Evolus Q4 2020 Earnings Call Transcript

Quartr
Provided by Quartr
March 24, 2021

Key Takeaways

  • In Q1 2021, Evolus eliminated $127 million of debt and obligations, secured a $25.5 million cash infusion from Daewoong, and resolved all ITC litigation, resulting in a stronger balance sheet with pro forma cash of $57 million.
  • Evolus expects the U.S. aesthetic neurotoxin market to reach $1.5 billion in 2021, driven by a V-shaped COVID recovery and the fast-growing millennial segment that now represents about 40% of Jeuveau users versus 30% for the overall market.
  • Despite COVID-19 and litigation headwinds, Jeuveau’s second-half 2020 recovery outpaced the broader market as Evolus added over 2,000 new accounts (nearly 600 in Q4), drove reorder rates to 72%, and enrolled 110,000 patients in its Evolus Rewards loyalty program.
  • Evolus forecasts Q2 2021 net revenue to be its highest since launch, noting minimal Q1 sales under bond constraints and expecting a record quarter as the full Jeuveau value proposition drives utilization and brand awareness.
  • Evolus plans to launch Jeuveau in Europe as Nuceiva in early 2022 and pursue additional country approvals, leveraging its lean digital marketing and loyalty programs without major headcount increases.
AI Generated. May Contain Errors.
Earnings Conference Call
Evolus Q4 2020
00:00 / 00:00

There are 10 speakers on the call.

Operator

afternoon, ladies and gentlemen, and welcome to the and Full Year 2020 Evolus Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's conference is being recorded. I would like to introduce your host for today's conference, Mr.

Operator

Ashwin Agarwal, Vice President, Finance, Investor Relations and Treasurer. Sir, please go ahead.

Speaker 1

Thank you, operator, and welcome to everyone participating on today's call. This call is also being broadcast live over the Internet at evolus dotcom and a replay of the call will be available on the company's website for 30 days. With me on today's call are David Moatazedi, President and Chief Executive Officer and Lauren Silvernail, Chief Financial Officer and EVP, Corporate Development. In our remarks today, we will include statements that are considered forward looking statements within the meaning of the United States security laws. In addition, management may make additional forward looking statements in response to your questions.

Speaker 1

Forward looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's business, strategy, operations or financial performance. A detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10 ks, quarterly reports on Form 10 Q and current reports on Form 8 ks. Actual results may differ materially from those expressed in or implied by the forward looking statements. The company undertakes no obligation to update or review any estimate, projection or forward looking statements. Additionally, the discussion today will include non GAAP financial measures.

Speaker 1

These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non GAAP results may be found in our earnings release, which was furnished with our Form 8 ks filed today with the SEC and may also be found on our Investor Relations website at investors. Evolus.com. And now let me hand the call over to David.

Speaker 2

Good afternoon and thank you Ashwin. It is a pleasure to be here with you today and to have both the uncertainty of the ITC case behind us and clarity around the financial support from our partner Daewoong. As I look back on 2020, I'm very pleased with the overall performance of the company and the underlying strength of the aesthetic neurotoxin market recovery despite the headwinds of COVID and the ITC case. As we transition to 2021, we are very bullish on the aesthetic neurotoxin market and expectations for Jeuveau. We expect the U.

Speaker 2

S. Aesthetic neurotoxin market will achieve $1,500,000,000 in value this year, marking a new high for the category. We believe this to be the case because of the strong V shaped recovery observed in the back half of last year, where in the Q3, we saw the market return to pre COVID levels and by the Q4 the market eclipsed all time highs. Consumer market trends are also favorable with the fast growing millennial segment on track to represent the majority of neurotoxin users within the next several years. We remain confident that Jeuveau is optimally positioned against this demographic due to our brand positioning, value of our consumer loyalty program and digital orientation.

Speaker 2

We were pleased to see this positioning reflected in the composition of our user base, which over indexed against millennials, which represented approximately 40% of Jeuveau users as compared to approximately 30% for the overall market. In February, we pre announced 2020 revenue with Jeuveau experiencing a faster recovery in the second half of 2020 as compared to the broader aesthetic neurotoxin market, despite the litigation backdrop and sales impact in the 4th quarter from selling under a bond for 2 weeks. We have built a resilient business by laying the foundation of our value proposition beginning with the launch of Evolus Rewards, our consumer loyalty program. In the back half of last year, we launched Jeuveau co branding initiatives made up of digital ads and billboards, which are earned when customers achieve certain purchase levels in our Evolux pricing program. This aligned our brand building activities directly with customer interest in expanding their millennial patient base.

