All right, we can get going. Great, thank you for joining us, everybody. I'm Marc Goodman, one of the biopharma analysts at Leerink, and we are lucky enough to have Evolus with us. Thank you for joining us, David Moatazedi, who is the CEO, and we have Rui Avelar, who's the Chief Medical Officer. It's been a nice ride for Evolus over the past 5 or so years, and I guess we're here to find out what the next 5 years are gonna be like. So I'll turn it over to you, and maybe you can make some opening comments.
Great.
David, thanks.
Thanks, Marc.
Yep.
Thank you for having us here at the conference. You're right, the last six years have really been an incredible evolution. As you know, we started Evolus with this focus on cash pay aesthetics. This market has evolved significantly in aesthetics in that there's a younger generation that views this category very differently than their parents. Historically, for those of you that have known medical aesthetics category, it's been viewed as a medical procedure. Getting an injectable toxin or a filler, you would go into a specialist, you would book your appointment months in advance, and you would treat it more like any other medical treatment. Over the evolution, call it the last 20 years, this category's really evolved out of a traditional medical procedure into being viewed by this younger generation as a beauty treatment.
As it's done that, we've seen the evolution of this category move from traditional dermatology and plastic surgery focused into medical spas. And today in the U.S., there's over 30,000 medical spas and aesthetic facilities doing these sort of procedures. And the younger demographic of millennials who are now into their early 40s represent the fastest-growing segment of this category, and they're significantly more likely to come in and get treated. And when we designed Evolus, we focused this company as cash pay only so that we can capitalize on this trend towards beauty. And everything we've done since is build a beauty company with the heritage of, of the clinical and regulatory experience that Rui brings, having formerly been the chief medical officer at Allergan. And through that, we developed our first drug, Jeuveau. We've been on the market for coming up on 5 years this May.
We've captured 12% as of the fourth quarter of the neurotoxin market, which is the largest category in aesthetics. It's a $2.5 billion category in the United States. And then last year, we licensed the rights to a next generation of filler. We've branded that filler Evolysse. We'll launch that product in the United States next year. That'll get us into a $1.8 billion category, effectively growing our total addressable market by 80% when you include the filler in the U.S. and also the opportunity of that filler being launched in Europe both next year. So, we're really excited about the future of the company. We've provided guidance. We'll get into that, in terms of our growth prospects this year.
But we expect on the high end of our guidance that the business will grow at over 30% again this year, on the back of just a strong trend that we're seeing in both account adoption of our product, where we increase our penetration in the U.S., consumer adoption and stickiness to our brand, and then, of course, the evolution of our business beyond a single product toxin market. So, we're really excited about the future and happy to chat with you about it.
Great, thanks. Let's start with just the overall market in the U.S. Talk about this past year and how the growth was and, you know, what the dynamics were, and then how, you know, 2024 is expected to play out.
Sure. So the overall market I mentioned, this year we expected to be $2.5 billion, coming off around a $2.3 billion market last year. But when you dig a layer deeper, what you see in the trends is the back half of last year in 2023, the market growth started to accelerate. You heard that from the market leader as well, that the market likely picked up from, call it, mid- to high-single digits, somewhere into the double-digit range in the back half. We expect that trend to carry forward in the front half of the year. We've guided conservatively on the market. For the full year this year, we expect a high-single-digit market growth rate. But, of course, we'll watch that as we enter the back half of this year to see if the market continues to clip, even higher.
If it does, of course, that would be favorable to the assumptions that we have. When you look at our underlying business trends, our back half of 2023, we saw a significant step up in growth, not just because of the market but continued strong execution of the business. Overall, in the back half of last year, our business grew over 40%, coming off of roughly 10 points lower growth in the front half of the year, which is not insignificant to be growing in the 30s. But, we saw a significant step up that gave us a lot of confidence to guide in the range that we did of $255 million-$265 million in revenue this year, which is primarily comprised of growth coming from the U.S. But the international business is starting to also contribute as well. And we're in early days.
