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Edited Transcript of EOLS.OQ earnings conference call or presentation 11-May-20 8:30pm GMT

May 12, 2020 (Thomson StreetEvents) — Edited Transcript of Evolus Inc earnings conference call or presentation Monday, May 11, 2020 at 8:30:00pm GMT

* Ashwin K. Agarwal

Evolus, Inc. – VP of Finance, IR & Treasury

Evolus, Inc. – President, CEO & Director

* Lauren P. Silvernail

Evolus, Inc. – CFO & Executive VP of Corporate Development

H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst

* Gregory B. Gilbert

* Roanna Clarissa H. Ruiz

Good afternoon, ladies and gentlemen, and welcome to the Q1 2020 Evolus Conference Call. As a reminder, today’s conference is being recorded.

I would like to introduce your host for today’s conference, Mr. Ashwin Agarwal, Vice President, Finance, Investor Relations and Treasury. Sir, please go ahead.

Ashwin K. Agarwal, Evolus, Inc. – VP of Finance, IR & Treasury [2]

Thank you, operator, and welcome to everyone participating on today’s call. This call is also being broadcast live over the Internet at evolus.com, and a replay of the call will be available on the company’s website for 30 days.

With me today are David Moatazedi, President and Chief Executive Officer; Lauren Silvernail, Chief Financial Officer and EVP, Corporate Development; Mike Jafar, Chief Marketing Officer; and Rui Avelar, Chief Medical Officer and Head of R&D.

In our remarks today, we will include statements that are considered forward-looking statements within the meaning of United States security laws. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which may affect the company’s business, strategy, operations or financial performance. A detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Actual results may differ materially from those expressed in or implied by the forward-looking statements. The company undertakes no obligation to update or review any estimate, projection or forward-looking statement.

Additionally, the discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not as a substitute for or in isolation from, our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website at investors.evolus.com.

And now let me hand the call over to David.

David Moatazedi, Evolus, Inc. – President, CEO & Director [3]

Good afternoon. I hope you and your families are all doing well and staying safe and healthy. It goes without saying that we’re in unprecedented times, and the environment in which we operate has rapidly evolved over the last 2 months due to the COVID-19 pandemic.

Given the backdrop of the current market environment, I’d like to open by giving you a more prescriptive view on both our performance as well as the key steps we’ve taken to weather through this period.

I will start with an overview of our business prior to COVID, and then I’ll provide a full view of how this crisis impacted quarter 1, including measures we took to protect our customers. I’ll close by sharing my views on the market recovery and why I believe we are well positioned to emerge a stronger company.

Starting with our first quarter performance and prior to the COVID-19 impact, we observed continued momentum for the launch of Jeuveau. In a quarter that historically has declined by double-digit percentages, Jeuveau unit sales grew in the single — low single digits through mid-March, signaling continued high demand for our product.

Our account base grew by greater than 15% in the quarter to over 4,100 accounts purchasing since launch, while reorder rates also continued to rise to 62%. By mid-March, as the crisis unfolded, most practices stopped seeing patients, and our revenue declined accordingly. As a result, we elected to drive higher redemptions of our consumer coupons by allowing practices to redeem the coupons to book future Jeuveau treatments.

We also extended the expiration date of the unredeemed $100 coupons from the end of the first quarter to the end of the second. While these changes resulted in higher gross to net adjustments to our revenue, this investment was designed to give our accounts the flexibility to use these coupons for consumers at a later date when their practice is reopened.

Lastly, in April, we announced a preemptive plan to conserve cash and significantly reduce our operating expenses, which Lauren will address momentarily.

Based on our learnings from launch and considering the post-COVID environment, we have designed a more efficient business model with a heightened reliance on technology that we believe will continue to drive share penetration.

Now let me pass the call over to Lauren, who will provide more color around our first quarter financials and our financial outlook. Lauren?

