they still plan on injecting on a 12-week basis and just getting better coverage for that patient during those 12 weeks, or really extending the time to the next injection because they're able to? I'm just trying to understand whether you've seen some stretching out of those second injections. And then finally, also, are physicians comfortable that this is now the same technique? It's just more durable with lower adverse events. And does that possibly give them comfort to try it in other movement-disorder indications that they also feel very comfortable using this product in? Thanks. Sorry. That was a lot of questions.

Mark Foley (President and CEO)

Yeah. That's all right. I'll try and move through them. Thanks, Annabel. So first off, on the portfolio programs, we plan to roll those out going forward. So those are early. The consumer coupon that we ran, we wanted to pilot to see, "Hey, with a consumer coupon, can we incentivize accounts to go deeper with us and offer this to a broader range of their patients?" Again, with this idea that once they try DAXXIFY, particularly with our new pricing, and get exposed to the benefits of the product, that that could result in stickiness. And it was very well received.

But since we don't have a consumer loyalty program set up and some of these other programs, the only way we could really do it was as basically a consumer coupon funneled through the practice that served as a rebate, which is why we had to take the full revenue reversal for that program. But it gave us good insights and learning. So as we think about our portfolio programs going forward, there will be a combination of some price incentives to practices to lean in with us more broadly across the portfolio. And then there'll be a variety of service offerings. So we've long stated that we're more focused right now on practice programs that create value for the practices since we think that they're the best suited to be able to influence switch and choice on the product side of it.

And so we'll have a variety of other initiatives also linked to portfolio that aren't just dollars and savings. They might be programs or other value-added services that they can benefit from. And we will start to roll those out this year. And we would expect, given the relationship that we have either with DAXXIFY or RHA, that we should be able to create programs that incentivize trial and hopefully adoption given the relationship that we have with the other products. So we're excited and encouraged about that. Your question on the therapeutic side with regards to frequency of injections, it's been really interesting. And frankly, one of the benefits of running the preview program to get real-world experience, obviously, there's two camps.

There's some that are saying, "Listen, I care less about extending the duration of the treatment effect and more about making sure that within that 12-week gap between retreatments, that they get as much benefit as possible." So we have some that we've talked to who've said, "Listen, most of the patients that I treat, they're a center of excellence. They drive and come a long way. They don't want to have any downtime. So if I can keep them on a 12-week reinjection cycle and I can give them more good days and avoid some of the roller coaster effect that they experience today, that's a huge win." We have others that say, "Hey, you know what? I'm going to start them on this, bring them back at 12 weeks.

But if I see and I can get them to 14 or 16, that's a huge win." And so it's been interesting in therapeutics, I think, because it's a reimbursed space, because these are debilitating conditions. I think there's a little bit more of a shift towards, "First, I want to just get more better days. And then if it turns out that I can extend the duration profile even better." But we feel, based on what we're hearing from them, it'll be a big win if we can just do a better job of controlling symptoms within that 12-week current timeframe. In terms of the technique, yes, the same injection technique. And what's been really encouraging for us is across a range of different doses, we are seeing that we're maintaining a very good safety profile consistent with what we saw in the ASPEN program.

We think a little bit of that speaks to the peptide formulation and the precision of the product. So we continue to be cautiously optimistic that we're going to see the benefit of this duration profile with, again, a very good safety profile going forward. Then the last question you asked just about spontaneous use. What's interesting on the commercial coverage side of it is they ultimately determine kind of what they cover. We have some of these commercial plans that are covering DAXXIFY as sort of a toxin generically across. I think from payer to payer, they will ultimately decide with their coverage universe how they are willing to reimburse the product. So obviously, we can only promote it for cervical dystonia.

If you look at the payer coverage universe, we do have coverage beyond just cervical dystonia in many of the commercial payer plans.

Annabel Samimy (Analyst)

Okay. Great. Thank you.

Mark Foley (President and CEO)

Great. Thanks, Annabel.

Operator (participant)

Thank you. The next question comes from Chris Shibutani with Goldman Sachs. You may proceed.

Chris Shibutani (Analyst)

Great. Thank you very much. A question on aesthetics and then a question on the therapeutic side. Within the aesthetics market, there's been commentary about the tone of the market overall on fillers as being one that has been a little bit slower to recover or has been lagging somewhat. Can you comment in terms of what you're seeing and in particular with regard to whether you feel as if there is any other aspect of filler fatigue in relation to toxins, just observations about the market? And then on the therapeutic side, appreciated the commentary that you gave about your launch approaches. You've talked about account numbers on the aesthetics. Can you help us, as you expand from preview to a broader launch, what kind of numbers of accounts you're talking about here so that we can hopefully get a sense for gauging progress?

