Xeris Biopharma Holdings, Inc.

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 the U.S. and global markets, ZARIS's business, financial condition, operations, clinical trials, and third-party suppliers and manufacturers, and other risk factors, 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'll now turn the call over to Paul.

Thanks, Alison. Good morning to everybody, and thanks for joining us today. Our headline for this call is that we had another very good quarter in the first quarter of 2022. We generated approximately $22 million in net product revenue. We continued strong prescription and share growth for GVOC, We continued to add more patients to all of our products, including G-Vote, La Corale of Cabeas, and even Ogolo in the U.K., and the G-Vote kit, which became available at the end of the quarter. We also dramatically strengthened our cash position with the addition of a $30 million pipe and the debt refinancing we finalized with Haytham, ending the quarter with over $132 million in cash. And we continued to advance the Phase I study of our Levothyroxine product. This first quarter performance gives us great confidence that we are on track for the year. We are therefore affirming our previously announced guidance of $100 to $120 million in total net product revenue for 2022, realizing $50 million in synergies from the StrongBridge acquisition by year end 2022, year end 2022 cash balance of $90 to $110 million, and achieving cash flow and break even by year end 2023. I'll go into some specific highlights behind our performance, starting with GVOC. We continue to see impressive GVOC prescription growth. In the first quarter, GVOC prescriptions grew 88% compared to first quarter last year. On a sequential basis, GVOC grew 5% quarter over quarter, while the overall glucagon market declined 1%. So, again, there continues to be strong demand for GVOC, and we continue to outpace the market. For those watching prescriptions, April started out a tad flat during the holiday period, but we finished the month strong with over 2,700 prescriptions the last week of April and a 22% market share, which makes us feel really good about the balance of the second quarter. Overall, the glucagon market growth versus prior year has been improving as offices are now open and reps have better access to those offices. While we are not quite back to pre-pandemic growth levels of over 20 to 30%, we are back to double-digit growth. Ready-to-use glucagon products are now over 65% of the new to glucagon prescriptions, which is also very encouraging. We believe that when the market does return to those pre-pandemic growth levels, Assuming GEVO continues to outpace the overall market, we are very well positioned to capture a good portion of that growth. Since Tetras Pharma launched OGLO in late 2021 in the U.K., they're beginning to see modest early uptake and growth in prescriptions as they get on regional health formularies, which is a process not terribly different than getting on payer formularies in the U.S., Texas also continues to work toward launching OGLO in additional countries in the EU in the balance of 2022. Moving on to Cabeas, we are very pleased with the steady increase in the number of primary paralysis patients benefiting from our product. Year over year, the number of patients on drug is up 12%, and as we've discussed previously, PPP patients are extremely hard to identify, so this strong performance is a testament to the collective expertise of the team and the close working relationship with the health care community. On to RecoraLive. As you know, we launched RecoraLive in February, and as we mentioned previously, from the time of first referral and clearing reimbursement to starting on drugs and then properly titrating to one's optimum dose can take a patient several weeks to a couple months. So demand-based sales will take a while to kick in. And with it being only a few weeks into launch, it's too early to be a meaningful contribution on the resident line. That said, receptivity with healthcare providers has been excellent. We are getting referrals, we're getting patients on drugs, and we're very excited about the prospects for RecoraLove as another alternative for healthcare professional patients who struggle with Cushing's syndrome. And while it's only been a few weeks since launch, we are already supporting patients on Recorla through the initiation, reimbursement, and titration process with our Xeris Care Connection team. We don't have much in terms of pipeline updates since our last call a few weeks ago. However, we did receive a positive response from FDA on our proposed next Phase II exercise-induced type of ischemia study, which we still aim to initiate later this year. Our phase one pharmacokinetic study of serosal levothyroxine to evaluate its potential as a once weekly subcutaneous injection is still ongoing. We have completed two dose levels and will begin dosing the third, the next higher dose cohort later in the second quarter. We expect to complete this PK study and report out results from a range of doses and dose proportionality later in 2022. Before I turn the call over to Steve for detail on our first quarter financial performance, I'd like to reiterate. We had a great quarter. We feel very confident in our ability to hit our guidance for the year, especially with our exceptionally strong cash position as a result of cash on hand, revenue generated from our three commercial products, the addition of cash from the recent private placement, and with our debt refinance. So now I'll turn it over to Steve.

