Evolus, Inc. (EOLS) Q4 2021 Earnings Report, Transcript and Summary

Hello and welcome to the Evolus Fourth Quarter 2021 Earnings Call and Webcast. At this time all participants are in a listen-only mode. [Operator Instructions]. As a reminder this conference is being recorded. It’s now my pleasure to turn the call over to David Erickson, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and welcome to everyone joining us on today’s call. With me today are David Moatazedi, President and Chief Executive Officer; Lauren Silvernail, Chief Financial Officer and Executive Vice President, Corporate Development; and Rui Avelar, Chief Medical Officer and Head of Research and Development. Our prepared remarks today will include forward-looking statements within the meaning of the 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. The detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Actual results may differ materially from those expressed in or implied by the forward-looking statements. The company undertakes no obligation to update or review any estimate, projection or forward-looking statement. Additionally today’s discussion will include non-GAAP financial measures, which should be considered in addition to and not as a substitute for or an isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC, and on our Investor Relations website at evolus.com. Lastly, following the conclusion of today’s call, a replay will be available on our website at evolus.com. And with that, I’ll turn the call over to David.

Thank you for joining our year-end earnings call. 2021 was an incredible year. We successfully relaunched Jeuveau and the business accelerated each quarter resulting in 76% top-line growth while keeping the growth of our non-GAAP operating expense to 13%. The majority of incremental spend for the year was directed towards brand building efforts through our first-in-class co-branded media program. And we funded the company to profitability and beyond allowing us to focus on building the business in 2022. For this year, our focus is on execution. We expect our top-line to grow 43% to 50%, and we remain very confident in our ability to deliver on these above market growth expectations. At the same time, our gross profit profile also improves dramatically in the fourth quarter with the conclusion of the royalty obligation to our largest competitor. Next we plan to expand our footprint beyond North America with a launch into Europe, which represents the second largest market in the world. And we will begin enrolling patients into our extra strength Phase II study this quarter. Now, let me get into some of the details. Our results for the fourth quarter and full year 2021 were unchanged from the preliminary results we shared on January 26. For the quarter, we delivered record revenue of $34.7 million, which represents 68% growth over sales in the fourth quarter of the prior year. Our quarter-over-quarter or sequential growth rate was 30%, which we estimate was more than double the industry growth rate, against a backdrop of strong underlying U.S. aesthetic market conditions Jeuveau continued to gain market share. For the full year, we finished very strong with the total revenue of nearly $100 million, which was up 76% over prior year. After successfully resolving our legal matters in Q1, we quickly regained momentum and invested in brand building efforts, which accelerated our growth each quarter during the year. I could not be more proud of the Evolus team for their dedication to result, this team stepped up to the challenge of a relaunch and executed our plan each quarter. I would also like to take a moment to thank our customers for enabling our success, not only for their confidence in Jeuveau, but also their recognition of the value Evolus provides to our millennial focus and unique co-branded marketing program. Our strong exit to the year, along with favorable underlying trends in the aesthetic neurotoxin market positions us for continued growth and share gain in 2022. It also gives us a confidence to introduce revenue guidance for the first time that reflects another year of above industry average growth. For 2022, we expect to generate total net revenues between $143 million and $150 million, which factors in a first quarter impact from the Omicron variant and the return of normal market conditions for the balance of the year. Building on our robust growth in the U.S., we are moving forward on our international expansion. In the third quarter of this year, we plan to commence the launch of Nuceiva in Europe, the second largest neurotoxin market globally. We’ve also made great progress in entering the Australian market, one of the top 10 aesthetic markets in the world. As we announced previously, the regulatory authority recently accepted our Nuceiva submission, which we expect will lead to approval next year in Australia. Our targeted customer reengagement strategy this past year successfully resulted in our capturing a greater share of the U.S. toxin market in 2021. In the fourth quarter, we continue to build our customer base by adding 400 new accounts, bringing our full year number of new accounts to 1,400. The addition of these new accounts brings our total account base since launch to more than 7,000 purchasing customers. The acceleration of our growth was largely due to the continued adoption of our co-branded marketing, which is first-in-class and possible because of our cash pay business model. Through co-branded marketing, we offer a range of advertising options with the dual benefit of building brand awareness of Jeuveau and the customer’s practice. Our co-branded marketing program grew considerably throughout the year. During 2021, we ran more than 2,300 individualized campaigns across the country resulting in more than one billion media impressions for the year. This is more than four times the number of campaigns we ran in 2020 and 20 times the number of impressions. The latest expansion to our co-branded marketing offering is streaming TV. Now customers can select from an even wider range of advertising options, which includes digital, billboards and streaming television advertising. Available to our top tier accounts, these customized TV commercials showcase the participating practice and their injectors to a highly targeted demographic residing within a short radius of the practice. Airing on streaming platforms, such as Hulu and networks like Bravo, the ads educate consumers about getting a quick in-office treatment with Jeuveau and included direct call to action for booking appointments on the spot using their smartphone and a QR code. Co-branded marketing drives both brand awareness and consumers into practices. Once consumers enter the practice, our goal is to enroll them into the Evolus rewards loyalty program. In the six quarters, since we launched the program, we have enrolled more than 270,000 consumers and repeat treatments totaled over 120,000, which demonstrates effective patient retention. We also continue to over index against the younger demographic, nearly 40% of our user base in the loyalty program is represented by millennial and younger patients, higher than the overall category of toxin users, where millennials and younger are currently estimated to represent less than 30%. The millennial segment is the future growth driver for the aesthetic market, and our marketing and digital capabilities are targeted to reach this under penetrated demographic efficiently and effectively. Before I turn it over to Rui for an update on our Phase II extra strength clinical study, I would like to take a few moments to outline the opportunity before us, as we embark on this important trial. To date, no neurotoxin has FDA approval for two strengths in the glabellar area. Recently we conducted a pilot survey of Evolus customers to gauge their interest in an extra strength dose of Jeuveau. We found that 86% would like to have extra strength as part of their product offering. However they expected the original strength 20 unit dose would still comprise the majority of their use. This clinical program would uniquely position us to capitalize on this opportunity by offering two strengths of Jeuveau original and extra strength while optimizing pricing because of our cash pay flexibility. With that, I’ll now turn the call over to Rui Avelar to provide more color around the Phase II study.

