Well, welcome everyone. Thanks for coming to our Global Biopharma Conference here with Leerink. So, I'm Roanna Ruiz, one of the Leerink analysts here, and it's my pleasure to introduce Xeris. I have with me the CEO and Chairman, Paul Edick, and also CFO, Steve Pieper. So, thanks for coming.
Thanks for having us.
Thank you.
Yeah, so maybe to kick it off with just, like, a bigger picture question, if you guys could just remind some of the investors who are newer to the story about what the major pieces are and some of the main commercial products that you have in your portfolio.
Okay. So we've got three aspects of our business. We have a core commercial business, three drugs on the market, all three growing. Gvoke, which is for severe hypoglycemia rescue, Keveyis, which is for primary periodic paralysis, and Recorlev, which is for Cushing's syndrome. And then we have the underlying foundation of the business is formulation technology, formulation science. We have a product in development as a part of that formulation science called levothyroxine. We're building a once-weekly, liquid-stable, subcutaneous injection of levothyroxine. And then our formulation science, we're partnering. The third leg of the stool, third pillar of the business, you could say, is partners on our technology, helping them make their drugs better, turning them into subcutaneous injections, et cetera.
Got it. Okay, great. And so, thinking about those different elements of your portfolio, what are your main goals for 2024? Just balancing, generating steady revenues, continuing disciplined spend, and advancing your clinical pipeline.
All of the above.
Great.
If you look at our guidance, we're gonna grow all three products. Hopefully, you know, if you... Our guidance is pretty wide range, assuming that Keveyis probably is not gonna continue to grow, may actually go backwards a little bit. It's been off patent for over a year, and, you know, the generics are gonna sooner or later start to take some of those patients. But Recorlev is gonna continue to grow, Gvoke is gonna continue to grow. We're advancing our partnerships. Hopefully, we'll sign up a couple more, and, we'll be at the end of phase II with the levothyroxine, and hopefully have an agreement with the FDA by the end of the year on what a phase III program looks like.
Okay, great. You kind of preempted my next question about catalysts, but anything else that you want to mention and-
Yeah, it-
So on?
... it's interesting. We're not really a catalyst-driven business at the end of the day. It's quarterly results. But you will hear, you know, phase II data for levothyroxine. And then if we have any partnerships that we sign up, we'll have that. But we're not a clinical study, catalyst-driven business.
Got it. Okay, great. So thinking about the commercial portfolio going into this year, could you help investors sort of break it down product by product? Like, how are you thinking about the growth of the different revenue streams, and where do you think the greatest growth could come from?
You want to take that one?
Yeah, so I think Paul touched on, we'll quickly touch on Keveyis, right? Because it has some generic competition. We've had generic competition now in the market for a year. So we started to see a little bit of pressure in the fourth quarter there, and we are expecting that brand to decline. The fact that it's been so resilient, you know, in the face of generic competition is really kind of a testament to the value of the brand and all the support services that we put around Keveyis. But looking at our growth drivers are really Gvoke and Recorlev. So we anticipate to continue to grow those products quarter-over-quarter in 2024 and beyond, really. So those are the growth drivers of our commercial business.
Okay, got it. And so digging in a little bit more, maybe starting with Gvoke. So how are you thinking about that growth trajectory, and do you expect it to still outpace some of the overall glucagon market?
Yes. We are, I mean, the growth in the, in the market, we're driving all the growth right now. There's really nobody else really participating in the market. Amphastar has really not gotten going with Baqsimi. We hope they will, because Gvoke, you know, there's 15 million people who should have a rescue, ready-to-use glucagon, and less than 10% do. So, you know, we're gonna continue to outpace the market in terms of market growth, but hopefully, both of them are continuing, and we continue to take share. And with Recorlev, it's going to, it's, it's taking share from everywhere. We're getting patients from all over the place, from ketoconazole, from Isturisa, from Korlym, you name it. We're even starting to get some first-line patients.
So both products are gonna continue to grow, and Gvoke will definitely outpace the market growth.