Thanks, Paul. Good morning, everyone. I will focus my remarks on a few of the key financial results, the details of which are in the press release issued this morning. Total net product revenue was $21.9 million for the first quarter, representing a 33% increase over pro forma first quarter 2021 revenue. Net product revenue was driven by strong underlying patient demand for both Chivo and Cabeas. While we did recognize Record Love revenue in the first quarter, it was immaterial to the overall results as we had just launched Record Love well into Q1. GVO continued its strong momentum in the first quarter, growing total prescriptions more than 88% from Q1 of 2021 and topping 30,000 prescriptions in the first quarter. GVOC quarter-over-quarter prescription growth was 5%, despite the overall glucagon market total prescriptions declining by 1%, which is in line with historical trends in the first quarter relative to Q4. In Q1, GVOC continued to capture share of the glucagon market. At the end of March, GVOC achieved approximately 22% NRX share, and the most recent weekly data ending April 29th would suggest GVOC has now achieved approximately 24% NRX share. In the first quarter, we also made an adjustment to our returns reserve based on actual returns. As our GVOC product is still in launch mode and we don't have a significant history of product returns, we estimate product returns based on various factors. We will continue to monitor and adjust our returns reserve as necessary. Cabeas also had a solid quarter from a patients on drug perspective as we grew patients on drug by 12% relative to the first quarter of 2021. Just to wrap up my comments on revenue performance in the first quarter and looking ahead of that, we had a solid quarter and we continue to feel confident based on the underlying fundamentals driving the growth of the business that we will finish within the range of $105 to $120 million for full-year 2022 net product revenue. Moving down to P&L, cost of goods sold was $6.3 million for the three months ended March 31, 2022, an increase of approximately $4.4 million compared to the same period in 2021. This increase was primarily driven by increased sales of our products. Research and development expenses increased by approximately 2.2 million in the first quarter to 6.3 million compared to the same period in 2021. These increases were primarily driven by higher pharmaceutical process development and clinical costs across multiple programs. Relative to the fourth quarter of 2021, research and development expenses decreased by approximately $3.8 million. This decrease was driven by lower clinical service and pharmaceutical process development costs, also across key pipeline programs, relative to the fourth quarter. Selling general and administrative expenses increased by $16.8 million, or 88% for the three months ended March 31, 2022, compared to the same period in 2021. We incurred $11.5 million of increased commercial-related costs, including an increased report for GVOC, Civeas. In addition, approximately $2 million of the increase was related to the acquisition of StrongBridge, primarily restructuring and related employee costs. The remaining change was due to an increase in general expenses given the growth of the company. Let me provide some important context. to these increases relative to the first quarter 2021, as well as some context on sequential quarter-over-quarter changes. I had mentioned on our year-end earnings call in March that with the acquisition of StrongBridge, we would absorb the Coveas commercial infrastructure and other key personnel, which prior to the fourth quarter of 21 did not exist in Xeris's financial results. In addition to StrongBridge-related infrastructure, we had also expanded our endocrinology commercial team in mid-2021. And this expansion is also driving some of the increase relative to the first quarter of 2021. This is an important context in terms of the increases to SG&A relative to first quarter 21 expenses. On a quarter-over-quarter basis, SG&A expenses actually decreased by approximately $18 million in the first quarter relative to the fourth quarter. The fourth quarter included approximately $18 million of cost associated with the acquisition of StrongBridge. And in the first quarter, we only incurred approximately $2 million of expenses associated with the acquisition of StrongBridge. We had mentioned that StrongBridge acquisition costs would materially decrease in 2022. Therefore, we are seeing a net decline of SG&A expenses on a quarter-over-quarter basis, even though we incurred costs associated with the launch of a Core 11 in the first quarter. As a reminder and consistent with previous guidance, we believe that we are on track to realize $50 million in strong bridge acquisition-related synergies approximately equally split between cost reductions and cost avoidance by the end of 2022. From a cash perspective, as of March 31, 2022, Xeris had total cash, cash equivalents, and short-term investments of $132.1 million compared to $102.4 million at December 31, 2021. Our balance sheet was strengthened by both the $30 million pipe financing in January and the debt refinancing we finalized with Hathen in March. Our net operating and investing cash burn for the quarter was approximately $42 million, which was driven by our net loss in Q1, coupled with changes in working capital, primarily related to an increase to accounts receivable from higher sales and a decline in accrued liabilities from year-end 2021. You will also see in our quarterly filing that Xeris today entered into a sales agreement with Jefferies for a new ATM. You'll recall that we had an ATM in place previously, but with the strong bridge acquisition and the establishment of a new corporate parent, the ATM was effectively terminated. We do not have a need currently for additional equity financing, but are doing this as a matter of good financial housekeeping should the need arise in the future. As we announced in March, we entered into a senior secured term loan agreement with funds managed by Hafen to provide us with up to a total of $150 million of capital. We drew $100 million on the closing date in March, and we repaid our previous debt facility of $43.5 million with Oxford Finance and Silicon Valley Bank. The net proceeds will provide additional working capital to fund our business plan. An additional $50 million is available to Xeris at our election until March 2023. Based upon our current operating plan, we would expect we will draw the remaining $50 million by the end of this year. This capital base and the additional $50 million from the debt facility provides the company with significant operating flexibility to drive our rapidly growing commercial business as currently constructed to cash flow break-even by year-end 2023 and thereafter produce increasing operating cash flow. As a reminder from our last call in March, we project the rate of cash burn to improve over the course of 2022 as our revenue base continues to grow and we see a decline in obligations associated with the strong bridge acquisition-related costs. With the revenue growth from our three marketed products combined with our current cash position, the cash received from the recent pipe financing and the debt restructuring with Hay Finish 2022 with approximately and further can achieve cash flow break-even by year-end 2023. Cash flows are off to a strong start, and we are excited about the very early returns on RECORLED. We are affirming our full year 2022 net product revenue range of 105 to 100. We have integrated StrongBridge quickly in Nazareth, and we will achieve $50 million in 2022. And we are in a solid position from a cash perspective to drive growth of Chivo, Cabeas, and Recorla, and fund our R&D pipeline. I will now turn the call back to Paul.

