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UNITED 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 June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 001-36297
Revance Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware77-0551645
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)

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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareRVNCNasdaq 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  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ý    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 growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerEmerging growth company
Non-accelerated filerSmaller reporting company
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  ý
Number of shares outstanding of the registrant's common stock, par value $0.001 per share, as of July 24, 2020: 65,928,296


Table of Contents
 
  Page
PART I. FINANCIAL INFORMATION
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

“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. 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)
(Unaudited)
 June 30,December 31,
 20202019
ASSETS
CURRENT ASSETS
Cash and cash equivalents$363,511  $171,160  
Short-term investments130,532  118,955  
Accounts receivable49    
Inventories778    
Prepaid expenses and other current assets7,901  6,487  
Total current assets502,771  296,602  
Property and equipment, net13,695  14,755  
Intangible assets, net31,660    
Operating lease right of use assets25,366  26,531  
Restricted cash1,050  730  
Other non-current assets1,639  1,669  
TOTAL ASSETS$576,181  $340,287  
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable$6,603  $8,010  
Accruals and other current liabilities22,245  18,636  
Deferred revenue, current portion12,255  7,911  
Operating lease liabilities, current portion3,789  3,470  
Derivative liability3,101  2,952  
Total current liabilities47,993  40,979  
Convertible senior notes174,304    
Deferred revenue, net of current portion74,295  47,948  
Operating lease liabilities, net of current portion23,871  25,870  
TOTAL LIABILITIES320,463  114,797  
Commitments and Contingencies (Note 11)
STOCKHOLDERS’ EQUITY
Convertible preferred stock, par value $0.001 per share — 5,000,000 shares authorized, and no shares issued and outstanding as of June 30, 2020 and December 31, 2019
    
Common stock, par value $0.001 per share — 95,000,000 shares authorized both as of June 30, 2020 and December 31, 2019; 57,313,556 and 52,374,735 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
57  52  
Additional paid-in capital1,222,271  1,069,639  
Accumulated other comprehensive income117  3  
Accumulated deficit(966,727) (844,204) 
TOTAL STOCKHOLDERS’ EQUITY255,718  225,490  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$576,181  $340,287  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Table of Contents

