Xeris Biopharma Holdings, Inc.

Hello, everyone. Thank you for joining us and welcome to the Xeris Biopharma fourth quarter 2025 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to Allison Way, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Thank you, Warren. Good morning, and welcome to the Xerox Biopharma 2025 Full-Year Financial Results Conference call. Earlier this morning, we issued a press release detailing our 2025 financial and operating results and financial guidance for 2026. This press release is available on our website. Joining me on the call today is John Shannon, our CEO, and Steve Piper, our CFO. Following our prepared remarks, we'll open the call for questions. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements regarding Xeris' future expectations, plans, strategies, objectives, and financial performance. These forward-looking statements are based on management's current assumptions and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For discussion of these risks and uncertainties, please refer to the risk factors described in our filings with the SEC. Any forward-looking statements made on this call speak only as of today's date and except as required by law, the company undertakes no obligations update or revise these statements. In addition, during today's call, we will reference certain financial measures that are presented on a non-GAAP basis. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release. With that, I will now turn the call over to John for his opening remarks.

Thanks, Allison, and good morning, everyone. We expected 2025 to be a transformational year for Xeris, And it was. Our performance extended well beyond our incredible fourth quarter and full year revenue growth. Across the organization, we executed with discipline and focus, advancing our strategic priorities and driving measurable progress throughout the business. Most importantly, we reached a defining milestone, financial self-sustainability. Our progress across the entire business has enabled us to forever put behind us the question of our ability to self-fund our strategy, our pipeline, and our future. Now, as we enter 2026, we do so with clear momentum, positioned to drive rapid revenue growth, execute on our advanced pipeline, and thoughtfully prepare for even greater opportunities ahead. I'm excited and confident that our long-term strategy is firmly on track. Before diving into the details, I want to recognize and thank the entire Xeris team. The performance you delivered in 2025 and the strength of our outlook for 2026 is a direct result of your extraordinary commitment, focus, and disciplined execution across every part of our enterprise. Now to the results. Fourth quarter total revenue grew 43% year over year to nearly 86 million. This outstanding quarterly result was driven by strong demand across all three products. For the full year, total revenue increased by an incredible 44% to 292 million. This performance was broad-based and strengthened as the year unfolded. Most importantly, It fueled our ability to deliver nearly 60 million in adjusted EBITDA and for the first time, net income on a full year basis. The exceptional performance we delivered in the fourth quarter was no aberration. It reflects consistent progress throughout the year as we executed with increasing discipline and effectiveness. As a result, we exited 2025 with strong momentum, increased confidence in our strategy, and a significantly stronger operating platform. With that, let me walk you through performance across our three commercial products. First, Recorilev. Recorilev remained the primary growth engine for Xeris in 2025 and delivered another strong quarter in Q4. Recorilev's growth was driven by continued expansion of the patient base, ending the year at approximately 700 patients nearly doubling the number of patients on therapy from year-end 2024. This growth reflects expanding prescriber awareness in a very dynamic market coupled with increasing confidence in Recorla's differentiated clinical profile. Turning to this year, in January, we nearly doubled our Recorla commercial team, significantly expanding our sales and patient support organizations to increase the quantity and quality of our healthcare provider and patient interactions. This expanded commercial footprint is expected to further escalate awareness and adoption, and we expect to see the impact of this expansion most notably in the second half of this year and