Speaker 2

As a result, our Jeuveau business experienced strong underlying business trends coming out of the second half of twenty twenty, where we added greater than 2,000 accounts during the year with these trends continuing into the 4th quarter with nearly 600 accounts added. Our reorder rates continue to rise reaching a healthy 72% by year end. In just twofold words on the market, we were able to enroll over 110,000 patients into Evolus Rewards, which speaks to the value of this program to both the doctor and to the patient who receives $40 off of every treatment. We believe we have the recipe to unlock the full potential Jeuveau with our direct to millennial strategy. Looking forward, we expect the Q2 this year to mark the Q1 since commercialization where the market will benefit from the full Jeuveau value proposition.

Speaker 2

As a result, we expect the Q2 of 2021 net revenue will hit an all time high as we drive greater utilization and practices and Jeuveau brand awareness with consumers. Let me turn the call over to Lauren to provide you with a financial update.

Speaker 3

Thank you, David, and good afternoon, everyone. At the beginning of 2021, we embarked on a 2 pronged strategy to strengthen our balance sheet and resolve all legal matters related to the ITC case. First, we eliminated a total of $127,000,000 of debt and milestone obligations. In January, we paid off $76,000,000 in senior debt with Oxford Finance. In March, we extinguished $41,000,000 of convertible debt when Daewoo agreed to an early conversion into Evolus common shares and the elimination of $10,500,000 of current and potential future milestone payments.

Speaker 3

In addition, Daewoong is providing us with $25,500,000 as a cash infusion, which will be called out as a GAAP to non GAAP adjustment to operating expenses in the Q1 of 2021. All combined, the financial restructuring plan we successfully completed this quarter has resulted in a stronger balance sheet with a pro form a cash position at December 31, 2020 of $57,000,000 2nd, we resolved all legal matters related to the ITC case with all parties, Betty Talks, Allergan and Bayoung. What this means to us financially is, we will pay $35,000,000 over 2 years, which is fully offset by the Daywound cash payment to us and the elimination of future milestones. With regards to royalties, there are two time periods. The first time period is the 21 month period from mid December 2020 through mid September 2022.

Speaker 3

During this time, Evolus will pay a dollar amount per vial sold in the United States. During the same 21 month period, Evolus will also pay a low double digit royalty on international sales, the impact of which is expected to be nominal through September 2022. The second time period is the 10 year period beginning mid September 2022. During this time, Evolus will pay a mid single digit royalty on our global net sales, which is expected to be offset by a nominal U. S.

Speaker 3

Price increase. As such, the settlement economics are not expected to materially impact gross margin after September 2022, which is now only about 17 months away. The settlement agreements with all three parties result in an expected 2021 corporate gross margin percentage between 50% 55%, excluding the Q1 where we have $25,500,000 the cash infusion from Daewoong, which will be booked into operating expense. This temporary gross margin profile is expected to have absolutely no ability, no impact on our ability to drive continued growth of Jeuveau while maintaining our competitive pricing. Transitioning to the strong 2020 performance David discussed, our 4th quarter 20 sequentially over Q3 2020.

Speaker 3

As a reminder, we had minimal sales in the last 2 weeks of Q4 as we were selling under a bond beginning mid December 2020. Turning to the Q1 of 2021, we recorded minimal net revenue through mid February as we continue to sell under a bond. As you model your Q1 revenue, you should assume revenue for only half of the first quarter. We expect Q2 2021 to be our strongest net revenue quarter since launch. As it relates to our international business, we expect nominal 2021 revenue from Canada and expect European sales to begin in 2022.

