Too Few Visible Catalysts For Revance Push Guggenheim to The Sidelines

Revance Therapeutics Inc RVNC announced interim Phase 2a results for RT002 in treating Plantar Fasciitis, which showed improvement over placebo for pain at eight weeks, the primary endpoint of the study. However, the study didn't meet statistical significance.

The Analyst

RGuggenheim analyst Rohit Vanjani downgraded shares from Buy to Neutral.

The Thesis

RT002 is Revance's next-gen neuromodulator DaxibotulinumtoxinA for injection to treat plantar fasciitis, a common debilitating form of foot pain.

The management attributed the failure to a high placebo response in the control group at two of the five study sites, Vanjani said. The patients will continue to be evaluated for a total of 16 weeks post-treatment.

Nevertheless, management remains confident in the indication and plans a second Phase 2a trial, with a modified design, costing the company $1 million to $3 million in 2018, Guggenheim said. The company already budgeted for $4 million to $5 million for a Phase 2b study.

Among the other catalysts for 2018 are the initiation of a Phase 3 trial in cervical dystonia in the second quarter of 2018 and the readout of the long-term safety study in glabellar lines in the second-half of 2018. Only a pivotal plus a safety study is needed for the cervical dystonia indication before submission, Vanjani said.

"While Revance still potentially could get acquired, announce a business development transaction, or announce another therapeutic indication for RT002, we believe that there are too few visible catalysts in the intermediate term to move the shares," Vanjani said.

Price Action

Revance shares are up about 41 percent over the last year.

Following Monday's release of the interim results, shares of Revance shed about 5 percent to $33.20. Shares rebounded Tuesday about 1 percent to $33.55.

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