Revance(RVNC) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the period ended June 30, 2022, reveal a significant net loss and accumulated deficit, with management expressing substantial doubt about the company's ability to continue as a going concern due to delayed product approval - The company's ability to continue as a going concern is in substantial doubt due to insufficient capital to fund operations for at least 12 months, primarily stemming from the delayed commercial launch of DaxibotulinumtoxinA for Injection following the FDA's Complete Response Letter (CRL)[25] Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $28,368 | $18,804 | $53,629 | $32,103 | | Loss from Operations | $(57,842) | $(70,337) | $(120,063) | $(140,349) | | Net Loss | $(61,435) | $(72,197) | $(125,777) | $(143,836) | | Net Loss Per Share | $(0.88) | $(1.07) | $(1.82) | $(2.15) | Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $69,418 | $110,623 | | Short-term investments | $164,397 | $114,448 | | Total Assets | $561,883 | $531,163 | | Total Liabilities | $564,514 | $462,692 | | Total Stockholders' Equity (Deficit) | $(2,631) | $68,471 | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(105,495) | $(123,760) | | Net cash used in investing activities | $(61,313) | $(74,113) | | Net cash provided by financing activities | $126,478 | $31,956 | | Net Decrease in Cash | $(40,330) | $(165,917) | Notes to Condensed Consolidated Financial Statements These notes provide details on accounting policies, revenue recognition, debt instruments, and contingencies, including a 'going concern' warning, new debt issuance, and ongoing legal proceedings - The company is involved in two significant legal cases: a patent infringement lawsuit by Allergan regarding DaxibotulinumtoxinA for Injection, and a securities class action complaint alleging misleading statements on manufacturing and regulatory approval timing[134][137] - In March 2022, the company issued $100.0 million in notes under a Note Purchase Agreement with Athyrium, with an additional $100.0 million available upon FDA approval of DaxibotulinumtoxinA for Injection for glabellar lines[93] Revenue by Segment (in thousands) | Segment | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Product Segment | $27,142 | $51,547 | | Service Segment | $1,226 | $2,082 | | Total Revenue | $28,368 | $53,629 | Loss from Operations by Segment (in thousands) | Segment | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Product Segment | $(24,969) | $(49,920) | | Service Segment | $(5,598) | $(9,533) | | Corporate and other expenses | $(27,275) | $(60,610) | | Total Loss from Operations | $(57,842) | $(120,063) | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial performance, revenue growth driven by RHA® Collection sales, ongoing 'going concern' doubts, recent FDA regulatory updates, and capital preservation strategies - The FDA issued a Form 483 with three observations following a July 2022 reinspection of the manufacturing facility, primarily related to SOP deviations and BLA documentation, to which the company has responded[163][164][165] - The company implemented cost preservation measures, including pausing non-critical hires and deferring the Phase 3 clinical program for upper limb spasticity, due to the delayed approval of DaxibotulinumtoxinA[173] Revenue Comparison (in thousands) | Revenue Type | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $46,320 | $28,686 | $17,634 | 61% | | Collaboration revenue | $5,227 | $2,905 | $2,322 | 80% | | Service revenue | $2,082 | $512 | $1,570 | 307% | | Total revenue | $53,629 | $32,103 | $21,526 | 67% | - The company generated $31.6 million in net proceeds from selling 1,734,853 shares under its 2020 ATM Agreement, and established a new $150.0 million ATM agreement in May 2022 with no shares sold to date[170][171] Quantitative and Qualitative Disclosures about Market Risk The company's market risk exposure, primarily from foreign currency and interest rate fluctuations, has not materially changed since year-end 2021 - No material changes occurred in the company's market risk exposure for the six months ended June 30, 2022, compared to the 2021 Annual Report on Form 10-K disclosures[265] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[266] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[267] PART II. OTHER INFORMATION Legal Proceedings The company is involved in two significant legal matters: a patent infringement lawsuit by Allergan and a securities class action complaint - Allergan filed a patent infringement complaint against Revance concerning DaxibotulinumtoxinA for Injection and its manufacturing process, with Revance's motion to dismiss denied in July 2022[270] - A securities class action complaint alleges false or misleading statements by the company and officers regarding DaxibotulinumtoxinA for Injection manufacturing and regulatory approval timelines between November 2019 and October 2021[271] Risk Factors This section outlines numerous risks, including substantial dependence on key products, 'going concern' doubts, regulatory challenges, intense competition, and intellectual property litigation - The company's future is substantially dependent on the clinical and commercial success of DaxibotulinumtoxinA for Injection and the RHA® Collection of dermal fillers, with regulatory approval for the former delayed[277][281] - Substantial doubt exists about the company's ability to continue as a going concern, as existing capital is insufficient for the next 12 months, requiring FDA approval for DaxibotulinumtoxinA and additional funding for viability[287] - The company faces significant competition from large, established companies with greater financial and marketing resources, potentially developing safer, more effective, or less expensive products[363] - Ongoing patent infringement litigation with Allergan could be expensive, time-consuming, and potentially delay or prevent the commercialization of DaxibotulinumtoxinA for Injection if unsuccessful[403] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None Other Information No other information is reported for the period - None Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, debt agreements, officer certifications, and XBRL data files