My name is Balaji Prasad. I'm the senior analyst for the Spec Pharma coverage. Continuing our sessions for this afternoon, we have with us the management team from Evolus. Sandra Beaver, the CFO, and Rui Avelar, Medical Officer, with us. Sandra and Rui, you just recently had your, I think it's, call earnings raise call. Maybe why don't you recap a few of the key points from earnings and then jump into Q&A from there. Sure. Sounds great. Thanks for having us here. It's nice to see everyone. Just last week, we did our Q4 earnings announcement. We put up 49% growth for 2022 revenue, ending the year at $149 million. We achieved our guidance target of top end of $140 million-$150 million of revenue. At $137 million for cost, which was also at the low end of our operating cost guidance. We're really pleased with the results, really pleased with the level of growth we're seeing in the market in 2022. We also reiterated our 2023 guidance, where we had guided to $180 million-$190 million of revenue, $145 million-$150 million of operating expenses, as well as achieving non-GAAP operating income profit for the fourth quarter of 2023. We're very excited about putting up that guidance and really pleased with the results in 2023. Fantastic. A few things to dig into that. Before that, yesterday we also had an aesthetic clinic visit on the back of the conference or as a prelude to the conference. We had an interesting conversation. I think one of the things which came out was that something that hit the last week, right, we had as a duration of being an unmet need in aesthetics. We also discussed the holy grail of wrinkle care, like topical toxins too. I want to start on the since we have Rui here, extra-strength duo that we have now. It's been a year that we've been discussing. You recently released the interim Phase II data for extra-strength. Walk us through these results. It looked compelling. It looked pretty strong. How do we interpret those results and extrapolate that to final readout, which is coming end of the year? When we started, the questions that we had to answer is, number one, where's the safety profile with 40 units? The second one is, when we create this extra-strength formulation, which is a combination of increasing dose and making it hyper-concentrated, what impact does it have on duration? Just to kind of give some background numbers as people think about it, there have been a couple companies that have actually done 40 units. When we look at something like a 1-point improvement on the Glabellar Line Scale, a 1-point improvement is important because most people have reported that out. By definition, it's a clinically significant change. We've seen about 24 weeks of duration on 1- point, we came in pretty much in line with that. We came in at 26.1 weeks. That's where the data is today. That's interim analysis. Mm-hmm. We still have patients within the trial end in June. Our expectation is by the end of June, the number would be same or it actually has potential to improve a little bit more. That's where we are with now with that study. Fantastic. As you come to the final readout, what are the key signals that you're looking to interpret from it or gather from this that will convince you of its potential and despite the other thing, we are going ahead with this happening? I mean, another really good question. From a top line perspective, we already see that we have a duration value that's just as good as anything that's been shown. Numerically, maybe it's a little bit better. Again, it's not much of a difference. We don't expect when the final data out, comes out that it'll be any different. We'll just have more data input. Probably the thing that's most important is what our HCPs say. This new kind of longer duration sector is a great opportunity, I think, for a lot of folks. It's a market. Nice thing about toxins, it's an under-penetrated market. The nice thing about longer duration is it just helps make the market even bigger. What we're showing is that if that actually becomes a meaningful market, then we'll be able to participate. The question that we want to ask the HCPs is, what do they advise us to do next? There's kind of three different ways we can go. One is simply publish the data that we have today and effectively in that publication is the recipe of how to do extra-strength. It's the same vial, same 100 unit vial. Yeah. The second step is for instance a large Phase II, maybe head-to-head. Mm-hmm. Then the third option is actually take it all the way through registration, conduct the Phase III studies and, you know, take it all the way to registration. Now that we've released the data and we've been discussing with HCPs, we're really getting doctors asking us, you know, "How do I do this? I'd like to try it myself. I'll do my own head-to-head, or I'll do my own little experiment in my clinic. I'll try it on my patients or staff or on myself." The sentiment right now is either publish it or do like a Phase IV study. We're not really getting people saying that you should take it to Phase III at this