Good afternoon, and welcome to the Evolus Third Quarter 2023 Earnings Conference Call. I would now like to turn the conference over to your host, Mr. Ned Mitchell from Investor Relations. Ned?

Thank you, operator, and welcome to everyone joining us on today's call. With me today are David Moatazedi, President and Chief Executive Officer; Rui Avelar, Chief Medical Officer and Head of R&D; and Sandra Beaver, Chief Financial Officer. Our prepared remarks today will include forward-looking statements within the meaning of United States securities laws and 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 statements. Additionally, today's discussion will include non-GAAP financial measures, which should be considered in addition to that 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 on our Investor Relations website at evolus.com. Following the conclusion of today's call, a replay will be available on our website at evolus.com. With that, I'll turn over to David.

Thank you, Ned. We are very pleased to see the increasing momentum of our business driven by strong execution, which has translated into record quarterly revenue and record low cash burn in what is historically the seasonally lowest for the injectible category. Our focus has been consistent and intentional. We're building a beauty brand for the younger generation, which represents the fastest-growing segment of the neurotoxin market. This differentiated approach to marketing has resulted in the highest quarterly revenue in the company's history. Our reported revenue of $50 million reflects 48% growth year-over-year and represents a sequential increase over the second quarter. We've also maintained a strong focus on operating expenses and I'm pleased to report that our operating cash burn was at an all-time low of $0.9 million this quarter, putting us on the path to profitability with our existing liquidity. Our success in the quarter demonstrates the strength of our brand-building efforts and the resilient neurotoxin market, which remains healthy as consumers continue to prioritize their spending on beauty. Toxins provide great value for consumers due to the consistency in outcomes and affordability of the treatment. We believe Jeuveau is well positioned as a beauty brand in this market and we'll continue to capture this increasing demand. The success of our consumer-centric strategy was demonstrated during the quarter in the number of total consumer loyalty redemptions, which eclipsed 1.2 million since the program was introduced in 2020. In the quarter, we reached an all-time high of 149,000 redemptions, demonstrating sustained and strong brand loyalty. On the market penetration side, we added more than 650 new accounts in the quarter, bringing our total purchasing customer count to nearly 11,600. As a reminder, with over 30,000 aesthetic customers in the United States, we continue to have a significant opportunity to further expand our market penetration over the coming years. In our international operations, Nuceiva is now commercial in 4 major countries. I'm proud of the progress we've made with the small and nimble team. This week, we celebrated 1 year since Nuceiva was first launched in Great Britain. Earlier this year, we launched in Germany and Austria, and most recently, we launched in Italy, which is off to a very strong start. Europe represents an estimated high single-digit millions in sales in 2023 and is key to our overall long-term growth strategy. The combination of continued strength in execution and increasing momentum gives us the confidence to raise again our full year 2023 revenue guidance to between $194 million and $198 million. This updated guidance equates to over 30% growth for the fiscal year and is magnitudes greater than the estimated category growth rate. Looking beyond 2023, we remain highly confident in our 2020 sales goal of $700 million, which is driven by the strong market opportunity of Jeuveau in the United States, the international expansion of Nuceiva, and the introduction of the Evolysse line of fillers in the U.S. beginning in 2025. Evolus continues to differentiate itself and outpace the growth of our competitors by leading with a strong beauty brand, a unique strategy targeting millennials, and a cash pay business model that rewards customer loyalty. Our platform for growth continues to scale with Jeuveau and Nuceiva experiencing tremendous growth as evidenced by our third quarter results. Moving to our R&D efforts, I would like to provide an update on several of our pipeline assets. Today, we will provide an update on the first 2 expected injectable products within the Evolysse line of fillers. We will also review the final Phase II extra-strength results. Starting with Evolysse, we have continued to make progress over the past quarter and are pleased to provide an update on our filing for the first 2 heavy-lift fillers, which we expect to be completed by summer 2024. This keeps us on track to launch Evolysse in the U.S. in 2025. On Monday, we announced the results from the Phase II clinical studies evaluating the extra-strength unit dose for extended duration of Jeuveau, the only neurotoxin dedicated exclusively to aesthetics. The final data presented this past weekend in Chicago at the American Society of Dermatologic Surgery demonstrated 26 weeks or 6 months of performance with the extra-strength dose of 40 units. The final Phase II outcomes were consistent with interim findings and reinforced that longer-lasting effects, particularly up to 26 weeks, can be achieved with the extra-strength 40-unit formulation of Jeuveau. I would now like to turn the call over to Rui Avelar, who will walk us through the filings.

