Xeris Biopharma Holdings, Inc. (XERS) Earnings Call Transcript & Summary

Good afternoon, everybody. Hope you had a great day 4 at the JPMorgan Healthcare Conference. I'm Bhavana Balakrishnan, an associate here in the health care investment banking team. Thank you so much for joining the presentation of Xeris Biopharma. With us today, we have Paul Edick, who is the Chairman and Chief Executive Officer; and Allison Wey, SVP of IR and Corporate Communications. We'll leave time at the end for questions. But for now, over to you, Paul.

Thank you. I appreciate it. Welcome. Good to see everybody today, and thank you to JPMorgan for having us. I'm going to go through our presentation today, and we'll save some time for questions. We are a public company. Please pay attention to our forward-looking statement. If you take the time to do that, we'd appreciate it. Xeris is an emerging biopharma company. We're a self-sustaining, growth-oriented business, committed to making a difference to patients. I'm going to talk about 3 pillars of our business. The core of our business is supported by formulation technologies. I'll get into the offspring of those technologies and how we're applying them. The second pillar of our business is a robust and growing commercial business with 3 products, marketed products, on the -- in the -- that we're currently promoting. And then also, I'll talk a little bit about technology partnerships. Many of you might have heard or seen that we had a press release yesterday. It seems like a few days ago, but yesterday that we landed a new license agreement with Amgen, that I'll talk briefly about that later on in the presentation. Bottom line is that Xeris is executing -- we're executing on our strategy. We're driving growth. We're adding leverage to our business. We continue to develop new products. We're adding partnerships, and we're -- as of the fourth quarter, we were cash flow positive in the fourth quarter. We will be continuing forward in 2024. We'll talk a little bit about some of our guidance for next year. But if you look at our guidance for last year, if you look at what we did in 2022 from a total revenue basis, we're about a $110 million business. This year, we guided to $135 million to $165 million. And as we've said recently, we're going to finish at the high end of that range. From a cash utilization perspective, last year, we burned about $103 million. We guided to $50 million to $77 million. This year, we're going to be even lower than at $52 million. We'll end up in the low -- that got really loud really fast. We'll end up in the low end of the range -- should I use this one? Okay. Sorry about that. We'll end up in the low end of the range in terms of cash utilization, and in terms of our position cash, we had guided originally last year, we had $122 million. We guided to $45 million to $65 million. We're going to end up way above that range this year at around $72 million. So a very healthy business, all going in the right direction. And as you can see, our growth remains very strong across all of our products, every quarter for the last several years, up and to the right. We're growing consistently. We've had 6 record quarters. And if you look at our portfolio, the marketed products, Gvoke, Ogluo is Gvoke in the U.K., we're developing a levothyroxine product that I'll talk briefly about, and then our partnership with Amgen. Essentially, we signed an agreement for a license of our XeriJect technology with Amgen to build a subcutaneous 15-second injection of their TEPEZZA product. And we're also working with Regeneron on similar kinds of formulation initiatives that -- all of which are undisclosed at this point. Speaking about our 3 commercial products, Gvoke is our product for severe hypoglycemia. It's -- people refer to it as EpiPen for diabetics. Very easy, very simple, and I'll kind of show you a picture of that later on in the presentation. Recorlev is our drug for Cushing's disease, launched about 1.5 years ago, doing extremely well. And Keveyis is a product for primary periodic paralysis, which is an ultra-rare condition. In 2023, with generic competition, we actually grew Keveyis business. Very healthy, growing product that we're -- we remain very excited about. Going a little bit deeper in our products. If you look at Gvoke, it's a ready-to-use liquid glucagon, the first room temperature-stable glucagon product for rescue with -- in an auto-injector produced by our partners, SHL, for severe hypoglycemia. If you look at the product itself, extremely easy to use. You pull off the red cap. You press the yellow cap on exposed skin. You wait 5 seconds. You wait for the second click, and you know that you've gotten the complete dosage. There's also -- you can see in the picture, there's a little window. It's clear before you administer and it's red after you administer. So very easy. And it basically has changed the world of rescue in severe hypoglycemia, where now you have self-administration, you can save your own life, which is a dramatic difference in diabetic people's ability to rescue themselves. If you look at what's going on in the space, there are, between patients who are on insulin, which is clearly a risk factor, you're at increased risk for severe low if you're on insulin. You're also at an increased risk for severe low if you're on sulfonylureas. You look at that entire population of the world of diabetes, you've got almost 15 million people that are on insulin or sulfonylureas, all at increased risk for severe low, and only about 1 million of those patients are actually getting a prescription for rescue glucagon today. So there is a tremendous amount of room for growth. And one of