Revance Therapeutics (RVNC) and its stock are experiencing a positive trend following the Food and Drug Administration’s approval of the company’s new treatment for frown lines, Daxxify. This injection is the latest botulinum toxin to be introduced to doctors’ offices across the U.S., following the popularity of AbbVie’s (ABBV) Botox in 2002.
Revance received FDA approval in September and reported approximately $11 million in sales for the fourth quarter, as announced in early January.
Mark Foley, Chief Executive of Revance, has noted that the U.S. market presents a higher barrier for medical aesthetics compared to regions like Korea and Europe, where competition and knockoffs are more prevalent. Revance is targeting “prestige” accounts, customers who desire a high-end product.
Alongside Daxxify, Revance also offers a range of facial fillers known as resilient hyaluronic acid fillers, or RHAs, designed to smooth wrinkles.
Foley pondered during a recent health care conference, “I think the big question will be: Where does Daxxify ultimately settle out in market penetration? And then, how much sort of lift does that give to the RHA line?”
The approval of Daxxify has indeed provided a boost to RVNC stock. The company’s shares surged nearly 37% in the two days following the FDA’s endorsement of Daxxify. Although Revance’s stock experienced a pullback in early January, it rebounded impressively, rising 54% on Jan. 9 after the company preannounced its fourth-quarter sales.
Currently, RVNC shares boast a top-tier Relative Strength Rating of 99. This places RVNC among the top 1% of all stocks in terms of 12-month performance.
Daxxify, administered via injection, is a neuromodulator, meaning it influences nerve function. Specifically, it inhibits the release of a chemical called acetylcholine, preventing the affected muscle from tightening and thus smoothing wrinkles.
Serge Belanger, an analyst, stated that RVNC stock investors had low expectations for Daxxify’s performance in the fourth quarter.
“Little to no Daxxify sales were expected in the fourth quarter and yet the product generated $11 million in sales during the short time since the PrevU (early experience) program initiated, meaning that 2023 sales estimates will likely need to be revised upward,” Belanger noted in a recent client memo.
The PrevU program involves 400 doctors who were granted early access to Daxxify ahead of a full commercial launch planned for late in the first quarter or early in the second quarter.
Uy Ear, an analyst, noted, “Even management was surprised by strong Daxxify uptake coming off the PrevU program. In our view, the strong fourth-quarter Daxxify performance should help de-risk the consensus sales forecast of $65 million to $70 million for Daxxify in 2023, which has been a source of significant investor concerns.”
RVNC stock broke out of a cup-with-handle base, surpassing a buy point at 30.70 on Jan. 20. Revance’s stock was slightly down on Friday.
Analysts tracking RVNC stock anticipate the company will report $220.3 million in sales for 2023. This would represent a nearly 74% increase over the forecasted $126.9 million for 2022. The company is also projected to become profitable in 2025, with adjusted earnings of $1.65 per share.
In addition to Daxxify, Revance preannounced sales of $34 million to $35 million for its fillers. These RHA products mimic the body’s own hyaluronic acid, a chemical that aids in skin smoothing. Revance’s RHA products are also injectable drugs. The company also offers a payment management system called Opul.
Belanger noted that the filler sales “significantly (outpaced) most Street estimates.” He maintains a buy rating on RVNC stock and has increased his price target from 35 to 38.
“The overall aesthetic market appears healthy ahead of the formal Daxxify commercial launch,” Belanger stated.
Revance’s CEO, Foley, expressed satisfaction with the performance of the filler line.
“We launched this product line in the middle of the pandemic without the benefit of our toxin, and we continue to believe that it’s the best product line that’s out there,” Foley declared.
Revance currently holds an estimated 8% of the global market in facial fillers, compared to the roughly 10% owned by AbbVie’s Juvederm filler in Europe. With the approval of Daxxify, Foley believes Revance has the opportunity to bundle its products, offering doctors a better deal and patients a superior experience.
“If you only have a single product, a single filler or single toxin, you lose some of the sales force leverage that you get when you have two products in the bag,” Foley explained.
Despite concerns about recession and ongoing inflation, Revance is not observing any slowdown in medical aesthetics spending. Similarly, RVNC stock, which holds a top-tier Relative Strength Rating of 99, is not experiencing any slowdown. This places the shares in the top 1% of all stocks in terms of 12-month performance.
“We’re targeting the prestige segment or the higher end of the accounts, which naturally attracts higher-end consumers, because they have choice and they’ve elected to go to a plastic surgeon or a dermatologist or a high-end med spa office, which typically is not the cheapest,” Foley said. “So, we think that consumer is going to be less impacted.”
Another important point to note is that medical aesthetic treatments often result in recurring revenue that’s paid out of pocket.
However, analysts following RVNC stock expect sales to decelerate through 2026. One key to slowing or preventing this deceleration will be securing new approvals for Daxxify. For instance, AbbVie’s Botox is also used to treat other conditions like migraine prevention and excessive sweating.
In August, the FDA will consider Daxxify for patients with cervical dystonia, a painful condition where the neck muscles contract involuntarily. Revance is also studying Daxxify in patients with plantar fasciitis and upper limb spasticity, a condition that causes the muscles of the arms and hands to become tense and overactive.
The market for Daxxify as a therapeutic is more concentrated, according to CEO Foley. He estimates that 80% of the volume in cervical dystonia treatment will come from fewer than 1,000 doctor’s offices.
“So we can be much more targeted,” Foley said.
In another sense, RVNC stock is also prestigious — it ranks first on a list of elite growth stocks.
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