Revance Therapeutics Inc (RVNC) Quote

well... so far, the fact tells us he did indeed sold to highest bidder... maybe the worst timing to shop the company though.

Mark Foley incompetent idiot destroyed RVNC. RVNC management are resigning in droves now. So sad what Foley and Dustin did….Daxxify is the best toxin in the world…Foley and Djust are total idiots!

I’ll have to block daxify news so it doesn’t drive me nuts.

Randy, that link doesn't say how much RVNC gets as a milestone payment, not that it matters anymore to RVNC shareholders.

So Foley sold us out cheap right before 1) interest rate cut cycle begins 2) Daxxify growth accelerate 3) Oversea approval....

It keeps Foley's record of always making the wrong decision intact.

Agreed and Surprised…source of funds for me to build positions in other biotechs where mgmt’s align with good stewards of balance sheet/cash and are more shareholder friendly!! And potential blockbuster pipes! Selling half, tender the rest…

Looks like ‘CWI’ threw in the towel by selling almost half of position in recent filing..

Item 4. Ownership.
Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.
(a) Amount Beneficially Owned:
6,948,769 **
(b) Percent of Class:
6.6%
(c) Number of shares as to which such person has:
sole power to vote or to direct the vote
6,948,769

**Capital World Investors ("CWI") is a division of Capital Research and Management Company
("CRMC"), as well as its investment management subsidiaries and affiliates Capital Bank and Trust Company, Capital International, Inc., Capital International Limited, Capital International Sarl, Capital International K.K., Capital Group Private Client Services, Inc., and Capital Group Investment Management Private Limited (together with CRMC, the "investment management entities"). CWI's divisions of each of the investment management entities collectively provide investment management services under the name "Capital World Investors." CWI is deemed to be the beneficial owner of 6,948,769 shares or 6.6% of the 104,823,331 shares ….

But still no other bidder.. what's wrong?

So Foley sold us out cheap right before 1) interest rate cut cycle begins 2) Daxxify growth accelerate 3) Oversea approval....

Brilliant...

Teach me please, this one really hurts !!!
At least Fooley could’ve thrown a bone with this f’g acquisition and a Contingent Consideration or an Earn-out to participate in any upside for shareholders !! Oh well, source of funds to build position in a few other promising Bio’s!!

https://www.biospace.com/press-releases/sirsram-medical-announces-nmpa-approval-for-daxxify


I’ll have to block daxify news so it doesn’t drive me nuts.

Fosun approved by China natl medical( BLA), great!!

when to the tender docs come out?

probably just a minor tweak given the stock price didn't react to it.

Anyone with experience on why this agreement would be executed and what it means?

Prob doesn’t mean much, but perhaps they both hear/see some resistance ??

http://archive.fast-edgar.com/20240828/A3ZZ322CZ2288232222S2CZ27GRTZZ2S6P62/rvncex991_waivertoagreemen.htm

SPOT ON as per usual ....

Well if there is no other bid before this closes, it means some of us here (myself included) have way over estimated how much Daxxify would fetch in case the company need to shop itself

For me, I was thinking at least 10 bucks

$12 to 15 per share sounds about right.

And still should provide lots of value to acquirer

Why it didn’t happen and seems not going to happen now say our glasses are just too rosy

Still about 45 days before the story ends

I hope someone will at least place a 1 billion bid for this

Fully agree. We should learn more from the tender docs and filings when they come out.

Another bid may still come in--they are not allowed to solicit it, but I believe they can provide DD info to a potential bidder. However based on how close RVNC trades to $6.66, and the pricing of the longer term calls and puts, the market seems to expect this transaction to go through.

This is a fire sale, and makes no sense to me unless there is some disaster we don't know about or this is a sweet deal where top RVNC management reloads in incentive shares and does great at the eventual sale/IPO at 5x.

Thoughts on Crown

PE backed and profitable. Selling lower priced commoditized consumer aesthetic products. Hearing they are well capitalized and supported by their PE partner so access to capital and debt burden are no longer issues.