Internationally, we're just over a year in to entering our first market, which was the U.K. internationally. Whereas in the U.S., as I mentioned earlier, we're five years in now. So, we're seeing very strong trends in our international business. It mirrors a lot of what we saw five years ago in the U.S., but we know it takes time to build that business over in that market.
What about just what's happening behind the scenes in the market? Let's talk about some of the competitive dynamics and how that's changing and how you view that.
Yeah, so our positioning as a beauty brand focused on this younger generation really has differentiated us from the outset relative to established players in the space. We jokingly say, you know, "This is not your mother's Botox," because we really are not trying to pursue that older demographic. Now, we do get quite a few of the older demographic that are using Jeuveau. That's driven by the providers recommending it. But we've built our brand on that younger segment. And it's as we've seen new entrants come in, we've continued to focus on our cash pay value proposition. So what we've done that's unique in the market, besides our creative and our branding, is that we've invested back into practices in the form of co-branded media.
As practices partner with us, we improve the profitability on the number one procedure they do in aesthetics relative to the market leader. Importantly, beyond profitability, we invest back and we advertise. All of the creative, this visual you see on the screen, that's all built in-house to push this beauty brand, this edgy marketing that attracts this younger generation. By advertising, we've put out thousands of billboards now around the U.S. with our practices in partnership with our brand, over 10,000 digital campaigns. We've started to do television spots more recently, and we've put out hundreds of television spots where we go out and film in the practice, the injectors, and we advertise their practice. All of this advertising happens within a radius of the office. It drives in that local consumer that lives right around that office.
But it drives them into practices that use Jeuveau. Keep in mind, we're only in 12,000 clinics, and there's 30,000 that offer these procedures. So by advertising those clinics that offer our brands, we're ensuring that we get really good return on that investment. And we've been tracking that. If you look at our consumer loyalty program as an example, Marc, we have, as of last year, over 700,000 consumers, 750,000, that are now in our consumer loyalty program and several years for that program being out. And importantly, you know, 60% of those patients last year that came in and got treated in our loyalty program were repeat patients.
So it's sticky, it's building, and it's a key driver of our confidence in the durability of our business, in this, what we call, the cash pay moat that we've built that differentiates us from companies that have reimbursed toxins.
Yeah. Give us some more patient metrics about the number of patients that are using your product and, you know, just, just how that's grown?
Yeah, the fourth quarter.
Loyalty a little.
Yeah, so the fourth quarter would be a great example of this building, right? It's we could pick any moment in time, but it's if you look at our investor deck, you can see it's part of a trend of we're investing behind a consumer, and we're investing in expanding our marketplace, and, and getting into more accounts through education. So in the fourth quarter, there were over 100,000 consumers that got treated with Jeuveau, and they earned $40 in our loyalty program. So these are consumers that are coming in, they're paying, they're getting treated, and they're earning $40 back from us in a text-based loyalty program. In about 90 days, they're gonna receive a text from us. And that text will be co-branded, and it will have the practice name they got injected along with the brand Jeuveau.
It'll tell them they have another $40 to go back in and get treated. That's why you're seeing 60% of patients.
Right.
Coming back in and getting treated all over again. And that's why practices are loyal to us, because we're advertising them with our brand. We're not just advertising our brand on its own, which has been the traditional pharmaceutical approach.
Yeah.
We've completely rewired or re-engineered the way we partner with them. And it's so if you're a practice, we're now bringing this consumer back and giving her $40 where maybe on the competitive loyalty programs, they were earning $20. But we're also then advertising for you. So you may have a TV spot we're running for you to try to bring in new consumers into your practice.
Yeah.
You put all of this together with our medical education under Rui's organization, where we talk about the precision of Jeuveau, and we train them on how to optimize our product. The complexion of this company is entirely different. It's just fun. It's just a completely different. We view it as beauty, and we don't view it just as traditional medical. So we bring that energy to the beauty space.
This is what you're describing as kind of the secret sauce of the company, right? I mean, with respect to just the way you market, 'cause no one else is really doing this, right? Yeah, pretty amazing. Let's talk about the longer-acting, you know, kind of market and what you thought about that this past year, how you're thinking about that, how you may position your product or not. You know, talk about that a little bit.
