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ABBVIE INC UNDER ATTACK AS THE FDA APPROVES NEW 'BOTOX' RIVAL DAAXIFY FROM REVANCE THERAPEUTICS

The U.S. Food and Drug Administration approved a new antiwrinkle treatment that could be the most formidable challenger to date to market leader Botox.

Analysts say the drug, from Revance Therapeutics, poses a threat to the market-dominating anti-wrinkle treatment because it promises to last longer.   Revance plans to market Daxxify as a luxury item and emphasize its longer duration than Botox and other toxins.

For about two decades, Botox, now sold by AbbVie Inc., has dominated the aesthetic-drug market it helped pioneer, racking up tens of billions of dollars in sales and successfully fending off challengers.

The FDA’s approval of Revance Therapeutics Inc.’s Daxxify introduces a new rival that doctors and analysts said could succeed carving out a big slice of a lucrative and fast-growing market by promising to last two months longer than Botox’s four months.

The FDA approved Daxxify, also known as daxibotulinumtoxinA, for the temporary improvement of frown lines in adults, Revance said Thursday.

The decision, analysts and doctors said, should touch off a fierce battle between upstart Revance and industry giant AbbVie, which acquired Botox as the centerpiece of a $63 billion deal for its manufacturer in 2020.

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“This marks what we think is the first real competitive threat to Botox,” said Cowen Inc. analyst Ken Cacciatore, who expect011s Daxxify to generate $1 billion in sales as early as 2030.

Botox, derived from the poisonous Botulinum toxin bacteria, blocks signals between nerves mand muscles, causing the muscles to relax. A doctor originally developed the drug to treat an eye disorder, before patients noticed it smoothed their wrink,m1 les.

The discovery prompted a company called Alle rgan to pursue Botox’s cosmetic use, which the FDA granted in 2002, launching a new market for p5mkroducts and procedures that enlarge lips, fill in cheeks and sculpt other body parts.

That aesthetics market was worth $14.6 billion worldwide last year, according to the Aesthetic Society, a professional society of plastic surgeons. Physicians in the U.S. performed about 4.4 million procedures involving Botox and two of its rivals in 2020, the American Society of Plastic Surgeons said.

The aesthetics market has been growing 10% annually, but could increase more rapidly over the next few years, according to McKinsey & Co., driven in part by a proliferation of med spas and social-media-inspired awareness among young people.

The Botox brand name has become a fixture in America’s cultural lexicon, like Band-Aid and Kleenex.

Despite facing a raft of competitors, Botox holds about 70% market share. The drug’s profitability attracted AbbVie, which sought the product as it girded for lower-priced competition for its top-selling drug Humira.

Botox sales totaled more than $4.6 billion last year, up more than $1 billion from the year prior as people working from home because of the pandemic sought to look good in video calls and returned to seeing their aesthetic doctors in person.

Botox is also approved for therapeutic uses. It lasts up to four months, according to the product’s website.

The Revance drug threatens to eat into Botox sales, which last year made up roughly 8% of AbbVie’s $56 billion revenues, behind only Humira’s roughly $20 billion in sales and the $5.4 billion from blood-cancer treatment Imbruvica.

To counter the threat, AbbVie has said it is investing more in its aesthetics business, spending more on R&D, consumer advertising and expanding its sales force in the U.S. as well as China, which the company said is a growing market.

AbbVie has said it is developing a toxin whose wrinkle-reducing duration could last longer than the approved version of Botox and a fast-acting one that has shorter duration.

AbbVie declined to comment.

Revance is taking a different tack than older Botox rivals like Dysport, made by France’s Ipsen Biopharmaceuticals; Xeomin, made by Germany’s Merz Group, and Evolus Inc.’s Jeuveau. The rivals primarily tried to compete on price, according to doctors and analysts.

Rather than discounting its drug to reach a mass market, Revance plans to market Daxxify as a luxury item to high-volume injectors in the U.S. and emphasize its longer duration than Botox and other toxins, Chief Executive Mark Foley said.

