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spk05: And welcome to the Xeris Biopharma Third Quarter 2022 Financial Results Call. My name is Adam and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand the floor over to Alison Way, Senior Vice President of Investor Relations and Corporate Communications to begin. So Alison, please go ahead when you are ready.
spk00: Thank you, Adam. Good morning and welcome to Xeris BioPharm's third quarter 2022 financial results and corporate update conference call and webcast. A press release with the company's third quarter 2022 financial results was issued earlier this morning and can be found on our website. We're joined this morning by Paul Edic, Chairman and CEO, and Steve Piper, our CFO. Paul will provide opening remarks, Steve will provide details on our financial results, and after a few closing remarks by Paul, we'll open up the call for Q&A. Before we 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 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, Xerises business, financial conditions, operations, clinical trials, third-party suppliers and manufacturers, and other risk factors included those discussed in our filings with the SEC. In addition, any forward-looking statements represent our views only as the date of this call and should not be relied upon as representing our views as any subsequent date. We specifically disclaim any obligations to update such statements. I will now turn the call over to Paul.
spk04: Thanks, Alison. Good morning, everyone, and thank you for joining us today. Before getting into the results of the quarter, I want to reiterate a few things we talked about on our second quarter call regarding what we're trying to build at Xeris. Number one, the most important aspect of building multiple successful companies as a team over the years has been knowing where we are, where we want to be, how we plan to get there, and executing against that strategy with absolute clarity. We have evolved considerably over the last few years, growing from a development company with one end of phase two asset and two very unique technologies to a full-fledged commercial business with three growing products, targeted pipeline development, and potentially meaningful technology partnerships. Reiterating what I said on the second quarter call, where we want to be and what we focus on at the beginning and end of each day is building a substantial, patient-centric, commercially-focused, self-sustaining biopharma enterprise with multiple products in multiple therapeutic areas a highly targeted development pipeline that has significant long-term promise, and increasingly value-added technology partnerships. What you will hear today is that we are continuing to progress very successfully on that journey. We are executing on our vision. Our 2022 momentum continued through the third quarter and into the early part of the fourth quarter. We continued delivering record growth in patient demand and net revenues for all three of our marketed products through the quarter. We also continued advancement of our levothyroxine pipeline program. With the solid year-to-date performance of all three products and the disciplined management of expenses and cash, we are confident we can achieve the following. As I've said on previous calls, I believe that a result at any point in our range of net product revenue guidance would be an exceptional commercial performance of 2022. At this point in the year, we have a good line of sight to where we may end the year and are thus narrowing our net product revenue guidance from 105 to 120 million to 105 to 110 million. At the same time, we are raising the previous year end 2022 cash balance guidance, which was 90 to $110 million and is now 110 to $120 million in cash. And we are reiterating our expectation that our cash position is adequate to fund our operations to cash flow breakeven, currently expected to happen by year end 2023, without the need to tap the equity markets for the purpose of funding ongoing operations. Now, I'll go into some specific highlights for each product behind this performance. GVOC had another strong quarterly performance with record revenues and prescriptions. GVOC net revenue in the third quarter was a record $13.7 million, a 24% increase compared to Q3 last year, and a 19% increase from last quarter. Year to date, GVOC net revenues increased 35% compared to the same period last year. In the third quarter, GVOC total prescriptions were over 38,000, growing more than 40% compared to the same period last year. Year to date, GVOC total prescriptions were over 103,000, growing approximately 60% compared to the same period in 2021. The total glucagon market grew an additional 9% in the third quarter versus prior year, fueled considerably by GVOC's performance. GVOC continues to outpace and