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REVANCE THERAPEUTICS, INC.

(RVNC)
  Report
Delayed Nasdaq  -  04:00 2022-11-28 pm EST
22.50 USD   -2.22%
11/22Revance to Participate in the 34th Annual Piper Sandler Healthcare Conference
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REVANCE THERAPEUTICS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/09/2022 | 05:16pm EST
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and the accompanying notes appearing elsewhere in this
Report and in conjunction with our other SEC filings, including our Annual
Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on
February 28, 2022.

This Report including the documents incorporated by reference herein, contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements other than statements of historical facts
contained in this Report and the documents incorporated by reference herein,
including statements regarding our future financial condition, regulatory
approvals, business strategy and plans and objectives of management for future
operations, are forward-looking statements. The words "may," "will," "could,"
"would," "should," "expect," "intend," "plan," "anticipate," "believe,"
"estimate," "predict," "project," "potential," "continue," "ongoing" and similar
expressions that convey uncertainty of future events or outcomes are intended to
identify forward-looking statements. In addition, any statements that refer to
our financial outlook or projected performance, anticipated growth, milestone
expectations, expected cash runway and cash preservation plans; our ability to
mitigate the substantial doubt to continue as a going concern; our future
responses to and the effects of the COVID-19 pandemic; the requirements, timing
and regulatory approval process for the biologics license application (the
"BLA") for DaxibotulinumtoxinA for Injection for the treatment of moderate to
severe glabellar (frown) lines, our PDUFA (as defined below) date, the U.S. Food
and Drug Administration (the "FDA") inspections of our manufacturing facility,
our ability to adequately address the FDA's observations from the inspections,
any actions taken in response to the inspections and the FDA's review of the
resubmission and the approval of the BLA; our ability to obtain, and the timing
relating to, regulatory submissions and approvals with respect to our drug
product candidates, including with respect to the RHA® Pipeline Products (as
defined below); our expectations regarding the HintMD fintech platform (the
"HintMD Platform") and OPULTM Relational Commerce Platform ("OPULTM" and
together with the HintMD Platform, the "Fintech Platform"), including their
features, functionality, gross processing volume ("GPV") and profitability; the
process and timing of, and ability to complete, the current and anticipated
future pre-clinical and clinical development of our product candidates including
the outcome of such clinical studies and trials; development of a biosimilar to
the branded biologic product (onabotulinumtoxinA) marketed as BOTOX® (an
"onabotulinumtoxinA biosimilar"), which would compete in the existing
short-acting neuromodulator marketplace; the process and our ability to
effectively and reliably manufacture supplies of DaxibotulinumtoxinA for
Injection; our ability to successfully compete in the dermal filler,
neuromodulator and fintech services markets; the design of our clinical studies;
the markets for our current and future products and services; our business
strategy, plans and prospects, including our commercialization plans and ability
to commercialize the RHA® Collection of dermal fillers (as defined below) and
DaxibotulinumtoxinA for Injection, if approved; the potential benefits of the
RHA® Collection of dermal fillers, our drug product candidates and the Fintech
Platform; the extent to which our products and services are considered unique
and premium; the rate and degree of economic benefit of the RHA® Collection of
dermal fillers, OPUL™ and our drug product candidates, if approved; patent
defensive measures; our ability to defend ourselves in ongoing litigation; and
strategic collaborations are forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events and financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial needs. These
forward-looking statements are subject to a number of known and unknown risks,
uncertainties and assumptions, including risks described in   Item 1A. "Risk
Factors"   and elsewhere in this Report.

You should not rely upon forward-looking statements as predictions of future
events. These forward-looking statements represent our estimates and assumptions
only as of the date of this Report. Except as required by law, we undertake no
obligation to update publicly any forward-looking statements for any reason to
conform these statements to actual results or to changes in our expectations.
You should read this Report, together with the information incorporated herein
by reference, with the understanding that our actual future results, levels of
activity, performance and achievements

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may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Summary of Risk Factors


Investing in our common stock involves risks. See Item 1A. "  Risk Factors  " in
this Report for a discussion of the following principal risks and other risks
that make an investment in Revance speculative or risky.

•Our success as a company, including our ability to finance our business and
generate revenue, and our future growth is substantially dependent on the
clinical and commercial success of DaxibotulinumtoxinA for Injection, and the
commercial success of the RHA® Collection of dermal fillers. Our longer-term
prospects will also depend on the successful development, regulatory approval
and commercialization of an onabotulinumtoxinA biosimilar product candidate and
any future product candidates. If we experience additional delays, as a result
of the Complete Response Letter ("CRL") from the FDA for the BLA for
DaxibotulinumtoxinA for Injection or otherwise, or are unable to successfully
complete the development or regulatory approval process or commercialize our
product candidates, we may not be able to generate sufficient revenue to
continue our business.

•We may be unable to address the outstanding observations of the FDA and
remediate the deficiencies related to the manufacturing inspections or obtain
regulatory approval for DaxibotulinumtoxinA for Injection for the treatment of
glabellar lines, on a timely basis or at all.

•Management has concluded there is substantial doubt about our ability to
continue as a going concern, and we will require substantial additional capital
to continue to operate our business and achieve our goals. We have incurred
significant losses since our inception and we anticipate that these losses will
continue for the foreseeable future. Our prior losses, combined with expected
future losses, may adversely affect the market price of our common stock and our
ability to raise capital and continue operations.

•The terms of the Note Purchase Agreement (as defined below) place restrictions
on our operating and financial flexibility, and if we fail to comply with these
restrictions, our business, business prospects, results of operations and
financial condition may be adversely affected.

•The COVID-19 pandemic has and may continue to adversely affect our product
approval timeline, financial condition and our business as well as those of
third parties on which we rely for significant manufacturing, clinical or other
business operations. Further, the COVID-19 pandemic has adversely affected the
economy and disposable income levels, which could reduce consumer spending and
lower demand for our products.

•If we are not able to effectively and reliably manufacture DaxibotulinumtoxinA
for Injection, an onabotulinumtoxinA biosimilar or any future product
candidates, including through any third-party manufacturers, as well as acquire
supplies of the RHA® Collection of dermal fillers from Teoxane SA ("Teoxane"),
our product development, regulatory approval, commercialization and sales
efforts and our ability to generate revenue may be adversely affected.

•DaxibotulinumtoxinA for Injection, an onabotulinumtoxinA biosimilar, the RHA®
Pipeline Products or any future product candidates, if approved, may not achieve
market acceptance among physicians and patients, and may not be commercially
successful, which would adversely affect our operating results and financial
condition.

•Our product candidates and the RHA® Collection of dermal fillers will face
significant competition, including from companies that enjoy significant
competitive advantages, such as substantially greater financial, research and
development, manufacturing, personnel and marketing resources, greater brand
recognition and more experience and expertise in obtaining marketing approvals
from the FDA and other regulatory authorities. Our failure to effectively
compete may prevent us from achieving significant market penetration and
expansion.

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•Reports of adverse events or safety concerns involving the RHA® Collection of
dermal fillers or other Teoxane approved product candidates could delay or
prevent Teoxane from maintaining regulatory approval or obtaining additional
regulatory approval for the RHA® Pipeline Products. The denial, delay or
withdrawal of any such approval would negatively impact commercialization and
could have a material adverse effect on our ability to generate revenue,
business prospects, and results of operations.

•If we do not effectively manage our expanded operations in connection with the
acquisition of Hint, Inc. ("HintMD"), or if we are not able to achieve market
acceptance of the Fintech Platform, then we may not achieve the anticipated
benefits or recoup the substantial expense incurred in connection with the
acquisition.

•Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results or actual patient outcomes.


•If our efforts to protect our intellectual property related to
DaxibotulinumtoxinA for Injection, the RHA® Pipeline Products, any future
product candidates, or the Fintech Platform are not adequate, we may not be able
to compete effectively. Additionally, we are currently and in the future may
become involved in lawsuits or administrative proceedings to defend against
claims that we infringe the intellectual property of others and to protect or
enforce our patents or other intellectual property or the patents of our
licensors, which could be expensive and time-consuming and would have a material
adverse effect on our ability to generate revenue if we are unsuccessful.