REVANCE THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenue$299  $  $357  $278  
Operating expenses:
Cost of revenue (exclusive of amortization)21    21    
Research and development27,103  25,526  66,897  49,521  
Selling, general and administrative29,606  13,596  50,830  26,506  
Amortization674    674    
Total operating expenses57,404  39,122  118,422  76,027  
Loss from operations(57,105) (39,122) (118,065) (75,749) 
Interest income964  1,596  2,455  3,166  
Interest expense(4,256)   (6,404)   
Changes in fair value of derivative liability(59) 21  (149) (71) 
Other income (expense), net(134) 115  (260) (40) 
Loss before income taxes(60,590) (37,390) (122,423) (72,694) 
Income tax provision    (100)   
Net loss(60,590) (37,390) (122,523) (72,694) 
Unrealized gain (loss) and adjustment on securities included in net loss(407) 46  114  124  
Comprehensive loss$(60,997) $(37,344) $(122,409) $(72,570) 
Basic and diluted net loss$(60,590) $(37,390) $(122,523) $(72,694) 
Basic and diluted net loss per share$(1.12) $(0.86) $(2.27) $(1.71) 
Basic and diluted weighted-average number of shares used in computing net loss per share54,257,320  43,260,317  54,062,678  42,434,137  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Table of Contents
REVANCE THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share and per share amounts)
(Unaudited) 
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
SharesAmountSharesAmountSharesAmountSharesAmount
Convertible Preferred Stock  $    $    $    $  
Common Stock
Balance — Beginning of period57,026,154  57  44,004,658  44  52,374,735  52  36,975,203  37  
Issuance of common stock in connection with the Teoxane Agreement—  —  —  —  2,500,000  3  —  —  
Issuance of restricted stock awards and performance stock awards, net of cancellation220,799  —  67,997  —  1,417,853  1  391,023  —  
Issuance of common stock in connection with offerings—  —  —  —  975,000  1  6,764,705  7  
Issuance of common stock upon exercise of stock options and warrants24,442  —  5,416  —  76,794  —  8,240  —  
Issuance of common stock relating to employee stock purchase plan48,661  —  35,166  —  48,661  —  35,166  —  
Net settlement of restricted stock awards for employee taxes(6,500) —  (7,763) —  (79,487) —  (68,863) —  
Balance — End of period57,313,556  57  44,105,474  44  57,313,556  57  44,105,474  44  
Additional Paid-In Capital
Balance — Beginning of period—  1,213,931  —  941,068  —  1,069,639  —  830,368  
Issuance of common stock in connection with the Teoxane Agreement—  —  —  —  —  43,397  —  —  
Issuance of restricted stock awards and performance stock awards, net of cancellation—  —  —  —  —  (1) —  —  
Issuance of common stock in connection with offerings, net of issuance costs of $44 and $521, respectively
—  —  —  —  —  15,536  —  107,572  
Issuance of common stock upon exercise of stock options and warrants—  427  —  75  —  999  —  93  
Issuance of common stock relating to employee stock purchase plan—  671  —  387  —  671  —  387  
Equity component of convertible senior notes, net of transaction costs—  —  —  —  —  108,510  —  —  
Stock-based compensation—  7,353  —  4,420  —  13,897  —  8,579  
Capped call transactions—  —  —  —  —  (28,865) —  —  
Net settlement of restricted stock awards for employee taxes—  (111) —  (99) —  (1,512) —  (1,148) 
Balance — End of period—  1,222,271  —  945,851  —  1,222,271  —  945,851  
Other Accumulated Comprehensive Gain (Loss)
Balance — Beginning of period—  524  —  70  —  3  —  (8) 
Unrealized gain (loss) and adjustment on securities included in net loss—  (407) —  46  —  114  —  124  
Balance — End of period—  117  —  116  —  117  —  116  
Accumulated Deficit
Balance — Beginning of period—  (906,137) —  (720,079) —  (844,204) —  (684,775) 
Net loss—  (60,590) —  (37,390) —  (122,523) —  (72,694) 
Balance — End of period—  (966,727) —  (757,469) —  (966,727) —  (757,469) 
Total Stockholders’ Equity57,313,556  $255,718  44,105,474  $188,542  57,313,556  $255,718  44,105,474  $188,542  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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REVANCE THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited) 
 Six Months Ended June 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss$(122,523) $(72,694) 
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash in-process research and development11,184    
Stock-based compensation13,897  8,579  
Amortization of debt discount and issuance costs4,504    
Depreciation and amortization2,152  1,418  
Amortization of discount on investments(1,111) (1,481) 
Other non-cash operating activities240  338  
Changes in operating assets and liabilities:
Accounts receivable(49) 27,000  
Inventories(778)   
Prepaid expenses and other current assets(1,179) (2,903) 
Operating lease right of use assets1,165  (2,938) 
Other non-current assets30  853  
Accounts payable(1,099) (321) 
Accruals and other liabilities4,052  (914) 
Deferred revenue30,692  (278) 
Operating lease liabilities(1,679) 2,637  
Net cash used in operating activities(60,502) (40,704) 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments(159,412) (164,970) 
Purchases of property and equipment(1,113) (1,459) 
Purchase of intangible assets(118)   
Proceeds from maturities of investments132,000  117,000  
Proceeds from sale of investments16,969    
Net cash used in investing activities(11,674) (49,429) 
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of convertible senior notes287,500    
Proceeds from issuance of common stock in connection with offerings, net of commissions and discount15,581  108,100  
Proceeds from the exercise of stock options, common stock warrants and employee stock purchase plan1,670  480  
Payment of capped call transactions(28,865)   
Payment of convertible senior notes transaction costs(9,190)   
Net settlement of restricted stock awards for employee taxes(1,512) (1,148) 
Payment of offering costs(337) (521) 
Net cash provided by financing activities264,847  106,911  
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH192,671  16,778  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period171,890  73,986  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period$364,561  $90,764  