Thank you. As David mentioned, I want to share the top line results of the Jeuveau study that were presented this past Friday at the ASDS in Chicago. The study focused on the safety and duration of the effects when the Jeuveau dose was doubled and hyper-concentrated. Its main goal was to determine how long it took for a patient to return to their baseline glabellar wrinkles after a single treatment, as assessed by the investigator. This metric has been used by others and is advantageous as it is independent of the scale across various studies. The study was conducted at five clinical sites, using a double-blind, randomized design with two active controls: 20 units of Jeuveau and 20 units of BOTOX on label. The duration of the trial was one year or until the patient returned to their baseline. As is standard in registration trials, patients had to be rated as moderate or severe on the 4-point glabellar line scale to qualify for the study. The demographics were typical for this kind of study, with a majority of participants being women in their late 40s. Notably, most subjects were rated as having severe glabellar severity at baseline, by both the investigator and the patients. Regarding safety, there were a total of 35 adverse events reported, occurring in 26 patients. This includes all adverse events, whether related or unrelated to the study drug, while drug-related events specifically refer to those caused by the drug. No differences were noted among the three groups. The actual drug-related events were itemized, with headaches being the most common, and there was one case of eyelid ptosis in the 40-unit Jeuveau group. In terms of event severity, 88.9% were rated as mild, with no differences across groups, and importantly, there were no serious adverse events recorded. The study's primary objective was to assess how long it took patients to return to their baseline, as evaluated by the investigator. The results showed that for the 40-unit Jeuveau, it took 26 weeks, or six months, to reach baseline. The control treatments lasted for 21 weeks, consistent with previous studies. The generated hazard ratios and p-values demonstrated statistical superiority for the 40-unit Jeuveau compared to the 20-unit controls. A one-point improvement on the glabellar line scale, which indicates a clinically meaningful response, showed similar duration results. An alternative assessment using the global aesthetic improvement scale showed a duration of 26.3 weeks, with Jeuveau extra-strength being statistically superior to both controls. Respondent rates over time were also assessed; a responder was defined as having none or mild glabellar lines. The data indicated that the 40-unit arm consistently had a higher percentage of responders over time compared to the controls. To reduce the burden on patients and minimize dropouts, there were no in-office visits between day two and day thirty, contributing to a high steady completion rate of 94.7%. The responder definition focused on non-mild glabellar lines is significant, as achieving none or mild lines is a clinically meaningful measure, indicating that these patients do not need repeat treatments. It is crucial to consider baseline severity when interpreting results; a group that primarily presents severe glabellar lines before treatment would require a two-point improvement to be classified as responders, whereas a group with mostly moderate lines would only need a one-point improvement. We often get asked how 40 units of Jeuveau compares to 40 units of DAXI. A direct comparison would necessitate a head-to-head study, but we are attempting to overlay data from their respective clinical trials. In the combined graph, we displayed results for both the 40-unit Jeuveau and the 40-unit DAXI, showing none-or-mild results from the investigator assessment compared to the DAXI outcomes found in their FDA-approved label. Given the baseline characteristics in each study, most of the DAXI patients only needed a one-point improvement to qualify as responders, whereas the Jeuveau group required a two-point improvement, suggesting that Jeuveau lasts longer over time. The stringent measure of efficacy is the two-point composite score, which the FDA designates as the primary endpoint in all studies. Success with this definition is defined as achieving a grade of none or mild, with a two-grade improvement from baseline, agreed on by both the investigator and the subjects. This composite endpoint is stringent and is recommended for evaluating duration. In summary, Jeuveau demonstrated a duration of 26 weeks or six months across multiple metrics, with no differences noted compared to active controls, and 88.9% of adverse events were mild, with no serious drug-related adverse events. With that, I'll turn it back to you, David.