Yep. And so when you're talking about Gvoke, you did mention Baqsimi, you know, there's Zegalogue, there's another competitor out there. I was curious if you're hearing anything there at all?
Zegalogue has done nothing from day one. What they managed to do was to pretty aggressively discount in order to try to get business, and it changed everybody's gross to net, but they really haven't been able to penetrate the market. It's not a competitive drug at the end of the day because it requires refrigeration. In a marketplace where you have ready-to-use products that don't require refrigeration, are room temperature stable for years. So it really is not something that is affecting the market. Baqsimi, we'd like to see Amphastar get going a little bit more.
Mm-hmm.
That's a good thing, more voices in the marketplace. But beyond that, it's just us and them.
Got it. Okay, great. And thinking about trends and seasonality, how should we think about back-to-school surge for Gvoke in this upcoming year?
Well, everybody benefits by the back to school. Baqsimi benefits more because Lilly launched during back to school, and Lilly is incredibly strong in pediatric endocrinology. We're not as strong in pediatric endocrinology. That's a really small piece of the overall marketplace. Adult is really where the opportunity is. We focus more of our time and attention on adult endo. We still do okay in back to school, but not, not like they do. But there's a lift. The whole market is lifted to some degree, and it's pretty similar every year.
Okay, got it. So, switching gears a little bit, you mentioned Recorlev as well, your most recently launched commercial program in Cushing's or endogenous Cushing's. So maybe could you walk us through what the market opportunity is for Recorlev? You talked a little bit about the different products, and you're getting some first-line patients. Like, how do you expect that growing in the future?
Well, it's growing very well right now. Our you know, we're generating tons of patient referrals. Referrals are doing extremely well. The product continues to grow. The growth isn't a straight line. It depends on the kind of patients you get, how long it takes to clear insurance. You know, it's a rare disease, and it's expensive, so that varies from quarter to quarter, but every quarter has grown. We expect it to continue. If you look at the marketplace, the market is historically, there's always been a great deal of churn, no matter what, and that's gonna continue, and it is continuing. And we've got a product. If you think about it, Korlym is one of the products in the marketplace. They do incredibly well.
I think it's a $400-$500 million franchise. It doesn't treat the underlying condition, doesn't normalize cortisol. Recorlev does. So we think we have a competitive advantage, so that's an interesting target for us. That whole business is going to be in a more volatile situation 'cause they have a generic, and they've got a follow-on product. So that, from our perspective, just puts it in play a little bit more. So I think we've got a better product in the marketplace, and we'll continue to grow, and we'll take share from, from everybody.
Got it. Okay, great. And then, so just digging in a little bit more for Recorlev, how do you think physicians are gravitating toward its, its product profile, both on efficacy and safety? And, you know, what are you hearing anecdotally from your field force?
Physicians really like the product. You know, once they get some utilization, you see repeat utilization simply because they're getting the efficacy they're looking for. They're not getting a ton of side effects beyond what is norm. The norm in this category is side effects. And, you know, you'll see the churn, for example, is predominantly in the first few months. You know, when you see switches, when you see discontinuations, it's early. Once they get beyond a few months, they're usually pretty sticky. So it's pretty much the pattern that we've seen in the market in general. And the feedback from physicians is positive.
You know, and they kinda have a roadmap on how to do it, what they have to test for, how long they have to test, how long they should follow them, when they can discontinue. It's all spelled out for them in the label, so it makes it a lot easier.
Got it. Okay. So you touched on this a little bit, when mentioning, other entrants into the market, especially generic coming on for, Korlym. So I'm curious, I guess maybe zooming out a little bit, thinking about the treatment landscape and treatment paradigm, do you foresee it changing at all in endogenous Cushing's with Recorlev in the mix, too?
I think we're already seeing that. I think we started really targeting 3,200 patients that are clearly a churn portion. We've expanded that to about 8,000 potential patients that are. I think that's going to expand even further. People are moving up the treatment paradigm a little bit in terms of trying to get patients earlier. I think that's gonna continue. I think you see Corcept going in that direction, which I think is healthy for the market. So I see it expanding.
