~~UNITED STATES~~

~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington, D.C. 20549~~

~~FORM 10-Q~~

~~(Mark One)~~



xUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~

orMarch 31, 2020



¨or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___

~~For the transition period from to~~

Commission File No. 001-36297

~~Revance Therapeutics, Inc.~~

~~(Exact name of registrant as specified in its charter)~~


Revance Therapeutics, Inc.
	(Exact name of registrant as specified in its charter)



	Delaware	77-0551645	~~77-0551645~~
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification ~~Number)~~
	No.)
~~7555 Gateway Boulevard~~ ~~Newark, California 94560~~ ~~(510) 742-3400~~ ~~(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)~~

7555 Gateway Boulevard, Newark, California, 94560

(Address, including zip code, of principal executive offices)

(510) 742-3400

(Registrant’s telephone number, including area code)



Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	RVNC	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xý No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes xý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨☐	Accelerated filer	x
☒	Emerging growth company		☐
Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~ ☐	Smaller reporting company	¨
	☒
		~~Emerging growth company~~	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial statement accounting standards provide pursuance to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No xý

Number of shares outstanding of the registrant's common stock, par value $0.001 per share, as of ~~October 26, 2017: 30,934,688~~April 24, 2020: 57,052,046

“Revance Therapeutics,” the Revance logos and other trademarks or service marks of Revance appearing in this quarterly report on Form 10-Q are the property of ~~Revance Therapeutics, Inc.~~Revance. This Form 10-Q contains additional trade names, trademarks and service marks of others, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

Unless expressly indicated or the context requires otherwise, the terms “Revance,” “company,” “we,” “us,” and “our,” in this document refer to Revance Therapeutics, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries.

PART I. FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements (Unaudited)

REVANCE THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

The accompanying notes are an integral part of these unaudited ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

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REVANCE THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

The accompanying notes are an integral part of these unaudited ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

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REVANCE THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share amounts)

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REVANCE THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

Nine Months Ended
September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (84,680 ) $ (62,468 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,096
1,068
Amortization of premium on investment 382
1,029
Change in fair value of derivative liability associated with Medicis settlement 211
595
Stock-based compensation expense 9,820
8,984
Capitalized interest (37 ) —
Effective interest on financing obligations 217
315
Loss on impairment —
1,949
Acquisition of in-process research and development —
2,000
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 4,632
(5,852 )
Other non-current assets (488 ) —
Accounts payable 2,749
200
Accruals and other liabilities (848 ) 5,821
Net cash used in operating activities (66,946 ) (46,359 )
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (2,037 ) (1,152 )
Proceeds from maturities of investments 60,655
139,050
Proceeds from sales of investments —
1,000
Purchases of investments (36,028 ) (159,754 )
Payment for acquisition of in-process research and development (100 ) (1,800 )
Net cash provided by (used in) investing activities 22,490
(22,656 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of at-the-market offering commissions 38,760
—
Principal payments made on financing obligations (2,727 ) (2,622 )
Net settlement of restricted stock awards to settle employee taxes (430 ) (359 )
Proceeds from the exercise of stock options and employee stock purchase plan 2,116
1,250
Payment of registration statement and at-the-market offering costs (441 ) (243 )
Net cash provided by (used in) financing activities 37,278
(1,974 )
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (7,178 ) (70,989 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period 64,082
202,050
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period $ 56,904
$ 131,061
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 259
$ 542

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Property and equipment purchases included in accounts payable and accruals and other current liabilities $ 429
$ 29
Deferred at-the-market offering costs $ 11
$ —
Holdback related to acquisition of in-process research and development $ —
$ 200



	Three Months Ended March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(61,933	)	$	(35,304	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash in-process research and development	11,184			—
Stock-based compensation	6,544			4,159
Amortization of debt discount and issuance costs	1,505			—
Depreciation and amortization	739			628
Amortization of discount on investments	(513		)	(649		)
Other non-cash operating activities	371			88
Changes in operating assets and liabilities:
Accounts receivable	—			27,000
Prepaid expenses and other current assets	(467		)	(1,018		)
Operating lease right of use assets	570			(3,440		)
Other non-current assets	175			101
Accounts payable	789			(3,736		)
Accruals and other liabilities	(2,373		)	(2,298		)
Deferred revenue	942			(278		)
Operating lease liabilities	(822		)	3,333
Net cash used in operating activities	(43,289		)	(11,414		)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments	(159,412		)	(127,357		)
Purchases of property and equipment	(539		)	(1,084		)
Purchase of intangible assets	(118		)	—
Proceeds from maturities of investments	54,500			25,000
Net cash used in investing activities	(105,569		)	(103,441		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible senior notes	287,500			—
Proceeds from issuance of common stock in connection with offerings, net of commissions and discount	15,581			108,100
Proceeds from the exercise of stock options and common stock warrants	572			18
Payment of capped call transactions	(28,865		)	—
Payment of convertible senior notes transaction costs	(8,703		)	—
Net settlement of restricted stock awards for employee taxes	(1,401		)	(1,049		)
Payment of offering costs	(337		)	(201		)
Net cash provided by financing activities	264,347			106,868
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	115,489			(7,987		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period	171,890			73,986
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period	$	287,379		$	65,999
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Issuance of common stock in connection with the Teoxane Agreement	$	43,400		$	—
Accrued transaction costs on convertible senior notes	$	487		$	—
Property and equipment purchases included in accounts payable and accruals	$	247		$	1,108
Accrued offering costs	$	—		$	320

The accompanying notes are an integral part of these unaudited ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

1. The Company and ~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Revance Therapeutics, Inc., or the Company, was incorporated in Delaware on August 10, 1999 under the name Essentia Biosystems, Inc. The Company commenced operations in June 2002 and on April 19, 2005, changed its name to Revance Therapeutics, Inc. The CompanyInc is a ~~clinical-stage~~ biotechnology company, ~~focused on the development, manufacturing and commercialization of novel botulinum toxin products~~developing new innovations in neuromodulators for ~~multiple~~ aesthetic and therapeutic indications. The Company is leveraging its proprietary portfolio of botulinum toxin type A compounds, formulated with its patented and proprietary peptide technology, to address unmet needs in large and growing neurotoxin markets. The Company's proprietary peptide technology enables delivery of botulinum toxin type A through two investigational drugOur lead product ~~candidates,~~candidate, DaxibotulinumtoxinA for Injection, ~~(RT002),~~combines a proprietary stabilizing peptide excipient with a highly purified botulinum toxin that does not contain human or ~~RT002 injectable,~~animal-based components. We have successfully completed a Phase 3 program for DaxibotulinumtoxinA for Injection in glabellar (frown) lines. In November 2019, we submitted the Biologics License Application (“BLA”) to the United States (the “U.S.”) Food and Drug Administration (the “FDA”) for DaxibotulinumtoxinA ~~Topical Gel (RT001), or RT001 topical.~~for Injection in the treatment of moderate to severe glabellar (frown) lines. The ~~Company~~FDA accepted the BLA on February 5, 2020, and the Prescription Drug User Fee Act (“PDUFA”) target action date is ~~pursuing clinical development~~November 25, 2020. We are also evaluating DaxibotulinumtoxinA for ~~RT002 injectable~~Injection in ~~a broad spectrum of aesthetic~~upper facial lines - glabellar lines, forehead lines and crow’s feet combined -- as well as in three therapeutic indications -- cervical dystonia, adult upper limb spasticity and ~~is planning~~plantar fasciitis. Beyond DaxibotulinumtoxinA for Injection, we have begun development of a biosimilar to ~~conduct additional preclinical development for RT001 topical. The Company holds worldwide rights~~BOTOX®, which would compete in the existing short-acting neuromodulator marketplace. In January 2020, we entered into an exclusive distribution agreement (the “Teoxane Agreement”) with Teoxane SA (“Teoxane”), pursuant to ~~RT002 injectable, RT001 topical~~which Teoxane granted us with the exclusive right to import, market, promote, sell and ~~the pharmaceutical uses~~distribute Teoxane’s line of ~~its proprietary peptide technology.~~Resilient Hyaluronic Acid® (RHA®) dermal fillers. We are dedicated to making a difference by transforming patient experiences.

Since ~~commencing operations in 2002, the Company has~~inception, we have devoted substantially all of ~~its~~our efforts to identifying and developing product candidates for the ~~aesthetics~~aesthetic and therapeutic pharmaceutical markets, recruiting personnel, ~~and~~ raising capital, ~~and~~conducting preclinical and clinical development of, and manufacturing development for ~~RT002 injectable~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, the biosimilar to BOTOX®, and ~~RT001 topical. The Company has never been profitable and has not yet commenced~~preparing the commercial ~~operations.~~

~~Since inception, the Company has~~launch of Teoxane’s line of Resilient Hyaluronic Acid® dermal fillers. We have incurred losses and negative cash flows from operations. ~~The Company has~~We have not generated ~~significant~~product revenue ~~from product sales~~ to date, and will continue to incur significant research and development and other expenses related to ~~its~~our ongoing operations. ~~During the nine~~

For three months ended ~~September 30, 2017, the Company~~March 31, 2020, we had a net loss of ~~$84.7 million and used $66.9 million of cash for operating activities.~~$61.9 million. As of ~~September 30, 2017, the Company~~March 31, 2020, we had a working capital surplus of ~~$134.8~~$476.8 million and an accumulated deficit of ~~$506.3~~$906.1 million. ~~The Company has~~In recent years, we have funded ~~its~~our operations ~~since inception~~ primarily through ~~the~~a combination of issuance and sale of common stock and issuance of convertible ~~preferred stock, notes payable, and convertible~~senior notes. As of ~~September 30, 2017, the Company~~March 31, 2020, we had capital resources of $511.3 million consisting of cash, cash equivalents, and ~~investments of $153.4 million. The Company believes~~short-term investments. We believe that ~~its~~our existing ~~cash, cash equivalents and investments~~capital resources will ~~allow~~fund the ~~Company to fund its operations~~operating plan through at least the next 12 months following the ~~filing~~issuance of this Form ~~10-Q.~~

10-Q, and may identify additional capital resources to fund our operations.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited, ~~Condensed Consolidated Financial Statements,~~and reflect all adjustments which are, in the opinion of management, ~~include all adjustments which the Company considers~~of a normal recurring nature and necessary for ~~the~~a fair statement of the ~~Condensed Consolidated Statements of Operations and Comprehensive Loss and Condensed Consolidated Statements of Cash Flows~~results for the interim periods ~~covered and the Condensed Consolidated Balance Sheets at the date of the~~presented.

Our condensed consolidated balance ~~sheets. The Condensed Consolidated Balance Sheet~~sheets for the year ended December 31, ~~2016~~2019 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles ~~in the United States of America, or US GAAP.~~(“U.S. GAAP”). The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, ~~2017~~,2020, or any other future period.

~~The Condensed Consolidated Financial Statements~~ Our condensed consolidated financial statements should be read in conjunction with ~~the Company’s~~our audited ~~Consolidated Financial Statements~~consolidated financial statements contained in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2016~~,2019, which was filed with the Securities and Exchange Commission ~~or SEC,~~(“SEC”), on February ~~28, 2017.~~26, 2020.

~~The Condensed Consolidated Financial Statements of the Company~~Our condensed consolidated financial statements include ~~the Company’s~~our accounts and those of ~~the Company’s~~our wholly-owned ~~subsidiary~~subsidiaries, and have been prepared in conformity with USU.S. GAAP. ~~The Company operates~~We operate in ~~one segment and there were no intercompany transactions to be eliminated during consolidation.~~1 segment.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Principles of Consolidation

Our condensed consolidated financial statements include our accounts and our wholly-owned subsidiaries. All intercompany transactions have been eliminated.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, revenue recognition, deferred revenue classification, accruals including clinical trial costs, stock-based compensation, fair value of derivative liability, fair value of the liability component of the convertible senior notes, allocation of purchase consideration of asset acquisitions, and accounting for income taxes. We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances. The worldwide continued spread of COVID-19 has caused a global slowdown of economic activity which has decreased demand for a broad variety of goods and services, including from our potential customers, while also disrupting sales channels and marketing activities for an unknown period of time until the disease is contained. We are unable to predict the future effect resulting from the COVID-19 pandemic on, for instance, paused clinical trials and revised product launch timing. As of the date of issuance of these condensed consolidated financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our condensed consolidated financial statements.

Intangible Assets

Intangible assets acquired in asset acquisition are stated at cost, less accumulated amortization on the condensed consolidated balance sheets, and are amortized on a ratable basis over their useful life. Assets acquired as part of an asset acquisition that are considered to be in-process research and development are immediately expensed unless there is an alternative future use in other research and development projects.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-15 on January 1, 2020 on a prospective basis.

Recent Accounting Pronouncements

The recent accounting pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

2. Revenue

Mylan Collaboration and License Agreement

Agreement Terms

We entered into a collaboration agreement with Mylan Ireland Limited, a wholly-owned indirect subsidiary of Mylan N.V. (“Mylan”) in February 2018 (the “Mylan Collaboration”), pursuant to which we agreed to collaborate with Mylan exclusively, on a world-wide basis (excluding Japan), to develop, manufacture, and commercialize a biosimilar to the branded biologic product (onabotulinumtoxinA) marketed as BOTOX®. In August 2019, the Mylan Collaboration was amended to, among other things, revise the period of time for Mylan to decide whether to continue the development and commercialization of the biosimilar beyond the initial development plan (the “Continuation Decision”) to be on or before the later of (i) April 30, 2020 or (ii) 30 calendar days from the date that we provide Mylan with certain deliverables. On May 1, 2020, we announced that we are continuing discussions with Mylan regarding whether or not Mylan plans to move forward with the biosimilar program.

Under the Mylan Collaboration, Mylan has paid us an aggregate of $30 million in non-refundable upfront fees, and the agreement provides for additional contingent payments of up to $100 million in the aggregate, upon the achievement of specified clinical and regulatory (i.e., a biosimilar biological pathway) milestones and of specified, tiered sales milestones of up to $225 million. The payments do not represent a financing component for the transfer of goods or services. The contingent payments would be payable after the Continuation Decision and upon meeting certain milestones.

Revenue Recognition

In accordance with ASC 606, transaction price is defined as the amount of consideration to which an entity expects to be entitled in exchange for promised goods or services to a customer. We estimated the transaction price for the Mylan Collaboration using the most likely amount method. In order to determine the transaction price, we evaluated all of the payments to be received during the duration of the contract, which included milestones and consideration payable by Mylan. Other than the upfront payment, all other milestones and consideration we may earn under the Mylan Collaboration are subject to uncertainties related to development achievements, Mylan’s rights to terminate the agreement, and estimated effort for cost-sharing payments. Components of such estimated effort for cost-sharing payments include both internal and external costs. Consequently, the transaction price does not include any milestones and considerations that, if included, could result in a probable significant reversal of revenue when related uncertainties become resolved. Sales-based milestones and royalties are not included in the transaction price until the sales occur because the underlying value relates to the license and the license is the predominant feature in the Mylan Collaboration. We re-evaluate the transaction price at each reporting period.As of March 31, 2020, the transaction price allocated to the unfulfilled performance obligations is $106.8 million.

We recognize revenue and estimate deferred revenue based on the cost of services incurred over the total estimated cost of services to be provided for the development period. For revenue recognition purposes, the development period is estimated to extend through 2024. It is possible that this period will change and is assessed at each reporting date.

For the three months ended March 31, 2020 and 2019, we recognized revenue related to development services of $0.1 million and $0.3 million, respectively. As of March 31, 2020 and December 31, 2019, we estimated short-term deferred revenue of $10.1 million and $7.9 million, respectively; and long-term deferred revenue of $15.7 million and $18.0 million, respectively.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Fosun License Agreement

Agreement Terms

In December 2018, we entered into a license agreement (the “Fosun License Agreement”) with Shanghai Fosun Pharmaceutical Industrial Development Co., Ltd., a wholly-owned subsidiary of Shanghai Fosun Pharmaceutical (Group) Co., Ltd (“Fosun”), whereby we have granted Fosun the exclusive rights to develop and commercialize our proprietary DaxibotulinumtoxinA for Injection in mainland China, Hong Kong and Macau (the “Fosun Territory”) and certain sublicense rights.

Under the Fosun License Agreement, in January 2019 we received a non-refundable upfront payment of $30.0 million, net of foreign withholding tax of $3.0 million. We are also eligible to receive (i) additional contingent payments of up to $230.5 million upon the achievement of specified milestones based on (a) the submission and approval of biologics license applications (“BLAs”) for certain aesthetic and therapeutic indications and (b) first calendar year net sales, and (ii) tiered royalty payments in low double digit to high teen percentages on annual net sales. The royalty percentages are subject to reduction in the event that (i) we do not have any valid and unexpired patent claims that cover the product in the Fosun Territory, (ii) biosimilars of the product are sold in the Fosun Territory or (iii) Fosun needs to pay compensation to third parties to either avoid patent infringement or market the product in the Fosun Territory. In March 2020, we received from Fosun a milestone payment of $1.0 million, before foreign withholding tax of $0.1 million, for the acceptance of the BLA submission to the FDA for DaxibotulinumtoxinA for Injection for the treatment of moderate to severe glabellar (frown) lines.

Revenue Recognition

We estimated the transaction price for the Fosun License Agreement using the most likely amount method. We evaluated all of the variable payments to be received during the duration of the contract, which included payments from specified milestones, royalties, and estimated supplies to be delivered. We will re-evaluate the transaction price at each reporting period and upon a change in circumstances. As of March 31, 2020, the transaction price allocated to unfulfilled performance obligation is $31.0 million.

NaN revenue has been recognized from the Fosun License Agreement for the three months ended March 31, 2020 and 2019. Substantially all payments received to date were included in long-term deferred revenue as of March 31, 2020 and December 31, 2019.

3. Cash Equivalents and Short-Term Investments

Our cash equivalents and short-term investments consist of money market funds, U.S. treasury securities, U.S. government agency obligations, commercial paper, and overnight repurchase agreements which are classified as available-for-sale securities.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

The following table is a summary of amortized cost, unrealized gains and losses, and fair value of our cash equivalents and short-term investments:



	March 31, 2020						December 31, 2019
			Unrealized						Unrealized
in thousands	Cost		Gains		Fair Value		Cost		Gains		Losses			Fair Value
Money market funds	$	179,031	$	—	$	179,031	$	136,258	$	—	$	—		$	136,258
U.S. treasury securities	30,124		182		30,306		48,349		6		—			48,355
U.S. government agency obligations	159,634		342		159,976		5,993		2		(5		)	5,990
Commercial paper	140,320		—		140,320		77,082		—		—			77,082
Overnight repurchase agreements	—		—		—		15,001		—		—			15,001
Total cash equivalents and available-for-sale securities	$	509,109	$	524	$	509,633	$	282,683	$	8	$	(5	)	$	282,686

Classified as:
Cash equivalents					$	285,012								$	163,731
Short-term investments					224,621									118,955
Total cash equivalents and available-for-sale securities					$	509,633								$	282,686

As of March 31, 2020 and December 31, 2019, we have 0 other-than-temporary impairments on our available-for-sale securities and the contractual maturities of the available-for-sale securities are less than one-year.

4. Filler Distribution Agreement

In January 2020, we entered into an exclusive distribution agreement (the “Teoxane Agreement”) with Teoxane SA (“Teoxane”), pursuant to which Teoxane granted us with the exclusive right to import, market, promote, sell and distribute Teoxane’s line of Resilient Hyaluronic Acid® (“RHA®”) dermal fillers in exchange for 2,500,000 shares of our common stock and certain other commitments by us. The Teoxane Agreement includes rights to i) RHA® 2, RHA® 3 and RHA® 4 which have been approved by the FDA for the correction of moderate to severe dynamic facial wrinkles and folds, including RHA® 2, RHA® 3 and RHA® 4 in the currently approved indications, ii) RHA® 1, which is currently in clinical trials for the treatment of perioral rhytids , and iii) future hyaluronic acid filler advancements and products by Teoxane (collectively the “RHA® dermal fillers”) in the U.S. and U.S. territories and possessions. The Teoxane Agreement will be effective for a term of ten years upon product launch and may be extended for a two-year period upon the mutual agreement of the parties. We are required to meet certain minimum purchase obligations and certain minimum expenditure requirements, which are discussed in Note 10.