Thank you, David. I’m pleased to share with you that we’ve made a great deal of progress preparing for the extra strength Jeuveau program. This is a Phase II registration study, and as such, it’ll give us the flexibility to pursue a longer duration indication for glabellar lines on label. As I mentioned before, since the launch of Jeuveau, we’ve learned a great deal about the product performance clinically. The feedback we get from clinicians is that Jeuveau is very precise. One of the main safety concerns regarding clinical studies with toxins is around the potential for local and distant spread of the drug. And we believe that a precise nature of Jeuveau makes it well suited for glabellar line indication at a higher dose. For background in 2005, the Caruthers published on the concept of increasing the duration of a toxins effect by increasing the dose. And they were able to show in two separate publications that this worked in both males and females. Since then, we’ve seen other companies show that this concept applies to their respective toxins. And we’ve also observed that there is a plateau to the duration effect. In our two U.S. pivotal studies, we found that Jeuveau’s duration of effect was 21 weeks when measuring a one point improvement on a validated glabellar line scale. In our head-to-head Phase III trial against Botox, we learned that Jeuveau’s duration was approximately one week longer than Botox at 20 units in the glabellar region using that same one point improved measurement. Our extra strength study is a double-blind randomized prospective three arm design. With respect to controls one of our potential competitors has been delayed in their approvals. So, we adjusted the design and we’ll be using two active controls, 20 units of Jeuveau and 20 units of Botox reconstituted on label. These will be compared to the extra strength Jeuveau arm, a 40-unit hyper concentrated Jeuveau formulation. Five studies sites have been selected and a total of 150 patients will be enrolled and followed for up to one year. The study will not only look at duration of effect, but importantly will also try to understand the potential clinical tradeoffs for patients when using longer duration formulations. Since our last call trial protocols have been finalized monitoring and safety plans completed, study sites are being activated, and we have now received our approval from the Institutional Review Board or IRB to proceed with the trial. We filed all our documents with the FDA using our open IND and remain on track to enroll the first subject this month. We’re very excited about our extra strength program, and well on our way. I look forward to providing you with updates on future calls. Back to you, David.