Thanks, Steve. As you just heard, we're off to a good start for 2022 in the first quarter. And we can't say often enough that we generated approximately $22 million in net product revenue. We continued strong prescription growth and share growth for GVOC. We continue to add more and more patients to all of our products. We continue to advance our pipeline with the phase one study of levothyroxine. And as Steve mentioned, we dramatically strengthened our cash position with the Pipe and the Hafen refinance. Given our exceptionally strong cash position as a result of cash on hand revenue generated from our three commercial products, the addition of cash and recent private placement in the refinance, we would not anticipate needing to raise additional capital in order to fund our ongoing operations. A return to capital markets would be for M&A purposes only. And importantly, to guidance of net product revenues of 105 to 120, 50 million in synergies from strong bridge acquisition, year-end cash balance of $90 to $110 million, and cash flow break-even, assuming we're on our guidance by year-end 2023. Operator, if you would please open the line for questions.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question today comes from David Amsellon from Piper Sandler. David, please go ahead.

Your line is now open. Hey, thanks. So I just had a couple questions. First, on RecorLiv, I know it's early days, Paul, but can you just talk about patient uptake? Maybe if you're not in a position to provide patient-level metrics, just talk about the extent to which you're growing the patient footprint and also talk about access to the product. Are these patients who are getting Recorlev, have they been exposed to racemic ketoconazole or switches from other agents? So I just wanted to get a sense of that. what adoption looks like in terms of patient-specific metrics to the extent you could provide them. That's number one. And then number two is you mentioned not having to go back to the capital markets unless for M&A purposes. I'm wondering if you could just elaborate on how you're thinking about M&A, what kind of assets are you looking at, and Would you take on any R&D risk in the context of a potential target, acquisition target, I should say? Thanks.

