Evolus, Inc. (EOLS) Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Evolus Extra Strength Interim Data Webcast. [Operator Instructions]. As a reminder, today's call is being recorded. I would now like to introduce your host for today's call, Mr. David Erickson, Vice President of Investor Relations. Please go ahead.

Thank you, operator. And welcome to everyone joining us on today's call. Our presenters today are David Moatazedi, President and Chief Executive Officer; and Rui Avelar, Chief Medical Officer and Head of Research and Development. Before we get started, let me run through a few housekeeping items. 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 to review any estimate projection or forward-looking statement. Today's call is being webcast with slides. If you have connected to this call by phone only and wish to view the slides during the call, please also connect to the webcast or download a copy of the slides that have been posted to our website just a few minutes ago. Both, the webcast link and PDF copy of the slides are available on the Events and Presentations page of our Investor Relations website at evolus.com. [Operator Instructions] Lastly, following the conclusion of today's presentation, a replay will be available on our website at evolus.com. And with that, I'll turn the call over to David.

Thank you, David. Today, we're very pleased to share with you the same data we presented on Saturday at the MCAS meeting in Paris, one of the largest aesthetics meetings in the world. This information was also summarized in a press release we issued that same day. This presentation was the first look at interim data from our Extra Strength Phase II study of Jeuveau, a study that is still ongoing and expected to conclude by June. This means that the data we presented can potentially improve as patients that are continuing on the study return to baseline. As we embarked on this Phase II study, there was some uncertainty about whether Jeuveau would meet the benchmark of 24 weeks that was established recently and whether the adverse event profile would be acceptable. At the onset, we were confident that this new formulation of Jeuveau, which is a combination of a higher dose and higher concentration would meet that important threshold. What we did not anticipate was the duration lasting 26 weeks or as we internally coined it, a prolonged 6 months. This is a successful outcome that gives Evolus the ability to offer treatment options for customers and their patients using the same original strength Jeuveau vile simply by changing how the product is reconstituted. Along with the 26-week duration, we saw a very favorable safety profile, which is consistent with the controls in the study and which we attribute to the precise nature of Jeuveau. With greater control of local and distance spread, it makes Jeuveau ideally suited for use in areas where injectors and patients may want to use an extra-strength dose. And with the natural-looking results customers can achieve with Jeuveau, having 2 dosage strength uniquely positions us in the underpenetrated and rapidly growing aesthetic neurotoxin market. I will now turn the call over to Rui to go through the data in more detail. Rui?

