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spk01: Hello and welcome to today's Xeris Biopharma second quarter 2022 financial results call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I would now like to hand over to Alison Way, Senior Vice President of Investor Relations and Corporate Communications. The floor is yours. Please go ahead.
spk00: Thank you, Elliot. Good morning and welcome to Xeris Biopharma's second quarter 2022 financial results and corporate update conference call and webcast. A press release with the company's second quarter 2022 financial results was issued earlier this morning and can be found on our website. We are joined this morning by Paul Edick, Chairman and CEO, and Steve Piper, our CFO. Paul will provide opening remarks, Steve will provide details on our financial results, and then we will open the call for questions. Before we would begin, I would like to remind you that this call will contain forward-looking statements concerning Xeris's business practices, Xeris's future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy, performance, and the impact of COVID-19 on Xeris's business practices, which constitute forward-looking statements for the purposes of the Safe Harbor provisions 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 the U.S. and global markets, various 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 will now turn the call over to Paul.
spk06: Thanks, Alison. Good morning to everybody and thank you for joining us today. This morning I want to start with a brief look at what we're trying to build at Xeris. The most important lesson that we've learned as a team in building companies over the years is to know what you are, what you want to be, and to execute with absolute clarity. Our goal at the beginning and end of each day is to build a substantial, patient-centric, profitable biopharma enterprise with multiple products in multiple therapeutic areas, a targeted development pipeline with promise, and value-added partnerships on our unique technologies. With the commercial launch of GVOC, the acquisition of StrongBridge, the addition of the commercial team for Cabeus, the subsequent launch of Recorlove, and the increasing difficult hurdles of cost and complexity in advancing numerous Phase II development assets simultaneously, who we are as a company has clearly had to evolve. Where we were once a technology-based 505 development company, We are now an all-in commercial execution company. That is not to say we are walking away from our unique formulation technologies or product development at all. However, once we cross the line into being a commercial business, our focus absolutely has to be predominantly on commercial success. Other aspects of the enterprise, in turn, are scrutinized more harshly in our internal prioritization process. Where once upon a time we had a goal of becoming a fully capable pharma company with equal emphasis on development and commercial, we have evolved to a commercially driven biopharma company selling differentiated and innovative products across a range of therapeutic areas. We continue development of a limited number of assets with our unique formulation capabilities, and we will take them forward if they prove uniquely differentiated additionally valuable and achievable based on evolving FDA requirements. Otherwise, we will make the early and hard decision to discontinue their development. We will also continue to partner our unique technologies as a potential value stream down the road and will be increasingly selective as to what we work on, with whom we work, and on only those projects that have a clear potential for potential pathway to development and commercial value for Xeris. With that said, we are a commercial business first and foremost, and we are executing. Our 2022 momentum continued in the second quarter, delivering record growth in patient demand and net revenues with continued pipeline development. We generated a record 25.3 million in net product revenue in the quarter, which is a 34% increase compared to Q2 last year on a pro forma basis. We saw continued strong GVOTE prescription growth throughout the quarter and year to date. We had another record quarter for Coveas in terms of net revenue. We are gaining a lot of traction in the early stage of record level launch with a steady rate of referrals and an increasing pace of getting patients started on therapy. And we dosed the final cohort of healthy volunteers in the phase one study of our weekly sub-Q levothyroxine product candidate. Importantly, our year-to-date performance of all three products gives us confidence to reiterate our guidance of net product revenue between $105 and $120 million. At any point in that range, we see the outlook for our 2022 commercial performance as great to outstanding. Our cash position is strong and we expect our year end cash balance to still be within our previously communicated range of 90 to 110 million. We expect our cash position to adequately fund our operations to cash flow break even, currently expected to happen by year end 2023. Now I'll go into some specific highlights for each product behind this performance. I usually start with GVOTE, but today I'm going to lead with Coveas, given its record Q2 performance. Coveas had its best quarter to date in terms of net revenue at $12.8 million. Year-to-date, Coveas net revenue has grown 20% over the same period in 2021 on a pro forma basis, and we expect to continue to grow Coveas for the foreseeable future. Now, moving on to our launch products, starting with GVOTE. GVOC had another strong quarterly performance with net revenue of $11.5 million for the second quarter. And year to date, GVOC sales increased 42% compared to the same period last year. We also continue to see impressive prescription growth. In the second quarter, GVOC total prescriptions were 34,000, growing more than 60% compared to last year. Year to date, GVOC total prescriptions were over 65,000, growing more than 73%, compared to the same period in 2021. The total glucagon market continued to grow 10% in the second quarter versus prior year, and glucagon continues