Speaker 3

Moving down the P and L, our Q4 2020 gross margin percentage was 64.6%. Consistent with commentary provided on prior calls, our gross margin will depend on sales levels, promotional activity and other factors. Our 4th quarter 2020 non GAAP loss from operations was $12,200,000 Of note, we improved our 2020 full year non GAAP loss from operations to $54,000,000 by 33% compared to 2019. Our pro form a cash at year end 2020 was $57,000,000 representing December 31, 2020 cash of 107 $600,000 plus $25,500,000 of cash being provided by Daewoong less $76,400,000 for the Oxford Finance debt payoff earlier this year. Cash burn during the Q4 was only 3,000,000 dollars due to favorable changes in working capital, including high revenue collections and no cash payments for inventory during the quarter.

Speaker 3

We expect our cash burn will be higher in Q1 2020 than Q excuse me, higher in Q1 2021 than in Q4 20 20. As a result of the recent settlement agreement, we have 43,700,000 shares of common stock outstanding. With that, I'll turn the call back to David.

Speaker 2

Thank you, Lauren. As we close the books on 2020, I would like to take a moment to thank our Evolus employees for the incredible resilience they have shown through what was an extraordinary year filled with challenges. I would also like to extend my thanks to our Evolus customers, many of whom wrote letters in support of our cause. I've always believed that customer centricity powers this company. We would not have reached this outcome without their unwavering support.

Speaker 2

We have a renewed level of energy and poised as we enter 2021. We have proven that an aesthetic company positioned against a younger demographic with a focus on technology creates a unique differentiation. In 2020, we laid the groundwork and now our focus is on execution. We expect our launch trajectory to continue and we will look to accelerate our market adoption by surrounding the customer with our full value proposition. Separately, we are actively developing plans for European launch, which we expect will take place early next year as we look forward to entering the 2nd largest market for neurotoxins in the world.

Speaker 2

Lastly, we will be pursuing further market expansion by gaining approvals in additional countries in the years following. With that, I'll turn the call over for Q and A. Operator?

Operator

Thank Our first question comes from the line of Marc Goodman with SVB Leerink. Your line is open.

Speaker 4

Yes, good afternoon. Couple of questions. First, you mentioned that you expect the market to be $1,500,000,000 this year. Can you just give us a sense of what was that number in 2020 and remind us what it was in 2019? And then second of all, Lauren, just give us a sense of how the company is thinking about spending.

Speaker 4

Obviously, this past year was an unusual year, but with things starting to open up a little bit and obviously with the uncertainty gone, how are you thinking about advertising and promotion dollars to kind of spend and the number of sales reps you're thinking about? Just give us a sense of that. Thank you.

Speaker 2

Hi, Mark. This is David. I'll take the first part and then hand it over to Lauren. Good question on the market value. I'll give you the numbers first and then I'll give you my color second.

Speaker 2

So we value the market at about $1,300,000,000 U. S. Market in 2019 and then the market declined to $1,250,000,000 in 2020 and we expect it to clip back up to $1,500,000,000 in 20 21. So that gives you a sense for the high growth rate we expect to see even when you compare it against the 2019 period, it's a healthy growth rate. But as you know, Mark, when you look at $1,250,000,000 in 2020, the decline doesn't tell the whole story.

Speaker 2

If you did a front half back to half view, what you'd see is the back half of the year in 2020, the market grew overall. It's the front half, of course, because of that COVID period that you see a significant decline. So effectively COVID was a 2 month 2 quarter pause on the market overall in growth, but what you saw was the market rebounded very quickly. No different than what we observed during the last recession in the late 2000 period. And this market has shown now multiple times when it's been tested that it's very resilient.

Speaker 2

These consumers come back and they come back quickly as they prioritize this treatment over other out of pocket expenses that they have. And it's great to see that strong trajectory to end the year. And we feel very good about that carrying into this year.

Speaker 3

Great. Hey, Mark. Good afternoon. To take second part of that question on operating expenses, for the December quarter in 2020, we did $25,500,000 of non GAAP operating expense. If you look at that, it's a good average proxy for this year on a quarterly basis.

Speaker 3

Some will be higher, some will be lower. And with regard to investments, we are continuing to invest heavily in the business with infrastructure and legal costs largely behind us. We're able to really redirect all of our expense investments directly into things close to the customer and the programs that David talked about. And as far as number of reps, we're going to continue to invest where it makes sense. So CS over the course of this year, while managing our equipment carefully, making those investments and shifting the mix to make sure we drive sales growth.

Speaker 4

How much do legal expenses go away? Can you just give us a sense of how much you spent on that this past year?