Acquiring Daxxify and a healthy and growing RHA filler business for EV of $922M. The Daxxify portion of the business took 10 years to get here post their 2014 IPO and over $1.2B was spent to get it to this point (2 FDA approvals in aesthetic and therapeutic and 17 months into commercial launch with manufacturing partners and clear path to PCI ramp in late 2025/early 2026). You can reasonably value their RHA business at $500M with around $150M a year in sales at around 65% GMs = $100M gross profit a year. That means Crown walked in and bought the leading performance NT on the market for $422M having put in zero work and time into R and D, exploiting 20 years of development labor since 2002 founding of the company. The debt burden is now lifted and this company is private, free to operate without having to report and be scrutinized by the public. Crown management is known for operating lean and mean, they will consolidate operations quickly and lower cash burn. They will license/spin off therapeutic Daxi asap, in effect, further lowering their cost basis. Therapeutic Daxi will then be able to raise the price and not be encumbered by pricing competition of cosmetic Daxi.

Who should be scared? each and every competing NT maker (Abbvie, Galderma, Evolus, Merz). They will now have to compete against a superior NT that is likely within 18 months of starting their hockey stick adoption phase into a consistently growing US neurotoxin market that should be in the $3.5B annual sales run rate in 2 to 3 years. A company that is well capitalized and competing with the lowest NT acquisition price in the biz while having the superior NT in the market today.

I am surprised that no other bidders emerged. From a defensive position, someone should have wanted to, at the very least, force the bid up into the $1.2 to $1.5B EV range so they are not competing against a superior NT purchased for only $422M. A counter bid in the $1.2B EV range would have priced the Daxi part of the business in the $700M range, still cheap IMO. With the PCI manufacturing ramp in 2026, Crown will be able to produce Daxi at scale at half the cost they produce it today: my guess from $50 a vial today to $25 a vial by 2027. By comparision, Evolus likely paying $50 to $65 for Jeuveau.

This acquisition will look well timed and cheap for the Crown group in as little as 2 years and I am guessing they will take it public again at a valuation 5x what they acquired it for in 3 to 5 years.

Right, I should have just stated the fee and not attempted to divide by my incorrect recollection of the outstanding shares.

In fact the $28,760,000 fee Revance pays is smaller than the $43,140,000 termination fee Crown pays.

You are right. There are 104.2 million shares outstanding so it’s about .27 a share. I didn’t check the outstanding shares and for some reason recalled it was roughly 28 million.

That seems incorrect. The termination fee is $28.76M which is nowhere close to $1/share. Perhaps Mouton can clarify where that figure comes from.

RVNC would have to pay a break fee of about $1 per share.

That seems remarkably high as a percentage of offer price. Was Foley, yet again, being incredibly incompetent?

Also, its weirdly MUCH higher than the amount paid if the deal falls through. What in the world is up with that?

I appreciate the partial pass :)
I sure don’t get them all right…..but with Revance, I was pretty spot on. I just didn’t make any real money shorting it because the extent of my shorting was a day trade or two. I did go long at the end.
I followed Revance closely because I have been very long Evolus for quite some time and know the toxin space well. And Dew and I were the only people that would comment on the Evolus iHub msg board.

I really think the Revance fail was a mixture of Daxxify over-hype, terrible mgmt and marketing strategy and then the difficulty of launching any new product (even if it is as good as the hype).

The merger agreement prohibits RVNC from soliciting another bid but they are permitted to consider and even accept an unsolicited bid. RVNC would have to pay a break fee of about $1 per share.

As for getting no alternate bids, … how many companies that could put together a meaningful offer would understand this level of detail?

That would have taken an active search for partners or a company to buy out RVNC. I don't think Foley tried that and unless I am mistaken, they can't do that now under the buyout deal he just negotiated.

I think we need to wait 6 -12 months before we make that determination. You’re assuming Foley made the right choice which would be the first time in a long time.

I think we have to admit we have overestimated the worth of Daxxify and RHA by a pretty far margin.

Yes,

A) after the price adjustment the therapeutic market was going to be a LOT smaller than the existing Botox Therapeutic. Per Revance’s own chart at repricing investor day, which essentially made this point without actually saying it.

