Xeris Biopharma Holdings, Inc. ($XERS)

All right. I think we're all set. Good morning. It's still morning. Good morning, and welcome to the Barclays Miami Healthcare Conference. My name is Jenna Davidner. I'm one of the analysts here on the Specialty Pharmaceuticals team. And on stage with me, I have Xeris Biopharma. And from the company, we have the CEO, John Shannon. And on the end, we have Steve Pieper, the CFO. Thank you, guys, for joining, and welcome to the conference.

Thanks for having us.

So maybe just to level set the conversation, John, can you just give investors that are less familiar a brief overview of the company and your current product portfolio?

Yes. I'll just go really high level because I know we're going to dig into some of this. So Xeris is a -- it's a fast-growing commercial biopharma company. We have 3 commercial products on the market, Gvoke for hypoglycemia. It's a rescue pen for hypoglycemia, basically an EpiPen for diabetics. Keveyis. Keveyis is for primary periodic paralysis, which is an ultra-rare hereditary genetic disorder. We can talk a little bit about that asset in a little bit. And then Recorlev. Recorlev is for hypercortisolemia and Cushing's syndrome, which is our big grower in the business. On top of that, we have XP-8121, which is our next potential blockbuster, and that's a once-weekly subcu levothyroxine for hypothyroidism. And that's Phase III ready. We're going to get that Phase III started this year. And it's really set us up to really develop and we're on this journey to build this multibillion-dollar -- commercial biopharmaceutical company. And that's what I really want people to hear today as we talk about the brands.

Awesome. And before we dive into the products and guidance, 2025 was a really big year for the company. You transitioned to positive EBITDA. Recorlev became the #1 product. So maybe just looking back over the course of the year, can you talk about the trends and things that maybe went even better than you expected through 2025?

As you pointed out, it was a transformational year for us. We delivered $292 million in revenue, which was above the high end of our range for the year. That's 44% revenue growth for the year. And the most exciting things about that was we then delivered $60 million of adjusted EBITDA. On top of that, we were net income -- we had net income for the full year, which really allowed us to transition to and really prove once and for all for people that we could fund our strategy, we could self-fund our strategy, our pipeline and our future.

So switching over to Recorlev. This product has grown over 100% for the past 2 years. It's still pretty early in the launch. Can you just talk about the launch trajectory from the beginning because it really started to inflect towards the end of 2024. And with that, just the drivers, whether patient demand and also along the way, you've made some incremental investments in sales. So if you can, as you're walking through this trajectory, remind us of where you've made those incremental sales investments and where we stand today?

Yes. So Recorlev is a great story. So we saw going out just before 2024 that there was a real dynamic changing in the marketplace. So in this marketplace of hypercortisolemia and Cushing's syndrome, more and more patients were being screened and diagnosed with cortisol levels 1.82x above the upper limit of normal, and they had these other conditions, which were resistant to drugs that should normally be working. This dynamic was starting to happen. And so at that time frame, we took our sales organization from 28 to 42 people in order to take advantage of that dynamic in the marketplace of more people coming in, right? So the growing population of people coming in being diagnosed. So as we expanded into that, we saw that coming. We made that first expansion 1.5 years ago, maybe a little more than that in front of that. And we were able to capture. That's why you see the acceleration in our growth as we find those patients and then get them on to Recorlev. And seeing that trend and where it's going has really allowed us to make incremental and additional investments, which is what we did this year. So we already have doubled our sales organization, our whole commercial footprint because it's not just salespeople. It's the patient services, reimbursement services, pharmacy services, all the things it takes to be able to get these patients on therapy, keep them on therapy and really help them get through this normalization of cortisol.

Awesome. And we're going to go back Recorlev, but let's talk about Gvoke and Keveyis. So Gvoke, can you talk about maybe the overall revenue growth in the most recent quarter and the dynamics between unit volumes and pricing on the ready-to-use side, there's another key competitor, and they've talked about focusing more on unit growth as opposed to pricing. So I'm just maybe curious for an update on the market and how penetration into that opportunity is going and maybe how you're thinking about it for next year -- this year?