drive market growth quarter after quarter. GVOC's market share grew to approximately 24% at the end of October, and the ready-to-use glucagon products are now approximately 70% of the glucagon market. It's great to see that more and more people with diabetes who are on insulin and therefore at serious risk of a severe low blood sugar event are getting a ready-to-use glucagon prescription such as GVOC. However, we have a long way to go until all patients on insulin who are all at high risk have a ready-to-use GVOC available just in case. Moving to Cabeas. Caveas had another record quarter with $13.4 million in net revenue, an increase of approximately 17% compared to third quarter 2021, and an increase of 4% from last quarter. Year to date, Caveas net revenue has grown 19% over the same period in 2021 on a pro forma basis. Comparing third quarter 2022 to third quarter 2021, we saw a 9% increase in patient demand, In 2022, on a year-to-date basis, patient demand has increased 10% compared to the same period in 2021. Looking at Recora, during the quarter, we continued to generate a meaningful number of patient referrals and an increase in number of patients starting on therapy. We're also seeing patients that have started on therapy begin to titrate up their average daily dose, which is a very good sign. This performance resulted in $2.5 million in net revenue for the third quarter, a 160% revenue growth from the second quarter. It's still very early in the launch, but Recorlove continues to grow and show great long-term growth potential. Now I'd like to turn to Xerosol Levothyroxine. A few weeks ago, we reported very encouraging results from the phase one pharmacokinetic comparison of oral Synthroid versus subcutaneous XP8121. Our small volume ready to use formulation of levothyroxine utilizing our Xerosol technology. The study results offer initial proof of concept that our novel subcutaneous formulation of levothyroxine has the potential to provide patients with a once weekly dosing, potentially improving treatment adherence, as well as bypassing the gastrointestinal tract and mitigating the limitations of oral therapy. In the first phase of the study, we compared single 600-microgram doses in a crossover design with normal volunteers. Subcutaneous XP8121 provided a lower maximum concentration, or Cmax, longer time to maximum concentration, or Tmax, and a more sustained exposure profile relative to oral Synthroid. We continued the study with two additional ascending doses of XP8121, and we confirmed linear dose proportionality between 600, 1,200, and 1,500 micrograms. Throughout the course of the study, no major safety concerns were identified. All data from this phase one study were then combined to develop a population pharmacokinetic model. This model allowed us to perform simulations of various chronic dosing scenarios. Based on comparable exposure at steady state, the model estimated that 1,200 micrograms of once-weekly XP8121 could provide similar exposure to 300 micrograms of daily oral Synthroid, implying a 4X conversion factor between once-daily and once-weekly dosing. At present, the FDA has granted our request for a Type C meeting to review our Phase I data and proposal for a single Phase II-III registration study and other requirements to enable an NDA. We expect their feedback by the end of this year. Our regulatory strategy is based on FDA's previous findings of safety and effectiveness for Synthroid, FDA published guidance for in vivo pharmacokinetic assessment of levothyroxine products, and precedent FDA approvals for products comparing daily oral versus weekly or longer administration. Our oral levothyroxine has been the standard of care treatment for hypothyroidism for several decades. While generally safe and effective, oral levothyroxine presents several challenges to hypothyroid patients in managing their condition, including inadequate absorption of levothyroxine in the gastrointestinal tract, either due to a concomitant GI condition or interfering concomitant medications, as well as compliance issues. Levothyroxine patients remain in need of improved treatment options. Yet, Levothyroxine remains one of the most prescribed medicines in the United States with over 100 million prescriptions dispensed every year. What does this mean in terms of a potential market opportunity? Conservatively, if we take 10% of those patients with multiple issues, as I've described, or approximately seven million prescriptions of this market at current branded pricing. This could be a two to three billion dollar market segment in which we believe our once weekly subcutaneous levothyroxine could compete very effectively. I know that's a mouthful on levothyroxine, but I think it's important for us to detail that once again. At this point, I'll turn it over to Steve for details on our financial performance.