Thank you, Rui. Before we move to the financials, I’d like to take moment to address the personnel news we issued this week. On Tuesday, we announced the addition of Christos Monovoukas to the Evolus leadership team as Senior Vice President, Corporate Development. Christos joined us from Olympus Corporation where he led global M&A and Business Development for the past several years. Christos’ extensive experience includes positions in business and market development, corporate strategy, and operations across a number of healthcare companies. And we look forward to his contributions to Evolus as we continue to execute on our growth plans. And today we announced a retirement of Lauren Silvernail, our Chief Financial Officer and Executive Vice President of Corporate Development, effective at the end of May. Lauren joined Evolus shortly after I did in 2018, and together with our colleagues, she has helped build this company from a development stage organization to a fast growing and well funded commercial business. During her tenure, Lauren has assembled a high performing team. She’s led the restructuring of our balance sheet, and most recently helped spearhead the successful negotiation of a credit facility that fund Evolus through cash flow breakeven. Lauren’s experience and dedication have been instrumental in helping Evolus get to the strong position we enjoyed today and she has our sincere gratitude. The search for her successor is already underway, and we wish her the very best and retirement. With that, I’ll turn the call over to Lauren.

Thank you, David. I really appreciate the kind words. I have truly enjoyed my time here at Evolus and the ability to work alongside so many great people who are dedicated to the success of this company. Choosing to retire at the end of May was not an easy decision, but after nearly 20 years as a public company CFO, I’m excited to begin a new chapter of my life. I leave knowing the company is in a strong financial position with an outstanding leadership team to guide it. And I look forward to seeing Evolus execute its growth strategy to become a leading multi-product aesthetic company. Now in the business. I’d like to start by reiterating just how pleased David and I are with the performance of the team this quarter and the strong finish to 2021. As he mentioned, and as we reported in our pre-release, net revenues for the fourth quarter were $34.7 million up 68% compared to net revenue in the fourth quarter of 2020, and up 30% on a sequential quarter-over-quarter basis. Year-over-year, sales were driven primarily by higher volumes and importantly, a higher average selling price. Consistent with last quarter, the pricing environment for neurotoxin products in the U.S. remains quite healthy. Our reported gross margin for the full year 2021 was 79.0%, including receipt of a $25.5 million settlement payment. Our adjusted gross margin for the year, excluding the amortization of a tangibles and the settlement payment was 56.3% and at the high end of our guidance. Selling, general and administrative expenses on a GAAP basis for the fourth quarter of 2021 were $33.3 million up from $27.4 million during the fourth quarter of 2020. The majority of this increase was driven by variable spending including co-branded marketing investments. For the fourth quarter of 2021 SG&A expense on a GAAP basis included $2.6 million of noncash stock based compensation expense. We are making solid progress towards profitability. Our non-GAAP loss from operations in the fourth quarter of 2021 was $12.2 million. However, it’s important to note that 2021 included a lower gross margin due to the payment of settlement royalties. Non-GAAP loss from operations, excludes stock based compensation, revaluation of the contingent royalty obligation, depreciation, amortization and settlement payments. We are also making strong inroads towards cash flow breakeven with slightly more than $4 million of cash used to operate the business in the fourth quarter, which was lower than the previous two quarters. We ended the year with $146 million in cash compared to $108 million at September 30, 2021, an increase of just short of $39 million. Contributing to this increase were $69 million of net proceeds from the first tranche of our credit facility offset by a scheduled final debt payments of $20 million to the Evolus founders, $6 million in net royalty payments and the cash used to operate the business of more than $4 million. In the first quarter of this year, we made our second settlement payment of $15 million. We owe just one final settlement payment milestone of $5 million to be paid out in the first quarter of 2023. As announced in December, we entered into a six year $125 million credit facility with Pharmakon Advisors. The facility has structured in two tranches of $75 million and $50 million. We borrow the $75 million tranche in the fourth quarter, which results in quarterly interest payments of about $1.8 million. We expect this first $75 million tranche will be sufficient to fund Evolus through cash flow breakeven removing the need for any further financing of our current operations. We have until the end of 2022 to borrow the second tranche of $50 million with no additional restrictions or covenants. This second tranche provides us with financial flexibility as we explore opportunities to expand our portfolio. Before I turn it back to David, I’d like to summarize our 2022 guidance, which remains unchanged. We continue to expect total net revenues of $143 million to $150 million, which assumes a minimal contribution from international markets. We expect our full year adjusted gross margin to be between 58% and 61%. Beginning in September, our settlement royalty rate will decrease significantly, which will dramatically lift our fourth quarter adjusted gross margin to be in the range of 68% to 71%. Full year non-GAAP operating expenses are expected to be between $135 million and $140 million, which consists mainly of continued investments in the growth of Jeuveau in the U.S. plus the Nuceiva launch expenses in Europe, and for modeling purposes, we suggest to you use approximately $56 million shares for the year. Back to you, David.