Yes. And I would start with Gvoke has been a very steady growing asset for us since we launched it 7 years ago. I think it's 7. And that product itself is all about getting the patients today that should be protected that are not protected. And when I talk about that, the people on insulin sulfonylureas, there's about 15 million of them. They should have -- based on the guidelines, they should have a ready-to-use rescue just in case, they don't. There's only about 1 million people out there. So all of our efforts have been getting more and more people on therapy. And that's what's allowed us to grow, is bringing on more people, more people on therapy. You mentioned the pricing. The pricing was a little bit of a difference this year because we've been also doing things to kind of improve that gross to net on the way during this process. And those things were showing up in our revenue numbers as well. So -- but the game here is really to grow this thing. And we see this growing in the high single digits to low double digits for a very long time with so many patients out there that still need to be protected.

Awesome. And then Keveyis has obviously turned generic with some competitors on the market. But in the fourth quarter, the product actually returned to growth after the first 3 quarters of some expected decline in 2025. So just can you talk about the outlook on the competitive landscape and maybe how that product -- we should think about the trajectory of that product?

Yes.

Yes. [indiscernible].

This is an asset that we're really, really proud of and its performance and how it's been so resilient since generic competition came in 3, 4 years ago and really hasn't made a dent. And as you mentioned, we actually saw growth. We saw growth from an overall patient perspective on the full year in 2025. Obviously, there's always pricing dynamics when you have generic competition, but those have been on balance with the patient growth kind of been neutralized. And we see Keveyis continuing to be a steady contributor to our business. And it's not just the product itself, all the services that we put around the patient to support them on their journey has really made that product really resilient for us from a contribution perspective.

Awesome. So tying these 3 products together into your recent 2026 guidance that you gave, which came in well ahead of what people thought. We talked about the trends in Keveyis, high single-digit growth from Gvoke, that leaves Recorlev. And I'm just curious, given the very strong 100%, almost 120% growth the past 2 years prior. Just can you help us understand the low end to the high end of that range? What gives you confidence that there's any layer of conservatism just given how strong Recorlev has been performing?

Steve, I'll let you take that one too.

Yes. I'll pick that one. So -- no, we're really confident in our guidance. And I think we've established a track record of meeting or beating guidance over the last couple of years. So we put out numbers that we feel like we can meet or beat. And to your point, I think you're seeing that the growth is really coming from Recorlev. Majority of the growth we're expecting in '26 is coming from Recorlev. As John mentioned, we doubled down on our commercial footprint for Recorlev this year. And so we're going to start to see the tailwinds of that really start to accelerate in the back half of the year. This is our third expansion with Recorlev. So we have a history of how these expansions performed. This was our most significant expansion, but we're really expecting to see the tailwinds from that expansion kind of in Q3 and beyond.

Awesome. And just -- as for people listening that might not be familiar, quickly on Recorlev with guidance. Was there any -- is there any part of the guidance that included -- there was a competitive product that was -- it received a CRL towards the end of 2025. Like was there -- did that impact your guidance at all?

Not at all.

Yes.

Not at all.

And just sticking on that point, is the way you think about the competitive landscape, like how do you view another player entering the market and maybe having more resources out there talking about it, and we're going to review the differentiated nature of Recorlev. So I'm just curious if having more people marketing a product can be a rising tide that lifts all boats.

Yes, that's exactly how we think about it is more and more products coming into this space, finding patients, screening them, diagnosing them with hypercortisolemia and Cushing's syndrome allows for a greater opportunity here. And so that's really what's going on in this marketplace is all -- everybody is out there finding new patients. More than 60% of our patients today are naive to therapy coming on to drug. So that would suggest a couple of things. One is we're becoming more and more first line as the last guy into the marketplace. And then number two is that that's what we're all doing is finding those patients, so we can treat them. So we see that as, again -- and this market is very early in kind of evolving and growing. So we're looking at all these metabolic disorders where drugs that should be working are not working. And if you go and look and find cortisol as the culprit, that's certainly not a clinician knows what to treat.

Yes. And thinking about the products that are on the market and even one has -- there's now a generic player involved and just the traditional therapies and with Cushing's, sometimes the issue has been the side effect profile as well as treating more of the symptoms rather than the underlying condition. So can you help frame Recorlev from that perspective and just how it's been different on those fronts relative to what's approved?