spk03: 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 a record $29.6 million for the third quarter, representing a 31% increase over the same quarter last year on a pro forma basis. This increase was driven by growth of all three of our products. Strong underlying demand, patient demand for both GVOC and Cabeus and new patient starts on therapy for Recorlev were the key drivers for total product revenue growth in the quarter. Breaking it down by product, GVOC net revenue for the quarter was $13.7 million, representing a 24% increase compared to the same period last year. This increase in revenue was driven by continued growth in prescriptions, topping $38,000 for the first time. more than a 40% increase compared to the same period in 2021. This growth in demand was partially offset by a decrease in net pricing, which I explained in detail on our last call. To be clear, we believe that our net pricing has stabilized. Year to date, GVOC net revenue was 37.6 million, representing a 35% increase compared to the same period last year. This increase was again driven by growth in prescriptions, approximately a 60% increase compared to the same period in 2021, which was partially offset by a decrease in net pricing. Moving to Caveas, Caveas net revenue for the quarter was $13.4 million, representing a 17% increase compared to the same period last year on a pro forma basis. On a year-to-date basis, Caveas net revenue was $35.5 million, representing a 19% 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. Recurral of net revenue for the quarter was 2.5 million, more than double compared to the second quarter of 2022, and a direct result of the steady growth of patients on therapy. Year to date, Recorlev net revenue was 3.6 million. We continue to be pleased with our initial financial performance of Recorlev, and we're also encouraged by the outlook of Recorlev given the weekly growth of new patient referrals and new patients coming on the therapy. As Paul mentioned, we are tightening our guidance of total net product revenue of 105 to 110, still within our previous range of 105 to 120 million. Moving down to P&L, Cost of goods sold increased by 7.9 million for the nine months ended September 30th compared to the same period in 2021. The increase was attributable to an increase in sales as well as product mix and increased costs. Research and development expenses increased 0.9 million or roughly 6% for the nine months ended September 30th compared to the same period in 2021. Consistent with prior quarters, the increase was primarily driven by higher personnel related costs offset by lower product development costs. Selling general and administrative expenses increased by 31.8 million or roughly 45% for the nine months ended September 30th compared to the same period in 2021. We incurred 24.2 million of increase in personnel related costs due primarily to the GVOC field expansion in Q3 of last year and the inclusion of our Coveas and Recorlev commercial infrastructure as this change is not on a pro forma basis. The company also incurred increased marketing spend driven by the launch of Recorlev. From a cash perspective, as of September 30th, Xeris had total cash, cash equivalents, and short-term investments of $93.4 million compared to $111.6 million at June 30th, 2022. We continue to maintain a strong cash position, are delivering on the synergies from the StrongBridge acquisition, and have a healthy balance sheet even as we have faced inflationary headwinds. Based on our current cash position, forecasted spend, and our previous guidance to draw the additional $50 million available under our HAFE and debt facility by the end of this year, we expect to end 2022 with more cash than previously guided. We are increasing our year end 2022 cash guidance from a range of 90 to 110 million to a new range of 110 to 120 million. We feel that Xeris is in a unique position with a healthy balance sheet and three growing commercial assets that we believe will ultimately lead to Xeris reaching cash flow break even by the end of 2023. I will now turn the call back to Paul.
spk04: Thanks, Steve. As we finish the year and head into 2023, we expect to build upon our 2022 momentum and continue creating shareholder value through continued revenue growth, careful allocation of resources, and proven expense management. Operator, would you please open the line for questions at this point?
spk05: Of course. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad. When preparing to ask a question, please ensure your headset is fully plugged in and unmuted locally. Star followed by one to ask a question. And our first question today comes from Glenn Santangelo from Jefferies. Glenn, your line is open. Please go ahead.
spk06: Oh, yeah. Thanks for taking my question. Paul, I wanted to dive into the glucagon market a little bit more. You said that this quarter the total market grew 9%. That seems, you know, it seems encouraging, but it's also a slight deceleration from where we were in 2Q. And And 2Q decelerated somewhat from where we were in 1Q. And so I'm wondering if you could talk about that from a high level. But beyond that, speaking with one of your competitors who manufactures a legacy, a generic legacy kit, they seem to be very excited about the fact that two of the manufacturers are going to sunset their legacy kits here soon. And it's their view that the price differential between you know, the ready-to-use products and the generic products are big enough that maybe that'll be enough to stem, you know, the tide towards these ready-to-use products. So I was wondering if you could just sort of give us your assessment of this market, how you think it shapes up for, you know, 23, given all the moving parts. Thanks.