•We use third-party collaborators, including Viatris Inc. ("Viatris"), Shanghai
Fosun Pharmaceutical Industrial Development Co., Ltd., a wholly-owned subsidiary
of Shanghai Fosun Pharmaceutical (Group) Co., Ltd ("Fosun"), Ajinomoto Althea,
Inc. dba Ajinomoto Bio-Pharma Services ("ABPS") and Lyophilization Services of
New England, Inc. ("LSNE"), to help us develop, validate, manufacture and/or
commercialize product candidates. Our ability to commercialize our product
candidates could be impaired or delayed if these collaborations are
unsuccessful.

•We are currently, and in the future may be, subject to securities class action
or stockholder derivative actions. If securities, product liability or other
lawsuits are brought against us and we cannot successfully defend ourselves, we
may incur substantial liabilities or be required to limit commercialization of
our products. Even a successful defense would require significant financial and
management resources.

•Significant disruptions of information technology systems or security incidents
could materially adversely affect our business, our reputation, our customer
relationships, results of operations and financial condition.

•Changes in and failures to comply with U.S. and foreign privacy and data protection laws, regulations and standards may adversely affect our business, operations and financial performance.


•Servicing our debt, including the Note Purchase Agreement (as defined below)
and the 2027 Notes (as defined below), requires a significant amount of cash to
pay our substantial debt. If we are unable to generate such cash flow, we may be
required to adopt one or more alternatives, such as selling assets,
restructuring debt or obtaining additional equity capital on terms that may be
onerous or highly dilutive.

•If we fail to attract and retain qualified management, clinical, scientific, technical and sales personnel, we may be unable to successfully execute our objectives.



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Overview


Revance is a commercial stage biotechnology company focused on innovative
aesthetic and therapeutic offerings, including its next-generation, long-acting,
neuromodulator product, DaxibotulinumtoxinA for Injection. DaxibotulinumtoxinA
for Injection combines a proprietary stabilizing peptide excipient with a highly
purified botulinum toxin that does not contain human or animal-based components.
We have successfully completed Phase 3 programs for DaxibotulinumtoxinA for
Injection across two different treatment categories, aesthetics and
therapeutics. In the aesthetics category, we completed our Phase 3 program for
the treatment of moderate to severe glabellar (frown) lines and are pursuing
U.S. regulatory approval. In the therapeutics category, we completed our Phase 3
program for the treatment of cervical dystonia in November 2021 and plan to
pursue U.S. regulatory approval following the FDA approval of
DaxibotulinumtoxinA for Injection for glabellar lines. We are also evaluating
additional aesthetic and therapeutic indications for DaxibotulinumtoxinA for
Injection including the full upper face, which includes glabellar lines,
forehead lines and crow's feet, and adult upper limb spasticity. To complement
DaxibotulinumtoxinA for Injection, we own a unique portfolio of premium products
and services for U.S. aesthetics practices, including the exclusive U.S.
distribution rights to the RHA® Collection of dermal fillers, the first and only
range of FDA approved fillers for correction of dynamic facial wrinkles and
folds, and OPUL™. We have also partnered with Viatris to develop an
onabotulinumtoxinA biosimilar, which would compete in the existing short-acting
neuromodulator marketplace.

Impact of the COVID-19 Pandemic on Our Operations


The full extent of the impact of the COVID-19 pandemic on our future operational
and financial performance will depend on future developments that are highly
uncertain, including variant strains of the virus and the degree of their
vaccine resistance and as a result of new information that may emerge concerning
COVID-19, the actions taken to contain or treat it, and the duration and
intensity of the related effects. The ongoing COVID-19 pandemic has and may
continue to negatively affect global economic activity, the regulatory approval
process for our product candidates, our supply chain, research and development
activities, end user demand for our products and services and commercialization
activities. The COVID-19 pandemic has caused delays in the regulatory approval
process for DaxibotulinumtoxinA for Injection. In November 2020, the FDA
deferred a decision on the BLA for DaxibotulinumtoxinA for Injection for the
treatment of glabellar lines. The FDA reiterated that an inspection of our
manufacturing facility was required as part of the BLA approval process, but the
FDA was unable to conduct the required inspection due to the FDA's travel
restrictions associated with the COVID-19 pandemic. Although the inspection was
completed, in October 2021, we received a CRL due to deficiencies related to the
FDA's onsite inspection at our manufacturing facility. We resubmitted the BLA in
March 2022, and in April 2022, the FDA accepted the resubmission of the BLA and
designated the BLA as a Class 2 resubmission with a Prescription Drug User Fee
Act ("PDUFA") date of September 8, 2022, with a reinspection required. In July
2022, the FDA completed the reinspection of our manufacturing facility and
issued a Form 483. We have responded to the Form 483. We cannot be certain of
the continued impact of the COVID-19 pandemic on the regulatory approval process
for the BLA for DaxibotulinumtoxinA for Injection for the treatment of glabellar
lines, including whether the PDUFA date will be met or the future impact of the
COVID-19 pandemic on the timing of the regulatory approval process for
DaxibotulinumtoxinA for Injection in indications outside of glabellar lines or
on any supplemental BLAs we may file.

Our supply of and our ability to commercialize the RHA® Collection of dermal
fillers has been impacted by the ongoing COVID-19 pandemic. The product supply
of the Current RHA® Collection of dermal fillers was delayed by our distribution
partner Teoxane as they temporarily suspended production in Geneva, Switzerland
as a precaution in early 2020 in response to the COVID-19 pandemic. Teoxane
resumed manufacturing operations at the end of April 2020 and delivered the
first shipment of the Current RHA® Collection of dermal fillers to us in June
2020. As a result, our initial product launch of the Current RHA® Collection of
dermal fillers was delayed by one quarter to September 2020. We have taken steps
to build sufficient levels of inventory to help mitigate potential future supply
chain disruptions, but we cannot be certain of whether we will experience
additional delays in the future. In addition, port closures and other
restrictions resulting from the COVID-19 pandemic have and may continue to
disrupt our supply chain or limit our ability to obtain sufficient materials for
the production of our products and the sale of our services.

The global computer chip shortage has impacted and may in the future impact our
third-party partners' ability to provide us with the point of sale ("POS")
hardware terminals that are provided to customers as a part of the OPUL™ service
offering. If our third-party partner cannot provide enough POS terminals to meet
OPULTM demand or we are unable to

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provide a substitute device, we may be unable to timely board new customers or
fulfill orders for additional hardware from existing customers. If the shortage
continues for an extended period of time, it could materially and adversely
affect the Fintech Platform's business.

Our clinical trials have been and may continue to be affected by the COVID-19
pandemic. The COVID-19 pandemic has and may further delay enrollment in and the
progress of clinical trials for our product candidates and the RHA® Pipeline
Products. Even as some restrictions have been lifted and vaccines are widely
available in the United States and certain other countries, the COVID-19
pandemic may continue to result in government imposed quarantines and consume
hospital resources, especially if infection rates rise or more contagious
variants develop and spread. Patients may not be able to comply with clinical
trial protocols if quarantines impede patient movement or interrupt healthcare
services. Site initiation and patient enrollment may be delayed due to
prioritization of hospital resources toward the COVID-19 pandemic. For example,
enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial was paused
in March 2020 due to challenges related to the COVID-19 pandemic. The trial was
originally designed to include 128 subjects. Due to COVID-19 challenges related
to continued subject enrollment and the scheduling of in-person study visits, in
June 2020, we announced the decision to end screening and complete the JUNIPER
trial with the 83 patients enrolled at that time.