If Teoxane pursues regulatory approval for RHA® dermal fillers for certain new indications or filler technologies, including innovations with respect to existing products in the U.S., we will be subject to certain specified cost-sharing arrangements for third party expenses incurred in achieving regulatory approval for such products. We will also have a right of first negotiation with respect to any cosmeceutical products that Teoxane wishes to distribute in the U.S, and Teoxane will have a right of first negotiation in connection with the distribution of DaxibotulinumtoxinA for Injection for aesthetic use, outside the U.S. and U.S. territories where Teoxane has an affiliate.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

The Teoxane Agreement is accounted for as an asset acquisition for the distribution rights of various approved and unapproved products and indications. The aggregate purchase consideration for the distribution rights is $43.5 million, consisting of the fair value of the 2,500,000 shares transferred to Teoxane and transaction costs. The purchase consideration is allocated to the underlying groups of approved and unapproved products based on their relative fair values, of which $11.2 million is allocated to certain unapproved products and future innovations, or in-process research and development assets, and is recognized as research and development expense on the condensed consolidated statements of operations and comprehensive loss. The remaining purchase consideration is allocated to the currently approved products and indications, and is recognized as an intangible asset on the condensed consolidated balance sheets. The intangible asset will be amortized over approximately 4 years commencing upon the first delivery of the RHA® dermal fillers products from Teoxane.

The following table summarized the distribution rights:



	March 31, 2020
(in thousands)	Initial Carrying Amount		Accumulated Amortization		Net Carrying Amount
Distribution rights to approved products and indications	$	32,334	$	—	$	32,334

5. Derivative Liability

In 2012, we entered into a settlement agreement in which we are obligated to pay $4.0 million upon achieving regulatory approval for DaxibotulinumtoxinA for Injection or DaxibotulinumtoxinA Topical. We determined that such payment was a derivative instrument that requires fair value accounting as a liability and periodic fair value remeasurements until settled. The fair value of the derivative liability was determined by estimating the timing and probability of the related regulatory approval and multiplying the payment amount by this probability percentage and a discount factor.

As of March 31, 2020, the fair value of the derivative liability was $3.0 million, which was measured using a term of 0.7 years based on an expected BLA approval in 2020, a risk-free rate of 0.2% and a credit risk adjustment of 7.5%. As of December 31, 2019, the fair value of the derivative liability was $3.0 million, which was measured using a term of 0.9 years based on an expected BLA approval in 2020, a risk-free rate of 1.6% and a credit risk adjustment of 7.5%.

6. Leases

We have non-cancelable operating leases for facilities for research, manufacturing, and administrative functions, and equipment operating leases. As of March 31, 2020, the weighted average remaining lease term is 6.8 years. The monthly payments for the facility lease escalate over the facility lease term with the exception of a decrease in payments at the beginning of 2022. We have options to extend the facility operating leases for up to 14.0 years. Our lease contracts do not contain termination options, residual value guarantees or restrictive covenants.

The operating lease costs are summarized as follows:



	Three Months Ended March 31,
(in thousands)	2020		2019
Operating lease cost	$	1,425	$	1,343
Variable lease cost ⁽¹⁾	77		290
Total operating lease costs	$	1,502	$	1,633


(1)	Variable lease cost includes management fees, common area maintenance, property taxes, and insurance, which are not included in the lease liabilities and are expensed as incurred.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

As of March 31, 2020, maturities of the Company’s operating lease liabilities are as follows:



Year Ending December 31,	(in thousands)
2020 remaining nine months	$	5,057
2021	6,942
2022	5,464
2023	5,557
2024	5,733
2025 and thereafter	12,226
Total operating lease payments	40,979
Less imputed interest ⁽¹⁾	(12,462		)
Present value of operating lease payments	$	28,517


(1)	Our lease contracts do not provide a readily determinable implicit rate. The imputed interest was based on a weighted average discount rate of 12.0%, which represents the estimated incremental borrowing based on the information available at the adoption or commencement dates.

Supplemental cash flow information related to the operating leases was as follows:



	Three Months Ended March 31,
(in thousands)	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,677	$	1,450
Right-of-use assets obtained in exchange for operating lease liabilities	$	—	$	3,890

7. Convertible Senior Notes

On February 14, 2020, we issued convertible senior notes that are due in 2027 (the “2027 Notes”) with an aggregate principal balance of $287.5 million, pursuant to an indenture, dated February 14, 2020, between Revance and U.S. Bank National Association, as trustee (the “Indenture”). The 2027 Notes are senior unsecured obligations and bear interest at a rate of 1.75% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The 2027 Notes will mature on February 15, 2027, unless earlier converted, redeemed or repurchased. In connection with issuing the 2027 Notes, we received $278.3 million in net proceeds, after deducting the initial purchasers’ discount, commissions, and other issuance costs. A portion of the net proceeds from the 2027 Notes were used to purchase the capped call transactions described below and the remainder will be used to fund expenses associated with commercial launch activities for both the RHA® dermal fillers and, if approved, DaxibotulinumtoxinA for Injection for glabellar lines, research and development, and other corporate activities.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

The 2027 Notes may be converted at any time by the holders prior to the close of business on the business day immediately preceding November 15, 2026 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on June 30, 2020 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the 2027 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after November 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2027 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

The conversion rate will initially be 30.8804 shares of our common stock per $1,000 principal amount of the 2027 Notes (equivalent to an initial conversion price of approximately $32.38 per share of our common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2027 Notes in connection with such a corporate event or notice of redemption, as the case may be.

We may not redeem the 2027 Notes prior to February 20, 2024. We may redeem for cash all or any portion of the 2027 Notes, at our option, on or after February 20, 2024 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2027 Notes.

If we undergo a fundamental change (as defined in the Indenture), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In accounting for the issuance of the 2027 Notes, we separated the 2027 Notes into liability and equity components. The carrying amount of the liability component was $175.4 million, which was calculated by using a discount rate of 9.5%, which was estimated to be our borrowing rate on the issuance date for a similar debt instrument without the conversion feature. The carrying amount of the equity component was $112.1 million, which represents the conversion option, and was determined by deducting the fair value of the liability component from the par value of the 2027 Notes. The equity component of the 2027 Notes is included in additional paid-in capital in the condensed consolidated balance sheets and will not be subsequently remeasured as long as it continues to meet the conditions for equity classification. The difference between the principal amount of the 2027 Notes and the liability component (the “debt discount”) is amortized to interest expense in the condensed consolidated statements of operations and comprehensive loss using the effective interest method over the term of the 2027 Notes.

Total transaction costs for the issuance of the 2027 Notes were $9.2 million, consisting of initial purchasers’ discount, commissions, and other issuance costs. We allocated the total transaction costs proportionally to the liability and equity components. The transaction costs attributed to the liability component were $5.6 million, which were recorded as debt issuance costs (presented as contra debt in our condensed consolidated balance sheets) and are amortized to interest expense in the condensed consolidated statements of operations and comprehensive loss over the term of the 2027 Notes. The transaction costs attributed to the equity component were $3.6 million, which were included in additional paid-in capital.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

Interest expense relating to the 2027 Notes in the condensed consolidated statements of operations and comprehensive loss are summarized as follows:



	Three Months Ended
(in thousands)	March 31, 2020
Contractual interest expense	$	643
Amortization of debt discount ⁽¹⁾	1,461
Amortization of debt issuance costs ⁽²⁾	44
Total interest expense	$	2,148


⁽¹⁾	The effective interest rate on the liability component of the 2027 Notes was 9.5% for the three months ended March 31, 2020, which remained unchanged from the issuance date. As of March 31, 2020, the unamortized debt discount was $110.6 million, and will be amortized over 6.9 years.


⁽²⁾	As of March 31, 2020, the unamortized debt issuance cost for the 2027 Notes was $5.6 million on the condensed consolidated balance sheets.

As of March 31, 2020, the convertible senior notes on the condensed consolidated balance sheets represented the carrying amount of the liability component of the 2027 Notes, net of unamortized debt discounts and debt issuance costs, which are summarized as follows:



(in thousands)	March 31, 2020
2027 Notes	$	287,500
Less: Unamortized debt discount and debt issuance costs	(116,195		)
Carrying amount of 2027 Notes	$	171,305

Capped Call Transactions

Concurrently with the 2027 Notes, we entered into capped call transactions with one of the initial purchasers and another financial institution (the “option counterparties”) and used $28.9 million of the net proceeds from the 2027 Notes to pay the cost of the capped call transactions. The capped call transactions are expected generally to reduce the potential dilutive effect upon conversion of the 2027 Notesand/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, as the case may be, with such reduction and/or offset subject to a price cap of $48.88 of our common stock per share, which represents a premium of 100% over the last reported sale price of our common stock on February 10, 2020. The capped calls have an initial strike price of $32.38 per share, subject to certain adjustments, which corresponds to the conversion option strike price in the 2027 Notes. The capped call transactions cover, subject to anti-dilution adjustments, approximately 8.9 million shares of our common stock.

The capped call transactions are separate transactions that we entered into with the option counterparties and are not part of the terms of the 2027 Notes. As the capped call transactions meet certain accounting criteria, the premium paid of $28.9 million was recorded as a reduction in additional paid-in capital in the condensed consolidated balance sheets, and will not be remeasured to fair value as long as the accounting criteria continue to be met. As of March 31, 2020, we had not purchased any shares under the capped call transactions.

8. Stockholders’ Equity and Stock-Based Compensation

Common Stock Warrants

As of December 31, 2019, warrants to purchase 34,113 shares of common stock were outstanding at an exercise price of $14.95 per share, which expired in May 2020. In February 2020, warrants to purchase 34,113 shares of common stock were net exercised for 11,134 shares of common stock. As of March 31, 2020, 0 common stock warrants were outstanding.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

2014 Equity Incentive Plan (the “2014 EIP”)

On January 1, 2020, the number of shares of common stock reserved for issuance under the 2014 EIP increased by 2,094,989 shares. For the three months ended March 31, 2020, 765,675 stock options and 1,261,225 restricted stock awards, including 215,000 performance stock awards, were granted under the 2014 EIP. As of March 31, 2020, 929,364 shares were available for issuance under the 2014 EIP.

2014 Inducement Plan (the “2014 IN”)

For the three months ended March 31, 2020, 0 stock options or restricted stock awards were granted under the 2014 IN. As of March 31, 2020, 246,130 shares were available for issuance under the 2014 IN.

2014 Employee Stock Purchase Plan (the “2014 ESPP”)

On January 1, 2020, the number of shares of common stock reserved for issuance under the 2014 ESPP increased by 300,000 shares. As of March 31, 2020, 1,704,005 shares were available for issuance under the 2014 ESPP.

Net Loss per Share

Our basic net loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding for the period, which includes the vested restricted stock awards. The diluted net loss per share is calculated by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, underlying shares of convertible senior notes, outstanding stock options, outstanding common stock warrants, unvested restricted stock awards and performance stock awards, and shares of common stock expected to be purchased under 2014 ESPP are considered common stock equivalents, which were excluded from the computation of diluted net loss per share because including them would have been antidilutive.

Common stock equivalents that were excluded from the computation of diluted net loss per share are presented as below:



	March 31,
	2020	2019
Convertible senior notes	8,878,938	—
Outstanding common stock options	5,305,185	4,372,676
Unvested restricted stock awards and performance stock awards	2,799,982	768,770
Shares of common stock expected to be purchased on June 30 under the 2014 ESPP	49,861	35,619
Outstanding common stock warrants	—	34,113

Follow-On Public Offering

In December 2019, we completed a follow-on public offering, pursuant to which we issued 6,500,000 shares of common stock at $17.00 per share for net proceeds of $103.6 million, after underwriting discounts, commissions and other offering expenses. In January 2020, the underwriters exercised their over-allotment option to purchase 975,000 additional shares of common stock at $17.00 per share for net proceeds of $15.6 million, after underwriting discounts, commissions and other offering expenses.

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

At-The-Market Offering

~~In March 2016, the Company entered into an At-The-Market Issuance Sales Agreement, or the 2016 ATM~~We are party to a controlled equity offering sales agreement with ~~Cowen and Company, LLC, or Cowen,~~Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) (the “2018 ATM Agreement”), under which ~~the Company~~we may offer and sell common stock having aggregate proceeds of up to ~~$75.0~~$125.0 million ~~from time to time~~ through ~~Cowen, the Company's~~Cantor Fitzgerald as our sales agent. ~~Sales~~Under the 2018 ATM Agreement, sales of common stock through ~~Cowen under the 2016 ATM agreement~~Cantor Fitzgerald will be made by means of ordinary brokers’ transactions on the ~~NASDAQ Global Market~~Nasdaq or otherwise at market prices prevailing at the time of sale, in block transactions, or as otherwise agreed upon by ~~the Company~~us and ~~Cowen. Cowen will~~Cantor Fitzgerald. From time to time, Cantor Fitzgerald may sell the common stock ~~from time to time,~~ based upon our instructions, ~~from the Company. The Company agreed to~~and we will pay ~~Cowen~~ a commission to Cantor Fitzgerald of up to 3.0% of the gross sales proceeds of any common stock sold through ~~Cowen under~~Cantor Fitzgerald. For the ~~ATM agreement. During~~ three months ended ~~September 30, 2017, the Company sold 389,600 shares of its~~March 31, 2020, 0 common stock ~~primarily to one investor~~was sold under the ~~2016~~2018 ATM agreement at a price of $25.56 per share resulting in net proceeds of $9.6 million, after commissions and offering expenses. During the nine months ended September 30, 2017, the Company sold 1,802,651 shares of common stock under the 2016 ATM Agreement at a weighted average price of $22.17 per share resulting in net proceeds of $38.2 million, whichAgreement.

Stock-based Compensation

Stock-based compensation expense was ~~comprised of gross proceeds after commissions of $38.8 million net of offering expenses of $0.6 million, of which $0.2 million was paid in 2016 and $0.4 million was paid in 2017.~~allocated as follows:



(in thousands)	Three Months Ended March 31,
(in thousands)	2020		2019
Research and development	$	2,442	$	2,079
Selling, general and administrative	4,102		2,080
Total stock-based compensation	$	6,544	$	4,159

~~2. Summary of Significant Accounting Policies~~

~~Significant accounting policies are described in Note 2 to the Consolidated Financial Statements in Item 15 of the Company’s Annual Report on Form 10-K for the year ended~~ ~~December 31, 2016. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2017, except as described below.~~

~~Use of Estimates~~9. Fair Value Measurements

The ~~preparation~~following table summarizes, for assets and liabilities measured at fair value, the respective fair value and the classification by level of Condensed Consolidated Financial Statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Such management estimates include accruals, stock-based compensation,input within the fair value of a derivative liability, impairment of long-lived assets, and the valuation of deferred tax assets. The Company bases its estimates on historical experience and on assumptions that it believes are reasonable, however, actual results could significantly differ from those estimates.

~~Recently Adopted Accounting Pronouncements~~

~~On March 30, 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting (Topic 718)~~. The amendments in ASU 2016-09 affect all entities that issue share-based payment awards to their employees and involve multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. As of January 1, 2017, the Company adopted ASU 2016-09 on a modified retrospective basis for the income statement impact of forfeitures and income taxes. Accordingly, the Company recognized a cumulative charge of less than $0.1 million to the Company's Accumulated Deficit balance as of January 1, 2017 from a change in the forfeiture rate methodology to account for forfeitures as they occur. The Company also adopted the accounting methodology related to stock-based compensation for deferred tax assets and liabilities balances; however, given the Company has a full valuation allowance, it did not have a material impact on the Company's Consolidated Financial Statements.~~The new guidance had no impact to classification on the Condensed Consolidated Statements of Cash Flows.~~

~~On November 18, 2016, the FASB issued Accounting Standards Update (ASU) 2016-18,~~ ~~Statements of Cash Flows (Topic 230)~~, which requires restricted cash to be included in the beginning-of-period and end-of-period totals with cash and cash equivalents. The Company early adopted this amendment as of December 31, 2016. The adoption of this standard required the Company to reclassify its restricted cash balances from investing activities to the cash and cash equivalents section of the Condensed Consolidated Statements of Cash Flows for all periods presented.

~~Recent Accounting Pronouncements~~

hierarchy:



	March 31, 2020
(in thousands)	Fair Value		Level 1		Level 2		Level 3
Assets
Money market funds	$	179,031	$	179,031	$	—	$	—
U.S. treasury securities	30,306		30,306		—		—
U.S. government agency obligations	159,976		—		159,976		—
Commercial paper	140,320		—		140,320		—
Total assets measured at fair value	$	509,633	$	209,337	$	300,296	$	—

Liabilities
Derivative liability	$	3,042	$	—	$	—	$	3,042
Total liabilities measured at fair value	$	3,042	$	—	$	—	$	3,042

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REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Scope of Modification Accounting (Topic 718)~~ ("ASU 2017-09"), which amends the scope of modification accounting for share-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its Consolidated Financial Statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 requires entities to recognize income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in ASU 2016-16 are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods and requires a modified retrospective method of adoption. Early adoption is permitted, but for public companies generally only in the first quarter of an entity’s annual fiscal year. The Company is currently evaluating the effect this standard will have on its Consolidated Financial Statements.

~~On February 25, 2016, the FASB issued Accounting Standards Update (ASU) 2016-02~~ ~~Leases (Topic 842)~~ which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases with terms greater than 12 months. In September 2017, the FASB issued ASU 2017-13, ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),~~ ~~which provides additional implementation guidance on the previously issued ASU 2016-02~~ ~~Leases (Topic 842)~~. The ASU also requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this standard will have on its Consolidated Financial Statements.

~~On January 5, 2016, the FASB issued Accounting Standards Update (ASU) 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The updated standard is effective for fiscal years, and interim periods, beginning after December 15, 2017 and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on its Consolidated Financial Statements.

~~3. In-Process Research and Development~~

On June 2, 2016, the Company entered into an asset purchase agreement with Botulinum Toxin Research Associates, Inc., or BTRX (the "BTRX Purchase Agreement"). Under the BTRX Purchase Agreement, the Company acquired all rights, title and interest in a portfolio of botulinum toxin-related patents and patent applications from BTRX and was granted the right of first negotiation and first refusal with respect to other botulinum toxin-related patents owned or controlled by BTRX. In exchange, the Company agreed to an upfront expenditure of $2.0 million of which $1.8 million was paid immediately, $0.1 million was paid in June 2017, and the remaining $0.1 million is due and payable in June 2018. The Company also agreed to pay up to an additional $16.0 million in aggregate upon satisfaction of specified milestones relating to the Company’s product revenue, intellectual property, and clinical and regulatory events (the "BTRX milestone payments"). As of September 30, 2017, the Company did not record a liability in connection with the BTRX milestone payments. The Company accrues for contractual milestones when it is probable that a milestone will be met.

~~The Company concluded that the BTRX Purchase Agreement did not meet the criteria of a business combination pursuant to the guidance prescribed in Accounting Standards Codification Topic 805,~~ ~~Business Combinations~~. During 2016, the Company accounted for the initial $2.0 million expenditure as research and development expense, as future alternative use of the acquired assets was deemed contingent upon the successful outcome of existing research and development activities as of the transaction date.

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

~~4. Medicis Settlement~~

In July 2009, the Company entered into a license agreement with Medicis Pharmaceutical Corporation, or Medicis, granting Medicis worldwide aesthetic and dermatological rights to the Company’s investigational botulinum toxin type A product candidates. In October 2012, the Company entered into a settlement and termination agreement with Medicis. The terms of the settlement provided for the reacquisition of the rights related to all territories of RT002 injectable and RT001 topical from Medicis and for consideration payable by the Company to Medicis of up to $25.0 million, comprised of (i) an upfront payment of $7.0 million, which was paid in 2012, (ii) a proceeds sharing arrangement payment of $14.0 million due upon specified capital raising achievements by the Company, of which $6.9 million was paid in 2013 and $7.1 million in 2014, and (iii) a Product Approval Payment of $4.0 million to be paid upon the achievement of regulatory approval for RT002 injectable or RT001 topical by the Company. Medicis was subsequently acquired by Valeant Pharmaceuticals International, Inc. in December 2012.

The Company determined that the settlement provisions related to the proceeds sharing arrangement payment in (ii) above and Product Approval Payment in (iii) above were derivative instruments that require fair value accounting as a liability and periodic fair value remeasurements until settled.

As of September 30, 2017, the Company determined the fair value of its liability for the Product Approval Payment was $2.2 million, which was measured by assuming a term of 2.75 years, a risk-free rate of 1.58% and a credit risk adjustment of 7.00%. The Company’s assumption for the expected term is based on an expected Biologics License Application, or BLA, approval in 2020. The Company did not make any payments under the Product Approval Payment during the nine months ended September 30, 2017.