continuing well into the future. We believe RecorLive is still in the early stages of realizing its full commercial potential. Last week, we filed a patent infringement lawsuit against two ANDA filers to vigorously enforce our rights and defend RecoraLift. We are very confident in the quality and strength of our intellectual property, our legal position, and our long-term outlook for RecoraLift. We have built a strong IP foundation for RecoraLift with four Orange Book listed patents that run until March 2040. and orphan drug exclusivity, which runs through the end of 2028. Our RecorLev strategy is unchanged. RecorLev is and will continue to be on an exciting journey for many years to come. And our expectation shared during our investor day last June of 1 billion in peak sales by 2035 remains securely intact. Moving to GVOTE. GVOTE delivered steady, reliable growth in 2025, reinforcing its role as a durable and predictable contributor to our portfolio. On a full year basis, revenue grew 14%, supported by broad access, strong prescriber awareness, and continued alignment with treatment guidelines. GVOTE remains a potentially life-saving rescue product that should be in the hands of every person with diabetes at risk of having their blood sugar go too low. Caveas. Caveas continues to outperform expectations, and 2025 was no exception. The brand's strength and durability have only become more evident given that we were able to end the year with an increase in the number of patients on therapy versus 2024. As we highlighted throughout 2025, success with CAVEAS reflects not only the product itself, but the comprehensive support we provide to patients living with primary periodic paralysis. Importantly, CAVEAS represents our longstanding commitment to serving a small, highly underserved patient community, and it remains deeply aligned with our mission to make a meaningful difference in the lives of patients with rare diseases. Turning to our pipeline, XP8121 continues to advance according to plan. The anticipated initiation of phase three in the second half of 2026 marks a significant value creation inflection point for the program and underscores our conviction in its blockbuster commercial potential. XP8121 addresses a significant unmet medical need. There are over 20 million patients with hypothyroidism on daily oral replacement therapy today. Of those 20 million patients, we believe there are 3 to 5 million patients who are unable to achieve and sustain normal range due to GI absorption issues. XP8121 is a once-weekly subcutaneous levothyroxine injection that potentially solves this problem for many patients. As we look ahead to phase three, the program is entering a pivotal stage, one where execution, milestones, and value creation become increasingly tangible and visible. We believe XP8121 has the attributes to become a differentiated, high-impact therapy for patients and a meaningful growth driver for Xeris. Building on our strong commercial momentum, we are entering 2026 with three clear priorities. First, we remain focused on driving rapid revenue growth and are making targeted investments across our sales, patient support, and commercial infrastructure. Second, we will continue to advance XP8121, our once-weekly subcutaneous levothyroxine for hypothyroidism. We believe XP8121 has the opportunity to become our next blockbuster, potentially generating one to three billion in peak revenue. As we prepare to initiate our phase three program in the second half of 2026, we intend to significantly step up our R&D investments, marking a critical milestone for both the asset and the company. Third, We remain committed to maintaining a strong balance sheet with disciplined operating execution. This approach preserves our flexibility to make ongoing prioritized investments in our business. Together, these priorities position Xerox perfectly to drive sustained performance over the near, medium, and long term. With that momentum as context, before turning the call over to Steve, I'd like to briefly share our outlook for 2026. For the full year, we are expecting total revenue between $375 million and $390 million, representing more than 30% growth at the midpoint compared to 2025. We will continue to be adjusted EBITDA positive, even as we significantly step up our R&D and commercial investments. Now with that, I'll turn the call over to Steve, who will take you through our financial results in greater detail and review our guidance for 2026.