B) interest rates broke them. They couldnt refinance their existing loans at the same rates - so they were going to burn much more cash than Foley stupidly assumed. (This has been a general problem with many stupid biotech management teams - they couldn’t see the writing on the wall when interest rates went up so they didnt slash and burn expenses until too late)

That said, if it really did start to take off in late Q2, they could have made it past #B above. Still wouldnt have been worth anywhere near as much as Botox because they sabotaged the price. As for getting no alternate bids, … how many companies that could put together a meaningful offer would understand this level of detail?

No bidder so far. I think we have to admit we have overestimated the worth of Daxxify and RHA by a pretty far margin.

Nope, he was right about growth even then. He noted in about early to mid June that Daxxy was finally getting buzz in his injector community.

I will give him a partial pass as he was very negative about prospects but did recognize the upswing at the end. I wonder if Foley was so detached from the company business that he didn't notice sales were rising as he was too focused on cutting a deal, which likely enrich himself.

He was indeed right until he wasn’t right.

Nope, he was right about growth even then. He noted in about early to mid June that Daxxy was finally getting buzz in his injector community.

He was indeed right until he wasn’t right.

Yes you kept telling us that.

In the end Borack was right about sales numbers. After launch they always did worse than EOLS Q/Q growth - until this last Q and Borack actually suggested ahead of time that might happen because he was finally seeing buzz among injectors he knew.

I didnt see much progress in my circles with Daxxify which was a red flag.

Yes you kept telling us that. Soma painted a different picture. Hard and inaccurate to paint a broad countrywide picture from small localized samples.

RVNC could have done SO much more to conserve funds inside the company. Reduced the Aesthetic expansion territories to make each Rep more profitable, redundant RSM's and Directors which 15-17 are not needed to run a salesforce of 90-75 reps (which they could have done just fine with), cutting corp costs at Nashville. There was so much waste here all the way from Mark down to the street level. I saw it back in spring/summer of 2023 that this company was going to go under at the rate the cash was being spent. The ego and arrogance was just too much.

I guess the issue is, rightly or wrongly, there would be very little room of error. But I agree. why need to sell the whole company now and give up the upside. Why not get a commercial partner.. why not just sell the ROW commercial right to raise cash.. At least we get to enjoy some potential upside.. now all the upside gone for 6.7.

But if we don't see another bid coming in.. that means management indeed get the best price they could.. which can only mean many of us have over estimated what Daxxify is worth.

Soma…..imo, you have been the best on this board. Great info all the time. Good luck to you.

Pretty sure he is as upset with RVNC as anyone else. Sometimes things don’t work out. He seems like a smart guy but lots of people relied on him too much. He gives what he knows and gives his opinion. (I learned quite a bit from him). Then do your OWN due diligence. My own DD told me there were issues.

That being said, the areas where I strongly disagreed with Dew was when he accused EOLS of doctoring their study/slides on the double dose study. And also claiming that Evolus would lose their ability to import Jeuveau from S. Korea (well after their settlement deal with Medytox). His bias against Evolus was very strong.
I didnt see much progress in my circles with Daxxify which was a red flag. And we were part of PrevU and it just didn’t impress enough. I always looked at the landscape where Revance, Evolus, Galderma could keep chipping away at Allergan. And if managed correctly, their stock prices could all do well. But the public journey for RVNC is over for now. GLTA

You mentioned the Athyrium debt but there’s also the convertible notes, due 2/15/2027, another $287.5 million. And yhose notes bear interest at 1.75 percent and so any refinance (if possible) would be at much higher interest

Why would they sell now at $6.66?

While we will have much more clarity on the negotiations when the tender offering documents post by end of August we can assume that this was reasonably and fairly shopped out by their banking partner: Centerview, and passed legal scrutiny by their law firm: Skadden, Arps.

So what did the board likely see that forced their hand?

1) They were not going to make Q3/Q4 revenue numbers and that they would likely have to revise those estimates down to the $260 to $265M range and this would then lead to analyst downgrades and further revision down to 2025 revenue targets, a possible going concern statement in 2025 with a $150M short term debt time bomb payoff of Athyrium debt in 2026. my thinking: if we could find someone to refinance that Athyrium debt out an additional 2 to 4 years it would help to take pressure off the balance sheet until they reach cash flow breakeven in late 2025/early 2026.