~~5. Cash Equivalents and Investments~~

~~The Company's cash equivalents and investments consist of money market funds, U.S. treasury securities, and U.S. government agency obligations, which are classified as available-for-sale securities.~~

~~The following table is a summary of amortized cost, unrealized gain and loss, and fair value (in thousands):~~

September 30, 2017 December 31, 2016
Gross Unrealized Gross Unrealized
Cost Gains Losses Fair Value Cost Gains Losses Fair Value
Money market funds $ 55,480
$ —
$ —
$ 55,480
$ 60,639
$ —
$ —
$ 60,639
U.S. treasury securities 81,210
—
(35 ) 81,175
81,103
4
(28 ) 81,079
U.S. government agency obligations 15,950
—
(8 ) 15,942
40,968
1
(22 ) 40,947
Total cash equivalents and available-for-sale securities $ 152,640
$ —
$ (43 ) $ 152,597
$ 182,710
$ 5
$ (50 ) $ 182,665

Classified as:
Cash equivalents $ 55,480
$ 60,639
Short-term investments 97,117
122,026
Total cash equivalents and available-for-sale securities $ 152,597
$ 182,665



	December 31, 2019
(in thousands)	Fair Value		Level 1		Level 2		Level 3
Assets
Money market funds	$	136,258	$	136,258	$	—	$	—
U.S. treasury securities	48,355		48,355		—		—
Commercial paper	77,082		—		77,082		—
Overnight repurchase agreements	15,001		—		15,001		—
U.S. government agency obligations	5,990		—		5,990		—
Total assets measured at fair value	$	282,686	$	184,613	$	98,073	$	—

Liabilities
Derivative liability	$	2,952	$	—	$	—	$	2,952
Total liabilities measured at fair value	$	2,952	$	—	$	—	$	2,952

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

There have been no significant realized gains or losses on available-for-sale securities for the periods presented. No significant available-for-sale securities held as of September 30, 2017 have been in a continuous unrealized loss position for more than 12 months, and unrealized gains and losses are included in “accumulated other comprehensive loss” within shareholders’ equity on the Condensed Consolidated Balance Sheets. As of September 30, 2017, unrealized losses on available-for-sale investments are not attributed to credit risk and are considered temporary. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity or the cost basis of the investment will be recovered. The Company believes it has no other-than-temporary impairments on its securities as it does not intend to sell these securities and does not believe it is more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in fair value. Our cash equivalents and short-term investments are due within one year.

~~Related Party Transactions~~

Of the Company's total cash, cash equivalents, and short-term investments of $153.4 million and $185.5 million as of September 30, 2017 and December 31, 2016, respectively, the Company held cash equivalents and short-term investments with a total fair value of $75.4 million and $86.0 million, respectively, in an investment account with a related party, J.P. Morgan Securities LLC. As of September 30, 2017, JPMorgan Chase & Co. and its wholly owned subsidiaries JPMorgan Chase Bank, National Association (NA), J.P. Morgan Investment Management Inc., and JPMorgan Asset Management (UK) Limited held approximately 3.5 million shares of the Company's common stock, which represents approximately 11.4% of the Company's outstanding common stock. J.P. Morgan Securities LLC, who acts as a custodian and trustee for certain Company investments, is an affiliate of JPMorgan Chase Bank, NA.

~~6. Fair Value Measurements~~

~~The Company determines the fair value of certain financial assets and liabilities using three levels of inputs as follows:~~

For Level 1 ~~— Observable inputs, such as~~investments, we use quoted prices in active markets for identical assets ~~or liabilities;~~

to determine the fair value. For Level 2 ~~— Observable inputs other than Level 1 prices, such as~~investments, we use quoted prices for similar assets ~~or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and~~

Level 3 — Valuations based on unobservable inputs to the valuation methodology and including data about assumptions market participants would use in pricing the asset or liability based on the best information available under the circumstances.

The carrying values of cash, prepaid expenses and other current assets, accounts payable, and accruals and other current liabilities approximate fair value due to the short maturities of these instruments.

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

~~The Company measures and reports~~sourced from certain ~~financial instruments as assets and liabilities at fair value on a recurring basis. The fair value of these instruments was as follows (in thousands):~~

As of September 30, 2017
Fair Value Level 1 Level 2 Level 3
Assets
Money market funds $ 55,480
$ 55,480
$ —
$ —
U.S. treasury securities 81,175
81,175
—
—
U.S. government agency obligations 15,942
—
15,942
—
Total assets measured at fair value $ 152,597
$ 136,655
$ 15,942
$ —

Liabilities
Derivative liability associated with Medicis settlement $ 2,233
$ —
$ —
$ 2,233
Total liabilities measured at fair value $ 2,233
$ —
$ —
$ 2,233

As of December 31, 2016
Fair Value Level 1 Level 2 Level 3
Assets
Money market funds $ 60,639
$ 60,639
$ —
$ —
U.S. treasury securities 81,079
81,079
—
—
U.S. government agency obligations 40,947
—
40,947
—
Total assets measured at fair value $ 182,665
$ 141,718
$ 40,947
$ —

Liabilities
Derivative liabilities associated with Medicis settlement $ 2,022
$ —
$ —
$ 2,022
Total liabilities measured at fair value $ 2,022
$ —
$ —
$ 2,022

~~The fair value of the U.S. government agency obligations is estimated by taking into consideration valuations obtained from~~ third-party pricing services. The third-party pricing services generally utilize industry standard valuation models ~~including both income and market-based approaches,~~ for which all significant inputs are observable, either directly or indirectly, to estimate the price or fair ~~value. These inputs include~~value of the securities. The primary input generally includes reported ~~trades~~trade of ~~and broker/dealer~~or quotes on the same or similar ~~securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical~~securities. We do not make additional judgments or assumptions made to the pricing data ~~and other observable inputs. Changes in~~sourced from the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. The Company did not transfer any assets or liabilities measured at fair value on a recurring basis between Level 1 and Level 2 during the nine months ended September 30, 2017 and the year ended December 31, 2016.third-party pricing services.

The following table ~~sets forth a summary of~~summarizes the ~~changes~~change in the fair value of ~~the Company’s~~our Level 3 financial ~~instruments as follows (in thousands):~~

Derivative Liability Associated with Medicis Settlement
Fair value as of December 31, 2016 $ 2,022
Change in fair value 211
Fair value as of September 30, 2017 $ 2,233

instrument:



(in thousands)	Derivative Liability
Fair value as of December 31, 2019	$	2,952
Change in fair value	90
Fair value as of March 31, 2020	$	3,042

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

The fair value of the derivative liability ~~resulting from the Medicis litigation settlement~~ was determined by estimating the timing and probability of the related regulatory approval and multiplying the payment amount by this probability percentage and a discount factor based primarily on the estimated timing of the payment and a credit risk adjustment ~~(Note 4)~~(Note 5). Generally, increases or decreases in these unobservable inputs would result in a directionally similar impact to the fair value measurement of this derivative instrument. The significant unobservable inputs used in the fair value measurement of the ~~Product Approval Payment~~product approval payment derivative are the expected timing and probability of the payments at the valuation date and the credit risk adjustment.

The fair value of the 2027 Notes (Note 7) was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy. We carry 2027 Notes at face value less unamortized debt discount and issuance costs on our condensed consolidated balance sheets and present the fair value for disclosure purposes only. As of March 31, 2020, the fair value of the 2027 Notes was $229.5 million.

~~7. Notes Payable and Financing Obligations~~

~~Essex Capital Notes~~

On December 20, 2013, the Company signed a Loan and Lease Agreement (Original Agreement) to borrow up to $10.8 million in the form of Secured Promissory Notes from Essex Capital, or the Essex Notes, to finance the completion and installation of the Company’s RT001 topical commercial fill/finish line, or the Fill/Finish Line. In December 2013 and January 2014, the Company withdrew a total of $5.0 million under the terms of the Original Agreement. In May 2014, pursuant to the terms of the Original Agreement, the Company sold equipment to Essex Capital, resulting in partial settlement of the outstanding loan balance of $1.1 million, and leased the equipment back for fixed monthly payments to be paid over 3 years.

On December 17, 2014, the Company entered into the First Amendment to the Loan and Lease Agreement (First Amendment) with Essex Capital. Under the terms of the First Amendment, the Company agreed to repay the outstanding debt balance of $3.9 million and issued a warrant to purchase 44,753 shares of common stock.

In February 2015, the Company executed the Second Amendment to the Loan and Lease Agreement (Second Amendment), under which the term of the facility was extended to April 15, 2015 and the purchase price for the remainder of the equipment was increased by $0.1 million to approximately $9.8 million. Concurrently with this sale, the Company leased the equipment back from Essex Capital for a fixed monthly payment to be paid monthly over 3 years.

None of the leases qualified for sale-leaseback accounting due to the Company’s continuing involvement in the equipment. Therefore, the Company accounted for these transactions as financing obligations using the effective interest rate method.

The leases provide for the option to purchase the leased equipment for 10% of the original purchase amount and, in June 2015, the Company exercised its option to purchase the remainder of the equipment sold and leased back from Essex Capital for 10% of the original purchase amount, or approximately $1.1 million, at the conclusion of the lease terms. In May 2017, the Company paid $0.1 million to purchase the equipment sold and leased back from Essex Capital in May 2014.

~~As of September 30, 2017, the aggregate total future minimum lease payments under the financing obligations were as follows (in thousands):~~

Year Ending December 31,
2017 $ 948
2018 949
Total payments $ 1,897

~~8. Interest Expense~~

Interest expense, includes cash and non-cash components with the non-cash components consisting of effective interest recognized on the financing obligations and interest capitalized for assets constructed for use in operations.

Table of Contents

REVANCE THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements — (Continued)

(Unaudited)

~~The interest expense by cash and non-cash components is as follows (in thousands):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest expense
Cash related interest expense (1) $ 63
$ 158
$ 259
$ 542

Non-cash interest expense
Effective interest on financing obligations 62
98
217
315
Non-cash capitalized interest expense (2) (21 ) —
(37 ) —
Non-cash interest expense 41
98
180
315

Total interest expense $ 104
$ 256
$ 439
$ 857


~~(1)~~	~~Cash related interest expense includes interest payments on the Essex Notes.~~


~~(2)~~	~~Capitalized interest expense pursuant to~~ ~~Accounting Standards Codification Topic 835, Interest~~.

~~9. Loss on Impairment~~

Long-lived assets such as the Company’s fill/finish line are reviewed for impairment whenever adverse events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets are measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company determines the fair value of its long-lived assets using the market, cost or income approach.

The Company constructed a fill/finish line for the future commercial manufacturing of RT001 topical and to support its clinical trials and regulatory license applications. In June 2016, following the results of the REALISE 1 Phase 3 clinical trial, the Company discontinued its RT001 topical clinical development programs for the treatment of crow’s feet and primary axillary hyperhidrosis. The Company performed an impairment analysis of the RT001 topical fill/finish line to determine fair value based on highest and best use. Based on the analysis, the Company determined that the fair value of certain equipment, which was calculated using the market approach, was lower than the carrying value. Accordingly, during the nine months ended September 30, 2016, the Company recorded a loss on impairment of $1.9 million.

During the three and nine months ended September 30, 2017, there were no additional indicators of or loss on impairment recorded for the RT001 topical fill/finish line. Nonetheless, it is reasonably possible that our estimate of the recoverability of the equipment's carrying value could change. As of September 30, 2017, the fill/finish line had a net book value of $5.1 million.

10. Commitments and Contingencies

~~Facility Lease~~Teoxane Agreement

~~In January 2010,~~We are parties to the ~~Company entered into~~Teoxane Agreement (Note 4), which will be effective for a ~~non-cancelable facility lease~~term of ten years upon product launch and may be extended for a two-year period upon the mutual agreement of the parties. We are required to meet certain minimum purchase obligations during each year of the term. We are also required to meet certain minimum expenditure requirements in connection with commercialization efforts. Either party may terminate the Teoxane Agreement in the event of the insolvency of, or a material breach by, the other party, including certain specified breaches that ~~requires monthly payments through January 2022. This facility is used~~include the right for ~~research,~~Teoxane to terminate the Teoxane Agreement for our failure to meet the minimum purchase requirements or commercialization expenditure during specified periods, or for our breach of the exclusivity obligations under the Teoxane Agreement.

Other Purchase Commitments

We are parties to a Technology Transfer, Validation and Commercial Fill/Finish Services Agreement with Ajinomoto Althea, Inc. dba Ajinomoto Bio-Pharma Services (“Althea”) (the “Althea Services Agreement”), under which Althea provides us a contract development and manufacturing organization, which allows us to have expanded capacity and ~~administrative functions.~~

~~In February 2014, the Company extended the~~a second source for drug product manufacturing in order to support a global launch of DaxibotulinumtoxinA for Injection. The initial term of the ~~Lease~~Althea Services Agreement expires in 2024, unless terminated sooner by thirty-six (36) months to January 2025. Under the terms of the lease agreement, the payments escalate over the term of the lease with the exception of a decrease in payments at the beginning of 2022. However, the Company recognizes the expenseeither company and we have minimum purchase obligations based on ~~a straight-line basis over the life of the lease.~~

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

Rent expense was $1.3 million for the three months ended September 30, 2017 and 2016, respectively, and $4.0 million for the nine-month periods ended September 30, 2017 and 2016, respectively. As of September 30, 2017, the aggregate total future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

Year Ending December 31,
2017 $ 1,350
2018 5,578
2019 5,763
2020 5,947
2021 and thereafter 20,644
Total payments $ 39,282
our production forecasts.

Other ~~Milestone-Based Commitments~~Contingencies

~~The Company has one remaining future~~We are obligated to pay $2.0 million milestone payment to a developer of botulinum toxin, List Biological Laboratories, ~~due and payable on the achievement of~~Inc. (“List Laboratories”), when a certain regulatory ~~milestone. The Company~~milestone is achieved. As of March 31, 2020, the milestone had not been achieved. We are also obligated to pay royalties to List Laboratories on future sales of botulinum toxin products.

The Company has one remaining future milestone payment of $4.0 million due and payable to Valeant Pharmaceuticals International, Inc., which acquired Medicis in December 2012, upon the achievement of regulatory approval for RT002 injectable or RT001 topical (Note 4).

~~The Company has obligations to pay~~We entered into an asset purchase agreement (the “BTRX Purchase Agreement”) with Botulinum Toxin Research Associates, Inc. ~~(BTRX)~~(“BTRX”), under which we are obligated to pay up to $16.0 million to BTRX upon the satisfaction of ~~specified~~ milestones relating to ~~the Company’s~~our product revenue, intellectual property, and clinical and regulatory ~~events (Note 3).~~events. As of March 31, 2020, a one-time intellectual property development milestone liability of $1.0 million has been recorded in accruals on our condensed consolidated balance sheets.

~~In April 2016, the Company~~We entered into an agreement with BioSentinel, Inc. to(“BioSentinel”), under which we in-license ~~their~~BioSentinel’s technology and expertise for research, ~~and~~ development and manufacturing purposes. ~~In addition~~We are obligated to pay BioSentinel minimum quarterly use fees ~~the Company has~~and a one-time ~~future~~ milestone payment of $0.3 million ~~payable to BioSentinel, Inc. upon the achievement of regulatory approval.~~

~~The Company accrues for contingencies~~ when ~~it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. The Company expects that contingencies related to~~ regulatory approval ~~milestones will only become probable once such regulatory outcome~~ is achieved.

~~Purchase Commitments~~

On March 14, 2017, the Company entered into a Technology Transfer, Validation and Commercial Fill/Finish Services Agreement (the “Services Agreement”) and Statement of Work ("SoW") with Ajinomoto Althea, Inc., a contract development and manufacturing organization (“Althea”). Under the Services Agreement, Althea has agreed, among other things, to provide the Company with a future source of commercial fill/finish services for the Company’s neuromodulator products. The Services Agreement has an initial term that will expire in 2024, unless terminated sooner by either party. In accordance with the Services Agreement, the Company will have minimum purchase obligations based on its production forecasts. As of ~~September 30, 2017,~~March 31, 2020, the Company made non-refundable advanced payments of $1.2 million in accordance with the terms of this arrangement. The remaining services are cancellable at any time, with the Company required to pay costs incurred through the cancellation date.

~~Contingencies~~

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. During the period from May 2015 through July 2017, the Company and certain of its directors and executive officers were subject to a securities class action complaint, pending in the Superior Court for the County of Santa Clara, captioned ~~City of~~

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

~~Warren Police and Fire Retirement System v. Revance Therapeutics Inc., et al.~~, Case No. 15-CV-287794 (previously assigned Case No. CIV 533635 prior to transfer from San Mateo Superior Court). On October 31, 2016, the parties executed a stipulation of settlement (the "Stipulation"), pursuant to which, in exchange for a release of all claims by the plaintiff class, the Company agreed to settle the litigation for $6.4 million in cash, of which $5.9 million was covered by its insurance policies. The Stipulation maintains that the defendants, including the Company, deny all wrongdoing and liability related to the litigation. On July 28, 2017, the Court granted final approval of the Settlement, as set forth in the Stipulation, and entered a Judgment dismissing the action with prejudice, thereby ending the litigation. This litigation didmilestone has not ~~have a material adverse effect on our business, results of operations, financial position or cash flows.~~

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. As a result of the Settlement, as set forth in the Stipulation, the Company began accruing for a loss contingency and recorded an undiscounted liability of $6.4 million in October 2016, which was included in accruals and other current liabilities on the Consolidated Balance Sheet until it was released upon the final approval of the Settlement on July 28, 2017. In January 2017, the Company paid $0.5 million, which was recorded in restricted cash on the Condensed Consolidated Balance Sheet until it was released, and its insurance company paid $5.9 million, which was recorded in prepaid and other current assets on the Condensed Consolidated Balance Sheet until it was released, both of which were held in an escrow account until final approval of the Settlement on July 28, 2017, when they were paid to the plaintiff.

been achieved.

Indemnification

~~The Company enters into~~We have standard indemnification agreements in the ordinary course of business. ~~Pursuant to~~Under these ~~arrangements, the Company indemnifies, holds~~indemnification agreements, we indemnify, hold harmless, and ~~agrees~~agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to ~~its~~our technology. The term of these indemnification agreements is generally perpetual after the execution of the ~~agreement.~~agreements. The maximum potential amount of future payments ~~the Company could be required~~we are obligated to ~~make~~pay under these indemnification agreements is not determinable because it involves claims that may be made against ~~the Company~~us in the future but have not ~~yet~~ been made. ~~The Company has~~We have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

~~The Company has entered into~~We have indemnification agreements with ~~its~~our directors and officers that may require ~~the Company~~us to indemnify them against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

NoFor the three months ended March 31, 2020, 0 amounts associated with ~~such indemnifications~~the indemnification agreements have been ~~recorded to date, except as noted above.~~recorded.

~~11. Stockholders' Equity~~

~~Convertible Preferred Stock~~

As of September 30, 2017 and December 31, 2016, the Company had 5,000,000 shares of convertible preferred stock with a par value of $0.001 per share authorized and no preferred stock issued and outstanding.

~~Warrants~~

As of September 30, 2017 and December 31, 2016, the Company had outstanding warrants to purchase 41,595 and 61,595 shares of common stock, respectively. In July 2017, a warrant to purchase 20,000 shares of common stock was net exercised by Essex Capital for 9,388 shares of common stock at an exercise price per share of $14.40 in accordance with the terms of the warrant agreement.

1519

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

~~Stock Option Plan~~

~~2014 Equity Incentive Plan and 2014 Inducement Plan~~

On January 1, 2017, the number of shares of common stock reserved for issuance under the Company’s 2014 Equity Incentive Plan, or 2014 EIP, automatically increased by 4% of the total number of shares of the Company’s common stock outstanding on December 31, 2016, or 1,145,958 shares. During the nine months ended September 30, 2017, the Company granted stock options for 868,625 shares of common stock and 310,575 restricted stock awards under the 2014 EIP. As of September 30, 2017, there were 911,380 shares available for issuance under the 2014 EIP.

During the nine months ended September 30, 2017, the Company granted stock options for 35,000 shares of common stock and 95,000 restricted stock awards granted under the 2014 Inducement Plan (the "2014 IN"). As of September 30, 2017, there were 288,867 shares available for issuance under the 2014 IN. The grant-date fair value of the employee stock options under the 2014 EIP and 2014 IN was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Expected term (in years) 6.0
6.0
6.0
6.0
Expected volatility 66.6 % 64.2 % 67.8 % 61.6 %
Risk-free interest rate 2.0 % 1.2 % 2.1 % 1.4 %
Expected dividend rate — % — % — % — %

~~Fair Value of Common Stock. The fair value of the shares of common stock is based on the Company's stock price as quoted by the NASDAQ.~~

~~Expected Term~~. The expected term for employees and non-employee directors is based on the simplified method, as the Company’s stock options have the following characteristics: (i) granted at-the-money; (ii) exercisability is conditioned upon service through the vesting date; (iii) termination of service prior to vesting results in forfeiture; (iv) limited exercise period following termination of service; and (v) options are non-transferable and non-hedgeable, or “plain vanilla” options, and the Company has a limited history of exercise data. The expected term for non-employee consultants is based on the remaining contractual term.