The COVID-19 pandemic has caused and may continue to cause general business
disruption worldwide. In response to the COVID-19 pandemic, we curtailed
employee travel and implemented a corporate work-from-home policy in March 2020.
Throughout the COVID-19 pandemic, certain manufacturing, quality and
laboratory-based employees continued to work onsite, and certain employees with
customer-facing roles have been onsite for training and interfacing in-person
with customers in connection with the product launch of the RHA® Collection of
dermal fillers. We have resumed essential on-site corporate operations and have
begun to transition certain employees back on-site on a full or part-time basis
and in accordance with local and regional restrictions. Although many of our
employees have returned to working on-site, if the severity, duration or nature
of the COVID-19 pandemic changes, it may have an impact on our ability to
continue on-site operations, which could disrupt our manufacturing operations,
clinical trials, sales activities and other operations. See "Item 1A. Risk
Factors-The current COVID-19 pandemic has and may continue to, and other actual
or threatened epidemics, pandemics, outbreaks, or public health crises may,
adversely affect our financial condition and our business."

The ultimate impact of the COVID-19 pandemic is highly uncertain and we do not
yet know the full extent of potential delays or impacts on our BLA for
DaxibotulinumtoxinA for Injection for the treatment of glabellar lines, our
manufacturing operations, supply chain, end user demand for our products and
services, commercialization efforts, business operations, clinical trials and
other aspects of our business, the healthcare systems or the global economy as a
whole. As such, it is uncertain as to the full magnitude that the COVID-19
pandemic will have on our financial condition, liquidity and results of
operations.

Regulatory Update on DaxibotulinumtoxinA for Injection for the Treatment of Glabellar Lines


On March 8, 2022, we announced that we resubmitted the BLA to the FDA with
respect to DaxibotulinumtoxinA for Injection for the treatment of glabellar
lines in response to the CRL previously issued by the FDA. On April 21, 2022,
the FDA accepted the resubmission of the BLA and designated the BLA as a Class 2
resubmission with a PDUFA date of September 8, 2022, with a reinspection
required. On July 15, 2022, the FDA completed the reinspection of our
manufacturing facility. The FDA issued a Form 483 with the following three
observations. Observations 1 & 2 each relate to an individual development lot.

•Observation #1 - Deviations are not always initiated according to Standard
Operating Procedures ("SOP") _xx_xxxx. Specifically, DaxibotulinumtoxinA drug
substance (DS) development lot (Dxxxx) was aborted due to a leak in the
filtration system, which is the same equipment used for commercial production of
DaxibotulinumtoxinA. For this development lot, the SOP was not followed
regarding the initiation of a deviation.

•Observation # 2 - The SOP for operation and cleaning of filtration equipment
does not contain adequate information to ensure consistent process performance.
Specifically, the SOP requires the performance of either clean-in-place (CIP),
steam-in-place or storage in a basic solution within 7 days of CIP. Development
lot (Dxxxx) failed to follow the existing SOP.

•Observation # 3 - The redundant site for storage of the working cell bank was not added to the BLA.

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We also announced that the corrective and preventive actions completed in
response to the five observations from the Form 483 we received in July 2021
related to our preapproval inspection were reviewed by the FDA and considered
closed. We have responded to the July 2022 Form 483 related to our reinspection.

RHA® Collection of Dermal Fillers


We recognized $25.5 million in product revenue and $8.1 million in cost of
product revenue (exclusive of amortization) for the three months ended June 30,
2022, and $46.3 million in product revenue and $15.4 million in cost of product
revenue (exclusive of amortization) for the six months ended June 30, 2022 from
the sale of the RHA® Collection of dermal fillers.

The Fintech Platform


For the three months ended June 30, 2022, the Fintech Platform processed $166
million of gross processing volume ("GPV"). GPV for the trailing-twelve months
ended June 30, 2022 totaled over $600 million. GPV measures the total dollar
amount of all transactions processed in the period through the Fintech Platform,
net of refunds. We also use the Fintech Platform PayFac capabilities to process
credit card transactions for products purchased from us; these transactions are
not included in GPV. Since the Fintech Platform predominantly generates revenue
as a percentage of credit card processing volumes, we use GPV as a key indicator
of the ability of the Fintech Platform to generate revenue.

Presentation of revenue generated by the Fintech Platform may be impacted by the
ongoing migration of customers from the HintMD Platform to OPULTM. We have
started migrating existing customers on the HintMD Platform to OPUL™. While the
ongoing migration of existing customers is not expected to have a material
impact to the gross margin generated by the Fintech Platform, it is expected to
cause a gross-up effect to service revenue and cost of service revenue
(exclusive of amortization) due to the gross vs. net presentation difference in
revenue accounting between the HintMD Platform and OPUL™.

Note Purchase Agreement


On March 18, 2022, we entered into a note purchase agreement (the "Note Purchase
Agreement") with Athyrium Buffalo LP (together with its affiliates, "Athyrium"),
as administrative agent, the purchasers party thereto from time to time (the
"Purchasers"), including Athyrium, and HintMD, as a guarantor, pursuant to which
the Purchasers agreed to purchase from us, and we agreed to issue to such
Purchasers, notes payable by us. On March 18, 2022, we issued to the Purchasers
notes in an aggregate principal amount for all such notes of $100.0 million (the
"Notes Payable"). See "-  Liquidity and Capital Resources  " for additional
information.

At-The-Market ("ATM") Offerings


In November 2020, we entered into a sales agreement with Cowen and Company, LLC
("Cowen") as sales agent (the "2020 ATM Agreement"). For the three months ended
June 30, 2022, we sold 1,264,783 shares of common stock under the 2020 ATM
Agreement at a weighted average price of $18.41 per share resulting in net
proceeds of $22.7 million after sales agent commissions and offering costs. For
the six months ended June 30, 2022, we sold 1,734,853 shares of common stock at
a weighted average price of $18.71 per share resulting in net proceeds of $31.6
million after sales agent commissions and offering costs.

On May 10, 2022, we terminated the 2020 ATM Agreement and entered into a new
sales agreement (the "2022 ATM Agreement") with Cowen. Under the 2022 ATM
Agreement, we may sell up to $150.0 million of common stock. As both June 30,
2022 and the filing date of this Report, no shares of common stock had been sold
under the 2022 ATM Agreement.

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Preservation of Capital and Expense Management


Beginning in October 2021, we took measures to defer or reduce costs in the near
term in order to preserve capital and increase financial flexibility as a result
of the delay in the potential approval of DaxibotulinumtoxinA for Injection for
the treatment of glabellar lines. These measures include but are not limited to:
pausing non-critical hires; deferring the Phase 3 clinical program for upper
limb spasticity and other therapeutics pipeline activities; and deferring
international regulatory and commercial investment for DaxibotulinumtoxinA for
Injection, with the exception of supporting our partnership with Fosun.

The commercial launch delay and its impact on our capital resources has raised
substantial doubt with respect to our ability to meet our obligations to
continue as a going concern. Our existing cash, cash equivalents and short-term
investments will not allow us to fund our operations for at least 12 months
following the filing date of this Report. We are dependent on our ability to
execute our commercial strategy for the RHA® Collection of dermal fillers,
obtain the approval of DaxibotulinumtoxinA for Injection for the treatment of
glabellar lines and meet certain other conditions in order to draw on the Second
Tranche (defined below) and raise sufficient additional capital outside of the
Note Purchase Agreement to mitigate the substantial doubt to continue as a going
concern. If adequate funds are not available to us on a timely basis, or at all,
we will be required to take additional actions beyond the cost preservation
measures previously initiated to address our liquidity needs, including to
continue to further reduce operating expense and delay, reduce the scope of,
discontinue or alter our research and development activities for
DaxibotulinumtoxinA for Injection, the RHA® Pipeline Products and our
onabotulinumtoxinA biosimilar program; the development of OPUL™; our sales and
marketing capabilities or other activities that may be necessary to continue to
commercialize the RHA® Collection of dermal fillers, OPUL™ and our product
candidates, if approved, and other aspects of our business plan. See Part I,
Item 1, "Financial Information-Condensed Consolidated Financial Statements
(Unaudited)-Notes to consolidated financial statements-  Note 1  -The Company
and Summary of Significant Accounting Policies."

