What changed in this filing

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Item 1. Business

2022-03-03 compared with 2021-03-25 · 100 added, 140 removed, 187 unchanged (56% of the section changed)

We are a performance beauty company with a customer-centric approach focused on delivering breakthrough products in the self-pay aesthetic market.

We are a performance beauty company with a customer-centric approach to delivering breakthrough products in the self-pay aesthetic market.

Our first commercial product is Jeuveau ® , which is a proprietary 900 kilodalton, or kDa, purified botulinum toxin type A formulation indicated for the temporary improvement in the appearance of moderate to severe glabellar lines, also known as “frown lines,” in adults.

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Food and Drug Administration, or FDA.

In May 2019, we commercially launched Jeuveau ® in the United States, and our net sales totaled $56.5 million for fiscal year 2020 and $20.6 million for the fourth quarter of 2020.

In May 2019, we commercially launched Jeuveau ® in the United States, and our net product revenue totaled $99.0 million for fiscal year 2021 and $34.7 million for the fourth quarter of 2021.

In November 2021, we announced the initiation of a Phase II clinical trial designed to investigate a higher strength dose of Jeuveau ® in the glabellar lines.

We plan to enroll our first patient in the clinical trial during the first quarter of 2022.

International

In August 2018, we received approval from Health Canada for the temporary improvement in the appearance of moderate to severe glabellar lines in adult patients under 65 years of age.

We began marketing Jeuveau ® in Canada in October 2019 through our distribution partner, Clarion Medical Technologies, Inc., or Clarion.

In September 2019, we received approval from the European Commission, to market Jeuveau ® in all 28 EU member states, Iceland, Norway and Liechtenstein.

We began marketing Jeuveau ® in Canada in October 2019 through our distribution partner, Clarion Medical Technologies, Inc., or Clarion, and our net service revenue totaled $0.7 million for fiscal year 2021.

In September 2019, we received approval from the European Commission, to market Jeuveau ® in all 27 European Union, or EU, member states plus the United Kingdom, Iceland, Norway and Liechtenstein.

In January 2021, we received a positive decision from the European Commission to add the 50 unit product to the existing approval obtained in September 2019.

We plan to launch Jeuveau ® in Europe in early 2022.

We plan to launch Jeuveau ® in Europe in select countries during the third quarter of 2022.

We received acceptance of our submission to the Australian Therapeutics Good Administration, or TGA, for regulatory approval of our neurotoxin in Australia in the first quarter of 2022.

We expect to receive full TGA regulatory approval and launch the product in Australia in 2023.

Our primary market is self-pay aesthetic healthcare, which includes medical products purchased by physicians that are then sold to consumers or used in procedures for aesthetic indications that are not reimbursed by any third-party payor, such as Medicaid, Medicare or commercial insurance.

By focusing on the self-pay medical aesthetics market, we believe we are not exposed to reimbursement risk associated with a reliance on payments from such third-party payors, and we are subject to fewer regulations that place limits on the types of marketing and other interactions we have with physicians.

Within the self-pay aesthetic market, the global aesthetic neurotoxin market was estimated to generate approximately $2.5 billion of revenue in 2020 and is estimated to grow to approximately $3.8 billion in 2023.

aesthetic neurotoxin market was estimated to generate $1.3 billion in sales in 2020 and is expected to grow to approximately $2.1 billion in 2023.

According to Medical Insight’s The Global Aesthetic Market Study, within the self-pay aesthetic market, the global aesthetic neurotoxin market is estimated to grow to approximately $5.5 billion in 2025.

aesthetic neurotoxin market is expected to grow to approximately $2.9 billion in 2025.

According to Clarivate Aesthetic Injectables Market Insights, the European aesthetic neurotoxin market is expected to grow to approximately $621 million in 2025.

We believe the growth in the medical aesthetics market is driven by a number of factors, including:

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We offer physicians and consumers a compelling value proposition because:

• Jeuveau ® offers the U.S.

market the first known 900 kDa neurotoxin alternative to BOTOX.

• Jeuveau ® offers the market the first known 900 kDa neurotoxin alternative to BOTOX.

The manufacture of both Jeuveau ® and BOTOX starts with a 900 kDa complex, includes adding the excipients human serum albumin, or HSA, and sodium chloride, and finishes by vacuum drying.

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We also believe an important component of competitiveness in the neurotoxin market relates to the characteristics associated with the 900 kDa complex and the potential of the accessory proteins to increase the effectiveness of the active toxin portion of the complex.

• Results from our TRANSPARENCY global clinical program in more than 2,100 patients provides robust data to physicians evaluating the purchase of Jeuveau ® .

We believe the comprehensive TRANSPARENCY clinical data set, including a head-to-head Phase III study comparing Jeuveau ® and BOTOX, provides physicians with confidence in recommending Jeuveau ® to their patients.

• We offer a unique technology platform.

We provide a simple, personal and connected experience for physicians utilizing our proprietary technology platform.