Thank you, Lauren. In closing, we are mentally proud of our strong finish in 2021 and confident we have a brand building strategy that can continue to generate robust growth and market share gains. We finished 2021 achieving all time highs across lead metrics, including number of accounts and enrollment and repeat treatments in our loyalty program. These strong trends are record high revenue and market share for Jeuveau and create a favorable backdrop entering 2022. Our focus this year is to continue driving these trends with investments behind training on the precision of our product, co-branded marketing to further create awareness of Jeuveau in the younger demographic, and expansion of our dosing with the Phase II extra strength study. We look forward to updating you on our progress as the year unfold. With that, we’re ready to take questions.

Thank you. [Operator Instructions] Our first question today is coming from Marc Goodman from SVB Leerink. Your line is now live.

Yes, good afternoon everybody, couple questions. Number one, can you give us a sense of the market in general, what your thought was in the fourth quarter? And where you think your market share ended up in the fourth quarter? And just, I think there was a comment about pricing remains healthy. Can you just give us a sense of is that were there any price increases across the products out there, and have there been anything going on in pricing? Just give us a sense there. And then just lastly for first quarter, since fourth quarter was so strong and it’s such a seasonally strong quarter, how do we think about first quarter relative to fourth quarter? I mean, is it possible that, that this could be down from fourth quarter or you expect some growth? Thanks.

Hi, Marc. Thanks for your questions. Let me start with the market, I’ll talk about fourth quarter and what that means for first quarter and then come back to pricing. The fourth quarter was very strong. What we saw was continued strength in the aesthetic market and the fourth quarter was exception to that. Our performance within the fourth quarter obviously picked up a meaningful step and we do believe that a large part of that increase in revenue was driven by market share and not necessarily market growth. And I think that’s a continued trend you’re seeing reflected in our guidance for 2022, where we’ve guided to market to the business growing at 43% to 50%, when we assume the market’s going to grow in the mid-teen. So you have a guidance range that’s roughly three times higher than the market growth expectation. So, we expect our share gains to persist. Now, at the same time, there is seasonality to this market. And you ask about the first quarter, generally in the first quarter, you expect to see a sequential step down of roughly 10 points to 15 points after the prior fourth quarter. Of course, this year, you have Omicron some impact on top of that, which we expect to be very minimal in the quarter. So you’ll have to factor for all of those at this time, we’re not guiding on a quarterly basis. So we’ve guided on the full year. We feel very confident in that guidance. As far as pricing has concerned, pricing historically in this category has been very strong for manufacturers. You’ve seen consistency in price increases across the major players and last year was certainly non-exception. You saw that in our earnings announcement. We mentioned that we gained on not just volume, but also on price year-on-year in 2021, we expect in 2022, that we’ll gain on price again, as well as volume. And I do believe that we’re in a position of strength as a manufacturer. And we’re in a very healthy market, not just in these past two years, but that over time, the resilience of pricing in this market sits in the hands of the manufacturers. We have seen price increase from one of the larger competitors in this space. We have not seen it yet this year across the board.

