Xeris Biopharma Holdings, Inc.

Hello, good morning, and welcome to the Xeris Pharmaceuticals second quarter financial results. My name is Gemma, and I'll be the co-operator today. If you'd like to ask a question during the presentation, please press star followed by one in the telephone keypad, or if you change your mind, please press star followed by two. I'll now hand you over to our host, Alison Way, Senior Vice President of Investor Relations. Please go ahead, Alison. Thank you, Gemma.

Good morning and welcome to Xeris Pharmaceutical's second quarter 2021 financial results and corporate update conference call. A press release with the company's second quarter financial results was issued earlier this morning and can be found on our website. We are joined this morning by Paul Edith, Chairman and CEO, and Steve Piper, our new CFO. Paul will provide opening remarks, Steve will provide details of our financial results, and then we will open the lines for Q&A. John Johnson and Rich Collender from Strongridge will also be available to answer select questions. We would like to remind you that the Strongridge transaction is subject to the Irish takeover rules, and as a result, we may be restricted from answering certain questions. Before we will begin, I would like to remind you that this call will contain forward-looking statements concerning the impact of COVID-19 on Xeris' business practice, Xeris' future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy, and performance, which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the effect of uncertainties related to the COVID-19 pandemic on U.S. and global markets, various business financial conditions, operations, clinical trials, and third-party suppliers and manufacturers, and other risks, including those discussed in our filings with the SEC. In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. I'd like to turn the call over to Paul.