point. Got it. That's interesting. The quickest path to commercialization is you leave it in that thread. Yeah. Got it. Great. I think, excuse me. For you, the interesting thing is that, you're lucky in that you had Daxxify, which is going ahead, which has gone ahead of you, is prepping the market, patients have been waiting for this product like this, and they are now ready to receive one or more products in that, is that a fair read? Yeah. I mean, I think we've seen, as Rui stated, really good market reaction to the idea of long duration, but also just really good reaction in terms of media coverage of toxins, right? Yeah. It's going to provide, hopefully, either expansion of the market for new consumers coming into the market that maybe hadn't heard of things otherwise and/or if there's higher usage of the product, right, which is higher volume per unit, then you're just gonna have the same consumers consuming more product, which itself provides some market expansion for us. I think we see nothing but opportunity and sort of positive buzz around the conversation around duration. Great. Maybe just last question on this topic. Can you give us a sense of the market expansion potential that you speak about, like if it's a $2.2 billion aesthetic market in the U.S. today, what kind of market expansion could we think about having a longer duration product, one or two longer duration products out there due to this market? I think it's early days, right? I don't know that we've sized with any specificity the opportunity around longer durations from a total market perspective. You know, we have some, I'll call it anecdotal evidence or evidence from talking to our HCPs about the interest level and what percentage of the patients might be considering something like longer duration, which is in the minority, call it 20%-ish range, right? You kind of extrapolate some thinking, but I don't know that it's fair to do that. Mm-hmm. without higher knowledge or adoption rates in the market yet. Fair enough. Rui, maybe just one last question again on. I think one of the clinical differentiators which has come out with Jeuveau has been precision and with longer duration of greater dose toxins, I think it's always been ensuring that the side effects don't really stay on for a long time, and that's been a deterrent in the past for this, right? Comparing the two, it looks like it's, you know, a better win for Jeuveau. Well, I mean, you know, first of all, I want to commend our friends at Revance. I think they've done a really nice job of creating a new market sector and bring a lot of awareness, so that, you know, helps everyone. In terms of the profile, you know, the one thing that we've learned about Jeuveau, and there's a consensus paper on this, it seems to be a very precise drug. To your point, when you look at the adverse events with the toxin, they're usually related to distant spread. That also plays into this adoption, the question you asked in terms of how big this market. I think we're going to have to learn our way through. There's areas where we know glabellar lines is a good place. There's places we're gonna be nervous about, like in the forehead, where already we underdose relative to the label. Right. adverse events. There's gonna be areas where we're just gonna have to work our way through off-label set downs in the corner of the mouth. Our product, we know now from clinical practice, is a very precise drug. I think it's well suited for this type of drug. Until we kind of get into the broader market and have more real-world experiences, we're just gonna be very conservative in comments. Got it. Okay. Great. Maybe getting to the broader toxins market, we had spoken to quite a few practitioners somewhere around Q3, Q4 last year who started calling out that they are seeing signs of a decline in the market. People, investors who are flush with cash, various sources for it, be it the markets or, COVID checks, that they're not coming in anymore, and that they're seeing declining visits at the clinics. Your numbers clearly are belying that. Your numbers are been fantastic. You came out with a $500 million guide, a less aspirational goal in 2028 at 20%+ growth. Not too many companies can really say in the year of launch and say they'll still grow 20%+ for the next few years. How do you kind of correlate these 2 data points, and the broader market? Sure. I mean, maybe we can talk a little bit about what we saw in 2022. Mm-hmm. How that's informing our thoughts on 2023 and beyond. I think it'd be useful to also unpack that $500 million, just so you can get a sense of why we're so confident in delivering that number out in 2028. I think in Q3 of 2022, I think we all know 2021 was not the most typical year, mostly due to COVID and the rebound and the recovery from COVID. We did, like others, see some softening in the third quarter. However, I think what we learned as we processed through the third quarter and into Q4 was this was really more of a return to typical seasonal purchasing behavior than what might have originally appeared