Thank you.

Thank you. Next question today is coming from Louise Chen from Cantor Fitzgerald. Your line is now live.

Hi, thanks for taking my questions and Lauren, thanks for all your contributions to Evolus and the industry we will really miss working with you. So my questions are as follows, the 2022 guidance of $143 million to $150 million seems to assume very little upside from the fourth quarter revenue run rate. So, what are the assumptions in the 2022 revenue guidance that are holding you back from forecasting, a stronger sequential growth off a fourth quarter? I understand your comments on Omicron. I was wondering if there’s anything else and then what is your capital allocation strategy? And then lastly, can you provide more color on how you think about the sales potential of the international opportunity to Evolus?

Great, thanks, Louis. I’m going to take the first point around our guidance and then turn it over to Lauren for your other two questions. Let’s just start with our assumptions for the category as a whole, for this year. We’re assuming that the toxin market in 2022 for the U.S. will grow in the mid-teens. As you’ve seen in our guidance, we’ve given guidance of 43% to 50% growth year-on-year coming off of a year with 76% growth. So, we are giving guidance. That’s roughly three times above what we expect the market to grow with, which gives you the confidence of that we have in our business and our ability to continue to gain share. And at the same time to your earlier question about Q4 and building a run rate off of that, look, this is our first time providing revenue guidance. And I just want to reiterate that we feel very confident in the numbers that we’ve given you for the year, and we want to execute on those numbers and we’ll give you updates as we make progress. I’ll turn over to Lauren.

Great. Thanks Louise, for the kind comments with regard to capital allocation, when we look at the investment of a marginal dollar today, the best return in 2022 for us is into the U.S. business. So, if you look at the non-GAAP operating expense investments, we’re making this year of between $135 million and $140 million, we have said previously that Europe is in the high single-digit million expenses. If you back that out, you drop down into the low $130 million range invested into the growth of the U.S. business, our run rate coming off of the fourth quarter, we had a $31 million OpEx quarter – non-GAAP OpEx quarter, which would annualize at $124 million. So, you can see that the growth of expenses is this far smaller than in the U.S. than it is than the sales growth, which is very high approaching 50%. So our capital allocation is the growth of the U.S. business. That said, our long term ambition is to be a global aesthetics player. And so we are funding that launch in Europe this year. And I’m sorry, Louise. Your last one was?

Hi. Last question, I had for you was just, how can you think about, or how should we think about the international sales opportunity to Evolus. I know you’re starting to reach out outside the U.S., and what are those sales going to look like to you?

Yes. This year because the launch is second half those sales will be in the low-single digit millions. So they don’t contribute much to the sales total for the year. It’s all driven off the U.S.

Okay. Thank you.

Thank you. Next question is coming from Annabel Samimy from Stifel. Your line is now live.

Hi, thanks for taking my question and ditto on Louise’s comments. Lauren, we’re going to miss you. Thank you for your contributions. It’s been great working with you and hopefully we’ll see you soon again. So separately if we could try to, I guess, get a little bit of color on the Evolux program. I just want to get a sense of the productivity. So, how much repeat ordering, do you see coming from your Evolux partners versus your standard customers? And just to sort of qualified a little bit are other accounts who are not part of this Evolux program now seeing, I guess what’s around them as far as individualized and localized content and promotion and wanting to get in on this co-branding initiative. I guess the second question is a little bit more cost related. And if you could just confirm for us, if I understand this correctly, the investment dollars that you put towards these marketing efforts are tied directly to the level of sales. So that pretty much implies that you have a predictable margin, at least on the downside and then room for leverage on the upside. So effectively good clarity on the profitability. So whatever dollar is spent, how much is going to be coming in terms of volumes. And yes, and I think you answered my guidance questions, so I’ll just stop there. Thanks.