Thanks, John. The results we are reviewing today are the product of a year defined by discipline, focus, and strong execution across the organization. I, too, want to thank our employees for your dedication. accountability, and relentless focus on delivering against our priorities. Your efforts continue to strengthen our operational foundation and position us for sustained success. Turning now to the fourth quarter and full year results. Total revenue for the fourth quarter was $85.8 million, representing 43% growth year over year. The strong performance reflects continued underlying demand across our portfolio. Importantly, this performance reinforces the momentum we carried through the end of the year as we enter 2026 with a solid foundation for continued growth. For the full year, total revenue was $291.8 million, an increase of 44% compared to 2024. This growth was driven by robust demand across all three commercial products, Recorilev, Jivo, and Cabeas. Looking at our performance from a product level, Recorilev revenue was $45.3 million in the fourth quarter and $139.3 million for the full year. This reflects growth of more than 100% both for the fourth quarter and the full year, and was driven almost entirely by a continued expansion of the patient base, reflecting strong underlying demand and increasing prescriber confidence. GVOC delivered revenue of $24.6 million in the fourth quarter and $94.1 million for the full year. Performance reflected steady prescription growth, broad access, and favorable gross to net dynamics. Jibo continues to serve as a stable and predictable contributor to our revenue base. Caveas generated revenue of $12.8 million in the fourth quarter and $47.6 million for the year, supported by an increase in the average number of patients on therapy. Our performance continues to benefit from our focused approach to ongoing healthcare provider and patient support. Overall, The breadth of contribution across our portfolio reinforces the durability of our revenue base and the focus of our team to meet and exceed goals. Gross margin for the fourth quarter was 87%, and for the full year was 85%, reflecting steady improvement relative to prior year, driven by favorability from product mix. R&D expenses were $7.9 million for the quarter and $31.2 million for the year. The 22% increase year-over-year primarily reflects our continued disciplined investment in advancing our pipeline, including increased spend to support our preparation for the upcoming Phase III clinical trial, XP8121. SG&A expenses were $47.5 million for the quarter, representing an increase of approximately 18% compared to prior year. For the full year, SG&A expenses were $182.4 million, an increase of approximately 12% driven by incremental personnel-related investments to support the rising demand for our commercial products. Adjusted EBITDA for the fourth quarter was $25.1 million, an improvement of $16.8 million compared to last year. For the full year, adjusted EBITDA was $59.4 million. The improved results reflect continued operating leverage and underscores our ability to scale revenue while maintaining a disciplined approach to expense management. We also delivered another period of net income in the fourth quarter, and as a result, we reported net income on a full year basis for 2025. Importantly, our 2025 performance resulted in an improved balance sheet, which provides us with the flexibility to fund continued revenue growth, advance XP 8121, and operate the business from a position of financial strength. As John outlined, we have entered 2026 guided by a clear set of priorities that underpin our decision-making. These priorities include, one, driving continued rapid revenue growth. Two, initiating the phase three study for XP8121, a significant milestone for the company. And lastly, maintaining disciplined investment prioritization as we continue to enhance operating leverage. We believe this balanced approach positions us well for 2026 and beyond. Turning to our outlook for 2026, we expect total revenue to be between 375 and 390 million for the full year, representing over 30% growth at the midpoint. This outlook reflects expanding patient demand across our products. Our revenue growth is also expected to drive a modest improvement in gross margin as we continue to benefit from a favorable product mix. Moving to R&D, as we plan to initiate our Phase 3 study for XP8121 in the second half of the year, we expect R&D to increase by approximately $25 million. This step up reflects a deliberate and disciplined allocation of capital to advance XP8121 and is critical to unlocking its significant long-term value and future potential, which we believe is $1 to $3 billion in peak sales. Looking at SG&A, we continue to invest and scale our commercial enterprise to support RecorLive, on its own journey to 1 billion in peak sales by 2035. As such, we plan to increase SG&A by approximately 45 million in 2026, primarily due to the expansion we recently completed. This deliberate material step up in investment will drive significant revenue growth, resulting in improved operating leverage across the business. As we committed to in 2025, we expect to remain adjusted EBITDA positive moving forward. And specific to 2026, we expect adjusted EBITDA will grow on an absolute dollars basis compared to 2025. Our business has never been on more solid financial ground. The sales growth momentum is enabling our reinvestment strategy and every dollar we deploy is aimed at expanding our capabilities and positioning Xeris for sustained long-term growth. With that, I'll turn the call over to the operator for Q&A.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Anselm with Piper Sandler. Your line is open. Please go ahead.