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Lauren P. Silvernail, Evolus, Inc. – CFO & Executive VP of Corporate Development [4]

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Thank you, David, and good afternoon, everyone. Our business climate changed dramatically in the middle of March as the majority of our customers closed their businesses due to COVID-19. Because of this, sales of Jeuveau were greatly reduced in the final weeks of March. We made the decision at that point to invest further in our coupon program to support our customers. As a result, net revenue for the first quarter was $10.5 million and was reduced primarily by a provision for coupons of $10.2 million.

In April and May, we are continuing to experience low sales volume and expect nominal net revenues in the second quarter 2020 followed by sequentially improving revenues — U.S. revenues for the balance of 2020. We do not expect sales from Europe in 2020.

Moving down the P&L, the first quarter gross margin was approximately 60% and was impacted by the high level of coupon activity in the quarter. Going forward, our gross margin will depend on our sales levels, promotional activities and other factors.

Non-GAAP operating expenses for Q1 2020 were $29.2 million and were in line with the prior 3 quarters. Non-GAAP operating expenses for the first quarter excluded these noncash items: $2.6 million for stock-based compensation, $1.7 million for depreciation and amortization and a $9.9 million benefit related to the revaluation of the contingent royalty obligation. At March 31, 2020, we were in a strong financial position with approximately $100 million in cash, cash equivalents and short-term investments.

Our existing cash is expected to fund our operations for at least the next 12 months. To tie out your financial models, please note our cash burn for the first quarter included $6.7 million of cash payments to our manufacturing partner for Jeuveau inventory.

In the first quarter, we accelerated our planned purchases of inventory and continued to maintain an adequate supply of Jeuveau.

Earlier this month, as David mentioned, we announced a preemptive plan to reset our expense base and significantly reduce our operating expenses to conserve cash to deploy when practices reopen. We reduced our employee base by approximately 100 or by more than 40%

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235 employees as of the end of last year. As a result, we expect to incur severance costs of approximately $2.9 million, mostly in the second quarter of 2020. We temporarily cut executive salaries and Board of Directors’ fees by 20%.

Over the past 4 quarters, our quarterly non-GAAP operating expenses have varied between $28 million and $33 million. In April, the company reduced its cost structure from previous levels. We now anticipate non-GAAP operating expenses for the second quarter of 2020 will be less than $25 million, including severance expense of approximately $2.9 million. We anticipate our non-GAAP operating expenses for the second half of 2020 will be less than $42 million.

In closing, we believe our decisive actions to rewire Evolus over the past weeks will allow us to operate more effectively at a reduced cost base. Going forward, we believe our more efficient business model will extend our cash runway and drive greater shareholder value.

I would like to thank the Evolus team and our customers for their tireless dedication to our success during these trying times. It is a sincere pleasure to work with each and every one of you.

And now I’ll turn the call back to David.

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David Moatazedi, Evolus, Inc. – President, CEO & Director [5]

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Thank you, Lauren. I’d like to close by sharing my views on the rebound of the market after speaking with customers and other industry leaders during the past several months. Given the fluid and unprecedented nature of this crisis, I’m certain our views will continue to evolve, and we will continue to update you on future calls. For now, we are taking a conservative, yet optimistic view of the market rebound, and here’s why.

We expect the second quarter of 2020 to reflect the bottom in terms of procedural volumes. As practices reopen, we expect an initial influx based on pent-up consumer demand. Following that, we expect the market recovery to be gradual and require time to return to pre-COVID levels. Despite these factors, we remain optimistic about our future for several reasons.

First, we know the toxin market is the most resilient category in aesthetics because the procedure is part of the consumers’ routine. In addition, the price point for a neurotoxin procedure in the U.S. is approximately $300 to $500, which is a great value for the outcome. In fact, a poll recently taken by the American Society for Dermatologic Surgery showed neurotoxin procedures are well-positioned post-COVID. 92% of physicians surveyed believe patients would prioritize aesthetic neurotoxin treatments first.

We’ve also conducted a series of webinars and advisory boards with key customers to better understand how their practices will evolve with companies as they reopen. What we’ve heard consistently is that doctors expect sales visits will be significantly reduced, and a majority of customers will increase their reliance on digital interaction.