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Issuance of common stock in connection with the Teoxane Agreement$43,400  $  
Property and equipment purchases included in accounts payable and accruals$159  $1,408  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. The Company and Summary of Significant Accounting Policies
The Company
Revance Therapeutics, Inc. is a biotechnology company focused on innovative aesthetic and therapeutic offerings, including our next-generation neuromodulator product, DaxibotulinumtoxinA for Injection. DaxibotulinumtoxinA for Injection combines a proprietary stabilizing peptide excipient with a highly purified botulinum toxin that does not contain human or animal-based components. We have successfully completed a Phase 3 program for DaxibotulinumtoxinA for Injection in glabellar (frown) lines and are pursuing U.S. regulatory approval for DaxibotulinumtoxinA for Injection in 2020. We are also evaluating DaxibotulinumtoxinA for Injection in the full upper face, including glabellar lines, forehead lines and crow’s feet, as well as in three therapeutic indications — cervical dystonia, adult upper limb spasticity and plantar fasciitis. To accompany DaxibotulinumtoxinA for Injection, we own a unique portfolio of premium products and services for prestige U.S. aesthetics practices, including (i) the exclusive U.S. distribution rights of Resilient Hyaluronic Acid® (“RHA®”) Collection of dermal fillers, the first and only range of FDA-approved fillers for correction of dynamic facial wrinkles and folds, through an exclusive distribution agreement with Teoxane SA (“Teoxane”) and (ii) the Hint Inc. (“HintMD”) fintech platform, acquired in July 2020, which includes integrated smart payment, subscription and loyalty digital services. We have also partnered with Mylan N.V. to develop a biosimilar to BOTOX®, which would compete in the existing short-acting neuromodulator marketplace. We are dedicated to making a difference by transforming patient experiences.
Since inception, we have devoted substantially all of our efforts to identifying and developing product candidates for the aesthetic and therapeutic pharmaceutical markets, recruiting personnel, raising capital, conducting preclinical and clinical development of, and manufacturing development for DaxibotulinumtoxinA for Injection, DaxibotulinumtoxinA Topical, the biosimilar to BOTOX®, and preparing the commercial launch of Teoxane’s RHA® Collection of dermal fillers. We have incurred losses and negative cash flows from operations. We have not generated substantial product revenue to date, and will continue to incur significant research and development and other expenses related to our ongoing operations.
For three and six months ended June 30, 2020, we had a net loss of $60.6 million and $122.5 million. As of June 30, 2020, we had a working capital surplus of $454.8 million and an accumulated deficit of $966.7 million. In recent years, we have funded our operations primarily through a combination of issuance and sale of common stock and issuance of convertible senior notes. As of June 30, 2020, we had capital resources of $494.0 million consisting of cash and cash equivalents and short-term investments. We believe that our existing capital resources will fund the operating plan through at least the next 12 months following the issuance of this Form 10-Q, and may identify additional capital resources to fund our operations.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited, and reflect all adjustments which are, in the opinion of management, of a normal recurring nature and necessary for a fair statement of the results for the interim periods presented.
Our condensed consolidated balance sheets for the year ended December 31, 2019 was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (“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, 2020, or any other future period. Our condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission (“SEC”), on February 26, 2020.
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
Our condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, and have been prepared in conformity with U.S. GAAP. We operate in one segment.
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, clinical trials and 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, net
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 expensed unless there is an alternative future use in other research and development projects.
Product Revenue
To determine revenue recognition for arrangements that we determine are within the scope of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within the contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
We recognize revenue from product sales when control of the product transfers, generally upon delivery, to the Customer. Upon recognition of revenue from product sales, reserves are evaluated for applicable variable considerations, which may include expected product returns, customer incentives and discounts, certain distributor costs and chargebacks, and those amounts that are subject to probable significant reversal. Where appropriate, these estimates generally take into consideration a range of possible outcomes that are probability-weighted in accordance with the expected value method under ASC 606 for relevant factors. These factors include known historical data, known market events and trends, and/or forecasted
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the respective underlying contracts.
Inventories
Inventories consist of finished goods held for sale to the customer. Cost is determined using the first-in-first-out (FIFO) method. Inventory valuation reserves are established based on a number of factors including, but not limited to, finished goods not meeting product specifications, product excess and obsolescence, or application of the lower of cost or net realizable value concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. No inventory valuation reserves have been recorded for any periods presented.
Recently Adopted Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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.

