Ten years from now, eliminating frown lines and other wrinkles with injectable neurotoxins will be as commonplace as any other beauty treatment at the salon, according to executives at Newport Beach-based Evolus Inc.
“Hair dye was initially taboo, and now 75% of women in the U.S. get their hair colored,’” Evolus Chief Executive David Moatazedi told the Business Journal during a recent tour of the company’s 17,000-square-foot Newport Center headquarters.
“By treating this category like a beauty treatment and not a medical procedure, the younger generation will gravitate to it.”
Evolus (Nasdaq: EOLS) is finally seeing its sales explode after years of promise and a settlement with aesthetics rival and Botox-maker Allergan.
Its revenue, which climbed 76% to $99.7 million in 2021, is expected to grow another 49% to $148.5 million this year.
“This product is in its early days of gaining success, yet based on our growth last year, we’re the fastest-growing neurotoxin in the United States right now,” Moatazedi added.
“We believe the opportunity is even bigger than what folks believe it could be—and that’s what makes it so exciting.”
Along with its domestic operations, Evolus is laying the groundwork to expand in Europe and Australia, according to officials.
Allergan Competition
Founded in 2012, Evolus’ product is an elective, cash-pay procedure not covered by insurance. Its name is a play on the words “evolve with us,” as Moatazedi puts it.
The company in 2018 hired Moatazedi, who at the time was head of Allergan’s Botox division in Irvine.
In 2019, the company launched its flagship product, Jeuveau, the only neurotoxin among four others on the U.S. market that competes head-to-head molecularly with Allergan’s Botox, according to industry watchers.
“Unlike Galderma’s Dysort or Merz’s Xeomin, [Jeuveau] is the first toxin that is really similar to Allergan’s Botox,” SVB Leerlink Analyst Marc Goodman said in a report last month.
“Hence, we think this product does have a viable opportunity (as Evolus’ management believes) to become the No. 2 player in the U.S. market.”
Lawsuit Resolution
After Jeuveau’s release in 2019, Allergan and its South Korean manufacturer, Medytox Inc., filed lawsuits against Evolus and its manufacturing partners and in late 2020 won a U.S. trade ruling that imposed a 21-month import ban on Evolus.
The two sides settled in February 2021, as Evolus agreed to pay royalties and $35 million in cash. It also issued 6.8 million shares to Medytox, which now owns 15.5% of Evolus and is the company’s single largest shareholder.
Since that agreement, Evolus shares have almost doubled to around $11 and a nearly $610 million market cap as of late last week.
The company went public in 2018 at $12 a share.
According to the company’s 2021 proxy statement, Moatazedi owns 996,700 shares, or 2.2% of Evolus, currently worth about $11.1 million.
Younger Market
While Allergan historically has catered to older clients with its Botox offering for aesthetic uses, Evolus is setting its sights on millennials in their 20s and 30s, who make up about 40% of its customer base, officials say.
Some 70% of millennials are willing to spend money on maintaining or improving their facial appearance, the company says.
It’s been able to convince about 7,000 practices in the U.S. to carry Jeuveau.
While the broader aesthetics market took a hit during the pandemic in 2020, it rebounded last year.
Allergan, which was once one of the largest companies based in Orange County, is now part of Chicago’s AbbVie Inc. (NYSE: ABBV), which reported its Botox Cosmetic division had 2021 sales of $2.2 billion, a 100% increase from 2020. It also uses Botox for a variety of therapeutic uses, and brought in about another $2.4 billion last year from that division.
Allergan’s Aesthetics division remains based in Irvine.
‘State-of-the-Art Manufacturing’
Evolus manufactures Jeuveau through South Korean company Daewoong Pharmaceutical, which says it has a state-of-the-art plant in Seoul. The proprietary manufacturing process takes approximately 1,000 steps.
“The manufacturing capabilities in our plant are sufficient to supply the entire U.S. demand for neurotoxins,” Moatazedi said. “When a consumer gets this product, [they] really see what the advantages are in that manufacturing process.”
According to Evolus executives, Jeuveau’s effect on wrinkles can be seen in as soon as two days—faster than Botox—and customers don’t need treatment more than three times per year.
The result is also slightly more localized than diffused, which Moatazedi sees as “a huge benefit, because precision is control.”
“When injected in the muscle, the line goes away, but facial flexibility remains, so the face isn’t frozen.”
On March 31, Evolus announced enrolling its first patient in a clinical study examining an “extra-strength” dose of Jeuveau for a longer-lasting result.
The randomized trial will follow 150 patients for one year. The study will include two active controls—the currently approved 20 units of Jeuveau and 20 units of Botox—which will be compared to 40 units of “extra-strength” Jeuveau.
Evolus anticipates completing the study in the first half of 2023.
Global HQ, Expansion
Part of Evolus’ strategy to turn Jeuveau into a leader in the wrinkle-busting sector is to sell it elsewhere in the world under the name Nuceiva.
Evolus first sold Nuceiva in Canada in 2019. In February, it filed an application for the Australian market, which it expects approval for within a few years.
The company plans to penetrate the second-largest toxin market in the world—Europe—by the third quarter this year. European approval would permit the sale of Nuceiva in 31 countries.
In tandem with the European launch, an international base will be installed just outside of London, where the hiring of European talent would grow its current workforce of 167.
Evolus previously hired talent from the Bay Area to build out its technology platform and mobile app, from which it gets a majority of its orders. In the fourth quarter alone, over 100,000 transactions took place within its rewards program, which deducts $40 off treatments.
“We’re a much leaner team than any of the competitors we operate against, yet we’re very productive per individual at the company,” Moatazedi said. “That is an advantage we will continue to lean into.”