Thanks, Rui. This data set conclusively puts to rest the relative contribution of dose to duration. Going into the Phase II study, we were expecting to see 24 weeks of longevity with Jeuveau, in line with other 40-unit doses of toxin. These final results exceeded our expectations with most time points achieving 26 weeks. This is a successful outcome that gives Evolus the ability to offer treatment options for customers and their patients using the same original strength Jeuveau simply by changing how the product is reconstituted. On the filler side, we remain excited about the differentiation of the Evolysse portfolio and its potential to become one of the leading HA fillers in the U.S. Our cash pay-focused platform was designed for scale, and there are tremendous synergies we can achieve by leveraging our seasoned sales force and our rapidly growing customer loyalty program to launch this innovative new technology alongside our flagship Jeuveau. We continue to believe the combination of a highly competitive filler line and our growing customer base provides a unique opportunity to build a durable brand that adds tremendous value to Evolus and our shareholders. Now I'll turn it over to Sandra, who will cover the financials.

Thank you, David. Our strong growth this quarter demonstrates our success and execution of our long-term strategy to become a top brand in the growing performance beauty market. I'd like to congratulate the Evolus team for a record quarter of above-market overall performance, including record highs of sales and our key metrics and for continued focus on diligent operating expense and cash management. Global net revenues for the third quarter were $50 million, up 48% compared to net revenue in the third quarter of 2022. We see U.S. sales comprising more than 95% of the total revenue, driven primarily by higher volumes. We continue to experience strong pricing in the U.S. with our average selling price in 2023 modestly increasing compared to the same period last year, while our customer reorder rate remains above 70%. Our reported gross margin for the third quarter was 67.7% and our adjusted gross margin, which excludes the amortization of intangibles, was 69.1% and in line with our guidance of 68% to 71%. Operating expenses declined sequentially in Q3 as compared to Q2. Our GAAP operating expenses for the third quarter were $63.4 million compared to $64.5 million in the second quarter. Non-GAAP operating expenses for the third quarter were $40.3 million compared to $42.7 million in the prior quarter. As a reminder, non-GAAP operating expenses exclude product cost of sales. Reported selling, general and administrative expenses for the third quarter were $43.3 million compared to $41.2 million recorded in the second quarter, with the increase mainly attributable to higher commercial costs. This quarter, SG&A expenses include $4.3 million of noncash stock-based compensation compared to $4 million in the second quarter. Our non-GAAP loss from operations in the third quarter was $5.7 million compared to $8 million reported in the second quarter. Non-GAAP operating losses declined $2.2 million as compared to Q2 and $7.5 million as compared to Q3 2022, which represents a 57% year-over-year improvement, continuing our trend towards profitability. Consistent with our initial 2023 guidance, we continue to expect to achieve non-GAAP operating profitability in the fourth quarter, excluding our investments related to Bali. Both non-GAAP operating expenses and non-GAAP loss from operations exclude stock-based compensation expense, revaluation of the contingent royalty obligation, and depreciation and amortization. Turning to the balance sheet, we ended the third quarter with $38.7 million in cash compared to $41.7 million at June 30, 2023. During the quarter, we had a record low in quarterly cash usage of $3 million. In the quarter, net cash used for operating activities was $0.9 million. Net cash used in the third quarter of 2023 continued its sequential quarterly decline throughout 2023, further demonstrating our continued progress towards cash flow breakeven. Before we turn to Q&A, I would like to summarize our 2023 guidance. Based on our strong year-to-date performance and confidence in the resilient toxin market, we now expect total net revenues for the full year of $194 million to $198 million. This equates to over 30% growth for the fiscal year and adjusted gross margin in the range of 68% to 71%, unchanged from our guidance. Full year 2023 non-GAAP operating expenses between $153 million and $158 million, also unchanged from prior guidance. Other modeling assumptions for 2023 include quarterly interest expense of $3.5 million and full year weighted average shares outstanding of approximately $57 million. Looking beyond 2023, we continue to target total revenue of $700 million in 2028, driven by continued growth and share gains in our neurotoxin franchise in the U.S. and international markets, along with the growing contribution from our Evolysse line of fillers that begins in 2025. This equates to a compounded annual growth rate of 29% on a total addressable market that is 70% greater with the addition of a filler product line. Now let me turn the call back to the operator to begin Q&A.