2. Revenue 
Product Revenue
For the three and six months ended June 30, 2020, product revenue of less than $0.1 million was recorded from an initial sale of the RHA® Collection of dermal fillers in connection with the PrevU Program in advance of our formal launch.
Collaboration 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. Mylan provided us with written notice of its Continuation Decision in May 2020, and paid a $30 million milestone payment in connection with the Continuation Decision in June 2020.
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
Mylan has paid us an aggregate of $60 million in non-refundable upfront fees as of June 30, 2020, and the agreement provides for additional remaining contingent payments of up to $70 million in the aggregate, upon the achievement of certain clinical and regulatory 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.
Revenue Recognition
We re-evaluate the transaction price at each reporting period. 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. As of June 30, 2020, the transaction price allocated to the unfulfilled performance obligations is $106.6 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 at least 2024. It is possible that this period will change and is assessed at each reporting date.
For the three and six months ended June 30, 2020, we recognized revenue related to development services of less than $0.3 million and $0.3 million, respectively. For the three months ended June 30, 2019, we recognized no revenue as no development services were provided during this period, and for the six months ended June 30, 2019, we recognized revenue related to development services provided of $0.3 million. As of June 30, 2020 and December 31, 2019, we estimated short-term deferred revenue of $12.2 million and $7.9 million, respectively; and long-term deferred revenue of $43.3 million and $18.0 million, respectively.
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.
Fosun has paid us non-refundable upfront and other payments totaling $31.0 million before foreign withholding taxes. We are also eligible to receive (i) additional remaining contingent payments of up to $229.5 million upon the achievement of certain milestones based on (a) the 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.
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
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
reporting period and upon a change in circumstances. As of June 30, 2020, the transaction price allocated to unfulfilled performance obligation is $31.0 million.
No revenue has been recognized from the Fosun License Agreement for the three and six months ended June 30, 2020 and 2019. Substantially all payments received to date were included in long-term deferred revenue as of June 30, 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.
The following table is a summary of amortized cost, unrealized gains and losses, and fair value of our cash equivalents and short-term investments:
June 30, 2020December 31, 2019
UnrealizedUnrealized
in thousandsCostGainsFair ValueCostGainsLossesFair Value
Money market funds$339,635  $  $339,635  $136,258  $  $  $136,258  
Commercial paper61,295    25,243  77,082      77,082  
U.S. government agency obligations43,937  57  43,994  5,993  2  (5) 5,990  
U.S. treasury securities25,183  60  61,295  48,349  6    48,355  
Overnight repurchase agreements      15,001      15,001  
Total cash equivalents and available-for-sale securities$470,050  $117  $470,167  $282,683  $8  $(5) $282,686  
Classified as:
Cash equivalents$339,635  $163,731  
Short-term investments130,532  118,955  
Total cash equivalents and available-for-sale securities$470,167  $282,686  
As of June 30, 2020 and December 31, 2019, we have no 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®”) Collection of 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 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® Collection of 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 two years 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 11.
If Teoxane pursues regulatory approval for RHA® Collection of dermal fillers for certain new indications or filler
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
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.
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 is amortized over approximately 4 years commenced upon the first delivery of the RHA® Collection of dermal fillers products from Teoxane in June 2020.
The following table summarized the distribution rights:
June 30, 2020
(in thousands)Initial Carrying AmountAccumulated AmortizationNet Carrying Amount
Distribution rights to approved products and indications$32,334  $(674) $31,660  


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 remeasurement 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 June 30, 2020, the fair value of the derivative liability was $3.1 million, which was measured using a term of 0.4 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. Inventories
As of June 30, 2020, our inventories of $0.8 million consisted of only finished goods, which are the purchased RHA® Collection of dermal fillers from Teoxane.

7. Leases
We have non-cancelable operating leases for facilities for research, manufacturing, and administrative functions, and equipment operating leases. As of June 30, 2020, the weighted average remaining lease term is 6.5 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.
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REVANCE THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements — (Continued)
(Unaudited)
The operating lease costs are summarized as follows:
 Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2020