Evolus, Inc. (NASDAQ:EOLS) Q3 2019 Earnings Conference Call November 4, 2019 8:00 AM ET Company Participants Ashwin Agarwal - Vice President, Finance, Investor Relations & Treasury David Moatazedi - President & Chief Executive Officer Lauren Silvernail - Chief Financial Officer & Executive Vice President, Corporate Development Mike Jafar - Chief Marketing Officer Conference Call Participants Louise Chen - Cantor Greg Fraser - SunTrust Annabel Samimy - Stifel Donald Ellis - JMP Securities Douglas Tsao - H.C. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________________________ FORM 10-Q _________________________________________________________________ (Mark One) Title of Class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.00001 per share EOLS Nasdaq Global Market Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURIT ...

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2019 financials show significant asset and liability growth from new debt and investments, increasing net loss due to higher operating expenses [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) Total assets increased to **$220.9 million** by March 31, 2019, driven by new short-term investments and long-term debt, while cash decreased and liabilities rose Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $54,367 | $93,162 | | Short-term investments | $79,313 | $— | | Total current assets | $139,084 | $94,339 | | Intangible assets, net | $58,782 | $56,076 | | Total assets | $220,929 | $171,844 | | **Liabilities & Equity** | | | | Total current liabilities | $9,400 | $5,276 | | Long-term debt, net | $72,557 | $— | | Total liabilities | $145,572 | $87,460 | | Total stockholders' equity | $75,357 | $84,384 | [Condensed Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss increased to **$11.0 million** in Q1 2019, primarily due to a sharp rise in operating expenses for commercial launch preparation, partially offset by an income tax benefit Condensed Statement of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Research and development | $2,353 | $1,678 | | General and administrative | $17,519 | $3,467 | | Revaluation of contingent royalty obligation | $4,913 | $900 | | Total operating expenses | $25,269 | $6,045 | | Loss from operations | ($25,269) | ($6,045) | | Income tax (benefit) expense | ($14,523) | $10 | | **Net loss** | **($10,975)** | **($6,162)** | | Net loss per share, basic and diluted | ($0.40) | ($0.30) | [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$19.2 million** in Q1 2019, with significant cash used in investing activities offset by financing proceeds, leading to a net decrease in cash Condensed Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($19,200) | ($2,201) | | Net cash used in investing activities | ($80,025) | $— | | Net cash provided by financing activities | $60,430 | $51,771 | | **Change in cash and cash equivalents** | **($38,795)** | **$49,570** | | Cash and cash equivalents, end of period | $54,367 | $49,570 | [Notes to Condensed Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail Jeuveau™ FDA approval, capital sufficiency, new lease standard adoption, a **$100 million** credit facility, and ongoing trade secret litigation - The company's first product, **Jeuveau™**, received U.S. FDA approval on **February 1, 2019**, for glabellar lines[37](index=37&type=chunk) - Current capital resources, including **$54.4 million** cash and **$79.3 million** short-term investments, are deemed sufficient for at least the next twelve months of operations[39](index=39&type=chunk)[41](index=41&type=chunk) - In March 2019, the company secured a **$100.0 million** credit facility with Oxford Finance, drawing an initial **$75.0 million** tranche[130](index=130&type=chunk) - The company is defending against lawsuits and an ITC complaint from Medytox and Allergan alleging trade secret misappropriation related to Jeuveau™ manufacturing, with potential import and sales bans[157](index=157&type=chunk)[159](index=159&type=chunk) - Upon FDA approval, a **$2.0 million** milestone was paid to Daewoong, and the **$56.1 million** IPR&D asset was reclassified to a definite-lived distribution right with a **20-year** useful life[128](index=128&type=chunk)[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the transition to commercial stage with Jeuveau™ launch, significant increase in operating expenses, securing a **$100 million** credit facility, and ongoing capital and legal risks - The company is launching its first product, **Jeuveau™**, in the U.S. in spring 2019 following FDA approval on **February 1, 2019**[177](index=177&type=chunk) Results of Operations Comparison (in thousands) | | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | Change | | :--- | :--- | :--- | :--- | | General and administrative | $17,519 | $3,467 | $14,052 | | Total operating expenses | $25,269 | $6,045 | $19,224 | | Net loss | ($10,975) | ($6,162) | ($4,813) | - General and administrative expenses increased by **$14.0 million** year-over-year, driven by higher personnel costs (headcount grew from **17 to 92**) and pre-commercialization expenses[195](index=195&type=chunk) - The company secured a loan agreement for up to **$100.0 million** with Oxford Finance, with an initial **$75.0 million** tranche funded in March 2019[207](index=207&type=chunk) - Management believes current capital resources are sufficient to fund operations for at least the next **twelve months** from the report's issuance date[212](index=212&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports that quantitative and qualitative disclosures about market risk are not applicable for this period - The company has determined that quantitative and qualitative disclosures about market risk are not applicable for this reporting period[232](index=232&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2019**[234](index=234&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended **March 31, 2019**[236](index=236&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) No material developments in legal proceedings have occurred since the 2018 Annual Report, with key ongoing matters detailed elsewhere in the report - There have been no material developments in legal proceedings since the company's **2018 Annual Report on Form 10-K**[239](index=239&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including single product and manufacturer dependence, substantial legal challenges, limited operating history, intense competition, and reliance on its controlling stockholder - **Business & Strategy Risks:** The company depends entirely on the successful commercialization of its single product, **Jeuveau™**, and has a limited operating history with significant losses[242](index=242&type=chunk)[244](index=244&type=chunk) - **Supplier & Manufacturing Risks:** The company relies solely on **Daewoong** in South Korea for **Jeuveau™** manufacturing, with any disruption or agreement termination posing material harm[249](index=249&type=chunk)[254](index=254&type=chunk)[318](index=318&type=chunk) - **Legal & IP Risks:** Significant legal threats, including an ITC complaint from Allergan and Medytox, could result in an exclusion order barring U.S. imports and sales of **Jeuveau™**[259](index=259&type=chunk)[270](index=270&type=chunk) - **Financial & Capital Risks:** Additional financing may be required, and the **$100 million** credit facility contains restrictive covenants and default clauses tied to business performance and legal outcomes[272](index=272&type=chunk)[282](index=282&type=chunk) - **Competition & Market Risks:** Significant competition from large, experienced companies like **Allergan** with dominant market share, greater resources, and broader product portfolios[305](index=305&type=chunk)[306](index=306&type=chunk) - **Controlling Stockholder Risks:** **ALPHAEON** owns **56.0%** of the company's stock, making Evolus a "controlled company" exempt from certain corporate governance requirements and allowing control over business decisions[453](index=453&type=chunk)[454](index=454&type=chunk)[462](index=462&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities in the quarter[516](index=516&type=chunk) [Item 3. Defaults Upon Senior Securities](index=79&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that there were no defaults upon senior securities - The company reports that there were no defaults upon senior securities[518](index=518&type=chunk) [Item 4. Mine Safety Disclosures](index=79&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports that mine safety disclosures are not applicable - The company reports that mine safety disclosures are not applicable[520](index=520&type=chunk) [Item 5. Other Information](index=79&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - There is no information to report under this item[522](index=522&type=chunk) [Item 6. Exhibits](index=80&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the Loan and Security Agreement with Oxford Finance and officer certifications - Key exhibits filed include the Loan and Security Agreement with Oxford Finance, LLC, and certifications by the Principal Executive Officer and Principal Financial Officer[525](index=525&type=chunk)[526](index=526&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________________ FORM 10-K _____________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38381 _____________________________ EVOLUS, INC. (Exact name of registrant as speci ...