We have built and continue to improve our platform with the goal of limiting friction and enhancing the overall experience for physicians and ultimately consumers.

We are modernizing the customer engagement with our proprietary “Evolus Practice” app.

We not only leverage technology for operational efficiency, but more importantly, to enhance a customer’s experience.

The combination of a highly specialized sales force and our technology platform is an effective and competitive model.

• Enhanced level of physician-customer interaction through a self-pay, aesthetic-only marketing strategy.

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We utilize this flexibility to drive market adoption through programs such as promotional events, experience product programs and pricing strategies.

• We offer a unique technology platform.

We provide a simple, personal and connected experience for physicians utilizing our proprietary technology platform.

We have built and continue to improve our platform with the goal of limiting friction and enhancing the overall experience for physicians and ultimately consumers.

We are modernizing the customer engagement with our proprietary “Evolus Practice” app.

We not only leverage technology for operational efficiency, but more importantly, to enhance a customer’s experience.

The combination of a highly specialized sales force and our technology platform is an effective and competitive model.

• Results from our TRANSPARENCY global clinical program in more than 2,100 patients provides robust data to physicians evaluating the purchase of Jeuveau ® .

• We have strong relationships with aesthetic key opinion leaders, or KOLs.

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• Our management team has significant experience and expertise in medical aesthetics.

Our management team has extensive experience in self-pay healthcare markets, in the development, market launch and commercialization of major medical products, execution and integration of business development transactions, identification of and partnerships with KOLs, and understanding of the regulatory environment of the healthcare markets.

Our management team has extensive experience in self-pay healthcare markets, in the development, market launch and commercialization of

major medical products, execution and integration of business development transactions, identification of and partnerships with KOLs, and understanding of the regulatory environment of the healthcare markets.

Key members of our leadership team have also served in relevant senior leadership positions with leading aesthetic companies.

In May 2019, we launched Jeuveau ® in the United States with our own specialty sales organization now consisting of over 70 positions between representatives, management and other sales employees and in Canada through our distribution partner,

We launched Jeuveau ® in the United States with our own specialty sales organization now consisting of over 70 positions between representatives, management and other sales employees and in Canada through our distribution partner, Clarion.

We plan to launch in select European countries during the third quarter of 2022.

We plan to expand our product offerings over time through in-licensing, partnerships and acquisitions and by launching our products internationally.

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• Establish a leading medical aesthetics company with a diversified product offering by in-licensing technology, developing partnerships and potentially acquiring products.

Final Ruling by the U.S.

International Trade Commission and the Subsequent Settlement Agreements

On January 30, 2019, Allergan, plc (now Allergan Limited) and Allergan, Inc., who we refer to collectively as Allergan, and Medytox, Inc., or Medytox, filed a complaint against us and Daewoong Pharmaceuticals Co., Ltd., or Daewoong in the International Trade Commission, or ITC, alleging that Jeuveau ® is manufactured based on misappropriated trade secrets of Medytox and therefore the importation of Jeuveau ® is an unfair act.

The ITC matter, which we refer to as the ITC Action, is entitled In the Matter of Certain Botulinum Toxin Products.

The ITC instituted an investigation as ITC Inv.

On December 16, 2020, the ITC issued a final determination in the ITC Action and issued (1) a limited exclusion order prohibiting the importation of Jeuveau ® into the United States for a period of 21 months and (2) a cease and desist order preventing the Company from, among other things, selling, marketing, or promoting such imported Jeuveau ® in the United States for a period of 21 months.

We refer to the limited exclusion order and the cease and desist order collectively as the remedial orders.

The Final Determination was subject to a 60-day presidential review period before taking effect.

During the presidential review period, the Company was permitted to continue importation and sales of Jeuveau ® subject to payment of a bond of $441 per vial.

Effective February 18, 2021, we entered into a Settlement and License Agreement with Medytox and Allergan, which we refer to as the U.S.

Settlement Agreement and another Settlement and License Agreement with Medytox, which we refer to as the ROW Settlement Agreement.

We refer to the U.S.

Settlement Agreement and the ROW Settlement Agreement collectively as the Medytox/Allergan Settlement Agreements.

Under the Medytox/Allergan Settlement Agreements, we obtained (i) a license to commercialize, manufacture and to have manufactured for us certain products identified in the Medytox/Allergan Settlement Agreements, including Jeuveau ® (the “Licensed Products”) in the United States and other territories where we license Jeuveau ® , (ii) the dismissal of outstanding litigation against us, including the ITC Action, a rescission of the related remedial orders, and the dismissal of a civil case in the Superior Court of California against us, which we refer to together with any claims (including claims brought in Korean courts) with a common nexus of fact as the Medytox/Allergan Actions, and (iii) releases of claims against us for the Medytox/Allergan Actions.