Then I couldn't help but notice that you use specifically in your vocabulary when you're talking about payers that you were trying to put in place a smooth switch process. Is that the focus of the strategy versus, say, new patient starts? Thank you.

Mark Foley (President and CEO)

Great. Thanks, Chris. So on the aesthetic side of it, in terms of what's impacting sort of the filler market and why was there observed softness in Q1, it's really hard to tell because it's one quarter. Obviously, some of the larger players have reported already and noticed a similar observation in Q1. I don't know if it's an economic issue where some patients maybe are saying, "Hey, rather than three syringes, I'm going to get two syringes." We've heard some of that. Or whether it's, like you said, a filler fatigue where people are changing sort of kind of ultimately what they want. It feels like it's more of a single quarter effect because if we look at sort of Q2, and again, I know it's early, it does feel like things are returning a little bit to the normal.

I do think we had the post-Zoom effect where we saw a little bit of an artificial increase in filler volume after the whole COVID lockdown being on Zoom for a while, people with a little bit more discretionary spend. So I think that drove a little bit more of an elevated market. I think we're now returning more to normal. I've not heard from clinicians any sort of change in consumer sentiment about fillers. So I think it probably had more to do with a little bit of the economics. But that seems to be abating as we move into Q2 and move to the back part of the year. On the preview side of it, in terms of the number of accounts, we've said that the top 500 accounts, there are, on average, two injectors per account. Top 1,000 injectors do about 70% of the volume.

It's a much more concentrated market. We have a commercial organization of about 20 people that will be targeting this. That's a mix of sales reps, market access, and medical affairs. We think that's going to be a pretty good balance. To your question on switch versus new patients, given that cervical dystonia is an orphan indication, this is mainly a switch population. There's not a lot of new people moving in. Even though there's an opportunity, certainly, for new patients to come in, this is largely going to be a switch patient, which is great because it's going to be easy for both the patient and the injecting physician to know what that prior treatment cycle looked like. Any incremental benefit that you can provide either on the duration, symptom control, or safety is going to be very well received.

These are very active communities, too, that share information pretty readily. So we think that since this is the real first true new innovation in this category in a while, that we'll get a fair bit of visibility within that community. We do expect it's going to be much more of a switch patient. Now, I did talk a little bit about the phasing. I do think with a switch patient and a new product, they're going to start conservatively on the dose. They're going to want to make sure that they aren't introducing any unnecessary side effects. Then they will start to dose escalate in subsequent visits. That's why it will take them a little while to just build that confidence to be able to lean in more aggressively.

Chris Shibutani (Analyst)

Great. Thank you.

Mark Foley (President and CEO)

Great. Thanks, Chris.

Operator (participant)

Thank you. The next question comes from David Amsalem with Piper Sandler. You may proceed.

David Amsalem (Analyst)

Thanks. And apologize if I missed any color here since I joined late. Wanted to ask you about competitive dynamics in both the toxin and the filler spaces. So regarding the toxin space, you have the Hugel asset that gained approval. And then as you look at the filler space, you've got Evolysse coming into the market next year. And I guess my question here is how you're thinking about pricing as both categories get more crowded. That's number one. And then number two, at what point do you see practices, sort of the larger practices, I should say, not carrying everything? What you see from a lot of practices is they sort of offer essentially all of the key options as it relates to facial injectables. And at what point do they start picking and choosing more and freezing certain players out?

How do you think about that going forward? Thank you.

Mark Foley (President and CEO)

Sure. Thanks, David. Listen, on the competitive dynamics, first off, it's a big market that's got healthy growth. As you've seen, different companies are finding their own place in the market. We've chosen to take an innovation strategy with the belief that we can carve out a pretty healthy part in the market by bringing performance attributes that are different from the others. I do think as more competitors come into the market, to your second question, practices are going to need to make some decisions about how many they carry because in the absence of a real performance benefit, I think increasingly, they're going to ask themselves, from an inventory management standpoint, "Why do I need to carry all of them?