From the beginning, our technology platform has differentiated Evolus in how we interact with and support our customers. We expect the role of the sales rep will change for some period of time. In addition, the size of the company’s sales force may not have the same competitive advantage it once did. In this environment, we believe the increased reliance on technology gives us an advantage. We can successfully conduct business with accounts virtually through our Evolus Practice app. Placing an order, tracking a shipment, chatting with our customer experience team or medical affairs representative and checking your loyalty status attainment, can all be done with a simple click or swipe.

As the markets begin to reopen and practices prepare for a new normal, we are launching several initiatives that will provide a stimulus for both the injectors and their patients. First, in an environment where practices’ top line will be impacted during the recovery, we are launching a post-COVID promotion program, named Evolus 350 Degrees, which offers flat and transparent pricing to all customers regardless of the size of the account.

As of May 15 and through the end of 2020, all customers can purchase Jeuveau for $350 per vial through our Evolus Practice app. As you know, competitor pricing is tied to volume. We will break through the noise with a flat price regardless of the size of the account. We are also launching the much anticipated Evolus Rewards program, which is a modern consumer loyalty program that provides instant savings and improves the affordability for patients. These 2 programs deliver clear value for accounts when practice profitability and patient affordability matters most. Both of these programs will be powered through our digital platform and supported by our seasoned sales organization.

Lastly, I would like to provide an update on the International Trade Commission, or ITC case. In June, we expect the administrative law judge to reach an initial determination, followed by the full commission’s final determination in October. We look forward to resolving this case this year and remain confident in the strength of our IP. We can’t speak further to this matter on today’s call, but recognize it is something important to all of our employees and to our shareholders.

In closing, we are now in a stronger position financially, having reset our operating expense base to effectively compete in this market for the long term. I would like to thank each customer who has supported the launch of Evolus, and we stand with them during these unprecedented times. I would also like to thank each and every employee for their strong contributions and dedication.

With that, I’ll turn over the call for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Marc Goodman.

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Roanna Clarissa H. Ruiz, SVB Leerink LLC, Research Division – Associate [2]

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This is Roanna on the line for Marc. A quick question about your coupons in the first quarter. I was curious how are customers and consumers reacting to the initiatives you put in place? And could you give us a little color about the sort of cadence of like more coupon use or less coupon use you saw and what you might expect for second quarter?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [3]

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Sure. Roanna, thanks for the question. So we saw very strong utilization of the coupons prior to COVID, consistent, though, with what we had seen in prior quarters. And once COVID hit in mid-March, we started to see practices calling patients and trying to get them in for treatment before their practice is shutdown. At the same time, though, as practices were shutting down, many accounts who had purchased product and received additional coupons wanted to continue to offer those benefits to their patients once their practice is reopened. And so we enabled those practices to be able to use those coupons and put those into the patient’s chart for their — when they do reopen, they can come back into those accounts. And it was around that time that we also made the decision to extend the coupons into the second quarter because of the high interest level in using them for patients. So overall, I would say that the coupon program was a great success. The first quarter leading up to COVID was very strong. And we believe that once these practices reopen, our continued penetration of Jeuveau into the toxin market will continue to persist.

Now your second part of your question was related to the second quarter. We are — as I pointed out before, we’re launching the consumer loyalty program here in mid-May. We expect the second quarter to be a quarter where practices just begin to reopen, and for us, to establish a loyalty program. And we anticipate slower demand once practices get through that initial pent-up interest, and then it will grow from there.

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Operator [4]

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Your next question comes from the line of Annabel Samimy with Stifel.

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Annabel Eva Samimy, Stifel, Nicolaus & Company, Incorporated, Research Division – MD [5]

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Just in terms of the practices reopening, can you tell us about how they plan on reopening, if they have protocols in place? And how they may deal with this pent-up demand? Are they going to be expanding their office hours? Are they limiting their office hours? And how do you think they’re going to be able to manage through this pent-up demand?