In exchange, we agreed to (i) make cash payments of $35.0 million in multiple payments over two years to Allergan and Medytox, (ii) pay to Allergan and Medytox certain royalties on the sale of Jeuveau ® , based on a certain dollar amount per vial sold of Licensed Product by or on our behalf in the United States, from December 16, 2020 to September 16, 2022, (iii) from December 16, 2020 to September 16, 2022, pay to Medytox a low-double digit royalty on net sales of Jeuveau ® sold by us or on our behalf in territories we have licensed outside the United States;

(iv) from September 16, 2022 to September 16, 2032, pay to Medytox a mid-single digit royalty percentage on net sales of Jeuveau ® in the United States and all territories we have licensed outside the United States, (v) issue to Medytox of 6,762,652 shares of our common stock, par value $0.00001 per share, which we issued on February 18, 2021, and (vi) enter into a Registration Rights Agreement pursuant to which we granted certain registration rights to Medytox with respect to such shares of common stock

beginning as of March 31, 2022.

In addition, under the Medytox/Allergan Settlement Agreements, we made certain representations and warranties and agreed to positive and negative covenants.

On March 23, 2021, we entered into a Confidential Settlement and Release Agreement with Daewoong Pharmaceuticals Co.

Ltd., or Daewoong, which we refer to as the Daewoong Settlement Agreement, a Convertible Promissory Note Conversion Agreement, which we refer to as the Conversion Agreement and the Third Amendment to the Supply Agreement (which amends the Daewoong Agreement), which we refer to as the Daewoong Agreement Amendment.

We refer to the Daewoong Settlement Agreement, the Conversion Agreement and the Daewoong Agreement Amendment collectively as the 2021 Daewoong Arrangement.

Under the 2021 Daewoong Arrangement, (i) Daewoong agreed to (a) pay us an amount equal to $25.5 million, (b) pay certain reasonable legal fees incurred by our litigation counsel in connection with its defense of the ITC Action (including any appeal of the resulting remedial orders), (c) cancel up to $10.5 million in aggregate milestone payments under our Daewoong Agreement, and (d) reimburse us certain amounts (calculated on a dollar amount per vials sold basis in the United States) for sales of certain products with respect to which we are required to pay Medytox and Allergan royalties pursuant to the U.S.

Settlement Agreement;

and (ii) we agreed to (y) release certain claims we may have against Daewoong or certain of its affiliates and representatives related to the allegations made in or the subject matter of the Medytox/Allergan Actions, or any orders, remedies and losses resulting from the Medytox/Allergan Actions, and (z) coordinate with Daewoong on certain matters related to the Medytox/Allergan Actions.

In the Conversion Agreement, among other things, the parties agreed that (i) the principal balance of the $40.0 million aggregate principal amount convertible promissory note we issued to Daewoong on July 30, 2020, which we refer to as the Daewoong Convertible Note, and accrued and unpaid interest thereon shall be automatically converted, at the conversion price of $13.00 per share, into 3,136,869 shares of our common stock;

and (ii) the Daewoong Convertible Note shall be deemed cancelled and satisfied in full in connection with such conversion.

Under the Daewoong Agreement Amendment, the parties agreed to amend the Daewoong Agreement to:

(i) expand the territory within which we may distribute Jeuveau ® to certain countries in Europe;

(ii) reduce the period of time with respect to which we are required to deliver binding forecasts to Daewoong;

(iii) introduce certain limitations on Daewoong’s ability to convert our exclusive license for certain territories to a non-exclusive license in the event we fail to meet certain minimum purchase requirements for such territory;

(iv) adjust the minimum purchase requirements and reduce the transfer price per vial of Jeuveau ® applicable to various territories;

(v) require that any Jeuveau ® supplied by Daewoong match certain shelf-life thresholds;

and (vi) prohibit us from sharing certain confidential information regarding Daewoong with Medytox or its affiliates or representatives.

For additional information on the final ruling by the ITC and the subsequent Settlement Agreements, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations— Impact on Our Business of Final Ruling by the U.S.

International Trade Commission and the Subsequent Settlement.”

Jeuveau ® Overview

Jeuveau ® is an injectable formulation of a 900 kDa botulinum toxin type A complex designed to address the needs of the large and growing facial aesthetics market.

We completed the TRANSPARENCY global clinical program which enrolled over 2,100 adult subjects.

The results of the TRANSPARENCY global clinical program were used to support our applications for regulatory approvals in the United States, EU and Canada.

As demonstrated in the figure below, Jeuveau ® contains a 900 kDa botulinum toxin type A complex produced by the bacterium Clostridium botulinum.

Jeuveau ® contains a 900 kDa botulinum toxin type A complex produced by the bacterium Clostridium botulinum.

The active part of the neurotoxin is the 150 kDa component, and the remaining 750 kDa of the complex is made up of accessory proteins that we believe help with the function of the active portion of the toxin.

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Botulinum toxin type A specifically blocks peripheral acetylcholine release at presynaptic cholinergic nerve terminals by cleaving SNAP-25, a protein integral to the successful docking and release of acetylcholine from vesicles situated within the nerve endings leading to denervation and relaxation of the muscle.