Great. Thank you, David. Yes, this morning, I'd like to share with you the results that we shared on Saturday and the interim look at this Extra Strength longer-duration study. Again, it needs an interim look, and it is a Phase II. For a little bit of background -- sorry, I'll get to the slide. For a little bit of background, what we wanted to do here is look at Jeuveau, which is currently approved for 20 units in the glabellar line in the context of an extra-strength version. And what we mean by an extra-strength version is we effectively did 2 things: one, we increased the dose; and second, we looked at hyper-concentrating the amount injected. Now given that we hadn't had this experience, we wanted to look at the safety, efficacy in the respect to duration when we actually use this extra-strength formulation. For a little bit of background, when we look at duration studies, we look at a few different parameters. One thing we can look at is something called the Glabellar Line Scale. And typically, a Glabellar Line Scale is a 4-point scale where there is none, mild, moderate or severe. And these scales are validated, and they can be used by the investigator, and they can be used by the subject. So it's a fairly good way to look at these things and gives you an accurate portrayal in terms of how effective your product is. However, patients don't typically look in the mirror and decide they're a 2 or 3. Instead, they like to look at aesthetic outcomes. So another important thing to look at to make sure that your scale actually is working are using scales such as the Global Aesthetic Improvement Scale. Here, we're asking a different question. We simply ask, is there an aesthetic improvement? And it allows you to effectively see if there's a correlation between patients actually having aesthetic improvement and how the scale is performing on a validated scale. Finally, ultimately, we always ask our patients for subject satisfaction. And interestingly enough, when we use toxin, they tend to score very well. Another thing that's a little different when we look at duration is the way we measure things. Typically, people see graphs that are efficacy graphs where it starts at 0 and you see kind of a curve that goes up and then back down. When we look at duration, we use typically what's called the Kaplan-Meier plot. And what you see here are all the responders on the far upper left. And then every time you see a little downtick, that's called an event. And in this plot, the event is a patient who has lost the correction. And then you could see, it ticks down as patients lose their correction and make their way back to baseline or whatever it is you're measuring. Now what the program also does is it reads the median or that 50th percentile and looks at the intersection where the majority of patients, i.e., the 50% mark, have started to lose their correction. And then it drops another vertical line to intercept and see how long it took. And that's what the time access is. Now when we look at time, it can be measured in a variety of different ways. And people like to compare and they like to kind of try and use a little bit of math to understand what's what. We typically measure in days. So you'll see our studies go out to 360 days, for instance, or a year. And the conversion for days is pretty simple. You take hours, divide by 24, that gives you days. If you want to look at weeks, again, fairly simple straightforward conversion. You take days divide by 7 and that gives you weeks. A little trickier is the conversion to months. Now if you just take weeks and you divide it by 4, you artificially inflate the number. For example, if you look at the number of weeks in a year and divide by 4, you would get 13 months. So the right correction or the division factor is 4.3, 4.5, the numbers there, and then you get the right number. A little bit about the trial design. It is a single treatment. It is multicenter, double-blind, randomized and there's an active control. It was conducted at 5 sites, 150 patients in total, randomization was in 1:1:1. The duration of the trial was 1 year long or until the subject returned back to baseline. And we looked at stable patients kind of on label, 18 years of age and over. And of course, we enrolled moderate to severe patients as typically is done. The test formulation, we call extra strength. And the way we get that is we actually use the 100-unit vile that's available today. And we reconstitute it differently. We put less volume in, 1/4 of the volume actually, 0.625 milligrams. And then you get this concentration of 8 units per 0.5 milligrams. And then there's 5 injections, and that's how you come up with the extra strength formulation. Primary objective of the study. Ultimately, when the study is over, the primary objective is to look at the duration of effect or time back to baseline, and we're using the investigator's assessment. Baseline demographics. Well, one thing we know is age is important because as people get older, efficacy drops a little bit. So we see fairly balanced 47-year-old in the Extra Strength arm, 50 and 47. We see predominantly females, 94% of the enrolls are all females. That's important because males typically have a lower response rate. So we want to make sure that was balanced. And then we also see mostly white females, which is fairly typical when we look at aesthetic studies done here in North America. Another important thing to look at is actually the baseline severity. So when we look at patients and we ask the physicians to grade them, what you see is most of the patients actually had severe Glabellar Lines at baseline. 71% versus 72% versus 66%. Now why is that important? Well, when you use none or mild as a responder definition, this has a tremendous amount of bearing. And you want to make sure that the severity -- you understand severity across groups when you use this because we enroll moderate and severe patients. And by definition, once you cross that line of none or mild, that's when you become a responder. So if you're a moderate at baseline, all you need is 1 point to become a responder. However, if most of your patients are severe or your patient is severe, you actually need at least a 2-point improvement, i.e., double, to become a responder. So again, you always want to make sure that those are fair, you understand where they are. Safety. That was the primary reason why we did this at the halfway interval. So this study, as you know, is 1 year. And typically, most of the adverse events take place in the first part of the after you've been injected. So we went to the IRBs, and we went to the ethics committees. And we basically put in an interim look primarily to understand the safety profile of a hyper-concentrated increased dose Jeuveau. So what we learned in the top line is that there were 33 adverse events up in this patient profile. And then you could see all adverse events, 18%, 33%, 49%. But those are all adverse events. So that means related and not related to the drug. The next line is the drug-related adverse events. And you can see, there's really no difference between them. There's just a couple of events, 3, 2 and 3. Another word looking at the data is, what about the subjects, number of subjects? And we saw that 26 of the 150 had an adverse event. All adverse events, you see 12%, 20% and 19%. But again, these are all events that include related and unrelated. And when you look at just the drug-related adverse events, not much different between the groups, you see 3, 2 and 3. And then a little further broken down, you can see the type of adverse events, mostly headaches. We have one case of lipomatosis in the 40 unit, and you see 1 patient fainted with a vasovagal event. What about the severity of the adverse events? Of the 33 adverse events, what we saw was 88% of them were mild, and the definition of mild is fairly noticeable. 12% were moderate and 0 were severe, and there were no serious adverse events. And if we look across the groups, you could see that fairly even distribution, most of them mild. What about duration of effect? We also have an opportunity to look at some of the duration of effect. And one way we can look at it is none and mild back to baseline. So what that means is you look at the responders, at none and mild and you ask the question, how long does it take that patient to go back to baseline? And the median was 183 days. If you can convert that, that's 26.1 weeks or 6 months. Another way to look at it is look at all patients. And all patients come in, and they have different baseline severity when they arrive. And after they were treated, you asked the question, how long did it take that patient to go all the way back to their baseline? And here, you can see that the median was 183 days. Again, if we convert them to weeks, that's 26.1 weeks. And months, that's 6 months. Another way of looking at it is actually looking at how long you hold a 1-point improvement. Now the reason this is significant is by definition, when we look at a scale, a change in 1 point is clinically significant. So when we ask the question that way, what we see was 183 days was the duration of at least a 1-point clinical improvement, which is also 26.1 weeks or 6 months. And finally, probably the most important question for the patient is what about my aesthetic outcome. So when we ask the investigator to look at the subject and look at when -- how long an aesthetic outcome actually lasted and how that correlated with their scale, we see they are almost superimposable. 184 days or converted into weeks 26.3 weeks or 6.1 months. So in summary, we see that safety, that was very similar across all the groups, 88% of the advents were mild, 12% moderate, no serious adverse events. And when we look at duration, we saw across multiple parameters at this point in time, 6 months duration or 26 weeks, those included Glabellar Lines back to baseline, none or mild back to baseline, how long a 1-point improvement actually last and Global Aesthetic Improvement. And finally, of course, the study is ongoing and this is an interim result. So we're looking for probably by midyear, the study should be ending, and we look forward to reporting the results after that's all done. Thank you. And with that, I'll turn it back to you, David.