Morning, David. Thanks for the call. Thanks for the questions. Yeah, we're not in a position to give a lot of metrics on the choral of patients. What we tried to convey in my remarks, and I'll reiterate, is we are getting patient referrals. We already have patients on drug. We're managing those patients through the process. We're working with them to clear their prior authorization and get insurance reimbursement paid for. And we believe relative to our guidance and the degree to which we're on track for what we set out as our plan. So that's the best I can give you on the core level. It's really early. In terms of the return to the capital markets, we want to very strongly, and I want to strongly reiterate, we have all of the funds necessary to fund our business through the cash flow breakeven, assuming we're on plan and on our guidance. But we did put an ATM in place because it's good financial housekeeping. That being said, to your point, we would not want to necessarily add an M&A, another company or asset that incurs R&D risk and has a negative impact on a cash position. We're focused on building critical mass and getting to cash flow breakeven. That being said, You know, if there's another strong bridge out there that's got a product like Cabeas that's generating good revenue and a product like RecorLab that's on the verge of being approved, that, you know, that would be an interesting opportunity for us.

Okay, that's helpful. And if I may just sneak in a follow-up here just on – the sales, product-specific sales disclosures. Can you provide, and I apologize if I missed this, just specifics on net sales for GVOC and Coveas, if at all possible? And, you know, if you're not in a position to do that, maybe just give us a sense of, you know, why you're not providing the product-specific sales figures. Thanks.

Yeah, so... What we've committed to is guidance for the year on a total product basis. GVOC is still in launch mode. RecoraLev has barely gotten out the door. We're not saying we'll never provide product-level results, but it's just too early. If you're following GVOC and you look at IQVIA, you can pretty much do the math. The balance is caveas, more or less. In the first quarter, Recorla didn't contribute much.

Thank you. Thank you, David. The next question today comes from Rolanda Ruiz from SBB Securities. Rolanda, please go ahead. Your line is now open.

Great. Morning, everyone. So a follow-up question, and you're not able to give too many specifics, but I was curious on the physician front, are you hearing anything anecdotally about real-world efficacy or safety about RecorLev, and how is awareness growing for the product in your first quarter of launch?

Good morning, Rihanna. The receptivity from physicians has been excellent. They're, you know, Efficacy, we've only got a few patients on it so far. We had no concerns about efficacy. The product is working. No safety concerns have been expressed. And awareness is quite high already. We're looking forward to the conference season. We've got ACE, ADA, and ENDO coming up. And we've had great receptivity to the activities we're having at both ACE and ENDO. And, you know, we're all participating. So, you know, so far, in a few weeks, we're feeling very positive.

Great. And quick questions for GVOC. I'm curious, what do you think is driving the continued share growth? We did notice that vaccine-y prescriptions seem to be stabilizing a bit. So I'm wondering what might be causing some of the slight differences and trends between your GVOC versus vaccine-y.

Well, I think it's what we've said all from the beginning, that they got out to a head start. They had about a 10-month or 10-month-plus head start. They also do extremely well during back-to-school season, which is when they launched the product with back-to-school, because they've got, through their insulin business, a very strong position with Pete Endos. But we've said from the beginning that we would trend upward at a faster rate, and we would begin to capture more and more share of the market, you know, to the point where at some point, you know, we see that we very likely could just split the market evenly. And as I've said since day one, we really value Lilly's voice in this market in terms of, you know, raising the level of, sense of urgency amongst patients and healthcare professionals that if you're on insulin, you should have a prescription for ready-to-use rescue glucagon. If that happens with 7 million people on insulin, we'll get our fair share and Lilly will get their fair share.

Yep, understood. And quick one for Coveas. I was curious if you have any updates on pursuit of additional patent life for the product as we approach the orphan exclusivity.