Results of Operations


We operate in two reportable segments: our Product Segment and our Service
Segment. Our Product Segment refers to the business that includes the research,
development and commercialization of our product candidates and the RHA®
Collection of dermal fillers. Our Service Segment refers to the business that
includes the development and commercialization of the Fintech Platform.

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Revenue

                                               Three Months Ended June 30,                                                    Six Months Ended June 30,
(in thousands, except
percentages)                  2022                2021             Change            % Change              2022              2021             Change             % change
Product revenue          $   25,483            $ 17,039          $ 8,444                    50  %       $ 46,320          $ 28,686          $ 17,634                    61  %
Collaboration revenue         1,659               1,394          $   265                    19  %          5,227             2,905          $  2,322                    80  %
Service revenue               1,226                 371          $   855                   230  %          2,082               512          $  1,570                   307  %
Total revenue            $   28,368            $ 18,804          $ 9,564                    51  %       $ 53,629          $ 32,103          $ 21,526                    67  %


Product Revenue

We have only generated product revenue from the sale of the RHA® Collection of dermal fillers.


For the three and six months ended June 30, 2022, our product revenue increased
compared to the same periods in 2021 due to higher sales volumes of the RHA®
Collection of dermal fillers.

Collaboration Revenue


We are actively developing an onabotulinumtoxinA biosimilar in collaboration
with Viatris. As described in Part I, Item 1. "Condensed Consolidated Financial
Statements (Unaudited)-Notes to Condensed Consolidated Financial Statements
(Unaudited) -  Note 2  -Revenue," we generally recognize collaboration revenue
for the onabotulinumtoxinA biosimilar program based on the cost of development
service incurred over the total estimated cost of development service multiplied
by the determined transactions price of the contract.

For the three and six months ended June 30, 2022, our collaboration revenue increased compared to the same periods in 2021 due to increased development activities of the onabotulinumtoxinA biosimilar program.

Service Revenue


Our service revenue is generated from the Fintech Platform, which earns revenues
through payment processing fees and certain value-added services. In our HintMD
Platform service offerings, we generally recognize service revenue net of costs
as an accounting agent. In our OPUL™ service offerings, we generally recognize
service revenue on a gross basis as the accounting principal because we maintain
control of the service offerings to our customers as the PayFac. Since the
fourth quarter of 2021, we have been onboarding new customers exclusively to
OPUL™, and since October 2021, migrating existing customers from the HintMD
Platform to OPUL™. While the ongoing migration of existing customers is not
expected to have a material impact to the gross margin generated by the Fintech
Platform in the near term, it is expected to cause a gross-up effect to service
revenue and cost of service revenue (exclusive of amortization) due to the gross
versus net presentation difference in revenue accounting between the HintMD
Platform and OPUL™.

For the three and six months ended June 30, 2022, our service revenue increased
compared to the same period in 2021 primarily due to increased GPV associated
with the commercial launch of OPUL™ since October 2021 and the presentation
difference in revenue accounting as described above.

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Operating Expenses

                                                    Three Months Ended June 30,                                                    Six Months Ended June 30,
(in thousands, except
percentages)                      2022               2021             Change             % Change               2022               2021             Change             % Change
Operating expenses:
Cost of product revenue
(exclusive of amortization)   $    8,121          $  5,409          $  2,712                    50  %       $  15,449          $   9,626          $  5,823                    60  %
Cost of service revenue
(exclusive of amortization)        1,402                17          $  1,385                 8,147  %           1,967                 17          $  1,950                11,471  %
Selling, general and
administrative                    47,847            50,598          $ (2,751)                   (5) %          92,922             99,603          $ (6,681)                   (7) %
Research and development          24,913            29,441          $ (4,528)                  (15) %          55,642             56,692          $ (1,050)                   (2) %
Amortization                       3,927             3,676          $    251                     7  %           7,712              6,514          $  1,198                    18  %

Total operating expenses $ 86,210 $ 89,141 $ (2,931)

                   (3) %       $ 173,692          $ 172,452          $  1,240                     1  %


Our operating expenses consist of costs of product revenue (exclusive of
amortization), cost of service revenue (exclusive of amortization), selling,
general and administrative expenses, research and development expenses, and
amortization. The largest component of our operating expenses is our personnel
costs, including stock-based compensation, which is a subset of our selling,
general and administrative and research and development expenses.

Cost of Product Revenue (exclusive of amortization)


Cost of product revenue (exclusive of amortization) primarily consists of the
cost of inventory and distribution expenses related to the RHA® Collection of
dermal fillers.

For the three and six months ended June 30, 2022, our cost of product revenue
(exclusive of amortization) increased compared to the same periods in 2021 due
to higher sales volumes of the RHA® Collection of dermal fillers.

Cost of Service Revenue (exclusive of amortization)

Cost of service revenue (exclusive of amortization) primarily consists of interchanges fees, hardware costs, and various fees in the fulfillment of our financial services.


For the three and six months ended June 30, 2022, cost of service revenue
(exclusive of amortization) increased compared to the same periods in 2021 due
to the increase of OPUL™ processing volume as well as the change to the gross
accounting presentation of revenue and costs associated with OPUL™ as described
in the Service Revenue section above.

We expect the cost of service revenue (exclusive of amortization) to increase in
the future as we expand the general availability of OPUL™ for existing and new
customers and due to the change to the gross accounting presentation of revenue
and costs associated with OPUL™ as described in the Service Revenue section
above.

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Selling, General and Administrative Expenses

                                                     Three Months Ended June 30,                                                   Six Months Ended June 30,
(in thousands, except
percentages)                       2022               2021             Change             % Change              2022              2021             Change             % Change
Selling, general and
administrative                 $   40,301          $ 42,391          $ (2,090)                   (5) %       $ 76,078          $ 83,183          $ (7,105)                   (9) %
Stock-based compensation            6,528             7,288          $   (760)                  (10) %         14,692            14,569          $    123                     1  %
Depreciation and amortization       1,018               919          $     99                    11  %          2,152             1,851          $    301                    16  %
Total selling, general and
administrative expenses        $   47,847          $ 50,598          $ (2,751)                   (5) %       $ 92,922          $ 99,603          $ (6,681)                   (7) %

Selling, general and administrative expenses consist primarily of the following:

•Personnel and professional service costs in our finance, information technology, commercial, investor relations, legal, human resources, and other administrative functions, including related stock-based compensation costs;

•Costs of sales and marketing activities and sales force compensation related to the RHA® Collection of dermal fillers and the Fintech Platform;

•DaxibotulinumtoxinA for Injection pre-commercial activities such as market research and public relations; and

•Depreciation and amortization of certain assets used in selling, general and administrative activities.

Selling, general and administrative expenses before stock-based compensation and depreciation and amortization

For the three and six months ended June 30, 2022, selling, general and administrative expenses decreased compared to the same periods in 2021, primarily due to a decrease in sales and marketing expenses, of which $2.4 million and $6.0 million was attributed to the Product Segment for the respective periods.


The decreases in selling, general and administrative expenses were primarily
related to cash preservation and expense management initiatives discussed above
as well as other ongoing operating cost efficiencies realized related to travel
and training costs in the Product Segment, partially offset by sales and
marketing expenses related to the RHA® Collection of dermal fillers.

Stock-based compensation

For the three months ended June 30, 2022, stock-based compensation included in selling, general and administrative expenses decreased compared to the same periods in 2021, primarily due to certain stock modification expense in the second quarter of 2021.

For the six months ended June 30, 2022, stock-based compensation included in selling, general and administrative expenses increased compared to the same periods in 2021, primarily due to more stock award grants to employees in selling, general and administrative functions.