Thank you, Rui. So in summary, here are the important things to keep in mind. We expect to complete the study by June, and our next update will be the presentation of final data sometime during the second half of 2023. These are interim data. And since some patients are still being evaluated, we expect these results will be maintained and possibly improve as we finish out the study. While the opportunity for an Extra Strength product is meaningful and can help further expand the toxin market, our data suggests customers will continue to use the original 20-unit dose a majority of the time. With our aesthetics-only business model, we are confident Evolus is uniquely positioned to capitalize on an extra strength dose. Evolus continues to execute on its long-term strategy and already this year has announced several key achievements and milestones, including a strong preliminary finish to 2022 with the projection for continued above-market growth in 2023, further international expansion and a target for achieving profitability. With these strong interim Extra Strength results, we truly believe the wind is at our back and that Evolus is well positioned to achieve our $500 million revenue target in 2028. With that, we'll open it up for questions.

[Operator Instructions]. Our first questions come from the line of Annabel Samimy with Stifel.

Congratulations on the strong data. I guess the first question is one of clarification. In terms of the metrics that were used is surprising to that the GLS score returned to baseline, none or mild GLS responders and the greater than 1-point improvement GLS response was exactly the same? Is that supposed to line up as precisely as it did? So that was just a clarification question. And then I guess the subsequent questions are really about how with this Phase II interim data, how can you really use this data right now? It really is just about a reconstitution at same. So is it something that you can talk about with physicians? The fact that you presented it in a forum, can you then discuss it with, I don't know, medical sales liaisons? How can you use this data? And then finally, if you're using the same vial, does this really change the pricing to the physicians when they're looking at purchasing vials? And is it really just what they offer on the back end to the patients? So I just wanted to understand those 3 things.