2) it was getting well into Q3, and they wouldn't be able to maintain the "at least $280M in 2024 Revenue guidance line" for much longer. They elected to sell before this announcement. The board and management team had grown tired and took the easier and less risky path is how I see it. I only wish they would have fought to somehow preserve some potential future upside for long term loyal shareholders in the event that Crown can help get this across the cash flow positive finish line.

3) a revenue estimate warning and $150M in short term debt payments in 2026 would likely force a dilutive raise of $100M in the $2 to $3 range in 2025 which would require 30 to 40M additional shares = 22 to 28% share dilution.

4) Other headwinds: Allergan trial expenses in 2025, China fosun payments paid in arrears which likely means we don't see China revs until 2nd half of 2025 and they will not be as significant until China market gains traction, slower Daxxify therapeutic payer reimbursements than many of us are modeling, competition from Hugel as new low cost Botox biosimilar in 2025.

So the board said let's take the $6.66 and protect shareholder value and get them 2.8x higher price compared to the recent lows, but capping all future shareholder gains. I am not happy about that. It appears they have swam 50 to 75% of the distance and decided to quit rather than risking failure and continuing to their goal of cash flow break even in 2nd half of 2025 or even early 2026. I suspect Revance is 12 months away from a clear path to breakeven which would help to bolster share price and a chance for debt refi. As you can see in my post below, I had already lowered my 2024 Revenue target to $265M which implies $148M of sales for Q3 and Q4 = flat in Q3 and $83M in Q4. For those of you who crunched their numbers, they lowered cash burn significantly from Q1 to Q2 and reduced cash flow from continuing operations significantly while increasing GMs to 73% from 71% last quarter. I now have them finishing the year with around $180M cash after receipt of $15 to $20M in Fosun milestone payments. I expect $350M in 2025 Revenue and additional $80M in cash burn to $100M by year end 2025 and before the needed prep for Athyrium debt payoff in 2026.

Based on how Daxxify is growing in my practice and the practices I am in close communication with, injectors finally figuring out optimal injection patterns and pricing, accelerating new account growth, a therapeutic sales ramp in 2025, Fosun China license revenue starting mid to late 2025, and how well RHA is doing against their competitors, I would have been willing to undergo the potential need for a dilutive share sale next year in order to hold my ownership and eliminate the cap on my future share gains.

My past post. As you can see, they beat on my Q2 Revenue growth.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174570035

$277M was cash at quarter end March 31, 2024 and after the $100M raise.

Non GAAP OPEX this year trending to bottom of range $290M to $310M....So let's assume $295M for full year minus $73.6M in Q1 = $221M for remainder of year.

$280M total revenue guidance for 2024 minus $52.1M in Q1 = $227.9M Revenue for remainder of 2024. This does not include any milestone payments from Fosun/Viatris.

$227.9M x 72% GMs = $164M Gross Profit for Q2 to Q4 2024.

$164M GP minus $221M non GAAP opex = $57M Non GAAP loss for remaining 3 quarters.

Now add debt paydown and Interest expenses and finance lease payments of $35M for remainder of year:
Net Interest Expense of $2.3M/qtr for next 3 quarters:
My estimate of Finance Lease pre-payments (this is for Anji and PCI manuf/Fill/finish facilities): $8M/qtr
Athyrium debt payments: $2.5M total Q3/Q4

Add in $10M to AR/AP deficit/working capital as sales grow and I have cash burn of $57M + $35M + $10M = $102M

$277M - $102M = $175M Cash to end 2024 plus any milestone payment from Fosun/Viatris = $15M and based on current Revenue projections, Revance should finish 2024 with $190M.

Assuming revenue hits $85M in Q4: $39M RHA (15% year/year increase) , $38M in Daxi Aesthetic (58% y/y revenue increase), and $8M Daxi for CD; and we should shrink cash burn to around $27M in Q4.

Revance will need $110 to $115M in quarterly revenue to get to cash flow break even. My thinking: $40M RHA, $50M Daxi Aesthetic, and $20M Daxi CD. Should be recognizing China Fosun daxi sales by 2025 first half of 2025.