Diagram of Botulinum Toxin Type A

TRANSPARENCY:

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The TRANSPARENCY program, which was developed in consultation with the FDA, Canadian, and European regulatory bodies, included three multicenter, randomized, double-blinded, controlled, single dose Phase III studies titled EV-001, EV-002 and EVB-003.

Each Phase III study lasted 150 days.

The TRANSPARENCY program also included two open label, multiple dose, long-term Phase II studies titled EV-004 and EV-006, each lasting one year.

Between September 2014 and August 2016, over 2,100 adult male and female subjects with moderate to severe glabellar lines at maximum frown participated in this program.

In our clinical trials, subjects received intramuscular injections in five target sites in muscles that contribute to the formation of glabellar lines:

the midline of the procerus, the inferomedial aspect of each corrugator, and the superior middle aspect of each corrugator.

Each of the five target sites was injected with 0.1 milliliters, or mL, for a total of 0.5mL.

Subjects assigned (in the open label studies) or randomized (in the controlled studies) to Jeuveau ® received a total of 20 units per treatment, administered as 4 units per 0.1mL and those subjects who were randomized to the placebo group received 0.5mL saline.

In our EVB-003 Phase III trial, the only study of the five with both a placebo and active control arm, subjects randomized to the active control received a total of 20 units of BOTOX administered as 4 units per 0.1mL.

All five studies contributed data to the evaluation of efficacy and safety of Jeuveau ® .

Phase III U.S.

Based Clinical Trials.

Treatment of the Glabellar lines was based on a 4-point photonumeric Glabellar Line Scale, or GLS, where 0=no lines, 1=mild lines, 2=moderate lines and 3=severe lines.

Phase III Clinical Trials – Composite End Point Versus Placebo

The two identical U.S.

Phase III studies, EV-001 and EV-002, enrolled subjects who were selected from a population of healthy adults, at least 18 years of age, who had moderate to severe glabellar lines at maximum frown, as independently assessed by the investigator and subject using the 4-point photonumeric Glabellar Line Scale, or GLS, where 0=no lines, 1=mild lines, 2=moderate lines and 3=severe lines.

On Day 0, eligible subjects were randomly assigned in a 3:1 ratio to receive a single treatment of either Jeuveau ® or placebo.

Subjects were followed for 150 days after treatment.

Phase III studies, EV-001 and EV-002 (the “U.S.

Phase III Studies”), enrolled a combined 654 adults who had moderate to severe glabellar lines at maximum frown.

Subjects were randomly assigned in a 3:1 ratio to receive a single treatment of either Jeuveau ® or placebo.

The primary efficacy endpoint was defined as the proportion of subjects classified as responders on Day 30.

This was a composite endpoint in which a responder was a subject with a 2 point improvement or greater on the GLS from Day 0 to Day 30 at maximum frown, only if independently agreed by both investigator and subject assessment.

Both studies met the primary endpoint of superiority over placebo.

The percentages of responders in the intent to treat population for the composite primary endpoint, a two point or greater score composite improvement, in each of the two controlled single dose studies were:

A subject was considered a responder only if both the investigator and the subject independently agreed that there was a 2 point improvement or greater on the GLS from Day 0 to Day 30 at maximum frown.

This type of endpoint where both the investigator and subject must agree is known as a composite endpoint.

Both of the U.S.

Phase III studies met the primary endpoint of superiority over placebo.

The percentages of responders in the intent to treat population were:

1.2% placebo, 67.5% Jeuveau ® , with an absolute difference between the groups of 66.3%, 95% CI (59.0, 72.4)

1.3% placebo, 70.4% Jeuveau ® , with an absolute difference between the groups of 69.1%, 95% CI (61.5, 75.1)

In the EV-002 study, the adverse event, or AE, rate was 26.9% in the placebo group and 28.5% in the Jeuveau ® group.

Placebo and Jeuveau ® groups were similar in the overall incidence of subjects who experienced one or more AEs.

Four Jeuveau ® subjects (4/246, 1.6%) experienced a serious adverse event, or SAE, but none were assessed as study drug related.

Placebo and Jeuveau ® groups were also similar in the percentages of subjects who experienced an AE assessed by the investigator as study drug related:

7.7% of placebo subjects and 9.8% of Jeuveau ® subjects.

The drug related eyelid and eyebrow ptosis rates in the Jeuveau ® arm were 1.2% and 0.4% respectively.

Overall, AEs with an incidence of 1% or greater were headache at 9.3% in the Jeuveau ® groups and 7.6% in the placebo groups and eyelid ptosis at 1% in the Jeuveau ® groups and 0% in the placebo groups.

Phase III European and Canadian Clinical Trial for Glabellar Lines

The EVB-003 study was the third Phase III safety and efficacy study in the Jeuveau ® clinical development program, and was conducted in Europe and Canada.

540 subjects with moderate to severe glabellar lines, or a GLS score of 2 or 3, as assessed by the investigator, were eligible to be enrolled provided that subjects also felt their glabellar lines had an important psychological impact, such as on their mood, anxiety or depressive symptoms.