Speaker 3

Some of that will be reimbursed as well. But basically, if we look at it, it's in the low single millions to the mid low to mid single millions. A lot of our retailers, as you know, were paid by Daywound.

Speaker 4

Thank you.

Operator

Thank you. Our next question comes from the line of Annabel Samimyal with Stifel. Your line is open.

Speaker 5

Hi. Thanks for taking my questions and congratulations on resolving all those issues. I have several actually. So first, the dollar amount that you have to pay per vial during that 21 month period, I know it's undisclosed, but does it provide you with sufficient flexibility to continue to offer the discounts to the customers and maintain the consumer programs? Or does this take away your edge visavis other competitors?

Speaker 5

So that's the first question. The second, now that you have certainty in the revenue line, is there any additional investment that you feel like you need to make and build out in the operating platform? Anything in the digital platform you need to bolster? Anything in terms of personal outreach that you can do, especially as we're entering a more competitive environment? And then finally, I know it's hard to discuss business development, but are you now in a position to consider it with the current cash levels that you have?

Speaker 5

And how do you balance that against the desire to breakeven? So thanks.

Speaker 3

So let me start off on the dollar side on the royalty and make sure I answer your question there, Annabel. When you look at the gross margin profile of the business, right, after we take into account all the puts and takes of the payments in and out in the settlement, we ended up in a really nice position. Last year, we ended the year when you look at the 4th when you look at the year overall at 68% in the 4th quarter, around 64%, 65% gross margin. So for 100 to 150 basis points, we're able to put the whole legal case behind us along with all the other details, of course. That leaves us in a really strong position to continue the same type of pricing programs we've had and actually to dial up our promotional spend this year.

Speaker 3

And we're measuring it very carefully versus return on investment because the best way to fund our business is to grow sales. And the return on investment comes very quickly at the stage we're at because we've already built out the infrastructure to your second question. Obviously, we continue to invest in improvements to our digital app and our software platform and we continue to invest in our design team. They're a huge part of our competitive advantage. But all the big investments have been made there and now we're really continuing to streamline and work on that.

Speaker 3

So not a lot of investment dollars behind the scenes. I think your next question was business development, unless I missed something there. Yes. David, that one.

Speaker 2

Yes, sure. Let me just go on one last question on the first point, Annabel, around the customer. There is no significant impact pricing to the customer. We did take a nominal price increase once we did complete the settlement, but that nominal price increase it allows customers as they move up our Evolux tiers to effectively maintain their same pricing. So what we've heard now back from customers is, number 1, we continue to maintain our value proposition, which is on average greater than 30% savings relative to the market leader.

Speaker 2

That was what we wanted to ensure maintained through this settlement. And fortunately, we were able to do that, thanks to the announcement we made yesterday related to our partners' support. As it relates to future investments, as you know Annabel, last year when COVID first struck, we reduced our expense base by nearly 40% and we leaned into our digital platform that created a level of efficiency within our operations that frankly changed the way that we look at investment going forward. We continue to build our digital platform and find that customers are transacting on that program as well as our loyalty program has created a very efficient way for them to pass on savings to the patient. At this point in time, it's unclear as we scale up how much we need to add infrastructure in terms of headcount relative to continuing to lean in the digital structure.

Speaker 2

And we think we have an efficiency that as we continue to scale, we can reap the value from. So you shouldn't expect meaningful increases in terms of our internal headcount structure going forward. What you should expect is incremental investments that are very thoughtful, Lauren pointed out, that will have high ROI associated with them.

Speaker 5

Great. And then the last on the balancing business development with cash breakeven?

Speaker 3

Sure. If you look at the types of business development that we're able to do today, we can look at it a couple of different ways. If we decide to add something to our pipeline, which is something we could do down the road, most of those do not come with a high upfront payment. So we're in a strong position to do those because they tend to be structured as pay as you go. And anything that's a marketed product is often a larger deal.

Speaker 3

And the stock these days is actually at a very nice level as a currency. That said, we're considering all of our options very, very carefully as we come out of this COVID period and as we continue to grow the business.

Operator

Great. Thank you. Thank you. Our next question comes from the line of Louise Chen with Cantor. Your line is open.