Thank you, Annabel. Those are all excellent questions. Just for background for the group, the Evolux program is our pricing program and what’s unique about Evolux is not only do we offer a greater savings on Jeuveau as you purchase more product, but we reinvest some of those savings back into co-branded marketing. And that reinvestment is what’s differentiating us relative to the market set. And it’s only enabled because of our cash paid focus, that we’re able to do that. And to your point Annabel, what we’re seeing within Evolux, is very impressive, which is why we’ve continued to invest into it. Not only have we seen the number of Evolux accounts, continue to increase as we look at our business through the quarters, that accounts are wanting not only to part participate in our co-branded media benefits and are purchasing more to benefit from it, but they’re moving up to higher levels as we continue to progress throughout the quarter. So if you sort of, looked at a slide right now and we showed you the trends, they’d be moving up and to the right, and we’re seeing that CBM is very effective in driving accounts to commit a greater portion of their market share to Jeuveau. And I don’t want to underestimate also the importance of the quality of Jeuveau that’s helping drive that, their confidence in this brand is rising as they’re using more of it. And the co-branded media is becoming a catalyst that’s driving that younger generation into their practice. And we think that the Evolux program in totality makes us very unique in this category. And this is just the very beginning of creating the brand impressions, driving awareness of Jeuveau throughout that younger demographic and creating more leads for these accounts. And that is something we’re actively tracking on a regular basis. And we see the spillover effect that it has in local markets. If you use one of our media vehicles, as an example, last year, we placed over 1000 billboards around the United States through co-branded media. Those billboards resulted in other neighboring accounts that would frequently drive by them seeing their competitor on a billboard. And they would be calling our representatives, asking for how those accounts earn that benefited. And it opened new doors for us, not just within that geography, but even across the U.S., this isn’t just a physical presence, social media’s driving a large part of it. Our accounts are very active on social media, not just with their patients, but also their peers have an opportunity to see that. And this is something that’s unique to this category. No other toxin has advertised directly in partnership with a customer in a targeted way within a local geography. And we believe that we’re in the very early innings of scaling our co-branded media. Over 2000 media campaigns, as I pointed out earlier is a significant number, but this market has a tremendous opportunity for growth. And then lastly it all comes down to the profitability of the investment and we have a global data and analytics group that scrutinizes our investment down to each account level. We look at the media mix, whether that’s digital, it’s billboard, or now TV and the investment that goes behind it, as you pointed out it is variable spent and it’s spend that can become more efficient over time as our media purchasing tower rises. And we’ve already seen that benefit as well. And I think you saw that reflected in our overall operating expense discipline, where last year, as you saw, we grew at a very high clip and still only grew our OpEx at roughly one fifth of the level of our top-line growth. And I think that’s the efficiency that we strive to continue to drive towards, which is to invest, to build a brand long-term, but to continue to have top-line for outpaced our expense line.

Okay. Great. If I could just follow up on one other question, in terms of the pricing that you mentioned, where is that really coming from? Is it from, lower discount than that you’re offering? Because it seems that is more people become higher orders, or become part of this Evolux partner program. Part of that benefit would be that they’d get greater discounts, but maybe I’m thinking about it incorrectly. As far as the Evolux partners go, they’re not necessarily getting more discount, but they’re getting more advertising dollars. So maybe you can just clarify that where the pricing is coming from?