On Day 0, eligible subjects were randomly assigned in a 5:5:1 ratio to receive a single treatment of 20 units of Jeuveau ® , 20 units of BOTOX or placebo.

EU Phase III Clinical Trials – Head-to-Head Comparison of Jeuveau ® , Botox and Placebo

The EVB-003 study was the third Phase III safety and efficacy study in the TRANSPARENCY Program and compared the efficacy of Jeuveau ® , Botox and Placebo.

The study was conducted in Europe and Canada and enrolled 540 adults who (i) the investigator assessed to have moderate to severe glabellar lines and (ii) who felt their glabellar lines had an important psychological impact, such as on their mood, anxiety or depressive symptoms.

Subjects were randomly assigned in a 5:5:1 ratio to receive a single treatment of 20 units of Jeuveau ® , 20 units of BOTOX or placebo.

The primary efficacy endpoint was defined as the proportion of subjects classified as responders on Day 30.

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EU Phase III Primary Endpoint - Responder Rates at Maximum Frown on Day 30 (GLS = 0 or 1) by Investigator Assessment EU Phase III Primary Endpoint - Non-Inferiority, at Maximum Frown on Day 30 by Investigator Assessment

As presented in the table below, within each group, 32.7% of placebo subjects, 41.9% of BOTOX subjects and 37.6% of Jeuveau ® subjects experienced AEs.

One placebo subject (1/49, 2.0%), one BOTOX subject (1/246, 0.4%) and three Jeuveau ® subjects (3/245, 1.2%) experienced a total of 11 SAEs and none were assessed as study drug related.

The drug related eyelid ptosis rates were 1.6% in the Jeuveau ® arm and 0% in the BOTOX arm and the eyebrow ptosis rates were 0% in the Jeuveau ® arm and 0.4% in the BOTOX arm.

EU and Canadian Phase III Trial - Adverse Event Rate Summary

As presented in the table below, in EVB-003, we also assessed as a secondary endpoint ≥ 1 point improvement GLS at maximum frown for both investigator and patient satisfaction.

The investigator assessment at Day 2, the beginning of the study, and at Day 150, at the end of the study, Jeuveau ® is statistically superior to placebo as measured by a one-point improvement on the GLS scale by investigator assessment.

We also looked at subject satisfaction on Day 30, and Jeuveau ® was superior to placebo at 91% versus 6% in the placebo arm.

EU and Canadian Phase III Trial - Select Secondary Endpoints

*P-Value Placebo vs Jeuveau ® <0.001

TRANSPARENCY Safety Evaluations

Safety was studied across all five studies that made up the TRANSPARENCY Clinical Program.

Jeuveau ® was relatively well tolerated with no drug related serious adverse events, or SAEs.

Most adverse events were mild and the labeling information for Jeuveau ® lists the most common adverse reactions as headache (9.3%), eyelid ptosis (2.0%), upper respiratory tract infections (3%) and increase white blood cell count (1%).

Phase II “Extra Strength” Clinical Trial

In November 2021, we announced the initiation of a Phase II clinical trial designed to investigate a higher strength dose of Jeuveau ® in the glabellar lines.

This planned glabellar line study is a controlled, randomized, prospective, double blind, three-arm trial following patients out to a maximum of 12 months.

Three-arms will be enrolled:

the currently approved 20 units of BOTOX and 20 units of Jeuveau ® compared to 40 units of “extra strength” Jeuveau ® .

Study initiation activity has begun with an open Investigational New Drug (“IND”) application and the first patient is expected to be enrolled in the first quarter of 2022.

We anticipate completing the study in the first half of 2023.

Manufacturing

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We believe this facility will be sufficient to meet demand for Jeuveau ® for the foreseeable future.

The FDA conducted a current Good Manufacturing Practice, or cGMP, and pre-approval inspection of the facility in November 2017 in connection with our BLA for Jeuveau ® .

The UK Medicines and Healthcare Products Regulatory Agency, or MHRA, also completed an inspection of the manufacturing facility in February 2018 in connection with our MAA.

The FDA conducted a current Good Manufacturing Practice, or cGMP, and pre-approval inspection of the facility in November 2017 in connection with our Biologics License Application, or BLA, for Jeuveau ® .

The UK Medicines and Healthcare Products Regulatory Agency, or MHRA, also completed an inspection of the manufacturing facility in February 2018 in connection with our Marketing Authorisation Application, or MAA.

FDA approval of Jeuveau ® in February 2019 included approval to manufacture Jeuveau ® at Daewoong’s facility.

Daewoong License and Supply Agreement

On September 30, 2013, we entered into the Daewoong Agreement with Daewoong, pursuant to which Daewoong agreed to manufacture and supply Jeuveau ® and grant us an exclusive license to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit Jeuveau ® for aesthetic indications in the United States, EU, Great Britain, European Economic Area, Switzerland, Canada, Australia, Russia, Commonwealth of Independent States, or CIS, and South Africa, each, a covered territory.