So the way Recorlev works is it normalizes and brings down cortisol levels by going after the source of synthesis of cortisol. So -- and it does it by hitting it at 3 enzymatic places in that design. So by slowing it down and bringing the cortisol into normal levels, you can -- a, the clinician can track that and you can see the progress to all the comorbidities that comes with bringing cortisol back in the normal range. So some -- other products will block the cortisol at the receptor level. So the cortisol is still being produced. It's running around. It's just not having an effect on certain things, right? So that's how we're very different in that respect. So our conversation with clinicians is like if you want to go after the source and we want to bring cortisol back into the range, let's talk about our product, which is very different than at least some of the competitors on the marketplace.

Awesome. And you hosted an Analyst Day earlier last year, and you laid out some peak sales estimates for Recorlev and your pipeline, which we'll get to. But just considering where we are today, 2025 was around $140 million. The peak sales target is $1 billion. I think it just emphasizes how much of a runway there still is. And sometimes the question we get now that this one product is in such high focus and for good reason. But I think we should talk about that peak sales, which is still about 10 years or so relative to when you gave it. So that's a long runway of growth. So just maybe talk about some of the assumptions behind that and maybe the -- how you see this playing out over time?

Yes. The main assumptions behind that are that we'll continue to see the dynamics in the marketplace where more and more people are screened and diagnosed. And this is one of those things where it's going to take time and it will move up and you'll have to scale along with it, right? So that's why we say by 2035, we'll get this to $1 billion. And we're -- and I'll tell you sitting here today just a year into it, we're on pace. I mean we're at where we want to be. The other thing we want to be really clear on with everybody is it will take investment on the way there, like we laid out this year, a doubling of our commercial footprint to be able to get -- have the reach and frequency to get at those patients. and then all the resources you need to bring those patients on. So there will be additional investments that will need to be made over the next several years to continue to keep that growth rate going and stay on the curve. And we'll -- in addition to that, we are also looking at and doing work around what other data generation, other things we can do to basically bring even more value into this space.

Awesome. And we're going to touch back on profitability, but I'll wait until we talk about the Phase III trial. So the recent Paragraph IV lawsuit, I just wanted to touch on that and just maybe help people better appreciate the nature of these ANDA filers and the timing on when the window can open for them to file, and how maybe that impacted you and like whether or not you expected this and just kind of talk us through that?

Yes. So we expected it. We were not surprised by this. We anticipated it. It was almost on the day that we anticipated it. The first day that they could file would have been technically the first of the year, which gets them to where they all ended up. So we had -- and we were ready for it. We filed the lawsuits within 10 days because we knew it was coming, we were prepared. And we feel so strongly we have such great IP going all the way out to the 4 patents that everybody is challenging go -- there's 4 of them, and they go out to 2040.

Yes.

And so -- and they're related to methods of use. They're related to methods of use on things that is very common utilized with people with hypercortisolemia, Cushing's. So we feel really strongly that we can defend those patents. And that's why -- and we knew that even when we put out that $1 billion back in July of last year -- June of last year. And I'll say it every single time I'm out here, our strategy does not -- has not changed. We have this product on a path to $1 billion. I don't see any scenario that takes us off that path.

Awesome. And you mentioned it, but it's just worth probably talking about again because, obviously, you gave the peak sales. You expected that this was coming. It's clearly contemplated in that forecast. And I just want to double highlight that because based on the market reaction, maybe if people haven't been following as closely, it's almost like you react first and then figure it out later. So it's just good to hear that this is as expected, it doesn't change anything. And I'm assuming that's all fair to say.

That's all fair to say.

Yes.

I couldn't reiterate that as much as I could. I mean we're making significant investments, and we'll continue to do that to drive that $1 billion of value.

Perfect. And speaking of investments in the long-term, you have an asset in Phase III now, and we turned into EBITDA profitability last year. You have some step-ups from investments, R&D to fund the trial. Can you talk about the profitability outlook this year and what you expect just for 2026.

Yes.

You take that one.