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Research and Development Expenses

                                                Three Months Ended June 30,                                                   Six Months Ended June 30,
(in thousands, except
percentages)                  2022               2021             Change             % Change              2022              2021             Change             % Change
Manufacturing and quality $   12,883          $ 11,517          $  1,366                    12  %       $ 26,508          $ 21,595          $  4,913                    23  %
Clinical and regulatory        3,905             6,315          $ (2,410)                  (38) %          7,882            14,379          $ (6,497)                  (45) %
Stock-based compensation       2,735             4,080          $ (1,345)                  (33) %          8,934             7,406          $  1,528                    21  %
Platform and software
development                    2,937             4,013          $ (1,076)                  (27) %          6,055             6,094          $    (39)                   (1) %
Other research and
development expenses           1,947             3,068          $ (1,121)                  (37) %          5,300             6,299          $   (999)                  (16) %
Depreciation and
amortization                     506               448          $     58                    13  %            963               919          $     44                     5  %
Total research and
development expenses      $   24,913          $ 29,441          $ (4,528)                  (15) %       $ 55,642          $ 56,692          $ (1,050)                   (2) %


In the Product Segment, we do not believe that allocation of all research and
development costs by product candidate would be meaningful; therefore, we
generally do not track these costs by product candidates unless contractually
required by our business partners. In the Service Segment, our research and
development expenses relate to the development and introduction of new
functionalities and features of OPUL™ that are not subjected to capitalization.

Research and development expenses consist primarily of:

•salaries and related expenses for personnel in research and development functions, including stock-based compensation;

•expenses related to the initiation and completion of clinical trials and studies for DaxibotulinumtoxinA for Injection, future innovations related to the RHA® Collection of dermal fillers and an onabotulinumtoxinA biosimilar, including expenses related to the production of clinical supplies;

•fees paid to clinical consultants, contract research organizations ("CROs") and other vendors, including all related fees for investigator grants, patient screening fees, laboratory work and statistical compilation and analysis;

•expenses related to medical affairs, medical information, publications and pharmacovigilance oversight;

•other consulting fees paid to third parties;

•expenses related to the establishment and maintenance of our manufacturing facilities;

•expenses related to the manufacturing of supplies for clinical activities, regulatory approvals, and pre-commercial inventory;

•expenses related to license fees, milestone payments, and development efforts under in-licensing agreements;

•expenses related to compliance with drug development regulatory requirements in the U.S. and other foreign jurisdictions;

•expenses related to the development of new features and functionalities of OPUL™ and services that are not subjected to capitalization;

•depreciation and other allocated expenses; and

•charges from the RHA® Collection of dermal fillers asset acquisition related to in-process research and


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development.


Our research and development expenses are subject to numerous uncertainties,
primarily related to the timing and cost needed to complete our respective
projects. In our Product Segment, the development timelines, probability of
success and development expenses can differ materially from expectations, and
the completion of clinical trials may take several years or more depending on
the type, complexity, novelty and intended use of a product candidate.
Accordingly, the cost of clinical trials may vary significantly over the life of
a project as a result of differences arising during clinical development. We
expect our research and development costs to decrease in the near term,
primarily due to capital preservation measures which includes deferring the
Phase 3 clinical program for upper limb spasticity and other therapeutics
pipeline activities, offset by continued product development related to OPUL™
not subjected to software capitalization, and certain shared development costs
with Teoxane related to future dermal filler innovations and indications.

When we conduct additional clinical trials, we expect our research and
development expenses to fluctuate as projects transition from one development
phase to the next. Depending on the stage of completion and level of effort
related to each development phase undertaken, we may reflect variations in our
research and development expenses. We expense both internal and external
research and development expenses as they are incurred.

Manufacturing and quality


Manufacturing and quality expenses include personnel and occupancy expenses,
external contract manufacturing costs, and pre-approval manufacturing of drug
product used in preparation for our regulatory activities and anticipated
commercial launch with respect to DaxibotulinumtoxinA for Injection for the
treatment of glabellar lines and research and development activities for
DaxibotulinumtoxinA for Injection. Manufacturing and quality expenses also
include raw materials, lab supplies, and storage and shipment of our products to
support quality control and assurance activities. For the three months ended
June 30, 2022 and 2021, manufacturing and quality expenses were 52% and 39% of
the total research and development expenses for the respective periods. For the
six months ended June 30, 2022 and 2021, manufacturing and quality expenses were
48% and 38% of the total research and development expenses for the respective
periods.

For the three and six months ended June 30, 2022, manufacturing and quality
expenses increased compared to the same periods in 2021, primarily due to
expenses related to pre-commercial manufacturing and quality activities for
DaxibotulinumtoxinA for Injection for the treatment of glabellar lines. We
expect that our manufacturing and quality expenses will remain at least at the
current level until the potential approval of DaxibotulinumtoxinA for Injection.
Certain amounts of the manufacturing and quality expenses, among other costs,
are expected to be treated as inventory costs after the potential approval of
DaxibotulinumtoxinA for Injection for the treatment of glabellar lines is
obtained.

Clinical and regulatory


Clinical and regulatory expenses include costs related to personnel, external
clinical sites for clinical trials, clinical research organizations, central
laboratories, data management, contractors and regulatory activities associated
with the clinical development of DaxibotulinumtoxinA for Injection. For the
three months ended June 30, 2022 and 2021, clinical and regulatory costs were
16% and 21% of the total research and development expenses for the respective
periods. For the six months ended June 30, 2022 and 2021, clinical and
regulatory costs were 14% and 25% of the total research and development expenses
for the respective periods.

For the three and six months ended June 30, 2022, clinical and regulatory
expenses decreased compared to the same periods in 2021, primarily due to the
completion of multiple clinical trials in 2021, offset by ongoing support of the
regulatory approval process for the BLA for DaxibotulinumtoxinA for Injection
for the treatment of glabellar lines. We expect clinical and regulatory expenses
to remain at the current level or decrease in the near term primarily due to
capital preservation measures which includes deferring the Phase 3 clinical
program for upper limb spasticity and other therapeutics pipeline activities.

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Stock-based compensation


For the three months ended June 30, 2022, stock-based compensation included in
research and development expenses decreased compared to the same periods in
2021, primarily due to less market value of stock award granted to employees in
research and development related functions.

For the six months ended June 30, 2022, stock-based compensation included in
research and development expenses increased compared to the same periods in
2021, primarily due to stock modification accounting adjustments related to the
separation of an executive officer from the Company in the first quarter of
2022.

Platform and software development


Platform and software development include expenses associated with research and
development activities in the Service Segment, which primarily represent the
costs of developing new functionality or features of OPUL™ that are not subject
to capitalization. For the three months ended June 30, 2022 and 2021, platform
and software development expenses were 12% and 14% of the total research and
development expenses for the respective periods. For both the six months ended
June 30, 2022 and 2021, platform and software development expenses were 11% of
the total research and development expenses.

For the three and six months ended June 30, 2022, platform and software
development expenses decreased compared to the same periods in 2021, primarily
related to decreased research and development activities after the OPUL™ launch
in the second quarter of 2021.

Other research and development expenses


Other research and development expenses include expenses for personnel, CROs,
consultants, and supplies used to conduct preclinical research and development
of DaxibotulinumtoxinA for Injection and an onabotulinumtoxinA biosimilar. For
the three months ended June 30, 2022 and 2021, other research and development
expenses were 8% and 10% of the total research and development expenses for the
respective periods. For the six months ended June 30, 2022 and 2021, other
research and development expenses were 10% and 11% of the total research and
development expenses for the respective periods.

For the three and six months ended June 30, 2022, other research and development
expenses decreased compared to the same periods in 2021, primarily due to
research and development activities related to DaxibotulinumtoxinA for Injection
in the second quarter of 2021 in preparation for the FDA inspection.

Amortization

For the three and six months ended June 30, 2022, amortization increased compared to the same periods in 2021, primarily due to the amortization related to the in-process research and development assets as well as the platform software, which were placed in service in the second quarter of 2021.