Our first question comes from Louise Chen with Cantor.

Congratulations on a very strong quarter in execution. My first question is what gives you confidence that the current rate of growth is sustainable? Is there any seasonality to the fourth quarter? Additionally, I would like to know what the next steps are regarding your Jeuveau 40 units and how important this product is to your portfolio.

Okay, Louise, thanks for the questions. Starting with the fourth quarter. The fourth quarter is generally the strongest quarter of the year in terms of procedural demand. As you see with the guidance range we provided, we expect the fourth quarter to be another all-time high in terms of revenue. So we do believe that the growth rates that we've demonstrated year-to-date will continue to hold and our guidance range reflects that with over 30% growth year-on-year for the quarter. On the second question around the Jeuveau 40 units dose and the next steps, I'm going to ask Rui to kick that.

Main objective, of course, will be to publish that. As we speak to providers, what we hear consistently is that there is not a longer duration label out there; therefore, people are saying there is no need to proceed to Phase III. So the main emphasis will be on publishing the Phase II studies. We will continue to watch how the doubling of the dose market evolves and then decide what we do next.

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

Congratulations on a strong quarter. Looking at the big picture over the past few years, the market still seems to be relatively underpenetrated. BOTOX has always led the market, driving the growth rate, but with your current growth and the entry of another competitor, it appears that new products are making an impact. How do you perceive these dynamics shifting in the marketplace? Are you still benefitting from a growing market, or are you actively increasing your market share? What do you estimate that share to be? That’s my first question.

Great. Annabel, thanks for the question. Look, the market remains highly underpenetrated. As you saw in the third quarter, the market leader posted solid growth, and we also showed very strong performance as well. We believe some dynamics at play here, starting with our focus with Jeuveau as a beauty brand. That is how this younger generation of consumers perceives this procedure, and we position ourselves well there. We held a number of advisory board meetings over the last quarter, and what we consistently hear back, even from non-users interested in bringing on our product into their practice, is that they view us as a product for the younger generation, the fastest-growing segment of the market. We believe that gives us sustainable growth from a consumer standpoint into the future. In addition to that, we’re in just over 11,000 accounts in a market that has over 30,000 customers. This gives us continued market penetration opportunities opening up new customers. And of course, both of these ideas go hand in hand. As we continue to drive more younger consumers into practice, it opens more new accounts for us that have an interest in partnering with us. Our cash pay positioning allows us to capitalize on opportunities in a way that positions us as a beauty brand that helps grow this segment of a practice. It’s hard to isolate any one variable, but collectively, this positioning drives continued growth, reflected in each quarter where we’ve seen our growth persist and accelerate. We’ve been the fastest-growing neurotoxin on the market now for 2 consecutive years, and this year continues to perform strongly. We think all this is reflected in our positioning and the cash pay strategy.

Do you dare to venture what market share could be at this point?

