Revance Therapeutics (RVNC) is making significant strides in the medical aesthetics industry with the FDA’s approval of its new treatment for frown lines, Daxxify. This botulinum toxin injection is the latest addition to U.S. doctor’s offices, following the popular Botox by AbbVie (ABBV) which was introduced in 2002. Revance secured FDA approval in September and reported approximately $11 million in sales for the fourth quarter.
Mark Foley, Revance’s Chief Executive, recognizes that the U.S. market for medical aesthetics is more challenging to penetrate than markets like Korea and Europe, which are saturated with competitors and imitations. Revance aims to cater to “prestige” clients who seek high-quality products. The company’s offerings extend beyond Daxxify to include a range of facial fillers, known as resilient hyaluronic acid fillers, or RHAs, designed to smooth wrinkles.
Foley recently pondered the future market penetration of Daxxify at a healthcare conference. He questioned where Daxxify would ultimately settle in market penetration and how much lift it would give to the RHA line.
The FDA’s approval of Daxxify has certainly boosted RVNC stock, with shares surging nearly 37% in the two days following the announcement. Despite a slight pullback in early January, the stock rebounded, soaring 54% on January 9 after the company’s preannouncement of its fourth-quarter sales. RVNC now boasts a top-tier Relative Strength Rating of 99, placing it in the top 1% of all stocks based on 12-month performance.
Daxxify, administered via injection, is a neuromodulator that alters nerve function. It inhibits the release of a chemical called acetylcholine, preventing the affected muscle from tightening and thereby smoothing wrinkles.
Serge Belanger, an analyst, noted that RVNC stock investors had low expectations for Daxxify’s fourth-quarter sales. He said, “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.”
The PrevU program provided 400 doctors with early access to Daxxify ahead of a full commercial launch slated for late in the first quarter or early in the second. Analyst Uy Ear 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 January 20. Analysts predict the company will report $220.3 million in sales for 2023, 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, known as RHA products. These injectable drugs mimic the body’s own hyaluronic acid, a chemical that aids in skin smoothing. 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. He said, “The overall aesthetic market appears healthy ahead of the formal Daxxify commercial launch.”
Foley, Revance’s CEO, expressed satisfaction with the performance of the filler line, saying, “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.”
Revance currently holds an estimated 8% of the global market in facial fillers, compared to the approximately 10% held by AbbVie’s Juvederm filler in Europe. With Daxxify’s approval, Foley sees an opportunity for Revance to bundle its products, offering doctors better deals and patients improved experiences. He said, “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.”
Despite concerns about recession and inflation, Revance has not observed a decrease in spending on medical aesthetics. RVNC stock continues to perform well, maintaining its top-tier Relative Strength Rating of 99. Foley said, “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. So, we think that consumer is going to be less impacted.”
Medical aesthetic treatments often generate recurring revenue that is paid out of pocket. However, analysts predict that RVNC stock sales will decelerate through 2026. One potential strategy to slow or prevent this deceleration is to secure additional approvals for Daxxify. For instance, 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 characterized by involuntary neck muscle contractions. Revance is also studying Daxxify’s potential use in patients with plantar fasciitis and upper limb spasticity, a condition that causes arm and hand muscles to become tense and overactive.
Foley, the CEO, said the market for Daxxify as a therapeutic is more concentrated. He estimates that 80% of the volume in cervical dystonia treatment will come from fewer than 1,000 doctor’s offices, allowing for a more targeted approach.
RVNC stock also holds prestige in another sense — it ranks first on a list of elite growth stocks.
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