like a decent softness in the market. We did still have a very strong 4th quarter, and as I fully earned Q4 results with significant growth over Q3 and then significant growth, you know, at 49% on the full year. Contemplated in our 2023 guidance is also that same return to sort of typical seasonality, where Q3 does tend to be a slightly softer quarter, higher vacations and things like that. We continue to see evidence of, you know, strong demand in the market, continued entrance of new patients, right? That was aided for us by our Switch Your Tox program, where we were incenting consumers to try the product by offering higher consumer loyalty rewards at $80 a visit for two visits. We saw a large influx of patients and a large share gain for us associated with that particular program. We just continue to see that momentum building coming into 2024. All the signs that we are seeing are strong market, continued opportunity to expand the market. As Rui said, it's a vastly under-penetrated space. Mm-hmm. For 2023, we're contemplating high single, low double-digit growth in the market. We do think that over the long term, that will persist out into 2028. Although we may see some ups and downs in that timeframe, our overall long-term guide is contemplated on a similar level of growth and strength in the market over the five-year horizon. Got it. Great. clearly there's a 10 to 12 percentage point differential in growth that you still expect Evolus to have over the next five years. Yeah. Let me talk you through how we get there. Please. With the $500 million guide, I think people are like, "Wow, that's ambitious, but that feels really good." Actually, as much as we're very proud to put up that number, it doesn't feel super ambitious to us. Okay. It feels really rational. As you know, we entered Great Britain of last year. We launched in Germany just this last weekend. By 2028 we expect roughly 15%-20% of our revenue to come from OUS. Mm-hmm. When you think about outpacing the market, when you take that out, we're actually not outpacing the market at quite the same rate that you might think when you look at the top down. That gives you, let's say, roughly $100 million of that $500 million is your international market. The remaining $400 million, we say that we exit 2023 in that $180 million-$190 million range. The $200 million gap comes from two areas. One being just that growth of the market we just talked about. Mm-hmm. That high single digit, low double digit growth, we'll enjoy and share in that benefit. About $100 million of your growth coming into that. The remaining comes from share gains. The majority of those share gains we actually have contemplated in our 2023 guidance, that $180 million-$190 million number. Now you're thinking about relatively modest share gains from 2023- 2028 on a strong market, and it's still very achievable. Okay, great. Maybe it's now been four years since the launch. Are there any recent learnings from your accounts, from loyalty programs both at the physician end and the consumer end? Maybe starting with the physician end for in terms of all you're seeing, and that you could use to drive your campaigns for 2023 and 2024. Sure. I mean, I think 2022 not only was a great year for us from revenue performance standpoint, but it was also a great opportunity to learn. To learn how our programs work, to learn how our practices responded to the different offerings we put into market. The two things that for us have shown to be the most effective, and we think they're pretty differentiated in the market, are our consumer loyalty programs- Mm-hmm. -and our co-branded media program. co-branded media allows the practice as they opt into higher levels of what we call our Evolus Rewards, which is our practice loyalty. They get access to these co-branded media campaigns in the form of billboards, digital campaigns, as well as TV ads. That's something unique to Evolus. That's something as the cash pay only business that we can do that others cannot. We do find that practices that are opting into these programs, that are purchasing at the levels to allow them access to these programs and opting into consumer loyalty are growing at roughly 3 x the rate of practices that are not. Right. That allows us to really focus our 2023 efforts on how do we help move those clients up those tiers? How do we get them engaged in co-branded media? How do we make sure that they're putting up consumer loyalty for their patients? Our patients get $40 off every treatment through our loyalty program, which is one of the richer programs available in market. That actually drives higher volume to practice and higher returns to practice. We're really partnering with the practice to drive long-term value and focusing on those segments that are going to come in today. Great. Couple of questions on your preferred customer segment on the millennials. I think one, how would they react to longer duration toxins? Like I said, is it something that is practical for this particular demographic segment? two, probably not a question for now that