spk04: Yeah, thanks, Glenn. I'll take that in reverse order because I think the end of your comments are probably the most pertinent at the end of the day. to kind of the dynamic in the marketplace. I would describe the legacy products relative to the new ready to use products as impossible to use products. There is no issue of price in this marketplace. And you can tell by the speed with which 70% of this market has gone from the legacy products to the ready to use products. And when I say impossible to use, When you look at the human factor studies that have been done by us and other manufacturers, in almost any study, the best outcome you could get was approximately three out of every 10 people could actually execute and deliver the proper dose using those kits. The critical need in the marketplace is a usable form factor. It's not price. And what has made the difference has been the nature of the new ready-to-use products. They're easy to use for a caregiver. They're easy to use for a medical professional. And they're easy to use for self-administration. And also, self-administration has never really been an option because of the complicated nature of the kit and the nature of a severe hypo. People are losing cognitive function. They can't execute the kit. So I think that's critically important to how people view this market. As far as the growth, we've had growth pre-pandemic that was as high as 25% to 30%. And we've had consistent growth in double digits throughout the COVID period. But it has been up and down. And we've had a couple of quarters where it's gone below double digit. That doesn't scare us at all. We think that's going to reverse and continue to grow. The fact of the matter is GVOC and Xeris are shouldering the majority of the growth that's happening in the marketplace. As Lilly gets more active with their nasal and Novo comes in, gets more active, we'll have a louder voice in the marketplace. And the bottom line is there are 7 million people on insulin who are at high risk for a severe low that should have one of these ready-to-use products such as GVOC. Sooner or later, that message will get through to clinicians.
spk06: Okay. And, Paul, maybe if I could just add some quick follow-up on the guidance. I mean, in your prepared remarks, you seem to be, you know, suggest that anything within the original guidance range was very encouraging. And I guess I generally agree. But, you know, just sort of looking at the guidance reduction, right, you lowered the midpoint by five and the top end of the range by 10 million. And so I'm just kind of curious as to maybe what changed in your mind or relative to what you might have been thinking 90 days ago. And then lastly, Stephen, thanks for the update on the cash, but could you give us the debt number as of today? That'd be great. Thanks.
spk04: Yeah, I think the answer to your question, Glenn, was in your first question. We expected double-digit market growth to continue, and we saw high single-digit market growth. So the top end was of the original guidance had more substantial market growth built in.
spk03: And then on the debt, you know, we currently have with HAFN 100 million outstanding, and then we have a convert that has roughly 47. But as I mentioned in my remarks, we plan to draw the additional 50 available to us under the HAFN facility. So we'll have 150.
spk04: And I would just reiterate, relative to that guidance, we've said from the very beginning that with two launch products, especially Recorlev, G-Book still being in launch mode, that we had a fairly wide guidance range, anticipating that there would be some variability. But the bottom line is, all three products continue to grow. They all are growing incredibly well at double digits versus prior year. And I've said from the beginning, anywhere in that range would be excellent performance for us as a company.
spk06: Great. Thanks for the responses.
spk05: The next question comes from David Amselim from Piper Samba. David, your line is open. Please go ahead.
spk07: Hey, thanks. So just a few. First, can you talk about payer dynamics surrounding Recorlev, what you're seeing there, and you know, what you can do to continue to grow, you know, underlying patient usage. And just talk generally about what you're hearing in the field about, you know, overall receptivity to the product. And if there's any, you know, patient specific metrics or prescriber metrics that you could share, that would also be helpful. And then just going back to the glucagon market, so Amphistar noted that they're going to be doubling their glucagon capacity, and your comments regarding the kits are not lost on me, but is it your view that with the kits being discontinued by Novo and Lilly that the ready-to-use products will capture the lion's share of that, or do you think it'll be sort of a mix of of, you know, business going to the generic kit and the ready-to-use products? I mean, ultimately, how do you see that shaking out as we move through 2023? Thanks.