Thank you, Annabel. Maybe I'll take the first 2 and then hand the third one over to David. So on the first one, yes, we're a little surprised. Obviously, the GLS back to baseline of 6 months was a very nice value for 26 weeks. The greater 1-point improvement was a little bit surprising for us. Obviously, it's higher than what we've seen in the past for others. And we know what we had. It was -- our value was 21 weeks when we looked at our 20 units across multiple studies. As to why? I think it may be just kind of a saturation of the curve for now. We're only halfway through the study. So this may be just a reflection of -- and we know that people are still within the study. So we may just see separation as the study goes on. So the short answer is probably where we are in the study and people are still in there. As to your second question, you're absolutely right. The 100-unit vile is what you use currently to create the existing formulation. And it is basically a reconstitution step and what you draw up in. Yes, docs can use it today. And in fact, we have clinicians who've reached out and said that they've started trying and playing with it "in their practice". And after I presented it in MCAS, that was another question that I got asked quite recently from HCPs was, can I try this myself? And of course, they're free to do what they like. In terms of -- I believe you were kind of delving into another point, ultimately, this gets published at some point and how you create the existing formulation will be part of that publication. So effectively, there's a recipe out there and clinicians will be free to do what they want, which is fairly common. Doctors play with reconstitution in how they treat. And then finally, we have a medical affairs group that can actually speak to off-label unsolicited requests, and they'd be able to respond. But ultimately, it will hover on having a publication out there that explains everything. And then last one, I'll turn it over to David.

Yes. Thanks for the question, Annabel. As Rui just pointed out, we have customers that were already using the extra strength dose, and that helped inform the Phase II study from the onset, and that's why we have the confidence going into it that the product would perform. What we have learned, though, is that our pricing is competitive today as it stands to using the Extra Strength dose. So I think from that standpoint, we feel good about where we are. And as you know, we have pricing flexibility because we're a cash pay business in order to optimize the relationship between both, the 20 unit and the 40-unit dose. And that in complement with our consumer loyalty program and that gives us the latitude to operate over time. But we're pleased to see the results. And I could tell you that I was receiving notes from customers over the weekend. And I think this brings clarity to Jeuveau users around what the extra strength dose brings to them relative to the original, which we do continue to believe will be the predominant use of neurotoxins as the original strength.

Our next questions come from the line of Louise Chen with Cantor Fitzgerald.

This is Carvey on for Louise from Cantor. First question, at the data cutoff, what percentage are -- how many extra strength patients have reached the 26-week mark and still being monitored for duration results? And our second question is, based on the data available, what's the theoretical dispersion of duration that we can expect at the final results?

Sure. So this is an interim data cut and we have a snapshot. I can't give you the exact percentage of patients. While I guess I can, you've asked what percentage of patients have reached the -- in the Extra Strength arm that reached 26 weeks. Just as a reminder, the first patient went in basically in March, last patient was the end of June. We're now in January. So everyone has gone past the 6-month mark. So all patients are there. So when you ask about the extra strength arm, they've all gone through 6 months and obviously, there's patients still within. Within the second one, theoretical, I can't map this out. All I can do is share with you. We know from past experience, if you look at the '04 and the '06 study, we have patients who lasted 7 months with 1 treatment. We even have some patients who lasted a full year with one treatment that was just at 20 units. So I can't map this out theoretically, but rather this is why we do these studies. And at the end of the study, then we'll actually have the duration answers for you.

Got it. And just one more question. So you did mention that there was a single subject that experienced high lipomatosis. Were there any notable characteristics that stood out to you that might explain the AE?

I don't have specific insights. The -- we have 1 subject out of 50. So that give you 2%, but I don't have any specific information on that patient if there's a reason why they had lipomatosis, if that was the question.

