Revance: Potential Comeback On FDA Resubmission For DAXI (NASDAQ:RVNC)

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Revance Therapeutics, Inc. (NASDAQ:RVNC) is a great speculative biotech to look into. That’s because it had its resubmission of DaxibotulinumtoxinA (DAXI) for the treatment of patients with moderate to severe glabellar frown lines accepted by the FDA. The PDUFA date for this resubmission has been established for September 8, 2022.

More about its Complete Response Letter (CRL) it received for DAXI below, but in short, the FDA noted issues with the working cell bank (WCB) and the drug substance manufacturing process. The WCB was the issue addressed in the CRL by the FDA, and now Revance believes that it has corrected it. If all goes well with the next review from the agency, then it should be able to obtain FDA approval for DAXI in treating patients with moderate to severe glabellar frown lines. Not only that, but this biotech is different in that it is already producing revenue from several other products. This is great speculative biotech to look into, because of the potential for it to achieve FDA approval with DAXI for Glabellar lines.

DAXI For Treatment Of Patients With Glabellar Frown Lines

DaxibotulinumtoxinA (DAXI) is being developed for the treatment of patients with moderate to severe glabellar frown lines. Glabellar lines are lines that run horizontally on your forehead. “Glabella” means the skin that is on the forehead. The glabella itself is located above the nose and often the skin tightens forming furrows. It may not seem like a big issue, but as one ages, it is a very big issue. Why is that? That’s because patients who have this form wavy lines that start to get bigger as time goes on.

Now, you might say, “well, these lines are only temporary when you smile/frown or perform another function.’ That’s only true to an extent, because the truth is that once you reach older age, the repeated facial movements can eventually become permanent. This leads to the appearance of wrinkling and sagging of the skin.

Here is another misconception about glabellar lines that is important to point out. One automatically assumes that glabellar lines are purely a cosmetic issue. Once again, that’s only true to an extent. While many do go and receive treatment for this indication because of cosmetic reasons, that may not be the only reason. It is still cosmetic; however, there is one major symptom that can cause glabellar lines. That would be cardiovascular disease, which mainly is caused by atherosclerosis. Atherosclerosis increases the risk of a heart attack or heart disease.

The fixing of the glabellar lines is still a purely cosmetic standpoint, but it still helps some doctors determine other underlying issues. The causes of Glabellar lines are as follows:

  • Aging (likely the main cause as one person ages over time);
  • Heavy sun exposure;
  • Genetics (some people just genetically get this issue as well); and
  • Smoking.

These are the main ones, but likely other factors play a role as well. Now, the most important item you are likely wondering. How big of a market is this? It is a very large market. The global Botulinum Toxin market is expected to reach $7.71 billion by 2027. It’s important to note that this is not just going to be for the use of glabellar lines, but for cervical dystonia (which Revance already achieved positive phase 3 for), belsophasm, and many other pain indications. As you can see, there is a future for Revance beyond just glabellar lines.

The main thing to explore now is the clinical trial data that may actually allow Revance to receive FDA approval of DAXI for glabellar lines. For starters, Revance ran two phase 3 trials. These two phase 3 trials were known as SAKURA 1 AND SAKURA 2 respectively. Both of these trials had met on their respective primary endpoints compared to the placebo compound that was involved in the trials. The primary endpoint for both trials were for patients who had none to mild wrinkles to achieve at least a 2-point improvement from baseline. This was to be measured and validated by physicians and patients involved in the trial.

Why is that important? Because for the primary endpoint to be met it had to satisfy physicians on a rating scale and satisfy patients with the clinical outcome. In terms of the primary endpoint 73.6% of patients saw an improvement in SAKURA 1 and 74% of patients in SAKURA 2 compared to placebo. This gave a p-value of p < 0.0001 at week 4. When it came to patient satisfaction both trials also met on the endpoint. Around 88% of patients in SAKURA 1 and 91% in SAKURA 2 said they were satisfied with their treatment of glabellar lines.

So, above based on both SAKURA 1 and SAKURA 2 phase 3 studies, you can see that the efficacy is there for DAXI in glabellar lines. Then, one may ask “What about long-term implications of patients taking this drug for glabellar lines?” This points to Revance running a long-term safety/efficacy study known as SAKURA 3. Not only did SAKURA 3 achieve comparable efficacy, but yet again treatment with DAXI was shown to be safe. SAKURA 3 was an open-label, long-term safety study that recruited up to a total of 2,691 patients. This was a lot of patients, because SAKURA 1 & 2 studies had recruited a little over 300 patients for each. With over 2,000 patients this is what makes for a strong long-term safety study.

