Evolus(US:EOLS)2025-05-07 21:02PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements This section presents the unaudited financial statements for Q1 2025, detailing Evolus's financial position, operational results, and cash flows Financial Statements Overview This overview presents the company's balance sheet, statement of operations, and cash flows for the quarter ended March 31, 2025 Condensed Consolidated Balance Sheet (as of March 31, 2025) | Metric | March 31, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $67.9 million | $87.0 million | | Total current assets | $131.7 million | $151.3 million | | Total assets | $213.4 million | $232.6 million | | Liabilities & Equity | | | | Total current liabilities | $56.2 million | $63.0 million | | Total liabilities | $220.0 million | $227.0 million | | Total stockholders' equity (deficit) | ($6.6 million) | $5.5 million | | Accumulated deficit | ($628.3 million) | ($609.4 million) | Condensed Consolidated Statement of Operations (Three Months Ended March 31) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total net revenues | $68.5 million | $59.3 million | | Gross profit | $46.7 million | $40.5 million | | Loss from operations | ($15.2 million) | ($8.9 million) | | Net loss | ($18.9 million) | ($13.1 million) | | Net loss per share, basic and diluted | ($0.30) | ($0.22) | Condensed Consolidated Statement of Cash Flows (Three Months Ended March 31) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($15.6 million) | ($10.6 million) | | Net cash used in investing activities | ($1.9 million) | ($0.8 million) | | Net cash provided by (used in) financing activities | ($1.6 million) | $45.7 million | | Change in cash and cash equivalents | ($19.1 million) | $34.1 million | Note 1. Business Overview and Liquidity Evolus, a beauty company, focuses on Jeuveau® and new HA fillers, maintaining sufficient liquidity despite recurring net losses - The company's main product is Jeuveau® (prabotulinumtoxinA-xvfs) It is expanding with the Evolysse™ line of HA fillers, launching two products in the U.S. in April 2025 and planning a European launch in the second half of 202531 - The company has a history of recurring net operating losses, recording a net loss of $18.9 million for the three months ended March 31, 2025, and had an accumulated deficit of $628.3 million33 - In March 2024, a follow-on offering raised net proceeds of $46.8 million Management believes current capital is sufficient for the next 12 months, further supported by a new $250 million loan agreement with Pharmakon executed in May 20253436 Note 7. Term Loans A new $250 million term loan agreement with Pharmakon, maturing in May 2030, enhances financial flexibility and reduces interest rates - On May 5, 2025, the company entered into an Amended and Restated Loan Agreement with Pharmakon, increasing its borrowing capacity to $250 million126 - The new loan facility matures on May 5, 2030, and accrues interest at 3-month SOFR (with a 3.5% floor) plus 5.0% per annum, a reduction from the previous rate126 - The initial $150 million tranche was drawn on May 5, 2025, which included refinancing the previous $125 million loan and providing $23.4 million in net proceeds from $25 million of incremental borrowings126 Note 9. Commitments and Contingencies This section details significant future purchase and milestone payment obligations, alongside ongoing shareholder derivative litigation - The company must meet minimum annual purchase requirements under its agreements with Daewoong and Symatese to maintain exclusive distribution rights133135 - Future milestone payments to Symatese are required, including up to €12.1 million for U.S. approvals (2025-2028) and €3.1 million for European approvals (triggered in October 2024)136139140 - A shareholder derivative lawsuit filed in 2020 remains stayed The court dismissed a related securities class action in favor of the defendants in October 2024141 Note 10. Stockholders' Equity This note outlines common stock outstanding, ATM offering program, equity incentive plans, and unrecognized stock-based compensation - In March 2024, the company completed a follow-on offering, issuing 3.554 million shares and raising $46.8 million in net proceeds34147 - An "at-the-market" (ATM) sales agreement is in place to sell up to $50 million of common stock, but no shares have been sold under this program to date149 - As of March 31, 2025, total unrecognized stock-based compensation cost was $56.7 million, which is expected to be recognized over a weighted-average period of 2.6 years165 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, operational performance, liquidity, and capital resources, noting revenue growth despite losses Results of Operations Q1 2025 saw net revenue growth driven by Jeuveau® sales, but increased SG&A led to a larger operating loss Results of Operations Comparison (in millions) | Metric | Q1 2025 ($) | Q1 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Total Net Revenues | $68.5 | $59.3 | 15.5% | | Gross Profit | $46.7 | $40.5 | 15.3% | | Selling, general and administrative | $56.6 | $45.1 | 25.5% | | Loss from operations | ($15.2) | ($8.9) | 70.8% | | Net Loss | ($18.9) | ($13.1) | 44.3% | - The $9.2 million (15.5%) increase in net revenue was primarily attributed to higher sales volumes of Jeuveau®175 - Selling, general and administrative (SG&A) expenses increased by $11.5 million (25.5%), mainly due to higher personnel costs related to commercial activities177 Liquidity and Capital Resources The company's liquidity is supported by recent financing and a new loan facility, despite historical losses and ongoing cash requirements - As of March 31, 2025, the company had $67.9 million in cash and cash equivalents and an accumulated deficit of $628.3 million183184 - A follow-on offering in March 2024 provided net proceeds of $46.8 million, and an additional $4.2 million was raised in April 2024 from the exercise of underwriter options185 - A new Amended and Restated Loan Agreement with Pharmakon was executed on May 5, 2025, providing access to up to $250 million in financing, extending maturity to 2030, and reducing the interest rate187 - Material cash requirements include debt service, royalty payments on Jeuveau® net sales to the Evolus Founders (until Q2 2029) and Medytox (until Q3 2032), and milestone payments for the Evolysse™ products188190205 Quantitative and Qualitative Disclosures About Market Risk This section details market risks from interest rate and foreign currency fluctuations, with no material changes reported - The company's main market risks are from fluctuations in interest rates and foreign currency exchange rates209 - No material changes in financial market risks were reported since the Annual Report for the year ended December 31, 2024210 Controls and Procedures Management concluded that disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025211 - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2025213 PART II - OTHER INFORMATION Legal Proceedings This section details ongoing legal proceedings, including a stayed shareholder derivative lawsuit and a books and records demand - A shareholder derivative lawsuit filed in 2020 remains stayed A related federal securities class action was dismissed in the company's favor in October 2024, and the dismissal was not appealed141 - The company received a demand to inspect its books and records in 2021 from a putative stockholder, with allegations similar to the derivative suit The outcome remains uncertain142 Risk Factors This section outlines principal risks, including financial losses, intense competition, reliance on third parties, and intellectual property challenges Business and Strategic Risks Key strategic risks include historical losses, intense competition, market adoption uncertainty, and cybersecurity threats - The company has a history of significant losses, with an accumulated deficit of $628.3 million as of March 31, 2025, and its ability to achieve profitability is not certain219 - The company faces significant competition from large, experienced companies with greater financial resources, brand recognition, and broader product portfolios that can be bundled and discounted220 - The business is reliant on its digital technology, and any system failures or cybersecurity incidents could disrupt operations and harm customer relationships244246 - Future growth depends on successfully in-licensing or acquiring additional products, a complex and competitive process257 Reliance on Third Parties and Supply Chain Risks The company's critical reliance on sole-source licensors for manufacturing and regulatory compliance poses significant supply chain risks - The company is completely dependent on its license agreements with Daewoong and Symatese; termination or loss of rights under these agreements would materially harm the business276 - Evolus relies solely on Daewoong to manufacture Jeuveau® and Symatese for Evolysse™, making it vulnerable to any production, quality, or regulatory issues at its partners' facilities277 - The company is dependent on Symatese to achieve and maintain regulatory approval for the Evolysse™ product line in the U.S. and Europe Any delays or failures by Symatese in this process would negatively affect Evolus's ability to sell these products228229 Intellectual Property and Legal Risks This section covers intellectual property infringement risks, reliance on licensors for IP protection, and Medytox royalty obligations - The company faces the risk of third-party intellectual property infringement claims, which could prevent or delay commercialization efforts and lead to substantial litigation costs283 - Evolus relies on its licensors, Daewoong and Symatese, to maintain, protect, and defend the intellectual property related to its products, as it does not own the core patents287290 - The Medytox Settlement Agreements require ongoing royalty payments that reduce profitability Failure to comply with the agreements could result in litigation or the loss of the ability to market and sell Jeuveau®235236237 Regulatory and Compliance Risks Extensive government regulation, off-label promotion risks, and the need for ongoing regulatory approvals pose significant compliance challenges - The business is subject to extensive, complex, and costly government regulation by the FDA and other global authorities, and failure to comply can lead to severe penalties306 - Marketing and promotion are strictly limited to approved indications If the company is found to have improperly promoted off-label uses, it could face significant fines, penalties, and damage to its reputation251253 - Obtaining and maintaining regulatory approvals in foreign jurisdictions is necessary for international marketing and is a complex, time-consuming, and uncertain process316