And then secondly, you had talked about a direct-to-millennial strategy in terms of like a consumer outreach. Is that part of your couponing program that you’ve started or that consumer loyalty program that you’ve started? Or was it something separate? And — or are you putting that on hold because your concern millennials may not be that population that’s there first? So I just wanted to understand this millennial strategy that you have now that we’re dealing with possibly a more economically vulnerable group?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [6]

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Sure. Thanks for the questions, Annabel. As it relates to practices and how they’re preparing for them, I’ve been on a number of calls with the major societies in aesthetics. Several of them have issued guidance for their members on practice protocols that they should follow when they do reopen their practices. And then, of course, many of the doctors that I’ve spoken with were a step ahead of the curve as they typically are and had already started to implement those measures even before the societies had provided their guidance. And overall, yes, you can expect that the interval between treatments will likely increase. And as a result of that, many practices are planning to offer extended hours to support that pent-up demand during this time where the practices have been shutdown.

At the same time, I do expect that these practices are going to think about the economics a bit differently than they did in the past. It was — historically, practice success will be measured by their procedural value per hour, and of course, now that the time interval between patient treatments is being extended, that means the amount of revenue they can generate in a given amount of time will obviously be reduced by that. Some of that can be offset by increasing hours. Others, they’re looking to offset by reducing some of their costs within the practice. And of course, every practice is managing through that differently. As you know, the pandemic has had varying effects depending on what part of the country you’re in. And we’re watching that very closely as we’re seeing some of the larger states like Texas come back online. And it’s great to see the pent-up demand of interest. And it’s now a question of once they get past that pent-up demand, what the new normal looks like, and we look forward to following that over a bit of the time here.

As it relates to your second question around the direct-to-millennial question. Yes, so as you learned in the last quarter, we launched Evolux in the first quarter of this year. That was the first toxin co-branded program, and there was — it was very well received. Many practices increased their levels to our top 3 tiers in order to benefit from our investment in co-branding. That investment was scheduled to begin in the second quarter. We did put a pause on it until the practices reopen. And now as practices are starting to come back online, we’re giving them the opportunity to tell us when to start investing. And some of that investment will begin here in the month of May for accounts and others that are reopening later in the quarter will turn on the investment at that time. So that’s the first element of our direct-to-millennial strategy, and that is continuing. And of course, we’ll report out on the metrics as it relates to our consumer effort and the advertising in combination with the customer.

The second element of our value proposition is the consumer loyalty program. And the consumer loyalty program is really the last dimension of our value proposition that we were looking forward to launch into the market. And we chose to launch it in May because now is the time to bring affordability to the market. And so this loyalty program, what it does is it gives practices the ability to give patients an immediate savings at the time of treatment, but it also gives the patient the ability to plan what their costs will be as they come back over time.

Coupon programs have been very successful for us in the introduction of Jeuveau into the market. But many practices who have used the consumer loyalty programs for the competitors tell us that their patients want that consistency of knowing what their savings will be each time they come back. And that is exactly what our consumer loyalty program will offer them is greater savings over time in order to make this treatment more affordable.

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Operator [7]

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Your next question comes from the line of Louise Chen with Cantor.

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Louise Alesandra Chen, Cantor Fitzgerald & Co., Research Division – Senior Research Analyst & MD [8]

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So my first question I have for you is, have you seen patients and physicians return to cosmetic procedures yet as social restrictions ease? Or are you anticipating that to happen? And when you talk about this sort of pent-up demand, is that coming in the third quarter versus the second quarter?

And then another question I had for you is, where do you think inventory levels are with Jeuveau when everything sort of paused for this COVID-19 pandemic?

And the last question I have for you is, historically, I know you addressed this earlier, but how have procedure volumes changed in times of recession?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [9]

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Sure. Let me start with the last question. Of course, the last recession we can point to in 2008, the neurotoxin market was the most resilient in aesthetics. It had a period where it was roughly flat. And then from there, it continued on its growth trajectory. And we expect that of all procedures within the aesthetic practice in this potential post-COVID environment that it will be the same. The toxins will be the first to come back and will be the most resilient for the reasons I outlined earlier.