Speaker 6

Hi, congratulations on all the progress you've made and thanks for taking my questions here. So you gave some good color on 1st and second quarter sales. Just curious if you're thinking 3rd and 4th quarter, it will be sequential quarterly increases over the 2nd quarter. Second question I had was your market share now, how has it improved throughout the year? And do you still plan to get to the number 2 player?

Speaker 6

And then last question here is just cash runway, you noted a pro form a number, where does that take you to or what kind of milestones will you meet with that cash value in place? Thank you.

Speaker 2

Thanks, Louise. I'll take the first two and then I'll turn it over to Lauren to answer your last question. Look, we believe that this year we continue to see strong momentum throughout the year, recognizing of course that there's a seasonal dynamic in this market that the 3rd quarter is generally the lowest volume quarter for our customers of the year. So factoring for that, we do expect that we'll continue to build momentum as our value proposition continues to build. And we track all the lead metrics and those lead metrics are new accounts and we continue to see that number move up into the right.

Speaker 2

We track reorder rates and we continue to see those numbers every quarter move up into the right. We also track consumers entering into our loyalty program. Of course, that's now just entering its 3rd full quarter and of course that's continuing to perform very well for us as well and all the co branding initiatives would be the last item. And all of those lead metrics for us continue to show strength. I've spent a significant amount of time now in speaking with customers.

Speaker 2

And what I'm hearing back is this is a very different value proposition than what others do. And I think you're familiar with the space, Luis, that it's been about portfolio selling and trying to bundle one brand to reduce the price on another. And what we're bringing to the market is very different. We introduced our value proposition of pricing year 1. So really isn't about the price any longer, it's about how we build their business.

Speaker 2

And what we're introducing with our singularity and focus is an entirely different value proposition. When we advertise, it's our customer with our brand together in digital or in billboards. And that's something that's very compelling because as they invest more into Jeuveau, we invest back into that customer. And that mutual relationship drives a lot of value and growth for them and of course growth for us as a brand. So we feel very good about what that will do over the coming quarters.

Speaker 2

We expect that to continue to build momentum. And that plays into your second question around share. In that, in the back half of last year, we believe our growth outpaced the overall market by a meaningful amount despite the fact that we were impacted by the bond period in the Q4. And then of course that bond period was a pause on our launch trajectory and it straddled both the 4th quarter and half of the first quarter before we were back in terms of able to perform at the levels we were before. And so we expect now as we reenter into our 1st full quarter without the bond impact in Q2 that we regain a lot of that uptake that comes in the form of continued share penetration in the market.

Speaker 2

So with that,

Speaker 4

I'll turn it over to Lauren to answer that.

Operator

Great. Thanks Louise. So

Speaker 3

on the cash runway, the best way for us to generate cash is of course to sell Jeuveau. And that continues to be the case going forward. So as David mentioned in his remarks, we'll continue to invest into the growth of Jeuveau as our highest opportunity set. With regards to cash, our cash runway is less than 12 months, But that is something when you look at the Q4, we burned about 3 there. We will burn a little more cash this year certainly as we have a few other things left to pay for.

Speaker 3

For example, we have a $15,000,000 milestone due under our settlement agreements this year. But puts us all in a very good position, able to price Jeuveau where we want, invest in the business as we're thinking. And as we look out there, we've never had trouble financing this business. It's always gone very well for us. Stock is in a very good place and we're pleased with our progress.

Speaker 6

Okay. Thank you very much.

Operator

Thank you. Our next question comes from the line of Gregg Gilbert with Truist Securities. Your line is open.

Speaker 7

Thanks. Good afternoon. David, what are the implications of Meditox and Daewoong being significant shareholders? And how long are they locked up? And can you confirm that you have free rein to pursue any strategic opportunities you and the company see fit?

Speaker 2

Hi, Greg. Let me talk a little bit about the strategic implications of Daewong and Meditox and then I'll let Lauren talk a little bit about their shares and how we see that. The first is, as you saw in Lauren's coverage of the settlement itself, Daewoong continues to be a strategic partner for us. They're more than a shareholder frankly. This is a relationship that we see over the long term.

Speaker 2

We have the licenses now in 2 of the largest markets in the world between the U. S. And Europe. And they want to see this business continue to grow. And of course, we represent the large majority of the revenue that they will develop in their neurotoxin business.