Provided that if we do not apply for approvals or commence clinical trials in certain covered territories within 12 months of the Daewoong Agreement Amendment, we may no longer have rights to that covered territory.

Daewoong also granted us a non-exclusive license to do the same in Japan.

In connection with our entry into the Daewoong Agreement, we made an upfront payment to Daewoong of $2.5 million and agreed to make milestone payments upon certain confidential development and commercial milestones, including payment to Daewoong upon each of FDA and EMA approval of Jeuveau ® .

Under the Daewoong Agreement, the maximum aggregate amount of milestone payments that could have been owed to Daewoong upon the satisfaction of all milestones is $13.5 million.

Upon the FDA approval in February 2019 and EMA approval in September 2019, we paid $2.0 million and $1.0 million milestone payment, respectively.

As of December 31, 2020, Daewoong was eligible to receive remaining contingent milestone payments of up to $10.5 million, all of which were cancelled in March 2021 as part of the Daewoong Settlement Agreement.

Daewoong is responsible for all costs related to the manufacturing of Jeuveau ® , including costs related to the operation and upkeep of its manufacturing facility, and we are responsible for all costs related to obtaining regulatory approval, including clinical expenses, and commercialization of Jeuveau ® .

Under the Daewoong Agreement, Daewoong has agreed to supply us with Jeuveau ® at an agreed-upon, transfer price, and we have agreed to make milestone payments upon completion of certain confidential development and commercial milestones.

Our exclusivity is subject to certain minimum annual purchases for each covered territory upon commercialization and if we fail to meet these targets, Daewoong may, at its option, convert the exclusive license for such covered territory to a non-exclusive license.

These potential minimum purchase obligations are contingent upon the occurrence of future events, including receipt of governmental approvals and our future market share in various jurisdictions.

During the term of the Daewoong Agreement, we cannot purchase, sell or distribute any competing products in a covered territory or Japan or sell Jeuveau ® outside a covered territory or Japan.

We also have the option to negotiate first with Daewoong to secure a distribution license for any product that Daewoong directly or indirectly develops or commercializes that is classified as an injectable botulinum toxin (other than Jeuveau ® ) in a covered territory or Japan.

In 2013, we entered into the Daewoong Agreement, pursuant to which Daewoong agreed to manufacture and supply Jeuveau ® and grant us an exclusive license to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit Jeuveau ® for aesthetic indications in the United States, EU, United Kingdom, members of the European Economic Area, Switzerland, Canada, Australia, Russia, certain members of the Commonwealth of Independent States, or CIS, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan.

Under the Daewoong Agreement, we are required to make certain minimum annual purchases in order to maintain the exclusivity of the license.

If we fail to meet these purchase requirements, Daewoong may, at its option, convert the exclusive license for such covered territory to a non-exclusive license.

These minimum purchase obligations are contingent upon the occurrence of future events, including receipt of governmental approvals and our future market share in various jurisdictions.

Under the Daewoong Agreement, Daewoong is responsible for all costs related to the manufacturing of Jeuveau ® , including costs related to the operation and upkeep of its manufacturing facility, and we are responsible for all costs related to obtaining regulatory approval, including clinical expenses, and commercialization of Jeuveau ® .

The initial term of the Daewoong Agreement expires September 30, 2023, and automatically renews for unlimited additional three-year terms if we meet certain performance requirements.

The Daewoong Agreement will terminate (A) upon written notice by either us or Daewoong upon a continuing default that remains uncured within 90 days (or 30 days for a payment default) by the other party, or (B) without notice upon the bankruptcy or insolvency of our company.

We are the sole owner of any marketing authorization and clinical trial results we pursue in a covered territory.

Under the Daewoong Agreement, we are the sole owner of any marketing authorization and clinical trial results we pursue in a covered territory.

However, if we do not renew the Daewoong Agreement or upon termination of the Daewoong Agreement due to a breach by us, we are obligated to transfer our rights to Daewoong.

The Daewoong Agreement also provides that Daewoong will indemnify us for any losses arising out of (i) Daewoong’s willful misconduct or gross negligence in performing its obligations under the agreement, (ii) Daewoong’s breach of the agreement, or (iii) any allegation that Jeuveau ® or Daewoong’s trademark infringes or misappropriates the rights of a third party, except, in each case, as a result of our willful misconduct or gross negligence.

We have agreed to indemnify Daewoong for any losses arising out of (A) our willful misconduct or gross negligence in performing our obligations under the agreement, or (B) our breach of the agreement, except, in each case, as a result of Daewoong’s willful misconduct or gross negligence.

Our primary competitors in the pharmaceutical market are companies offering injectable dose forms of botulinum toxin.

Impact of Settlement Agreements

In February 2021, we settled litigation claims related to a complaint against us filed by Allergan, Inc.

and Allergan Limited (together, “Allergan”) and Medytox, Inc.

(“Medytox”) in the U.S.

