Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 29, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38381 | |
Entity Registrant Name | EVOLUS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-1385614 | |
Entity Address, Address Line One | 520 Newport Center Drive Suite 1200 | |
Entity Address, City or Town | Newport Beach | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92660 | |
City Area Code | (949) | |
Local Phone Number | 284-4555 | |
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Trading Symbol | EOLS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,576,988 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity CIK | 0001570562 | |
Current Fiscal Year End Date | --12-31 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 107,796 | $ 102,562 |
Short-term investments | 0 | 5,000 |
Accounts receivable, net | 13,289 | 9,680 |
Inventories | 3,816 | 3,354 |
Prepaid expenses | 4,484 | 4,828 |
Other current assets | 8,959 | 2,188 |
Total current assets | 138,344 | 127,612 |
Property and equipment, net | 1,058 | 1,297 |
Operating lease right-of-use assets | 2,902 | 3,414 |
Intangible assets, net | 51,468 | 55,297 |
Goodwill | 21,208 | 21,208 |
Other assets | 240 | 240 |
Total assets | 215,220 | 209,068 |
Current liabilities | ||
Accounts payable | 7,365 | 9,615 |
Accrued expenses | 23,436 | 9,102 |
Accrued litigation settlement | 15,000 | 63,421 |
Operating lease liabilities | 1,252 | 1,212 |
Contingent royalty obligation payable to Evolus Founders | 4,300 | 3,446 |
Promissory note payable to Evolus Founders | 19,950 | 19,068 |
Term loan, net of discounts and issuance costs | 0 | 74,384 |
Total current liabilities | 71,303 | 180,248 |
Accrued litigation settlement | 5,000 | 20,000 |
Operating lease liabilities | 2,488 | 3,147 |
Contingent royalty obligation payable to Evolus Founders | 39,000 | 38,100 |
Convertible note | 0 | 40,506 |
Deferred tax liability | 25 | 25 |
Total liabilities | 117,816 | 282,026 |
Commitments and contingencies | ||
Stockholders’ equity (deficit) | ||
Preferred stock, $0.00001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 0 | 0 |
Common stock, $0.00001 par value; 100,000,000 shares authorized; 55,553,792 and 33,749,228 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 1 | 1 |
Additional paid-in capital | 502,108 | 303,113 |
Accumulated deficit | (404,705) | (376,072) |
Total stockholders’ equity (deficit) | 97,404 | (72,958) |
Total liabilities and stockholders’ equity | $ 215,220 | $ 209,068 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares, issued (in shares) | 55,553,792 | 33,749,228 |
Common stock, shares, outstanding (in shares) | 55,553,792 | 33,749,228 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Revenue | $ 26,677 | $ 17,661 | $ 65,016 | $ 35,963 |
Operating expenses: | ||||
Product cost of sales (excludes amortization of intangible assets) | 11,490 | 4,854 | 27,700 | 11,021 |
Settlement payment from Daewoong | 0 | 0 | (25,500) | 0 |
Selling, general and administrative | 31,685 | 21,944 | 78,834 | 70,796 |
Research and development | 301 | 350 | 1,641 | 1,003 |
Revaluation of contingent royalty obligation payable to Evolus Founders | 1,400 | (2,471) | 4,049 | (9,922) |
Depreciation and amortization | 923 | 1,744 | 4,702 | 5,151 |
Restructuring costs | 0 | 0 | 0 | 2,956 |
Total operating expenses | 45,799 | 26,421 | 91,426 | 81,005 |
Loss from operations | (19,122) | (8,760) | (26,410) | (45,042) |
Other income (expense): | ||||
Interest income | 0 | 32 | 1 | 630 |
Interest expense | (311) | (2,758) | (1,256) | (7,680) |
Loss from extinguishment of debts, net | 0 | 0 | (968) | 0 |
Loss before income taxes: | (19,433) | (11,486) | (28,633) | (52,092) |
Income tax (benefit) expense | 0 | (27) | 0 | 227 |
Net loss | (19,433) | (11,459) | (28,633) | (52,319) |
Other comprehensive loss: | ||||
Unrealized loss on available-for-sale securities, net of tax | 0 | (16) | 0 | (3) |
Comprehensive loss | $ (19,433) | $ (11,475) | $ (28,633) | $ (52,322) |
Net loss per share, basic (in dollars per share) | $ (0.35) | $ (0.34) | $ (0.60) | $ (1.55) |
Net loss per share, diluted (in dollars per share) | $ (0.35) | $ (0.34) | $ (0.60) | $ (1.55) |
Weighted-average shares outstanding used to compute basic net loss per share (in shares) | 55,007,132 | 33,748,690 | 47,818,288 | 33,734,014 |
Weighted-average shares outstanding used to compute diluted net loss per share (in shares) | 55,007,132 | 33,748,690 | 47,818,288 | 33,734,014 |
Cost, Product and Service [Extensible List] | Product revenue, net | Product revenue, net | Product revenue, net | Product revenue, net |
Product revenue, net | ||||
Revenue: | ||||
Revenue | $ 26,677 | $ 16,923 | $ 64,314 | $ 35,225 |
Service revenue | ||||
Revenue: | ||||
Revenue | $ 0 | $ 738 | $ 702 | $ 738 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Follow-On Offering | ATM Sales Agreement | Preferred StockSeries A Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Gain (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2019 | 0 | 33,562,665 | ||||||
Beginning balance at Dec. 31, 2019 | $ 79,457 | $ 0 | $ 1 | $ 292,509 | $ 6 | $ (213,059) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 165,370 | |||||||
Issuance of common stock in connection with the incentive equity plan | 0 | |||||||
Share-based compensation | 2,665 | 2,665 | ||||||
Net loss | (19,735) | (19,735) | ||||||
Other comprehensive loss | 219 | 219 | ||||||
Ending balance (in shares) at Mar. 31, 2020 | 0 | 33,728,035 | ||||||
Ending balance at Mar. 31, 2020 | 62,606 | $ 0 | $ 1 | 295,174 | 225 | (232,794) | ||
Beginning balance (in shares) at Dec. 31, 2019 | 0 | 33,562,665 | ||||||
Beginning balance at Dec. 31, 2019 | 79,457 | $ 0 | $ 1 | 292,509 | 6 | (213,059) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (52,319) | |||||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | 33,749,228 | ||||||
Ending balance at Sep. 30, 2020 | 35,095 | $ 0 | $ 1 | 300,469 | 3 | (265,378) | ||
Beginning balance (in shares) at Mar. 31, 2020 | 0 | 33,728,035 | ||||||
Beginning balance at Mar. 31, 2020 | 62,606 | $ 0 | $ 1 | 295,174 | 225 | (232,794) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 20,443 | |||||||
Issuance of common stock in connection with the incentive equity plan | 0 | |||||||
Share-based compensation | 2,328 | 2,328 | ||||||
Net loss | (21,125) | (21,125) | ||||||
Other comprehensive loss | (206) | (206) | ||||||
Ending balance (in shares) at Jun. 30, 2020 | 0 | 33,748,478 | ||||||
Ending balance at Jun. 30, 2020 | 43,603 | $ 0 | $ 1 | 297,502 | 19 | (253,919) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 750 | |||||||
Issuance of common stock in connection with the incentive equity plan | 0 | |||||||
Share-based compensation | 2,967 | 2,967 | ||||||
Net loss | (11,459) | (11,459) | ||||||
Other comprehensive loss | (16) | (16) | ||||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | 33,749,228 | ||||||
Ending balance at Sep. 30, 2020 | 35,095 | $ 0 | $ 1 | 300,469 | 3 | (265,378) | ||
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 33,749,228 | ||||||
Beginning balance at Dec. 31, 2020 | (72,958) | $ 0 | $ 1 | 303,113 | 0 | (376,072) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with litigation settlement (in shares) | 6,762,652 | |||||||
Issuance of common stock in connection with litigation settlement | 48,421 | 48,421 | ||||||
Issuance of common stock for conversion of convertible note (in shares) | 3,136,869 | |||||||
Issuance of common stock for conversion of convertible note | 39,808 | 39,808 | ||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 88,222 | |||||||
Issuance of common stock in connection with the incentive equity plan | 11 | 11 | ||||||
Share-based compensation | 1,606 | 1,606 | ||||||
Net loss | 6,401 | 6,401 | ||||||
Ending balance (in shares) at Mar. 31, 2021 | 0 | 43,736,971 | ||||||
Ending balance at Mar. 31, 2021 | 23,289 | $ 0 | $ 1 | 392,959 | 0 | (369,671) | ||
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 33,749,228 | ||||||
Beginning balance at Dec. 31, 2020 | (72,958) | $ 0 | $ 1 | 303,113 | 0 | (376,072) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss | (28,633) | |||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | 55,553,792 | ||||||
Ending balance at Sep. 30, 2021 | 97,404 | $ 0 | $ 1 | 502,108 | 0 | (404,705) | ||
Beginning balance (in shares) at Mar. 31, 2021 | 0 | 43,736,971 | ||||||
Beginning balance at Mar. 31, 2021 | 23,289 | $ 0 | $ 1 | 392,959 | 0 | (369,671) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 10,350,000 | 209,532 | 76,289 | |||||
Issuance of common stock in connection with the incentive equity plan | 644 | $ 92,212 | $ 2,707 | 644 | ||||
Share-based compensation | 2,887 | 2,887 | ||||||
Net loss | (15,601) | (15,601) | ||||||
Ending balance (in shares) at Jun. 30, 2021 | 0 | 54,372,792 | ||||||
Ending balance at Jun. 30, 2021 | 106,138 | $ 0 | $ 1 | 491,409 | 0 | (385,272) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with incentive equity plan (in shares) | 724,835 | 456,165 | ||||||
Issuance of common stock in connection with the incentive equity plan | 0 | $ 8,203 | 0 | |||||
Share-based compensation | 2,496 | 2,496 | ||||||
Net loss | (19,433) | (19,433) | ||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | 55,553,792 | ||||||
Ending balance at Sep. 30, 2021 | $ 97,404 | $ 0 | $ 1 | $ 502,108 | $ 0 | $ (404,705) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (28,633) | $ (52,319) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 4,702 | 5,151 |
Stock-based compensation | 6,927 | 7,954 |
Provision for bad debts | 501 | 2,439 |
Amortization of discount on short-term investments | 0 | (420) |
Amortization of operating lease right-of-use assets | 512 | 490 |
Amortization of debt discount and issuance costs | 882 | 1,993 |
Paid-in-kind interest on convertible note | 272 | 203 |
Deferred income taxes | 0 | 179 |
Revaluation of contingent royalty obligation payable to Evolus Founders | 4,049 | (9,922) |
Loss from extinguishment of debts | 968 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (4,110) | (3,177) |
Inventories | (7,161) | 1,536 |
Prepaid expenses | 344 | (681) |
Other assets | 0 | 1,296 |
Accounts payable | (2,312) | (2,845) |
Accrued expenses | 14,334 | (6,926) |
Accrued litigation settlement | (15,000) | 0 |
Operating lease liabilities | (619) | (556) |
Net cash used in operating activities | (24,344) | (55,605) |
Cash flows from investing activities | ||
Purchases of property and equipment | 0 | (798) |
Additions to capitalized software | (580) | (2,041) |
Purchases of short-term investments | 0 | (74,668) |
Maturities of short-term investments | 5,000 | 70,000 |
Net cash provided by (used in) investing activities | 4,420 | (7,507) |
Cash flows from financing activities | ||
Repayment of long term debt | (76,323) | 0 |
Payment of contingent royalty obligation to Evolus Founders | (2,295) | (1,131) |
Payment for debt obligation | 0 | (522) |
Proceeds from issuance of convertible note | 0 | 40,000 |
Payments for offering costs | (214) | 0 |
Net cash provided by financing activities | 25,158 | 38,347 |
Change in cash and cash equivalents | 5,234 | (24,765) |
Cash and cash equivalents, beginning of period | 102,562 | 109,892 |
Cash and cash equivalents, end of period | 107,796 | 85,127 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 79 | 5,443 |
Non-cash investing and financing information: | ||
Conversion of convertible note to equity | 39,808 | 0 |
Issuance of common stock in exchange for accrued litigation settlement expense | 48,421 | 0 |
Capitalized software recorded in accounts payable and accrued expenses | 10 | 81 |
Follow-On Offering | ||
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 92,426 | 0 |
ATM Sales Agreement | ||
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 10,910 | 0 |
Incentive Equity Plan | ||
Cash flows from financing activities | ||
Proceeds from issuance of common stock | $ 654 | $ 0 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business Description of Business Evolus, Inc., (“Evolus” or the “Company”) is a performance beauty company focused on delivering products in the self-pay aesthetic market. The Company received the approval of its first product Jeuveau ® (prabotulinumtoxinA-xvfs) from the U.S. Food and Drug Administration (the “FDA”) in February 2019. The product was also approved by Health Canada in August 2018 and the European Commission (“EC”) in September 2019. Jeuveau ® is a proprietary 900 kDa purified botulinum toxin type A formulation indicated for the temporary improvement in the appearance of moderate to severe glabellar lines, also known as “frown lines,” in adults. The Company commercially launched Jeuveau ® in the United States in May 2019 and in Canada through a distribution partner in October 2019. The Company currently generates all of its net revenues from Jeuveau ® . The Company is headquartered in Newport Beach, California. Liquidity and Financial Condition The accompanying unaudited condensed financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, and do not include any adjustments that may result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of the Company’s liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Since inception, the Company has incurred recurring annual net operating losses. The Company has recorded net loss of $19,433 and $28,633 for the three and nine months ended September 30, 2021, respectively. The Company used cash of $24,344 from operations during the nine months ended September 30, 2021. As of September 30, 2021, the Company had $107,796 in cash and cash equivalents, $19,950 in current debt and an accumulated deficit of $404,705. In January 2021, the Company paid Oxford Finance, LLC (“Oxford”) $76,447 to discharge in full all outstanding obligations, including accrued interest, and the Oxford Term Loan (as such term is defined in Note 6 . Oxford Term Loan ) was extinguished. See Note 6 . Oxford Term Loan for additional information. In February 2021, the Company entered into settlement and license agreements with Medytox, Inc. (“Medytox”) and Allergan, plc and Allergan, Inc. (collectively, “Allergan”), pursuant to which the Company (1) agreed to pay Medytox and Allergan $35,000 in multiple payments over two years, including $15,000 paid in the third quarter of 2021 and $15,000 due in the next twelve months, (2) issued Medytox 6,762,652 shares of common stock and (3) agreed to pay Medytox and Allergan certain royalties on the sale of Jeuveau ® , among other terms. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information. In March 2021, the Company and Daewoong entered into certain agreements, pursuant to which Daewoong (1) paid the Company $25,500 in April 2021 and (2) agreed to reimburse the Company certain amounts with respect to the royalties payable to Medytox and Allergan, among other terms. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information. In addition, the outstanding Daewoong Convertible Note (as such term is defined in Note 7. Daewoong Convertible Note ), including accrued interest, in the amount of $40,779 was converted into 3,136,869 shares of the Company’s common stock. See Note 7. Daewoong Convertible Note for additional information. In April 2021, the Company completed a follow-on public offering and issued 10,350,000 shares of its common stock, which included the exercise in full by the underwriters of their option to purchase an additional 1,350,000 shares of common stock, at a price to the public of $9.50 per share. The Company received net proceeds of approximately $92,426 from the offering, after deducting underwriting discounts and commissions, excluding other offering expenses. In June, July and August 2021, the Company sold 934,367 common shares at the prevailing market prices for total net proceeds of $10,910 under the existing “at-the-market” sales agreement. Since August 2021, the Company has not sold any shares under the “at-the-market” sales agreement. See Note 10 . Stockholders’ Equity for additional details. The Company’s ability to execute on its business strategy, meet its future liquidity requirements, and achieve profitable operations, is dependent on a number of factors, including its ability to gain and expand market acceptance of its product and achieve a level of revenues adequate to support its cost structure, its ability to maintain regulatory approval of its product, its ability to maintain compliance with the settlement agreements and its ability to operate its business and sell products without infringing third party intellectual property rights. The Company believes that its current capital resources, which consist of cash and cash equivalents, are sufficient to fund operations through at least the next twelve months from the date the accompanying condensed financial statements are issued based on its expected cash needs. The Company may be required to raise additional capital to fund future operations through the incurrence of debt, the entry into licensing or collaboration agreements with partners, sale of its equity securities, grants or other sources of financing. Sufficient funds may not be available to the Company at all or on attractive terms when needed from equity or debt financings. If the Company is unable to obtain additional funding from these or other sources when needed, or to the extent needed, it may be necessary to significantly reduce its controllable and variable expenditures and current rate of spending through reductions in staff and delaying, scaling back, or suspending certain research and development, sales and marketing programs and other operational goals. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed financial statements have been prepared on a consistent basis with the annual financial statements and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. Pursuant to these SEC rules and regulations, the Company has condensed or omitted certain financial information and disclosures normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the interim financial statements reflect all adjustments, which include only normal recurring adjustments, considered necessary for a fair statement of the interim periods. The interim results presented herein are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2021 or for any other interim period. The accompanying unaudited condensed financial statements and related disclosures should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 25, 2021. Reclassifications Certain comparative amounts for prior year have been reclassified to conform to current year presentations. Such reclassifications did not affect net income or retained earnings. Use of Estimates Management is required to make certain estimates and assumptions in order to prepare financial statements in conformity with GAAP. Such estimates and assumptions affect the reported financial statements. The Company’s most significant estimates relate to net revenues, allowance for doubtful accounts, fair value measurements, goodwill and long-lived asset valuations and impairment assessments, inventory valuations, income tax valuations, stock-based compensation and royalty obligations, among others. Management bases estimates on historical experience and on assumptions that management believes are reasonable. The Company’s actual results could differ materially from those estimates. Additionally, the full impact of the COVID-19 outbreak is unknown and cannot be reasonably estimated. However, where possible, management has made appropriate accounting estimates with respect to certain accounting matters, which include the fair value of royalty obligations, allowance for doubtful accounts, inventory valuation and impairment assessments of goodwill and other long-lived assets, based on the facts and circumstances available as of the reporting date. The Company’s future assessment of the magnitude and duration of the COVID-19 outbreak, as well as other factors, could result in material impacts to the Company’s financial statements in future reporting periods. Risks and Uncertainties In 2013, Evolus and Daewoong Pharmaceutical Co. Ltd. (“Daewoong”) entered into an agreement (the “Daewoong Agreement”), pursuant to which the Company received an exclusive distribution license to Jeuveau ® from Daewoong for aesthetic indications in the United States, European Union, United Kingdom, members of the European Economic Area, Switzerland, Canada, Australia, Russia, certain members of the Commonwealth of Independent States, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan. Jeuveau ® is manufactured by Daewoong in a facility in South Korea. The Company also has the option to negotiate first with Daewoong to secure a distribution license for any product that Daewoong directly or indirectly develops or commercializes that is classified as an injectable botulinum toxin (other than Jeuveau ® ) in a territory covered by the Daewoong Agreement. The Company relies on Daewoong, its exclusive and sole supplier, to manufacture Jeuveau ® . Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect the Company’s commercialization of Jeuveau ® . See Note 9 . Commitments and Contingencies and Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information. The Company commercially launched Jeuveau ® in the United States in May 2019 and in Canada through its distribution partner in October 2019 and, as such, has a limited history of sales. If any previously granted approval is retracted or the Company is denied approval or approval is delayed by any other regulators, it may have a material adverse impact on the Company’s business and its financial statements. The Company is also subject to risks common to companies in the pharmaceutical industry including, but not limited to, dependency on the commercial success of Jeuveau ® , the Company’s sole commercial product, significant competition within the medical aesthetics industry, its ability to maintain regulatory approval of Jeuveau ® , the need for additional financing to achieve its goals, third party litigation and challenges to its intellectual property, uncertainty of broad adoption of its product by physicians and patients, its ability to in-license, acquire or develop additional product candidates and to obtain the necessary approvals for those product candidates, and the need to scale manufacturing capabilities over time. The COVID-19 outbreak and restrictions intended to slow the spread of COVID-19, including quarantines, government-mandated actions, stay-at-home orders and other restrictions, have adversely affected the Company’s business in a number of ways, which have resulted, and may continue to result, in a period of business disruption and in reduced sales and operations. In addition, any disruption and volatility in the global capital markets may increase the Company’s cost of capital and adversely affect its ability to access financing when and on terms that the Company desires. Any of these events could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer who manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. Substantially all of the Company’s cash is held by financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant. The Company invests its excess cash, in line with its investment policy, primarily in money market funds and debt instruments of U.S. government agencies. The Company’s accounts receivable is derived from customers located principally in the United States. Concentrations of credit risk with respect to trade receivables are limited due to the Company’s credit evaluation process. The Company does not typically require collateral from its customers. Credit losses historically have not been material. The Company continuously monitors customer payments and maintains an allowance for doubtful accounts based on its assessment of various factors including historical experience, age of the receivable balances, and other current economic conditions or other factors that may affect customers’ ability to pay. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities at purchase of three months or less that can be liquidated without prior notice or penalty. Cash and cash equivalents may include deposits, money market funds and debt securities. Amounts receivable from credit card issuers are typically converted to cash within two to four days of the original sales transaction and are considered to be cash equivalents. Short-Term Investments Short-term investments consist of available-for-sale U.S. Treasury securities with original maturities greater than three months and remaining maturities of less than twelve months. These investments are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses reported in other comprehensive (loss) gain in the Company’s condensed statements of operations and comprehensive loss. Purchase premiums and discounts are recognized in interest expense using the effective interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed statements of operations and comprehensive loss using the specific-identification method. The Company periodically reviews all available-for-sale securities for other than temporary declines in fair value below the cost basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company also evaluates whether it has plans or is required to sell short-term investments before recovery of their amortized cost bases. To date, the Company has not identified any other than temporary declines in fair value of its short-term investments. Inventories Inventories consist of finished goods h eld for sale and distribution. Cost is determined based on the estimated amount payable to the Company’s supplier after accounting for any reimbursement receivable pursuant to the Daewoong Settlement Agreement (as such term is defined, and such agreement is discussed, in Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement ), using the first-in, first-out method with prioritization of the items with the earliest expiration dates. Inventory valuation reser ves are established based on a number of factors including, but not limited to, finished goods not meeting product specifications, product excess and obsolescence, or application of the lower of cost or net realizable value concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. No material inventory valuation reserves have been recorded for the periods presented. Adverse changes in assumptions utilized in the Company’s inventory reserve calculations could result in an increase to its inventory valuation reserves. Product cost of sales, excluding amortization of intangible assets, consisted of the inventory cost, and, for periods on or after December 16, 2020, included certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox/Allergan Settlement Agreements (as such term is defined in Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement ) , as partially offset by reimbursement receivable from Daewoong pursuant to the Daewoong Settlement Agreement with respect to such royalties. In the three and nine months ended September 30, 2021, the Company also recorded the settlement payment of $0 and $25,500, respectively, from Daewoong in connection with the Daewoong Settlement Agreement as part of cost of sales. See “— Litigation Settlement ” for additional information. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in an orderly transaction between market participants in a principal market on the measurement date. The fair value hierarchy defines a three-tiered valuation hierarchy for disclosure of fair value measurement is classified and disclosed by the Company in one of the three categories as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability; and • Level 3—Prices or valuation techniques that require inputs that are unobservable that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of approximately five years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the term of the related lease. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performs an annual qualitative assessment of its goodwill in the fourth quarter of each calendar year to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required. If further testing is required, the Company performs a two-step process. The first step involves comparing the fair value of the Company’s reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step of the test is performed by comparing the carrying value of the goodwill in the reporting unit to its implied fair value. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the purpose of impairment testing, the Company has determined that it has one reporting unit. There was no impairment of goodwill for any of the periods presented. Intangible Assets Upon FDA approval of Jeuveau ® in February 2019, the in-process research and development (“IPR&D”) related to Jeuveau ® was evaluated as completed and reclassified to a definite-lived distribution right intangible asset, which is amortized over the period the asset is expected to contribute to the future cash flows of the Company. The Company determined the pattern of this intangible asset’s future cash flows could not be readily determined with a high level of precision. As a result, the distribution right intangible asset is being amortized on a straight-line basis over the estimated useful life of 20 years. The Company capitalizes certain internal-use software costs associated with the development of its mobile and web-based customer platforms. These costs include personnel expenses and external costs that are directly associated with the software projects. These costs are included as intangible assets in the accompanying condensed balance sheets. The capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful life of two years upon being placed in service. The Company reviews long-term and identifiable definite-lived intangible assets or asset groups for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset or an asset group, further impairment analysis is performed. An impairment loss is measured as the amount by which the carrying amount of the asset or asset groups exceeds the fair value for assets to be held and used or fair value less cost to sell for assets to be disposed of. The Company also reviews the useful lives of its assets periodically to determine whether events and circumstances warrant a revision to the remaining useful life. Changes in the useful life are adjusted prospectively by revising the remaining period over which the asset is amortized. There was no material impairment of long-lived assets for any periods presented. Leases In accordance with Accounting Standards Codification 842, Leases (“ASC 842”), at the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (“ROU”) asset which represents the Company’s right to use an underlying asset during the lease term. Operating lease assets and liabilities are included in ROU assets, current portion of operating lease liabilities and noncurrent operating lease liabilities in the accompanying condensed balance sheets. Operating lease ROU assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using the Company’s incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable. Operating lease ROU assets also include any lease payments made at or before lease commencement and exclude any lease incentives received, if any. The Company determines the lease term as the noncancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company’s leases do not contain any residual value guarantees. Leases with a term of 12 months or less are not recognized on the condensed balance sheets. For operating leases, the Company recognized rent expense on a straight-line basis over the lease term. There were no significant finance leases as of September 30, 2021. Contingent Royalty Obligation Payable to the Evolus Founders The Company determines the fair value of the contingent royalty obligation payable at each reporting period end based on Level 3 inputs using a discounted cash flows method. Changes in the fair value of the contingent royalty obligation payable are determined at each reporting period end and recorded in operating expenses in the accompanying condensed statements of operations and comprehensive loss and as a liability in the condensed balance sheets. Promissory Note Payable to the Evolus Founders On February 12, 2018, the Company recognized a promissory note payable at present value using a discount rate for similar rated debt securities. Discount amortization related to the promissory note is recorded in interest expense in the condensed statements of operations and comprehensive loss with a corresponding increase to the liabilities in the condensed balance sheets. Revenue Recognition The Company applies Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), to account for revenue generated since the commercial launch of Jeuveau ® in May 2019. The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when the Company satisfies the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. General The Company generates product revenue from the sale of Jeuveau ® in the United States and service revenue from the sale of Jeuveau ® through a distribution partner in Canada. For product revenue, the Company recognizes revenue when control of the promised goods under a contract is transferred to a customer, in an amount that reflects the consideration the Company expects to receive in exchange for those goods as specified in the customer contract. The transfer of control occurs upon receipt of the goods by the customer since that is when the customer has obtained control of the goods’ economic benefits. The Company does not provide any service-type warranties and does not accept product returns except under limited circumstances such as damages in transit or ineffective product. The Company also excludes any amounts related to taxes assessed by governmental authorities from revenue measurement. Shipping and handling costs associated with outbound product freight are accounted for as fulfillment costs and are included in selling, general and administrative expenses in the accompanying condensed statements of operations and comprehensive loss. For service revenue, the Company evaluated the arrangement with the distribution partner in Canada and determined that it acts as an agent in the distribution of Jeuveau ® in Canada as it does not control the product before control is transferred to a customer. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred and discretion in establishing the price. Accordingly, the Company records the sale as service revenue on a net basis. Revenue from services is recognized in the period the service is performed for the amount of consideration expected to be received. The Company recognized $0 and $702, respectively, of revenues related to international sales for the three and nine months ended September 30, 2021 and $738 for the three and nine months ended September 30, 2020. Disaggregation of Revenue The Company’s disaggregation of revenue is consistent with its operating segment as disclosed above. Gross-to-Net Revenue Adjustments The Company provides customers with discounts, such as trade and volume discounts and prompt pay discounts, that are directly reflected in the invoice price. Revenues are recorded net of sales-related adjustments, wherever applicable, primarily for the volume-based rebates, coupon and consumer loyalty programs. • Volume-based Rebates — Volume-based rebates are contractually offered to certain customers. The rebates payable to each customer are determined based on the contract and quarterly purchase volumes. • Coupons — The Company issued customers coupons redeemable into gift cards funded by the Company for the benefit of patients. The coupons were accounted for as variable consideration. The Company estimates coupon redemption rates based on historical data and future expectations. The coupons were accrued based on estimated redemption rates and the volume of products purchased and were recorded as a reduction to revenues on product delivery. All issued coupons expired on June 30, 2020. • Consumer Loyalty Program — In May 2020, the Company launched a consumer loyalty program, which allows participating customers to earn rewards for qualifying treatments to their patients (i.e. consumers) using Jeuveau ® and redeem the rewards for Jeuveau ® in the future at no additional cost. The loyalty program represents a customer option that provides a material right and, accordingly, is a performance obligation. At the time Jeuveau ® product is sold to customers, the invoice price is allocated between the product sold and the estimated material right reward (“Reward”) that the customer might redeem in the future. The standalone selling price of the Reward is measured based on historical sales data, estimated average selling price of Jeuveau ® at the time of redemption, expected customer and consumer participation rates in the loyalty program, and estimated number of qualifying treatments to be performed by customers. The portion of invoice price allocated to the Reward is initially recorded as deferred revenue. Subsequently, when customers redeem the Reward and the related product is delivered, the deferred revenue is recognized in net revenue at that time. As of September 30, 2021 and December 31, 2020, the accrued revenue contract liabilities, primarily related to volume-based rebates and consumer loyalty program, were $5,751 and $3,081, respectively, which were recorded in the accrued expenses in the accompanying condensed balance sheets. For the three and nine months ended September 30, 2021, provisions for rebate and consumer loyalty programs were $3,912 and $9,355, respectively, which were offset by related payments, redemptions and adjustments of $2,695 and $6,686, respectively. For the three and nine months ended September 30, 2020, provisions for rebate, coupon and consumer loyalty programs were $2,378 and $12,607, respectively, which were offset by related payments, redemptions and adjustments of $806 and $11,945, respectively. Contract balances A contract with a customer states the terms of the sale, including the description, quantity and price of each product purchased. Amounts are recorded as accounts receivable when the Company’s right to consideration becomes unconditional. The Company does not have any significant financing components in customer contracts given the expected time between transfer of the promised products and the payment of the associated consideration is less than one year. As of September 30, 2021 and December 31, 2020, all amounts included in accounts receivable, net on the accompanying condensed balance sheets are related to contracts with customers. The Company did not have any contract assets nor unbilled receivables as of September 30, 2021 or December 31, 2020. Sales commissions are included in selling, general and administrative expenses when incurred. Contract liabilities reflect estimated amounts that the Company is obligated to pay to customers or patients primarily under the rebate and coupon programs and deferred revenue associated with Rewards under the consumer loyalty program. The Company’s contract liabilities are included in accounts payable and accrued expenses in the accompanying condensed balance sheets. During the nine months ended September 30, 2021 and 2020, the Company recognized $2,802 and $0, respectively, of revenue related to amounts included in contract liabilities at the beginning of the period and did not recognize any revenue related to changes in transaction prices regarding its contracts with customers from previous periods. Collectability Accounts receivable are recorded at the invoiced amount and do not bear interest. At the time of contract inception or new customer account set-up, the Company performs a collectability assessment of the customer’s creditworthiness. The Company assesses the probability that the Company will collect the entitled consideration in exchange for the goods sold, by considering the customer’s ability and intention to pay when consideration is due. On a recurring basis, the Company estimates the amount of receivables considered uncollectable to reflect an allowance for doubtful accounts. The Company writes off accounts receivable balances when it is determined that there is no possibility of collection. As of September 30, 2021 and December 31, 2020, allowance for doubtful accounts was $2,381 and $2,118, respectively. For the three and nine months ended September 30, 2021, provision for bad debts were $188 and $501, respectively, and the write-off amount was $23 and $214, respectively. For the three and nine months ended September 30, 2020, recovery of and provision for bad debts was $168 and $2,439, respectively, and the write-off amount was $0 and $171, respectively. Practical Expedients The Company expenses sales commissions when incurred as the amortization period is one year or less. These costs are recorded within selling, general and administrative expenses in the accompanying condensed statements of operations and comprehensive loss. The Company does not adjust the amount of promised consideration for the effects of the time value of money for contracts in which the anticipated period between when the Company transfers the goods or services to the customer and when the customer pays within one year. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses include personnel-related costs, costs associated with pre-clinical and clinical development activities, costs associated with and costs for prototype products that are manufactured prior to market approval for that prototype product, internal and external costs associated with the Company’s regulatory compliance and quality assurance functions, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings, and overhead costs, including allocated facility related expenses. Litigation Settlement In February 2021, upon entering into certain agreements to settle intellectual property disputes relating to Jeuveau ® , the Company agreed to pay to Allergan and Medytox $35,000 in multiple payments over two years and issued 6,762,652 shares of its common stock to Medytox. In addition, for the period from December 16, 2020 to September 16, 2022, the Company agreed to pay to Allergan and Medytox a royalty on the sale of Jeuveau ® , based on a certain dollar amount per vial sold in the United States and a low-double digit royalty on net sales of Jeuveau ® sold in other Evolus territories. For the period from September 17, 2022 to September 16, 2032, the Company agreed to pay to Medytox a mid-single digit royalty percentage on all net sales of Jeuveau ® . The royalty payments are made quarterly and recorded as product cost of sales on the accompanying condensed statements of operations and comprehensive loss in the periods the royalties are incurred. The settlement agreements resulted in an $83,421 charge for the fourth quarter of 2020, which consisted of $35,000 in deferred cash payments and $48,421 from the issuance of 6,762,652 shares of the Company’s common stock in February 2021. In the third quarter of 2021, the Company made the first cash payment of $15,000 to Medytox and Allergan. As of September 30, 2021 and December 31, 2020, a current liability of $15,000 and $63,421, respectively, and non-current liability of $5,000 and $20,000, respectively, were recorded in the accompanying condensed balance sheets. Separately, in March 2021, Daewoong and the Company entered into certain agreements, pursuant to which Daewoong agreed to pay the Company an amount equal to $25,500, which was recorded as a settlement payment from Daewoong and included as part of cost of sales on the accompanying condensed statements of operations and comprehensive loss for the nine months ended September 30, 2021. For the period from December 16, 2020 to September 16, 2022, Daewoong also agreed to reimburse the Company certain amounts with respect to the royalties payable to Medytox and Allergan. This reimbursement is received quarterly and recorded as an offset to the related royalties to Medytox and Allergan in the product cost of sales on the accompanying condensed statements of operations and comprehensive loss. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for the details |
Fair Value Measurements and Sho
Fair Value Measurements and Short-Term Investments | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Short-Term Investments | Fair Value Measurements and Short-Term Investments Short-Term Investments As of September 30, 2021, the Company did not hold any short-term investments. The following is a summary of the Company’s short-term investments, considered available-for-sale, as of December 31, 2020: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Available-for-sale securities U.S. treasury securities $ 5,000 $ — $ — $ 5,000 Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The fair value of these instruments was as follows: As of September 30, 2021 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent royalty obligation payable to Evolus Founders $ 43,300 $ — $ — $ 43,300 As of December 31, 2020 Fair Value Level 1 Level 2 Level 3 Available-for-sale debt securities U.S. treasury securities $ 5,000 $ 5,000 $ — $ — Liabilities Contingent royalty obligation payable to Evolus Founders $ 41,546 $ — $ — $ 41,546 The Company did not transfer any assets or liabilities measured at fair value on a recurring basis between levels during the nine months ended September 30, 2021 and 2020. The Company determines the fair value of the contingent royalty obligation payable to the Evolus Founders based on Level 3 inputs using a discounted cash flows method. The significant unobservable input assumptions that can significantly change the fair value include (i) projected amount and timing of net revenues during the payment period, which terminates in the quarter following the 10-year anniversary of the first commercial sale of Jeuveau ® in the United States, (ii) the discount rate, and (iii) the timing of payments. During the three and nine months ended September 30, 2021 and 2020, the Company utilized discount rates between 13.0% and 20.0%, reflecting changes in the Company’s risk profile. Net revenue projections are also updated to reflect changes in the timing of expected sales. The following table shows a reconciliation of the beginning and ending fair value measurements of the contingent royalty obligation payable: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Fair value, beginning of period $ 42,683 $ 36,334 $ 41,546 $ 44,683 Payments (783) (233) (2,295) (1,131) Change in fair value recorded in operating expenses 1,400 (2,471) 4,049 (9,922) Fair value, end of period $ 43,300 $ 33,630 $ 43,300 $ 33,630 Other Financial Assets and Liabilities The Company’s financial instruments consist primarily of cash and cash equivalents, short-term available-for-sale debt securities, accounts receivable, accounts payable, accrued expenses, lease liabilities, and long-term debt. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The table below shows the weighted-average life, original cost, accumulated amortization and net book value by major intangible asset classification: Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 59,076 $ (7,850) $ 51,226 Capitalized software 2 7,314 (7,072) 242 Intangible assets, net 66,390 (14,922) 51,468 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of September 30, 2021 $ 87,598 $ (14,922) $ 72,676 Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 59,076 $ (5,650) $ 53,426 Capitalized software 2 6,681 (4,810) 1,871 Intangible assets, net 65,757 (10,460) 55,297 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of December 31, 2020 $ 86,965 $ (10,460) $ 76,505 * Intangible assets with indefinite lives have an indeterminable average life. The following table outlines the estimated future amortization expense related to intangible assets held as of September 30, 2021 that are subject to amortization: Fiscal year Remaining in 2021 $ 844 2022 3,094 2023 2,955 2024 2,955 2025 2,955 Thereafter 38,665 $ 51,468 The Company capitalized $0 and $432 for the three months ended September 30, 2021 and 2020, respectively, and $633 and $1,966 for the nine months ended September 30, 2021 and 2020, respectively, related to costs of computer software developed for internal use. The Company recorded total intangible assets amortization expense of $843 and $1,664 for the three months ended September 30, 2021 and 2020, respectively, and $4,463 and $4,813 for the nine months ended September 30, 2021 and 2020, respectively, within depreciation and amortization on the accompanying condensed statements of operations and comprehensive loss. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of: September 30, December 31, 2021 2020 Accrued royalties under the Medytox/Allergan Settlement Agreements $ 9,088 $ — Accrued payroll and related benefits 5,485 4,076 Accrued revenue contract liabilities 5,751 3,081 Accrued professional services 1,655 895 Other accrued expenses 1,457 1,050 $ 23,436 $ 9,102 |
Oxford Term Loan
Oxford Term Loan | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Oxford Term Loan | Oxford Term Loan On March 15, 2019, the Company entered into a Loan and Security Agreement with Oxford (the “Loan Agreement”), providing for a credit facility of up to $100,000. Pursuant to the terms of the credit facility, the lender extended term loans (the “Oxford Term Loan”), available in two advances, to the Company. The first tranche of $75,000 was funded on the closing date. The second tranche of $25,000 was not drawn. The credit facility bore an annual interest rate equal to the greater of 9.5%, or the 30-day U.S. Dollar LIBOR rate plus 7.0%. The Company agreed to pay interest-only for the first 36 months until May 2022, followed by a 23-month amortization period. Upon the earliest to occur of the maturity date, the acceleration of the Oxford Term Loan, or the prepayment of the Oxford Term Loan, the Company was required to pay to Oxford a final payment of 5.5% of the full principal amount of the Oxford Term Loan funded (“Final Payment”). The Company could elect to prepay all amounts owed prior to the maturity date, provided that a prepayment fee was also paid, which would be equal to 2.0% of the amount prepaid if the prepayment occurred after March 15, 2020 and on or prior to March 15, 2021, or 1.0% of the amount prepaid if the prepayment occurred thereafter (“Prepayment Fee”). At the closing date, the Company incurred $1,094 and $2,205 in debt discounts and issuance costs related to the Oxford Term Loan, respectively. Debt discounts and issuance costs related to the Oxford Term Loan were presented as a deduction to the debt balance and are amortized into interest expense using the effective interest method. On January 4, 2021, the Company and Oxford entered into an agreement (“Payoff Letter”), pursuant to which (i) the Company paid Oxford $76,447 to discharge in full all outstanding obligations, including accrued interest, by and between Oxford, in its capacity as collateral agent and lender, and the Company, and (ii) effective upon such repayment, the Loan Agreement, and all unfunded commitments thereunder, guarantees and other security interests granted to Oxford in connection with the Loan Agreement and all other obligations of and restrictions on the Company under the Loan Agreement, terminated. As a condition to entering into the Payoff Letter, Oxford agreed to waive a total of $4,300 of fees comprised of (i) $2,800 of the Final Payment and (ii) the Prepayment Fee of $1,500. As a result, the Company recorded a loss of $1,939 in extinguishment of debts, net on the accompanying condensed statements of operations and comprehensive loss. On July 6, 2020, the Company entered into a Convertible Promissory Note Purchase Agreement with Daewoong for the principal amount of $40,000 (the “Daewoong Convertible Note”), which was funded on July 30, 2020. Additionally, on July 6, 2020, the Company, Daewoong and Oxford entered into a Subordination Agreement pursuant to which the Daewoong Convertible Note was subordinated to the Company’s obligations under the Loan Agreement. The Daewoong Convertible Note bore interest at a rate of 3.0% payable semi-annually in arrears on June 30th and December 31st of each year and was to mature on July 30, 2025, subject to earlier conversion as provided below. Interest was initially paid in kind by adding the accrued amount thereof to the outstanding principal amount on a semi-annual basis on June 30th and December 31st of each calendar year for so long as any principal amount under the Oxford Term Loan remained outstanding and the Subordination Agreement was not terminated. Interest became payable in cash after the Oxford Term Loan was repaid in full, and the Subordination Agreement was terminated on January 4, 2021. On March 23, 2021, the outstanding principal balance including all accrued and unpaid interest thereon, of $40,779 was converted, at the conversion price of $13.00 per share, into 3,136,869 shares of the Company’s common stock under the Conversion Agreement. The conversion was accounted for as an extinguishment of debt resulting in a gain of $971, which is recorded in loss from extinguishment of debts, net on the accompanying condensed statements of operations and comprehensive loss. The Daewoong Convertible Note was not registered, and the shares of the Company’s common stock issued upon conversion of the Daewoong Convertible Note have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for the details of the Conversion Agreement. |
Daewoong Convertible Note
Daewoong Convertible Note | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Daewoong Convertible Note | Oxford Term Loan On March 15, 2019, the Company entered into a Loan and Security Agreement with Oxford (the “Loan Agreement”), providing for a credit facility of up to $100,000. Pursuant to the terms of the credit facility, the lender extended term loans (the “Oxford Term Loan”), available in two advances, to the Company. The first tranche of $75,000 was funded on the closing date. The second tranche of $25,000 was not drawn. The credit facility bore an annual interest rate equal to the greater of 9.5%, or the 30-day U.S. Dollar LIBOR rate plus 7.0%. The Company agreed to pay interest-only for the first 36 months until May 2022, followed by a 23-month amortization period. Upon the earliest to occur of the maturity date, the acceleration of the Oxford Term Loan, or the prepayment of the Oxford Term Loan, the Company was required to pay to Oxford a final payment of 5.5% of the full principal amount of the Oxford Term Loan funded (“Final Payment”). The Company could elect to prepay all amounts owed prior to the maturity date, provided that a prepayment fee was also paid, which would be equal to 2.0% of the amount prepaid if the prepayment occurred after March 15, 2020 and on or prior to March 15, 2021, or 1.0% of the amount prepaid if the prepayment occurred thereafter (“Prepayment Fee”). At the closing date, the Company incurred $1,094 and $2,205 in debt discounts and issuance costs related to the Oxford Term Loan, respectively. Debt discounts and issuance costs related to the Oxford Term Loan were presented as a deduction to the debt balance and are amortized into interest expense using the effective interest method. On January 4, 2021, the Company and Oxford entered into an agreement (“Payoff Letter”), pursuant to which (i) the Company paid Oxford $76,447 to discharge in full all outstanding obligations, including accrued interest, by and between Oxford, in its capacity as collateral agent and lender, and the Company, and (ii) effective upon such repayment, the Loan Agreement, and all unfunded commitments thereunder, guarantees and other security interests granted to Oxford in connection with the Loan Agreement and all other obligations of and restrictions on the Company under the Loan Agreement, terminated. As a condition to entering into the Payoff Letter, Oxford agreed to waive a total of $4,300 of fees comprised of (i) $2,800 of the Final Payment and (ii) the Prepayment Fee of $1,500. As a result, the Company recorded a loss of $1,939 in extinguishment of debts, net on the accompanying condensed statements of operations and comprehensive loss. On July 6, 2020, the Company entered into a Convertible Promissory Note Purchase Agreement with Daewoong for the principal amount of $40,000 (the “Daewoong Convertible Note”), which was funded on July 30, 2020. Additionally, on July 6, 2020, the Company, Daewoong and Oxford entered into a Subordination Agreement pursuant to which the Daewoong Convertible Note was subordinated to the Company’s obligations under the Loan Agreement. The Daewoong Convertible Note bore interest at a rate of 3.0% payable semi-annually in arrears on June 30th and December 31st of each year and was to mature on July 30, 2025, subject to earlier conversion as provided below. Interest was initially paid in kind by adding the accrued amount thereof to the outstanding principal amount on a semi-annual basis on June 30th and December 31st of each calendar year for so long as any principal amount under the Oxford Term Loan remained outstanding and the Subordination Agreement was not terminated. Interest became payable in cash after the Oxford Term Loan was repaid in full, and the Subordination Agreement was terminated on January 4, 2021. On March 23, 2021, the outstanding principal balance including all accrued and unpaid interest thereon, of $40,779 was converted, at the conversion price of $13.00 per share, into 3,136,869 shares of the Company’s common stock under the Conversion Agreement. The conversion was accounted for as an extinguishment of debt resulting in a gain of $971, which is recorded in loss from extinguishment of debts, net on the accompanying condensed statements of operations and comprehensive loss. The Daewoong Convertible Note was not registered, and the shares of the Company’s common stock issued upon conversion of the Daewoong Convertible Note have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for the details of the Conversion Agreement. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Operating Leases | Operating LeasesThe Company’s corporate headquarters in Newport Beach, California is leased under a five-year non-cancelable operating lease, which expires on January 31, 2025. Lease payments increase each year on February 1 based on an annual rent escalation clause. The Company may, under certain circumstances, terminate the lease on the 36-month anniversary of the lease commencement date by providing a written notice 12 months prior to such anniversary and paying a termination fee equal to six months basic rent plus certain other expenses. The Company has an option to extend the term of the lease for an additional 60 months, which is not recognized as part of its ROU assets and lease liabilities. The Company’s lease agreement does not contain any residual value guarantees or material restrictive covenants. The payments associated with the renewal will only be included in the measurement of the lease liability and ROU assets if the exercise of the renewal option is determined to be reasonably certain. The Company considers the timing of the renewal period and other economic factors such as the financial implications of a decision to extend or not to extend a lease in determining if the renewal option is reasonably certain to be exercised. For the three and nine months ended September 30, 2021, the components of operating lease expense are as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Fixed operating lease expense $ 268 $ 266 $ 797 $ 813 Variable operating lease expense 20 5 40 32 Short-term operating lease expense — — — 168 $ 288 $ 271 $ 837 $ 1,013 The weighted-average remaining lease term was 3.3 years and weighted-average discount rate was 9.4% as of September 30, 2021. Operating lease expenses were included in the selling, general and administrative expenses in the accompanying condensed statements of operations and comprehensive loss. Operating lease right-of-use assets and related current and noncurrent operating lease liabilities are presented in the accompanying condensed balance sheets. The following table presents the future minimum payments under the operating lease agreements with non-cancelable terms as of September 30, 2021: Fiscal year Remainder of 2021 $ 305 2022 1,265 2023 1,320 2024 1,377 2025 115 Total operating lease payments 4,382 Less: imputed interest (642) Present value of operating lease liabilities $ 3,740 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Purchase Commitments As of September 30, 2021, the Company has entered into commitments to purchase services and products for an aggregate amount of approximately $1,601. Certain minimum purchase commitments related to the purchase of Jeuveau ® are described below. License and Supply Agreement The Daewoong Agreement includes certain minimum annual purchases that the Company is required to make in order to maintain the exclusivity of the license. The Company may, however, meet these minimum purchase obligations by achieving certain market share in its covered territories. These potential minimum purchase obligations were contingent upon the occurrence of future events, including receipt of governmental approvals and the Company’s future market share in various jurisdictions. Legal Proceedings Securities Class Action Lawsuit On October 16 and 28, 2020, two putative securities class action complaints were filed in the U.S. District Court for the Southern District of New York by Evolus shareholders Armin Malakouti and Clinton Cox, respectively, naming the Company and certain of its officers as defendants. The complaints assert violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts related to the Company’s acquisition of the right to sell Jeuveau ® , the complaint against the Company filed by Allergan and Medytox in the U.S. International Trade Commission related to Jeuveau ® (the “ITC Action”), and risks related to the ITC Action. The complaints assert a putative class period of February 1, 2019 to July 6, 2020. The court consolidated the actions on November 13, 2020, under the caption In re Evolus Inc. Securities Litigation , No. 1:20-cv-08647 (PGG). On September 17, 2021, the court appointed a lead plaintiff and lead counsel. Under the court’s November 13, 2020 order, the lead plaintiff must file a consolidated, amended complaint by November 16, 2021, and the Company must move, answer or otherwise respond by January 18, 2022. Shareholder Derivative Lawsuit On November 27, 2020 and December 2, 2020, two putative Evolus shareholders filed substantially similar shareholder derivative actions in the U.S. District Court for the Southern District of New York against certain of the Company’s officers and directors as defendants. The complaints alleged substantially similar facts as those in the Securities Class Action and assert claims for, among other things, breach of fiduciary duty, waste of corporate assets, unjust enrichment, and violations of Section 14(a) of the Exchange Act and for contribution under Sections 10(b) and 21(D) of the Exchange Act. On December 29, 2020, the plaintiffs filed a joint stipulation to consolidate their actions and on February 5, 2021, the court consolidated the action under the caption In re Evolus, Inc. Derivative Litigation , No. 1:20-cv-09986-PPG, and adjourned defendants’ time to move, answer or otherwise respond to the complaints. On September 20, 2021, the court so-ordered the parties’ stipulated stay of the consolidated derivative suit pending the court’s decision on the defendants’ anticipated motion to dismiss the Securities Class Action. It is possible that additional suits will be filed, or additional allegations will be made by stockholders, with respect to these same or similar or other matters and also naming the Company and/or its officers and directors as defendants. The Company believes that the complaints are without merit and intends to vigorously defend against it. However, the outcome of the legal proceeding is uncertain at this point. Based on information available to the Company at present, management cannot reasonably estimate a range of loss and accordingly has not accrued any liability associated with this action. Books and Records Demand On March 5, 2021, the Company received a letter from a putative stockholder demanding inspection of specified categories of the Company’s books and records under Section 220 of the Delaware General Corporations Law. The subject of the demand is substantially similar to the allegations in the putative securities class action and derivative complaints described above. The Company has responded to the stockholder’s demand, including providing certain materials to the stockholder. The Company was subsequently informed that the stockholder sold his shares of the Company’s common stock. On October 13, 2021, the Company received a substantially similar demand to inspect specified categories of the Company’s books and records under Section 220 of the Delaware General Corporations Law from another putative stockholder. Other Legal Matters The Company is, from time to time, involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation. These other matters may raise difficult and complex legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit or regulatory encounter is brought, and differences in applicable laws and regulations. Except as set forth above, the Company does not believe that these other matters would have a material adverse effect on its accompanying financial position, results of operations or cash flows. However, the resolution of one or more of the other matters in any reporting period could have a material adverse impact on the Company’s financial results for that period. In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because they involve claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. No amounts were accrued as of September 30, 2021 and December 31, 2020. Medytox/Allergan Settlement Agreements U.S. Settlement Agreement Effective February 18, 2021, the Company, Allergan and Medytox entered into a Settlement and License Agreement (the “U.S. Settlement Agreement”), pursuant to which, among other things: (i) Allergan and Medytox agreed to file a petition requesting the remedial orders related to the ITC Action be rescinded with respect to the Company; (ii) Medytox agreed to dismiss substantially similar litigation in California against the Company; (iii) the Company, on the one hand, and Medytox and Allergan, on the other hand, agreed to mutually release certain claims they may have against one another and their respective affiliates, (iv) Allergan and Medytox granted to the Company and its agents a license to manufacture and commercialize certain products identified in the U.S. Settlement Agreement, including Jeuveau ® (the “Licensed Products”), in the United States during the 21 month period that, pursuant to the ITC Action, the Company was restricted from, among other things, selling, marketing, or promoting such imported Jeuveau ® in the United States (the “Restricted Period”); (v) the Company agreed to pay to Allergan and Medytox $35,000 in multiple payments over two years, of which the Company paid the first cash payment of $15,000 in the third quarter of 2021; and (vi) during the Restricted Period, the Company agreed to pay to Allergan and Medytox certain confidential royalties on the sale of Licensed Products, calculated on dollar amount per vial sold of Licensed Product by or on behalf of the Company in the United States. ROW Settlement Agreement Effective February 18, 2021, the Company and Medytox entered into a Settlement and License Agreement (the “ROW Settlement Agreement” and, together with the U.S. Settlement Agreement, the “Medytox/Allergan Settlement Agreements”), pursuant to which, among other things: (i) the Company and Medytox agreed to mutually release certain claims they may have against one another and their respective affiliates; (ii) Medytox granted to the Company and its agents a license to manufacture and commercialize the Licensed Products, in Canada, the European Union, Switzerland, member countries and cooperating countries of the European Economic Area, Russia, certain members of the Commonwealth of Independent States, South Africa, Australia and Japan (the “ROW Territories”) during the Restricted Period; (iii) Medytox granted to the Company and its agents a fully paid up license to manufacture and commercialize the Licensed Products in the ROW Territories and the United States from the end of the Restricted Period (the “Medytox License Period”); (iv) the Company and Medytox agreed to enter into the Share Issuance Agreement (as defined below) pursuant to which the Company issued 6,762,652 shares (the “Settlement Shares”) of the Company’s common stock, par value $0.00001 per share, to Medytox; (v) the Company and Medytox agreed to enter into the Registration Rights Agreement (as defined below), pursuant to which the Company granted certain registration rights to Medytox with respect to the Settlement Shares; (vi) during the Restricted Period, the Company agreed to pay Medytox a confidential low-double digit royalty on net sales of the Licensed Products sold by or on behalf of the Company in the ROW Territories; and (vii) during the Medytox License Period, the Company agreed to pay Medytox a confidential mid-single digit royalty percentage on net sales of the Licensed Products sold by or on behalf of the Company in the United States and the ROW Territories. Share Issuance Agreement In connection with the execution of the ROW Settlement Agreement, the Company and Medytox entered into a Share Issuance Agreement effective February 18, 2021 (the “Share Issuance Agreement”). Pursuant to the Share Issuance Agreement and subject to the terms and conditions set forth therein, among other things, the Company issued to Medytox the Settlement Shares to enter into the ROW Settlement Agreement and in consideration for Medytox’s representations, warranties, and other agreements set forth in the Share Issuance Agreement. The Settlement Shares are subject to contractual restrictions on transfer that, subject to certain limited exceptions such as transfers to affiliates, prevent Medytox from transferring any shares of common stock prior to February 16, 2022 and, thereafter, prohibit Medytox from transferring more than 25% of the shares it holds prior to September 16, 2023, more than 50% of the shares it holds prior to September 16, 2024 and more than 75% of the shares it holds prior to September 16, 2025, with such contractual restrictions terminating on September 16, 2025. Additionally, until February 17, 2022, Medytox is required to vote all Settlement Shares that it owns (i) in any action or proposal relating to the election of directors, in line with the recommendations of the board of directors of the Company and (ii) in all other actions, at Medytox’s option either (A) in line with the recommendation of the board of directors of the Company or (ii) in the same manner and proportion as the votes made by all outstanding voting securities other than those held by Medytox, the officers and directors of the company and Alphaeon 1, LLC and its affiliates. Registration Rights Agreement In connection with the execution of the ROW Settlement Agreement, the Company and Medytox also entered into a Registration Rights Agreement effective February 18, 2021 (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, among other things, the Company agreed, after March 31, 2022, (i) to comply with certain requests by Medytox to register for sale, under the Securities Act, the Settlement Shares, and (ii) to include the Settlement Shares in certain registrations by the Company of its securities for sale under the Securities Act, to the extent requested by Medytox, in each case subject to certain customary conditions, exceptions and limitations as set forth in the Registration Rights Agreement. In addition, Medytox’s registration rights under the Registration Rights Agreement will terminate at such time that Medytox is able to sell all of the Settlement Shares over a three-month period, or less, pursuant to an exemption to registration under the Securities Act. 2021 Daewoong Arrangement Daewoong Settlement Agreement On March 23, 2021, the Company and Daewoong entered into a Confidential Settlement and Release Agreement (the “Daewoong Settlement Agreement”), pursuant to which, among other things: (i) Daewoong agreed to (a) pay to the Company an amount equal to $25,500, which the Company received in April 2021, (b) pay certain legal fees incurred by the Company’s litigation counsel in connection with its defense of the ITC Action (including any appeal of the resulting remedial orders), (c) cancel all remaining milestone payments totaling $10,500 in aggregate, and (d) reimburse the Company certain amounts (calculated on a dollar amount per vials sold basis in the United States) for sales of certain products with respect to which the Company is required to pay Medytox and Allergan royalties pursuant to the U.S. Settlement Agreement; and (ii) the Company agreed to (a) release, on behalf of itself and certain of its affiliates and representatives, certain claims they may have against Daewoong related to the allegations made in or the subject matter of the Medytox/Allergan Actions, or any orders, remedies and losses resulting from the Medytox/Allergan Actions, and (b) coordinate with Daewoong on certain matters related to the Medytox/Allergan Actions. Conversion Agreement In connection with the execution of the Settlement Agreement, the Company and Daewoong also entered into a Convertible Promissory Note Conversion Agreement (the “Conversion Agreement”), pursuant to which, among other things, (i) the principal balance under the Daewoong Convertible Note, together with all accrued and unpaid interest thereon, in the amount of $40,779 was converted, at the conversion price of $13.00 per share, into 3,136,869 shares of Common Stock (the “Conversion Shares”); and (ii) the Daewoong Convertible Note was deemed cancelled and satisfied in full in connection with such conversion. After the conversion, shares owned by Daewoong, together with its affiliates and attribution parties, did not exceed 9.99% of the Company’s then outstanding common shares immediately following such issuance, as required under the terms of the Daewoong Convertible Note. Daewoong Agreement Amendment In connection with the execution of the Daewoong Settlement Agreement, on March 23, 2021, the Company and Daewoong also entered into the Third Amendment to the Supply Agreement (the “Daewoong Agreement Amendment”). Pursuant to the Daewoong Agreement Amendment, the parties amended the Daewoong Agreement to (i) expand the territory within which the Company may distribute Jeuveau ® to certain countries in Europe, (ii) reduce the period of time with respect to which the Company is required to deliver binding forecasts to Daewoong; (iii) introduce certain limitations on Daewoong’s ability to convert the Company’s exclusive license for certain territories to a non-exclusive license in the event the Company fails to meet certain minimum purchase requirements for such territory; (iv) adjust the minimum purchase requirements and reduce the transfer price per vial of Jeuveau ® applicable to various territories, (v) require that any Jeuveau ® supplied by Daewoong match certain shelf-life thresholds, and (vi) prohibit the Company from sharing certain confidential information of Daewoong with Medytox or its affiliates or representatives. |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stockholder's Equity | Stockholders’ Equity Preferred Stock The Company has 10,000,000 authorized shares of preferred stock with a par value of $0.00001 per share. As of September 30, 2021, no shares of its preferred stock were issued and outstanding. Common Stock The Company has 100,000,000 authorized shares of common stock with a par value of $0.00001 per share. As of September 30, 2021, 55,553,792 shares of its common stock were issued and outstanding. On February 28, 2021, the Company issued 6,762,652 shares of its common stock to Medytox pursuant to the Share Issuance Agreement. See Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information. On March 25, 2021, the Company issued 3,136,869 shares of its common stock to Daewoong in connection with the conversion of Daewoong Convertible Note. See Note 7. Daewoong Convertible Note for additional information. In April 2021, the Company completed a follow-on public offering and issued 10,350,000 shares of its common stock, which included the exercise in full by the underwriters of their option to purchase an additional 1,350,000 shares of common stock, at a price to the public of $9.50 per share. The Company received net proceeds of approximately $92,426 from the offering, after deducting underwriting discounts and commissions, excluding other offering expenses. “At-the-market” Offerings of Common Stock On March 26, 2021, the Company entered into an “at-the-market” sales agreement with SVB Leerink LLC (the “Sales Agent”) pursuant to which shares of the Company’s common stock may be sold from time to time for aggregate gross proceeds of up to $75,000 (the “ATM Program”). The Sales Agent is entitled to compensation, at a commission rate equal to 3.0% of the gross proceeds from sales of the Company’s common shares under the ATM Program. For the three months ended September 30, 2021, the Company sold a total of 724,835 shares of its common stock pursuant to the ATM Program at the prevailing market prices for total net proceeds of $8,203 and paid total commissions of $254 to the Sales Agent. For the nine months ended September 30, 2021, the Company sold a total of 934,367 shares of its common stock pursuant to the ATM program at the prevailing market prices for a total net proceeds of $10,910 and paid total commissions of $337 to the Sales Agent. 2017 Omnibus Incentive Plan and Stock-based Compensation Allocation The Company’s 2017 Omnibus Incentive Plan (the “Plan”) provides for the grant of incentive options to employees of the Company, and for the grant of non-statutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to the Company’s officers, directors, consultants and employees of the Company. The maximum number of shares of common stock that may be issued under the Plan is 4,361,291 shares, plus an annual increase on each anniversary of November 21, 2017 equal to 4% of the total issued and outstanding shares of the Company’s common stock as of such anniversary (or such lesser number of shares as may be determined by the Company’s board of directors). As of September 30, 2021, the Company had an aggregate of 1,364,826 shares of its common stock available for future issuance under the Plan. Stock-Based Award Activity and Balances Options are granted at exercise prices based on the Company’s common stock price on the date of grant. The options and RSU grants generally vest over a one The weighted-average assumptions used in determining the fair value of stock options granted were as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Volatility 79.6 % 70.3 % 78.9 % 60.0 % Risk-free interest rate 1.12 % 0.38 % 1.16 % 1.53 % Expected life (years) 6.25 6.25 6.25 6.24 Dividend yield rate — % — % — % — % A summary of stock option activity under the Plan for the nine months ended September 30, 2021, is presented below: Weighted Weighted Average Average Remaining Aggregate Stock Exercise Contractual Intrinsic Options Per Share Terms (Years) Value Outstanding, December 31, 2020 4,407,498 $ 12.20 7.66 $ 50 Granted 264,950 10.06 Exercised (98,329) 9.87 Canceled/forfeited (700,767) 16.30 Outstanding, September 30, 2021 3,873,352 $ 11.38 7.26 $ 982,996 Exercisable, September 30, 2021 2,301,132 $ 11.52 6.84 $ 352,474 The aggregate intrinsic value of outstanding and exercisable options represents the excess of the fair market value of the Company’s common stock over the exercise price of underlying options as of September 30, 2021 and December 31, 2020. A summary of RSU activity under the Plan for the nine months ended September 30, 2021, is presented below: Weighted Average Grant Date Restricted Fair Value Stock Units Per Share Outstanding, December 31, 2020 1,173,741 $ 6.42 Granted 1,655,844 Vested (544,698) Forfeited (512,949) Outstanding, September 30, 2021 1,771,938 $ 8.05 The following table summarizes stock-based compensation expense arising from the above Plan: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Selling, general and administrative $ 2,399 $ 2,924 $ 6,784 $ 7,802 Research and development 77 28 143 152 $ 2,476 $ 2,952 $ 6,927 $ 7,954 |