The safety was pretty good in SAKURA 3. There was no evidence of cumulative adverse events when patients were given 3 cycles of DAXI treatment. Not only that, but each patient had a stable safety profile after repeat dosing, which is always a good thing. That means repeat dosing didn’t increase toxicity for these patients. Then, when you are comparing SAKURA 3 with the other phase 3 studies (SAURA 1 & SAKURA 2), it was noted that they were similar in terms of adverse events (AES). The breakdown of this is as follows:

  • SAKURA 1 and SAKURA 2 studies – 41% adverse events
  • SAKURA 3 studies – 39% adverse events

This is pretty good considering that SAKURA 3 enrolled 2,691 patients, compared to the other phase 3 studies which each only having recruited 300+ patients. Even then, the adverse events aren’t even that bad. They are noted as follows:

  • Headaches in 5.9% of patients
  • Nasopharyngitis in 4.4% of patients
  • Injection site pain in 3.9% of patients.

In terms of serious adverse events it was 1% across the board in all three phase 3 studies and none were related to DAXI treatment itself which is a good thing. Lastly, SAKURA 3 saw just about the same efficacy as the other two phase 3 studies. That is, DAXI treatment had seen patients return to moderate severe levels after 24 weeks, and about 28 weeks to return to baseline levels. Most notably, there was a 96% response rate based on the Investigator Global Assessment–Frown Wrinkle Severity (IGA-FWS) scale after 3 treatments.

Potential For Turnaround After Complete Response Letter For DAXI

Revance Therapeutics suffered a major blow in October of 2021 when it received a complete response letter (CRL) from the FDA for DAXI in glabellar frown lines. At that time shares plunged and not much was known about the rejection. Later on, the company received Type A meeting minutes from the FDA for the reason on why the drug was rejected. Bottom-line the CRL was given because of issues relating to the manufacturing of the drug product.

It had nothing to do with safety or efficacy of DAXI itself. Having said that, things are looking up for Revance, because the FDA accepted its resubmission of the BLA for DAXI. A PDUFA date of September 8, 2022 has been established. Besides a re-review of the application itself, the FDA will need to inspect the manufacturing process again.

I believe that things should go well this time around. The biotech states it addressed the outstanding issues of the working cell bank (WCB) and drug substance manufacturing process. It completed the production of three consecutive drug substance lots and one drug product lot as part of the qualification of a new working cell bank (WCB). With the company addressing these issues, I believe that it has a greater chance of receiving FDA approval for DAXI this time around.

Financials

According to the 10-Q SEC Filing, Revance Therapeutics had cash, cash equivalents and short-term investments of $262.6 million as of March 31, 2022. It should be good on cash for quite some time, that’s because it developed a $300 million purchase agreement with Athyrium Capital Management which closed in March of 2022. This type of funding would be able to give enough cash to fund its operations into 2024. This would be $100 million in notes issued at closing of this note purchase agreement and an additional $100 million upon FDA approval of DAXI for glabellar lines. It also has an ATM agreement to draw upon to raise funds with as well. Year-to-date it raised approximately $31.8 million under its ATM offering.

The company is generating some revenue already as well. This is because of the RHA Collection which is the first and only FDA-approved hyaluronic acid filler for dynamic wrinkles and folds. The three approved formulas are RHA2, RHA3 and RHA4. Since launch of the RHA Collection, sales reached $100 million, with first-quarter revenue totaling $20.8 million. This first quarter revenue represents a 78.9% year over year growth from the same period in 2021.

Risks To Business

There are several risks which investors/traders should be aware of for Revance Therapeutics. Even though it has stated that it took the proper steps to correct issues identified in the CRL given for DAXI, there is no guarantee that the FDA will agree. In addition, for the biotech to receive FDA approval, inspection of the manufacturing process must take place beforehand. It is possible that the FDA may find similar or different deficiencies with the manufacturing process. As such FDA approval for DAXI is not guaranteed.

The second risk would be as it relates to the $300 million purchase agreement. One stipulation is that $100 million will be given upon FDA approval of DAXI. If a CRL is given again for it, then Revance would lose out on obtaining this additional cash for financing its operations.

The final risk would be with respect to its dermal fillers. Thus far, sales have been going well, as evidenced above with the 78.9% year over year growth. However, there is no guarantee that such a percentage in growth will continue. It is also generating revenue through its fintech platform which has OPUL and HintMD. Gross payment volume for this platform was $154 million in Q1 of 2022.

Conclusion

The final conclusion is that Revance Therapeutics is a great speculative biotech to look into. That’s because it has potential to obtain FDA approval for DAXI for the treatment of patients with moderate to severe glabellar frown lines. A PDUFA date of September 8, 20222 has been established for this potential regulatory approval for this treatment in the United States.

As long as the inspection of the manufacturing plant goes well, then it should have no problem receiving FDA approval for DAXI. At least this company is producing revenue by other means. These are the fintech platform that includes OPUL and HintMD, plus the selling of the RHA Collection as well.

Speaking of which, Revance is expected to launch another product as part of the RHA Collection known as RHA Redensity dermal filler. This launch is expected to take place in Q3 of 2022 and it will be for the treatment of moderate to severe dynamic perioral rhytids (lip lines) in adults aged 22 or older.

With possible FDA approval of DAXI in a huge market, plus the sales it is producing already through several other products, I believe that Revance Therapeutics is a great speculative biotech to look into.



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