Sure. So last year we did take a price increase upon settlement and that price increase impacted across the customer group. But as you pointed out, as customers continue to buy us co-branded media, they can improve their price point yet relative to the prior year, it’s still an increase and this year you’ll see the same impact as well. And as you think about each of the tiers, both within Evolux and accounts that aren’t within Evolux, we’re continuing to populate each of those tiers. So as accounts move up within Evolux and purchase more to earn CBM benefits. We’re spending a significant amount of time adding new accounts at lower tiers that are not yet benefiting from all of the better pricing, as well as Evolux co-branded media. So it’s a continuum, it’s not aesthetic customer base, and that’s reflected in the overall account growth. We ended 2020 with about 5,600 accounts, and we ended 2021 with roughly 7,000 accounts. And so this market has over 30,000 aesthetic customers. And if you look at it through that lens, we had a long ways to go in terms of adding new accounts and making each of those accounts more productive. I think what we’re most impressed with now is that once we gain these accounts, we feel confident that we’ve built a flywheel, that can move these accounts from trialing the product to gaining confidence in the product, and then experiencing the benefits through co-branded media that keeps them sticky. And I wouldn’t underestimate the importance of our Evolus Rewards program, which drove these consumers back into their offices. One insightful point here in the fourth quarter alone, 100,000 consumers benefited from our Evolus Rewards program. That’s 100,000 transactions that took place in the fourth quarter alone, and we’re only six quarters into this program. So our customers are seeing the benefits of our branding investment through advertising. They’re also seeing the benefits of the investment we have on the backend and bringing these patients back to their practices.

Great. Thanks a lot.

Thank you. Our next question is coming from Greg Fraser from Truist Securities. Your line is now live.

Thanks and good afternoon folks. And Lauren, let me add my congrats on the retirement. It’s been a real pleasure working with you over the years.

Thank you.

First question on the extra strength study is the intents, that study gets a quarter regulatory filing, assuming the study is positive. And then just following up on the European opportunity, how are you thinking perhaps qualitatively about the launch curve beyond this year? Maybe you can comment on the key differences between the U.S. and Europe that are important to consider and how should we think about how much you’ll have to spend over time to build a brand in Europe. Thank you.

Why don’t I take the question on Europe, and I’m going turn it over to Rui to address the extra strength portion. Look, if you’re comparing U.S. and Europe you’re comparing a bit of apples and oranges in all fairness, you’ve got a U.S. category that’s roughly $2 billion for neurotoxins and a Europe market that’s the second largest market in the world. That’s valued up roughly $500 million. So call it a quarter of the size. At the same time you have to factor for the, the pricing differential. In Europe, it’s a lower average selling price. And of course, Europe is in one market. It’s many individual markets that comprise Europe. So the advantage we feel we have is one, two years of experience in launching Jeuveau in the U.S. that we can apply to get Europe off to a fast start. Fortunately, under Crystal’s leadership, we’ve hired great management, in Europe, that team is actively building out our plans and we feel very confident in our ability to create value in that market. That being said, Lauren spoke to the single digit millions in investment we’re going, going to make, to launch in Europe. And that should give you a feel for how we’re investing into a market that has potential at the same time, we want to make sure that as we invest, we see a strong return from that investment. Over time, you should really value the U.S. as the key driver of our long-term revenue and growth, but Europe’s going to play an important role both today and over time as we add additional assets into our portfolio. And I’ll turn it over to Rui to address your questions on the extra strength.

Sure. And with respect to the Phase II, the intent is once we have the Phase II data, we have the optionality to continue through a registration process. Phase II data alone, won’t get you a label, but it gives us a good feel for what that data looks like and helps us make decisions as we go through the process.

Thank you.

Thank you. Next question today is coming from Douglas Tsao from H.C. Wainwright. Your line is now live.

Hi, good afternoon. Thanks for taking questions and just wishing Lauren well, and appreciate all of her contributions and enjoyed working with her over the years. Maybe as a starting point, I’d just be curious on the extra strength. Do you anticipate seeing the same benefits across all the potential uses of Jeuveau or will it largely be seen, in for the glabellar?

Sure. That’s a great question, where everyone has looked thus far is the glabellar. So your question remains unanswered truly. And I think we’ll just find that there will be idiosyncrasies of which we go into different indications with a higher strength, we’ll see different things. The one thing we want to keep in mind of course, are there are certain areas where if there’s a problem, along with longer iterations means that problem sticks around for a lot longer. So that’s why you see most trying the glabellar region first and then just dipping their toes in other indications.

And Doug, maybe additional color to Rui, just in talking to doctors that are using extra strength dose today in their daily practices. What we’re finding is extra strength has value for them in particular patient types and in certain areas. And they’re continuing to use the original strength in other areas. And that’s where we really see the advantage of having both the original and the extra strength doses in the end. We do believe injectors want to have the optionality just as consumers will around what the right dosing is for that given area. And that’s what makes us unique in pursuing both with our cash pay strategy.