~~Expected Volatility~~. As of January 1, 2017, the expected volatility is based on the historical volatility of a group of similar entities combined with the historical volatility of the Company, whereas prior to 2017, the expected volatility was based solely on the historical volatility of a group of similar entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle, capital structure, and size.

~~Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury constant maturity rates with remaining terms similar to the expected term of the options.~~

~~Expected Dividend Rate. The Company has not and does not plan to pay dividends in the foreseeable future, and therefore used an expected dividend rate of zero percent in the valuation model.~~

~~Forfeitures.~~ As of January 1, 2017, the Company adopted the forfeiture rate methodology change in accordance with ASC 2016-09 to account for forfeitures as they occur (Note 2). Prior to the adoption of ASC 2016-09, the Company was required to estimate forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from those estimates. The Company used historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that were expected to vest. To the extent actual forfeitures differed from the estimates, the difference was recorded as a cumulative adjustment in the period that the estimates were revised.

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

In June 2017, an employee converted to a non-employee consultant and the individual's options and awards continued to vest in accordance with the 2014 EIP. There were no stock option grants made to non-employee consultants during 2017. The fair value of the stock options outstanding for non-employee consultants is calculated at each reporting date using the Black-Scholes option pricing model with the following weighted-average assumptions:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2017 2016 2017 2016
Expected term (in years) 8.9
7.2
8.9
7.5
Expected volatility 68.1 % 66.5 % 68.6 % 69.7 %
Risk-free interest rate 2.2 % 1.4 % 2.2 % 1.5 %
Expected dividend rate — % — % — % — %

~~2014 Employee Stock Purchase Plan~~

On January 1, 2017, the number of shares of common stock reserved for issuance under the Company’s 2014 Employee Stock Purchase Plan, or 2014 ESPP, automatically increased by 1% of the total number of shares of the Company’s common stock outstanding on December 31, 2016, or 286,489 shares. As of September 30, 2017, there were 931,181 shares available for issuance under the 2014 ESPP.

~~The fair value of the option component of the shares purchased under the 2014 ESPP was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Expected term (in years) 0.5
0.5
0.5
0.5
Expected volatility 46.6 % 80.9 % 59.1 % 72.0 %
Risk-free interest rate 1.1 % 0.4 % 0.9 % 0.4 %
Expected dividend rate — % — % — % — %

~~Fair Value of Common Stock. The fair value of the shares of common stock is based on the Company’s stock price.~~

~~Expected Term. The expected term is based on the term of the purchase period under the 2014 ESPP.~~

~~Expected Volatility~~. As of January 1, 2017 the expected volatility is based on the historical volatility of the Company's common stock. Prior to January 1, 2017, the expected volatility was based on volatility of a group of similar entities. In evaluating similarity, the Company considered factors such as industry, stage of life cycle, capital structure, and size.

~~Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury constant maturity rates with remaining terms similar to the expected term.~~

~~Expected Dividend Rate. The Company has never paid dividends and does not plan to pay dividends in the foreseeable future, and therefore used an expected dividend rate of zero percent in the valuation model.~~

~~Table of Contents~~

~~REVANCE THERAPEUTICS, INC.~~

~~Notes to Condensed Consolidated Financial Statements — (Continued)~~

~~(Unaudited)~~

~~Total Stock-Based Compensation~~

Total stock-based compensation expense related to options, restricted stock awards, and ESPP for employees, non-employee directors, and non-employee consultants was allocated as follows (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Research and development $ 1,534
$ 1,124
$ 4,341
$ 4,325
General and administrative 1,612
1,631
5,479
4,659
Total stock-based compensation expense $ 3,146
$ 2,755
$ 9,820
$ 8,984

~~12. Net Loss per Share Attributable to Common Stockholders~~

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2017 and 2016 (in thousands, except share and per share amounts):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss attributable to common stockholders, basic and diluted $ (30,651 ) $ (17,978 ) $ (84,680 ) $ (62,468 )
Net loss per share attributable to common stockholders, basic and diluted $ (1.01 ) $ (0.64 ) $ (2.86 ) $ (2.22 )
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted 30,270,260
28,160,458
29,623,805
28,085,541

~~The following common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented as their inclusion would have been antidilutive:~~

As of September 30,
2017 2016
Outstanding common stock options 3,381,927
2,843,580
Outstanding common stock warrants 41,595
61,595
Unvested restricted stock awards 640,931
327,899
Shares expected to be purchased on December 31 under the 2014 ESPP 14,778
11,643

~~13. Subsequent Event~~

In October 2017, the Company created a wholly owned subsidiary, Revance International Limited, which is incorporated in the Cayman Islands, and is transferring the economic rights to certain intellectual property for approximately $42 million to the newly formed subsidiary. The transaction had no financial statement impact to the Company other than to decrease the current net operating loss by the amount of the consideration.



~~ITEM 2.~~	~~MANAGEMENT’S~~ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements and the accompanying notes appearing elsewhere in this Quarterly Report on this Form 10-Q and in conjunction with our other ~~Securities and Exchange Commission, or~~ SEC filings, including our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, filed with the SEC on February ~~28, 2017.~~ 26, 2020. This Quarterly Report on Form 10-Q and the following discussion and analysis contains forward-looking statements within meaning of within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.The words ~~“believe,~~“may,” “will,” ~~“may,~~“could,” ~~"would," “estimate,~~“would,” “should,” “expect,” “intend,” “plan,” “anticipate,” ~~“intend,~~“believe,” ~~“should,” “plan,” “expect,~~“estimate,” “predict,” ~~“could,~~“project,” ~~“potentially,~~“potential,” “continue,” “ongoing” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. ~~The following discussion and analysis contains forward-looking statements within meaning of the Private Securities Litigation Reform Act of 1995.~~

These forward-looking statements include, but are not limited to, statements concerning the following:

our expectations regarding the results, timing, costs and completion of our clinical trials and regulatory submissions needed for the approval of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection, including but not limited to, for the treatment of glabellar (frown) lines, ~~muscle movement disorders including~~forehead lines, lateral canthal lines, upper facial lines (frown lines, forehead lines and lateral canthal lines combined), cervical dystonia, ~~and~~ plantar fasciitis, and adult upper limb spasticity in the ~~United States,~~U.S., Europe and other ~~countries;~~countries or for the approval of RHA® 1 in the U.S.;

the uncertain clinical development process, including the risk that clinical trials may not have an effective design or generate positive results, or that positive results would assure regulatory approval or commercial success of our product candidates;

our expectations regarding our future development of ~~RT002 injectable and RT001 topical~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar or any future product candidates for other ~~indications;~~indications, including but not limited to, migraine;

our ~~expectations regarding the development~~ability to effectively and reliably manufacture supplies of DaxibotulinumtoxinA for Injection, biosimilar or any future product ~~candidates;~~candidates and to develop, validate and maintain a commercially viable manufacturing process, as well as our ability to acquire supplies of RHA® dermal fillers from Teoxane;

our plans to research, develop and commercialize our product candidates, including the potential for commercialization by us of ~~RT002 injectable,~~DaxibotulinumtoxinA for Injection, if approved;

our expectations regarding the potential market size, opportunity and growth potential for ~~RT002 injectable and RT001 topical,~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar or any future product candidates, if approved for commercial use;

our belief that ~~RT002 injectable and RT001 topical~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar or any future product candidates can expand overall demand for botulinum toxin;

that we may not obtain the ~~overall botulinum toxin market;~~anticipated financial and other benefits of the Teoxane Agreement with Teoxane Teoxane, including our ability to realize anticipated synergies and successfully commercialize Teoxane’s RHA® dermal fillers;

the commercial acceptance and potential of Teoxane’s RHA® dermal fillers, including market size and anticipated adoption rates;

status of commercial collaborations, including collaboration agreement with Mylan’s continuation decision with respect to our collaboration agreement and the timing thereof;

our ability to build our own sales and marketing capabilities, or seek collaborative partners including distributors, to commercialize our product candidates, if approved;

our ability to successfully commercialize our product candidates and the timing of commercialization activities;

our ability to manufacture in our facility and to scale up our manufacturing capabilities and those of ~~our current and~~ future third-party manufacturers if our product candidates are approved;

unanticipated costs or delays in research, development and commercialization efforts;

estimates of our expenses, future revenue, and capital ~~requirements and our needs for additional financing;~~requirements;

the timing or likelihood of regulatory filings and approvals;

our ability to obtain and maintain regulatory approval of our product candidates;

our ability to advance product candidates into, and successfully complete, clinical trials;

the implementation of our business model, and strategic plans for our business, product candidates and technology;

our ability to achieve market acceptance of our product candidates;

the rate and degree of market acceptance of our product candidates;

the initiation, timing, progress and results of future preclinical studies and clinical trials and our research and development programs;

unanticipated costs or delays in research;

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

our ability to establish collaborations or obtain ~~additional funding;~~

funding for our ~~expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act;~~operations;

our financial ~~performance; and~~performance, including future revenue targets;

developments and projections relating to our competitors and our ~~industry.~~industry; and

the impact of the COVID-19 pandemic on our manufacturing operations, supply chain, business operations, commercialization efforts, end user demand for our products, clinical trials and other aspects of our business.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions ~~including those~~ described ~~in “Risk Factors” included in Part II, Item 1A and elsewhere~~ under the section titled “Risk factors”in this ~~report. Moreover, we~~Form 10-Q and the documents incorporated by reference herein. We also operate in a very competitive and rapidly changing ~~environment, and new~~environment. New risks emerge from time to ~~time. It~~time and it is ~~neither~~not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking ~~statements we may make.~~statements. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances ~~discussed~~described in this ~~report~~Form 10-Q and the documents incorporated by reference herein may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking ~~statements. We~~statements contained or incorporated by reference in this offering memorandum and the documents incorporated by reference herein.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, events, circumstances or achievements reflected in the forward-looking statements will ever be achieved or occur. These forward-looking statements represent our estimates and assumptions only as of the date of the document containing the applicable statement. Except as required by law, we undertake no obligation to ~~revise or~~update publicly ~~release the results of~~ any ~~revision to these~~ forward-looking statements ~~except as required by law. Given~~for any reason to conform these ~~risks and uncertainties, readers are cautioned not~~statements to ~~place undue reliance on such forward-looking statements.~~actual results or to changes in our expectations.

1921

You should read this in this Form 10-Q, together with the information incorporated herein by reference, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Overview

Revance Therapeutics, ~~Inc.~~Inc is a ~~clinical-stage~~ biotechnologycompany, ~~focused on the development, manufacturing, and commercialization of novel botulinum toxin products~~developing new innovations in neuromodulators for ~~multiple~~ aesthetic and therapeutic indications. We are leveraging our proprietary portfolio of botulinum toxin type A compounds, formulated with our patented and proprietary peptide technology, to address unmet needs in large and growing neurotoxin markets. Our ~~proprietary peptide technology enables delivery of botulinum toxin type A through two investigational drug~~lead product ~~candidates,~~candidate, DaxibotulinumtoxinA for Injection, ~~(RT002),~~combines a proprietary stabilizing peptide excipient with a highly purified botulinum toxin that does not contain human or ~~RT002 injectable, and DaxibotulinumtoxinA Topical Gel (RT001), or RT001 topical.~~animal-based components. We ~~are pursuing clinical development~~have successfully completed a Phase 3 program for RT002 injectable in a broad spectrum of aesthetic and therapeutic indications and are planning to conduct additional preclinical development for RT001 topical. Neither formulation of our product candidates contains albumin or any other animal or human-derived materials. We believe this reduces the risk of the transmission of certain viral diseases. We hold worldwide rights to RT002 injectable and RT001 topical, and the pharmaceutical uses of our proprietary peptide technology.

DaxibotulinumtoxinA for Injection ~~(RT002 or RT002 Injectable)~~

RT002 injectable is a novel, injectable formulation of botulinum toxin type A designed to be a targeted and long-lasting injectable botulinum toxin treatment. We believe RT002 injectable may provide targeted delivery of botulinum toxin to intended treatment sites. We believe, and our preclinical and clinical studies indicate, that this targeted delivery, enabled by our proprietary peptide technology, may permit safe administration of higher doses of botulinum toxin and may result in ~~high response rates and long duration of effect. We are studying RT002 injectable for aesthetic indications, such as~~ glabellar (frown) ~~lines and therapeutic indications, such as cervical dystonia and plantar fasciitis. We believe RT002 injectable has~~lines. In November 2019, we submitted the ~~potential to expand into additional aesthetic and therapeutic indications in the future.~~

~~Glabellar Lines~~

Glabellar or frown lines are the result of the gathering of the tissue between the eyebrows into a fold. They are caused by the repeated action of underlying muscles associated with facial expression. Years of squinting and frowning tend to leave deep wrinkles in the skin between the eyebrows and on the bridge of the nose, across the forehead and at the corners of the eyes. On many people, frown lines produce an angry or sad look that detracts from a pleasant facial appearance. Physical, emotional and social reasons for treating frown lines and forehead furrows include improved appearance and enhanced self-esteem.

We are in Phase 3 clinical development for RT002 injectable in North America for the treatment of glabellar lines. During the fourth quarter of 2016, we initiated subject dosing in our SAKURA Phase 3 program. In the first quarter of 2017, we completed patient enrollment in the two pivotal trials (SAKURA 1 and SAKURA 2). We expect to report topline results from those trials in the fourth quarter of 2017. In additionBLA to the ~~two planned pivotal trials, the Phase 3 program includes the SAKURA open-label safety trial (SAKURA 3), which is designed to evaluate the long-term safety of RT002 injectable~~U.S. FDA for DaxibotulinumtoxinA for Injection in the treatment of moderate to severe glabellar ~~lines in adults following both single~~(frown) lines. The FDA accepted the BLA on February 5, 2020, and ~~repeat treatment administration. In October 2017, we completed enrollment of more than 2,100 subjects at multiple sites in~~ the ~~United States and Canada for SAKURA 3. Depending~~PDUFA target action date is November 25, 2020. If the BLA is approved on or by the number of treatments and duration of follow-up, a subject may be on trial for a maximum of 86 weeks. We have designed SAKURA 3 to support a safety database adequate for both domestic and international marketing applications. Assuming successful completion of our SAKURA Phase 3 program in the second half of 2018,target action date, we plan to file marketing applications first in the United States followed by the European Union, Canada, and certain Latin American and Asian countries. If approved, we believe RT002 injectable has the potential to address significant unmet needs in these markets.

~~In October 2015, we reported results from BELMONT, a Phase 2 active comparator, placebo-controlled clinical trial~~initiate commercialization activities for DaxibotulinumtoxinA for Injection for the treatment of glabellar lines ~~against~~before the end of 2020. We are also evaluating DaxibotulinumtoxinA for Injection in upper facial lines - glabellar lines, forehead lines and crow’s feet combined -- as well as in three therapeutic indications -- cervical dystonia, adult upper limb spasticity and plantar fasciitis. Beyond DaxibotulinumtoxinA for Injection, we have begun development of a biosimilar to BOTOX®, which would compete in the existing short-acting neuromodulator marketplace. In January 2020, we entered into the Teoxane Agreement with Teoxane, pursuant to which Teoxane granted us with the exclusive right to import, market, ~~leader BOTOX® Cosmetic.~~ promote, sell and distribute Teoxane’s line of RHA® dermal fillers. We are dedicated to making a difference by transforming patient experiences.

Impact of the COVID-19 Pandemic on Our Operations

On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic and recommended containment and mitigation measures worldwide. On March 13, 2020, the U.S. declared a national emergency with respect to the coronavirus pandemic. This pandemic has severely affected global economic activity, and many countries and many states in the U.S. have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel.

The ~~24-week results~~health and safety of the Revance team, their families and our communities remains our top priority. As a response to COVID-19 pandemic, we curtailed employee travel and implemented a corporate work from home policy in March 2020. We continue to monitor the situation and will gradually resume normal operations once it is prudent to do so, and in compliance with all Federal, State, and local laws. In the meantime, we have adopted remote working tools to minimize the disruption to the achievement of our goals and objectives.

The COVID-19 pandemic may negatively affect our supply chain, end user demand for our products, our ability to obtain approval of product candidates from the ~~trial showed that RT002 injectable achieved its primary efficacy measurement~~FDA or other regulatory authorities and our commercialization activities. For instance, the product supply of RHA® dermal fillers was delayed by distribution partner, Teoxane SA, as they temporarily suspended production in Geneva, Switzerland as a precaution surrounding the COVID-19 pandemic. Teoxane resumed manufacturing operations at ~~four weeks~~the end of April 2020 and has projected to deliver the RHA® dermal fillers to us in June 2020.

As a result, our anticipated product launch of the RHA® 2, 3 and 4 dermal fillers has been delayed by at least one quarter and the hiring time frame for ~~all doses of RT002 injectable and that such efficacy was highly statistically significant as compared~~building our sales force has been adjusted to ~~placebo.~~coincide with product availability. In addition, port closures and other restrictions resulting from the ~~40 Unit dose~~COVID-19 pandemic may disrupt our supply chain or limit our ability to obtain sufficient materials for our drug products.

Our clinical trials may also be affected by the COVID-19 pandemic. Site initiation and patient enrollment may be delayed due to prioritization of ~~RT002 injectable demonstrated~~hospital resources toward the COVID-19 pandemic. Currently, enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial is paused due to challenges in subject assessments during time of required social distancing. COVID-19 pandemic may delay enrollment in our global clinical trials, and some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

The ultimate impact of the COVID-19 pandemic is highly uncertain and we do not yet know the full extent of potential delays or impacts on our business, our clinical trials, our supply chains, end user demand for our products,

healthcare systems or the global economy as a ~~23.6-week median duration versus BOTOX Cosmetic~~whole. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations.

Neuromodulator Pipeline

To ensure proper clinical trial coordination and completion, in line with ~~an 18.8-week median duration. Across all cohorts, RT002 injectable~~the FDA-issued guidance of March 18, 2020 on the Conduct of Clinical Trials of Medical Products during the COVID-19 Pandemic, we are evaluating and implementing risk-based approaches for remote clinical trial monitoring and activities, including remote patient assessment, for those subjects who cannot physically visit clinic sites, to ensure the full completion of trials.

DaxibotulinumtoxinA for Injection - Aesthetics

Glabellar lines. In December 2018, we announced top-line results for the SAKURA 3 open-label, long-term safety study. DaxibotulinumtoxinA for Injection appeared to be generally ~~safe~~well-tolerated with no new tolerability or safety concerns reported. We submitted the BLA in November 2019. The FDA accepted the BLA on February 5, 2020, and ~~well-tolerated.~~the PDUFA target action date is November 25, 2020. If the BLA is approved on or by the target action date, we plan to initiate commercialization activities for DaxibotulinumtoxinA for Injection for the treatment of glabellar lines before the end of 2020.

The FDA has not informed us of any changes to its PDUFA date and we continue to assist the FDA with its review. As we have a U.S. based manufacturing facility and manufacture our drug substance and drug product in Newark, California, we do not anticipate any supply chain issues related to the production of DaxibotulinumtoxinA for Injection and expect to have drug product on time for commercial launch, subject to product approval.

Forehead lines. In January 2019, we initiated a Phase 2 multicenter, open-label, dose-escalation study to evaluate treatment of moderate or severe dynamic forehead lines in conjunction with treatment of the glabellar complex. The objective is to understand the potential dosing and injection patterns of DaxibotulinumtoxinA for Injection in other areas of the upper face in addition to the lead indication in glabellar lines. We completed enrollment for the study in July 2019 and had all subjects dosed and past the primary endpoint at the time the COVID-19 situation escalated in the U.S. We expect to release top-line results in second quarter of 2020.

Lateral canthal lines. In March 2019, we initiated a Phase 2 multicenter, open-label, dose-escalation study to evaluate the treatment of moderate or severe lateral canthal lines. The objective is to understand the potential dosing of DaxibotulinumtoxinA for Injection in the lateral canthal area. We completed enrollment for the study in August 2019 and had all subjects dosed and past the primary endpoint at the time the COVID-19 situation escalated in the U.S. We expect to release top-line results in second quarter of 2020.

Upper Facial Lines. In December 2019, we initiated a new multicenter, open-label Phase 2 trial for treatment of the upper facial lines -- glabellar (frown), lateral canthal (crow’s feet), and forehead lines combined -- to understand the safety and efficacy, including potential dosing and injection patterns, of DaxibotulinumtoxinA for Injection, covering the upper facial lines. This trial is in addition to the existing open-label Phase 2 clinical trials that the company has already fully enrolled in forehead lines and crow’s feet. We completed enrollment this quarter with all subjects dosed. As a result of the COVID-19 pandemic, the timing of the top-line results release, originally expected in fourth quarter, is subject to change.