Yeah, we don't have an update. We continue to prosecute several patents. You know, we're in the appeals process, appeal panel with one or two. You know, we continue to work very hard to try to get a patent across the finish line.

Got it. Thanks a lot.

Thank you. The next question today comes from Vermeer Devan from Mizuho Securities. Vermeer, please go ahead. Your line is now open.

Great. Thanks for taking my question. Maybe following up on a couple of the earlier ones, the IP and trying to secure more patents, can you just give us a sense of what's your sort of base case assumption at this point on potential generic competition there? if at all. And then, as you spoke, you mentioned sort of doing the math to kind of get to the product sale there. It looked like from our math that maybe Lilly is doing a little bit of discounting now, or more than they were before, at least with Bexamy. I'm just curious if you can share anything on the pricing side and sort of gross-to-net assumptions we should make as we sort of chime back in to what the prescriptions actually mean in terms of net sales. Thank you.

Yeah, for Cabeas on the generic front, I think we've said historically we don't expect a generic. We haven't seen any evidence of a generic. If there is one, we wouldn't expect anything until 2023. We think we're in really good shape for 2022. And we also think that the way Cabeas is, the way PPP patients are identified is and put through the process, it takes a great deal of work on the part of the company. We basically do the analysis to help physicians identify patients. So a generic is going to have a tough time doing that same amount of work. If you recall, the product was originally launched by a generic company and didn't go terribly well, and that's how Strongbridge ended up buying the product. But we're being very diligent, and as I believe I've said historically, You know, we have all options open to us, up to and including our own authorized generic. So I think there's a way to protect a significant portion of this business. As far as GVOTE on the gross to net, I think Steve mentioned the thing that probably hit the gross to net that you are in your math is the returns. We added to the returns reserve.

To our returns reserve, we'll see it in our financials, $1.4 million in the quarter. And, again, We take into account various factors when estimating our returns reserve, but primarily driven by actual returns. So I would say that that was the impact. We don't comment specifically on gross to net percentage, but in line with industry average for a retail product.

And to your question on pricing, there's been no negative impact on pricing. We're still in pretty good shape.

Okay. And then maybe just one quick follow-up more on the financial side with the SG&A. Steve, I caught your comments there on the sequential decline. I guess we're starting to think about forecasting that forward. We were quite a bit higher than what you guys reported for the quarter. So would you expect things to sort of stabilize at these levels, or do you expect a little bit more of a decline here going over at least into the second quarter as you try and think about kind of the progression of your expenses here?

Yeah, good question, Bammel. I would expect that, you know, it's basically stabilized. So what you would see, and really, you know, from an SG&A perspective, what happened in Q1 I think would probably play out for the balance of the year.

Okay, thank you very much.

Thank you. The next question today comes from Robin Garner from Craig Hallam. Robin, please go ahead. Your line is now open.

Good morning. Can you expand on Tetris and the plan and the time to look to further commercialize Agluo into?

I didn't catch the second half, Robin. Welcome to the call, Robin. Good morning. But I didn't catch the second half of your question. Anyway, the Tetris is launched in the U.K. They're beginning to get on all the formularies, and there are more formularies in the U.K., I think, than there are payers in the U.S. So it is a difficult process and a long process, but they're off to a pretty good start. Operationally, they're doing very well. They're getting patients. They're getting prescriptions. They're ordering products. I think they're still on track to launch in Germany and a couple other countries in mid-year. And, you know, they're going to sequentially go to other countries, Nordic, Scandinavian countries, Italy, France, Spain, all the likely suspects over the course of 2022 and into 2023. I don't believe that, you know, that... Business is going to be a huge contributor for us because, you know, the pricing they got is equivalent to about $100 U.S. We sell it to them at a transfer price, and they make whatever they can beyond that.

Thank you for expanding on that.

Was there another three-year question on this?

That answers the question. One additional question is just around the number of units per patient for GVOC and if you're seeing that change as your awareness and growth continues in terms of your revenue share.