The company hasn’t disclosed pricing but has said it expects physicians to pay more than they do for existing toxins. As with other antiwrinkle toxins, doctors would purchase Daxxify directly from Revance and then bill patients, rather than insurers.

“We’re going to be introducing a product that we’re not trying to say is everything to everybody. Now, you can choose,” Mr. Foley said.

Daxxify will face big obstacles, doctors and analysts said, such as overcoming the loyalty of doctors and patients who are longtime Botox customers.

AbbVie can also sell Botox with its other aesthetic products like fat-removing CoolSculpting and dermal filler Juvéderm in exchange for discounts. And physicians will need to be trained to use Revance’s drug because it is prepared and administered differently than Botox.

In a survey of 25 physicians last year by Truist Securities Inc., nearly two-thirds said the new Revance drug would account for none to a small amount of their toxin usage, while most of the remaining physicians surveyed said it would account for a moderate amount of usage.

The FDA was slated to decide on Daxxify in 2020, but pandemic-related travel restrictions delayed the agency’s inspection of Revance’s manufacturing facility in Newark, Calif., according to the company. Several months after completing the inspection last summer, the FDA declined to approve the drug, which Revance said was due to manufacturing concerns.

After resolving those FDA concerns, Revance requested approval again and has since addressed all the agency’s subsequent issues, Mr. Foley said.

In a pair of late-stage trials studying about 600 total subjects, about a third of patients who received the product maintained either no or only mild wrinkles after about six months, according to Revance.

Similar results were reported by researchers in a subsequent open-label trial of about 2,700 subjects. No safety concerns were observed in the studies, according to the company.

COMMENTARY:   The idea that you can market Daaxify as a "luxury" prescription facial injectable wrinkle remover makes me want to laugh.  Differentiator strategy?  The only point of differentiation that Daaxify can really claim is that it lasts two months longer than Botox.  AbbVie has an answer for that:  AbbVie already developed a longer-lasting version of Botox, so Daaxify's advantage will not last very long when they go head-to-head.  Don't know the difference in price between Daaxify and Botox in order to say Daaxify can compete on price.  New entrant into the market?  I have never considered being new into a market a competitive advantage.  Nobody really knows you.  If the Revance Therapeutics, maker of Daaxify were part of Pfizer, I might worry.  

 

Botox dominates the market for wrinkle remover facial injectables with a 70% share of the global market.  It is well entrenched and Botox is the go-to wrinkle remover facial injectable drug by doctors.  Marketing Daaxify as a "luxury" just does not compute with me.  I wasn't aware that there was a "luxury" market segment for wrinkle remover facial injectables.  Will dermatologists ask their patients, "Do you prefer the newer Daaxify or the more popular regular Botox or the newer advanced version of Botox that also lasts eight months?"  

 

AppVie's Botox has huge advantages over new market entrants:  well branded, loyal customers, better or superior product, distribution channels (doctors) all locked-up, huge product development team, and deep pockets to protect its market position.  It's a Lovemark brand by any definition.  Those are huge castle walls to climb and a huge moat to cross.   

 

Sorry, Daaxify.

 

How Big is the wrinkle remover facial injectables market?   Here are a few facts:

 

Factors driving the growth and use of facial injectable products to remove wrinkles are as follows: 

• Demand For Anti-Aging Aesthetics - A growing focus on physical appearance among consumers, especially among women, has led to an increased demand for facial injectables in recent years.
• Increased Demand For Minimally Invasive Procedures - Consumer awareness regarding minimally invasive procedures due to various beauty campaigns being organized by key players in the market is also a driving factor for market growth.
• COVID-19 Pandemic - The ongoing COVID-19 pandemic has increased the time spent on video calls. Known as the ‘Zoom Boom’, several adults are becoming more aware of their appearance. This has increased demand for cosmetic surgeries, with Botox being one of the most popular products preferred.

According to market research by Grand View Research, the global facial injectable market size was valued at USD $16.1 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.  

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Vantage Market Research states that the global facial injectable market is driven primarily by new product launches and the market is estimated to reach USD $7.5 billion by the year 2028.  