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Net Non-Operating Income and Expense


                                                     Three Months Ended June 30,                                                   Six Months Ended June 30,
(in thousands, except
percentages)                       2022               2021             Change             % Change              2022              2021             Change             % Change
Interest income                $      619          $     85          $    534                   628  %       $    695          $    182          $    513                   282  %
Interest expense                   (3,874)           (1,569)         $ (2,305)                  147  %         (5,805)           (3,129)         $ (2,676)                   86  %
Change in fair value of
derivative liability                  (61)              (19)         $    (42)                  221  %           (105)              (78)         $    (27)                   35  %
Other expense, net                   (277)             (357)         $     80                   (22) %           (499)             (462)         $    (37)                    8  %
Total net non-operating
expense                        $   (3,593)         $ (1,860)         $ (1,733)                   93  %       $ (5,714)         $ (3,487)         $ (2,227)                   64  %


Interest Income

Interest income primarily consists of interest income earned on our deposit,
money market fund, and investment balances. We expect interest income to vary
each reporting period depending on our average deposit, money market fund, and
investment balances during the period and market interest rates.

Interest Expense


Interest expense includes cash and non-cash components. The cash component of
the interest expense represents the contractual interest charges for our 2027
Notes and Notes Payable. The non-cash component of the interest expense
represents the amortization of debt issuance costs for our 2027 Notes and the
amortization of debt insurance cost and debt discount for the Notes Payable.

For the three and six months ended June 30, 2022, interest expense increased
compared to the same periods in 2021 primarily due to the contractual interest
on the Notes Payable, which we began to incur in the first quarter of 2022.

Change in Fair Value of Derivative Liability


The derivative liability on our consolidated balance sheets is remeasured to
fair value at each balance sheet date with the corresponding gain or loss
recorded. We will continue to record adjustments to the fair value of derivative
liability until paid.

Other Expense, net

Other expense, net primarily consists of miscellaneous tax and other expense items.

Liquidity and Capital Resources

Our financial condition is summarized as follows:


                                                                              December 31,           Increase
(in thousands)                                          June 30, 2022             2021              (Decrease)

Cash, cash equivalents, and short-term investments $ 233,815

   $  225,071          $     8,744
Working capital                                       $      183,719          $  178,828          $     4,891
Stockholders' equity (deficit)                        $       (2,631)         $   68,471          $   (71,102)


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Sources and Uses of Cash


We hold our cash, cash equivalents, and short-term investments in a variety of
non-interest bearing bank accounts and interest-bearing instruments subject to
investment guidelines allowing for certain lower-risk holdings such as, but not
limited to, money market accounts, commercial paper, and corporate bonds. Our
investment portfolio is structured to provide for investment maturities and
access to cash to fund our anticipated working capital needs.

As of June 30, 2022 and December 31, 2021, we had cash, cash equivalents and
short-term investments of $233.8 million and $225.1 million, respectively, which
represented an increase of $8.7 million.

The increase was primarily due to the proceeds from the issuance of the Notes
Payable pursuant to the Note Purchase Agreement, net of debt discount of $98.2
million, the issuance of shares of our common stock in connection with the ATM
offering program, net of commissions, of $31.8 million, and proceeds from the
purchase of shares of our common stock in connection with our 2014 Employee
Stock Purchase Plan of $2.1 million. The increase was primarily offset by other
operating activities of 106.9 million, finance lease prepayments of $9.9
million, net settlement of restricted stock awards for employee taxes of $2.8
million, principal payments on finance leases of $1.8 million, and payment of
debt issuance cost and offering costs of $1.4 million.

We derived the following summary of our condensed consolidated cash flows for the periods indicated from Part I, Item 1, "Financial Information-Condensed Consolidated Financial Statements (Unaudited)" in this Report:


                                        Six Months Ended June 30,
(in thousands)                            2022                 2021
Net cash provided by (used in):
Operating activities              $     (105,495)          $ (123,760)
Investing activities              $      (61,313)          $  (74,113)
Financing activities              $      126,478           $   31,956

Cash Flows from Operating Activities


Our cash used in operating activities is primarily driven by personnel,
manufacturing and facility costs, clinical development, and sales and marketing
activities. The changes in net cash used in operating activities are primarily
related to our net loss, working capital fluctuations and changes in our
non-cash expenses, all of which are highly variable. Our cash flows from
operating activities will continue to be affected principally by our working
capital requirements and the extent to which we increase spending on personnel,
commercial activities, and research and development activities as our business
grows.

For the six months ended June 30, 2022, net cash used in operating activities
was $105.5 million, which was primarily due to personnel and compensation costs
of approximately $68 million; professional services and consulting fees of
approximately $38 million; rent, supplies and utilities expenses of
approximately $27 million; legal and other administrative expense of
approximately $11 million; the 2027 Notes and Notes Payable interest paid of $5
million, clinical trials expenses of approximately $3 million, offset by
approximately $47 million from product and service revenue.

For the six months ended June 30, 2021, net cash used in operating activities
was $123.8 million, which was primarily due to personnel and compensation costs
of approximately $66 million; professional services and consulting fees of
approximately $53 million; rent, supplies and utilities expenses of
approximately $21 million; clinical trials expenses of approximately $6.5
million; legal and other administrative expense of approximately $9 million; and
the 2027 Notes interest paid of approximately $2.3 million, offset by
approximately $34 million from product and service revenue.

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Cash Flows from Investing Activities


For the six months ended June 30, 2022 and 2021, net cash provided by or used in
investing activities was primarily due to fluctuations in the timing of
purchases and maturities of investments, purchases of property and equipment and
prepayments for a finance lease.

Cash Flows from Financing Activities


For the six months ended June 30, 2022, net cash provided by financing
activities was driven by the issuance of the Notes Payable pursuant to the Note
Purchase Agreement, net of debt discount, and the ATM offering program, net of
commissions. The inflows were offset by the net settlement of restricted stock
awards for employee taxes.

For the six months ended June 30, 2021, net cash provided by financing
activities was driven by the at-the-market offering program, net of commissions,
and proceeds from the exercise of stock options and common stock warrants. The
inflows were offset by the net settlement of restricted stock awards for
employee taxes and payments of offering costs.

Note Purchase Agreement


On March 18, 2022, we entered into the Note Purchase Agreement and issued Notes
Payable to the Purchasers in an aggregate principal amount for all such notes of
$100.0 million (the "First Tranche"). Subject to satisfaction of certain
conditions set forth in the Note Purchase Agreement, including the FDA approval
of DaxibotulinumtoxinA for Injection for the treatment of glabellar lines,
$100.0 million in additional Notes Payable (the "Second Tranche") remains
available to us under the Note Purchase Agreement until September 18, 2023. In
addition, there is an uncommitted tranche of additional Notes Payable in an
aggregate amount of up to $100.0 million (the "Third Tranche") available until
March 31, 2024, subject to the satisfaction of certain conditions set forth in
the Note Purchase Agreement, including the achievement of greater than or equal
to $50 million in trailing twelve-months revenue for DaxibotulinumtoxinA for
Injection for the treatment of glabellar lines preceding the date of the draw
request for the Third Tranche, and approval by Athyrium Capital Management, LP.

Our obligations under the Note Purchase Agreement are secured by substantially all of our assets and the assets of our wholly owned domestic subsidiaries, including their respective intellectual property.


Initially, the Notes Payable bear interest at an annual fixed interest rate
equal to 8.50%. If the Third Tranche of Notes Payable becomes committed, the
Notes Payable will then bear interest at an annual rate equal to the sum of (a)
7.0% and (b) Adjusted Three-Month LIBOR for such interest period (subject to a
floor of 1.50% and a cap of 2.50%). We are required to make quarterly interest
payments on each Note Payable commencing on the last business day of the
calendar month following the funding date thereof, and continuing until the last
business day of each March, June, September and December through September 18,
2026 (the "Maturity Date"). The Maturity Date may be extended to March 18, 2028
if, as of September 18, 2026, less than $90 million principal amount of our
existing 2027 Notes remain outstanding and with the consent of the Purchasers.
Initially, all principal for each tranche is due and payable on the Maturity
Date. Upon the occurrence of an Amortization Trigger (as defined in the Note
Purchase Agreement), we are required to repay the principal of the Second
Tranche and the Third Tranche in equal monthly installments beginning on the
last day of the month in which the Amortization Trigger occurred and continuing
through the Maturity Date. At our option, we may prepay the outstanding
principal balance of all or any portion of the principal amount of the Notes
Payable, subject to a prepayment fee equal to (i) a make-whole amount if the
prepayment occurs on or prior to the first anniversary of the Effective Date and
(ii) 2.0% of the amount prepaid if the prepayment occurs after the first
anniversary of the Effective Date but on or prior to the second anniversary of
the Effective Date. Upon prepayment or repayment of all or any portion of the
principal amount of the notes (whether on the Maturity Date or otherwise), we
are also required to pay an exit fee to the Purchasers.