Medytox_Allergan Settlement Agr
Medytox/Allergan Settlement Agreements and Daewoong Arrangement | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Medytox/Allergan Settlement Agreements and Daewoong Arrangement | Commitments and Contingencies Purchase Commitments As of September 30, 2021, the Company has entered into commitments to purchase services and products for an aggregate amount of approximately $1,601. Certain minimum purchase commitments related to the purchase of Jeuveau ® are described below. License and Supply Agreement The Daewoong Agreement includes certain minimum annual purchases that the Company is required to make in order to maintain the exclusivity of the license. The Company may, however, meet these minimum purchase obligations by achieving certain market share in its covered territories. These potential minimum purchase obligations were contingent upon the occurrence of future events, including receipt of governmental approvals and the Company’s future market share in various jurisdictions. Legal Proceedings Securities Class Action Lawsuit On October 16 and 28, 2020, two putative securities class action complaints were filed in the U.S. District Court for the Southern District of New York by Evolus shareholders Armin Malakouti and Clinton Cox, respectively, naming the Company and certain of its officers as defendants. The complaints assert violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, claiming that the defendants made false and materially misleading statements and failed to disclose material adverse facts related to the Company’s acquisition of the right to sell Jeuveau ® , the complaint against the Company filed by Allergan and Medytox in the U.S. International Trade Commission related to Jeuveau ® (the “ITC Action”), and risks related to the ITC Action. The complaints assert a putative class period of February 1, 2019 to July 6, 2020. The court consolidated the actions on November 13, 2020, under the caption In re Evolus Inc. Securities Litigation , No. 1:20-cv-08647 (PGG). On September 17, 2021, the court appointed a lead plaintiff and lead counsel. Under the court’s November 13, 2020 order, the lead plaintiff must file a consolidated, amended complaint by November 16, 2021, and the Company must move, answer or otherwise respond by January 18, 2022. Shareholder Derivative Lawsuit On November 27, 2020 and December 2, 2020, two putative Evolus shareholders filed substantially similar shareholder derivative actions in the U.S. District Court for the Southern District of New York against certain of the Company’s officers and directors as defendants. The complaints alleged substantially similar facts as those in the Securities Class Action and assert claims for, among other things, breach of fiduciary duty, waste of corporate assets, unjust enrichment, and violations of Section 14(a) of the Exchange Act and for contribution under Sections 10(b) and 21(D) of the Exchange Act. On December 29, 2020, the plaintiffs filed a joint stipulation to consolidate their actions and on February 5, 2021, the court consolidated the action under the caption In re Evolus, Inc. Derivative Litigation , No. 1:20-cv-09986-PPG, and adjourned defendants’ time to move, answer or otherwise respond to the complaints. On September 20, 2021, the court so-ordered the parties’ stipulated stay of the consolidated derivative suit pending the court’s decision on the defendants’ anticipated motion to dismiss the Securities Class Action. It is possible that additional suits will be filed, or additional allegations will be made by stockholders, with respect to these same or similar or other matters and also naming the Company and/or its officers and directors as defendants. The Company believes that the complaints are without merit and intends to vigorously defend against it. However, the outcome of the legal proceeding is uncertain at this point. Based on information available to the Company at present, management cannot reasonably estimate a range of loss and accordingly has not accrued any liability associated with this action. Books and Records Demand On March 5, 2021, the Company received a letter from a putative stockholder demanding inspection of specified categories of the Company’s books and records under Section 220 of the Delaware General Corporations Law. The subject of the demand is substantially similar to the allegations in the putative securities class action and derivative complaints described above. The Company has responded to the stockholder’s demand, including providing certain materials to the stockholder. The Company was subsequently informed that the stockholder sold his shares of the Company’s common stock. On October 13, 2021, the Company received a substantially similar demand to inspect specified categories of the Company’s books and records under Section 220 of the Delaware General Corporations Law from another putative stockholder. Other Legal Matters The Company is, from time to time, involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation. These other matters may raise difficult and complex legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit or regulatory encounter is brought, and differences in applicable laws and regulations. Except as set forth above, the Company does not believe that these other matters would have a material adverse effect on its accompanying financial position, results of operations or cash flows. However, the resolution of one or more of the other matters in any reporting period could have a material adverse impact on the Company’s financial results for that period. In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because they involve claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. No amounts were accrued as of September 30, 2021 and December 31, 2020. Medytox/Allergan Settlement Agreements U.S. Settlement Agreement Effective February 18, 2021, the Company, Allergan and Medytox entered into a Settlement and License Agreement (the “U.S. Settlement Agreement”), pursuant to which, among other things: (i) Allergan and Medytox agreed to file a petition requesting the remedial orders related to the ITC Action be rescinded with respect to the Company; (ii) Medytox agreed to dismiss substantially similar litigation in California against the Company; (iii) the Company, on the one hand, and Medytox and Allergan, on the other hand, agreed to mutually release certain claims they may have against one another and their respective affiliates, (iv) Allergan and Medytox granted to the Company and its agents a license to manufacture and commercialize certain products identified in the U.S. Settlement Agreement, including Jeuveau ® (the “Licensed Products”), in the United States during the 21 month period that, pursuant to the ITC Action, the Company was restricted from, among other things, selling, marketing, or promoting such imported Jeuveau ® in the United States (the “Restricted Period”); (v) the Company agreed to pay to Allergan and Medytox $35,000 in multiple payments over two years, of which the Company paid the first cash payment of $15,000 in the third quarter of 2021; and (vi) during the Restricted Period, the Company agreed to pay to Allergan and Medytox certain confidential royalties on the sale of Licensed Products, calculated on dollar amount per vial sold of Licensed Product by or on behalf of the Company in the United States. ROW Settlement Agreement Effective February 18, 2021, the Company and Medytox entered into a Settlement and License Agreement (the “ROW Settlement Agreement” and, together with the U.S. Settlement Agreement, the “Medytox/Allergan Settlement Agreements”), pursuant to which, among other things: (i) the Company and Medytox agreed to mutually release certain claims they may have against one another and their respective affiliates; (ii) Medytox granted to the Company and its agents a license to manufacture and commercialize the Licensed Products, in Canada, the European Union, Switzerland, member countries and cooperating countries of the European Economic Area, Russia, certain members of the Commonwealth of Independent States, South Africa, Australia and Japan (the “ROW Territories”) during the Restricted Period; (iii) Medytox granted to the Company and its agents a fully paid up license to manufacture and commercialize the Licensed Products in the ROW Territories and the United States from the end of the Restricted Period (the “Medytox License Period”); (iv) the Company and Medytox agreed to enter into the Share Issuance Agreement (as defined below) pursuant to which the Company issued 6,762,652 shares (the “Settlement Shares”) of the Company’s common stock, par value $0.00001 per share, to Medytox; (v) the Company and Medytox agreed to enter into the Registration Rights Agreement (as defined below), pursuant to which the Company granted certain registration rights to Medytox with respect to the Settlement Shares; (vi) during the Restricted Period, the Company agreed to pay Medytox a confidential low-double digit royalty on net sales of the Licensed Products sold by or on behalf of the Company in the ROW Territories; and (vii) during the Medytox License Period, the Company agreed to pay Medytox a confidential mid-single digit royalty percentage on net sales of the Licensed Products sold by or on behalf of the Company in the United States and the ROW Territories. Share Issuance Agreement In connection with the execution of the ROW Settlement Agreement, the Company and Medytox entered into a Share Issuance Agreement effective February 18, 2021 (the “Share Issuance Agreement”). Pursuant to the Share Issuance Agreement and subject to the terms and conditions set forth therein, among other things, the Company issued to Medytox the Settlement Shares to enter into the ROW Settlement Agreement and in consideration for Medytox’s representations, warranties, and other agreements set forth in the Share Issuance Agreement. The Settlement Shares are subject to contractual restrictions on transfer that, subject to certain limited exceptions such as transfers to affiliates, prevent Medytox from transferring any shares of common stock prior to February 16, 2022 and, thereafter, prohibit Medytox from transferring more than 25% of the shares it holds prior to September 16, 2023, more than 50% of the shares it holds prior to September 16, 2024 and more than 75% of the shares it holds prior to September 16, 2025, with such contractual restrictions terminating on September 16, 2025. Additionally, until February 17, 2022, Medytox is required to vote all Settlement Shares that it owns (i) in any action or proposal relating to the election of directors, in line with the recommendations of the board of directors of the Company and (ii) in all other actions, at Medytox’s option either (A) in line with the recommendation of the board of directors of the Company or (ii) in the same manner and proportion as the votes made by all outstanding voting securities other than those held by Medytox, the officers and directors of the company and Alphaeon 1, LLC and its affiliates. Registration Rights Agreement In connection with the execution of the ROW Settlement Agreement, the Company and Medytox also entered into a Registration Rights Agreement effective February 18, 2021 (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, among other things, the Company agreed, after March 31, 2022, (i) to comply with certain requests by Medytox to register for sale, under the Securities Act, the Settlement Shares, and (ii) to include the Settlement Shares in certain registrations by the Company of its securities for sale under the Securities Act, to the extent requested by Medytox, in each case subject to certain customary conditions, exceptions and limitations as set forth in the Registration Rights Agreement. In addition, Medytox’s registration rights under the Registration Rights Agreement will terminate at such time that Medytox is able to sell all of the Settlement Shares over a three-month period, or less, pursuant to an exemption to registration under the Securities Act. 2021 Daewoong Arrangement Daewoong Settlement Agreement On March 23, 2021, the Company and Daewoong entered into a Confidential Settlement and Release Agreement (the “Daewoong Settlement Agreement”), pursuant to which, among other things: (i) Daewoong agreed to (a) pay to the Company an amount equal to $25,500, which the Company received in April 2021, (b) pay certain legal fees incurred by the Company’s litigation counsel in connection with its defense of the ITC Action (including any appeal of the resulting remedial orders), (c) cancel all remaining milestone payments totaling $10,500 in aggregate, and (d) reimburse the Company certain amounts (calculated on a dollar amount per vials sold basis in the United States) for sales of certain products with respect to which the Company is required to pay Medytox and Allergan royalties pursuant to the U.S. Settlement Agreement; and (ii) the Company agreed to (a) release, on behalf of itself and certain of its affiliates and representatives, certain claims they may have against Daewoong related to the allegations made in or the subject matter of the Medytox/Allergan Actions, or any orders, remedies and losses resulting from the Medytox/Allergan Actions, and (b) coordinate with Daewoong on certain matters related to the Medytox/Allergan Actions. Conversion Agreement In connection with the execution of the Settlement Agreement, the Company and Daewoong also entered into a Convertible Promissory Note Conversion Agreement (the “Conversion Agreement”), pursuant to which, among other things, (i) the principal balance under the Daewoong Convertible Note, together with all accrued and unpaid interest thereon, in the amount of $40,779 was converted, at the conversion price of $13.00 per share, into 3,136,869 shares of Common Stock (the “Conversion Shares”); and (ii) the Daewoong Convertible Note was deemed cancelled and satisfied in full in connection with such conversion. After the conversion, shares owned by Daewoong, together with its affiliates and attribution parties, did not exceed 9.99% of the Company’s then outstanding common shares immediately following such issuance, as required under the terms of the Daewoong Convertible Note. Daewoong Agreement Amendment In connection with the execution of the Daewoong Settlement Agreement, on March 23, 2021, the Company and Daewoong also entered into the Third Amendment to the Supply Agreement (the “Daewoong Agreement Amendment”). Pursuant to the Daewoong Agreement Amendment, the parties amended the Daewoong Agreement to (i) expand the territory within which the Company may distribute Jeuveau ® to certain countries in Europe, (ii) reduce the period of time with respect to which the Company is required to deliver binding forecasts to Daewoong; (iii) introduce certain limitations on Daewoong’s ability to convert the Company’s exclusive license for certain territories to a non-exclusive license in the event the Company fails to meet certain minimum purchase requirements for such territory; (iv) adjust the minimum purchase requirements and reduce the transfer price per vial of Jeuveau ® applicable to various territories, (v) require that any Jeuveau ® supplied by Daewoong match certain shelf-life thresholds, and (vi) prohibit the Company from sharing certain confidential information of Daewoong with Medytox or its affiliates or representatives. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Payment Obligations Related to the Acquisition by Alphaeon The Company was acquired by Strathspey Crown Holdings Group, LLC (“SCH”) in 2013 and subsequently by its subsidiary, Alphaeon Corporation, by means of a stock purchase agreement (“Stock Purchase Agreement”) pursuant to which Alphaeon assumed certain payment obligations related to the acquisition. On December 14, 2017, the Stock Purchase Agreement was amended (“Amended Stock Purchase Agreement”), and, as a result, effective upon the closing of the Company’s IPO, the Company assumed all of Alphaeon’s payment obligations under the Amended Stock Purchase Agreement. Under the Amended Stock Purchase Agreement, the payment obligations consisted of (i) a $9,200 up-front payment upon obtaining FDA approval for Jeuveau ® for the treatment of glabellar lines which was paid in full during the first quarter of 2019, (ii) quarterly royalty payments of a low single digit percentage of net sales of Jeuveau ® , and (iii) a $20,000 promissory note that matures in November 2021. The payment obligations set forth in (ii) above terminate in the quarter following the 10-year anniversary of the first commercial sale of Jeuveau ® in the United States. Under the Amended Stock Purchase Agreement, the Company recorded the fair value of all revised payment obligations and the promissory note owed to the Evolus Founders. See Note 3. Fair Value Measurements and Short-Term Investments for more information about the Company’s accounting thereof. The Company has the right to prepay the promissory note, in whole or in part, at any time and from time to time without penalty. Upon an event of default under the promissory note, all unpaid principal becomes immediately due and payable at the option of the holder. An event of default occurs under the terms of the promissory note upon any of the following events: (i) Evolus fails to meet the obligations to make the required payments thereunder, (ii) Evolus makes an assignment for the benefit of creditors, (iii) Evolus commences any bankruptcy proceeding, or (iv) Evolus materially breaches the Amended Stock Purchase Agreement or Tax Indemnity Agreement (which is defined below) and such breach is not cured within 30 days. In addition, upon a change-of-control of Evolus, all unpaid principal becomes immediately due and payable. In connection with the Amended Stock Purchase Agreement, the Company entered into a tax indemnity agreement with the Evolus Founders (“Tax Indemnity Agreement”). Pursuant to the Tax Indemnity Agreement, the Company is obligated to indemnify the Evolus Founders for any tax liability resulting from the Company’s assumption of the revised payment obligations under the Amended Stock Purchase Agreement from Alphaeon. Such assumption of the revised payment obligations occurred upon the completion of the IPO. Under the Amended Stock Purchase Agreement, the payment obligations are contingent and thus eligible for installment sale reporting under Section 453 of the Internal Revenue Code of 1986, as amended. Under the Tax Indemnity Agreement, the Company was obligated to indemnify the Evolus Founders for any taxes or penalties required to be paid by the Evolus Founders in the event the U.S. Internal Revenue Service or other taxing authority were to determine that Company’s assumption of the revised payment obligations under the Amended Stock Purchase Agreement rendered continued installment sale reporting unavailable to the Evolus Founders. Any taxes or penalties paid by us on behalf of the Evolus Founders under the Tax Indemnity Agreement will be offset dollar-for-dollar against the promissory note and future royalties that will be payable to the Evolus Founders under the Amended Stock Purchase Agreement. Exclusive Distribution and Supply Agreement with Clarion Medical Technologies Inc. On November 30, 2017, the Company entered into an exclusive distribution and supply agreement (the “Distribution Agreement”), with Clarion Medical Technologies Inc. (“Clarion”). The Distribution Agreement provides terms pursuant to which the Company will exclusively supply Jeuveau ® to Clarion in Canada. On March 23, 2021, the Company, Clarion, and Daewoong entered into an addendum to the Distribution Agreement to provide for Clarion to purchase Jeuveau ® directly from Daewoong. Commencing March 23, 2021, Clarion is required to pay the Company on a per unit basis for its purchase of Jeuveau ® from Daewoong. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared on a consistent basis with the annual financial statements and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. Pursuant to these SEC rules and regulations, the Company has condensed or omitted certain financial information and disclosures normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the interim financial statements reflect all adjustments, which include only normal recurring adjustments, considered necessary for a fair statement of the interim periods. The interim results presented herein are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2021 or for any other interim period. |
Reclassifications | Reclassifications Certain comparative amounts for prior year have been reclassified to conform to current year presentations. Such reclassifications did not affect net income or retained earnings. |
Use of Estimates | Use of Estimates Management is required to make certain estimates and assumptions in order to prepare financial statements in conformity with GAAP. Such estimates and assumptions affect the reported financial statements. The Company’s most significant estimates relate to net revenues, allowance for doubtful accounts, fair value measurements, goodwill and long-lived asset valuations and impairment assessments, inventory valuations, income tax valuations, stock-based compensation and royalty obligations, among others. Management bases estimates on historical experience and on assumptions that management believes are reasonable. The Company’s actual results could differ materially from those estimates. Additionally, the full impact of the COVID-19 outbreak is unknown and cannot be reasonably estimated. However, where possible, management has made appropriate accounting estimates with respect to certain accounting matters, which include the fair value of royalty obligations, allowance for doubtful accounts, inventory valuation and impairment assessments of goodwill and other long-lived assets, based on the facts and circumstances available as of the reporting date. The Company’s future assessment of the magnitude and duration of the COVID-19 outbreak, as well as other factors, could result in material impacts to the Company’s financial statements in future reporting periods. |
Risks and Uncertainties and Concentration of Credit Risk | Risks and Uncertainties In 2013, Evolus and Daewoong Pharmaceutical Co. Ltd. (“Daewoong”) entered into an agreement (the “Daewoong Agreement”), pursuant to which the Company received an exclusive distribution license to Jeuveau ® from Daewoong for aesthetic indications in the United States, European Union, United Kingdom, members of the European Economic Area, Switzerland, Canada, Australia, Russia, certain members of the Commonwealth of Independent States, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan. Jeuveau ® is manufactured by Daewoong in a facility in South Korea. The Company also has the option to negotiate first with Daewoong to secure a distribution license for any product that Daewoong directly or indirectly develops or commercializes that is classified as an injectable botulinum toxin (other than Jeuveau ® ) in a territory covered by the Daewoong Agreement. The Company relies on Daewoong, its exclusive and sole supplier, to manufacture Jeuveau ® . Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect the Company’s commercialization of Jeuveau ® . See Note 9 . Commitments and Contingencies and Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement for additional information. The Company commercially launched Jeuveau ® in the United States in May 2019 and in Canada through its distribution partner in October 2019 and, as such, has a limited history of sales. If any previously granted approval is retracted or the Company is denied approval or approval is delayed by any other regulators, it may have a material adverse impact on the Company’s business and its financial statements. The Company is also subject to risks common to companies in the pharmaceutical industry including, but not limited to, dependency on the commercial success of Jeuveau ® , the Company’s sole commercial product, significant competition within the medical aesthetics industry, its ability to maintain regulatory approval of Jeuveau ® , the need for additional financing to achieve its goals, third party litigation and challenges to its intellectual property, uncertainty of broad adoption of its product by physicians and patients, its ability to in-license, acquire or develop additional product candidates and to obtain the necessary approvals for those product candidates, and the need to scale manufacturing capabilities over time. The COVID-19 outbreak and restrictions intended to slow the spread of COVID-19, including quarantines, government-mandated actions, stay-at-home orders and other restrictions, have adversely affected the Company’s business in a number of ways, which have resulted, and may continue to result, in a period of business disruption and in reduced sales and operations. In addition, any disruption and volatility in the global capital markets may increase the Company’s cost of capital and adversely affect its ability to access financing when and on terms that the Company desires. Any of these events could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. Substantially all of the Company’s cash is held by financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant. The Company invests its excess cash, in line with its investment policy, primarily in money market funds and debt instruments of U.S. government agencies. The Company’s accounts receivable is derived from customers located principally in the United States. Concentrations of credit risk with respect to trade receivables are limited due to the Company’s credit evaluation process. The Company does not typically require collateral from its customers. Credit losses historically have not been material. The Company continuously monitors customer payments and maintains an allowance for doubtful accounts based on its assessment of |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer who manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents consist of cash and highly liquid investments with remaining maturities at purchase of three months or less that can be liquidated without prior notice or penalty. Cash and cash equivalents may include deposits, money market funds and debt securities. Amounts receivable from credit card issuers are typically converted to cash within two to four days of the original sales transaction and are considered to be cash equivalents. |
Short-Term Investments | Short-Term Investments Short-term investments consist of available-for-sale U.S. Treasury securities with original maturities greater than three months and remaining maturities of less than twelve months. These investments are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses reported in other comprehensive (loss) gain in the Company’s condensed statements of operations and comprehensive loss. Purchase premiums and discounts are recognized in interest expense using the effective interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed statements of operations and comprehensive loss using the specific-identification method. |
Inventories | Inventories Inventories consist of finished goods h eld for sale and distribution. Cost is determined based on the estimated amount payable to the Company’s supplier after accounting for any reimbursement receivable pursuant to the Daewoong Settlement Agreement (as such term is defined, and such agreement is discussed, in Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement ), using the first-in, first-out method with prioritization of the items with the earliest expiration dates. Inventory valuation reser ves are established based on a number of factors including, but not limited to, finished goods not meeting product specifications, product excess and obsolescence, or application of the lower of cost or net realizable value concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. No material inventory valuation reserves have been recorded for the periods presented. Adverse changes in assumptions utilized in the Company’s inventory reserve calculations could result in an increase to its inventory valuation reserves. Product cost of sales, excluding amortization of intangible assets, consisted of the inventory cost, and, for periods on or after December 16, 2020, included certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox/Allergan Settlement Agreements (as such term is defined in Note 11. Medytox/Allergan Settlement Agreements and Daewoong Arrangement ) , as partially offset by reimbursement receivable from Daewoong pursuant to the Daewoong Settlement Agreement with respect to such royalties. In the three and nine months ended September 30, 2021, the Company also recorded the settlement payment of $0 and $25,500, respectively, from Daewoong in connection with the Daewoong Settlement Agreement as part of cost of sales. See “— Litigation Settlement ” for additional information. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in an orderly transaction between market participants in a principal market on the measurement date. The fair value hierarchy defines a three-tiered valuation hierarchy for disclosure of fair value measurement is classified and disclosed by the Company in one of the three categories as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability; and • Level 3—Prices or valuation techniques that require inputs that are unobservable that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
Property and Equipment | Property and EquipmentProperty and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of approximately five years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the term of the related lease. |
Goodwill | GoodwillGoodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performs an annual qualitative assessment of its goodwill in the fourth quarter of each calendar year to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required. If further testing is required, the Company performs a two-step process. The first step involves comparing the fair value of the Company’s reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step of the test is performed by comparing the carrying value of the goodwill in the reporting unit to its implied fair value. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the purpose of impairment testing, the Company has determined that it has one reporting unit. |
Intangible Assets | Intangible Assets Upon FDA approval of Jeuveau ® in February 2019, the in-process research and development (“IPR&D”) related to Jeuveau ® was evaluated as completed and reclassified to a definite-lived distribution right intangible asset, which is amortized over the period the asset is expected to contribute to the future cash flows of the Company. The Company determined the pattern of this intangible asset’s future cash flows could not be readily determined with a high level of precision. As a result, the distribution right intangible asset is being amortized on a straight-line basis over the estimated useful life of 20 years. The Company capitalizes certain internal-use software costs associated with the development of its mobile and web-based customer platforms. These costs include personnel expenses and external costs that are directly associated with the software projects. These costs are included as intangible assets in the accompanying condensed balance sheets. The capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful life of two years upon being placed in service. The Company reviews long-term and identifiable definite-lived intangible assets or asset groups for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset or an asset group, further impairment analysis is performed. An impairment loss is measured as the amount by which the carrying amount of the asset or asset groups exceeds the fair value for assets to be held and used or fair value less cost to sell for assets to be disposed of. |
Leases | Leases In accordance with Accounting Standards Codification 842, Leases (“ASC 842”), at the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (“ROU”) asset which represents the Company’s right to use an underlying asset during the lease term. Operating lease assets and liabilities are included in ROU assets, current portion of operating lease liabilities and noncurrent operating lease liabilities in the accompanying condensed balance sheets. |
Contingent Royalty Obligation Payable to the Evolus Founders | Contingent Royalty Obligation Payable to the Evolus Founders The Company determines the fair value of the contingent royalty obligation payable at each reporting period end based on Level 3 inputs using a discounted cash flows method. Changes in the fair value of the contingent royalty obligation payable are determined at each reporting period end and recorded in operating expenses in the accompanying condensed statements of operations and comprehensive loss and as a liability in the condensed balance sheets. Promissory Note Payable to the Evolus Founders |
Revenue Recognition | Revenue Recognition The Company applies Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), to account for revenue generated since the commercial launch of Jeuveau ® in May 2019. The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for the goods or services. In order to achieve that core principle, a five-step approach is applied: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue allocated to each performance obligation when the Company satisfies the performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. General The Company generates product revenue from the sale of Jeuveau ® in the United States and service revenue from the sale of Jeuveau ® through a distribution partner in Canada. For product revenue, the Company recognizes revenue when control of the promised goods under a contract is transferred to a customer, in an amount that reflects the consideration the Company expects to receive in exchange for those goods as specified in the customer contract. The transfer of control occurs upon receipt of the goods by the customer since that is when the customer has obtained control of the goods’ economic benefits. The Company does not provide any service-type warranties and does not accept product returns except under limited circumstances such as damages in transit or ineffective product. The Company also excludes any amounts related to taxes assessed by governmental authorities from revenue measurement. Shipping and handling costs associated with outbound product freight are accounted for as fulfillment costs and are included in selling, general and administrative expenses in the accompanying condensed statements of operations and comprehensive loss. For service revenue, the Company evaluated the arrangement with the distribution partner in Canada and determined that it acts as an agent in the distribution of Jeuveau ® in Canada as it does not control the product before control is transferred to a customer. The indicators of which party exercises control include primary responsibility over performance obligations, inventory risk before the good or service is transferred and discretion in establishing the price. Accordingly, the Company records the sale as service revenue on a net basis. Revenue from services is recognized in the period the service is performed for the amount of consideration expected to be received. The Company recognized $0 and $702, respectively, of revenues related to international sales for the three and nine months ended September 30, 2021 and $738 for the three and nine months ended September 30, 2020. Disaggregation of Revenue The Company’s disaggregation of revenue is consistent with its operating segment as disclosed above. Gross-to-Net Revenue Adjustments The Company provides customers with discounts, such as trade and volume discounts and prompt pay discounts, that are directly reflected in the invoice price. Revenues are recorded net of sales-related adjustments, wherever applicable, primarily for the volume-based rebates, coupon and consumer loyalty programs. • Volume-based Rebates — Volume-based rebates are contractually offered to certain customers. The rebates payable to each customer are determined based on the contract and quarterly purchase volumes. • Coupons — The Company issued customers coupons redeemable into gift cards funded by the Company for the benefit of patients. The coupons were accounted for as variable consideration. The Company estimates coupon redemption rates based on historical data and future expectations. The coupons were accrued based on estimated redemption rates and the volume of products purchased and were recorded as a reduction to revenues on product delivery. All issued coupons expired on June 30, 2020. • Consumer Loyalty Program — In May 2020, the Company launched a consumer loyalty program, which allows participating customers to earn rewards for qualifying treatments to their patients (i.e. consumers) using Jeuveau ® and