Speaker 2

So that strategic relationship is very strong. Separately, as you know, there's ongoing litigation in Korea between the 2 companies Daewoong and Meditox. And that is why as we work through the settlement, we were pleased to make Meditox a shareholder to align our long term interest. In the near term, those long term interests appear around the opportunity to ensure that this company has no future risks as it relates to litigation. We've resolved now all outstanding issues.

Speaker 2

But there's also opportunities beyond that that we'll provide color on as we get into the future, as it relates to other potential entrants that may enter the market. And those are things we'll give color on as we make progress into the year.

Speaker 3

Great. Hello, Greg. With regard to the lockup agreements, etcetera, and the shares, with regard to Meditalk, they are locked up through 2025. Those vest 25% a year beginning 20 22. And with regard to Daewoong, the shares are unregistered.

Speaker 7

Okay. Then a follow-up is, Lauren, any safety tips on just the quarterly lumpiness of SG and A? And for David, curious how your BD activity levels have evolved based on COVID, based on pre settlement, now post settlement? And maybe more importantly, looking ahead, as you think about broadening out the portfolio over time, would you encourage us to think about a somewhat, let's say, typical strategy we've seen for other aesthetics players or more something outside the box that we haven't seen before from a company evolution standpoint? Thanks.

Speaker 3

So on the SG and A question, I think it's probably helpful to look at it from a total non GAAP operating expense basis. We reported $25,500,000 in the Q4 of 2020 for non GAAP OpEx. That's a good proxy for a quarterly average for us for 2021. It will be a little higher and a little lower depending on the promotional mix we employ in the specific quarter. We will continue to invest in promotion as we have been doing.

Speaker 3

But obviously, we've become more efficient with our rewards program and allows us to redirect dollars into Evolux, Millboards and other in the digital media that David has been talking about. We really have a very disciplined approach around looking for return on investments and we're pretty ruthless with making sure we pick those programs and continue to grow those programs that are generating the sales dollars that immediately fund the business.

Speaker 2

Thanks, Lauren. And Greg, as it relates to business development, clearly this is a priority area for us and the litigation put a pause on some of our business development activity. And that being said, you made an interesting comment around do you follow the same path or do you consider different approaches. As you know, this market today, whether it's the market leader or those that follow, they've neared a similar strategy. It's about building a portfolio of products to leverage one against the other for better pricing.

Speaker 2

And that's ultimately been the point of differentiation is both breadth and the ability to leverage. As we look at our business today, we like our singularity and focus. I shared with you earlier as to why we think that singularity and focus is an advantage when all the other competitors are focused on their portfolio and how they bundle them, because we believe our pricing delivers the value, but it's about growing the market that ultimately cracks the real value of this category and unlocks it. Separately, as we look at assets, durable assets and those assets that we believe that younger demographic will gravitate to. And that is how we create the next category in aesthetics.

Speaker 2

And so we will provide more color around our business development strategy. You can expect that this year as we begin to spend more time on that. But thanks for that question.

Speaker 3

Thanks, guys.

Operator

Thank you. Our next question comes from the line of Vamil Divan with Mizuho. Your line is open.

Speaker 8

This is Oi for Vamil. A few questions. First, I guess, could you talk about your European launch that's expected in 2022? It seems like just in terms of geography and it looks like you're doing it on your own or are you going with a partner? And the second question is, just wondering like before the pause and the 40% reductions in your operations versus now that you are out of the you're in the clear with the ITC issue.

Speaker 8

Just wondering like what is the difference in terms of the need for more reps then versus now going forward to grow your revenue? Like what has changed? Thanks.

Speaker 3

Hi. Thanks for the question. In regard to Europe, we're really excited. And when you look at what we've done over this quarter to unlock value, with our expanded partnership with Daewoong, we're really ready to get things moving in Europe, and we're very pleased with where we've landed on that. We are in the process right now of looking at our strategy.

Speaker 3

With our partnership with them, we have the ability now to launch on

Speaker 2

our own

Speaker 3

or to use distributors. And to give you more color on strategy as the year rolls out. Our Chief Marketing Officer, Crystal Meilenberg, is going through all those details now. As you know, Europe is not a country, it's a region. And we're going to put together a very strategic strategy to make sure we're highly successful there.