Okay, great. And then obviously I think, in Lauren’s comments, you referenced Evolus becoming a multi-product aesthetics company. And obviously you’ve spoken, increasingly that business development. I’m just curious if, we should interpret that, as reflecting greater urgency on the part of the company to broaden the portfolio. Thank you.

Well, first off it is great to have Crystal’s on board and Lauren’s done certainly a phenomenal job of leading corporate development on top of her CFO responsibilities, but there’s a lot of value in and having dedicated focus against it. And as Lauren said, look, we aspire to be a multi-product aesthetic company over time. If you look at our three priorities, it the first two, start with our singularity and focus. It’s about execution on the U.S. business and a launch on the international side. At the same time, we are actively looking at ways to expand our product portfolio. The flagship brand will continue to be Jeuveau going forward in the U.S. or Nuceiva outside of the U.S., but our next asset, to the extent that it accelerates our flagship product creates a lot of value for our customers, for consumers, and of course, for investors in the company. And this is going to be an important part of our capital allocation strategy as we think about business development or corporate development going forward.

Okay, great. Thank you so much.

Thank you. Your next question is coming from Vamil Divan from Mizuho Securities. Your line is now live.

Great. Thanks for taking my questions. So let me first add my thanks and congrats to Lauren, and then maybe just a couple follow up ones on the market share. So discussions from before, one, I’m wondering if you could maybe, sort of breakdown, you talk about millennial versus, non-millennials, or maybe more in terms of the provider sort of what your share looks like, sort of the MediSpa sort of market versus a plastic surgeon and, or cosmetic dermatologists. And then my second question, previously kind of before all the ITC issues then and COVID and all that you talked about some longer term market share assumption than trying to become the number two player in the market. I’m just wondering now that things that sort of stabilized to some extent you guys are growing nicely. Can you just give some, maybe new perspective on, how you see your market share evolving over time and where do you see, what would you be comfortable with in terms of your, where you’d be in relative the other players say one or two years from now. Thank you.

Thanks for the questions Vamil. I appreciate that. First on shares, as you know, not all manufacturers are public, so we don’t have access to all the revenue figures as we close out each quarter. But we do look at what is available publicly within the toxin market. We do index our revenue relative to what’s available publicly. And what you’d see if you did that analysis is that we’ve gained meaningful share. I suspect we’re trading in the single digit market share roughly the upper end of that, that range but likely not a double digit market share just yet. So as you think about this $2 billion category, there’s a significant opportunity in front of us as we continue to expand accounts and add new ones, as well as grow accounts within our co-branded media Evolux program this year. As we’ve mentioned in the past, we don’t provide too much color on the composition of our business because of the importance of maintaining the privacy of that internally. But we have said that we do over index within the medical spa channel. We do believe that medical spas in the United States represent roughly 60% of the total toxin value. And by overindexing clearly, that means, we have a business that has a higher market share within that medical spa channel than we do outside of it. And we’re continuing to see really great, great strength there. I think our positioning is well suited for the customer type. That’s looking to expand their patient base by targeting a younger generation and our advertising is effective. And it’s customized around these accounts and it replaces a significant portion of their advertising spend at a significantly lower cost based on our national purchasing power. And then of course the profitability profile of improving the profit and their number one procedure for their practice is, is a meaningful difference maker in these, these practices overall. And then long term, we haven’t provided updated guidance as it relates to share. I can tell you that we do expect to continue to gain share. We provided revenue guidance for this year and it reflects the growth this year, largely coming from market share rather than market growth. And we expect that to be a trend, that will continue to build from, as we relaunched Jeuveau in the U.S. beginning the second quarter of last year. So in our first three quarters, we’ve significantly outpaced market growth. And we expect to do that again this year. And if you extrapolate that trend, I think you’re going to find that we’re on a very favorable profile going forward, and we don’t expect that to slow down.

Okay. Thank you.

Thank you. We reached end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.

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

Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.