When will this happen? Q2 to Q3 2025. Revance should have over $100M cash remaining despite the accelerating Athyrium loan payoff schedule.

A solid Q2 revenue increase of 15% over Q1 would get us to $60M but that means Q3 and Q4 will need to see some big revenue growth and I am not so confident they will hit their revenue guidance so I feel that $280M revenue guidance for 2024 is at risk. My rev target is $265M, and, while disappointing, I still see Fosun milestone payment and CD milestone payments in 2025 as countering the $10M higher cash burn for 2024.

It looks as if Dew removed the my stocks section of his profile. Could it be that some who accused him of misleading followers on this board triggered him to do that ?

Misleading? What the hell are you talking about? Do you think he said he had high hopes for stocks he really didn't like? That would be misleading.

Where is your list of stocks?

Of course. The board has been very useful, and while this investment was a fail for me, the opinions expressed here by informed posters were helpful and encouraged me to add to my position in the low 3's, as a result substantially reducing my losses.

Great post! The information provided her gave me confidence to buy mire in the low $3s, the mid $2s and even the lower $2s, which allowed me to make a profit.

I still don't get the outcome, given that aesthetic use is trending the right way, CD *has* to be a success given the shortcomings of existing treatments, and milestone payments are expected soon. How can they be running out of money so bad they had to do a fire sale? And Crown? How come someone like Galderma doesn't offer $10 at this point? Something seems off here...

Couldn't agree more. Good luck and a better outcome on other stocks you invest in.

It looks as if Dew removed the my stocks section of his profile. Could it be that some who accused him of misleading followers on this board triggered him to do that ?
I hope not! I certainly welcome Dew's (and everyone's) ideas.
[OT]Speaking of which, anyone has an opinion on VRCA? My derm contacts (who were Mohs surgeons before getting into aesthetics) don't think much of their molascum product, think they will have reimbursement issues with warts, but think if their P2 results hold up to multi-year followup, the BCC product can succeed as a first line treatment before Mohs surgery. That could be a huge market, but the company seems a mess financially, so a big dilution seems inevitable...

I really don’t like when people point blame at others (like Dew) for investing losses. No one is clicking the buttons for you. I certainly didn’t see things the same as Dew and others on this board. It was unfortunate that a couple of loud people on this board made it sometimes unbearable and did a huge disservice to others.
Of course. The board has been very useful, and while this investment was a fail for me, the opinions expressed here by informed posters were helpful and encouraged me to add to my position in the low 3's, as a result substantially reducing my losses.

I think I made two main misjudgements in evaluating this investment:
1. I should have analyzed daxxi as a new drug, with the corresponding introduction challenges
2. I should have assigned a higher probability to poor execution.

I still don't get the outcome, given that aesthetic use is trending the right way, CD *has* to be a success given the shortcomings of existing treatments, and milestone payments are expected soon. How can they be running out of money so bad they had to do a fire sale? And Crown? How come someone like Galderma doesn't offer $10 at this point? Something seems off here...

It looks as if Dew removed the my stocks section of his profile. Could it be that some who accused him of misleading followers on this board triggered him to do that ?
Just wondering ??

I really don’t like when people point blame at others (like Dew) for investing losses. No one is clicking the buttons for you. I certainly didn’t see things the same as Dew and others on this board. It was unfortunate that a couple of loud people on this board made it sometimes unbearable and did a huge disservice to others.

"Of course, the whole point of a Doomsday Machine is lost, if you *keep* it a *secret*.""

If I recall correctly, the Soviet Ambassador said they were going to announce it but they were waiting for their premier's birthday or some other celebratory occasion.

Somewhat OT, but looking at your profile image and recalling iwfal's remark that only a drooling imbecile would lower prices and not permit advertising, recall Dr. Stangelove's observation:

"Of course, the whole point of a Doomsday Machine is lost, if you *keep* it a *secret*.""

Similarly, the point of a price cut -- to increase demand -- is lost if you keep it a secret (from the consumers who ultimately drive demand).

Dew is an amazing asset to have here on iHub, and quite frankly, is the #1 reason I stay here.

Vin, we should somehow switch monikers.