the things that we're really proud of is all of the advocacy organizations, all of the societies have recently updated their guidelines or guidance to include or emphasize the use of -- or the ability, the -- having available a rescue glucagon, ready-to-use rescue glucagon, for in the event of a severe hypo. The ADA has recently updated theirs, and we're partnering with them on an ongoing basis to try to get the word out, that if you're on one of these products, you should have a ready-to-use rescue glucagon handy just in case. And so it's a tremendous opportunity that we've only just begun to penetrate. If you look at the glucagon market in general, over the last 5 or 6 years, it has continued to grow, but the growth has been relatively modest, 2%, 3%, 4%, 5%. In 2023, we finally got back to double-digit growth, growing about 10% year-over-year in terms of total glucagon, and it's accelerating. So that's a very good sign, and we hope to be able to continue to accelerate that growth. Gvoke itself is growing -- is rapidly growing. You can see from this slide, every quarter, we continue to increase. Every quarter has been a record quarter for the past year. And you can also see that the ready-to-use products have really started to dominate this market. It's really about 80%, 81% of the market is in the ready-to-use products at this point. And then from launch, you can see how well we've done with Gvoke. Last year, $52 million. Year-to-date through the third quarter, $48 million. And that's contributing greatly to our high end of the range revenue for next year. Moving on to Recorlev for Cushing's syndrome. We launched Recorlev about, I don't know, about 1.5 years ago. Cushing's is a very severe condition with a lot of different potential maladies. We are the only -- one of the only products that actually treats the underlying cause of Cushing's, which is elevated cortisol production. We actually normalize cortisol. You can see on this slide, there are a number of products available or being used for Cushing's, only a couple of which are actually indicated for Cushing's. And we have data and a label that is an indication for Cushing's, and we normalize cortisol in the process. So we do treat the underlying disease. One of the biggest drugs in the category, Korlym, patients do well, but it does not necessarily normalize cortisol. We do, so we think we're very competitive in the category. If you look at the population, patients who are -- would be candidates for our product, it's about 8,000. So it is a very rare condition. We have the broadest indication and treat the root cause of the disease. We get to rapid and sustained reduction of cortisol. We resolve the symptoms, and we think it's the best-in-class ongoing full support for the patients. We surround the patients with all kinds of services to help them do well on the product. Since launch, we continue to do well with Recorlev. It's grown every single quarter, continues to grow every single quarter. We're going to have a great year in 2023 with Recorlev, and we're going to continue to grow it in 2024. Moving on to Keveyis. Keveyis is a product that is probably not on anybody's radar. Very, very ultra-rare condition in primary periodic paralysis. These are patients that have had a series of maladies over the course of many years, almost never identified as PPP by health care professionals. We find the patients for physicians. We analyze billing data and diagnosis data, and when we see a constellation of ailments that have been treated over time. We approach the physician and recommend that they identify who the patient is in their practice that may be a candidate, get them in, get them evaluated and get them treated. There are about, by most estimates, somewhere between 4,000 and 5,000 potential PPP patients in the United States. They all have different triggers. Some of them could be potassium or carbohydrates. Symptoms are -- vary greatly, but left untreated, these patients are frequently -- become almost housebound. If you think about it, if you have the potential of a trigger that could cause a paralysis behind the wheel of a car, many of these people no longer drive cars. They're not going to dinner. They're not going to the movies. Their lives are really reduced in -- from all intent -- for all intent and purpose. What we do is we give them their life back. They can get back behind the wheel of a car. They can be out at dinner, go to movies. They are back into a somewhat normal life once they are on Keveyis. The product we know is clinically shown to reduce the frequency, severity and duration of attacks within a few months. It's a sustained benefit over time. It works across all the different patients that we've bumped into. Very well tolerated, with dosage that is titrated to each individual's needs. We support these patients, much like I said we do with Recorlev, but we support them with our care connections, which are -- we have case managers to assist them with their prescription, with their reimbursement. We also have patient assistance managers to guide them through the process. We even have patient mentors who are patients who've been on Keveyis for a number of years, who will work with patients, hold their hand, help them through, be a sounding board as they get into their Keveyis therapy and get titrated to the right dose and deal with some of the early side effects. Once again, if you look at the revenue that we've generated with Keveyis, it has continued to do extremely well. In the acquisition of Strongbridge, there was a CVR for KEVEYIS for 2023 of $40 million. We've been growing the product in a way that we triggered that CVR in the third quarter of the