The Note Purchase Agreement includes affirmative and negative covenants
applicable to us, our current subsidiaries and any subsidiaries we create in the
future. The affirmative covenants include, among others, covenants requiring us
to maintain our legal existence and governmental approvals, deliver certain
financial reports, maintain insurance coverage and satisfy certain requirements
regarding deposit accounts. We must also (i) maintain at least $30.0 million of
unrestricted cash and cash equivalents in accounts subject to a control
agreement in favor of Athyrium at all times and (ii) upon the occurrence of
certain specified events set forth in the Note Purchase Agreement, achieve at
least $70.0 million of Consolidated Teoxane

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Distribution Net Product Sales (as defined in the Note Purchase Agreement) on a
trailing twelve-months basis. The negative covenants include, among others,
restrictions on our transferring collateral, incurring additional indebtedness,
engaging in mergers or acquisitions, paying dividends or making other
distributions, making investments, creating liens, selling assets and undergoing
a change in control, in each case subject to certain exceptions.

If we do not comply with the affirmative and negative covenants, such
non-compliance may be an event of default under the Note Purchase Agreement. The
Note Purchase Agreement also includes events of default, the occurrence and
continuation of which could cause interest to be charged at the rate that is
otherwise applicable plus 2.0% and would provide Athyrium, as administrative
agent, with the right to exercise remedies against us and the collateral,
including foreclosure against our property securing the obligations under the
Note Purchase Agreement, including our cash. These events of default include,
among other things, our failure to pay principal or interest due under the Note
Purchase Agreement, a breach of certain covenants under the Note Purchase
Agreement, our insolvency, the occurrence of a circumstance which could have a
material adverse effect and the occurrence of any default under certain other
indebtedness.

Convertible Senior Notes

On February 14, 2020, we issued the 2027 Notes with an aggregate principal
balance of $287.5 million, pursuant to the Indenture. The 2027 Notes are senior
unsecured obligations and bear interest at a rate of 1.75% per year, payable
semiannually in arrears on February 15 and August 15 of each year, beginning on
August 15, 2020. The 2027 Notes will mature on February 15, 2027, unless earlier
converted, redeemed or repurchased. In connection with issuing the 2027 Notes,
we received $278.3 million in net proceeds, after deducting the initial
purchasers' discount, commissions, and other issuance costs.

The 2027 Notes may be converted by the holders at any time prior to the close of
business on the business day immediately preceding November 15, 2026 only under
the following circumstances: (1) during any fiscal quarter commencing after the
fiscal quarter ending on June 30, 2020 (and only during such fiscal quarter), if
the last reported sale price of our common stock for at least 20 trading days
(whether or not consecutive) during a period of 30 consecutive trading days
ending on, and including, the last trading day of the immediately preceding
fiscal quarter is greater than or equal to 130% of the conversion price on each
applicable trading day; (2) during the five business day period after any ten
consecutive trading day period (the "measurement period") in which the trading
price (as defined in the Indenture) per $1,000 principal amount of the 2027
Notes for each trading day of the measurement period was less than 98% of the
product of the last reported sale price of our common stock and the conversion
rate on each such trading day; (3) if we call any or all of the 2027 Notes for
redemption, at any time prior to the close of business on the scheduled trading
day immediately preceding the redemption date; or (4) upon the occurrence of
specified corporate events. On or after November 15, 2026 until the close of
business on the second scheduled trading day immediately preceding the maturity
date, holders may convert all or any portion of their 2027 Notes at any time,
regardless of the foregoing circumstances. Upon conversion, we will pay or
deliver, as the case may be, cash, shares of our common stock or a combination
of cash and shares of our common stock, at our election.

The conversion rate will initially be 30.8804 shares of our common stock per
$1,000 principal amount of the 2027 Notes (equivalent to an initial conversion
price of approximately $32.38 per share of our common stock). The conversion
rate is subject to adjustment in some events but will not be adjusted for any
accrued and unpaid interest. In addition, following certain corporate events
that occur prior to the maturity date or if we deliver a notice of redemption,
we will, in certain circumstances, increase the conversion rate for a holder who
elects to convert its 2027 Notes in connection with such a corporate event or
notice of redemption, as the case may be.

We may not redeem the 2027 Notes prior to February 20, 2024. We may redeem for
cash all or any portion of the 2027 Notes, at our option, on or after
February 20, 2024 if the last reported sale price of our common stock has been
at least 130% of the conversion price then in effect for at least 20 trading
days (whether or not consecutive) during any 30 consecutive trading day period
(including the last trading day of such period) ending on, and including, the
trading day immediately preceding the date on which we provide notice of
redemption at a redemption price equal to 100% of the principal amount of the
2027 Notes to be redeemed, plus any accrued and unpaid interest to, but
excluding, the redemption date. No sinking fund is provided for the 2027 Notes.

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If we undergo a fundamental change (as defined in the Indenture), holders may
require us to repurchase for cash all or any portion of their 2027 Notes at a
fundamental change repurchase price equal to 100% of the principal amount of the
2027 Notes to be repurchased, plus any accrued and unpaid interest to, but
excluding, the fundamental change repurchase date.

We used $28.9 million of the net proceeds from the 2027 Notes to pay the cost of
the capped call transactions. The capped call transactions are expected
generally to reduce the potential dilutive effect upon conversion of the 2027
Notes and/or offset any cash payments we are required to make in excess of the
principal amount of converted 2027 Notes, as the case may be, with such
reduction and/or offset subject to a price cap of $48.88 of our common stock per
share, which represents a premium of 100% over the last reported sale price of
our common stock on February 10, 2020. The capped calls have an initial strike
price of $32.38 per share, subject to certain adjustments, which corresponds to
the conversion option strike price in the 2027 Notes. The capped call
transactions cover, subject to anti-dilution adjustments, approximately 8.9
million shares of our common stock.

ATM Programs


For the three months of June 30, 2022, we sold 1,264,783 shares of common stock
under the 2020 ATM Agreement at a weighted average price of $18.41 per share
resulting in net proceeds of $22.7 million after sales agent commissions and
offering costs. For the six months ended June 30, 2022, we sold 1,734,853 shares
of common stock under the 2020 ATM Agreement at a weighted average price of
$18.71 per share resulting in net proceeds of $31.6 million after sales agent
commissions and offering costs.

On May 10, 2022, we terminated the 2020 ATM Agreement and entered into a new
sales agreement (the "2022 ATM Agreement") with Cowen. Under the 2022 ATM
Agreement, we may sell up to $150 million of our common stock. As of both June
30, 2022 and the filing date of this Report, no shares of common stock have been
sold under the 2022 ATM Agreement.

Common Stock and Common Stock Equivalents


As of July 29, 2022, outstanding shares of common stock were 73.1 million,
outstanding stock options were 5.0 million, unvested restricted stock awards and
performance stock awards were 2.6 million, unvested restricted stock units and
performance stock units were 2.6 million, and shares of common stock underlying
the 2027 Notes is 8.9 million based upon the initial conversion price.