to outpace and drive that growth quarter after quarter. Now onto Recor11. Newly launched Recor11 net sales were $1 million in Q2. Importantly, all sales in the quarter were demand-based sales, not stocking or inventory. All sales for Recorlev are based on identified patients beginning therapy. And while we're thrilled with our second quarter results, we're even more excited by the weekly growth of referrals and new patients coming on to therapy. Keep in mind, Q2 was our first full quarter with Recorlev, with our reps having just made the first trip through their territories in February and March. As such, Recorlev continues to show great long-term growth potential. From a commercial perspective, the continued strong performance of GVOC and early success of RecoraLive has led us to pull forward a previously planned addition of approximately 25 territories to our endocrinology-focused field organization from early 2023 into the fourth quarter of this year. We expect that this will ensure and accelerate the growth of these recently launched products over the course of 2023. A couple words on OGLUO. Last week, we announced that Tetras Pharma, our commercialization partner for Ogalloh in the UK and EU, has been acquired by Aracor Therapeutics, a UK-based, publicly traded, globally focused biopharmaceutical company. We are very pleased with the acquisition and look forward to having Aracor as our commercial partner. Having Ogalloh in the hands of a well-capitalized company dedicated to the diabetes space, is a very positive step forward for the millions of patients with diabetes in the UK and EU, in our view. And we are working closely with Ericor to ensure a smooth transition and no disruption of commercial activities, and we will continue to support the commercial efforts going forward. From a development perspective, a few words about our Xerosol Levothyroxine. As I mentioned previously, we dosed the last cohort in the phase one pharmacokinetic study of our potential once-weekly subcutaneous levothyroxine product candidate. We will compile all the data from a range of doses to assess dose proportionality early in the fourth quarter. This latest data should provide us an increased level of confidence that we have a product candidate with the potential of once-weekly dosing. This is an important starting point for developing our Phase 2-3 program with the FDA. And we are using this information to support our FDA meeting request regarding a registration strategy, which we will anticipate having in the early part of 2023. Exercise-induced hypoglycemia. Based on our earlier Phase 2 data and our discussions with the FDA, we have an agreed plan for an additional phase two study in order to collect additional utilization data later this year. We're in the process of planning the initiation of that study. That said, initiation of the EIH study and further development of the EIH program is being reviewed as part of our clinical prioritization and commercial opportunity assessment later this year, taking the requirements that we've gotten from the FDA and cost into consideration. Before I turn the call to Steve for detail on our second quarter financial performance, I'd like to reiterate. Xeris has a record quarter on several fronts as I just reviewed. We are prioritizing our spend to accelerate the growth of our enterprise. We remain confident in our ability to achieve our guidance for the year for both revenue and ending cash position. And delivering on these two commitments affirms our expectation that we will achieve cash flow breakeven by year end 2023. without the need to raise additional equity. We believe our performance is a clear demonstration that we're building an increasingly valuable enterprise, energetically and aggressively, but with discipline.
spk04: Now I'll turn this call 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 $25.3 million for the second quarter, representing a 34% increase over the same quarter last year on a pro forma basis. This growth was driven by strong underlying patient demand for both GVOC and CAVEAS, and patient starts on therapy for RecorLiv. Breaking it down by product, GVOC net revenue for the quarter was $11.5 million, or a 30% increase compared to the same period last year. This increase was driven by continued growth in prescriptions, topping 34,000 for the first time, more than a 60% increase compared to prior year Q2, partially offset by a decrease in net pricing, which I will explain in detail later. Year-to-date net revenue for GVOC was 23.9 million, or a 42% increase compared to the same period last year. This increase was again driven by growth in prescriptions, more than a 73% increase compared to the same period prior year, which was partially offset by a decrease in net pricing. Let me provide more context on the decrease in net pricing for GVOC this year. As discussed last quarter, we made adjustments to our returns reserves. based on actual results. This is driving a portion of the net price decrease relative to last year. Additionally, in order to continue to maintain unrestricted access for patients that want GVO, we have made decisions regarding our payer strategy that are resulting in higher commercial and government rebates. These rebates started to impact our net pricing in the latter half of Q2. Looking forward, we expect GVOC demand to continue to grow, and we expect the net pricing to begin to stabilize in Q3 once all of the new payer agreements take effect, assuming, of course, a consistent payer mix. Moving to Cabeas, Cabeas net revenue for the quarter was $12.8 million, or a 28% increase compared to the same period last year on a pro forma basis. On a year-to-date basis, Cabeas net revenue was $22.1 million, or a 20% increase compared to the same period last year on a pro forma basis. We continue to see increases in the number of patients on Cabeas. These patient increases coupled with a net pricing increase contributed to this revenue growth. Looking forward, we are confident in our ability to continue to maintain and grow our Cabeas business. Moving to Recorlev. Recently launched Recorlev net revenue for the quarter was 