you're planning, but as this age group evolves and grows further, do you kind of see them transitioning out of Jeuveau, or do you expect them to stay loyal to the brand for a long time? Sure. I'll go on the first one. The, you know, the duration point is an interesting one because it's not a linear relationship. When we look at the dosing and the amount you get, if you look at duration for 20 units and you look at duration for 40 units, you get more duration, but it's not linear. In some ways, if you model it out, you end up finding out it's going to be cost conscious, for instance. You're almost better off doing 20 units than 40 units if you do it mathematically that way. In terms of having the product from a long-term perspective, and in the context of millennial, one of the important things to look at is antibodies. Not just neutralizing antibodies, that's only part of the story. It's general antibodies, 'cause that's how 900 kDa, that's how you run into trouble with hypersensitivity reactions and everything else. Right. When we looked at our antibody profile, we had zero antibodies in the vacuum-dried. As predicted, the freeze-dried had general antibodies. Now, neither of those products had neutralizing antibodies. I think from a long-term exposure with repeat exposures, not having any antibodies at all will be an interesting thing. Thirdly, and particularly when we think about the millennials, that's why that publication was so important. Funny enough, we were not able to find a publication that looked at millennials and at glabellar lines. We did a really large, we pooled three Phase III studies together. Mm-hmm. We were able to show a few things. We were able to show that, if you look at the Glabellar Line Scale, which is a validated scale, non-millennials do really well. Which of course we do. Yeah. Millennials do even better. Now, physiologically, there's good reason for that. Sure. The big surprise for us was when you ask a relatively critical millennial to self-assess on the aesthetic or on subject satisfaction, non-millennials do really well. Millennials did even better, with nearly 100% scores. I think that really bodes well for this product in the context of millennials and having some data to support that from a long-term perspective helps. Only in studies like this the patient-applied scores are going to be lower than the investigator scores. That's the big ask, right? That we were looking for. Yeah. Okay, great. Maybe I want to spend a few minutes on the international opportunity now that you called out, of course, $100 million, which is probably achievable considering. Give us a sense of how we expect this ramp to happen. What kind of expenditures do you expect to incur over the course of the next few years as you expand into these markets? We're currently in Canada through a distributor. We launched in Great Britain in the fourth quarter of last year. Just recently, as early as a week or two ago, we've launched in Germany and Austria. We also received approval in Australia in the first quarter, which came a full quarter earlier than we had actually anticipated that approval to come. In Europe, we did get blanket approval, so we do have approval to operate in all the jurisdictions we have rights in Europe. Really, as we think about our expansion, we're focusing on the markets that are of the highest value and highest potential opportunity for us. Hence why we launched first in Great Britain as well as Germany and Austria. We're planning actively to think about how we launch in Australia, which is also the larger market outside of the U.S. for neurotoxin. We built up the infrastructure to support these launches largely in 2022. You can expect sort of future investments to be somewhat modest and aligned to the path with which we expect to grow revenue. We're going to enter markets in a way that ensures the highest degree of success in each market, right? We're not trying to do this big bang launch in all of Europe. We're trying to do a much more thoughtful, rational rollout as we test and learn as we enter into each one of these markets and build our opportunity there with Nuceiva. Great. Between these two, you're really looking at around 20% revenue export from here. How does it also impact your capital allocation strategy as you think about these growth markets and then adding additional layers of assets to these, to this existing pipeline? In terms of capital allocation just to support the expansion, it's really business as usual for us, right? It's contemplated in our normal operating cost structure. It's considered in our guide to profitability, as well as sort of our long-term guide on how we intend to fund the business through profitability. Certainly, as we look at business development and other uses of capital to expand assets, we consider not just the U.S. market, but the footprint we have in international to make sure that we're getting the highest value out of those opportunities. I do want to spend a couple of minutes on the competitive landscape, especially as we hear about Hugel