Operating and Capital Expenditure Requirements - Going Concern


Since inception, we have devoted substantial efforts to identifying and
developing product candidates for the aesthetic and therapeutic pharmaceutical
markets, recruiting personnel, raising capital, conducting preclinical and
clinical development of, and manufacturing development for DaxibotulinumtoxinA
for Injection, DaxibotulinumtoxinA Topical, the onabotulinumtoxinA biosimilar,
development of the Fintech Platform and the commercial launch of our products
and services. We have not generated substantial revenue to date. As a result, we
have incurred losses and negative cash flows from operations and we expect to
continue to incur losses for the foreseeable future. We expect to continue to
devote capital toward significant research and development, sales and marketing,
and other expenses related to our ongoing operations. In connection with the
Teoxane Agreement, we must make specified annual minimum purchases of the RHA®
Collection of dermal fillers and meet annual minimum expenditures in connection
with the commercialization of the RHA® Collection of dermal fillers. We have
incurred substantial transaction expenses in order to complete the HintMD
Acquisition. Further, to grow the Fintech Platform business, we must develop
features, products and services that reflect the needs of customers and the
changing nature of payments processing software and continually modify and
enhance the Fintech Platform to keep pace with changes in updated hardware,
software, communications and database technologies and standards. In addition,
we have dedicated manufacturing capacity, buyback obligations, cost sharing
arrangements and related minimum purchase obligations under our manufacturing
and supply agreements in connection with the manufacture and supply of our
product candidates. In addition, other unanticipated costs may arise from
disruptions associated with the COVID-19 pandemic.

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We have funded our operations primarily through the sale of common stock,
convertible senior notes, payments received from collaboration arrangements, and
sales of the RHA® Collection of dermal fillers, and in March 2022, we received
proceeds from the First Tranche of the Note Purchase Agreement. Our capital
requirements and operating plan may change as a result of many factors, the most
significant of which relates to the timing of potential approval of the BLA for
DaxibotulinumtoxinA for Injection for the treatment of glabellar lines.

On October 15, 2021, the FDA issued a CRL regarding our BLA for
DaxibotulinumtoxinA for Injection for the treatment of glabellar lines. The FDA
indicated it was unable to approve the BLA in its present form due to
deficiencies related to the FDA's onsite inspection at our manufacturing
facility. As a result, the potential commercial launch of DaxibotulinumtoxinA
for Injection for the treatment of glabellar lines has been delayed. The
commercial launch delay and its impact on our capital resources has raised
substantial doubt with respect to our ability to meet our obligations to
continue as a going concern. Our existing cash, cash equivalents, and short-term
investments will not allow us to fund our operations for at least 12 months
following the filing of this Report.

In order to mitigate the substantial doubt to continue as a going concern, we
will be required to continue to execute our commercial strategy for the RHA®
Collection of dermal fillers, obtain the approval of DaxibotulinumtoxinA for
Injection for the treatment of glabellar lines and meet certain other conditions
in order to draw on the Second Tranche under the Note Purchase Agreement and
raise additional capital outside of the Note Purchase Agreement. We may seek
additional capital through public or private equity or debt financings, royalty
financings or other sources, such as strategic collaborations. Additional
capital may not be available when needed, on terms that are acceptable to us or
at all. If adequate funds are not available to us on a timely basis, or at all,
because we are unable to draw on the Second Tranche or because we are unable to
raise capital through another method, we will be required to take additional
actions beyond the cost preservation measures previously initiated to address
our liquidity needs, including to continue to further reduce operating expense
and delay, reduce the scope of, discontinue or alter our research and
development activities for DaxibotulinumtoxinA for Injection, the RHA® Pipeline
Products and our onabotulinumtoxinA biosimilar program; the development of
OPUL™; our sales and marketing capabilities or other activities that may be
necessary to continue to commercialize the RHA® Collection of dermal fillers,
OPUL™ and our product candidates, if approved, and other aspects of our business
plan.

If we raise additional capital through marketing and distribution arrangements,
royalty financings or other collaborations, strategic alliances or licensing
arrangements with third parties, we may need to relinquish certain valuable
rights to our product candidates, technologies, future revenue streams or
research programs or grant licenses on terms that may not be favorable to us. If
we raise additional capital through public or private equity offerings, the
ownership interest of our existing stockholders will be diluted and the terms of
any new equity securities may have a preference over our common stock. If we
raise additional capital through debt financing, we may be subject to specified
financial covenants or covenants limiting or restricting our ability to take
specific actions, such as incurring additional debt, making capital expenditures
or pursuing certain transactions, any of which could restrict our ability to
commercialize our product candidates or operate as a business. In addition, our
ability to raise capital may be limited by restrictions under the Note Purchase
Agreement.

If the BLA for DaxibotulinumtoxinA for Injection for the treatment of glabellar
lines is approved, following approval, we may draw on the Second Tranche, which
could generate up to $100.0 million of operating capital, and expect to increase
operating expenditures with respect to: activities required to support the
preparation for and commercialization of DaxibotulinumtoxinA for Injection;
internal and external manufacturing capabilities; the development and continued
commercialization of OPUL™; the completion of clinical trials and associated
programs relating to DaxibotulinumtoxinA for Injection for various indications,
an onabotulinumtoxinA biosimilar and our investment in future innovations in the
RHA® Pipeline Products; and the procurement of regulatory approval for
DaxibotulinumtoxinA for Injection in various indications and an
onabotulinumtoxinA biosimilar.

Please read Part II, Item 1A. "  Risk Factors   -We will require substantial
additional financing to continue to operate our business and achieve our goals"
for additional information.

Critical Accounting Policies and Estimates


For the six months ended June 30, 2022, there have been no material changes in
our critical accounting policies compared to those disclosed in Item 7 in our
Annual Report on Form 10-K for the year ended December 31, 2021, filed with the
SEC on February 28, 2022.

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Contractual Obligations


Except as follows, there were no material changes outside of the ordinary course
of business in our contractual obligations as of June 30, 2022, from those as of
December 31, 2021 as reported in our Annual Report on Form 10-K for the year
ended December 31, 2021, as filed with the SEC on February 28, 2022.

Note Purchase Agreement


On the March 18, 2022, we issued the First Tranche of the Notes Payable under
the Note Purchase Agreement, and the Notes Payable bear interest at an annual
fixed interest rate equal to 8.50%. We are required to make quarterly interest
payments on each Note Payable issued under the Note Purchase Agreement
commencing on the last business day of the calendar month following the funding
date thereof, and continuing until the last business day of each March, June,
September and December through September 18, 2026 (the "Maturity Date"). The
Maturity Date may be extended to March 18, 2028 if, as of September 18, 2026,
less than $90 million principal amount of our existing 2027 Notes remain
outstanding and with the consent of the Purchasers. Initially, all principal for
each tranche is due and payable on the Maturity Date. Upon the occurrence of an
Amortization Trigger (as defined in the Note Purchase Agreement), we are
required to repay the principal of the Second Tranche and the Third Tranche in
equal monthly installments beginning on the last day of the month in which the
Amortization Trigger occurred and continuing through the Maturity Date. At our
option, we may prepay the outstanding principal balance of all or any portion of
the principal amount of the Notes Payable, subject to a prepayment fee equal to
(i) a make-whole amount if the prepayment occurs on or prior to the first
anniversary of the Effective Date and (ii) 2.0% of the amount prepaid if the
prepayment occurs after the first anniversary of the Effective Date but on or
prior to the second anniversary of the Effective Date. Upon prepayment or
repayment of all or any portion of the principal amount of the Notes Payable
(whether on the Maturity Date or otherwise), we are also required to pay an exit
fee to the Purchasers.

Refer to Part I, Item 1. "Condensed Consolidated Financial Statements (Unaudited)-Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 8 -Debt" for details of the Notes Payable.

Finance Lease Obligation


In January 2022, we had substantively obtained the right of control for the
dedicated fill-and-finish-line and the associated lease commenced as a finance
lease. Refer to Part I, Item 1. "Condensed Consolidated Financial Statements
(Unaudited)-Notes to Condensed Consolidated Financial Statements (Unaudited)
-  Note 7  -Leases" for details of the finance lease obligations.

Recent Accounting Pronouncements

Refer to "Recent Accounting Pronouncements" in Part I, Item 1, "Financial Information-Notes to Condensed Consolidated Financial Statements (Unaudited)- Note 1 -The Company and Summary of Significant Accounting Policies" in this Report.

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