Is there something that this product gives me that I can't get with the others?" And so as we've come in and we've learned more about DAXXIFY in particular, again, not just the duration but the onset and skin quality, we think that we're going to be able to compete very effectively based on a performance profile that we think will resonate certainly with a reasonable subset of the market and certainly one that allows us to hit our target of blockbuster potential in the U.S. aesthetics market. And so we believe that that's going to be our way to win. We've adjusted our price so that we're able to offer this to our accounts, and they can offer it to their consumers at a price that is competitive. And so these practices and these patients are able to get incremental value for the dollar spend.

And that's sort of how we think about competition. And so as some of the newer players come in, we think if anything, they're likely going to compete probably more in other segments of the market. And because of bundling and loyalty and services, we do think that the U.S. market's a little bit more insulated compared to some of the other international markets and should allow for a full value play across that. And then same on the filler side. I mean, listen, the RHA Collection of fillers has been in the market for a long time. The Teoxane franchise is very well-known, highly regarded. It's the least modified of the fillers. And as a result, the performance attributes, we believe when we go in or are able to win business, we win it not on price, but we win it based on the quality of the product.

And so we think that's ultimately going to be our strategy. And we know that there will be different ways that different companies compete. But to close out then on your second question, I do think that accounts will start to increasingly pick and choose. And in the absence of bringing something of differentiation either on the services or on the product side, I think that it will be harder for them to carry all the products.

David Amsalem (Analyst)

If I may sneak in a follow-up, as both spaces get more crowded, do you envision outright price competition or scenarios in either or both of the spaces where your hand just gets forced on price? How do you think about that?

Mark Foley (President and CEO)

I think that already exists today, David. I don't know that a new player coming in offering perhaps more price incentive because, I mean, there are competitors out there today that lean in pretty heavily on price. Whether it's direct price or samples or other things like that, I think you already have a pretty competitive market. Pricing has been pretty resilient. Again, I think it comes down to the fact that there are other things that come into this than price. It's the product quality. It's what other services I think we've got a pretty competitive market already. There are definitely some players that either as a strategy or on a quarterly basis lean heavily on incentives that directly tie into a better deal. The market has been pretty resilient there.

David Amsalem (Analyst)

Great. Thank you.

Mark Foley (President and CEO)

Thanks.

Operator (participant)

Thank you. The following question comes from Terence Flynn with Morgan Stanley. You may proceed.

Speaker 10

Hi. This is Dan on for Terence. Thanks for taking our questions. Just a little bit on the market. I know you spoke to the filler side, but any color on the toxin market would be helpful, maybe just kind of what you saw in Q1 and how you're thinking about over the course of this year. And then just on the OpEx side, maybe just a little more on kind of the savings progression that you're seeing over the course of this year and just kind of how that's going. Thank you.

Mark Foley (President and CEO)

Great. Well, I'll take the first one and then flip the second one on OpEx over to Toby. But yeah, the toxin market has been pretty resilient. I think if you look back at other points in time, even when there was some economic stress around 2008, the toxin market was not impacted to the same level as the filler market. And I think it has to do with a few things. It's a lower-cost procedure. Once consumers get used to getting their toxin and sort of their wrinkles not coming back as soon as they start to show, it's a lot more obvious. Whereas fillers, they tend to last 12-18 months. It's a little bit more of a subtle change. And so at times, it's easier for them to perhaps push out treatment a little bit longer.

We continue to see the toxin market as being healthy. Again, we would expect that to continue to grow, certainly as all the underlying fundamentals continue to play out. So we think we'll continue to see the kind of high single-digit growth that we've seen historically on the toxin market. Then Toby, I'll throw it over to you on the OpEx savings.

Tobin Schilke (CFO)

Thanks, Mark. It's a great question. When we commented on the prepared remarks, we talked about non-GAAP OpEx from continuing operations. We noted an increase year-on-year. That's partially because we took a step up on the field force to support our aesthetics and increased, obviously, ahead of the cervical dystonia launch. That's been offset. When you look at it instead of a year-on-year but a sequential basis from continuing operations, excluding the impact of OPUL, you can compare, I think it was $91.7 million in Q4 of non-GAAP OpEx, excluding OPUL, from continuing operations to $73.6 million of non-GAAP OpEx in Q1, 2024. The team did an analysis. When we think about 40% or so, it was driven by efficiency initiatives that we've had across the company to deliver that.

There is some seasonality to spend in Q4 that's related to increased aesthetics activity. But we feel that the efficiency initiatives that we've put into place in the last several quarters are starting to pay dividends.

Operator (participant)

Thank you. The next question comes from Sergey Belanger with Needham & Co. You may proceed.