Hey, thanks. So just a couple for me. Helpful color on the spend this year. Was wondering, though, as you think about the expansion of RecorLiv and the widening of the addressable market, that you've seen and certainly your competitors have seen. Can you talk about the extent of additional operating leverage that you think you're going to be able to realize longer term and specifically interested in further Salesforce expansion? Or I guess we've seen, for instance, your competitor expand the Salesforce a few times. Is that a good way to think about what you're going to need to do to adequately support RecordLib. So that's number one. And then number two is, as you think about the IP litigation, and I realize this is going to play out over the long term, but just help us understand how that's playing into your sense of urgency regarding the potential acquisition of an asset where you can leverage your now expanded commercial organization. That would be helpful color as well. Thank you.

Thanks, David. It's John. Let's start with the expansion. And we just doubled our commercial footprint as of the 1st of January. And when I say that, it's not only our salespeople, but all the patient support, medical affairs, pharmacy services, all of those things that it takes to manage this very complex patient as you bring them on to therapy. So we see that as... you know, a significant move that we need to do in order to continue to drive the growth we're driving and get those patients on therapy and keep them on therapy. As we continue to expand into outer years, we'll need to add more resources in that capacity. It just takes more to, again, manage the patient loads. So we see that as continuing and continuing to based on scale and how we grow there. We're also making additional investments in data, studies, things like that. So we'll see that over time as well. So we see a constant and consistent increase in expense and investment on RecorLive for the next several years. Um, as, as it relates to your question, I think around IP litigation and how does that change anything? Well, as I said, in my opening comments, our strategy is unchanged on Recora. We will continue to do exactly what we said we were going to do. We think we know we can get this thing to a billion dollars by 2035. Those investments will again, continue to come on a, on a, a scaled approach so that we can, you know, again, manage the growth that we're driving. So we see that as longer term and we feel strongly that we'll continue to do that and we'll be able to get this to a $1 billion product by 2035.

Your next question comes from the line of Brandon Foulkes with HC Wainwright. Your line is open. Please go ahead.

Hi, thanks for taking my questions and congratulations on another very good quarter. So maybe just following on from the earlier line of questioning, can you just help us think about the evolution of capital deployment beyond 2026? As you realize this operating leverage in the business, What's your updated thinking about internal allocations that you've laid out today on the call versus perhaps external business development? Does the emergence of this IP litigation change your appetite to perhaps sort of bring in something between sort of now and when 8121 comes to market to just sort of hedge the product concentration risk? And then secondly, maybe I'll just ask this because maybe it goes in. Can you just talk about the evolution of gross margin here longer term? How should we think about gross to net in 2026 across your portfolio as we think about the evolution just with regards to product mix? Thank you.

Let me try to start this, Brandon. I don't know that we got all those questions in there. So we'll try to answer them all. You know, so... As you heard in our comments, we're in a position where we're self-sustainable in terms of the amount of leverage we're getting from the business and our ability to support, you know, whatever is in front of us. Specifically, 81-21 and recorrelate growth. And, you know, as it relates to the IP. Again, nothing's changed. It's unchanged. We weren't surprised by these lawsuits. So we knew this was coming. We saw this coming. We're prepared for it. And we still see a future where we have lots of opportunities in front of us with respect to our own existing technology and capabilities to drive growth for a long time, as well as external. So we see all of that in front of us. And now that we're at this point where we're forever... you know, have situations where as long as we continue to grow, we'll be able to continue to leverage that in the future growth. So, and then I'll let Steve cover any of that kind of.

Yeah, I'll just add on to John's comments around operating leverage and some of the questions that have come up. I mean, yeah, I think when you start to do the math on our growth trajectory and look at even with the step up in investment, it's becoming clear that the balance sheet is as strong as ever and it will continue to improve and our operating leverage will continue to improve. And so that opens up capacity to do other things. The good news is we don't have to do other things. We've got great assets, both commercial assets and an asset in the pipeline, a blockbuster in the wings, but certainly opens up capacity to do other things. We'll continue to be disciplined about business development and evaluating those things. Touching on your question around gross margin and gross to nets, gross to net, you know, we benefited on G-Book specifically this year. I would say gross to nets on balance have kind of steadied out. So we're not expecting any material movement either way in 26 on the gross to net front. From a gross margin perspective, as we've noted over the last year and a half, we've seen a nice steady increase in our gross margin really benefiting from product mix. We see that continuing for the foreseeable future and approaching kind of best in class gross margin profiles for a company that looks like us. Hopefully that addresses your questions, Brandon.