International Trade Commission related to Jeuveau ® (the “ITC Action”) and certain related matters by entering into a Settlement and License Agreement with Medytox and Allergan, which we refer to as the U.S.

Settlement Agreement, and another Settlement and License Agreement with Medytox which we refer to as the ROW Settlement Agreement.

We refer to the U.S.

Settlement Agreement and the ROW Settlement Agreement collectively as the Medytox/Allergan Settlement Agreements.

Under the Medytox/Allergan Settlement Agreements, we agreed to (i) make cash payments of $35.0 million in multiple payments over two years to Allergan and Medytox, of which we paid the first payment of $15.0 million in the third quarter of 2021 and $15.0 million during the first quarter of 2022, with final payment of $5.0 million due in 2023, (ii) pay to Allergan and Medytox royalties on the sale of Jeuveau ® , based on a certain dollar amount per vial sold of Licensed Products by or on our behalf in the United States, from December 16, 2020 to September 16, 2022, (iii) from December 16, 2020 to September 16, 2022, pay Medytox a low-double digit royalty on net sales of Jeuveau ® sold by us or on our behalf in territories we have licensed outside the United States, and (iv) beginning September 16, 2022 to September 16, 2032, we will pay Medytox a mid-single digit royalty percentage on net sales of Jeuveau ® in the United States and all territories we have licensed outside the United States.

We also issued 6,762,652 shares of our common stock to Medytox.

Our primary competitors are companies offering injectable dose forms of botulinum toxin.

There are only four approved injectable botulinum toxin type A neurotoxins in the United States, including Jeuveau ® .

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• BOTOX, marketed by Allergan plc, or Allergan, received FDA approval in 2002 for glabellar lines.

Allergan was the first company to market neurotoxins for aesthetic purposes.

Allergan (now AbbVie) was the first company to market neurotoxins for aesthetic purposes.

• Dysport, marketed by Galderma S.A., or Galderma, received FDA approval in 2009 for glabellar lines.

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We are also aware that Revance Therapeutics, Inc.

has submitted a BLA to the FDA for an injectable botulinum toxin type A neurotoxin and received a target date action date of November 25, 2020 under the Prescription Drug User Fee Act;

however the FDA has deferred its decision on the BLA and the BLA has not yet been approved.

If Revance’s BLA is approved, we expect the competition in the U.S.

has submitted a BLA to the FDA for an injectable botulinum toxin type A neurotoxin and in October 2021 received a Complete Response Letter from the FDA.

Additionally, Hugel Inc., has submitted

a BLA to the FDA for an injectable botulinum toxin type A neurotoxin.

If either BLA is approved, we expect the competition in the U.S.

injectable botulinum toxin market to further increase.

Most of our primary competitors are also approved to sell injectable botulinum toxin type A neurotoxins in Europe and other markets that we may enter.

In addition to the companies commercializing and developing neurotoxins, there are other products and treatments that may indirectly compete with Jeuveau ® , such as dermal fillers, laser treatments, brow lifts, chemical peels, fat injections and cold therapy.

We compete with various companies that have products in these medical aesthetic categories.

Among these companies are Allergan, Sanofi, Sun Pharma, Valeant Pharmaceuticals International, Inc., or Valeant, Mentor Worldwide LLC, a division of Johnson & Johnson, Merz, Galderma, and Skinceuticals, a division of L’Oreal SA.

Among these companies are Allergan (now AbbVie), Sanofi, Sun Pharma, Valeant Pharmaceuticals International, Inc., or Valeant, Mentor Worldwide LLC, a division of Johnson & Johnson, Merz, Galderma, and Skinceuticals, a division of L’Oreal SA.

In addition, we are aware of other companies also developing and/or marketing products in one or more of our target markets, including competing injectable botulinum toxin type A formulations that are in various phases of development in North America for the treatment of glabellar lines.

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aesthetic neurotoxin market in May 2019.

Given the early stage of our launch of Jeuveau ® , the impact of the COVID-19 outbreak and the impact of the ITC remedial orders, we have not observed significant seasonality in our net revenue to date.

Given the limited history of the commercialization of Jeuveau ® , the impact of the COVID-19 outbreak and the impact of the ITC remedial orders, we have not observed significant seasonality in our net revenues to date.

However, we are aware that historically the aesthetic neurotoxin market experiences higher revenue in the second and fourth calendar quarters as compared to the first and third calendar quarters.

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• purity and potency from results of nonclinical testing and clinical trials;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with cGMP, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices for the use of human cellular and tissue products;

preserve the biological product’s identity, strength, quality and purity and, if applicable, the FDA’s current good tissue practices for the use of human cellular and tissue products;

• potential FDA audits of the nonclinical study and clinical trial sites that generated the data in support of the BLA;

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• The Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services relating to healthcare matters;

• the Federal Physician Payments Sunshine Act, and its implementing regulations, which require that certain manufacturers of drugs, medical devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report to the CMS information related to certain payments or other transfers of value made or distributed to physicians, which is defined broadly to include other healthcare providers, teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;

• The Federal Physician Payments Sunshine Act, and its implementing regulations, which require that certain manufacturers of drugs, medical devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report to the CMS

information related to certain payments or other transfers of value made or distributed to physicians, which is defined broadly to include other healthcare providers, teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;

• State and foreign law equivalents of the foregoing and state laws regarding pharmaceutical company marketing compliance, reporting and disclosure obligations.