Serge Belanger (Analyst)

Hi. Good afternoon. This is Serge. Yes, Mark, the first question is about your own net pricing in DAXXIFY over the first quarter, if it changed, and whether you expect it to change over the remainder of 2024 as volumes grow. And then you also talked about, on the other side, the consumer prices have been coming down and becoming more in line with the other products. Was the couponing strategy to help that movement down to be comparable to your competitors? Thanks.

Mark Foley (President and CEO)

Thanks, Serge. On the net pricing side, listen, this was solely related to the consumer coupon. So we had to take our gross revenue of $24.1 million, reduce it by $2 million to $22.1 million because of the value of the consumer coupon that we ran. And so net pricing going forward, we will continue to report on net pricing. Based on some of the different initiatives that we do, there could be some gross-to-net impacts on that. But as we said, ideally, we would structure future programs in a way that it's either more of a revenue deferral or a sales and marketing expense where possible. But this was a great one that we wanted to pilot and evaluate. And we saw the desired effect. It was very well received at the practices where we rolled it out.

In talking to them, they were able to that conversion discussion with the patient was much easier. That helped get more patients exposed to DAXXIFY, which we think will create the necessary stickiness that we want over time. So that was more on the services, activation, more consumers. In terms of consumer pricing coming down, that wasn't related or connected to the consumer coupon. When we rolled out the lower price to accounts, since we don't ultimately control what they charge to the consumer, we were hoping that they would pass that savings along. But it doesn't happen overnight. You had some accounts that were happy charging a premium and wanted to stay the course. Then you had others who sort of were trying to figure that out. But we listened to the market.

We made the price change so that they could offer DAXI at a price that's in line with other toxins so that the switch discussion or the discussion with the patient becomes much easier. "Hey, I can give you this new peptide-powered toxin. It's the latest innovation in the toxin space. It's not going to cost you any more. And oh, by the way, you're likely going to see it kick in quicker, last long, and you'll observe some better skin quality." And that has made for a much easier switch process. And so we've been encouraged by the fact that that is coming down. But that's untethered from the consumer coupon. The consumer coupon program went out to a subset of accounts. Whereas this overall price strategy but we feel and again, with all my visits, people are saying this has just really made things easier.

People are loving DAXXIFY. This change has made it much easier to switch patients.

Serge Belanger (Analyst)

Got it. And then when we've conducted aesthetic consumer surveys, DAXI typically comes in last of all the toxins in terms of awareness. And obviously, it's the newest product, so that's not surprising. But curious what you see in your own surveys and what you're doing to increase that awareness of the product to drive additional demand?

Mark Foley (President and CEO)

Yeah. So listen, obviously, coming into the market where we are, the first thing that we wanted to do is to make sure that we got the providers in a good spot because if we spent a lot of awareness dollars with the consumer and they went into accounts that either didn't offer DAXXIFY or accounts that weren't happy with DAXXIFY, that wasn't going to create a good ROI. So that's why we spent the last two quarters really focused on reengaging these practices that already were trained on DAXXIFY, saw the promise and the benefit, but given the pricing, struggled with sort of patient expectations. And so we thought that was first and foremost. We've been supporting the brand with some digital and social, but we'll be upping and increasing our spend there in those areas now that we have a broader user base.

We have some internal KPIs exactly around that: brand awareness, share of voice, all of these things. And so we understand and appreciate the need to support the brand at the consumer level from an awareness standpoint. But we also think that making sure that these practices have the tools at the practice level to be able to engage customers in a discussion around something new is also a really good ROI. But yeah, we will increase some of our social and digital efforts to create more awareness.

Serge Belanger (Analyst)

Thanks, Mark.

Mark Foley (President and CEO)

Great. Thanks, Serge.

Operator (participant)

Thank you. The next question comes from Tim Lugo with William Blair. You may proceed.

Speaker 11

Hey, guys. This is Lachlan on for Tim. Thanks for taking the questions. I guess one clarification to start. On the market share data, can you just talk about how that's calculated? Is that patients treated, vials, sold, some other metric? And then on my other actual question, I was curious if you've seen any changes in the use patterns of DAXXIFY since the pricing change, either in terms of how injectors are using it or the type of injectors or practices that are interested in getting it or anything else that you may have seen?

