RVL Pharmaceuticals plc

Net product sales, entirely from UPNEEQ, were $8.3 million in Q2 2023, reflecting a slight decrease from the prior year due to lower sales volume, partly offset by higher pricing from an April 2022 price increase. Total cost of goods sold was $1.9 million, and gross profit margin was 76% versus 74% in the prior-year period. SG&A was $13.9 million, down $6.3 million year over year, and R&D was $0.5 million, down $0.7 million. The company recorded $13.9 million of impairment charges tied to discontinued arbaclofen marketing efforts. Adjusted EBITDA loss was $7.4 million, nearly 40% better than the $11.8 million loss in the prior-year quarter. Cash was $19.2 million at June 30, and senior secured indebtedness was $70.7 million. For Q3, management said total operating expense should be roughly comparable to Q2, with Q4 expected to ramp somewhat as it seeds direct-to-consumer marketing and heads into the holiday season for aesthetics.

Brian Markison framed the quarter around three priorities: continuing momentum in UPNEEQ, advancing strategic review/business development, and extending runway through lower operating expense. He said the company is in advanced discussions with a short list of potential partners or acquisition targets and wants deals that bring meaningful cost synergies or vertical integration. His tone was confident about the commercial setup, especially the large untapped market, very low awareness, and the launch of Elevate, which he said is converting ahead of internal expectations.

Mike DePetris focused on the quarterly financials and cost discipline. He highlighted $8.3 million of net product sales, $1.9 million of cost of goods sold, 76% gross margin, $13.9 million of SG&A, $0.5 million of R&D, and a $13.9 million non-cash impairment charge related to arbaclofen. He also said monthly total operating expense, excluding nonrecurring items and noncash stock comp, was solidly below $5 million versus a $7 million benchmark, and that adjusted EBITDA loss improved to $7.4 million. He closed with the balance sheet: $19.2 million of cash and $70.7 million of senior secured debt.

Analysts pressed on why RVL needs business development and what type of targets it wants; management said the goal is to amortize the sales force, add relevance in a crowded aesthetics call point, and find cost synergies through a roll-up strategy or vertical integration. Questions on direct-to-consumer were answered with a push for more consumer awareness via digital tactics, not big traditional TV, and management said the current field-centric model needs more surround-sound support. On expenses, Brian said Q3 should look similar to Q2 and Q4 should rise modestly. On Elevate and margins, management said the platform is raising average fill size from about 40 vials to about 60 vials, improving pricing control, and should become accretive to margins over time.