Yep. Got it. Okay, great. And touching on your other commercial product, Keveyis. So, I think you had some highlights in your recent earnings call and expecting a little bit of generic impact as well. So maybe could you just recap, you know, how are you thinking about that sort of pressure in 2024? What are some of the strategies that you can use to help protect share for Keveyis?
Yeah. In 2022 and 2023, what we've done with Keveyis is somewhat remarkable at the end of the day because it, it was a $30-some million drug that, you know, we finished last year $57 million, you know, in the face of over a year of generic competition. And what we've done is we surround those patients with services, you know, reimbursement support, you know, patient support, you know, interaction with the specialty pharmacy and the physician, even as, you know, patient mentors, people who've been on Keveyis for a couple of years that help them reenter life a little bit because these are patients that have lost the ability to really participate in a lot of aspects of life because they never know when they're gonna suddenly be paralyzed.
So that, those services really help physicians fight for brand at the end of the day. And that's been really successful. We're gonna continue that, but we're being very realistic. You know, we're starting to see the payers get a little bit more aggressive, cleaving off a few patients, and we've been able to fill the top of the funnel faster than the bottom has been leaking. But over time, we can't fill it as fast as payers are gonna steal them. So what we've guided is probably we'll see in the first quarter of 2024, a little bit of a step down, and then gradual continued decline from that point forward.
It'll take a while for it to get back to even where it was when we acquired Strongbridge, so it's still a pretty healthy contributor to the business over the next 2024 and into 2025.
You mentioned the payers getting a little bit more aggressive. What does that look like, and could they get even more aggressive into the year?
Well, they can get as aggressive as they can get. You know, at a certain point, payer can demand that you, that the patient be switched to a generic. That's happened, and some of those patients come back because they don't get the services that they were getting. They don't feel as though they're getting the same level of care. We'll see some of that going forward. But they, you know, payers get as aggressive as they're going to get. Like I said, it'll take a while before it even is back to where it was when we acquired Strongbridge.
Got it. And typically, do generic companies provide similar patient support systems or anything like that?
No.
Okay.
No. It's unique to, to us.
Yep, understood. Okay, wanted to switch gears, give some time to your XeriJect and XeriSol programs. So, we just noticed that kind of macro-wise in the field, there's more demand for subcutaneous formulations of IV products, and that's becoming a bit of a tailwind. We're getting more inbounds about your programs as well. So maybe could you just give us an overview of your platform, your technology, how long you've been working on it, and why you think it's differentiated?
About 25 questions in there.
Yeah.
Yeah, so start at the beginning, if you've got a monoclonal antibody in just about any category these days, almost the cost of entry is subcutaneous. Having an IV product in a lot of categories is becoming uncompetitive, if that's a word. So what we're able to do is we can take those IV products, and we can. It's about how much drug can you get into the body subcutaneously as opposed to an IV. We can get a significant amount of milligrams per milliliter, depending on the drug we're working with, into the body in a subcutaneous injection. For just about anything that we've worked on, we've been able to formulate to the target product profile.
There is a lot more attention on it, and competitively, we're probably at the cutting edge of technology. So take Tepezza, for example, which is the Horizon, now Amgen, drug. I think Halozyme probably could get to a couple hundred mgs per mil in still a push infusion. We can get to multiples of that in terms of drug load in a less than 30-second injection. So competitively, I think we've got a better mousetrap.
Got it. Okay, and just digging in there a little bit more, I mean, what are you most excited about with that collaboration with a possible subcutaneous Tepezza, and, you know, what are some of the things that investors should focus on with that partnership?
Through the transition of Amgen buying Horizon, it's just kind of getting going.
Mm-hmm.
They just picked up the license, the team is reformed, and, you know, they're beginning to meet and work on what the development plan is going forward. We delivered the target product profile with the required amount of stability. Now it's a matter of Amgen figuring out what it is they want to do from a clinical perspective, FDA, et cetera, what their timing is to get to the market. But that'll all take its own course. We can talk about it in a limited way. You know, what's gonna happen, how it's gonna happen, and when it's gonna happen, probably can't talk about any of those things be cause that's a highly competitive situation. But that's going, and it's moving.