Yes. As far as market share last quarter, we estimated that we had captured about 11% of the market. We don’t expect to click up a full share point every quarter. Clearly, we gained share in the third quarter. I think we're approaching a share point higher, and we'll certainly give you an update when we feel confident that we would collect study 1 share.

Okay. One other question. To what extent do you believe Evolysse will boost additional account penetration? How many accounts do you think are out there that do not entertain the use of Jeuveau just because you don't have, I guess, a portfolio of products to offer them?

We believe that with Jeuveau alone, we can continue to expand our market penetration. In looking back over the last 3 years, our penetration of new accounts has accelerated over the last month, 12 months prior. Our belief is that accounts are more interested in bringing us on today than we were in a position a year or 2 years prior. Evolysse is certainly a catalyst in the sense that it becomes more interesting to partner with us on a broader portfolio. We believe that we have an excellent runway of existing accounts just with Jeuveau, and that Evolysse gives us an opportunity to expand the product portfolio with our existing customer base, which now exceeds 11,000 customers. Our cash pay positioning is appreciated by our customers, and they value our investment in advertising. Extending that offering to the filler line would give them more reasons to partner with us across the portfolio of products. For that reason, we're very optimistic about what Evolysse could bring when we introduce it to the market. Of course, we still have some time until we launch Evolysse in 2025, but we see tremendous runway for Jeuveau and continued market opportunity.

Our next question comes from the line of Marc Goodman with SVB Securities.

David, what is your sense that the market grew this past quarter? Do you think it was high single digits? It just seemed, obviously, BOTOX grew 5%, right? And then secondly, what are your thoughts about Revance and the dynamics of what they've done and their metrics so far?

Marc, we’re really pleased to see that the third quarter reflected a healthy rebound in terms of procedural volume. It’s hard to pin the exact number, but we do believe this is a high single-digit growth market coming into this year. Our views are relatively intact, and Q3 was certainly an acceleration of market growth from the front half of the year, which is positive. We assume that will carry through into the fourth quarter with no reason to believe it wouldn't, as that has been the traditional growth rate for this market over many years. As for the market dynamics of competitors, we continue to maintain our focus on our brand positioning and establishing our brand in the market as a unique beauty product. That has differentiated us from existing competitors competing on similar dynamics as other drug companies do. I think we’ll continue to do that. I don't have a view to share on how other companies launching are progressing. I think we will have insight into that when they report.

Our next question comes from the line of Doug Tsao with H.C. Wainwright.

Congrats on the progress. Just on the extra-strength, I'm just curious; do you have a thought or perspective on the amount of extended duration as a function of just more units versus the hyper-concentration? I mean, is the hyper-concentration important? Or is it just simply more toxin?

Thanks, Doug. Dr. John Joseph was the first to introduce that concept of increasing the concentration and getting a little bit of duration. There may be a contributor there. A few years ago, BOTOX also demonstrated when they doubled the dose, they hyper-concentrated almost at the same level as everyone else. And what they did with the 20-unit arm, they noticed that even though the 20-unit arm looked better than the baseline. Bottom line is that doubling the dose gives you longer duration. It’s not linear, though. This comment applies to all the treatments we’ve seen come out. Concentrating may also contribute a little, but we’ve seen that with others as well.

Is getting in for concentration something that an injector can accomplish themselves if they know the right recipe?

That's exactly right. Today, you have a vial or a certain number of units in there, and it's dry. You can control the concentration by adding the diluent. Depending on how much you put in, you can determine the concentration. Looking at people who inject it, you take a vial of 100 units of different products and can concentrate it with up to 5 milliliters to get a spectrum. Even today, the common practice is for some people to hyper-concentrate a little bit. In the context of Jeuveau extra-strength, for instance, it would be effective in publication you can get a 100-unit vial, meaning you can reconstitute it as described in the publication to create your own for hyper-concentration in your office.

Our next question comes from the line of Navann Dietschi with BNP Paribas.