Now as a result of likely slower procedural volume, what you tend to see in this type of environment is practices will hold less inventory than they would in the prior to COVID environment. And not — these practices generally do not carry a significant amount of inventory, it was generally weeks, but you might see practices even pull back further as cash flow is impacted as a result of lower procedural volume, and they’re more likely to order on an on-demand basis during these types of environments. That’s what I observed having managed through the prior recessionary period, and we’re expecting that, which is why in the Evolus 350, we wanted to make sure that all practices benefited from the better pricing regardless of the volume that they purchase because we know that these are challenging times. Regardless of the volume of the account, they’re all facing the same challenges. It’s challenging to make payroll. It’s challenging when your top line is impacted by procedural volume declines. And of course, what you try to do is deliver a great outcome and also try to improve your operating margins. And so as a result of that, we think we’re well positioned.

Given we’re an aesthetic-only company, we have the ability to address the financial gap that gets created in the #1 procedure in the market. And so that is why we launched the Evolus 350 program. And we are starting to see practices. I pointed out, Texas is an example of a major market that’s now back online. They are treating patients. They are taking the proper precautions. Most of these practices have sent out a letter to their patients or on social media, have been very clear about the measures they’re taking to ensure patient safety is paramount, and they’re starting to see patients come back into the office. It’s too early to say how large that pent-up demand is. Because I can tell you, I’ve had a mixed range of feedback, and it’s only a small sample size. I think we’ll have to watch that. But overall, I think it’s very positive that we’re transitioning to a place where practices are settling into what the new normal is, and we’ll be watching that closely and report out as we learn more.

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Operator [10]

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Okay. Your next question comes from the line of Greg Gilbert with SunTrust.

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Gregory B. Gilbert, SunTrust Robinson Humphrey, Inc., Research Division – Analyst [11]

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The $10 million that you called out for coupon, what would a normal level have been? I’m assuming we can’t simply add the $10.2 million to the $10.5 million to come up with what revenue would have been because you would always be couponing to some degree. So can you help me understand that as well as where operating expenses can go on a quarterly basis in the near term? And then I have a follow-up.

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Lauren P. Silvernail, Evolus, Inc. – CFO & Executive VP of Corporate Development [12]

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David, do you want me to take that?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [13]

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Please.

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Lauren P. Silvernail, Evolus, Inc. – CFO & Executive VP of Corporate Development [14]

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Greg, with regard to normal levels of couponing, I would say this quarter was probably on the order of almost double what our normal level of couponing has been through last year. And so that gives you an idea of where we might have been.

With regard to expenses, if you look at the guidance we provided and we just did it on the release a little while ago, we said that we would have non-GAAP operating expenses of around $25 million or less in the second quarter of this year and that includes $2.9 million of severance. So if you take that off, we’re running around $22 million. And the second half of this year will be less than $42 million over the 2 quarters. So that puts us in a $21 million or $22 million average over the rest of the year.

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Gregory B. Gilbert, SunTrust Robinson Humphrey, Inc., Research Division – Analyst [15]

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And David, I wanted to ask you about the flat pricing model. How permanent you would expect that to be? And maybe you can frame for us what that equates to relative to the 20% to 25% average discount you previously spoke to relative to the market leader?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [16]

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Sure. Yes. So the flat pricing of 350 is a promotional program that we’re going to run through the end of this year. At that time, we’ll revert back to our tiered pricing program as we had proposed it prior. And we think, first off, the global pandemic that impacted this aesthetic market has really changed the playing field in the category overall. And the way I think about it is throw the playbook of historicals out the window, and we really took a fresh lens at how can we support this market in a way that enables them to weather through this period. And our biggest advantage of being aesthetic-only is our ability to help the practices achieve greater profitability. And we know that having spoken to practices, that interval between treatments that they have to exercise in order to maintain the distancing measures results in less profit per hour for these practices. And clearly, they’re looking at products, they’re looking at different ways that they can recoup the lost revenue in their practices. And we believe Evolus 350 cuts through all of that and delivers meaningful value at a time when it matters to them most. And so you can expect that this will continue through the end of the year, but it is a promotional program.

And as it relates to pricing relative to competitors, it’s hard to say in the middle of everything that’s going on here, Greg, because we see quite a bit of different promotional activities from the competitive set. And we know that there are other measures being taken. So I’d hate to venture a guess at this point in terms of what it would be from a relative standpoint, probably too early to say.