It does. You got all of them, so I appreciate that and appreciate the color. Congrats again.

Your next question comes from the line of Chase Knickerbocker with Craig Hallam. Your line is open. Please go ahead.

Good morning. Congrats on all the progress here and thanks for taking the questions. uh maybe just first to start out a little bit more color on guidance would be helpful can you just kind of walk us through maybe with kind of some rough outlines how you're kind of thinking about the uh the top line uh by product in 2026 obviously largely being um you know being driven by record love but any sort of thoughts you know kind of down the product portfolio would be helpful

Good morning, Chase. Yeah, I'll take this one. So on the revenue, I think, you know, maybe we'll start with the easiest one is Cabeas. You know, we see that Cabeas has kind of, you know, been a steady contributor over the last, you know, five, six quarters in terms of its revenue contribution. And it's kind of... you know, flattening out, so to speak. So I think that's a fair assumption moving forward. On GVOC, I think what we've talked about, you know, over the last year is that we see that, again, being a steady contributor in that high single digit, low double digit growth. And I would anticipate that we're going to see that play out in 2026 that way. And then for RecorLab, that is, you know, the growth driver. So you can kind of back into the math there in terms of the contribution there. But that's on balance what we're expecting. And we did, you know, we do expect some contribution from, you know, our partnerships, other revenue. Historically, it's been in that 5 to 10 range. I think that's a fair assumption for 2026.

Helpful. And maybe just specifically on record, Lev, you know, obviously, you know, very strong implied guide. Can you maybe talk to us about kind of what you've seen so far on Q1, even kind of before that Salesforce expansion, you know, benefit that you will get here? And, you know, there was a competitive product that was kind of expected in the market in 2026. I mean, any kind of anticipation that you sensed in the market from that, that is kind of now unwound and kind of come to your benefit? Just some thoughts that would be helpful.

Yeah, Chase, it's John. You know, I think the first quarter is as we expected. It's pretty typical. You know, we get a lot of, you know, payer resets and copay resets and things like that that slow down the quarter early on in January. We see that it's another typical year. But that's all kind of starting to rebound pretty aggressively in February and going into usually does so in March. So we're seeing that standard. In terms of a lack of a new competitor, I don't think that's really changed much. The market dynamic is still very strong towards finding and diagnosing people with hypercortisolemia and getting them treated. So that That momentum continues in the marketplace, and now with our expanded team in there, we're in a great position to capture more of it, and we don't see any of that slowing down in our organization as well as with any of our competitors.

Helpful, guys. Thank you.

Your next question comes from the line of Dennis Ding with Jefferies. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking our questions. We have two on RecordLive. So number one, it's been a few years since the launch, so I guess what is holding you back from issuing RecordLive guidance? And I guess what additional data do you need to make an informed approach to guidance? And then number two, Do you have any updated thoughts on how you're thinking about the market if Teva indeed is able to secure specialty pharmacy to distribute generic coralline? And if you think that's a risk at all, many thanks.

Yeah. Dennis, the first one is, you know, we don't give specific product guidance and we haven't. And, you know, so we just, you know, give a total revenue guidance and try to give it, you know, the color Steve just gave. So that there's no hesitation there. It's just that's that's what we do. And then I don't know I understood or could even hear your last question. So maybe you could repeat that.