potentially looking at, coming with their Letybo. You also have Galderma who are working on a botulinum with a liquid toxin. How do these figure into your thoughts around the market? You guys are still looking to gain share every year, but with these competitors coming in, how does it change the dynamics? I'll let you speak to the products first, Rui Avelar, and then I can talk to- Sure. On the Hugel product, we'll have to see. North America's a little bit trickier because. Mm-hmm. The ITC case, we'll have to see how they play out. It'll be interesting to see how it plays out in Europe. The early read on the product in Europe is, seems to have a performance profile, kind of along the lines of incobotulinumtoxinA. That's the early read. I just came back from Germany this weekend. Okay. Now those are early days. It's unfair to pass any judgment, but that's the feedback. The liquid toxin, again, will be interesting to see how that plays out. One of the challenges that they may run into is it's certainly convenient because it is pre, you know, reconstituted, if you will. Now, we know that clinicians do like to exercise their own judgment in terms of the concentrate, and so we'll have to see that played out, that flexibility is taken out of their formulary. Then there are a couple of other questions that we still need to see. Stability has been a bit of an issue in Europe so far. We know that the product we've seen thus far only has a one-year stability as opposed to three years. The third one that we keep hearing really consistently is pain. One of the pieces of feedback that I think everyone's heard pretty consistently, when you get the liquid toxins, it seems to be a lot more painful. All lessons we have to learn and see what happens in real life. Great. That's very helpful. If you think about these in the context of our guide, right? As I mentioned to you, 2023 is our biggest year of share gain, and then we sort of have modest share gain thereafter. Our entire long-term model is sort of built off of the analytics that we developed in 2022 and the expansion opportunity we see in the market with new accounts and new consumers. We feel essentially there's plenty of share to go around for new entrants to come in. We obviously never underestimate the importance of a new entrant into the market. We feel comfortable that, you know, our guide has contemplated how we'll build that share and, you know, others will share effectively in the remainder of the market. That there's not a concern for us around our long-term guide as it relates to new entrants. Got it. In terms of the outlook, I think clearly most of the investors speak to understand the narrative with Evolus very well now. Fairly straightforward narrative. You had a couple of headwinds with ITC, with Medytox and all of it, which you have navigated very well. As you think about the next couple of years, what are the biggest challenges for you now? Your goals concerning generating returns for investors. I mean, I see opportunities, right? I kind of look at where we've guided for this year. It's obviously gonna be a pivotal year for us, right? Mm-hmm. We've guided to non-GAAP operating income profitability by Q4, that our cash position will drive us there. We've developed an execution plan that we've proven over the course of 2022 and very focused on executing and continuing that success in 2023. Certainly we've got a, kind of a playbook and a clear set of measures now from all the learnings that we've had over the last few years. It's gonna be about execution and about focus and ensuring that we deliver on the commitments we've made to the market. I see, you know, great prospects for us, and we're excited about it. As you mentioned, you know, we're obviously still looking at opportunities to leverage the infrastructure we built, right? We've got this great sales force. We've got a very unique and differentiated business model. We think it's very logical that we would put another asset into the bag. The timing around that, though, is not something that's been entirely controlled, right? We remain active. We're looking for the right asset, but we'll do that when the timing's right, when the opportunity's right, when we find something that is of the right level of quality and calibrated partner with as well. Great. It's probably reasonable to expect that valuation has been a significant reset in valuations as you look at these assets? I think we've looked at a very broad range of assets. How could I put it? Rui's done the thankless work of, you know, toiling through hundreds of different options and opportunities. you know, we're looking at the right, you know, is it a commercial stage, development stage, different partnerships with. Okay. What are those valuation conditions against all of those factors when we think about what's gonna make sense for us. Okay, great. With that we are out of time. Sandra and Rui, thanks so much for your time, and pleasure speaking to you. I do wish you a very productive conference and the rest of the day. Thanks very much. Thanks for having us.