 

The Global Anti Aging Market is valued at USD 59.1 Billion in the year 2021 and is projected to reach a value of USD 88.1 Billion by the year 2028. The Global Market is anticipated to grow exhibiting a Compound Annual Growth Rate (CAGR) of 6.9% over the forecast period.  The Global Facial Injectables Market revenue stood at USD $4.4 billion in the year 2021 and is expected to grow at a Compound Annual Growth Rate (CAGR) of 9.4% during the forecast period. 

 

On the basis of product, the Anti-Aging Market is segmented into four segments:

• Anti-Wrinkle.
• Hair Color.
• Ultraviolet (UV) Absorption.
• Anti-Stretch Mark.

The Anti Aging sector is currently dominated by anti-wrinkle products, which account for the majority of sales.  Anti-wrinkle products had the largest market share in 2021, and significant growth is expected by 2028.  Because of the harmful effects of cosmetics and chemical-based products, natural products are predicted to expand at the fastest rate.

 

According to market research by Grand View Research, the U.S. facial injectable market size was valued at USD $5.6 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.

 

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The anti-aging market is segmented demographically into four segments: 

• Generation X.
• Generation Y.
• Generation Z.
• Baby Boomers.

Generation X has dominated the Anti Aging industry in terms of revenue. Increased disposable income and a greater focus on physical appearance would both help the market flourish. Over the forecasted period, the demographic group Generation Y is likely to grow at a high rate. The target demographic is millennials who are familiar with high-end premium brands like Estée Lauder and Elizabeth Arden. Premium skincare brands are becoming increasingly popular among millennials.

 

Courtesy of an article dated February 8, 2022 appearing in The Wall Street Journal, an article dated June 2022 appearing in Vantage Market Research, an article dated February 2021 appearing in Grand View Research,

WARBY PARKER FACING ECONOMIC UNCERTAINTY, REDUCES SALES OUTLOOK AND TRIMS COSTS TO REDUCE MOUNTING LOSSES FOR THE YEAR 2022

Warby Parker on Thursday joined the slew of retailers that have cut their financial forecasts for the year, even as it reported a narrower-than-expected loss in its fiscal second quarter and sales in-line with analysts’ estimates.

Chief Financial Officer Steve Miller said the eye glasses maker is facing an “uncertain macroeconomic environment.”  

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Miller said in a statement:

“We are taking a disciplined approach to managing costs to set us up for sustainable growth and profitability.”

As part of its efforts to trim expenses, Warby has cut 63 jobs, representing about 2% of its total employee base and 15% of corporate positions, a spokesperson confirmed to CNBC.

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In recent weeks, retailers including Walmart, Best Buy, Gap and Allbirds have lowered their expectations for sales or profits as they begin to see consumers cut back spending on discretionary items, such as apparel or electronics, amid soaring inflation. At the same time, though, luxury brands like Ralph Lauren and Versace owner Capri Holdings say people are still splurging on expensive shoes and handbags.

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At Warby, customer demand started to fall off in the second half of May, executives told analysts on a conference call Thursday morning. The company also said it pulled back on marketing spending as fewer people visited its brick-and-mortar shops.

Still, the retailer’s shares rallied Thursday, closing up more than 19%. Investors cheered the cost-cutting efforts as Warby attempts to turn a profit while still in growth mode.

Here’s how Warby did in its fiscal second quarter ended June 30 compared with what analysts were anticipating, based on Refinitiv estimates:

• Loss per share: 1 cent adjusted vs. 2 cents expected
• Revenue: $149.6 million vs. $149.5 million expected

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Warby’s loss for the three-month period ended June 30 widened to $32.2 million, or 28 cents per share, from a loss of $18.8 million, or 35 cents a share, a year earlier. Excluding one-time items, it lost a penny a share.

Sales grew roughly 14% to $149.6 million from $131.6 million a year earlier, boosted in part by loyal customers spending more money on average.

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The company said its count of active customers increased 8.7% to 2.26 million. It defines these customers as people who have made at least one purchase of any product or service from Warby in the previous 12-month period.

“While the losses are disappointing, they are somewhat understandable given that the company remains in expansion mode,” said Neil Saunders, managing director of GlobalData Retail.