Our next questions come from the line of Navann Ty with BNP Paribas.

It's Navann Ty from BNP Paribas Exane. Just a question on the Jeuveau precision profile. So do you think with that data, would it allow a more natural look than long-acting toxin, Daxxify?

Well, thank you for the question. Obviously, I can't talk about it relative to Daxxify. This study interesting enough, was first set up to be a head-to-head against Daxxify. But because of delays, we had to put in another arm. But until you have a head-to-head, it's unfair to talk about it. What I can say is one thing that we know from clinical practices, we tend to have a more "natural look". And that's the feedback we've been getting from clinicians because it hits certain points. It allows a lot of fibers to kick in. And that's actually one of the things that we're studying in this at the end is the patients who have gone through the extra strength, how is that kind of natural feel and look compared to the 20 units? So we'll be able to compare our 20 units to 40 units from kind of that natural perspective in this study.

Can I also follow up on the efficacy data for the other 2 arms, the 20 units, BOTOX and Jeuveau? I don't think I've seen anything from the other 2. Answers would be helpful.

Yes. So as I mentioned at the beginning, the reason the study was unblinded was this study was primarily a safety look at the interim. So the bulk of the data that we had and dug into is on the safety. And we only had a limited, at this point in time, looks at the other arms. The arm that was of interest for efficacy for most and for us also was how the 40-unit arm look. In terms of how the 20 units of Jeuveau and 20 units of BOTOX compare, I mean I think there's an abundance of literature out there right now. The 20 units of Jeuveau has been studied now in 5 larger restoration trials. Two Phase IIIs that showed the -- 1 point was about 21 weeks. And we also have a very large 540 patients head-to-head against BOTOX, if you want to do that comparison. And in that, you could see what the duration looks like all the way out. There is actually an independent paper that was published by 2 doctors out of Chicago, [indiscernible] and [indiscernible]. They looked at the comparison of BOTOX to Jeuveau. And then finally, there was another recent publication that just came out comparing BOTOX to Jeuveau in males. And there, you can actually see both, onset and duration. So in this study, as I mentioned, this study was originally designed to be head-to-head against the other 40 units of toxin but they got delayed. So instead, we just put these arms in. But I don't think we should see any surprises between the botulinum 20 and Jeuveau at 20.

Our next questions are from the line of Serge Belanger with Needham & Company.

I guess first question on the adverse event profile. Was there any surprise that there doesn't seem to be any differences in drug-related AEs across the different arms even once you double the Jeuveau dose? And secondly, is there enough data here for you to start contemplating the next step? And I think in the past, you've talked about a potential registration path. Maybe just talk about what that would entail.

Sure. Thank you. The adverse event profile, I mean, certainly, we're really pleased to see that effectively, there was no dose between the 40 units extra strength and the 20 units of either one. Basically, they're the same. We actually anticipated this. One of the things that we've heard fairly consistently on our Jeuveau is it's a pretty precise field of effect. There was a paper that was published by [indiscernible] that actually speaks of the relative doses. And if we think of the main adverse event, issue is it's usually related to spread of the toxin. So we took an extra step, of course, we made it hyper concentrated. And again, that was the main reason why we did this cut at 6 months halfway through the trial. So it was nice to see that we didn't see an adverse event that may be related to a very tight field of effect there. As to your next question, the intent is to finish the study. So the responsible thing to do is to complete the study, have all the patients go through, see what the data looks like. And then we're probably going to hold some Advisory Boards to understand what the benefit is of taking this all the way through to a label or not. So we won't make any decisions until we have the final data set. And again, the study -- the 1-year mark is June of this year.

Our next questions come from the line of Greg Fraser with Truist.

I'm curious how you view the interim results on efficacy versus the data that have been generated for 40-unit injections of BOTOX. And also whether you believe that there's much off-label use of higher concentrations of BOTOX currently.

And so the registration -- you're talking about the BOTOX as in onabotulinum.