DaxibotulinumtoxinA for Injection - Therapeutics

Cervical ~~Dystonia~~

~~We have also been developing RT002~~dystonia (ASPEN). In June 2018, we announced the initiation of patient dosing in our ASPEN Phase 3 clinical program based on the Phase 2 safety and efficacy results and guidance from the FDA and European Medicines Agency (“EMA”). The ASPEN Phase 3 clinical program consists of two trials to evaluate the safety and efficacy of DaxibotulinumtoxinA for Injection for the treatment of cervical dystonia in adults including a ~~muscle movement disorder. Muscle movement disorders, such as cervical dystonia, are neurological conditions that affect a person's ability~~randomized, double-blind, placebo-controlled, parallel group trial (ASPEN-1), and an open-label, long-term safety trial (ASPEN-OLS). We completed the ASPEN-1 enrollment in October 2019 with all subjects dosed and past the primary endpoint visit, and expect to ~~control muscle activity~~release topline results in ~~one or more areas~~the second half of 2020. The target number for enrollment for ASPEN-OLS has been met and the ~~body.~~trial is ongoing.

Adult upper limb spasticity (JUNIPER). In ~~2015,~~December 2018, we initiated a Phase 2 ~~dose-escalating, open-label clinical study of RT002 injectable~~trial for the treatment of ~~cervical dystonia. The Phase 2 study evaluated~~adult upper limb spasticity (JUNIPER). This is a randomized, double-blind, placebo-controlled, parallel group, dose-ranging trial to evaluate the ~~safety, preliminary~~ efficacy and ~~duration~~safety of ~~effect of RT002 injectable in subjects with moderate to severe isolated cervical dystonia. The trial enrolled 37 subjects and followed three sequential treatment cohorts~~DaxibotulinumtoxinA for up to a total of 24 weeks after treatment for each cohort. The trial’s first cohort of 12 subjects received a single dose of up to 200 units of RT002 injectable, the second cohort of 12 subjects received between 200 and 300 units, and the third cohort of 13 subjects received from 300 to 450 units.

In May 2017, we announced positive 24 week topline results in all three cohorts from the Phase 2 trial. The topline data demonstrated a median duration of at least 24 weeks for each of all three cohorts. Duration of effect was defined as the number of weeks from treatment until the return of signs and symptoms that warrant retreatment, based on subjects reaching their target Toronto Western Spasmodic Torticollis Rating Scale (TWSTRS) score. The topline data also displayed clinically significant impact on cervical dystonia signs and symptoms. At Week 4, RT002 injectable showed a clinically significant mean reduction of 38% from baseline across all three cohorts. This reduction continued to increase to 50% at Week 6 for all subjects, was 42% at Week 12 and was maintained at or above 30% through Week 24. The topline data also showed that RT002 injectable appeared to be generally safe and well-tolerated through Week 24 in all three cohorts. There were no serious adverse events and no dose-dependent increase in adverse events. The treatment-related adverse events were generally transient and mild to moderate in severity, with one case of neck pain reported as severe. The most common adverse events were dysphagia, or difficulty in swallowing (14%), of which all cases were mild in severity, injection site redness (8%), injection site bruising (5%), injection site pain (5%), muscle tightness (5%) and muscle weakness (5%).

~~In the fourth quarter of 2017, the company plans to meet with regulatory authorities to determine next steps for the cervical dystonia program.~~

~~Plantar Fasciitis~~

~~We are also developing RT002~~Injection for the treatment of ~~plantar fasciitis.~~upper limb spasticity in adults after stroke or traumatic brain injury. Enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial is paused due to challenges in subject assessments during time of required social distancing. We will provide a new date for expected full enrollment after the trial is reopened and an enrollment trajectory is established.

Plantar fasciitis is a painful affliction caused by inflammation of the ligament running along the bottom of the foot and is the most common cause of heel pain for patients who visit podiatrists and orthopedic foot and ankle surgeons. In 2016, we. We initiated aour current Phase 2 trial in December 2018. The Phase 2 prospective, randomized, ~~double-blinded,~~double-blind, multi-center, placebo-controlled ~~trial of RT002 injectable in the therapeutic indication of plantar fasciitis. This~~ study ~~is evaluating~~was designed to evaluate the safety and efficacy of ~~a single~~two doses of administration of ~~RT002 injectable~~our investigational drug candidate DaxibotulinumtoxinA for Injection in reducing the signs and symptoms of plantar fasciitis. ~~In April 2017, we expanded our plantar fasciitis~~We completed Phase 2 ~~program from a single-site study~~trial enrollment in December 2019 with all subjects dosed and past the primary endpoint. We expect to ~~a multi-center study with protocol updates. The primary efficacy endpoint is the reduction~~release top-line results in the ~~visual analog scale (VAS)~~second half of 2020.

Migraine. As part of our 2020 planning process, we decided to adjust the initiation of migraine clinical trials this year and will re-evaluate the timing next year as part of our 2021 planning cycle.

Teoxane’s Resilient Hyaluronic Acid®(RHA®) Technology and Launch

In January 2020, we entered into the Teoxane Agreement with Teoxane, pursuant to which Teoxane granted us with the exclusive right to import, market, promote, sell and distribute Teoxane’s line of RHA dermal fillers in exchange for ~~pain~~2,500,000 shares of our common stock and certain other commitments by us. The Teoxane Agreement includes rights to i) RHA® 2, RHA® 3 and RHA® 4 which have been approved by the FDA for the correction of moderate to severe dynamic facial wrinkles and folds, including RHA® 2, RHA® 3 and RHA® 4 in the ~~foot at eight weeks and subjects will be followed for 16 weeks following treatment. In October 2017, we completed patient enrollment and topline week eight results from this study are expected~~currently approved indications, ii) RHA® 1, which is currently in ~~2017.~~

~~DaxibotulinumtoxinA Topical Gel (RT001 or RT001 Topical)~~

RT001 is a topical gel formulation of botulinum toxin type A. The botulinum toxin in RT001 topical blocks neuromuscular transmission by binding to receptor sites on motor or sympathetic nerve terminals, entering the nerve terminals and inhibiting the release of specific neurotransmitters. RT001 topical is designed to provide treatment with no needles, no downtime, no bruising and no pain.

~~We previously completed RT001 topical~~ clinical trials for the treatment of ~~lateral canthal lines (crow’s feet)~~perioral rhytids and ~~primary axillary hyperhidrosis, but discontinued further clinical development~~is anticipated to be approved by the FDA in ~~2016 following~~2021, and iii) future hyaluronic acid filler advancements and products by Teoxane (collectively the ~~results~~“RHA® dermal fillers”) in the U.S. and U.S. territories and possessions. The Teoxane Agreement will be effective for a term of ten years upon the mutual agreement of the parties. We are required to meet certain minimum purchase obligations during each year of the term. We are also required to meet certain minimum expenditure requirements in connection with commercialization efforts. Either party may terminate the Teoxane Agreement in the event of the insolvency of, or a material breach by, the other party, including certain specified breaches that include the right for Teoxane to terminate the Teoxane Agreement for our failure to meet the minimum purchase requirements or commercialization expenditure during specified periods, or for our breach of the exclusivity obligations under the Teoxane Agreement.

As of mid-March, product supply of RHA® dermal fillers was delayed due to Teoxane’s temporarily suspended production in Geneva, Switzerland as a precaution surrounding the COVID-19 pandemic. Teoxane resumed manufacturing operations at end of April 2020 and has projected to deliver to deliver the RHA® dermal fillers to us in June 2020. We have adjusted our plan accordingly to build out a U.S. commercial organization and to introduce the FDA-approved RHA® dermal fillers in the U.S. in the third quarter of 2020. Our plan to launch RHA® dermal fillers in the U.S. is subject to change based on Teoxane’s ability to resume production with regard to COVID-19 pandemic containment and recovery in France and Switzerland. The term of the Teoxane agreement does not begin until launch.

Mylan and OnabotulinumtoxinA Biosimilar

In August 2019, the Mylan Collaboration was amended to, among other things, revise the period of time for the Continuation Decision to be on or before the later of (i) April 30, 2020 or (ii) 30 calendar days from the date that we provide Mylan with certain deliverables. On May 1, 2020, we announced that we are continuing discussion with Mylan regarding whether or not Mylan plans to move forward with the biosimilar program. We expect a decision by the end of May 2020. We will issue an update on the path forward for the program once Mylan’s decision has been reached.

Convertible Senior Notes

mature on February 15, 2027, unless earlier converted, redeemed or repurchased. The 2027 Notes are convertible into cash, shares of our ~~REALISE 1 Phase 3 clinical trial.~~common stock, or a combination of cash and shares of our common stock, at our election. In connection with issuing the 2027 Notes, we received $278.3 million in net proceeds, after deducting the initial purchasers’ discount, commissions, and other issuance costs. We ~~plan~~may not redeem the 2027 Notes prior to ~~study RT001 topical in~~February 20, 2024, and no sinking fund is provided for the 2027 Notes. Refer to Part I, Item 1. “Condensed Consolidated Financial Statements (Unaudited)—Notes to Condensed Consolidated Financial Statements (Unaudited) —Note 7—Convertible Senior Notes” for details of the convertible senior notes.

Follow-On Public Offering

In December 2019, we completed a ~~preclinical setting~~follow-on public offering, pursuant to which we issued 6,500,000 shares of common stock at $17.00 per share for ~~therapeutic~~net proceeds of $103.6 million, after underwriting discounts, commissions and ~~aesthetic applications where topical administration~~other offering expenses. In January 2020, the underwriters exercised their over-allotment option to purchase 975,000 additional shares of ~~botulinum toxin provides a meaningful advantage over injection. In accordance with international guidelines~~common stock at $17.00 per share for net proceeds of $15.6 million, after underwriting discounts, commissions and in consultation with the FDA, we previously conducted a nonclinical development program for RT001 topical. The program included preclinical efficacy, safety bioavailability and single and repeat dose toxicity studies of RT001 topical, including chronic studies of up to nine months' duration. Genotoxicity, local tolerance and formulation bridging studies were also conducted, along with reproductive toxicity testing. Together, these studies supported prior and possible future clinical development of RT001 topical.

Based on the results of additional preclinical studies, we will determine further development of indications for RT001 topical, such as hyperhidrosis, neuropsychiatric disorders, and chronic inflammatory diseases.other offering expenses.

Results of Operations

Revenue

~~The following table presents~~For the three months ended March 31, 2020, our ~~revenue for the periods indicated and related changes from the prior period.~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 Change 2017 2016 Change
(In thousands, except percentages)
Relastin Royalty $ 75
$ 75
—% $ 225
$ 225
—%

~~Our~~ total revenue ~~for the three and nine months ended September 30, 2017 remained unchanged,~~decreased $0.2 million or 79%, compared to the same ~~period~~periods in ~~2016,~~2019, due to ~~minimum royalty payment obligations pursuant to the Valeant Pharmaceuticals International, Inc. (Valeant) Relastin royalty agreement equal to at least $0.3 million per year.~~

~~On April 23, 2015, we received notice from Valeant terminating the royalty agreement effective as of July 23, 2015. As of September 30, 2017, reversion~~relative effort and timing of the ~~Relastin intellectual property rights had not been completed and we are entitled to~~initial development activities from the ~~minimum royalty payment until such rights are reverted back to us.~~Mylan Collaboration.

Operating Expenses

~~Research and Development Expenses~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 Change 2017 2016 Change
(In thousands, except percentages)
Research and development (inclusive of stock-based compensation noted below) $ 21,643
$ 10,296
110% $ 59,357
$ 37,851
57%
Stock-based compensation $ 1,534
$ 1,124
36% $ 4,341
$ 4,325
—%

~~Research~~Our operating expenses consist of research and development expenses ~~for the three~~ and ~~nine months ended September 30, 2017 increased by 110%~~selling, general and ~~57%, respectively, compared to the same period in 2016, primarily due to increased clinical activity for RT002 injectable,~~administrative expenses. The largest component of our operating expenses is our personnel costs including ~~the SAKURA Phase 3 program, the Phase 2 plantar fasciitis trial, and the Phase 2 cervical dystonia trial, along with increased pre-commercial manufacturing activities and personnel.~~stock-based compensation. We expect our ~~research and development expenditures to continue~~operating expenses to increase in the near term as we prepare to commercialize the Teoxane RHA® dermal fillers in the U.S. and, if the BLA is approved on or before the PDUFA target action date, DaxibotulinumtoxinA for Injection for treatment of glabellar lines, initiate and complete additional clinical trials and associated programs related to DaxibotulinumtoxinA for Injection for the treatment cervical of dystonia, plantar fasciitis, adult upper limb spasticity, and any future new indications, and our biosimilar product candidate.

Research and Development Expenses

We recognize research and development expenses as they are incurred. Since our inception, we have focused on our clinical development programs and the related research and development. Since 2002, we have been developing one or more of DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, and our biosimilar product candidate and have typically shared our employees, consultants and infrastructure resources across all programs. We believe that the strict allocation of costs by product candidate would not be meaningful, therefore, we generally do not track these costs by product candidates.

Research and development expenses consist primarily of:

salaries and related expenses for personnel in research and development functions, including stock-based compensation;

expenses related to the initiation and completion of clinical trials and studies for DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical and our biosimilar candidate, including expenses related to production of clinical supplies;

fees paid to clinical consultants, contract research organizations (“CROs”) and other vendors, including all related fees for investigator grants, patient screening fees, laboratory work and statistical compilation and analysis;

other consulting fees paid to third parties;

expenses related to establishment and maintenance of our own manufacturing facilities;

expenses related to the manufacture of drug substance and drug product supplies for ongoing and future preclinical and clinical trials and other ~~associated programs relating~~pre-commercial supplies;

expenses to ~~RT002 injectable~~support our product development and establish manufacturing capabilities to support potential future commercialization of any products for which we may obtain regulatory approval;

expenses related to license fees and milestone payments under in-licensing agreements;

expenses related to compliance with drug development regulatory requirements in the U.S., the European Union and other foreign jurisdictions;

depreciation and other allocated expenses; and

charges from asset acquisition related to in-process research and development.

Our research and development expenses are subject to numerous uncertainties primarily related to the timing and cost needed to complete our respective projects. Further, the development timelines, probability of success and development expenses can differ materially from expectations, and the completion of clinical trials may take several years or more depending on the type, complexity, novelty and intended use of a product candidate. Accordingly, the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development. We expect to maintain our research and development efforts as we continue our clinical development of DaxibotulinumtoxinA for Injection for the treatment of ~~glabellar lines,~~facial wrinkles and other neuroscience indications, such as cervical dystonia, plantar fasciitis, adult upper limb spasticity, and ~~other indications.~~migraine, any future new indications, and our biosimilar product candidate or if the FDA requires us to conduct additional clinical trials for approval.

Our research and development expenses fluctuate as projects transition from one development phase to the next. Depending on the stage of completion and level of effort related to each development phase undertaken, we may reflect variations in our research and development ~~expense.~~expenses. We expense both internal and external research and development expenses as they are incurred.

~~Stock-based compensation for~~Our research and development ~~increased for the periods presented primarily due to granting awards to new and existing employees and higher stock valuations in 2017, offset by stock award cancellations.~~

~~General and Administrative Expenses~~expenses are summarized as follows:


	Three Months Ended					Nine Months Ended					Three Months Ended March 31,
	September 30,					September 30,
	2017		2016		Change	2017		2016		Change
	(In thousands, except percentages)
General and administrative expenses (inclusive of stock-based compensation noted below)	$	9,148	$	7,502	22%	$	25,511	$	21,975	16%
(in thousands, except percentages)											2020		2019		Change
Clinical and regulatory											$	14,688	$	12,367	19	%
In-process research and development											11,184		—		N/M
Manufacturing and quality											9,387		7,362		28	%
Other research and development expenses											2,093		2,187		(4	)%
Stock-based compensation	$	1,612	$	1,631	(1)%	$	5,479	$	4,659	18%	2,442		2,079		17	%
Total research and development expenses											$	39,794	$	23,995	66	%

~~General~~N/M - Not meaningful

Clinical and ~~administrative~~regulatory

Clinical and regulatory expenses include personnel costs, external clinical trial costs for clinical sites, clinical research organizations, central laboratories, data management, contractors and regulatory activities associated with the development of DaxibotulinumtoxinA for Injection. For the three months ended March 31, 2020 and 2019, clinical and regulatory costs totaled $14.7 million, or 37%, and $12.4 million, or 52%, respectively, of the total research and development expenses for the respective periods.

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020, clinical and regulatory expenses increased by ~~22% and 16%~~$2.3 million, or 19%, ~~respectively,~~ compared to the same period in ~~2016,~~2019. This increase is primarily due to increased expenses related to hiring additional personnel and outside services to support new and continuing clinical trials. We expect to maintain our clinical and regulatory expenses in the near term as we initiate and complete clinical trials and other associated programs related to DaxibotulinumtoxinA for Injection for

the treatment forehead lines, lateral canthal lines, cervical dystonia, plantar fasciitis, and adult upper limb spasticity. We expect a temporary decrease in clinical costs in the near future as a result of pausing JUNIPER and other related activities due to our response to the COVID-19 pandemic.

In-process research and development

In connection with the Teoxane Agreement, $11.2 million of the aggregate purchase consideration is recognized as in-process research and development that are related to certain products and indications not approved by the FDA.

Manufacturing and quality

Manufacturing and quality expenses include personnel and occupancy expenses, external contract manufacturing costs and pre-approval manufacturing of drug product used in our research and development of DaxibotulinumtoxinA for Injection. Manufacturing and quality expenses also include raw materials, lab supplies, and storage and shipment of our product to support quality control and assurance activities. These expenses do not include clinical expenses associated with the development of DaxibotulinumtoxinA for Injection. For the three months ended March 31, 2020 and 2019, manufacturing and quality expenses were $9.4 million, or 24%, and $7.4 million, or 31%, respectively, of the total research and development expenses for the respective periods.

For the three months ended March 31, 2020, manufacturing and quality expenses increased by $2.0 million, or 28%, compared to the same period in 2019, primarily due to increased expenses related to manufacturing and quality activities, and hiring additional personnel. We expect to increase our manufacturing and quality efforts as we approach commercialization for the potential launch of DaxibotulinumtoxinA for Injection despite certain disruptions related to the COVID-19 pandemic.Certain amounts of the manufacturing and quality expenses, among other costs, are expected to be treated as inventory costs after the potential approval of DaxibotulinumtoxinA for Injection is obtained.

Other research and development expenses

Other research and development expenses include expenses for personnel, contract research organizations, consultants, raw materials, and lab supplies used to conduct preclinical research and development of DaxibotulinumtoxinA for Injection and our biosimilar product candidate. For the three months ended March 31, 2020 and 2019, other research and development expenses were $2.1 million, or 5%, and $2.2 million, or 9%, respectively, of the total research and development expenses for the respective periods.

For the three months ended March 31, 2020, other research and development expenses decreased by $0.1 million, or 4%, compared to the same period in 2019, primarily due to decreased expenses related to the initial development activities from the Mylan Collaboration, which was completed in February 2019. The level of effort related to the biosimilar development program in 2020 may depend on Mylan’s Continuation Decision.

In August 2019, the Mylan Collaboration was amended to, among other things, revise the period of time for the Continuation Decision to be on or before the later of (i) April 30, 2020 or (ii) 30 calendar days from the date that we provide Mylan with certain deliverables. On May 1, 2020, we announced that we are continuing discussions with Mylan regarding whether or not Mylan plans to move forward with the biosimilar program.

Stock-based compensation

For the three months ended March 31, 2020, stock-based compensation included in research and development expenses increased by $0.4 million, or 17%, compared to the same periods in 2019, primarily due to increased employee headcount.

Selling, general and Administrative Expenses

Selling, general and administrative expenses consist primarily the following:

We expect that our selling, general and administrative expenses will increase with the launch of the RHA® dermal fillers and, if approved, the commercialization of DaxibotulinumtoxinA for Injection.

Our selling, general and administration expenses are summarized as follows:



	Three Months Ended March 31,
(in thousands, except percentages)	2020		2019		Change
Selling, general and administrative expenses before stock-based compensation	$	17,122	$	10,830	58	%
Stock-based compensation	4,102		2,080		97	%
Total selling, general and administrative expenses	$	21,224	$	12,910	64	%

Selling, general and administrative expenses before stock-based compensation

For the three months ended March 31, 2020, selling, general and administrative expenses increased by $6.3 million, or 58%, compared to the same period in 2019, primarily due to ramp up in pre-commercial activities, increased personnel in commercial and administrative functions, and costs related to ~~pre-commercial~~professional services in preparation for the launch of Teoxane’s RHA® dermal fillers and, ~~information technology expenses.~~ if approved, DaxibotulinumtoxinA for Injection.

We expect ~~our~~selling, general and administrative expenses to ~~continue~~ramp-up for the planned commercial activities in the near future. With the revised launch plan for the RHA® dermal fillers mentioned above, the planned activities and related costs are shifted by approximately one quarter from the second quarter to ~~increase~~the third quarter of 2020, but the expenses are not expected to decrease as a result of the ~~Company approaches commercialization.~~delay.