1 million or 1.1 million year to date. We are pleased with our initial financial performance through June. We are also encouraged by the outlook of Recorlev given the weekly growth of referrals and new patients coming in to therapy. As Paul mentioned, we are reaffirming our guidance of net product revenue of $105 to $120 million. Moving down to P&L, cost of goods sold was $11.1 million for the six months ended June 30, 2022, an increase of approximately $5.9 million compared to the same period in 2021. This increase was primarily driven by increased sales of our products as well as product mix and increased costs. Research and development expenses increased 0.6 million or roughly 6% for the six months ended June 30th, 2022 compared to prior year. The increase was primarily driven by higher personnel related costs offset by lower product development costs. Selling general and administrative expenses increased by 23.9 million or roughly 53% for the six months ended June 30th, 2022 compared to the same period in 2021. We incurred $19.6 million of increase in personnel-related costs due to the GVOC field expansion in the third quarter of 2021 and the inclusion of our Coveas and RecoraLev commercial infrastructure. The company also incurred increased marketing spend driven by the RecoraLev launch. As of June 30, 2022, Xeris had total cash, cash equivalents, and short-term investments of $111.6 million compared to $132.1 million at March 31, 2022. We are in a strong cash position. Looking forward and consistent with prior guidance, we plan to draw the additional $50 million available under our HAFN debt facility by the end of this year and finish the year within our previously communicated cash guidance of $90 to $110 million. We expect our cash position to adequately fund our operations as currently constructed to cash flow break even by year end 2023. I will now turn the call back to Paul. Thanks, Steve.
spk06: As you just heard from both myself and Steve, the first half of 2022 has been one of steady growth and commercial and operational execution, and we're on track to achieve our guidance. Operator, we will now take questions.
spk01: Thank you. For our Q&A, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Rowana Ruiz from SVB Securities. Your line is open. Please go ahead.
spk02: Great morning, everyone. So two quick questions for me. First on GVOC, I was curious about the sales in the quarter and the impact on net price. Could you talk a little bit about the relative magnitude of net price change that you're seeing? And do you expect to see that trend a little bit into 3Q or could it normalize?
spk04: Yeah, so Rowana, you know, the impact, there's a couple of things. If we look at it just from a, quarter over quarter perspective, a couple of things were going on there. So in the first quarter, we actually had revenue that was related to our sales to our European partner, Tetris, at the time. That was a stocking order that didn't repeat in the second quarter. So that was a little north of a million dollars. So that impacted the quarter over quarter growth. That's included in our GVOC line. And then in terms of our net pricing, just to remind everybody, we had last year in the first half of last year, we had a reversal to our returns reserve that ultimately increased our revenue. As we discussed last quarter, we had an adjustment this this in the first half of this year that based on actual returns We expect that that's actually normalized What happened in the second quarter was you know, we made decisions around our pair Agreements and That was a bit of a drag on our net pricing but we expect that you know once those kind of flush through and um on a full quarter basis in the third quarter that our net pricing will will stabilize i wouldn't expect as a material movement from the second quarter to the third quarter in terms of that price it may bounce around a couple percentage points but nothing material okay great helpful
spk02: And then I wanted to ask a question about Recorlev. Could you discuss a little bit the titration process that you're observing for early patients that are receiving Recorlev? And how long do you estimate that it might take individual patients to get to their specific ideal maintenance dose?
spk06: Hey, Rana, it's Paul. And I may ask John Shannon to help me with this question because he's a little closer to it. So our original assumptions on titration were based on the clinical studies. And in the clinical studies, people got to an average dose of about 600 milligrams. As you would expect in a clinical study, it's very prescribed and controlled, and patients return to the offices on a routine, scheduled basis. So you have a pretty easy way of seeing the titration and managing the titration in that context. It's a controlled environment. In actuality, in the wild, as we say, in normal practice, patients don't go back to the office as frequently. And it takes a little longer. So far, we're seeing people begin to titrate up. But on average, I think they're pretty much at the starting dose still. you know, given that we're basically one quarter in, we'll have a better sense of how that titration is going, you know, as we get closer to the end of the year. Right now, I think John would agree it's a little slower than we anticipated, but it's one quarter.
spk02: Great. Helpful. Thanks.
spk01: Our next question comes from Oren Livnat from HC Wainwright. Your line is open.
spk03: Thanks. I have a couple questions. Just to follow up quickly on RecorLiv, are you able to give us any more color on the, I guess, sort of volume or acceleration of patients in the funnel, you know, with regards to referrals into your hub services? And what kind of success or proportion of patients are successfully referred getting coverage and getting drug. And I guess to dig into that further, you know, what sort of renewal requirements are you seeing or expecting to see on those prescriptions? You know, for some drugs, insurance companies require every month to reauthorize. Are you seeing that or are they getting chronic sort of indefinite authorization and coverage? And I have a follow up.