Mark Foley (President and CEO)

Sure. So first, on the market share question, so we use a third-party independent data source, Qsight, which is part of Guidepoint. And this is the market share is calculated by average patient spend per average patient spend at the practice level. So kind of if we look at the total dollars that a patient spends across these practices, that's how we calculate the market share. And it's a good sample size. Obviously, they've powered it to make sure that it's accurate and reflects kind of what the trends are in the market. In terms of usage patterns on DAXXIFY, typically, when an injector decides to inject a product, they use that product for the different areas that they want to treat on the face.

And so what we are seeing is a good mix of a nice pipeline of new accounts that are coming in and sort of experimenting with it to see where it fits in their practice, combined with existing accounts that are getting more comfortable and confident in the product that are growing their share within their practices. And that was reflected by, again, the higher average order volume per practice that we saw in Q1 compared to Q4. And so it's going to be a mix.

And listen, across any practice, since we have a smaller percentage of our accounts that have made DAXXIFY a majority share in their practice, you'll have some that will use it for patients that want something new or some that say, "Hey, the current toxin I have isn't providing me kind of the value that I want." And so there'll be some variability among practices. But on average, they get in, they start it with a certain subset of patients, and then they continue to grow it from there.

Serge Belanger (Analyst)

Thanks.

Mark Foley (President and CEO)

Great.

Operator (participant)

Thank you.

Mark Foley (President and CEO)

Thanks so much.

Operator (participant)

The final question comes from Navann Ty with BNP Paribas. You may proceed.

Navann Ty (Analyst)

Hi. Good afternoon. My first question is, will Revance increase the share of MedSpa versus derms and plastics? And will that impact the use of coupons and other promotions going forward? And then I had a second question on therapeutics. The CD launch came slightly earlier than expected. So is it based on the previous survey or early feedback or other companies' payer preparations? Thank you.

Mark Foley (President and CEO)

Sure. Thanks, Navon. I'll try and make sure I hit these right. So first, in terms of our customer mix with Revance and the consumer coupon, the lines are increasingly getting blurred across MedSpa versus core account because you'll find, for example, plastic surgeons, they might own 3 MedSpas, and they're the medical director there. And so is that a plastic surgery account, or is it a MedSpa account? If you look at it, our primary focus in the quarter was to double back around to those accounts that had already ordered DAXXIFY. And so we said that we've got now 3,500 ordering DAXXIFY accounts at the end of Q1. We have a really good healthy mix of all types. We've got some MedSpas, really high-volume MedSpas. We have some boutique MedSpas. We have plastic surgeons. We have dermatologists. And we have some cosmetic physicians.

So we have a good mix across all of those. The consumer coupon went into a subset of accounts and represented all those different ones. I think universally, it was appreciated because they realized it made for a much easier switch process and allowed these accounts to offer their patients something of value, which is always good for them as a practice to say, "Hey, I've got something else that I can offer to you." Your other question on the CD side and sort of how we're tracking it, we got approval last August. We did indicate that we were going to start a preview program because we wanted these subset of KOLs to have access to the product to get through a few treatment cycles to inform our go-forward.

And that's where we sort of learned a little bit more about, "Hey, yeah, incremental duration is great, but if I can get better symptom control within the 12-week treatment timeframe since there's published papers out there that say more than 80% of patients have symptom breakthrough before they can get reinjected at week 12, that that's a big win." They talked a little bit about how they think about dosing and dose escalation. And so all of that has woven in. As you point out, we were very encouraged with the progress that our payer team has made. I mean, to have a J-code, to have over 200 million lives covered, pushing 80% of commercial plans already incorporating us into their plans is obviously a big jump compared to where companies would normally be at this stage of launch.

We do think it bodes well for the long term. We are very encouraged, and we have high expectations for that franchise.

Navann Ty (Analyst)

Thank you. Maybe if I can ask as well if you have immediate uses for the $100 million offering?

Mark Foley (President and CEO)

I'm sorry. Missed that, Navon?

Navann Ty (Analyst)

If you have immediate uses for the $100 million offering.

Mark Foley (President and CEO)

Oh, the proceeds that we raised. Toby, do you want to hit that one?

Tobin Schilke (CFO)

No, I think when we talked about the offering, this was for general corporate proceeds. So we continue to feel good about our runway and things like that. So we took the time on giving feedback on sort of where we were with various debt obligations that it would be prudent to strengthen our balance sheet. So there wasn't an immediate use for that other than general corporate.

Navann Ty (Analyst)

Thank you.

Tobin Schilke (CFO)

Thanks, Navon.

Operator (participant)

Thank you. This concludes the Revance Therapeutics 2024 first-quarter financial results call. Thank you for your participation. You may now disconnect your line.