Stock-based compensation for general and administration decreased for the periods presented primarily due to a decrease in employee headcount, offset by grants to new and existing employees and higher stock valuations in 2017.

~~Loss on Impairment~~

We constructed a large capacity Fill/Finish Line dedicated to the manufacture of RT001 topical and to support our regulatory license applications. We discontinued clinical development of RT001 topical for the treatment of crow’s feet and axillary hyperhidrosis in June 2016, following results from our REALISE 1 Phase 3 clinical trial. Under generally accepted accounting principles in the United States, long-lived assets, such as our RT001 topical Fill/Finish Line, are required to be reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. If business conditions or other factors indicate that the carrying value of the asset may not be recoverable, we may be required to record additional non-cash impairment charges. Additionally, if the carrying value of our capital equipment exceeds current fair value as determined based on the discounted future cash flows of the related product, the capital equipment would be considered impaired and would be reduced to fair value by a non-cash charge to earnings, which could negatively affect our operating results. DuringFor the three months ended ~~June 30, 2016, we recorded a loss on impairment of $1.9~~March 31, 2020, stock-based compensation included in selling, general and administrative expenses increased by $2.0 million, ~~related~~or 97%, compared to ~~certain components of~~ the ~~RT001 topical Fill/Finish Line. There was no loss on impairment recorded~~same period in 2019, primarily due to increased employee headcount, and the stock-based compensation expense for the ~~three and nine months ended September 30, 2017. Nonetheless, it is reasonably possible that our estimate~~performance stock awards which were granted starting in the fourth quarter of ~~the recoverability of the equipment's carrying value could change.~~

~~Total Operating Expenses~~

Total operating expenses for the three and nine months ended September 30, 2017 and 2016, were $30.8 million and $84.9 million and $17.8 million and $61.8 million, respectively. Total operating expenses include non-cash stock-based compensation and depreciation expenses. Stock-based compensation was $3.1 million and $9.8 million for the three and nine months ended September 30, 2017, respectively, and $2.8 million and $9.0 million for the same periods in 2016, respectively. Depreciation expense was $0.4 million and $1.1 million for the three and nine months ended September 30, 2017, respectively, and $0.4 million and $1.1 million for the same periods in 2016, respectively.2019.

Net Non-Operating ~~Expenses~~Income and Expense

Interest income primarily consists ~~primarily~~ of interest income earned on our deposit, money market fund, and investment balances. We expect interest income to vary each reporting period depending on our average deposit, money market fund, and investment balances during the period and market interest rates. ~~Interest income for the three and nine months ended September 30, 2017 is materially consistent with the same periods last year.~~

Interest expense includes cash and non-cash ~~components with~~components. The cash component of the ~~non-cash components consisting of effective interest recognized on the financing obligations and interest capitalized for assets constructed for use in operations.~~

~~The~~ interest expense ~~by cash and~~represents the contractual interest charges for our convertible senior notes. The non-cash ~~components is as follows:~~

Cash related interest expense⁽¹⁾

Non-cash capitalized interest expense ⁽²⁾

~~Interest~~ expense represents the amortization of the debt discount issuance costs for our convertible senior notes issued in February 2020. For the three ~~and nine~~ months ended ~~September 30, 2017 decreased by 59% and 49%, compared to~~March 31, 2020, interest expense of $2.1 million was from the ~~same periods~~2027 Notes issued in ~~2016, primarily due to the decreasing interest on the equipment leases with Essex Capital as the leases approach maturity.~~February 2020.

Change in Fair Value of Derivative Liability ~~Associated with Medicis Settlement~~

The ~~Product Approval Payment associated with Medicis settlement is classified as a~~derivative liability on our ~~Condensed Consolidated Balance Sheet. This liability~~condensed consolidated balance sheets is remeasured to fair value at each balance sheet date with the corresponding gain or loss ~~from the adjustment recorded in the Condensed Consolidated Statement of Operations and Comprehensive Loss.~~recorded. We will continue to record adjustments to the fair value of ~~the Medicis settlement~~ derivative liability until we make the ~~Product Approval Payment has been paid. The loss recorded during the nine months ended September 30, 2017 reflects an increase to the valuation~~payment.

Other expense, net primarily consists of ~~the derivative liability based on assumptions related to the development of RT002 injectable for glabellar lines.~~miscellaneous tax and other expense items.

~~Total Net Non-Operating Expenses~~

~~The total~~Our net non-operating ~~expenses is~~income and expense are summarized as follows:

N/M - Not meaningful

Our total net non-operating expense for the three and nine months ended September 30, 2017 decreased by 125% and 96%, respectively, compared to the same periods in 2016, primarily due to a decrease in interest expense, as described above, and the change in fair value of the derivative liability associated with the Medicis settlement. The decrease in the change in the fair value of derivative liability associated with the Medicis settlement is primarily due to recording additional expense in 2016 to increase to the valuation of the derivative liability based on time-based discounting and interest rates.

Liquidity and Capital Resources

~~Through September 30, 2017, we have funded substantially all~~Our financial condition is summarized as follows:



(in thousands)	March 31, 2020		December 31, 2019		Increase
Cash, cash equivalents, and short-term investments	$	511,270	$	290,115	$	221,155
Working Capital	$	476,806	$	255,623	$	221,183
Stockholders’ Equity	$	308,375	$	225,490	$	82,885

Sources and Uses of our operations through the sale and issuance of our common stock, preferred stock, venture debt, and convertible debt. On March 7, 2016, we entered into an at-the-market sales agreement, or the 2016 ATM Agreement, with Cowen and Company, LLC, or Cowen, under which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $75 million through Cowen as our sales agent. During the nine months ended September 30, 2017, we sold 1,802,651 shares of our common stock under the 2016 ATM Agreement at a weighted average price of $22.17 per share resulting in net proceeds of $38.2 million, which was comprised of gross proceeds after commissions of $38.8 million net of offering expenses of $0.6 million.

We ~~have never been profitable~~hold our cash, cash equivalents, and short-term investments in a variety of non-interest bearing bank accounts and interest-bearing instruments subject to investment guidelines allowing for certain lower-risk holdings such as, ~~of September 30, 2017, had an accumulated deficit of $506.3 million. We incurred net losses of $30.7 million~~but not limited to, money market accounts, U.S. treasury securities, U.S. government and ~~$84.7 million in the three~~agency securities, overnight purchase agreements, and ~~nine months ended September 30, 2017, respectively. We incurred net losses of $18.0 million~~commercial paper. Our investment portfolio is structured to provide for investment maturities and ~~$62.5 million in the three and nine months ended September 30, 2016, respectively.~~ access to cash to fund our anticipated working capital needs.

As of ~~September 30, 2017,~~March 31, 2020 and December 31, 2019, we had cash, cash equivalents and short-term investments of ~~$153.4~~$511.3 million and $290.1 million, respectively, which represented an increase of $221.2 million. ~~We expect~~The increase was primarily due to ~~continue to incur~~the proceeds from issuance of convertible senior notes of $287.5 million, the issuance of common stock in connection with the offering, net of commissions and discount, of $15.6 million. These increases were primarily offset by cash used in operating ~~losses for at least the next several years as we advance RT002 injectable through clinical development, seek regulatory approval, prepare for~~activities of $43.3 million, payment of capped call transactions of $28.9 million and ~~if approved, proceed to commercialization.~~payments of offering costs and convertible senior notes transaction costs of $9.0 million.

We derived the following summary of our ~~Condensed Consolidated Statements of Cash Flows~~condensed consolidated cash flows for the periods indicated from ~~our unaudited~~ Part I, Item 1, “Financial Information—Condensed Consolidated Financial Statements ~~included elsewhere~~(Unaudited)” in this Form ~~10-Q (in thousands):~~

Nine Months Ended
September 30,
2017 2016
Net cash used in operating activities $ (66,946 ) $ (46,359 )
Net cash provided by (used in) investing activities 22,490
(22,656 )
Net cash provided by (used in) financing activities 37,278
(1,974 )



	Three Months Ended March 31,
(in thousands)	2020			2019
Net cash provided by (used in):
Operating activities	$	(43,289	)	$	(11,414	)
Investing activities	$	(105,569	)	$	(103,441	)
Financing activities	$	264,347		$	106,868

Cash Flows from Operating Activities

Our cash used in operating activities is primarily driven by personnel, manufacturing and facility costs, clinical development, and ~~facility costs.~~pre-commercial activities. The changes in net cash used in operating activities are primarily related to our net loss, working capital fluctuations and changes in our non-cash expenses, all which are highly variable. Our cash flows from operating activities will continue to be affected principally by our working capital requirements and the extent to which we increase spending on personnel and research and development activities as our business grows.

~~Cash~~For the three months ended March 31, 2020, net cash used in operating activities ~~of $66.9~~was $43.3 million, during the nine months ended September 30, 2017 resulted primarily from our net loss of $84.7 million offset by stock-based compensation expense of $9.8 million, depreciation expense of $1.1 million, amortization on investment premiums of $0.4 million, and other adjustments of $0.4 million. The increase in our net operating assets and liabilities by $6.0 millionwhich was primarily due to ~~an increase~~approximately $15 million of investing in ~~prepaid~~our personnel and talent retention; approximately $12 million in professional services and consulting; approximately $11 million in clinical trials; $4 million in rent, supplies and utilities; and $4 million in legal and other ~~current assets by $4.6 million and accounts payable by $2.7 million,~~expenditure; offset by ~~decreases~~$1.5 million in ~~accruals~~interest income from our cash, cash equivalent and ~~other current liabilities by $0.8~~short-term investments, and $0.9 million ~~and non-current assets by $0.5 million.~~payment received from Fosun.

~~Cash~~For the three months ended March 31, 2019, net cash used in operating activities ~~of $46.4~~was $11.4 million, during the nine months ended September 30, 2016 resulted primarily from our net loss of $62.5 million offset by stock-based compensation expense of $9.0 million, the acquisition of in-process research and development of $2.0 million (Note 3), a loss on the impairment of assets of $1.9 million, depreciation expense of $1.1 million, amortization on investment premiums of $1.0 million, and other adjustments of $0.9 million. The increase in our net operating assets and liabilities by $0.2 millionwhich was primarily due to ~~an increase~~clinical spend of approximately $11 million to advance our clinical programs toward commercialization; investing in ~~accounts payable~~our personnel and ~~accruals~~talent retention, which represents approximately $14 million; professional services and ~~other current liabilities by $6.0 million~~consulting of approximately $9 million; and rent, supplies and utilities of $5 million; offset by ~~decreases in prepaid and~~the upfront payment, net with withholding tax, received under the Fosun License Agreement of $27 million. The remaining balance of operating activities related primarily to other ~~currents assets by $5.8 million.~~supplies.

Cash Flows from Investing Activities

~~Cash provided by~~For the three months ended March 31, 2020 and 2019, net cash used in investing activities was ~~$22.5 million for~~primarily due to fluctuations in the ~~nine months ended September 30, 2017 consisting~~timing purchases and maturities of ~~$36.0 million for purchases of~~ investments, ~~$2.0 million for~~ purchases of property and equipment, and ~~$0.1 million payment for~~in 2020, the ~~acquisition~~purchase of ~~in-process research and development (Note 3) offset by maturities of short-term investments of $60.7 million.~~

Cash used in investing activities was $22.7 million for the nine months ended September 30, 2016 consisting of $159.8 million for purchases of investments, $1.8 million payment for the acquisition of in-process research and development (Note

Cash Flows from Financing Activities

~~Cash~~For the three months ended March 31, 2020, net cash provided by financing activities was ~~$37.3 million for the nine months ended September 30, 2017 comprised of~~driven by proceeds from issuance of the 2027 Notes (as described below), proceeds from the issuance of common stock in connection with the offering (as described below), net of commissions ~~of $38.8 million,~~and discount, and proceeds from the exercise of stock options and ~~ESPP purchases of $2.1 million~~common stock warrants. The inflows were offset by ~~principal~~payment of capped call transactions, payments ~~on our financing obligations~~ of ~~$2.7 million~~offering costs and ~~other adjustments~~convertible senior notes transaction costs, and net settlement of ~~$0.9 million.~~

~~Cash used in~~restricted stock awards for employee taxes. For the three months ended March 31, 2019, net cash provided by financing activities was ~~$2.0 million for~~primarily driven by proceeds from the ~~nine months ended September 30, 2016 comprised~~issuance of common stock in connection with the offering, net of commissions and discount, proceeds from the exercise of stock options, ~~and ESPP purchases of $1.3 million~~ offset by ~~principal payments on our financing obligations~~net settlement of ~~$2.6~~restricted stock awards for employee taxes and payment of offering cost.

Follow-On Public Offering

During December 2019 and January 2020, we completed a follow-on public offering of an aggregate of 7,475,000 shares of common stock at $17.00 per share including the exercise of the underwriters’ over-allotment option to purchase 975,000 additional shares of common stock, for net proceeds of $119.2 million, after underwriting discounts, commissions

and other offering expenses, of which $103.6 million was received in December 2019 and $15.6 million was received in January 2020.

Convertible Senior Notes

The 2027 Notes may be converted by the holders at any time prior to the close of business on the business day immediately preceding November 15, 2026 only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on June 30, 2020 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the 2027 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after November 15, 2026 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their 2027 Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

We used $28.9 million of the net proceeds from the 2027 Notes to pay the cost of the capped call transactions. The capped call transactions are expected generally to reduce the potential dilutive effect upon conversion of the 2027 Notesand/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, as the case may be, with such reduction and/or offset subject to a price cap of $48.88 of our common stock per share, which represents a premium of 100% over the last reported sale price of our common stock on February 10, 2020. The capped calls have an initial strike price of $32.38 per share, subject to certain adjustments, which corresponds to the conversion option strike price

in the 2027 Notes. The capped call transactions cover, subject to anti-dilution adjustments, approximately 8.9 million shares of ~~$0.6 million.~~our common stock.

Common Stock and Common Stock Equivalents

As of April 24, 2020, outstanding shares of common stock were 57,052,046, outstanding stock options were 5,324,029, unvested restricted stock awards and performance stock awards were 2,820,170, shares expected to be purchased on June 30, 2020 under the 2014 ESPP were 49,861, and underlying shares convertible from the 2027 Notes is 8,878,938.

Operating and Capital Expenditure Requirements

We have not achieved profitability on a quarterly or annual basis since our inception and we expect to continue to incur net ~~losses~~loss for the foreseeable future. We expect ~~our cash expenditures~~to make additional capital outlays to increase inoperating expenditures over the ~~near term~~next several years to ~~initiate and complete~~support the completion of the clinical trials and other associated programs relating to ~~RT002 injectable~~DaxibotulinumtoxinA for Injection for the treatment of ~~glabellar lines,~~ cervical dystonia, plantar fasciitis, adult upper limb spasticity, migraine, and other ~~indications.~~indications, our biosimilar candidate, and shared investment in future innovations in RHA® dermal fillers, seek regulatory approval, prepare for and, if approved, proceed to commercialization, as well as efforts to introduce and sell the Teoxane’s RHA® dermal fillers in the U.S. in 2020. We have funded our operations primarily through the sale and issuance of common stock and, in February 2020, the 2027 Notes. We believe that our existing capital resources ~~the net proceeds from our IPO, net proceeds from our follow-on public offerings, and net proceeds from our at-the-market offerings~~ will be sufficient to fund our operations for at least the next 12 months following the filing of this Form 10-Q. However, we anticipate that we ~~will~~may need to raise substantial additional financing in the future to fund our operations. Our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional capital sooner than planned. In order to meet these additional cash requirements, we may seek to sell additional equity or issue debt, convertible debt or other securities that may result in dilution to our stockholders. If we raise additional funds through the issuance of debt or convertible debt securities, these securities could have rights senior to those of our common stock and could contain covenants that restrict our operations. There can be no assurance that we will be able to obtain additional equity or debt financing on terms acceptable to us, if at all. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. In addition, the continued spread of COVID-19 and uncertain market conditions may limit our ability to access capital. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations, and financial condition.

If adequate funds are not available to us on a timely basis, or at all, we may be required to ~~delay~~terminate or ~~terminate~~delay clinical trials or other development activities for ~~RT002 injectable, RT001 topical,~~DaxibotulinumtoxinA for Injection, our biosimilar product candidate and DaxibotulinumtoxinA Topical, and any future product candidates, or delay our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our product candidates, if we obtain marketing approval. We may elect to raise additional funds even before we need them if the conditions for raising capital are favorable. Our future capital requirements depend on many factors, including:

physician and patient demand for the RHA® dermal fillers, or, if approved for commercialization, DAXI and any future product candidates, which may be influenced by general consumer confidence, general economic and political conditions, including challenges affecting the global economy resulting from the COVID-19 pandemic, as our products are discretionary items, the purchase of which can be reduced before patients adjust their budgets for necessities;

Please ~~see~~read Part II, Item 1A. ~~"Risk Factors”~~“Risk Factors” for additional risks associated with our substantial capital requirements.

We have not generated product revenue from RT002 injectable or RT001 topical and we do not know when, or if, we will generate such revenue. We do not expect to generate significant revenue unless or until we obtain marketing approval of, and commercialize RT002 injectable or RT001 topical. We expect our continuing operating losses to result in increases in cash used in operations over the next several years.

We have based our estimates of future capital requirements on a number of assumptions that may prove to be wrong, and changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate. For example, our ongoing clinical trials of RT002 injectable may encounter technical or other difficulties that could increase our development costs more than we currently expect or the FDA may require us to conduct additional clinical trials prior to approving RT002 injectable or future products we may develop. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials beyond 2017.

Critical Accounting Policies and Estimates

~~There~~For the three months ended March 31, 2020, there have been no material changes in our critical accounting policies ~~during the nine months ended September 30, 2017,~~ as compared to those disclosed in Item 7 in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2016,~~2019, filed with the SEC on February ~~28, 2017,~~26, 2020, except as ~~described in Footnote 2~~a result of the convertible senior notes and the Teoxane Agreement described as below.

Convertible Senior Notes

Refer to Part I, Item 1. “Condensed Consolidated Financial Statements (Unaudited)—Notes to ~~the~~ Condensed Consolidated Financial Statements ~~included elsewhere~~(Unaudited) —Note 7—Convertible Senior Notes” for details of the convertible senior notes.

Refer to Part I, Item 1, “Financial Information—Notes to Condensed Consolidated Financial Statements (Unaudited)—Note 1—The Company and Summary of Significant Accounting Policies” and Part I, Item 1. “Condensed Consolidated Financial Statements (Unaudited)—Notes to Condensed Consolidated Financial Statements (Unaudited) —Note 4—Filler Distribution Agreement” for details of the intangible assets in ~~this Form 10-Q.~~connection with the Teoxane Agreement.

Contractual Obligations

~~Our minimum~~Except as follows, there were no material changes outside of the ordinary course of business in our contractual ~~commitments were~~obligations as of March 31, 2020, from those as of December 31, 2019 as reported in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, as filed with the ~~SEC. Our future minimum contractual commitments have~~SEC on February 26, 2020.

Convertible Senior Notes

On February 14, 2020, we issued the 2027 Notes with an aggregate principal balance of $287.5 million, pursuant to the Indenture. The 2027 Notes are senior unsecured obligations and bear interest at a rate of 1.75% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2020. The 2027 Notes will mature on February 15, 2027, unless earlier converted, redeemed or repurchased earlier. The 2027 Notes are convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. In connection with issuing the 2027 Notes, we received $278.3 million in net proceeds, after deducting the initial purchasers’ discount, commissions, and other issuance costs. We may not ~~changed materially from~~redeem the ~~amounts previously reported, except as described below.~~2027 Notes prior to February 20, 2024, and no sinking fund is provided for the 2027 Notes. Refer to Part I, Item 1. “Condensed Consolidated Financial Statements (Unaudited)—Notes to Condensed Consolidated Financial Statements (Unaudited) —Note 7—Convertible Senior Notes” for details of the convertible senior notes.