spk04: Okay. Well, let me start with Glukegon first again. What you've seen over the course of the last couple of years is regardless of whether Lilly or the Amphistar generic entry, et cetera, the legacy kit type of delivery has continued to decline. And we believe, and we believe we're seeing evidence of it in the marketplace, that the ready-to-use products, like the nasal and like GVOC, are going to continue to take a greater percentage of the market. And the Lilly discontinuation of their kit is a clear signal to prescribers that the biggest company in the business does not believe that that kit is an appropriate form factor for patients. So where the rubber meets the road is with the prescriber. And if they're prescribing the ready-to-use products, they're not going to be converted to the old legacy generic kits. So we expect that portion of the market to continue to decline. We expect the ready-to-use to take the lion's share. And we've always said, A little bit of it might linger, but I don't think anyone anticipated that it would be 70% in the ready-to-use in such a short period of time. In terms of Recorlev payer patient usage, patient usage on Recorlev is patient referrals are strong, patient initiations are strong. The difference that we're seeing is We had anticipated that people would titrate up to their optimal dose a little bit faster, but we're not concerned about that at all. Physicians are taking an appropriate approach to stepwise dose titration. That's good medicine. We're working very effectively with payers, clearing insurance. Nobody gets Rekorlev until the insurance is cleared. There is a process to being to a patient starting on Recorlev. There's the initial referral, and then the patient has to go through some testing, they need to get an EKG, and physicians are busy, patients are busy, and those repeat visits, they take time. So we've said from the beginning that it can be weeks to months from a patient referral to an actual patient on drug. Receptivity has been outstanding. We've gotten no pushback from physicians. It's a matter of them getting a good sense of Recorlev and how they can best utilize it in their practice. We think we've got a better product than Isterisa, which has a lot of androgenic side effects. We think we have a better product than Coralem, which when you think about it, the goal in Cushing's is to normalize cortisol. Coralem doesn't do that. So we think we've got a very competitive product. In fact, we know we do, and we're encouraged by the results so far. And payer dynamics have been as expected. You know, it's a negotiation one at a time.
spk05: Okay, helpful. Thank you. The next question comes from Oren Livner from HC Wainwright. Oren, your line is open. Please go ahead.
spk02: Thanks. I have a few questions. If we could just talk big picture, you've reiterated your guidance for year-end cash flow break-even or 2023 year-end break-even, which I think is probably a major upside to current street expectations. So can you just talk about the main drivers of that growth in your mind? Is it safe to assume that's largely year-over-year record-level growth in there? And I guess main, the main drivers of that is that, uh, versus the current trends we're seeing, is that just the conversion of a, you know, maybe a backlog of patients as they get on, you know, through insurance and that product accelerates quickly now, or is up to up titration, a major component of that and, uh, a couple others. Thanks.
spk04: Yeah, Warren, it is. Record plays an important role in that. Um, and it is a lot about the time from referral to patient on drug. The more efficient we get at that, the better we get at that, the more we negotiate with payers, et cetera. And importantly, the rate of titration to the optimal dose. More patients getting to where they need to be over time is going to be a pretty big driver.
spk03: As well as continued growth in GVOC. I think, yeah, continued growth in GVOC as well, Oren.
spk02: Okay. And... Following up on that Rekorlev conversion and uptitration, at any point should we expect to get numbers on patients referred and or patients on drug, or is that going to be something you maintain close to the vest even going forward? And you talked about having a superior drug. Can you comment on just any pushback in the adjudication phase, the insurance adjudication phase, with regards to off-label ketoconazole out there. Is that an issue you face or is it just normal we're trying to put a patient on a very expensive drug and that's a process?