Sure. Maybe we'll start with Rui talking a little bit about the data we generated.
Yeah.
Longer-acting.
So when we looked at the long-duration strategy, the one thing that came back to us fairly consistently was that it was probably gonna be a niche-type product. When we asked people if we had a 20-unit product or something that lasted longer, you know, how would you divide up your day? And everyone, 86%, said, "I would love to have a longer-duration option." However, when you ask how often you use what, most people would say, "But we would use the regular strength most commonly." So we obviously are watching the 40-unit market. And when we ran our studies, we wanted to show how our 40 units compared, and a line had been set in the sand that a one-point improvement with 40 units could get up to 24 weeks' duration. OnabotulinumtoxinA showed that. Daxxify showed that.
We ran our studies, and we got 26 weeks' duration with a one point. Where we are right now is that study's done. It's been accepted for publication, and we expect it to be published this year.
Yeah. The idea of pushing forward with that product is still being considered or not? What are you thinking?
Yeah, I think we did a number of advisory board meetings, and we asked injectors if they thought it was important for us to pursue that to an approval, do a phase III and getting that approval. The view was that the phase II study was comprehensive.
Mm-hmm.
that we don't need to do that. So at this time, we have no plans beyond publishing the phase II data to pursue it any further.
So it teaches the injectors, "Hey, this is you know, if you wanna use this, you can. We're not gonna go for an approval right now.
Correct.
Yeah. And did you think that Revance did a, you know, pretty good job of helping to expand the market last year? Like, what do you know, 'cause I agree with you. Like, I always thought it would be a niche. I think, like you said, 86%, that doesn't surprise me at all. You know, in five years, it's probably still 86%, you know? But I guess it helps expand the market if it's an extra 15% that we weren't using before, right? Is that kinda what happened?
I think that's exactly right.
Yeah.
I think you credit Revance for bringing this conversation to light around higher dose. And to Rui's point, there were investors curious about how our current Jeuveau formulation would work at a higher dose. And I think the phase II study answered that question. It'll remain a niche market, we believe. But it's important to have that data out there.
Yeah.
To build on top of the dataset we already have. Keep in mind, there were over 2,000 subjects in the different original Evolus studies that led to the U.S. and European approvals. So having that body of evidence to be on the podium and to be represented as part of the longer-acting category, which although it is niche, it is important to have the data.
Yeah.
To represent it. I think it helps build our focus of generating data and being out there in the clinical world.
Well, I think everybody's seen that that's a niche play after a year or so. I think, the other question we get from investors about competitive environment is Hugel's coming in. Talk about that product a little bit, what we know about it, and what, you know, you're expecting from it, you know, as a competitor.
So we know it's a freeze-dried product. And 900 kDa. We have experience with freeze-dried product. Actually, give credit to Allergan. Allergan figured this out early days. The original Botox was freeze-dried. And in a 100-unit vial, you had 25 nanograms of product in there. And the reason you had so much product is when you freeze-dry, you form crystals. Crystals will destroy your protein. It denatures it. So the way you compensate for this is you put in extra product because the crystals are gonna destroy some of your product, and you get 100 units out the other side. Then around 2000, Allergan changed the way they manufactured, and they went to a vacuum-dried system where you didn't form crystals. So you didn't have to compensate for denatured protein. Now, a 100-unit vial only has 5 nanograms in it.
So as you can imagine, in the freeze-dried 'cause you have a mix of protein that is denatured, doesn't do anything, and regular protein, you can see the element of unpredictability with that. When we signed with Daewoong, they also had a freeze-dried product. And, you know, we go out of our way to explain, "This product was effectively designed in Santa Barbara, California. We changed the manufacturing process. We changed the specifications. And most importantly, went from freeze-dried to vacuum-dried to have a more predictable and precise product." So we're big, obviously, advocates of the vacuum-dried. The Hugel product is still freeze-dried, so using the older technology. So, you know, we'll get to see how that plays out. But certainly, the one thing that we see in the public domain is we do see some variability.