~~On March 14, 2017, the Company~~Teoxane Agreement

In January 2020, we entered into ~~a Technology Transfer, Validation and Commercial Fill/Finish Services~~the Teoxane Agreement. Pursuant to the Teoxane Agreement, (the “Services Agreement”) and Statement of Work ("SoW") with Ajinomoto Althea, Inc., a contract development and manufacturing organization (“Althea”). Under the Services Agreement, Althea has agreed, among other things, to provide the Company with a future source of commercial fill/finish servicesif Teoxane pursues regulatory approval for the ~~Company’s neuromodulator~~RHA® dermal fillers for certain new indications or filler technologies, including innovations with respect to existing products in the U.S., we will be subject to certain specified cost-sharing arrangements for third party expenses incurred in achieving regulatory approval for such products. ~~The Services Agreement has an initial term that will expire in seven years, unless terminated sooner by either party. In accordance with the Services Agreement, the Company will have~~We are required to meet certain minimum purchase obligations ~~based on its production forecasts. As of September 30, 2017, the Company made non-refundable advanced payments of $1.2 million in accordance with the terms~~during each year of the ~~arrangement. The remaining services~~term. We are ~~cancellable at any time, with the Company~~also required to ~~pay costs incurred through~~meet certain minimum expenditure requirements in connection with commercialization efforts. Refer to Part I, Item 1. “Condensed Consolidated Financial Statements (Unaudited)—Notes to Condensed Consolidated Financial Statements (Unaudited) —Note 4—Filler Distribution Agreement” for details of the ~~cancellation date.~~Teoxane Agreement.

Recent Accounting Pronouncements

Refer to ~~"Recent~~“Recent Accounting ~~Pronouncements"~~Pronouncements” in ~~Note 2~~Part I, Item 1, “Financial Information—Notes to ~~our~~ Condensed Consolidated Financial Statements ~~included elsewhere~~(Unaudited)—Note 1—The Company and Summary of Significant Accounting Policies” in this Form 10-Q.

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2020, we did not have any off-balance sheet arrangements or any relationships with any entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We do not hold or issue financial instruments for trading purposes.

~~Interest Rate Sensitivity~~

~~Our~~ For the three months ended March 31, 2020, our exposure to market risk has not changed materially since that disclosed in Item 7A in our Annual Report on Form 10-K for changes in interest rates relates primarily to our cash, cash equivalents, and investments. We had cash, cash equivalents, and investments of $153.4 million and $185.5 million as of September 30, 2017 andthe year ended December 31, 2016, respectively. As of September 30, 2017, our cash, cash equivalents, and investments were held in deposit, money market fund accounts, and U.S. government agency and treasury obligations. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of the interest rates in the United States. A hypothetical 10% movement in interest rates would not be expected to have a material impact on our Condensed Consolidated Financial Statements. We mitigate market risk for changes in interest rates by holding our investments in U.S. treasury and government agency obligations to maturity.

~~Foreign Exchange~~

Our operations are primarily conducted in the United States using the U.S. Dollar. However, we conduct limited operations in foreign countries, primarily for clinical and regulatory services, whereby settlement of our obligations are denominated in the local currency. Transactional exposure arises when transactions occur in currencies other than the U.S. Dollar. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction2019, filed with the resulting liabilities being translated into the U.S. Dollar at exchange rates prevailing at the balance sheet date. The resulting gains and losses, which were insignificant for the nine months ended September 30, 2017 and 2016, are included in other expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss. We do not use currency forward exchange contracts to offset the related effectSEC on ~~the underlying transactions denominated in a foreign currency.~~February 26, 2020.



~~ITEM 4.~~	ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Management, with the participation of our ~~chief~~principal executive officer and our ~~chief~~principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2017~~.the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and ~~procedures,”~~procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September 30, 2017~~,the end of the period covered by this Quarterly Report on Form 10-Q, our ~~chief~~principal executive officer and ~~chief~~principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

~~There~~For the three months ended March 31, 2020, there were no changes in our internal control over financial reporting ~~during~~identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the ~~nine months ended September 30, 2017~~Exchange Act that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, ~~the Company~~we may ~~have certain contingent liabilities that arise~~be involved in litigation relating to claims arising out of our operations. We are not currently involved in any material legal proceedings. We may, however, be involved in material legal proceedings in the ~~ordinary course of business. From May 2015 until July 2017, the Company and certain of its directors and executive officers were~~future. Such matters are subject to ~~a securities class action complaint, pending in the Superior Court for the County of Santa Clara, captioned~~ ~~City of Warren Police~~uncertainty and ~~Fire Retirement System v. Revance Therapeutics Inc., et al.~~, Case No. 15-CV-287794 (previously assigned Case No. CIV 533635 prior to transfer from San Mateo Superior Court). On October 31, 2016, the parties executed a stipulation of settlement (the "Stipulation"), pursuant to which, in exchange for a release of all claims by the plaintiff class, the Company agreed to settle the litigation for $6.4 million in cash, of which $5.9 million was covered by its insurance policies. The Stipulation maintainsthere can be no assurance that the defendants, including the Company, deny all wrongdoing and liability related to the litigation. On July 28, 2017, the Court granted final approval of the Settlement, as set forth in the Stipulation, and entered a Judgment dismissing the action with prejudice, thereby ending the litigation. This litigation didsuch legal proceedings will not have a material adverse effect on our business, results of operations, financial position or cash flows.

~~Except as provided above, we are not currently involved in any material legal proceedings.~~

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as all other information included in this Form 10-Q, including our ~~Condensed Consolidated Financial Statements,~~condensed consolidated financial statements, the notes thereto and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before you decide to purchase shares of our common stock. If any of the following risks actually occurs, our business, prospects, financial condition and operating results could be materially harmed. As a result, the trading price of our common stock could decline and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and stock price.

We have marked with an asterisk (*) those risks described below that reflect substantive changes from, or additions to, the risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2019.

Risks Related to Our Business and Strategy

We are substantially dependent on the clinical and commercial success of our ~~injectable~~ product candidate ~~RT002 injectable.~~DaxibotulinumtoxinA for Injection.*

To date, we have invested substantial efforts and financial resources in the research and development of botulinum toxin-based product candidates. Our success as a company is substantially dependent on the clinical and commercial success of ~~RT002 injectable.~~DaxibotulinumtoxinA for Injection.

We completed RT001 topical Phase 3 clinical trials for the treatment of lateral canthal lines (crow’s feet) and initial Phase 2 clinical trials for the treatment of primary axillary hyperhidrosis (excessive under arm sweating). However, we discontinued clinical development of RT001 topical for the treatment of crow’s feet and for the treatment of axillary hyperhidrosis in June 2016, following results from our REALISE 1 Phase 3 clinical trial, which was designed to evaluate the safety and efficacy of RT001 topical compared to placebo in subjects with moderate to severe crow's feet and did not achieve its co-primary or other endpoints.

~~We have invested substantial efforts and financial resources in the research and development of RT002 injectable. We are in~~ Phase 3 clinical development for ~~RT002 injectable~~DaxibotulinumtoxinA for Injection in North America for the treatment of glabellar lines. ~~During the fourth quarter of~~From 2016 to 2018, we ~~initiated subject dosing~~conducted and announced results relating to multiple pivotal and safety trials in our SAKURA Phase 3 program. InThe SAKURA 1 and SAKURA 2 trials were designed to evaluate the ~~first quarter~~safety and efficacy of ~~2017, we completed patient enrollment~~a single administration of DaxibotulinumtoxinA for Injection for the treatment of moderate-to-severe glabellar lines in ~~the two pivotal trials of our SAKURA Phase 3 program. We expect to report topline results from those trials in the fourth quarter of 2017.~~adults. In addition to the two ~~planned~~ pivotal trials, the Phase 3 program includes ~~the SAKURA~~a long-term open-label safety trial (SAKURA 3), which is designed to evaluate the long-term safety and duration of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection for the treatment of moderate to severe glabellar lines in adults following both single and repeat treatment administration. We expect to complete the long-term safety study in the second half of 2018. In October 2017, we completed enrollment of more than 2,100 subjects at multiple sites in the United States and Canada for SAKURA 3. Depending on the number of treatments and duration of follow-up, a subject may be on trial for a maximum of 86 weeks. We have designed SAKURA 3 was designed to support a safety database adequate for both domestic and international marketing applications. We submitted our BLA to the U.S. FDA for DaxibotulinumtoxinA for Injection for the treatment of glabellar lines in November 2019. In ~~October 2015,~~February 2020, the FDA accepted the BLA filing. If the BLA is approved on or by the PDUFA target action date, we ~~reported results from BELMONT, a Phase 2 active comparator clinical trial against~~plan to initiate commercialization activities for DaxibotulinumtoxinA for Injection for the ~~market leader BOTOX® Cosmetic. The data from~~treatment of glabellar lines before the ~~BELMONT trial showed that all doses~~end of RT002 injectable achieved highly statistically significant efficacy at four weeks as compared to placebo. In addition, the 40 Unit dose of RT002 injectable demonstrated a 23.6-week median duration versus BOTOX® Cosmetic with an 18.8-week median duration. Across all cohorts, RT002 injectable appeared to be generally safe and well-tolerated. These results may not be indicative of results from future trials.2020.

In ~~September~~ 2015, we initiated a Phase 2 dose-escalating, open-label clinical study of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection for the treatment of cervical dystonia. The Phase 2 study evaluated the safety, preliminary efficacy, and duration of effect of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection in subjects with moderate to severe isolated cervical dystonia. The trial was designed to enroll 37 subjects following three sequential treatment cohorts for up to a total of 24 weeks after treatment for each cohort. The trial’s first cohort of 12 subjects received a single dose of up to 200 units of RT002 injectable, the second cohort of 12 subjects received between 200 and 300 units, and the third cohort of 13 subjects received from 300 to 450 units. In May 2017, we announced positive topline results fromBased on the Phase 2 ~~trial.~~safety and efficacy results and subsequent guidance from the FDA and EMA, in June 2018 we announced the initiation of patient dosing in our ASPEN Phase 3 clinical program. The ~~topline data showed that in all three cohorts RT002 injectable appeared~~ASPEN Phase 3 clinical program consists of two trials to ~~be generally safe~~evaluate the safety and ~~well-tolerated, demonstrated a median duration~~efficacy of ~~at least 24 weeks, and displayed a clinically significant impact on~~DaxibotulinumtoxinA for Injection for the treatment of cervical dystonia in adults including: a randomized, double-blind, placebo-controlled, parallel group trial and ~~symptoms. Based on these~~an open-label, long-term safety trial. In October 2019, we completed the ASPEN Phase 23 pivotal trial enrollment, and plan to release topline results ~~we expect to discuss next steps~~ in ~~this clinical program with~~ the ~~US and EU regulatory agencies later this year. These results may not be indicative~~second half of ~~results from future trials.~~2020.

In 2016, we also initiated a Phase 2 prospective, randomized, double-blinded, placebo-controlled trial of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection in the therapeutic indication of plantar fasciitis. This study ~~is evaluating~~evaluated the safety and efficacy of a single administration of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection in reducing the signs and symptoms of plantar fasciitis. ~~In April 2017, we expanded our plantar fasciitis Phase 2 program from a single-site study to a multi-center study with protocol updates.~~ The study’s primary efficacy endpoint is the ~~reduction~~improvement in the ~~visual analog scale (VAS) for pain in the foot~~American Orthopedic Foot and ~~subjects will be followed for 16 weeks following treatment.~~Ankle Score. In ~~October 2017,~~January 2018, we ~~completed patient enrollment and preliminary topline~~announced interim 8-week results from this study. We completed the 16-week trial which showed a 58% reduction of pain from baseline along with a strong placebo response, with the difference between the treatment groups not being statistically significant. We initiated another Phase 2, double-blind, placebo-controlled trial utilizing two doses of DaxibotulinumtoxinA for Injection in the fourth quarter of 2018. We completed Phase 2 trial enrollment in December 2019 and expect to release topline results in the second half of 2020.

In April 2018, we announced two new clinical programs for DaxibotulinumtoxinA for Injection, including adult upper limb spasticity and migraine. We initiated the JUNIPER Phase 2 study in adult upper limb spasticity in the fourth quarter of 2018. Enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial is paused due to challenges in subject assessments during time of required social distancing. We will provide a new date for expected full enrollment after the trial is reopened and an enrollment trajectory is established.In 2021, we may initiate a study with DaxibotulinumtoxinA for Injection for the treatment of migraine.

In July 2019, we completed the enrollment in the Phase 2 clinical study of DaxibotulinumtoxinA for Injection for forehead lines. In August 2019, we completed Phase 2 study enrollment of DaxibotulinumtoxinA for Injection for lateral canthal lines (crow’s feet). Topline results for both studies are expected in ~~2017.~~the second quarter of 2020. In December 2019, we initiated an additional study of upper facial lines, which includes glabellar (frown), lateral canthal (crow’s feet), and forehead lines combined. This trial is being conducted to understand the safety and efficacy of DaxibotulinumtoxinA for Injection, including potential dosing and injection patterns for covering upper facial lines. The upper facial lines trial is fully enrolled, and all subjects have been dosed. We previously expected to receive topline results for the upper facial lines trial in fourth quarter of 2020; however, the timing of such topline results in now uncertain and may be delayed by the COVID-19 pandemic.

Our near-term prospects, including our ability to finance our company and generate revenue, will depend heavily on the successful development, regulatory approval and commercialization of ~~RT002 injectable.~~DaxibotulinumtoxinA for Injection. Our longer-term prospects will depend on the successful development, regulatory approval and commercialization of ~~RT002 injectable,~~DaxibotulinumtoxinA for Injection, as well as DaxibotulinumtoxinA Topical, biosimilar or any future product candidates. The preclinical, clinical and commercial success of our product candidates will depend on a number of factors, including the following:

If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates. Accordingly, we cannot assure you that we will be able to generate sufficient revenue through the sale of ~~RT002 injectable, RT001 topical,~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar or any future product candidate to continue our business.

We are substantially dependent on the clinical and commercial success of the Teoxane Resilient Hyaluronic Acid®(RHA®) dermal fillers.*

In January 2020, we entered into the Teoxane Agreement with Teoxane, pursuant to which Teoxane granted us with the exclusive right to import, market, promote, sell and distribute Teoxane’s line of RHA dermal fillers in exchange for 2,500,000 shares of our common stock and certain other commitments by us. The Teoxane Agreement includes rights to i) RHA® 2, RHA® 3 and RHA® 4 which have been approved by the FDA for the correction of moderate to severe dynamic facial wrinkles and folds, including RHA® 2, RHA® 3 and RHA® 4 in the currently approved indications, ii) RHA® 1, which is currently in clinical trials for the treatment of perioral rhytids and is anticipated to be approved by the FDA in 2021, and iii) future hyaluronic acid filler advancements and products by Teoxane (collectively the “RHA® dermal fillers”) in the U.S. and U.S. territories and possessions.

Our success as a company is substantially dependent on our ability to successfully and timely commercialize the RHA® dermal fillers, which will depend on many factors including, but not limited to, our ability to:

materially impact the success of our business. For example, as a result of the COVID-19 pandemic, product supply of RHA® dermal fillers was delayed by Teoxane SA, as they temporarily suspended production in Geneva, Switzerland, which in turn has delayed our anticipated product launch of the RHA® 2, 3 and 4 dermal fillers. Teoxane resumed manufacturing operations at the end of April 2020 and has projected to deliver the RHA® dermal fillers to us in June 2020. As a result, our anticipated product launch of the RHA® 2, 3 and 4 dermal fillers has been delayed by at least one quarter. Additional delays in the product supply of the RHA® dermal fillers may cause us to further revise our anticipated product launch.

If we fail to comply with the terms of the Teoxane Agreement, including by failing to meet certain obligations in connection with purchase and marketing of RHA® dermal fillers, Teoxane may terminate the Teoxane Agreement, and we would have no further rights to distribute the RHA® dermal fillers. In addition, the lack of, or limited, complementary products to be offered by sales personnel in marketing the RHA® dermal fillers may put us at a competitive disadvantage relative to companies with more extensive product lines. Accordingly, we cannot assure you that we will be able to generate sufficient revenue through the sale of the RHA® dermal fillers to continue our business.

The current COVID-19 pandemic, as well as other actual or threatened epidemics, pandemics, outbreaks, or public health crises, may adversely affect our financial condition and our business.*

Our business could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent COVID-19 pandemic. The risk of a continued pandemic, or public perception of the risk, could cause customers to continue to avoid public places, including hospitals and physician offices, and has caused temporary, and may cause long-term, disruptions in our supply chain, manufacturing and/or delays in the delivery of our inventory. Further, such risks could also adversely affect our customers' financial condition, resulting in reduced spending for the aesthetic products. Moreover, an epidemic, pandemic, outbreak or other public health crisis,could require or cause employees to avoid our properties, which could adversely affect our ability to adequately staff and manage our businesses. For instance, “shelter-in-place” or other such orders by governmental entities effected as a result of the COVID-19 pandemic have disrupted our operations, as employees who cannot perform their responsibilities from home are not able to report to work and as we have had to put in place a work from home policy. Risks related to an epidemic, pandemic or other health crisis, such as COVID-19 pandemic, could also continue to lead to the complete or partial closure of one or more of our facilities or operations of our sourcing partners. The ultimate extent of the impact of COVID-19 pandemic or any other epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19 pandemic, could therefore materially and adversely affect our business, financial condition and results of operations.

Our business has been and could continue to be adversely affected by the effects of health epidemics, including the recent COVID-19 pandemic, in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations. The COVID-19 pandemic has materially affected and may continue to materially affect our operations, including at our headquarters in the San Francisco Bay Area, which is currently subject to a shelter-in-place order, and at our clinical trial sites, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct business.*

Our business could be adversely affected by health epidemics in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations.

As a result of the COVID-19 pandemic, we have had to limit operations or implement limitations, including a work from home policy. Our increased reliance on personnel working from home may negatively impact productivity, or disrupt, delay, or otherwise adversely impact our business. In addition, this could increase our cyber security risk, create data accessibility concerns, and make us more susceptible to communication disruptions, any of which could adversely impact our business operations or delay necessary interactions with local and federal regulators, manufacturing sites, research or clinical trial sites and other important agencies and contractors.

Port closures and other restrictions resulting from the COVID pandemic may continue to disrupt our supply chain or limit our ability to obtain sufficient materials for our drug products. For example, product supply of RHA® dermal fillers was delayed by distribution partner, Teoxane SA, as they temporarily suspended production in Geneva, Switzerland as a precaution surrounding the COVID-19 pandemic. Teoxane resumed manufacturing operations at the end of April 2020 and has projected to deliver the RHA® dermal fillers to us in June 2020. As a result, our anticipated product launch of the RHA® 2, 3 and 4 dermal fillers has been delayed by at least one quarter. Additional delays in the product supply of the RHA® dermal fillers may cause us to further revise our anticipated product launch.

In addition, our clinical trials have been affected by the COVID-19 pandemic. Site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Currently, enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial is paused due to challenges in subject assessments during time of required social distancing. The COVID-19 pandemic may delay enrollment in our global clinical trials, and some patients may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

There is a risk that other countries or regions may be less effective at containing COVID-19, or it may be more difficult to contain if the pandemic reaches a larger population or broader geography, in which case the risks described herein could be elevated significantly. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole. However, these effects could have a material impact on our operations, and we will continue to monitor the COVID-19 pandemic situation closely.

Our business is affected by worldwide economic and market conditions; an unstable economy, a decline in consumer-spending levels and other adverse developments, including inflation, could adversely affect our business, results of operations and liquidity.*

Many economic and other factors are outside of our control, including general economic and market conditions, consumer and commercial credit availability, inflation, unemployment, consumer debt levels and other challenges affecting the global economy including the recent COVID-19 pandemic. Increases in the rates of unemployment, reduced access to credit and issues related to the domestic and international political situations may adversely affect consumer confidence and disposable income levels. Decreases in number of physicians and physician offices or financial hardships for physicians may also adversely affect distribution channels of our products. Early societal responses to the COVID-19 pandemic have involved business closures and limited social interaction as well as work reductions. Low consumer confidence and disposable incomes could lead to reduced consumer spending and lower demand for our products, which are discretionary items, the purchase of which can be reduced before customers adjust their budgets for necessities. Even after the COVID-19 pandemic has subsided, we may continue to experience negative impacts to our business and financial results due to the continued perceived risk of infection or concern of a resurgence of the COVID-19 outbreak as well as COVID-19’s global economic impact, including decreases in consumer discretionary spending and any economic slowdown or recession that has occurred or may occur in the future. These factors could have a negative impact on our potential sales and operating results.

Reports of adverse events or safety concerns involving the RHA® dermal fillers could delay or prevent Teoxane from obtaining or maintaining regulatory approval for, or could negatively impact our sales of, the RHA® dermal fillers.

Reports of adverse events or safety concerns involving the RHA® dermal fillers could result in the FDA or other regulatory authorities withdrawing approval of the RHA® dermal fillers for any or all indications that have approval, including the use of the RHA® dermal fillers for specified aesthetic indications. We cannot assure you that patients receiving the RHA® dermal fillers will not experience serious adverse events in the future that require submission of medical device reports to the FDA. Adverse events may also negatively impact the sales of the RHA® dermal fillers. Teoxane may also be required to further update package inserts and patient information brochures of the RHA® dermal fillers based on reports of adverse events or safety concerns, which could adversely affect acceptance of the RHA® dermal fillers in the market, make competition easier or make it more difficult or expensive for us to commercialize the RHA® dermal fillers.