Interesting. Right now it's stabilized right about two units per patient per prescription. It's one of those things where patients might be getting multiple prescriptions in order to get more units, but the average units per prescription is stabilized about two. When we first launched, we did see the average units per prescription creep up to about three, but we're not seeing that now. What we're seeing more is patients just get multiple prescriptions.

Okay, thank you very much.

Thank you. Our next question today comes from Arendelle Nutt from HC Wainwright. Please go ahead. Your line is now open.

Thanks for taking the questions. I have a couple. On RecurLiv, I understand it's really early and revenue immaterial at this point, but when we start thinking looking forward, I think on the last call a couple months ago, you did mention already having some patients on therapy, and clearly I hope you've added more in the meantime. Can you talk about those earliest patients? Do you already have some or all of them through the reimbursement stages to the extent that you've already got revenue-producing patients now, even if they're still titrating up and at lower revenue per patient than they'll eventually get to? I'll follow up, thanks.

Yeah, the answer is yes. As you know, all of these patients are going to require prior authorization until we actually get guidelines with the various payers. But we're clearing insurance. We have patients that are getting reimbursement, and we're adding patients every week.

Okay. At some point in the future, do you think we'll provide, besides revenue breakouts hopefully, any more metrics around this product? Obviously, for orphan indications, we're talking about small numbers, and small numbers make a big difference. Will you ever talk about patient volumes added into either the funnel and or on active therapy?

Yeah, I don't think we'll actually be talking about patient volumes because they are such small numbers and they do vary pretty regularly. As we get more history with all of our products, we assess every quarter on what metrics can we provide that are metrics that we can predict going forward and that are reliable in terms of the data that we're getting. And so as things grow and as things stabilize, we'll continue to look at whether or not we'll provide product-level results. We've never said never.

And I think I've asked you this before, but I apologize. I can't remember the answer. Can you just remind us with your, you know, care connection process and onboarding process for Recoilab, do patients who are referred or prescribed the product, theoretically get on therapy before the PA is, you know, adjudicated, or is anyone who's getting on therapy already through, you know, through the process and presumably producing revenue?

Yeah, the best way for patients to get on therapy, such as Recorlev or Cabeas for that matter, is to have the physician, the Care Connections patient partner involved, and the specialty pharmacy involved, where all of that is managed insurance is cleared, patients ready to go, doctors ready to go. A lot of physicians actually request the patient's care connections, patient partner be involved in the consultation when they initiate therapy so that the patients know what's going to happen, how it's going to go. you know, maybe what side effects to expect, how their titration is going to be managed, who's going to be talking to them from the specialty pharmacy, the physician's office, and from Care Connections, so that by the time a patient is actually initiated on drugs, they are in the position to be as successful as possible.

I apologize if I didn't fully understand the answer, but I guess just is drug getting sent to a patient's house? before it's necessarily cleared just to make this as smooth a frictionless transaction as possible for docs and patients, or does the PA have to be approved before they can get it?

PA has to be cleared, insurance has to be cleared, then the drug is initiated.

Beautiful. And on Coveas, sorry for asking a lot of questions, you mentioned 12% year-over-year patient growth. Can you talk a little bit about how that translates to, you know, without giving an exact number, you know, ballpark revenue growth just in terms of I believe there is some price or material price benefit maybe year over year also on top of that? And is that all total patients on therapy added year over year, or is there some churn there?

There is some churn in there, right? We do have churn. We do have turnover, right, discontinuation in there. I would say that the – I would generally think that the patient growth translates to revenue growth on a year-over-year basis. I think that's a safe assumption. Okay.

Thank you for the time. Thanks, Ryan. Thank you. There are no additional questions waiting at this time, so I'd like to pass the conference over to Paul Edick for closing remarks.

Thanks again to everybody for joining the call and for your continued support as we execute on our strategy to create critical mass necessary to become a fully capable and profitable pharmacy. Everybody have a really good day.

That concludes the Xeris Biopharma first quarter 2022 financial results conference call and webcast. Thank you for your participation. You may now disconnect your lines.