For instance, when we look at their phase III studies, the responder rate's somewhere between mid-40%-60%. So there's some variability there. And that's all we've seen, right, to date.
The product's on the market and competes against your product in the U.K. Maybe you can just talk about the dynamic there just to give people a sense of.
No, that's exactly right. We entered the market in the U.K. in the fourth quarter of 2022, around the same time that Hugel entered with their product. And we've seen very healthy uptake. We've also closely watched the competitive environment, and we performed very well for the reasons that Rui mentioned, is we moved to vacuum-dried. We have a very precise, very predictable, and high-quality product. That variability is something that practices, they can't commit to products that don't deliver consistent outcomes because the consumer is accustomed to getting a consistent outcome. And so for that reason, we've seen a mixed response. We expect that will be the same product that enters the U.S. But look, in the end, there's probably a place for everyone in this category. It's a $2.5 billion market, and there's plenty of opportunity.
I think nothing changes in terms of our focus, with the competitive environment. Our guide this year did contemplate the entrance of another competitor, so that is all factored into our assumptions.
Yeah. Their strategy from a pricing perspective, just talk about that a little bit.
Yeah, it's hard to say what they'll do in the United States. In Europe, it's been at a significant discount relative to where we are priced. So to the extent that they may.
You're discounted to Botox.
Yeah, a slight discount to Botox, and they're significantly discounted to that. So, I, I think in the end, in this category, it starts with the product has to deliver a consistent outcome. At that point, the whole value proposition matters. Price is one dimension of the value proposition. We've built ours on the younger demographic and how we build our cash pay business in partnership with these practices. And I think any new entrant would have to experience that. As, as you saw, I think there were a lot of questions last year with a new entrant what that would mean for our business. And you saw growth accelerate in the face of competition. And I think for Evolus, it is less about the competitive environment.
It's more about focusing on what we're building because there's a significant untapped market potential in this younger generation who's looking to brands that are edgy, that they can relate to with text-based loyalty and the way that we bring them into the office that we think creates a significant opportunity in front of us to not only establish Jeuveau as we go broader, keep in mind, we're in about a third of the market, and we have 12% of the market share. And the addition of the filler creates another opportunity on top of that.
Yeah. So I wanna talk about the filler for sure. But just on the med spas, just talk about what percent of the usage out there is med spas, just in general for the market, and what percent is your business from med spas?
Yeah, so, we believe roughly 2/3 of the market today.
Wow.
For toxins is comes from the med spa. We over-index a bit against that group as well. Now, we anticipate, as we introduce the filler, we'll probably expand our business into the derm and plastic specialties a bit more. But we do over-index in that med spa channel, which is the faster-growing segment.
Yeah. So let's, let's pivot to the filler. So let's talk about the market size.
Yeah.
First of all. Second, let's talk about your product specifically, the data of your product, how it compares relative to, you know, kind of the standard that people are used to using today.
Sure. Why don't we start with the product, and then I'll come back to the market if you don't mind.
Sure. So, you know, fillers, for those of you who don't know, are these gels. They do pretty amazing things. They go into the tissue. They lift tissue. They correct defects. They have these properties of elasticity, yet they're cohesive. They don't spread around. They're; it's kind of amazing. If you think about how it's done, it's the secret behind that is these molecules, the building blocks, called hyaluronic acid. They're these long, complex things that Mother Nature invented. Now, if you just inject hyaluronic acid into the body, it will disappear pretty quickly. So what we figured out was when you cross-link them, then you can create all these properties. You can make them more elastic, harder, softer, last longer. So everyone cross-links with these, BDDE molecules. To cross-link, you have to do two things. You have to increase the pH.
As you increase the pH, that molecule becomes vulnerable. You also have to use some form of heat, somewhere between room temperature, 24 degrees, all the way up to 40 degrees. The combination of that pH going up and that heat will fragment those molecules. When you fragment the molecules, you compromise the efficacy of that product. So Symatese is a shop you may have not heard of, but it's a R&D, manufacturer or an R&D, company based out of Lyon, France, with a long legacy of actually creating great products. They create products for L'Oréal. They are the ones who invented the Mentor breast implant. They actually have created the number one line of gels today, the Restylane XpresHAn line. What they did is they basically took all the experience that they had, and they solved for that step that I just described.