The Teoxane Agreement requires us to make specified annual minimum purchases of RHA® dermal fillers and to meet specified expenditure levels in connection with our marketing of RHA® dermal fillers in furtherance of the commercialization of the RHA® dermal fillers, regardless of whether our commercialization efforts are successful. Such expenditure requirements may adversely affect our cash flow and our ability to operate our business and our prospects for future growth, or may result in the termination of the Teoxane Agreement.

The Teoxane Agreement requires us to make specified annual minimum purchases of RHA® dermal fillers, and to meet an annual minimum expenditure on marketing and other areas related to the commercialization of the RHA® dermal fillers, regardless of whether our commercialization efforts are successful. If we fail to meet the annual minimum purchase amount or the annual minimum marketing spending requirements specified in the Teoxane Agreement, Teoxane has the right to terminate the Teoxane Agreement.

If our commercialization efforts of the RHA® dermal fillers are unsuccessful, there can be no assurance that we will have sufficient cash flow to comply with such minimum purchase and expenditure requirements. Our obligation to Teoxane to meet such requirements could:

make it more difficult for us to satisfy obligations with respect to our indebtedness, including the 2027 Notes (as defined in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”) and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under the agreements governing such indebtedness;

Any of the factors listed above could materially and adversely affect our business and our results of operations.

We may be unable to obtain regulatory approval for ~~RT002 injectable, RT001 topical,~~DaxibotulinumtoxinA for Injection, Daxibotulinumtoxin A Topical product candidates, biosimilar product candidates or future product candidates, and Teoxane may be unable to do the same for RHA^® 1 and future hyaluronic acid filler advancements, under applicable regulatory requirements. The denial or delay of any such approval, including as a result of the COVID-19 pandemic, would delay commercialization and have a material adverse effect on our potential to generate revenue, our business prospects, and our results of operations.*

To gain approval to market a biologic product, such as ~~RT002 injectable~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical or ~~RT001 topical,~~biosimilar, we must provide the FDA and foreign regulatory authorities with data that adequately demonstrate the safety, efficacy and quality of the product for the intended indication applied for in the BLA, or other respective marketing applications. Teoxane must do the same with its PMAs to the FDA for the RHA® dermal fillers. The development of ~~biologic~~such products is a long, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in clinical trials, including in Phase 3 development, even after promising results in earlier preclinical studies or clinical trials. These setbacks have been caused by, among other things, findings made while clinical trials were underway, safety or efficacy observations, including previously unreported adverse events; and the need to conduct further supportive or unanticipated studies, even after initiating Phase 3 trials. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful or that additional supportive studies will not be required, and the results of clinical trials by other parties may not be indicative of the results in trials we may conduct.

~~Specifically,~~For example, we completed ~~RT001 topical~~DaxibotulinumtoxinA Topical clinical trials for the treatment of ~~lateral canthal lines (crow’s feet)~~“crow’s feet and primary axillary ~~hyperhidrosis. We~~hyperhidrosis but discontinued further clinical development ~~of RT001 topical for the treatment of crow’s feet and hyperhidrosis~~ in 2016 following the results from our REALISE 1 Phase 3 clinical ~~trial. The~~ trial ~~designed~~for crow’s feet. In 2016, we also initiated a Phase 2 trial of DaxibotulinumtoxinA for Injection for the treatment of plantar fasciitis. In January 2018, we announced interim 8-week results from this study and subsequently completed the 16-week trial, which showed a strong placebo response, with the difference between the treatment groups not being statistically significant.

Additionally, the completion of our clinical trials may be delayed as a result of the COVID-19 pandemic. For example, enrollment in the JUNIPER Phase 2 adult upper limb spasticity trial is paused due to ~~evaluate~~challenges in subject assessments during time of required social distancing and the ~~safety~~timing of topline results for the DaxibotulinumtoxinA for Injection upper facial lines trial, previously expected in fourth quarter of 2020, is now uncertain and ~~efficacy of RT001 topical compared to placebo in subjects with moderate to severe crow's feet, did not achieve its co-primary or other endpoints.~~may be delayed.

Our business currently depends substantially on the successful development, regulatory approval and commercialization of our product candidates. ~~Based on discussion with~~

Currently, the ~~FDA at a Pre-Phase 3 meeting in~~only products for which we have the ~~second quarter of 2016~~rights to commercialize and the minutes received following the meeting, we submitted an IND in the United States and initiated subject dosing in Phase 3 clinical studies of RT002 injectable for the treatment of glabellar lines in 2016. In the first quarter of 2017, we completed patient enrollment in the two pivotal trials of our SAKURA Phase 3 program and in October 2017, we completed enrollment of SAKURA 3. We also plan to move forward with studies required for submission of a BLA. Such studies may increase the time, expense and uncertainty of our RT002 injectable development program, including, for example, because results of such studies may indicate to us a further need to refine the RT002 injectable product candidate.

~~We currently~~that have ~~no drug or biologic products~~been approved for sale by the applicable regulatory authorities are RHA® 2, RHA® 3, and weRHA® 4, and product supply of RHA® dermal fillers was delayed by distribution partner, Teoxane SA, as they temporarily suspended production in Geneva, Switzerland as a precaution surrounding the COVID-19 pandemic. Teoxane resumed manufacturing operations at the end of April 2020 and has projected to deliver the RHA® dermal fillers to us in June 2020. As a result, our anticipated product launch of the RHA® 2, 3 and 4 dermal fillers has been delayed by at least one quarter. Additional delays in the product supply of the RHA® dermal fillers may cause us to further revise our anticipated product launch.

We may never obtain regulatory approval to commercialize ~~RT002 injectable~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar, or ~~RT001 topical.~~future rights to commercialize RHA® 1 or any hyaluronic acid filler products developed pursuant to the Teoxane Agreement. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of drug, biologic and ~~biologic~~medical device products are subject to extensive regulation by the FDA and other regulatory authorities in the ~~United States~~U.S. and other countries, and such regulations differ from country to country. We are not permitted to market ~~RT002 injectable~~our biologic product candidates, including DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar product candidate, any hyaluronic acid filler products, such RHA® 1 or future advancements developed by Teoxane, or future product candidates, in the ~~United States~~U.S. until we receive approval of a BLA from the FDA. We are also not permitted to market ~~RT002 injectable~~the RHA® dermal fillers for additional indications for use unless and until Teoxane receives approval of a PMA supplement for such new indication for use. We are also not permitted to market our product candidates in any foreign countries until we receive the requisite approval from the regulatory authorities of such countries.

The FDA or any foreign regulatory body can delay, limit or deny approval of our product candidates ~~including RT002 injectable,~~ for many reasons, including:

Further, interruption or delays in the operations of the FDA or other applicable local or foreign regulatory agencies caused by the COVID-19 pandemic may affect the review and approval timelines for DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar, RHA^® 1 or any future hyaluronic acid filler products developed pursuant to the Teoxane Agreement or any future product candidates, including the PDUFA target action date for DaxibotulinumtoxinA for Injection in the treatment of glabellar lines.

Our business currently depends substantially on the successful development, regulatory approval and commercialization of our product candidates. Of the large number of drugs, including biologics, and medical devices in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized.

Even if we eventually complete clinical testing and receive approval of any regulatory filing for ~~RT002 injectable, RT001 topical,~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar, RHA^® 1 or any future hyaluronic acid filler products developed pursuant to the Teoxane Agreement or any future product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional post-approval clinical trials. The FDA or the applicable foreign regulatory agency also may approve ~~RT002 injectable, RT001 topical,~~DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, biosimilar, RHA^® 1 or any future hyaluronic acid filler products developed pursuant to the Teoxane Agreement, or any future product candidates for a more limited indication or a narrower patient population than we originally requested, and

the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of our product candidates.

Any delay in obtaining, or inability to obtain, applicable regulatory approval for any of our product candidates, and ~~RT002 injectable~~DaxibotulinumtoxinA for Injection in particular, would delay or prevent commercialization of ~~RT002 injectable~~DaxibotulinumtoxinA for Injection and would materially adversely impact our business, results of operations and prospects.

All of the RHA® dermal fillers and any of our approved products and product candidates in the future will be subject to ongoing FDA and foreign regulatory obligations and continued regulatory review.

We and any third-party contract development and manufacturers or suppliers are required to comply with applicable cGMP regulations and other international regulatory requirements. The regulations require that our product candidates be manufactured and records maintained in a prescribed manner with respect to manufacturing, testing and quality control/quality assurance activities. Manufacturers and suppliers of materials must be named in a BLA submitted to the FDA for any product candidate for which we are seeking FDA approval. The RHA® dermal fillers are subject to the FDA’s Quality Systems Regulation (“QSR”), for medical devices. Additionally, third party manufacturers and suppliers and any manufacturing facility must undergo a pre-approval inspection before we can obtain marketing authorization for any of our product candidates. Even after a manufacturer has been qualified by the FDA, the manufacturer must continue to expend time, money and effort in the area of production and quality control to ensure full compliance with cGMP and QSR, as applicable. Manufacturers are subject to regular, periodic inspections by the FDA following initial approval. Further, to the extent that we contract with third parties for the manufacture of our products (for example, Teoxane, with respect to the RHA® dermal fillers), our ability to control third-party compliance with FDA requirements will be limited to contractual remedies and rights of inspection.




		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets ~~at September 30, 2017 and December 31, 2016 (unaudited)~~	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss ~~for the Three and Nine Months ended September 30, 2017 and 2016 (unaudited)~~	4
	Condensed Consolidated Statements of ~~Cash Flows for the Nine Months ended September 30, 2017 and 2016 (unaudited)~~Stockholders' Equity	5
	~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements ~~(unaudited)~~of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2835
Item 4.	Controls and Procedures	2935

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3036
Item 1A.	Risk Factors	3136
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5783
Item 3.	Defaults Upon Senior Securities	5783
Item 4.	Mine Safety Disclosures	5783
Item 5.	Other Information	5783
Item 6.	Exhibits	5784

Signatures		58

~~Exhibit Index~~		5986


	September 30,			December 31,			March 31,			December 31,
	2017			2016			2020			2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	56,323		$	63,502		$	286,649		$	171,160
Short-term investments	97,117			122,026			224,621			118,955
Prepaid expenses and other current assets	2,827			7,167			7,171			6,487
Total current assets	156,267			192,695			518,441			296,602
Property and equipment, net	11,500			10,585			13,967			14,755
Intangible assets							32,334			—
Operating lease right of use assets							25,961			26,531
Restricted cash	580			580			730			730
Other non-current assets	836			500			1,494			1,669
TOTAL ASSETS	$	169,183		$	204,360		$	592,927		$	340,287
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,680		$	3,754		$	8,709		$	8,010
Accruals and other current liabilities	12,069			12,418			16,178			18,636
Financing obligations, current portion	2,727			3,475
Deferred revenue, current portion							10,079			7,911
Operating lease liabilities, current portion							3,627			3,470
Derivative liability							3,042			2,952
Total current liabilities	21,476			19,647			41,635			40,979
Financing obligations, net of current portion	—			1,872
Derivative liability associated with Medicis settlement	2,233			2,022
Deferred rent	3,418			3,648
Other non-current liabilities	—			100
Convertible senior notes							171,305			—
Deferred revenue, net of current portion							46,722			47,948
Operating lease liabilities, net of current portion							24,890			25,870
TOTAL LIABILITIES	27,127			27,289			284,552			114,797
Commitments and Contingencies (Note 10)
STOCKHOLDERS’ EQUITY
Common stock, par value $0.001 per share — 95,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 30,935,094 and 28,648,954 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	31			29
Convertible preferred stock, par value $0.001 per share — 5,000,000 shares authorized, and no shares issued and outstanding as of March 31, 2020 and December 31, 2019							—			—
Common stock, par value $0.001 per share — 95,000,000 shares authorized both as of March 31, 2020 and December 31, 2019; 57,026,154 and 52,374,735 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							57			52
Additional paid-in capital	648,329			598,630			1,213,931			1,069,639
Accumulated other comprehensive loss	(43		)	(45		)
Accumulated other comprehensive income							524			3
Accumulated deficit	(506,261		)	(421,543		)	(906,137		)	(844,204		)
TOTAL STOCKHOLDERS’ EQUITY	142,056			177,071			308,375			225,490
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	169,183		$	204,360		$	592,927		$	340,287



Period	Total Number of Shares Purchased (i)	Weighted-Average Price Paid per Share (ii)		Total Number of Share Purchased as Part of Publicly Announced Plan or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs (in thousands)
July 1 through July 31, 2017	344	$	26.40	—	—
August 1 through August 31, 2017	—	—		—	—
September 1 through September 30, 2017	978	25.17		—	—
Total	1,322	$	25.49	—	—



+
	~~REVANCE THERAPEUTICS, INC.~~

~~Date: November 3, 2017~~	~~By:~~	~~/s/ L. Daniel Browne~~
		~~L. Daniel Browne~~
		~~President~~Portions of this exhibit (indicated by asterisks) have been omitted as the registrant has determined that (i) the omitted information is not material and ~~Chief Executive Officer~~ ~~(Duly Authorized Principal Executive Officer)~~

~~Date: November 3, 2017~~	~~By:~~	~~/s/ Lauren P. Silvernail~~
		~~Lauren P. Silvernail~~
		~~Chief Financial Officer and Chief Business Officer~~ ~~(Duly Authorized Principal Financial Officer)~~ (ii) the omitted information would likely cause competitive harm to the registrant if publicly disclosed.



**	Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934
	REVANCE THERAPEUTICS, INC.

Date: May 7, 2020	By:	/s/ Mark J. Foley
		Mark J. Foley
		President and ~~otherwise are not subject to liability under these sections.~~Chief Executive Officer
		(Duly Authorized Principal Executive Officer)

	By:	/s/ Tobin C. Schilke
		Tobin C. Schilke
		Chief Financial Officer
		(Duly Authorized Principal Financial Officer and Principal Accounting Officer)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
Revenue	$	75		$	75		$	225		$	225		$	58		$	278
Operating expenses:
Research and development	21,643			10,296			59,357			37,851			39,794			23,995
General and administrative	9,148			7,502			25,511			21,975
Loss on impairment	—			—			—			1,949
Selling, general and administrative													21,224			12,910
Total operating expenses	30,791			17,798			84,868			61,775			61,018			36,905
Loss from operations	(30,716		)	(17,723		)	(84,643		)	(61,550		)	(60,960		)	(36,627		)
Interest income	341			306			999			940			1,491			1,570
Interest expense	(104		)	(256		)	(439		)	(857		)	(2,148		)	—
Change in fair value of derivative liability associated with Medicis settlement	(44		)	(167		)	(211		)	(595		)
Changes in fair value of derivative liability													(90		)	(92		)
Other expense, net	(128		)	(138		)	(386		)	(406		)	(126		)	(155		)
Loss before income taxes													(61,833		)	(35,304		)
Income tax provision													(100		)	—
Net loss	(30,651		)	(17,978		)	(84,680		)	(62,468		)	(61,933		)	(35,304		)
Unrealized gain (loss) on available for sale securities	72			(132		)	3			56
Unrealized gain and adjustment on securities included in net loss													521			78
Comprehensive loss	$	(30,579	)	$	(18,110	)	$	(84,677	)	$	(62,412	)	$	(61,412	)	$	(35,226	)
Net loss attributable to common stockholders:
Basic and Diluted	$	(30,651	)	$	(17,978	)	$	(84,680	)	$	(62,468	)
Net loss per share attributable to common stockholders (Note 12):
Basic and Diluted	$	(1.01	)	$	(0.64	)	$	(2.86	)	$	(2.22	)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders:
Basic and Diluted	30,270,260			28,160,458			29,623,805			28,085,541
Basic and diluted net loss													$	(61,933	)	$	(35,304	)
Basic and diluted net loss per share													$	(1.15	)	$	(0.85	)
Basic and diluted weighted-average number of shares used in computing net loss per share													53,868,036			41,598,919



	September 30, 2017									December 31, 2016
			Gross Unrealized									Gross Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
Money market funds	$	55,480	$	—	$	—		$	55,480	$	60,639	$	—	$	—		$	60,639
U.S. treasury securities	81,210		—		(35		)	81,175		81,103		4		(28		)	81,079
U.S. government agency obligations	15,950		—		(8		)	15,942		40,968		1		(22		)	40,947
Total cash equivalents and available-for-sale securities	$	152,640	$	—	$	(43	)	$	152,597	$	182,710	$	5	$	(50	)	$	182,665

Classified as:
Cash equivalents								$	55,480								$	60,639
Short-term investments								97,117									122,026
Total cash equivalents and available-for-sale securities								$	152,597								$	182,665



	As of September 30, 2017
	Fair Value		Level 1		Level 2		Level 3
Assets
Money market funds	$	55,480	$	55,480	$	—	$	—
U.S. treasury securities	81,175		81,175		—		—
U.S. government agency obligations	15,942		—		15,942		—
Total assets measured at fair value	$	152,597	$	136,655	$	15,942	$	—

Liabilities
Derivative liability associated with Medicis settlement	$	2,233	$	—	$	—	$	2,233
Total liabilities measured at fair value	$	2,233	$	—	$	—	$	2,233



	As of December 31, 2016
	Fair Value		Level 1		Level 2		Level 3
Assets
Money market funds	$	60,639	$	60,639	$	—	$	—
U.S. treasury securities	81,079		81,079		—		—
U.S. government agency obligations	40,947		—		40,947		—
Total assets measured at fair value	$	182,665	$	141,718	$	40,947	$	—

Liabilities
Derivative liabilities associated with Medicis settlement	$	2,022	$	—	$	—	$	2,022
Total liabilities measured at fair value	$	2,022	$	—	$	—	$	2,022



	Derivative Liability Associated with Medicis Settlement
Fair value as of December 31, 2016	$	2,022
Change in fair value	211
Fair value as of September 30, 2017	$	2,233



Year Ending December 31,
2017	$	1,350
2018	5,578
2019	5,763
2020	5,947
2021 and thereafter	20,644
Total payments	$	39,282



	As of September 30,
	2017	2016
Outstanding common stock options	3,381,927	2,843,580
Outstanding common stock warrants	41,595	61,595
Unvested restricted stock awards	640,931	327,899
Shares expected to be purchased on December 31 under the 2014 ESPP	14,778	11,643


~~(1)~~	~~Cash related~~component of the interest ~~expense included interest payments on the Essex Notes.~~



~~ITEM 3.~~	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


��	the ability of our board of directors, by a majority vote, to amend the bylaws; and



~~ITEM 2.~~	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filling Date	Filed Herewith
3.1	Amended and Restated Certificate of Incorporation	8-K	001-36297	3.1	February 11, 2014	—
3.2	Amended and Restated Bylaws	S-1	333-193154	3.4	December 31, 2013	—
4.1	Form of Common Stock Certificate	S-1/A	333-193154	4.4	February 3, 2014	—
4.2	Indenture, dated as of February 14, 2020, by and between Revance Therapeutics, Inc. and U.S. Bank National Association, as Trustee	8-K	001-36297	4.1	February 14, 2020	—
4.3	Form of Global Note, representing Revance Therapeutics, Inc.’s 1.75% Convertible Senior Notes due 2027 (included as Exhibit A to the Indenture filed as Exhibit 4.2)	8-K	001-36297	4.2	February 14, 2020	—
10.1*	Revance Therapeutics, Inc. Amended and Restated Non-Employee Director Compensation Policy	10-K	001-36297	10.27	February 26, 2020	—
10.2*	Revance Therapeutics, Inc. 2020 Management Bonus Plan	10-K	001-36297	10.28	February 26, 2020	—
10.3*	Separation Agreement effective January 8, 2020 by and between Revance Therapeutics, Inc. and Caryn G. McDowell	10-K	001-36297	10.41	February 26, 2020	—
10.4*	Executive Employment Agreement dated February 17, 2020 by and between Revance Therapeutics, Inc. and Dwight Moxie	10-K	001-36297	10.42	February 26, 2020	—
10.5+	Exclusive Distribution Agreement, dated January 10, 2020, by and between Revance Therapeutics, Inc. and Teoxane SA	10-K	001-36297	10.43	February 26, 2020	—
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) promulgated under the Exchange Act	—	—	—	—	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) promulgated under the Exchange Act	—	—	—	—	X
32.1†	Certification of the Principal Executive Officer pursuant to18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	—	X
32.2†	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	—	—	—	—	X
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	—	—	—	—	X
101.SCH	XBRL Taxonomy Extension Schema Document	—	—	—	—	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	—	—	—	—	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	—	—	—	—	X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document	—	—	—	—	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	—	—	—	—	X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)	—	—	—	—	X



~~ITEM 6.~~*	~~EXHIBITS~~Indicates a management contract or compensatory plan or arrangement.