The Regeneron deal, we've formulated both of the assets that they asked for to the target product profile. Both are up on stability. We need to deliver six months real-time stability for them before they evaluate going to the next stage and whether they want to pick up a license and go forward with either one of those. And they can nominate additional products to go into our technology. And, you know, the reason we're able to do that is because we highly concentrate whatever drug we're working with. We just suspend it in our semi or low viscosity paste. That suspension goes away once it's in the body. It's just the drug.
Got it. Okay, great. And then, just thinking about just looking ahead at possible future partnerships with the platform, I mean, I know you, you can't disclose too, too much, but are you still, optimistic about having future partnerships or could have other applications for your technology?
I don't know, not really other applications. It does what it does. But there's very few IV products that we've tried to formulate— I don't know that we've ever failed to formulate something. So if it's in an IV, we can probably make it a sub-Q injection. And as you know, the XeriJect was really what the company was founded on at the end of the day, so it's core to what we do. We are talking to more people. It's a very long sales cycle. You know, we've talked about before, Regeneron, we formulated a couple of their molecules three or four years ago.
Mm.
Three years , maybe as many as 4 years ago. And they disappeared like c rickets. Then suddenly they were back and said: "Okay, we've evaluated a lot of different technologies. We like yours, and we wanna do a deal." And suddenly, we had a platform deal with multiple products that we're gonna formulate for them. So it goes in fits and starts. And when you're dealing with these big companies, it is a very long sales cycle.
Yep. Got it. Okay, great. Well, also wanted to look into XeriSol and hypothyroidism and that program. So, given that's a large market opportunity, and you have a program running along here, how do you think the subcutaneous formulation could fit into the treatment paradigm? And maybe just give us some background about what the standard of care is today.
Yeah. Levothyroxine is the second most prescribed drug in the United States, over 100 million prescriptions a year. There is a subset of the patients who either start and discontinue or are on Levothyroxine that don't do well for one reason or the other, sometimes multiple reasons for the same patient. When you look at it, blood levels are highly variable unless you're taking the drug under the exact same circumstance, situation, and at the exact same time every day. You get very widely varied blood levels. Not absorbed terribly well in the gut by a lot of the patients, and a lot of GI side effects for those who do take it.
So you add all that up, and probably somewhere between 25%-30% of those 100 million prescriptions are people that either aren't doing well, discontinued, can't take it. So the oral, although it is counterintuitive to think you'd go from an oral to an injection versus the other way around, a once-a-week subcutaneous injection for that population, that subset, is really interesting. And when you talk to those patients, they're, like, universally interested in a once weekly subQ because either the levothyroxine has helped them, but they had side effects, or they haven't really been able to be managed well. So from a patient perspective, it is very, very interesting, and I don't think we've talked to a single patient that said they wouldn't be interested.
That subset, at today's branded prices of, of, Synthroid, for example, we estimate between $2 billion and $3 billion subset of that, of the levothyroxine market, so really attractive. And we'll have the only product that actually bypasses the gut, smooths out the blood levels. So very interesting, and our goal is to get that to the market hopefully by 2028.
Got it. So you have the phase II top line coming for that program with XeriSol. What do you expect to see, and can you just remind us what your next steps are, assuming that the data are good?
Yeah. The phase II study is a confirmatory study for the dose conversion. So from oral to liquid, is it 4x or 5x or 7x? What is it? In our phase I study, it was 4x, and the FDA wants actual patient data at more dosages to see if that conversion is still the same. We anticipate it's gonna be the same. So we'll go to the FDA with that conversion rate. It'll be very clear. We're also gathering a ton of information on patients that are not stable. So if you look at the enrollment for the phase II study, it was really slow because the screen failure rate, screening failures of patients. We wanted people who were stable on Synthroid. Hard to find, which speaks to the market need.
So we'll be able to provide that data for the FDA. We'll give them the dosage conversion, and we'll talk about a phase III study, and what that entails. Hopefully, get alignment on that by the end of the year.