First one, a follow-up on taxis; have you seen any impact at all from the change in pricing strategy since September 1 during and after the quarter? And I was also curious about whether you have conducted any promotional activities in the quarter, and will you conduct an event versus November the next day.

Navann, regarding the newest competitor entering the market, the guidance we provided at the beginning of the year when we were aware of their launch indicated a very healthy performance. We have since guided that performance up a few times, reflecting our confidence in how Jeuveau is performing, despite the entrance of a new competitor. This is a competitive market, but we always believe the bigger market opportunity lies with the consumer and targeting the younger generation. Our focus has been consistent and unwavering over the last several years. What you’re seeing reflected in the results is that it has little to do with the competitive environment as much as it does our market positioning and how our customers are responding to that, which is seen in the increasing share of Jeuveau in their practices. We feel strong about that. Regarding promotions in the market, there wasn’t anything particularly unique about the quarter. In the fourth quarter, with the holidays being the peak season for the injectable category, you can expect promotions from all competitors. We are certainly part of that as well. We’ve had a program for several consecutive years now called the 11 Day program, which is currently in the market. It’s been a successful program for us, which evolves in different ways. Ultimately, it captures a larger share of that segment.

Our next question comes from the line of Uy Ear with Mizuho Securities.

I guess the first question is, David, are you suggesting that the fourth quarter could be driven more by market growth? Or did you do something different to achieve a quarter where, typically, it would be down? And I guess my second question is, what do you think of the short-acting toxin that Allergan reported some data for Jeuveau PE?

Sure. I think on the third quarter, I believe what we said is that we saw the overall procedural volume tick positively year-on-year. We went into the quarter with that assumption. The leading market player indicated a similar rebound in the market. That was our assumption, and we’re pleased that it played out positively. We did not expect our business to grow sequentially; we anticipated a slight step down in the third quarter followed by a step back up in the fourth. We were pleasantly surprised by the increase in demand for Jeuveau in the third quarter, and we attribute that to continued market penetration and share gains more than we do to the actual procedural volume increase in the quarter. Moving on to the additional toxins coming into the market, I don’t have a lot of color to provide on that. I’m curious to better understand how it would be positioned as a shorter-acting toxin. The industry has not had visibility into what longer-acting could be, perhaps what shorter-acting might be. In the end, I think we’re well positioned with the unique 900-kilodalton molecule, which is separate from the market leader. Our brand is targeted at the younger generation, the fastest-growing segment in this market, and our cash-pay positioning enables us to partner effectively with practices as first-in-class programs help accelerate their growth and profitability. Overall, I believe we’re positioned well in light of the upcoming competition. Thank you, operator. In closing, the success of our long-term strategy is evident in the strong results of the third quarter and clearly demonstrates the continued above-market progress that the Evolus team is achieving in driving brand awareness and capturing market share. With record quarterly revenue and all-time highs in key metrics, we continue to build momentum, outpacing both the underlying growth of our market as well as the competition. The final results of our extra-strength study this past week and the addition of the Evolysse line of dermal fillers beginning in 2025 underline our continuous efforts to build a strong and growing beauty brand. With a healthy injectable market backdrop and a 70% expansion in our total addressable market directly attributable to the addition of a dermal filler line, we remain confident in our $700 million revenue target for 2028, representing a 29% revenue CAGR. We are fully funded to achieve that growth, and we have an experienced team in place to execute our growth plans. This category is transitioning from pharma to beauty, moving from an older generation of users to millennials. Our cash-pay focus enables us to uniquely partner with practices through first-in-class programs that help accelerate practice growth and profitability. With our business model focused on the beauty market, we have built a moat against our competitors. This is a unique and sustainable competitive advantage for Evolus, the benefits of which are evident in our pace of growth and strong financial results. Note that we will be participating at the Stifel conference in New York on November 14 and 15, and at the Evercore Healthcare Conference in Miami on November 28. We look forward to seeing you there. Thank you all for joining us today.

You may now disconnect your lines.