year, didn't even take a full year. Year-to-date, we're at 42%, and we grew beyond that. So we had a really good year with Keveyis in spite of a generic available for the entire year. The other thing I wanted to talk about a little bit is our formulation technologies and our development pipeline. We have 2 different technologies -- 2 different, basically, formulation chemistries. XeriSol, which is the way in which we develop levothyroxine, our pipeline product, but also Gvoke, which is our lead product in our commercial business. We're able to take products that are not stable in solution and make them stable liquids. Gvoke is stable at room temperature for 30 months, which is very different. It used to always be a reconstitution of a rescue kit. We also have a technology we call XeriJect, which is essentially an injectable paste, a low viscosity paste that we can put in a prefilled syringe or an auto-injector, and we basically can take large molecules, monoclonal antibodies that are delivered predominantly through IV, and we can administer them subcutaneously in a 15-second injection. The way we do that is by super concentrating the molecule and suspending it in our medium. Once that medium is injected, our medium dissipates. All that's left is the drug substance, and the drug substance reconstitutes using bodily fluids. Very elegant chemistry, really tomorrow's technology. And when you look at what we're able to do for products, for example, going back to XeriSol for a second. Levothyroxine, huge product used, 100 million prescriptions a year. It's a daily oral, and a significant percentage of these patients do not do well with gastrointestinal side effects, the lack of absorption and widely varying blood levels. What we're building is a once-weekly liquid stable formulation that we can put in a prefilled syringe or an auto-injector or a dial-a-dose pen, and patients can use whatever dose is necessary in 1 device. And we estimate that there's close to about 25% or 30% of the total population that have one or more of those issues that we can bypass the gut. We can do it for a week at a time, and we can smooth out blood levels over time. If you look at pricing and you look at that market, even at today's pricing, that segment could be worth anywhere from $1 billion to $2 billion. We're completing -- we've completed enrollment in our Phase II trial, and we should have data on Phase II, which will confirm the conversion ratio from oral to liquid, and we'll go to the FDA in the second half of the year with a proposed Phase III program. We hope to get Phase III started sometime in the first half of 2025. Going back and forth, sorry about that. But if you look at XeriJect, I wanted to talk briefly about the Amgen deal that you may have seen we signed a couple of days ago, yesterday, or announced yesterday. What we're able to do is we're working with their Horizon product, which is TEPEZZA. It's a multibillion dollar franchise, and we're going to turn that IV product into a subcutaneous 15-second injection. There's a bunch going on in this slide, but if you go to our website and you look at the video that's on there, you'll see that it is a very elegant process where our low viscosity liquid is injected, dissipates, all you've got left is the actual drug substance. We can build any number of different products that are currently IV. We can turn them into subcu. One of the questions we get all the time is, everybody is familiar with Halozyme. How does it compare? Halozyme is still an infusion, good in technology, very helpful in terms of the administration of drugs. You can move from IV to a push infusion, but you're still in the office, you still have an office procedure. Our goal is to get these patients home and give them something they can self-administer in the home. Less costly, less burdensome and equally effective at getting the drug substance into the body. One of the things that's even just as critically important is all of our technologies and everything we do is supported by an incredibly extensive patent estate, both U.S. and Europe or around the world. And our products are covered -- our technology covers products into the 2030s, late 2030s. So any drug we work on is going to have a robust patent estate behind it. The team that we've assembled for -- at Xeris is a team that's been together for a long time. In one version or another, we've been together in multiple companies for anywhere from 20 to 30 years. So we're a very experienced team. We know what we're doing, and we think we're building a very, very important enterprise. And in conclusion, if you look at the company and you look at the 3 pillars that we're building, we're fundamentally a formulation technology company built on technologies and chemistry that is adaptable in many different situations across multiple types of products. We have a growth engine in our commercial business with Gvoke, Recorlev and Keveyis. It is the core of our forward-looking business, and we have the ability to partner our technologies with big companies to help them move patients from office-based procedures into the home. We also have a deal with Regeneron that we're working on a number of their preclinical and commercial assets in order to do the same thing for them. We hope that, that translates into equally beneficial for both companies, partnerships and licensing deals down the road, all basically focused on making a big difference in patients' lives. We're either saving lives or we're changing lives, which is our mission at the end of the day, and we think we're building a pretty interesting enterprise in order to do that. So I think I'm on time. Then we'll open it up to questions.