spk06: Yeah, I'll start from the end or in the renewal process. Once a patient is on therapy, it's not really a prescription-based process. They're on therapy, and it's approved by the payer, and then it's a continuous process from there. You don't have to renew the prescription, at least not so far. We haven't seen it in the category. Coverage so far, we haven't had a lot of losses. Most everybody that we've put through the process, we're being pretty successful at getting patients through the insurance process. There are hurdles, as we anticipated, but we're getting through them reasonably efficiently. In terms of volume, we're not going to disclose patient numbers. We think that's a competitive thing that we don't want our competitors to know where we are. We'll continue to give you dollars. We're seeing rapid increase in referrals, and we're seeing referrals convert to patients on drugs at an increasing rate.
spk03: Okay, that's encouraging. And I meant Cavea's follow-up, actually. Impressive quarter, up nicely quarter over quarter, and you said a couple times in the script, you emphasized that you were looking to maintain and grow this franchise, and I think the general consensus expectation for this product is erosion starting next year, and I'm wondering if you have any updated thoughts on the potential timing and or impact of any competition. Are you in fact, investing more behind this product for a longer runway, in your view?
spk06: The answer to your question at the end is yes, we are investing more behind the product in anticipation of a healthy runway. We haven't seen any evidence that there's any competitive product coming. We haven't seen evidence of a generic. And as we've said repeatedly, we believe that we can maintain and grow this business in the face of a generic competitor no matter what. We have a lot of reason to believe that's the case. It's an ultra rare disease. It's one specialty pharmacy. Patients are hard to find. We're the only ones finding them up to and including our own authorized generic if at some point we feel that's necessary. So we bought the company and knowing full well that Cabeas was going to lose exclusivity and we believe we can grow the product.
spk03: Thank you. Appreciate the color.
spk01: Our next question comes from David Anselin from Piper Sandler. Your line is open.
spk05: Thanks. So I just had a couple. So can you just talk anecdotally about what you're hearing in the field from practitioners about Mercorlev and, you know, specifically, you know, where, you know, patients are coming from, you know, are they switchers from the racemic ketoconazole? Are they de novo patients? And just overall, you know, receptivity, that's number one. Number two is, you know, as we think about, you know, GVOC, you know, longer term, what's your view on, you know, just overall penetration of these ready-to-use modalities? You know, it seems like the pandemic sort of kind of threw a wrench into into uptake. So do you expect, now that we're sort of emerging from it, more growth in just penetration of these ready-to-use modalities overall? And just how are you thinking about it longer term? Thank you.
spk06: Thanks, David. I'll start right at the beginning with RecurLev. The receptivity to RecurLev has been great. It's been very high. Doctors are very interested in the product. We're getting great reception. In terms of where are we getting the patients, we're getting them from everywhere. We're getting de novo patients. We're getting switch patients. So doctors see this as a valuable and alternative that they're eager to use. So we're very pleased with very early days, you know, we're basically one quarter of actual selling. Moving on to GVOC, you're right, the pandemic did have an impact on the move to the ready to use and the growth of the category. The category has grown throughout the, that said, the category has grown throughout the pandemic. Maybe it dipped to single digits for a period, but it's continued to grow. I think one of the things that you may have seen recently that really speaks volumes about what's going to happen with this category. Lilly just announced that they're going to withdraw their kit, the old kit that's been around forever. They're going to withdraw it from the market. They're going to discontinue distribution of that kit. That signals a commitment by Lilly to the ready-to-use category in a major fashion. And as we've all discussed, those kits are almost impossible to use. It'll be interesting to see if other companies withdraw their products and discontinue distribution of kits altogether. But that says a great deal about the rated-to-use category, and we're happy to see it.
spk05: Okay, that's helpful. If I may just seek in a follow-up, just regarding that discontinuation, I mean, do you think that's more of a function of the fact that Amphistar has a generic and Lilly's kit is the reference listed drug or do you think it's really about the migration to the ready to use modalities?
spk06: I think at the end of the day it's probably some of both but the fact of the matter is they are taking it off the market and they are emphasizing the ready to use. At the end of the day Lilly's the reference product for the generic, so I don't see how the Amphistar product can continue to grow. I think it's going to decline. Our perspective is Novo and Amphistar should withdraw theirs and discontinue distribution of theirs as well. They're not good for patients. Thanks, Paul. Thanks, David. Drive carefully.
spk01: This concludes our Q&A. I'll now hand back to Paul Edick, CEO, for final remarks.
spk06: Okay, thank you. Thanks to everyone for joining the call this morning and for your continued support as we execute on our growth strategy to create a profitable pharmaceutical company with products in multiple therapeutic categories that meet the needs of patients and their caregivers. Thank you very much.
spk01: This call is now concluded. We'd like to thank you for your participation. You may now disconnect.
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