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Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

Product Approval Process Outside the United States and Europe

Regulation Outside of the United States and Europe

In addition to regulations in the United States and EU, we may be subject to a variety of regulations in other jurisdictions governing manufacturing, clinical trials, commercial sales and distribution of our future products.

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Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,” those independent contractors or agents of covered entities that create, receive, maintain, transmit or obtain protected health information in connection with providing a service on behalf of a covered entity.

injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

In addition, state and non-U.S.

laws, including the General Data Protection Regulation adopted by the EU, govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

laws, including the General Data Protection Regulation adopted by the

EU, govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security concerns.

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We are subject to numerous foreign, federal, state, and local environmental, health and safety laws and regulations relating to, among other matters, safe working conditions, manufacturing practices, fire hazard control, product stewardship and end-of-life handling or disposition of products, and environmental protection, including those governing the generation, storage, handling, use, transportation and disposal of hazardous or potentially hazardous substances and biological materials.

We were incorporated in November 2012 and are headquartered in Newport Beach, California.

In a series of related transactions in 2013, Strathspey Crown Holdings Group, LLC (formerly known as Strathspey Crown Holdings, LLC), or SCH, acquired all of our outstanding equity in exchange for membership interests in SCH.

In 2014, SCH contributed our equity that it had acquired in 2013 to its subsidiary operating entity, ALPHAEON Corporation, or Alphaeon.

As a result of these transactions, prior to our initial public offering we were a wholly-owned subsidiary of Alphaeon.

In 2019 Alphaeon changed its name to AEON Biopharma, Inc.

and contributed all of the shares it held in the Company to Alphaeon 1, LLC.

The Company continues to refer to the renamed AEON Biopharma, Inc.

as “Alphaeon” and Alphaeon 1, LLC as Alphaeon 1, LLC.

As of December 31, 2020 and March 25, 2021, Alphaeon owned 25.7% and 19.8% of our outstanding shares of common stock, respectively.

We believe that we have been and remain in substantial compliance with all applicable environmental laws and regulations and that we currently have no liabilities under such environmental requirements that could reasonably be expected to materially harm our business, results of operations or financial condition.

Human Capital Resources

As of December 31, 2020, we had 119 employees, all of whom are full-time in the United States, and 63% of our full-time employees were women.

As of December 31, 2021, we had 167 employees, all of whom are full-time in the United States and United Kingdom, and 69% of our full-time employees were women.

None of our employees are represented by labor unions or covered by collective bargaining agreements, and we have never experienced any work stoppage.

We believe we have good relations with our employees.

Attracting and Developing Talent

We believe that our future success largely depends upon our continued ability to attract and retain highly qualified management and technical personnel.

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To facilitate talent attraction and retention, we strive to make our company a safe and rewarding workplace, with opportunities for our employees to grow and develop in their careers, supported by strong compensation and benefits, and by programs that build connections among our employees.

We continue to be committed to an inclusive culture which values equity, opportunity, and respect.

In support of our inclusive culture, we offer competitive compensation and benefits, including stock awards;

provide unconscious bias training to strengthen employee awareness;

and strive to recruit a diverse talent pool across all levels of the organization.

Compensation and Benefits

To attract, retain and recognize talent, we aim to ensure merit-based, equitable compensation practices and strive to provide competitive compensation and benefit packages to our employees.

Our compensation package includes competitive base pay, an annual performance bonus, long-term incentive awards, health care and retirement benefits, paid time off and family leave, among others.

Health, Safety and Wellness

We are committed to the health, safety and wellness of our employees.

In response to the COVID-19 pandemic, we implemented changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

This included implementing a work-from-home policy for all employees who are able to perform their duties remotely and restricting all nonessential travel.

This included requiring our employees and sales professionals to work remotely when required by local jurisdictions, limiting non-essential travel and minimizing in-person work-related meetings.

Inclusion and Belonging

We promote an inclusive culture that values equity, opportunity, and respect.

In 2019, we formed a Culture & Belonging Council comprised of our employees.

This council has a vision to create and foster a culture that reflects diversity and inclusion so that each of our employees has a sense of belonging as their authentic, unique selves.

In support of our inclusive culture, we provide unconscious bias training to strengthen employee awareness and strive to recruit a diverse talent pool across all levels of the organization.

Corporate Information

We were incorporated in the State of Delaware in November 2012.

Our principal executive offices are located at 520 Newport Center Drive, Suite 1200, Newport Beach, California 92660, and our telephone number is (949) 284-4555.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business