Thanks, Alison. Good morning to everyone who's listening. We appreciate your interest in ZARIS and our discussion this morning. Xeris had a very strong second quarter, especially with GVOC, following a strong first quarter and maintaining momentum with what is clearly our number one priority. We've shown steady and consistent progress in all leading indicators for the core business. We also announced a major move in the process of transitioning our business to a commercially focused rare disease and specialty pharma company, as well as a number of other key achievements. I'll start with a few highlights. The major highlight of the second quarter was the continued strong demand for GVOC, driven by the hypopen sales as evidenced by impressive increases in several key metrics that I'll share with you shortly. Equally important was the announcement of the proposed acquisition of StrongBridge Biopharma, a major step to becoming a more commercially focused rare disease and specialty pharma company, which we'll discuss in more detail as well in my follow-on remarks. We also found in Tetris Pharma, a great UK and EU partner to prioritize the commercialization of OGLO in that territory. We received FDA approval during the quarter for an extended shelf life of the GVOC one milligram hypopent and pre-filled syringe, moving from 24 months to 30 months at room temperature. We renegotiated our Oxford SVB venture debt facility to extend our cash runway. And based on feedback, FDA feedback, we determined it was best to terminate the mini-dose post-bariatric hypoglycemia prevention program and advance our micro-dose exercise-induced hypoglycemia prevention program with an interim Phase II study in a broader diabetes population, which we'll talk further about as well. Excuse me. Let me start with GVOC. Since the launch of Jibo Kypopen, a strong foundation has been built and our growth is beginning to accelerate. Although overall market growth is not yet back to pre-pandemic growth of 20% to 30% that we had seen, the market showed modest growth of 5% in the second quarter. However, our market share in the second quarter improved by 18% from the first quarter and is now approaching 16% of the new prescription market at the end of June. significantly outpacing the overall group down market. We do see modest signs of acceleration, driven by the innovative, ready-to-use brands like GVOC. Compared to the first quarter, GVOC prescription volume was up 32% in the second quarter. GVOC unit sales to wholesalers and direct customers were up 36% in the second quarter. And net sales were up 10% in the second quarter. We've also increased the number of unique prescribers of g vote by 30 percent in the quarter the end result was a very strong performance at the growth sales level not fully reflected in our net sales number owing mostly to our gross to net being negatively impacted by one continuation of the zero dollar copay which we think is extremely important and two wholesaler and indirect returns of the pss product that was sold prior to june 2020. we don't see returns as a recurring uh event especially excuse me, especially for the one milligram hypopen, which, as I mentioned, now has 30 months dating from manufacture. With our expanded sales force of approximately 135 customer-facing people, including our inside sales group, we are now able to target approximately 20,000 endocrinologists, pediatric endocrinologists, and top decile primary care physicians. We're seeing momentum in our effort to expand ready-to-use glucagon prescribing to the 6 million-plus insulin taking people with diabetes who currently don't carry glucagon. We've developed and are currently launching an integrated campaign to pediatric endocrinologists during the fast approaching critical back to school season. These physicians drive the natural periodic third quarter spike in glucagon prescriptions. Of course, this is assuming we have a more normal back to school this year. As we see COVID resurging again due to the Delta variant around the country, We're closely monitoring the nature of in-person school reopenings around the country, and we'll be anxiously awaiting children returning to school. We'll see what it looks like. Turning to OGUO and our European glucagon brand, I want to remind everyone of our approach and process with OGUO in the U.K. and the E.U. We originally viewed this ex-U.S. territory as having very limited potential based on reimburse pricing of the legacy Novo kits. In fact, we had analyzed and reported that it would be a losing proposition to launch anywhere in the region and then reimburse prices of – at the then, reimburse prices of the legacy kits. Therefore, our going-in assumption was the only viable strategy would be to launch in a select few countries for the self-pay market only. We were thus not looking for a commercial partner, but rather contracted distributors in select markets. What changed in early 2021 was the successful success of the Lilly launch and the levels at which they're getting reimbursed pricing in many countries, as well as the higher than expected prices people are paying out of pocket in countries where Lilly is not yet even reimbursed. As a result, and since OGLO's approval in the EU in February of 2021, and in the UK at the end of April 2021, we had several inbound inquiries and also started our own outbound partnering outreach. speaking with several potential partners. Our priority was getting a partner who would prioritize OGLO and put the kind of time and attention necessary into making it a success in the territory. Essentially, for OGLO to get the attention it deserves, it needed to be in the hands of a company for whom success with OGLO would be – OGLO, that is a hard name to pronounce – for whom success would be absolutely critical to their overall success as a company. And as you know, a few weeks ago we announced that we had found in Tetris a great partner. Tetris is a UK-based company founded by a leadership team of complimentary and highly experienced individuals from UK and international pharmaceutical companies. They're scaling up in the UK for launch and they're expanding across the EU. We're also very excited by their entrepreneurial approach to their organization. Starting in 2022 and over several subsequent years, JARIS could potentially receive up to $71 million in payments tied to the first commercial sale and other time launch and sales-related milestones, as well as collecting a mid-single-digit royalty on net sales. Tetris anticipates that OGLO will be available in the UK later this year and launch subsequently in additional countries as individual country pricing and reimbursement is secured. Now let me provide an update on our mini and microdose ready-to-use glucagon programs. As we've reported, we've spent the past several months in dialogue with the FDA trying to find a reasonable clinical pathway in order to advance our ready-to-use mini and microdose glucagon programs. As you'll recall, that is prevention of post-bariatric hypoglycemia and prevention of exercise-induced hypoglycemia, both into Phase III. We've gotten all of the feedback we need and have made decisions on both programs. In short, the new FDA requirements for these programs to enter full phase three development are far too costly and complex for us to contemplate any phase three work at this point on either program. For PBH, we have discontinued further clinical development. For EIH, based on FDA feedback and specific underlying data requirements, we will develop and execute an additional Phase II study in prevention of exercise-induced hyperglycemia to examine the efficacy and safety of long-term use in a broader range of Type I and Type II patients, patients that exercise at least twice a week. We will anticipate initiating the study in early 2022. Now on to the rest of the pipeline. With our intensified focus on the commercial business, especially with the anticipated close of the StrongRidge Biopharma acquisition, we are reprioritizing our approach to our pipeline and will focus our development efforts going forward solely on products for our own potential commercialization. Now, what do I mean by that? First, like our liquid-stable diazepam and pramlum-tide insulin combination, we're never intended for Xeris development beyond Phase II. The intent was to develop these products to, first, prove that our Xerasol technology was applicable beyond glucagon, and second, to out-license them for further development to other companies. We've clearly, with these products, proven that technology is broadly applicable. However, the competitive landscape has changed rather rapidly, making out-license more difficult. That said, we will continue to look for development and commercialization partners to advance both of our Xerosalt Pramlentide insulin co-formulation program and our diazepam program. Our goal is to find a suitable partners. However, we will otherwise not spend additional resources on advancing these assets. We will continue to advance our two undisclosed programs in endocrinology and gastroenterology as they have high potential for development and commercialization in our primary area of current commercial focus. and an adjacent therapy area in which we have a development program underway. We will also continue to look for partners and or out-license our unique technologies to companies for whom our formulation science may create a competitive advantage. We currently have three such programs that continue to advance in proof of concept and all with top 10 pharma companies and we're in discussions on additional potential projects as we speak. Now I'd like to spend some time discussing the StrongBridge biopharma acquisition and revisiting why this is the perfect combination in our mind for Xeris. First, by bringing Xeris and StrongBridge together, we're creating a scalable and diversified biopharmaceutical company increasingly oriented toward more specialty and rare disease products. We will have a stronger revenue base with two rapidly growing assets, GVOC and Cabeas, We will also have the opportunity for a near-term launch of Recorlev, and subject to FDA approval, we will be well-positioned to leverage Xeris's experienced endocrinology-focused commercial infrastructure to bring Recorlev to market. Our commercial footprint in endocrinology is larger than StrongBridge had envisioned for the launch of Recorlev, enabling a greater potential reach at launch. We will also have an overall more robust rare disease and endocrinology-focused commercial infrastructure into which we can add additional products benefiting a broader range of patients. We also expect that new products will be brought forward in these therapeutic areas using our unique formulation technology platforms to put into our larger and scalable infrastructure for continued development of specialist-oriented and rare disease products from Xerosol and Xeroject. Furthermore, with a stronger financial and strategic foundation, we see the potential opportunity to participate in the consolidation of commercial and late-stage products and companies focused on endocrinology, neurology, gastroenterology, and rare diseases. We also have the potential to realize significant synergies and substantial cost avoidance. And importantly, we believe this combination will provide significant benefits to all of our stakeholders and will position us to drive enhanced value for shareholders. Transitioning to our finance and the specifics of our quarter, I want to talk just briefly about the change in our CFO. In April of 2018, we were readying for our IPO. It was important that we have a finance leader who could build a team we would need as a new public company and guide our financing debt and reporting efforts as a development stage company. Barry Deutsch stepped into that role and has built a superb team that stewarded our finances for the last three years, culminating in the pending close of the StrongBridge acquisition. Barry and I believe the next stage for Xeris, as an increasingly commercially focused, larger and more complicated company, needs the appropriate leader of our finance team for that stage. Barry has been mentoring Steve Piper for several years, and Steve has a significant background in commercial finance. We believe Steve is what Xeris needs for the next stage of our development, and as such has recently been tapped to succeed Barry as our CFO. I want to thank Barry for everything he's done for the company, and I want to welcome Steve to the role, and now I'll turn it over to Steve to review the highlights of our financial performance.