What they figured out was how to do this cross-linking step and preserve that HA by doing that reaction at near-freezing temperature. So when you do that step at near-freezing temperature, you have less of that thermal fragmentation. So during our diligence, we really liked that manufacturing step 'cause they're not introducing new chemistry, which is always a risk. They solved for a problem, and they effectively have taken a well-known HA and created perhaps a, a better one, a, a next-generation one. Then they supported that with benchtop data that showed that this gel was more robust, can take abuse, and actually stand up to it. But ultimately, how does it perform in a human? And that's what we shared on that last conference call.
In a split-face design against Restylane L, one of the top fillers today, what we saw at the primary endpoint, met the primary endpoint, and they were shown to be equivalent. Then at three and six months, it actually showed statistical superiority. The other piece of data that we shared was in the lips. The lips is a very challenging area because you have to use a soft product so that the lips still look natural and are soft. And so what typically happens is that product goes away fairly quickly. The data we shared there was not a head-to-head, but it was based on the historical publication and compared this new generation against Restylane Kysse. Using the same scale effectively, what we saw was, despite having 30% less volume, we saw more correction, and we saw it last almost twice as long.
So for us, it felt really good because we started with a solve in a challenging manufacturing step. We saw preclinical data and benchtop data, and then we've seen this clinical data. At this point in time, those products are all in clinical trials. We're seeing, in the United States, the first two products will be, nasolabial products should be approved next year, 2025. We're submitting it this year. Data should come out this summer. The mid-face product, which is the premium product, that should be approved in 2026, and then the lip and eye product in 2027. This year, we're expecting all the European products to be approved by the end of this year.
So just going to your first part of the question around the market opportunity, the addition of the filler just changed the entire complexion of the company. It's really transformative in the sense that if you look at it through just a total addressable market, we increased our total addressable market by almost 80% by bringing in the filler. We really look at our business very differently now as we look out over the next five years, in the sense that we see it in three buckets. The first bucket is the toxin market we've been competing in that I talked about earlier. We've got a 12% market share in a $2.5 billion market, with really high growth behind that business.
The second bucket is now the U.S. filler market, which is a $1.6 billion market with growth rates very similar to the toxin space where we have no penetration. And of course, as Rui mentioned, we'll file this year, and we expect to launch in 2025. The next market is the international market, which doubled as a result of the filler transaction because the filler market's so sizable in Europe. We now have a $1.8 billion international market. And when we look out to 2028, we expect to have a presence in 80% of that $1.8 billion market. So we're building our capabilities internationally, but we're scaling it. And we expect that to be a meaningful contributor to our 2028 revenue potential.
So, we have a number of opportunities for growth, but it all boils down pretty simply to we've got it we're executing on Jeuveau in the U.S. this year. That's our product that delivers the guidance. But we have a keen focus on learning about this filler and preparing for our launch in 2025 in the U.S. That's obviously a key inflection point for that second opportunity. And we see the international business as a combination of continuing to expand into new markets. We'll enter Spain and Australia this year while we also prepare for the same filler line launching in Europe in 2025. So, new market opportunities, but a clear focus on how we get there.
Let's talk about the operating leverage that you get with this, you know, new product and a little bit of the, you know, how you think about the numbers play out over the next few years.
Yeah. The filler's very synergistic. It's effectively when you look at the 30,000 clinics in the U.S. that offer neurotoxins, almost every single one of them offers a filler as well. So, from an overlap standpoint, our sales force has tremendous synergy, our consumer loyalty program, our pricing program, all of our digital infrastructure powers, both brands. So I think, there's it creates a lot of opportunity on top of the fact that having both gives us a lot of leverage within these customers to build a more meaningful presence with them. And when you think about co-branded media, today, it's on one brand. As we expand it to multiple brands, you can imagine the noise level that that creates and the loyalty that that engenders, for us.