Speaker 2

And then, Vamil, it's a good question around what has changed. I'd characterize as 3 things have changed. The first is macro environment has changed, so that the trend towards digitization clearly accelerated as a result of COVID. And that played well into our hand. And then in addition to that, we made significant infrastructure changes to reduce our burn out of necessity, frankly.

Speaker 2

But what that yielded to us was clarity and that as we leaned into our digital platform, the market rapidly adopted it and used it, which created an efficiency about our business that was much greater than what we had anticipated. As I mentioned before, the majority of our orders now transact through our digital platform. And then lastly, we have the hindsight now of seeing this product now in the market for almost 2 years. And as we look forward, what we see is every incremental dollar, the driving more value around the customer versus just the sales force trying to push product into account. And that's why you're seeing the increased focus around digital co branding and billboards and things of that nature, because what these accounts are hungry for are new patients.

Speaker 2

And what we believe we have is the code that cracks the new patients against that younger millennial demographic. And that is the fastest growing segment and we believe this brand is well positioned for it. And so to the extent we can invest to make these practices more productive, we believe that that yields the best return for us in both market share penetration as well as long term stickiness in this market. And so we'll look to continue to selectively invest and there will of course be a requirement for some additional resources as it relates to the sales force. But it will we believe that this efficiency carries for this company long term and we feel very good about our ability to do that over time.

Speaker 2

And you see that evidence in the Q4, where our revenue hit an all time high on this lower spend base and we believe that's very

Speaker 8

sustainable. Okay, thanks.

Operator

Thank you. Our next question comes from the line of Douglas Tsao with H. C. Wainwright. Your line is open.

Speaker 9

Good afternoon, everyone. Chris Bialis on for Doug Sao. So 2 from me. Once that initial higher royalty period through 2022 is over, how, if at all, will your promotional strategy change? Can we maybe expect more spend, maybe an increase in BD activities or a new marketing campaign?

Speaker 9

And my second question is, which ex U. S. Geographies other than the EU are you targeting? And can you give us a little more color on that strategy? Thank you.

Operator

Douglas, you may resume.

Speaker 9

Hey. So this is Chris Vialt on for Doug. So two quick ones. The first one is in 2022, once that higher royalty period is done, how if at all will your promotional strategy change? Can we expect any different, maybe more marketing spend, maybe more BD activities?

Speaker 9

And second, which ex U. S. Geographies are you seeing it expanding to? And maybe can you give us a little more color on your plans there, aside from Europe, of course? Thank you.

Speaker 2

Hi, Chris. This is David. Thanks for the question. I'll touch on the royalty period after 2022 when that initial royalty is resolved, nothing changes. The reality of it is even now, our plans for this year as well as next year during this royalty period, we plan to invest, we plan to drive the revenue to the same levels and ultimately we view this what's remaining at 17 months as a tax period that we will pay.

Speaker 2

It impacts obviously our operating profit during this window. But this is about building a company for the long term. And so that investment will persist beyond. But once it goes away, of course, it creates a business with a better margin profile, which means potentially the operating profit could be greater and gives us the ability to think about how we can use that capital in different ways, of course, as you pointed out. So with that, I think I answered the business development question, but I'll turn it over to Lauren as well.

Speaker 2

Maybe she can give you some color you're looking for further information.

Speaker 3

Sure, Bill. And let me know if I'm not getting your question right because it broke up a little bit on our side. What I heard is what are our plans internationally beyond Europe? Was that the right question?

Speaker 9

Yes. Just with geographies maybe what you're thinking over there?

Speaker 3

Absolutely. We have a fantastic product that needs to be launched in all the territories that are in our license. And so Europe is approved now and we are ready to go with that planning and launch in 'twenty two early 'twenty two. With all the deals done this quarter and particularly with the restructuring of our license with our strategic partner Daewoong, it really opens up some of the terms, etcetera, the rest of the world in our license. So look for us to provide more color as the year goes on, but we will be doing filings and at least in one jurisdiction a little bit of clinical work to make sure Jeuveau and Aesthetics, it's actually Nu CEVA, the brand outside the U.

Speaker 3

S. Is launched in our territories over the next few years.

Speaker 9

Awesome. Thank you so much.

Operator

Thank you. Thank you. I'm showing no further questions in the queue. Ladies and gentlemen, this concludes today's conference call.

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