Yeah, maybe I'll just repeat that. Yeah, I was just wondering if you have any updated thoughts on how you're thinking about the Cushing's market and for Corlim specifically, if Teva is indeed able to secure a specialty pharmacy to distribute generic Corlim, if you think that is a risk at all for your business moving forward.

Yeah, we don't see that as a risk at all for our business with respect to generic corallum. We haven't seen that for the last couple of years. We don't see that going forward. This is a scenario where a clinician will have to write a referral for someone to normalize cortisol in order to get to recorallum. And that's a very different approach than what corallum does.

Okay, thank you.

Your next question comes from the line of Rowana Ruiz with LeeRinc Partners. Your line is open. Please go ahead.

Hi, this is Michael on for Rowana Ruiz at LeeRinc Partners. Congrats on your great quarter. We have some questions about XP8121. Could you provide more color on your interactions with the FPA regarding the upcoming initiation of the Phase 3 program and are there any remaining gating items or regulatory dependencies that needs to be handled before the initiation?

So we've had all the interactions with the agency. We're very much aligned on everything we need to do. So no regulatory gating. The gating that we're going through right now is we want to enter that Phase 3 trial with the actual go-to-market device and formulation scale-up for commercial scale-up. So we're going through all the steps before we start that phase three to get all that work done and enter that phase three with the actual go-to-market device scaled up at commercial scale, which is really important when you're going into kind of a narrow therapeutic window area with a lot of range of doses, we wanted to make sure we take the time now so that we don't create delays later in the approval process. So that's what's really the gating item and that's what we're working on.

Got it, great. And are you thinking about any partnership optionality for 8-1-21 at all?

You know, that's a great question. We don't need to do a partnership. We have what we need to get this to market. We think it's an outstanding opportunity for ourselves. And, you know, from that perspective, we don't need to, but it doesn't mean that the right situation came along that we wouldn't consider that.

That would drive incremental value.

Great. Thank you.

Your next question comes from the line of Jason Doerr with Opco. Your line is open. Please go ahead.

Hey, good morning. Jason on for leading your show and congrats on the strong quarter.

Thanks.

Understanding early in the process, could the team provide any guidance on the patent infringement lawsuit for record love against the end of filers? You know, maybe what might the timelines be and what does a favorable outcome look like for the ZERS team? Thank you.

Um, well, as you can tell, we're early in, um, you know, we, we just filed on Thursday, the lawsuit, um, timing wise, I don't know, years, months, you know, so, um, so, you know, more to come on that. We feel really strongly in, you know, our four orange book patents that run till 2040. Um, so that, that's really important that we, uh, you know, kind of make sure we defend and stay behind those.

Appreciate the color there. Looking forward to following. Thank you.

Your next question comes from the line of Jenna Davidner with Barclays. Your line is open. Please go ahead.

Hi, thank you for taking my question. I was just curious on the record of litigation, what your openness or appetite for a settlement could be appreciating your confidence in the 2040 patent timeframe, but also maybe the balance between removing any potential overhang that could in theory last several years versus settling for a couple years prior to 2040. I'm just curious what your thought process there is. Thank you.

Thanks for the question, Jenna. I clearly can't comment on, you know, legal strategy and litigation strategy, but I do appreciate the question.

There are no further questions at this time. I will now turn the call back to John Shannon, CEO, for closing remarks.

Thanks, and thanks everyone for your questions. In closing, 2025 was a defining year for Xeris. We exited the year with strong momentum, a more durable operating foundation, and tremendous confidence in our strategy. We believe our commercial portfolio is well positioned to drive Continued rapid revenue growth in our pipeline, specifically XP8121, adds extended, meaningful, longer-term value as we look ahead. As we enter 2026, our priorities are clear. We believe the immediate and long-term opportunities for Xeris are increasingly exciting, and we remain committed to translating our continued success and momentum into long-lasting value for the patients we serve and our share of rovers. We appreciate your time and your continued support and thank you.

This concludes today's call. Thank you for attending. You may now disconnect.