redeem the rewards for Jeuveau ® in the future at no additional cost. The loyalty program represents a customer option that provides a material right and, accordingly, is a performance obligation. At the time Jeuveau ® product is sold to customers, the invoice price is allocated between the product sold and the estimated material right reward (“Reward”) that the customer might redeem in the future. The standalone selling price of the Reward is measured based on historical sales data, estimated average selling price of Jeuveau ® at the time of redemption, expected customer and consumer participation rates in the loyalty program, and estimated number of qualifying treatments to be performed by customers. The portion of invoice price allocated to the Reward is initially recorded as deferred revenue. Subsequently, when customers redeem the Reward and the related product is delivered, the deferred revenue is recognized in net revenue at that time. As of September 30, 2021 and December 31, 2020, the accrued revenue contract liabilities, primarily related to volume-based rebates and consumer loyalty program, were $5,751 and $3,081, respectively, which were recorded in the accrued expenses in the accompanying condensed balance sheets. For the three and nine months ended September 30, 2021, provisions for rebate and consumer loyalty programs were $3,912 and $9,355, respectively, which were offset by related payments, redemptions and adjustments of $2,695 and $6,686, respectively. For the three and nine months ended September 30, 2020, provisions for rebate, coupon and consumer loyalty programs were $2,378 and $12,607, respectively, which were offset by related payments, redemptions and adjustments of $806 and $11,945, respectively. Contract balances A contract with a customer states the terms of the sale, including the description, quantity and price of each product purchased. Amounts are recorded as accounts receivable when the Company’s right to consideration becomes unconditional. The Company does not have any significant financing components in customer contracts given the expected time between transfer of the promised products and the payment of the associated consideration is less than one year. As of September 30, 2021 and December 31, 2020, all amounts included in accounts receivable, net on the accompanying condensed balance sheets are related to contracts with customers. The Company did not have any contract assets nor unbilled receivables as of September 30, 2021 or December 31, 2020. Sales commissions are included in selling, general and administrative expenses when incurred. Contract liabilities reflect estimated amounts that the Company is obligated to pay to customers or patients primarily under the rebate and coupon programs and deferred revenue associated with Rewards under the consumer loyalty program. The Company’s contract liabilities are included in accounts payable and accrued expenses in the accompanying condensed balance sheets. During the nine months ended September 30, 2021 and 2020, the Company recognized $2,802 and $0, respectively, of revenue related to amounts included in contract liabilities at the beginning of the period and did not recognize any revenue related to changes in transaction prices regarding its contracts with customers from previous periods. Collectability Accounts receivable are recorded at the invoiced amount and do not bear interest. At the time of contract inception or new customer account set-up, the Company performs a collectability assessment of the customer’s creditworthiness. The Company assesses the probability that the Company will collect the entitled consideration in exchange for the goods sold, by considering the customer’s ability and intention to pay when consideration is due. On a recurring basis, the Company estimates the amount of receivables considered uncollectable to reflect an allowance for doubtful accounts. The Company writes off accounts receivable balances when it is determined that there is no possibility of collection. As of September 30, 2021 and December 31, 2020, allowance for doubtful accounts was $2,381 and $2,118, respectively. For the three and nine months ended September 30, 2021, provision for bad debts were $188 and $501, respectively, and the write-off amount was $23 and $214, respectively. For the three and nine months ended September 30, 2020, recovery of and provision for bad debts was $168 and $2,439, respectively, and the write-off amount was $0 and $171, respectively. Practical Expedients The Company expenses sales commissions when incurred as the amortization period is one year or less. These costs are recorded within selling, general and administrative expenses in the accompanying condensed statements of operations and comprehensive loss. The Company does not adjust the amount of promised consideration for the effects of the time value of money for contracts in which the anticipated period between when the Company transfers the goods or services to the customer and when the customer pays within one year. |
Research and Development Expenses | Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses include personnel-related costs, costs associated with pre-clinical and clinical development activities, costs associated with and costs for prototype products that are manufactured prior to market approval for that prototype product, internal and external costs associated with the Company’s regulatory compliance and quality assurance functions, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings, and overhead costs, including allocated facility related expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expense for employees, consultants and members of the Board of Directors based on the fair value at the date of grant. The Company uses the Black-Scholes option pricing model to value stock option grants. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected volatility of the Company’s common stock, expected risk-free interest rate, and the option’s expected life. The fair value of the Company’s restricted stock units (“RSUs”) is based on the fair value on the grant date of the Company’s common stock. The Company also evaluates the impact of modifications made to the original terms of equity awards when they occur. |
Income Taxes | Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision or benefit for interim periods, as required under GAAP. The Company recorded a tax benefit of $0 and $27 for the three months ended September 30, 2021 and 2020, respectively, and a tax provision of $0 and $227 for the nine months ended September 30, 2021 and 2020, respectively. The Company’s ETR differs from the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2021 and 2020, primarily as a result of the impact of the change of the valuation allowance to offset its deferred tax assets. A valuation allowance is recorded against deferred tax assets to reduce the net carrying value when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made. Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company monitors changes to the tax laws in the states it conducts business and files corporate income tax returns. The Company does not expect that changes to state tax laws through September 30, 2021 to materially impact its financial statements. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period including contingently issuable shares. Diluted earnings per share is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and the vesting of restricted stock units. Because the impact of the options and non-vested RSUs are anti-dilutive during periods of net loss, there was no difference between the weighted-average number of shares used to calculate basic and diluted net loss per common share for the periods presented. Excluded from the dilutive net loss per share computation for the three and nine months ended September 30, 2021 and 2020 were stock options of 3,873,352 and 4,374,925, respectively, and non-vested RSUs of 1,771,938 and 1,110,367, respectively, because their inclusion would have been anti-dilutive. Although these securities were anti-dilutive for these periods, they could be dilutive in future periods. |
Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Issued But Not Adopted | Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes . FASB issued this update as part of its Simplification Initiative to improve areas of GAAP and reduce cost and complexity while maintaining usefulness. The main provisions remove certain exceptions including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the amendments simplify income tax accounting in the areas such as income based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public companies, the standard is effective for fiscal years beginning after December 15, 2020 and interim periods therein. The Company has adopted the guidance on the effective date of January 1, 2021. There are no material impacts to the financial statements as a result of this adoption. Recent Accounting Pronouncements Issued But Not Adopted In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The update simplifies the accounting for goodwill impairment by removing step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will be the amount by which a reporting unit’s carrying amount, including goodwill, exceeds its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. As amended by ASU 2019-10, the updated guidance is effective for the Company as a smaller reporting company beginning January 1, 2023. The standard requires prospective application. Early adoption is permitted. The Company is evaluating the effect of this standard on its financial statements and related disclosures as well as whether to early adopt the new guidance. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The new standard requires the use of forward-looking expected credit loss models based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses . This ASU does not change the core principle of the guidance in ASU 2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. The FASB also subsequently issued ASU 2019-04 which did not change the core principle of the guidance in ASU 2016-13 but clarified that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should not exceed amounts previously written off and expected to be written off. As amended by ASU 2019-10, the updated guidance is effective for the Company as a smaller reporting company beginning January 1, 2023. The Company is in the process of determining the effects the adoption will have on its financial statements and reviewing credit loss models to assess the impact of the adoption of the standard on the financial statements. Based on initial assessments, the Company believes that while adoption will modify the way it analyzes financial instruments, it does not expect adoption of this guidance will have a material impact to its financial statements. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future financial position, results of operations or cash flows. |
Fair Value Measurements and S_2
Fair Value Measurements and Short-Term Investments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Debt Securities, Available-for-sale | The following is a summary of the Company’s short-term investments, considered available-for-sale, as of December 31, 2020: Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Available-for-sale securities U.S. treasury securities $ 5,000 $ — $ — $ 5,000 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair value of these instruments was as follows: As of September 30, 2021 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent royalty obligation payable to Evolus Founders $ 43,300 $ — $ — $ 43,300 As of December 31, 2020 Fair Value Level 1 Level 2 Level 3 Available-for-sale debt securities U.S. treasury securities $ 5,000 $ 5,000 $ — $ — Liabilities Contingent royalty obligation payable to Evolus Founders $ 41,546 $ — $ — $ 41,546 |
Schedule of Financial Instruments Recorded at Fair Value on a Recurring Basis | The following table shows a reconciliation of the beginning and ending fair value measurements of the contingent royalty obligation payable: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Fair value, beginning of period $ 42,683 $ 36,334 $ 41,546 $ 44,683 Payments (783) (233) (2,295) (1,131) Change in fair value recorded in operating expenses 1,400 (2,471) 4,049 (9,922) Fair value, end of period $ 43,300 $ 33,630 $ 43,300 $ 33,630 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The table below shows the weighted-average life, original cost, accumulated amortization and net book value by major intangible asset classification: Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 59,076 $ (7,850) $ 51,226 Capitalized software 2 7,314 (7,072) 242 Intangible assets, net 66,390 (14,922) 51,468 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of September 30, 2021 $ 87,598 $ (14,922) $ 72,676 Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 59,076 $ (5,650) $ 53,426 Capitalized software 2 6,681 (4,810) 1,871 Intangible assets, net 65,757 (10,460) 55,297 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of December 31, 2020 $ 86,965 $ (10,460) $ 76,505 * Intangible assets with indefinite lives have an indeterminable average life. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table outlines the estimated future amortization expense related to intangible assets held as of September 30, 2021 that are subject to amortization: Fiscal year Remaining in 2021 $ 844 2022 3,094 2023 2,955 2024 2,955 2025 2,955 Thereafter 38,665 $ 51,468 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accrued expenses consisted of: September 30, December 31, 2021 2020 Accrued royalties under the Medytox/Allergan Settlement Agreements $ 9,088 $ — Accrued payroll and related benefits 5,485 4,076 Accrued revenue contract liabilities 5,751 3,081 Accrued professional services 1,655 895 Other accrued expenses 1,457 1,050 $ 23,436 $ 9,102 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Schedule of Composition of Lease Expense and Other Quantitative Information | For the three and nine months ended September 30, 2021, the components of operating lease expense are as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Fixed operating lease expense $ 268 $ 266 $ 797 $ 813 Variable operating lease expense 20 5 40 32 Short-term operating lease expense — — — 168 $ 288 $ 271 $ 837 $ 1,013 |
Schedule of Maturity of Operating Lease Liabilities | The following table presents the future minimum payments under the operating lease agreements with non-cancelable terms as of September 30, 2021: Fiscal year Remainder of 2021 $ 305 2022 1,265 2023 1,320 2024 1,377 2025 115 Total operating lease payments 4,382 Less: imputed interest (642) Present value of operating lease liabilities $ 3,740 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average assumptions used in determining the fair value of stock options granted were as follows: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Volatility 79.6 % 70.3 % 78.9 % 60.0 % Risk-free interest rate 1.12 % 0.38 % 1.16 % 1.53 % Expected life (years) 6.25 6.25 6.25 6.24 Dividend yield rate — % — % — % — % |
Share-based Compensation, Stock Options, Activity | A summary of stock option activity under the Plan for the nine months ended September 30, 2021, is presented below: Weighted Weighted Average Average Remaining Aggregate Stock Exercise Contractual Intrinsic Options Per Share Terms (Years) Value Outstanding, December 31, 2020 4,407,498 $ 12.20 7.66 $ 50 Granted 264,950 10.06 Exercised (98,329) 9.87 Canceled/forfeited (700,767) 16.30 Outstanding, September 30, 2021 3,873,352 $ 11.38 7.26 $ 982,996 Exercisable, September 30, 2021 2,301,132 $ 11.52 6.84 $ 352,474 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | A summary of RSU activity under the Plan for the nine months ended September 30, 2021, is presented below: Weighted Average Grant Date Restricted Fair Value Stock Units Per Share Outstanding, December 31, 2020 1,173,741 $ 6.42 Granted 1,655,844 Vested (544,698) Forfeited (512,949) Outstanding, September 30, 2021 1,771,938 $ 8.05 |
Schedule of Stock-based Compensation Expense Allocation | The following table summarizes stock-based compensation expense arising from the above Plan: Three Months Ended Nine Months Ended 2021 2020 2021 2020 Selling, general and administrative $ 2,399 $ 2,924 $ 6,784 $ 7,802 Research and development 77 28 143 152 $ 2,476 $ 2,952 $ 6,927 $ 7,954 |
Description of Business (Detail
Description of Business (Details) | Mar. 25, 2021shares | Feb. 18, 2021USD ($) | Jan. 04, 2021USD ($) | Apr. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2021USD ($)shares | Aug. 31, 2021USD ($)shares | Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($)shares | Sep. 30, 2020USD ($) | Mar. 23, 2021USD ($) | Feb. 28, 2021shares | Dec. 31, 2020USD ($)shares |
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Net loss | $ (19,433,000) | $ (15,601,000) | $ 6,401,000 | $ (11,459,000) | $ (21,125,000) | $ (19,735,000) | $ (28,633,000) | $ (52,319,000) | ||||||||
Net cash used in operating activities | (24,344,000) | (55,605,000) | ||||||||||||||
Cash and cash equivalents | 107,796,000 | 107,796,000 | $ 102,562,000 | |||||||||||||
Promissory note payable to Evolus Founders | 19,950,000 | 19,950,000 | 19,068,000 | |||||||||||||
Accumulated deficit | 404,705,000 | 404,705,000 | 376,072,000 | |||||||||||||
Loss contingency accrual | 0 | 0 | 0 | |||||||||||||
Payments for legal settlements | $ 48,421,000 | |||||||||||||||
Accrued litigation settlement | $ 15,000,000 | $ 15,000,000 | $ 63,421,000 | |||||||||||||
Common stock, shares, issued (in shares) | shares | 55,553,792 | 55,553,792 | 33,749,228 | |||||||||||||
Settlement payment from Daewoong | $ 25,500,000 | $ 0 | $ 0 | $ 25,500,000 | $ 0 | |||||||||||
Public Stock Offering | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Number of shares issued in transaction (in shares) | shares | 10,350,000 | |||||||||||||||
Offering price per share (in dollar per share) | $ / shares | $ 9.50 | |||||||||||||||
Aggregate net proceeds from stock offering | $ 92,426,000 | |||||||||||||||
Over-Allotment Option | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Number of shares issued in transaction (in shares) | shares | 1,350,000 | |||||||||||||||
ATM Sales Agreement | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Number of shares issued in transaction (in shares) | shares | 724,835 | 934,367 | ||||||||||||||
Aggregate net proceeds from stock offering | $ 8,203,000 | $ 10,910,000 | ||||||||||||||
Intellectual Property Disputes, Jeuveau | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Loss contingency accrual | $ 35,000,000 | |||||||||||||||
Settlement agreement, payment terms (in years) | 2 years | |||||||||||||||
Payments for legal settlements | 15,000,000 | |||||||||||||||
Accrued litigation settlement | $ 15,000,000 | $ 15,000,000 | ||||||||||||||
Common stock, shares, issued (in shares) | shares | 6,762,652 | |||||||||||||||
Oxford Term Loan Facility | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Repayments of long-term lines of credit | $ 76,447,000 | |||||||||||||||
Daewoong Convertible Note | Convertible Debt | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Convertible debt | $ 40,779,000 | |||||||||||||||
Daewoong Convertible Note | Convertible Debt | Common Stock | ||||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||||
Conversion of common shares (in shares) | shares | 3,136,869 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) | Feb. 18, 2021USD ($) | Apr. 30, 2021USD ($) | Sep. 30, 2021USD ($)shares | Dec. 31, 2020USD ($)shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2021USD ($)reporting_unitshares | Sep. 30, 2020USD ($)shares | Dec. 31, 2020USD ($)shares | Feb. 28, 2021shares |