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However, Saunders said, the main concern is that the money spent needs to translate into delivering stronger returns.

For fiscal 2022, Warby is now calling for sales to be within a range of $584 million to $595 million, down from a prior range of $650 million to $660 million.

It sees its adjusted EBITDA amounting to about $22 million to $26 million, including a $7.5 million hit related to pandemic-related disruptions to its business.

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In its latest quarter, Warby said it opened nine stores, bringing its total count of physical locations to 178. The retailer, founded online in 2010, has been ramping up its investments in real estate to reach more customers and market its brand. It hopes to one day grow to more than 900 stores.

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Beyond its glasses, Warby has a contact lens business and offers services in its stores for eye exams. The company has said that people who buy contacts from Warby end up spending more than those who only shop its eyewear.

Including Thursday’s gains, Warby shares have fallen more than 60% year to date.

COMMENTARY:   Warby Parker's sales began to soften about the same time many retail brands began to feel the effects of inflation and slowdown in buying by consumers.  Warby Parker joined the slew of retailers that have cut their financial forecasts for the year 2022.  Warby Parker reported a narrower-than-expected Q2 2022 quarterly loss and sales in-line with analysts' estimates. 

Warby Parker opened a record 35 stores in 2021 to end the year with 161.  Warby Parker plans on opening a total of 40 stores in 2022.  Warby Parker had 188 stores in the U.S. on July 27, 2022, but the economic uncertainty will probably put a halt to any new store openings in the second half of 2022.

Warby Parker's primary target customers are hip and fashionable millennial-aged consumers between 25-34.  Warby Parker customers are socially active, purchase online, overshare and engage on social media channels.  Warby Parker understands them very well. These young consumers have a bustling loyalty to the brand.  This may be Warby Parker's Achilles heel for the following reasons:

• Millennials have the highest median income but are burdened with high levels of debt from home loans, automobile loans, personal loans and student loans, and this debt is growing at a faster rate than any other generation.
• Millennials are the largest generation and growing as a group because lower wage earning middle class workers are falling behind economically and trickling down into the millennial generation group.
• A 2019 survey by Fannie Mae found that 55% of millennials and Generation Z believe that homeownership is “out of reach financially.” Several factors, including the rising cost of housing and pre-existing debt (often from student loans), present barriers to homeownership for these generations — and new obstacles continue to emerge.
• Millennials cannot afford today's high rents and utilities and often have one or more roommates to lessen this burden.  
• Millennials do not make enough to save for retirement or emergencies and often resort to credit cards to make ends meet.    
• 60% of millennials (those born between 1983 and 2002) are considered middle-class, compared to 70% of baby boomers (those born between 1943 and 1964) when they were in their twenties, according to the report, “Under Pressure: The Squeezed Middle Class.” Worldwide, the share of households considered middle-class has slipped from 64% in the 1980s to 61% today. 

It is not all bad news for Warby Parker.  Growth opportunities include progressive lenses, which account for 20 percent of Warby’s mix versus 45 percent of all prescription glasses sold in the U.S. Progressive glasses start at $295, Warby’s highest price point and highest margin.  Buyers of progressive lenses tend to be 45 years or older.  Dave Gilboa, co-CEO at Warby Parker said, “Progressives purchases tend to skew more toward bricks and mortar given the complex nature of the prescription and the older customer demographic.”

Stores also enable eye exams, which accounted for less than two percent of Warby’s sales in 2021 compared to 10-to-15 percent at a typical optical retailer. Neil Blumenthal, co-CEO, said exams also “give us greater control over the customer experience.”

Finally, in-store exams support sales of contact lenses, which doubled in 2021 to four percent of Warby’s sales versus 15-to-20 percent at a typical optical retailer. Industrywide, 70 percent of consumers buy glasses and contacts in the same location where they have an eye exam.

Courtesy of an article dated August 11, 2022 appearing in CNBC, an article dated April 27, 2022 appearing in Seeking Alpha, and an article dated March 24, 2022 appearing in Retail Wire, and an article dated April 12, 2019 appearing in CNBC