So clearly, the 12,000 account base we have is a great starting point, but it allows us to expand further as well. And then look, we, we said in this last earnings call, that we, we will continue to be conservative, whether it's our guidance this year or our longer-term outlook of $700 million. Keep in mind, we signed the rights to the European filler in the fourth quarter. We didn't raise our outlook to reflect the, the rights to this filler in Europe. We beat and raised in the back half of last year on Jeuveau, which obviously put us on a much stronger trajectory that's reflected in our guidance this year. That we didn't raise our longer-term outlook based on that either. And then as you think about the filler uptake relative to other analogs, I think we've been relatively conservative considering how differentiated this product is.
But I think we'd rather continue to update our numbers over time and be conservative in our longer-term outlook but deliver on the immediate term. We feel really good about the position we're in the market and the direction that we're taking it.
Are the fillers in the med spas in the same way that the toxins are? It's the same kind of indexing, and your expectation is you'll be over-indexed there too?
It's similar. I think medical spas don't over-index as high on filler as they do with toxin.
Mm-hmm.
But they are still the largest segment.
Mm-hmm.
For fillers as well.
Right. So okay. So the leverage is there. And then you mentioned the $700 million sales guidance. Just give us a sense of what goes into that, how you're thinking about it right now.
Sure. Well, it started with a $500 million guide when this company was a single-product company, was Jeuveau and Nuceiva. So that was our initial guide. When we signed the rights to the filler in the U.S. in the second quarter last year, we upped our guide to $700 million. And we said the large majority of that is the filler, but we expected some incremental lift on our toxin as a result of having the filler business. So that's kind of how you think about it. If you break it down on the toxin, this year, our guidance reflects roughly a one full share point gain on Jeuveau in the U.S. From this point forward, it's very nominal share gains for the remainder through 2028 to get to that roughly $500 million.
It's market growth.
Yeah. It's really primarily high single-digit market growth that'll get you there. So to the extent we can continue to overperform on share, I think for context, last year, we gained 2 share points. The year prior, we gained 2 share points. But in all reality, you can't expect that to continue in perpetuity, right? So it's conservative. And then we assume that the filler ramp is at a fraction of the ramp we saw on our neurotoxin. So we've been very conservative and discounted the filler until we can get to a place where we submit the data and we have a better sense for the product line, which clearly you saw with the press release of our head-to-head data on lift. I think we're incrementally increasing in our optimism 'cause it's validation of what we believe that we obtained. And Marc, I think you know this.
It's probably as important as the data itself. Both Rui and I spent a lot of time in the filler market. We launched and Rui developed a number of filler products. I launched a number. We looked at over 100 fillers before we signed the rights here. And we took our time. We took several years before we signed the rights to any filler because we wanted a product of the same quality as Jeuveau to be the partner product so that we can believe that our brands on their own are very competitive against the market leaders. And I do believe strongly that that's exactly what we have here in the market.
Just to put, you know, finish on the numbers here, so of the $700 million, how much of that is U.S. versus OUS, roughly?
We've said roughly 10%-15% will be international once we get to $700 million.
Okay. So the incremental $200 was mostly filler, but some of it was just the synergistic effect on the base product.
Correct.
And then 10%-15% is OUS. Got it. Okay. And then how about just the overall profitability of the company, just, you know, as the income statement breaks even and stuff? How to think about that?
Yeah. So, we did provide updated guidance on profitability. We expect to be profitable for the full year of 2025, and we also expect to achieve profitability for the first time in the fourth quarter of this year. So, we've pulled forward our assumptions based on the overperformance we've seen in the business, to be able to achieve that profitability. And if you look back, we're getting it while we're driving growth. So we've had more than 2x operating leverage now, multiple years consistently.
Yeah.
On top line versus expense. So we feel like we're making the right investments to drive meaningful top line growth, but we're also starting to get the operating expense leverage. That's all happening on a single product. So you can imagine once you layer in the filler with overlapping customer base, that's where you get meaningful leverage in the U.S. You get meaningful leverage on the international business as well. So we're really excited about what Evolysse does for the company overall from a financial perspective as well.
Great. Thank you. Thanks for joining us.
Great.
Great.
Thank you.
Good luck with everything.