Accounting Policies [Line Items] | |||||||||
Settlement payment from Daewoong | $ 25,500,000 | $ 0 | $ 0 | $ 25,500,000 | $ 0 | ||||
Number of reporting units | reporting_unit | 1 | ||||||||
Impairment of goodwill | 0 | 0 | $ 0 | 0 | |||||
Impairment of intangible assets | 0 | 0 | 0 | 0 | |||||
Revenue | 26,677,000 | 17,661,000 | 65,016,000 | 35,963,000 | |||||
Accrued revenue contract liabilities | 5,751,000 | $ 3,081,000 | 5,751,000 | $ 3,081,000 | |||||
Credits and payments | 3,912,000 | 2,378,000 | 9,355,000 | 12,607,000 | |||||
Payments for provisions for accrued volume-based rebate, coupon and consumer loyalty program liability | 2,695,000 | 806,000 | 6,686,000 | 11,945,000 | |||||
Contract with customer liability revenue recognized | 2,802,000 | 0 | |||||||
Allowance for doubtful accounts | 2,381,000 | 2,118,000 | 2,381,000 | 2,118,000 | |||||
Credit loss expense (reversal) | 188,000 | (168,000) | 501,000 | 2,439,000 | |||||
Accounts receivable, writeoff | 23,000 | 0 | 214,000 | 171,000 | |||||
Loss contingency accrual | $ 0 | $ 0 | $ 0 | $ 0 | |||||
Common stock, shares, issued (in shares) | shares | 55,553,792 | 33,749,228 | 55,553,792 | 33,749,228 | |||||
Litigation settlement, expense | $ 83,421,000 | ||||||||
Payments for legal settlements | $ 48,421,000 | ||||||||
Accrued litigation settlement | $ 15,000,000 | 63,421,000 | $ 15,000,000 | $ 63,421,000 | |||||
Accrued litigation settlement | 5,000,000 | $ 20,000,000 | 5,000,000 | $ 20,000,000 | |||||
Income tax expense (benefit) | $ 0 | $ (27,000) | $ 0 | $ 227,000 | |||||
Common stock options | |||||||||
Accounting Policies [Line Items] | |||||||||
Securities excluded from the computation of diluted net loss per share (in shares) | shares | 3,873,352 | 4,374,925 | 3,873,352 | 4,374,925 | |||||
RSUs | |||||||||
Accounting Policies [Line Items] | |||||||||
Securities excluded from the computation of diluted net loss per share (in shares) | shares | 1,771,938 | 1,110,367 | 1,771,938 | 1,110,367 | |||||
Intellectual Property Disputes, Jeuveau | |||||||||
Accounting Policies [Line Items] | |||||||||
Loss contingency accrual | $ 35,000,000 | ||||||||
Settlement agreement, payment terms (in years) | 2 years | ||||||||
Common stock, shares, issued (in shares) | shares | 6,762,652 | ||||||||
Payments for legal settlements | $ 15,000,000 | ||||||||
Accrued litigation settlement | 15,000,000 | $ 15,000,000 | |||||||
Service revenue | |||||||||
Accounting Policies [Line Items] | |||||||||
Revenue | 0 | $ 738,000 | 702,000 | $ 738,000 | |||||
Service revenue | CANADA | |||||||||
Accounting Policies [Line Items] | |||||||||
Revenue | $ 0 | $ 738,000 | $ 702,000 | $ 738,000 | |||||
Distribution right | |||||||||
Accounting Policies [Line Items] | |||||||||
Useful life | 20 years | 20 years | |||||||
Internal-use software | |||||||||
Accounting Policies [Line Items] | |||||||||
Useful life | 2 years |
Fair Value Measurements and S_3
Fair Value Measurements and Short-Term Investments - Schedule of Short-term Investments (Details) - U.S. treasury securities $ in Thousands | Dec. 31, 2020USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Amortized Cost | $ 5,000 |
Gross Unrealized | |
Gains | 0 |
Losses | 0 |
Estimated Fair Value | $ 5,000 |
Fair Value Measurements and S_4
Fair Value Measurements and Short-Term Investments - Assets and Liabilities on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Contingent royalty obligation payable to Evolus Founders | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent royalty obligation payable to Evolus Founders | $ 43,300 | $ 41,546 |
Contingent royalty obligation payable to Evolus Founders | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent royalty obligation payable to Evolus Founders | 0 | 0 |
Contingent royalty obligation payable to Evolus Founders | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent royalty obligation payable to Evolus Founders | 0 | 0 |
Contingent royalty obligation payable to Evolus Founders | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent royalty obligation payable to Evolus Founders | $ 43,300 | 41,546 |
U.S. treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 5,000 | |
U.S. treasury securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 5,000 | |
U.S. treasury securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 0 | |
U.S. treasury securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | $ 0 |
Fair Value Measurements and S_5
Fair Value Measurements and Short-Term Investments - Narrative (Details) $ in Thousands | Sep. 30, 2021USD ($)year | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Estimate of Fair Value Measurement | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent promissory note payable | $ 20,000 | |||||
Contingent royalty obligation payable to Evolus Founders | $ 19,284 | |||||
Estimate of Fair Value Measurement | Oxford Term Loans | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent royalty obligation payable to Evolus Founders | 76,368 | |||||
Contingent royalty obligation payable to Evolus Founders | $ 43,300 | $ 42,683 | $ 41,546 | $ 33,630 | $ 36,334 | $ 44,683 |
Contingent Royalty Obligation | Measurement Input, Expected Term | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Measurement input | year | 10 | |||||
Contingent Royalty Obligation | Measurement Input, Discount Rate | Minimum | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Measurement input | 0.130 | 0.130 | ||||
Contingent Royalty Obligation | Measurement Input, Discount Rate | Maximum | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Measurement input | 0.200 | 0.200 |
Fair Value Measurements and S_6
Fair Value Measurements and Short-Term Investments - Contingent Royalty Obligation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 42,683 | $ 36,334 | $ 41,546 | $ 44,683 |
Payments | (783) | (233) | (2,295) | (1,131) |
Change in fair value recorded in operating expenses | 1,400 | (2,471) | 4,049 | (9,922) |
Ending balance | $ 43,300 | $ 33,630 | $ 43,300 | $ 33,630 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Definite and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Definite-lived intangible assets | ||
Original Cost | $ 66,390 | $ 65,757 |
Accumulated Amortization | (14,922) | (10,460) |
Net Book Value | 51,468 | 55,297 |
Indefinite-lived intangible asset | ||
Goodwill | 21,208 | 21,208 |
Intangible assets, gross (including goodwill) | 87,598 | 86,965 |
Total net book value | $ 72,676 | $ 76,505 |
Distribution right | ||
Definite-lived intangible assets | ||
Useful life | 20 years | 20 years |
Original Cost | $ 59,076 | $ 59,076 |
Accumulated Amortization | (7,850) | (5,650) |
Net Book Value | $ 51,226 | $ 53,426 |
Capitalized software | ||
Definite-lived intangible assets | ||
Useful life | 2 years | 2 years |
Original Cost | $ 7,314 | $ 6,681 |
Accumulated Amortization | (7,072) | (4,810) |
Net Book Value | $ 242 | $ 1,871 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remaining in 2021 | $ 844 | |
2022 | 3,094 | |
2023 | 2,955 | |
2024 | 2,955 | |
2025 | 2,955 | |
Thereafter | 38,665 | |
Net Book Value | $ 51,468 | $ 55,297 |
Goodwill and Intangible Asset -
Goodwill and Intangible Asset - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Capitalized computer software | $ 0 | $ 432 | $ 633 | $ 1,966 |
Amortization expense | $ 843 | $ 1,664 | $ 4,463 | $ 4,813 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued royalties under the Medytox/Allergan Settlement Agreements | $ 9,088 | $ 0 |
Accrued payroll and related benefits | 5,485 | 4,076 |
Accrued revenue contract liabilities | 5,751 | 3,081 |
Accrued professional services | 1,655 | 895 |
Other accrued expenses | 1,457 | 1,050 |
Accounts payable and accrued liabilities, current | $ 23,436 | $ 9,102 |
Oxford Term Loan (Details)
Oxford Term Loan (Details) | Jan. 04, 2021USD ($) | Mar. 15, 2019USD ($)advance | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Loss from extinguishment of debts, net | $ 0 | $ 0 | $ 968,000 | $ 0 | ||
Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of final payment of full principal amount | 5.50% | |||||
Prepayment fee percentage, year two | 2.00% | |||||
Prepayment fee percentage, thereafter | 1.00% | |||||
Oxford Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt discount | $ 1,094,000 | |||||
Debt issuance costs | 2,205,000 | |||||
Repayments of long-term lines of credit | $ 76,447,000 | |||||
Debt instrument fee amount comprised | 4,300,000 | |||||
Debt instrument of principal amount payment | 2,800,000 | |||||
Debt instrument prepayment fee amount | 1,500,000 | |||||
Loss from extinguishment of debts, net | $ 1,939,000 | |||||
Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 100,000,000 | |||||
Number of advances | advance | 2 | |||||
Interest rate on debt | 9.50% | |||||
Period of interest only payments | 36 months | |||||
Amortization period | 23 months | |||||
Secured Debt | London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 7.00% | |||||
Secured Debt | First tranche | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 75,000,000 | |||||
Secured Debt | Second tranche | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 25,000,000 |
Daewoong Convertible Note (Deta
Daewoong Convertible Note (Details) | Mar. 25, 2021shares | Mar. 23, 2021USD ($)$ / shares | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Jul. 06, 2020USD ($) |
Short-term Debt [Line Items] | |||||||
Loss from extinguishment of debts, net | $ 0 | $ 0 | $ (968,000) | $ 0 | |||
Daewoong Convertible Note | Convertible Debt | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, face amount | $ 40,000,000 | ||||||
Interest rate on debt | 3.00% | ||||||
Convertible debt | $ 40,779,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 13 | ||||||
Loss from extinguishment of debts, net | $ 971,000 | ||||||
Daewoong Convertible Note | Convertible Debt | Common Stock | |||||||
Short-term Debt [Line Items] | |||||||
Conversion of common shares (in shares) | shares | 3,136,869 |
Operating Leases - Narrative (D
Operating Leases - Narrative (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Term of contract | 5 years |
Termination period | 36 months |
Period of written notice | 12 months |
Period of termination fee prior to lease termination date | 6 months |
Renewal term | 60 months |
Weighted-average remaining lease term | 3 years 3 months 18 days |
Weighted-average discount rate | 9.40% |
Operating Leases - Lease Cost (
Operating Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Leases [Abstract] | ||||
Fixed operating lease expense | $ 268 | $ 266 | $ 797 | $ 813 |
Variable operating lease expense | 20 | 5 | 40 | 32 |
Short-term operating lease expense | 0 | 0 | 0 | 168 |
Lease, cost | $ 288 | $ 271 | $ 837 | $ 1,013 |
Operating Leases - Operating Le
Operating Leases - Operating Lease Maturity (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2021 | $ 305 |
2022 | 1,265 |
2023 | 1,320 |
2024 | 1,377 |
2025 | 115 |
Total operating lease payments | 4,382 |
Less: imputed interest | (642) |
Present value of operating lease liabilities | $ 3,740 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Dec. 02, 2020plaintiff | Oct. 28, 2020complaint | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | ||||
Purchase commitment, amount | $ 1,601,000 | |||
Loss contingency, new claims filed, number | complaint | 2 | |||
Loss contingency, number of plaintiffs | plaintiff | 2 | |||
Loss contingency accrual | $ 0 | $ 0 |
Stockholder's Equity - Narrativ
Stockholder's Equity - Narrative (Details) $ / shares in Units, $ in Thousands | Mar. 26, 2021USD ($) | Mar. 25, 2021shares | Nov. 21, 2017shares | Apr. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2021USD ($)$ / sharesshares | Aug. 31, 2021USD ($)shares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020shares | Feb. 28, 2021shares | Feb. 18, 2021$ / shares | Dec. 31, 2020$ / sharesshares |
Class of Stock [Line Items] | |||||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||
Preferred stock, shares issued (in shares) | 0 | 0 | 0 | ||||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 | ||||||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||||||
Common stock, shares, outstanding (in shares) | 55,553,792 | 55,553,792 | 33,749,228 | ||||||||
Common stock, shares, issued (in shares) | 55,553,792 | 55,553,792 | 33,749,228 | ||||||||
Maximum number of shares authorized under the plan (in shares) | 4,361,291 | ||||||||||
Annual increase percentage of maximum shares outstanding (equal to) | 4.00% | ||||||||||
Capital shares reserved for future issuance (in shares) | 1,364,826 | 1,364,826 | |||||||||
Contractual term | 10 years | ||||||||||
RSUs Market Conditions | |||||||||||
Class of Stock [Line Items] | |||||||||||
Restricted stock units granted (in shares) | 0 | 0 | |||||||||
RSUs Performance Conditions | |||||||||||
Class of Stock [Line Items] | |||||||||||
Restricted stock units granted (in shares) | 0 | 0 | |||||||||
Minimum | |||||||||||
Class of Stock [Line Items] | |||||||||||
Award vesting period | 1 year | ||||||||||
Maximum | |||||||||||
Class of Stock [Line Items] | |||||||||||
Award vesting period | 4 years | ||||||||||
Public Stock Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued in transaction (in shares) | 10,350,000 | ||||||||||
Offering price per share (in dollar per share) | $ / shares | $ 9.50 | ||||||||||
Aggregate net proceeds from stock offering | $ | $ 92,426 | ||||||||||
Over-Allotment Option | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued in transaction (in shares) | 1,350,000 | ||||||||||
ATM Sales Agreement | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares issued in transaction (in shares) | 724,835 | 934,367 | |||||||||
Aggregate net proceeds from stock offering | $ | $ 8,203 | $ 10,910 | |||||||||
Maximum consideration receivable | $ | $ 75,000 | ||||||||||
Sale of stock, commission payment upon gross proceeds | 3.00% | ||||||||||
Total commission paid | $ | $ 254 | $ 337 | |||||||||
Daewoong Convertible Note | Convertible Debt | Common Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Conversion of common shares (in shares) | 3,136,869 | ||||||||||
Intellectual Property Disputes, Jeuveau | |||||||||||
Class of Stock [Line Items] | |||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | ||||||||||
Common stock, shares, issued (in shares) | 6,762,652 |
Stockholders_ Equity - Schedule
Stockholders’ Equity - Schedule of Valuation Assumptions (Details) - Common stock options | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Class of Stock [Line Items] | ||||
Volatility | 79.60% | 70.30% | 78.90% | 60.00% |
Risk-free interest rate | 1.12% | 0.38% | 1.16% | 1.53% |
Expected life (years) | 6 years 3 months | 6 years 3 months | 6 years 3 months | 6 years 2 months 26 days |
Dividend yield rate | 0.00% | 0.00% | 0.00% | 0.00% |
Stockholders_ Equity - Schedu_2
Stockholders’ Equity - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Weighted Average Contractual Term | ||
Contractual term | 10 years | |
Common stock options | ||
Stock Options | ||
Beginning balance (in shares) | 4,407,498 | |
Granted (in shares) | 264,950 | |
Exercised (in shares) | (98,329) | |
Cancelled/forfeited (in shares) | (700,767) | |
Ending balance (in shares) | 3,873,352 | 4,407,498 |
Stock Options, Exercisable (in shares) | 2,301,132 | |
Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 12.20 | |
Granted (in dollars per share) | 10.06 | |
Exercised (in dollars per share) | 9.87 | |
Cancelled/forfeited (in dollars per share) | 16.30 | |
Ending balance (in dollars per share) | 11.38 | $ 12.20 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 11.52 | |
Weighted Average Contractual Term | ||
Contractual term | 7 years 3 months 3 days | 7 years 7 months 28 days |
Weighted Average Remaining Contractual Term , Exercisable (Years) | 6 years 10 months 2 days | |
Aggregate Intrinsic Value | ||
Beginning balance | $ 50 | |
Ending balance | 982,996 | $ 50 |
Aggregate Intrinsic Value, Exercisable | $ 352,474 |
Stockholders_ Equity - Restrict
Stockholders’ Equity - Restricted Stock Unit (Details) - RSUs | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Restricted Stock Unit | |
Beginning balance (in shares) | shares | 1,173,741 |
Granted (in shares) | shares | 1,655,844 |
Vested (in shares) | shares | (544,698) |
Forfeited (in shares) | shares | (512,949) |
Ending balance (in shares) | shares | 1,771,938 |
Weighted Average Grant Date Fair Value Per Share | |
Beginning balance (in dollars per share) | $ / shares | $ 6.42 |
Granted (in dollars per share) | $ / shares | |
Vested (in dollars per share) | $ / shares | |
Forfeited (in dollars per share) | $ / shares | |
Ending balance (in dollars per share) | $ / shares | $ 8.05 |
Stockholder's Equity - Stock-ba
Stockholder's Equity - Stock-based Compensation Expense Allocation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated stock-based compensation expense | $ 2,476 | $ 2,952 | $ 6,927 | $ 7,954 |
Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated stock-based compensation expense | 2,399 | 2,924 | 6,784 | 7,802 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated stock-based compensation expense | $ 77 | $ 28 | $ 143 | $ 152 |
Medytox_Allergan Settlement A_2
Medytox/Allergan Settlement Agreements and Daewoong Arrangement (Details) | Mar. 25, 2021shares | Mar. 23, 2021USD ($)$ / shares | Feb. 18, 2021USD ($)$ / shares | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 15, 2025 | Sep. 15, 2024 | Sep. 15, 2023 | Feb. 28, 2021shares | Dec. 31, 2020USD ($)$ / sharesshares |
Loss Contingencies [Line Items] | |||||||||
Loss contingency accrual | $ 0 | $ 0 | |||||||
Payments for legal settlements | $ 48,421,000 | ||||||||
Common stock, shares, issued (in shares) | shares | 55,553,792 | 33,749,228 | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||||
Daewoong Settlement Agreement | |||||||||
Loss Contingencies [Line Items] | |||||||||
Long-term purchase commitment, amount | $ 25,500,000 | ||||||||
Contingent milestone payment | 10,500,000 | ||||||||
Daewoong Convertible Note | Convertible Debt | |||||||||
Loss Contingencies [Line Items] | |||||||||
Convertible debt | $ 40,779,000 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 13 | ||||||||
Daewoong Convertible Note | Convertible Debt | Maximum | |||||||||
Loss Contingencies [Line Items] | |||||||||
Common stock shares beneficially own percentage | 0.0999 | ||||||||
Daewoong Convertible Note | Convertible Debt | Common Stock | |||||||||
Loss Contingencies [Line Items] | |||||||||
Conversion of common shares (in shares) | shares | 3,136,869 | ||||||||
Forecast | |||||||||
Loss Contingencies [Line Items] | |||||||||
Share issuance agreement, percentage of share dispose per year | 75.00% | 50.00% | 25.00% | ||||||
Intellectual Property Disputes, Jeuveau | |||||||||
Loss Contingencies [Line Items] | |||||||||
Loss contingency accrual | $ 35,000,000 | ||||||||
Settlement agreement, payment terms (in years) | 2 years | ||||||||
Payments for legal settlements | $ 15,000,000 | ||||||||
Common stock, shares, issued (in shares) | shares | 6,762,652 | ||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | Dec. 14, 2017USD ($) |
SCH | Evolus, Inc. | |
Related Party Transaction [Line Items] | |
Up-front payment upon obtaining FDA approval | $ 9,200 |
Related party transaction amount in period | $ 20,000 |
Period of termination of first commercial sale | 10 years |
ALPHAEON | |
Related Party Transaction [Line Items] | |
Period available to cure breach | 30 days |