spk04: It's what you just said at the end. It's trying to put a patient on a very expensive drug and it's a process. We are not getting pushback on keto because, in fact, at the physician level, we're being embraced as having something that's actually been studied has an actual label and is being detailed on label, physicians are not comfortable using keto off-label. They just aren't. And the payer is not really in a good position to require keto in order to get to RecoraLove.
spk02: Okay. And just one last one on GVOC. Aside from prescription growth, it looks like your quarter-over-quarter revenue growth is surprisingly strong. It was above our estimates. Can you confirm if there were any inventory dynamics at play, or is it just that the net price has stabilized higher than maybe where it was recognized in 2Q? And I think you said that should be stable going forward?
spk03: Yeah, it's stabilized in Q3, the net price. You know, assuming a consistent payer mix, Oren, I think we would expect that it to remain kind of where it leveled off in Q3. But I think what we did see is, you know, relative demand. We did see a little bit of inventory build in the quarter. You know, it could be going to alternate channels. But, yeah, we saw a little bit of inventory build in the third quarter. And you see that from time to time. So particularly, you know, back to school season. Perfect. Well, thanks for the help.
spk05: The next question comes from Romano Ruiz from SDB Securities. Romano, please go ahead. Your line is open.
spk01: Great. Thanks. Good morning, everyone. So I did have a couple of questions on GVOC. Maybe could you talk a little bit about some of the competitive dynamics you're seeing between GVOC and Vaccini? And is there anything that we should expect going into the holiday months end of this year for 4Q?
spk04: Well, the competitive dynamics, I think, are pretty much as we expected. Lilly continues to promote Baximi. They're most active during the back-to-school season. And their biggest real franchise is in pediatric endocrinologists. So that's usually when they're even more active. Like I said previously, and you and I have talked about, I'd like to see them a little bit even more active because they're a big voice and they can drive market growth. And we've got a great product, and we continue to grow our share of the ready-to-use. So I think the competitive dynamic is playing out, like we said at the outset. They're going to take a bigger piece of the pie than we are early on. We're going to close that gap somewhat. But if both products continue to grow the way they are and continue to grow the market, we're both going to do extremely well. And it's pretty much just Lilly and us at this point. And like I said previously, the generic companies can ramp up in their manufacturing as much as they want. They have a product that patients can't use.
spk01: Yep, fair point. And I wanted to ask a little bit about Recoralev. So I know you talked a little about the titration going very well. I was curious if you had any insights on what you expect the overall average maintenance dose to be, like going into 2023 as more patients ramp up. Any sort of color in that would be super helpful.
spk04: Well, what we saw in the clinical studies was patients were titrated up to most commonly 600 Um, we expect that the, you know, in the, in the, in practical utilization that we'll end up somewhere in the 500 to 600 neighborhood. Um, and I think it's playing out that way. And you, you also asked something about the holiday, uh, in your previous question, you asked about holiday dynamics. Um, nothing special except, you know, people are at increased risk during the holidays based on the, you know, the way they eat and drink, et cetera, but. We don't attack it in any different manner than normal.
spk01: Got it. Thanks.
spk05: We have no further questions. I'll turn the call back to Paul Edick for concluding remarks.
spk04: Thank you. I want to personally thank all of our long loyal shareholders and investors for their support over the last few years. We absolutely appreciate your continued belief in what we're building. We continue to work hard every day to deliver value on your investment. You can see from everything we just discussed that our business is in great shape. We continue to affirm and meet our guidance, which represents excellent continued growth year over year. We have plenty of cash and we're managing expenses aggressively. Thanks for joining the call this morning and your continued support as we execute on our growth strategy to build a substantial patient-centric, commercially focused, profitable biopharma enterprise. with multiple products in multiple therapeutic areas, a highly targeted development pipeline that has significant long-term promise and increasing value-added partnerships based on unique technologies, and meeting the needs of patients and caregivers every day. Thank you very much.
spk05: This concludes today's call. Thank you very much for your attendance.
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