Got it. Great. And I feel like I should give Steve a question too, so -
Sure.
Um, maybe-
Ask him about the debt.
Let's, let's talk about cash utilization, your plan on being disciplined with spend this year. Like, how are you guys thinking about that?
Yeah. No, good question. So, if you go back a couple of years, I think when we looked at 2022, our cash utilization was over $100 million. Cut that in half last year, really on the heels of our growing commercial business. And then, you know, what we've guided to is ending this year with $55 million-$75 million of cash to run our business. We refinanced our debt facility. We've been really disciplined with our cash management over the years. We've also guided to flat SG&A investment year-over-year. We are going to invest incrementally for a couple of the things that Paul already touched on from an R&D perspective.
So, wrapping up the Levo phase II trial, doing some phase III readiness activities for Levo, and then also investing, making some really strategic investments in the technology business, right? From a GMP manufacturing perspective, and hopefully supporting our partners as they look at moving their products into clinical development. So, we've been really disciplined about that over the years, and we'll reduce our cash utilization once again in 2024 from 2023 levels.
Great.
The debt facility, our refinance, we upsized at pretty much the same cost. We have $200 million at the cost of what we were spending on $150 million. So, the timing of that was really good, and you know, the total cost of capital has gone down pretty significantly, over 200 basis points. And a commitment from our long-term partner to support future M&A with an incremental $100 million. I think is a really good sign about, you know, somebody who really wants to lean into our business.
Okay, great. And then maybe just zooming in a bit more on guidance. So you gave a bit of a range there. What are some of the pushes and pulls that can get you to the high or the low end of that range?
I think-
Go ahead.
So I think on the high end, you know, I would think it would take revenue contributions, incremental revenue contributions from our partners, right? As Paul touched on, that's a bit episodic, and it comes in waves. So, and then being able to maintain our Keveyis business to a large extent, right? We gave a similar range in 2023 as well, right? We didn't know how the generic was gonna play out with our Keveyis business, and then also the contribution from the technology business. But I think those are the two real drivers of low end and high end, right?
Low end is, you know, last year and this year was a hedge conservatively on what's gonna happen with Keveyis.
Mm-hmm.
We did a lot better last year than we anticipated, so hopefully that'll be the case this year as well.
Okay. Okay, great. Maybe just a closing question or two, maybe, Paul, if you wanna walk us through, like, some of the things that you're most excited about going into the next couple of years, I guess, for investors to focus on, and anything that I didn't touch upon that you think is worth mentioning, that would be interesting to the story.
I think we've touched upon most everything. You know, we're very excited about the growth of Recorlev and Gvoke. Those are really gonna be the growth drivers in the future. The technology business is really interesting, and we're starting to refer to it as a business. You know, getting a couple, 2 or 3 partnerships that turn into commercial assets with royalties, that's that could be a really big part of our business at the end of the day. Levothyroxine is interesting, not quite exciting yet. Once we get visibility on what we have to do in phase III, then I think it's gonna get a little bit more exciting. And, you know, beginning the whole commercialization planning process for that is gonna be fun.
But overall, I mean, from an investor perspective, we're, you know, we're just chugging along, and, you know, we're gonna keep growing, we're gonna keep delivering. You know, we've said, "Here's what we're gonna do," and we do it.
Mm-hmm.
I think that's what investors should pay attention to. We do what we say we're gonna do.
Great. Any final words, Steve?
Yeah, I was gonna say, look, we've I don't think there are a lot of businesses that look like us. We have also a healthy, very healthy balance sheet. We can service our debt. We haven't raised equity in over two years, so we've been pretty, pretty firm on that point as well as, you know, growing our business organically is really important and for building a sustainable enterprise. So, we're really excited about the direction this business is heading and with all the opportunities ahead of us to add value, meaningful value to the enterprise.
Yeah. And, you know, we think we're undervalued, so we think it's a buying opportunity.
Fair enough. Sounds good. Well, thanks again for coming to our conference, and, yeah, hope everybody has a great rest of the meeting.
Thanks for having us, Roanna.
Thanks. Really appreciate it.