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Operator [17]

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Your next question comes from Vamil Divan with Mizuho Securities.

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Vamil Kishore Divan, Mizuho Securities USA LLC, Research Division – MD [18]

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I guess two. One, I guess, David, really when do you think the volumes will get back to where they were at the first part of this first quarter? I know it’s obviously a lot of uncertainty, but are you thinking by next year first quarter will be sort of back to where we were? Do you think it’s maybe midyear next year or further out than that? Just trying to get a sense of how you’re thinking about the recovery. And I know before, you had made those comments around having the #2 share position in terms of volume by this next May, 2 years after launch. I’m just wondering if you think that’s still your goal at this point?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [19]

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Sure. Yes. Look, predicting future procedural volumes would be based on a number of assumptions around what consumer confidence index may look like as well as unemployment rates. As you know, a large number of toxin users are individuals that make less than $100,000 annually in their household per year. So I don’t want to venture on the recovery curve because that would require a broader view on the overall market. Except to say that we do expect it to recover. How soon you get to pre-COVID levels? Look, whether it’s 6 months, as you asked into first quarter next year or whether it takes a bit longer than that, in the end, on the macro view, this is a market that has a lot of growth potential in the long term. Low consumer penetration, a price point that’s very reasonable and a market that’s shown it’s very resilient. Not only is it the flagship procedure for any aesthetic practice,but it’s also the most affordable one to the patient. And so long-term, we think that the trends are intact regardless of whether that window, to your question, is a 6-month window or slightly elongated from that time point.

What was the second question that you asked?

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Vamil Kishore Divan, Mizuho Securities USA LLC, Research Division – MD [20]

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Just your prior commentary on the #2 share 2 years post launch. Is that still sort of reasonable in this environment?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [21]

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Sure. Yes. Look, clearly, COVID was a pause in terms of the launch trajectory itself. So we do believe we have a product that has the potential to get to the #2 market share position, and we remain committed to driving the value of this product there. That being said, of course, some of the time lines have evolved a bit, and we’ll watch as these markets come back online and give you further updates.

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Operator [22]

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Your next question comes from Douglas Tsao with H.C. Wainwright.

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Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst [23]

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Just from a couponing standpoint, is there a point when practices that maybe booked some of these revenues or booked some of these appointments as a means of sort of preserving their cash flow in the near term, is there a time when those have to be utilized? And when you would ultimately see the revenue flow through, is there sort of like an expiration when this needs to happen?

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David Moatazedi, Evolus, Inc. – President, CEO & Director [24]

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Well, the coupons are given to the patient, and so they have an expiration date. Originally, they had an expiration date at the end of March. And so we would have seen all coupons redeemed by that point, and any coupons not redeemed at the end of March, at that point would have been canceled, and they would not have been eligible for use beyond that time period. That decision to extend those coupons into the second quarter now enables these practices to use the coupons through the end of June, which means that they can continue now to use those coupons as they reopen their practices, and those patients can benefit from the $100. Does that answer your question, Doug? Or was there something more you’re asking?

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Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division – MD & Senior Healthcare Analyst [25]

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Yes. No, no. That makes sense, I mean, and how do you think about — now that you have the Evolus 350 program, the sort of promotional levers that you can pull through the next few months as you see versus the coupons.

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David Moatazedi, Evolus, Inc. – President, CEO & Director [26]

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Right. So what I like about our program is it’s simple. The Evolus 350 is one message for every customer as it relates to their pricing, and it has other promotional benefits that come with it. Our consumer loyalty program is one program that’s designed to make the treatment more affordable for patients. And then, of course, there’s practices who still continue to have the coupons. And from my conversations with those practices, they’ve already earmarked those coupons for the patients as they come back. Many of them during this down period where their practices were closed, they were advertising those $100 coupons to get those patients back into their practice when they did reopen. So I do believe those coupons largely are committed, and they will be used very quickly as these practices reopen. But what will persist through the rest of the year is Evolus 350 as well as the loyalty program.

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Operator [27]

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I am showing there are no further questions at this time. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.

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