On time to the second, actually. Thanks, Paul. Any questions from the audience? I can kick us off with one, something that you said towards the end and also you've been touching on through your presentation about the Regeneron program. Is there any update -- tell us when we can expect any update on that program?

No. We just started the Regeneron program not even a year ago. The things that we work on, the formulations that we do, we go through numerous cycles of formulation. For any particular product we're working on, we might do 100 to 150 different formulations in several cycles. And as you saw on the one slide, there are several elements to that, including spray-drying stages, et cetera. It takes many months. We're in that process, we're late in that process with both assets we're working on so far, but it will be a while yet before there's anything conclusive.

Yes. And shifting gears a little bit. You talked about your levothyroxine Phase II study and that you expect to start in second half of 2024. What does good data look like?

The Phase II study is -- we originally went to the FDA with a Phase I healthy volunteer study that basically was to determine the conversion ratio from oral to liquid, and we showed a statistical analysis based on a couple of different dosages that, that was about 4:1. This Phase II study is in actual patients on levothyroxine that is designed to confirm that ratio, that conversion ratio. So is it 4:1? Is it 3:1? Is it 5:1? So we'll get that data. We'll be able to go to the FDA with a confirmatory study that will inform a Phase III program. The other thing that is interesting about that study is we're doing it in -- our target is patients who are stable on levothyroxine today. What is really reinforcing the purpose for building the drug is those patients are really hard to find. So the screen failure numbers are pretty high because there are very few people who are actually stable on today's -- Synthroid, for example, which is the reason we're building the once-weekly subcutaneous drug in the first place. So that is a reinforcing of the need for the drug. We'll have the conversion ratio, and we'll go to the FDA with a proposed Phase III program.

Yes. And also thinking about your strategy a little -- at a higher level, is M&A a part of your strategy at all? Or do you believe in more of a stand-alone approach?

Both. So if you look at our history, we developed Gvoke and we bought a company called Strongbridge, which got us Keveyis and Recorlev. So our go-forward strategy is to build all 3 pillars. We want to drive our commercial business. We can drive that business by way of developing more products in our own pipeline with our technologies, such as levothyroxine. We are focused on potential acquisitions in order to add to our pipeline and most importantly, our commercial business, through acquisition. And those partnerships allow us to generate incremental revenue to do all of the above.