So thanks for the question, Jenna. So yes, we guided to this year, starting at the top, 30% growth at the midpoint of revenue, and that allows us to fund these additional investments, both from an R&D perspective as well as SG&A. So we've guided to increasing SG&A $45 million this year and $25 million incrementally for R&D to support XP-8121. And we'll continue to invest incrementally in those 2 assets beyond '26, okay? But the good news is that's powered by the growth that we're seeing on the top line. And importantly, I think it's worth noting, we're -- we finished the year with 85% gross margin. We also guided to our gross margin modestly improving this year as well. So that -- again, those 2 factors really allow us to kind of reinvest back into the business.

Yes. And as Recorlev progresses towards that peak sales, and as you mentioned along the way, there will be incremental investments. It's probably too early because you just gave guidance for this year, but the way you think about the path to $1 billion, is there like a time frame on when you might, or certain milestones or metrics that would determine when we might see these incremental investments? Is it a step-up every year with new sales force addition or just anything to help us think about the longer-term profitability?

I'll try and take this one. So yes, I think we've been pretty opportunistic. This has been -- this is our third expansion with Recorlev. So as the market conditions warrant, we'll make those investments, and we have capacity to now invest incrementally. So there isn't like a set time, but we're expecting we will continue to invest incrementally behind those assets.

And it's all about scaling it at the right pace so that you can really keep up and make sure not only are you filling the top of the funnel with referrals, but being able to pull those patients through on drug, and then also keep them on drug. So really important.

And now we'll talk about the pipeline. So maybe just walk us through this asset. What makes you so excited? I mean the peak sales is 3x what you gave for Recorlev. So that's very interesting in the time line of when we might expect any data readouts and milestones and things like that.

Yes. We're -- as you pointed out, we're really excited about XP-8121. And starting with -- it was formulated, and it's made possible by our own formulation technology. So it's homegrown, developed inside, and it fits right into everything we do from drug device combo to endocrinology and our sales teams and commercial teams. So it's like the perfect fit for us going forward. And as we've got it to this point, we're about ready to start the Phase III, we can see that there's a real unmet medical need in the marketplace. So this is hypothyroidism. There's 20 million people out there on replacement therapy, daily orals. And somewhere between 3 million and 5 million of them cannot come into the range or cannot -- the clinicians can't even get them in the range because of GI absorption issues. This bypasses the GI, right? So doing a once weekly subcu can really solve a problem, not only for the patients, for the clinicians. These are really challenging patients to manage. So we are going about this as building as it's a blockbuster. We're taking our time to do all the things right before you even start the clinical trial and making sure that we can successfully navigate that. And we'll give a lot more about the trial design, endpoints and all the things everybody wants to know probably later this summer, early fall, right before we start that trial.

Awesome. And then maybe we'll touch on the balance sheet as well, Steve. Just we talked earlier about transitioning to profitability and being able to really fund the current -- the commercial products as well as the pipeline and just give us maybe a balance sheet update and any thoughts that you're willing to share on capital allocation priorities?

Yes. So as you mentioned, our balance sheet continues to improve. It's never been stronger. We ended the year with over $110 million in cash. And given our guidance, we expect that to continue to grow. And the capital allocation priorities right now are Recorlev and XP-8121 and funding their futures. And then beyond that, there are things that we can do inorganic, things from a balance sheet perspective with regard to our debt. So a lot of options open up to us as our balance sheet continues to improve.

Awesome. So in review, 2025 milestone year, Recorlev, top product, EBITDA profitable. You gave preliminary strong 4Q. You reiterated those results and also then guided ahead of the Street. So these updates have been incrementally positive. And just if we take a step back and think about just how the stock has traded, and I mean, I think we might -- we kind of discussed the answer to this, but I just wanted to give you the last word on what you're thinking is the most dislocated between what's going on at the company and all these positive trends and outlook versus maybe how the stock has responded to some of the news that we've seen this year.

Yes. I think our position on this is we're just going to keep executing. That's what we do. And at some point, there'll be more rational movements in the markets and that -- and we'll see that. But if we continue to do exactly what we said, which we've been doing, there's no reason that the stock wouldn't just follow the right kind of trajectory up as it was following just a few months ago.

Awesome. And I think we're out of time. So this will be a good place to stop. Thank you so much.

Thank you.

Thank you, Jenna.