Okay. Excellent. Good afternoon, everybody. Why don't we get started? For our next presentation, we are excited to have Xeris Biopharma here with us today. Representing the company is Paul Edick, who's sitting there on my left, and Steven Pieper, who's the CFO of the company to his left, and Allison Wey, who's sitting in the front row, who heads the investor relations effort for the company. So, obviously excited. For those of you who don't know me, I'm Glen Santangelo. I cover the specialty pharmaceutical sector at Jefferies, along with healthcare information technology and animal health and some other things. But with that, why don't we get started? Paul, Steven, welcome. We're excited that you guys could make it.
Thank you. Happy to be here.
Okay, excellent. Well, why don't we—I don't know if we want to start with you, Paul, or you, Steven. I always like to ask a financial question upfront, particularly given that we've just come in; we've just come on the heels of 1Q a couple of few weeks ago. And maybe if you can just sort of give us the quick overview, revenue breakdown. I mean, essentially, revenues were in line. I don't know if there were any surprises relative to what you would have thought across the three products.
No, we had a great start to the year. We grew total product revenue 25% in the first quarter versus last year. We generated north of $16 million for Gvoke, roughly $10.6 million for Recorlev, and a little north of $13 million for Keveyis, which continues to remain really resilient in the face of generic competition.
All right. Obviously, pretty strong growth. So maybe on the heels of that, let's talk about the fact that you raised your guidance on the low end, right, to $175 million-$200 million. And put that into context for us. After generating that $40 million in 1Q, and now just looking at the midpoint of the new guidance at about $187million-$188 million, we think about sort of the cadence of the growth throughout on a sequential basis throughout the year.
Yeah, I think we signaled last month when we announced Q1 earnings that, one, we first of all felt really good about how we started out the year. And we saw that momentum continue into Q2. And we're expecting, again, that strength to carry on in the second half of the year. I would also say that in the first quarter, we experienced a bit of a headwind with the impact of the Change Healthcare cyber attack on our Gvoke business, which was really just a temporary impact. And we've seen that essentially resolve in the second quarter. So we feel really good about the growth of the business and where we're trending and expect to be in the range. We feel like the low end of that range is really a slam dunk for our business.
Steven, within that range, any expectations for any milestone revenue in there that we should be thinking about?
Yeah, I think we signed an agreement with Beta Bionics. We announced last month as well. And so we've got some contribution assumed from that partnership in the second half of the year. But we've talked about the contribution from the technology partnership business. It seems it's a bit episodic, a bit lumpy. It's less predictable. But I think kind of in the near term, that would be one area that I point to is Beta Bionics in that milestone.
All right, perfect. All right, well, listen, Paul, we're going to go through all the products in detail. But maybe before we do that, why don't we—
I'm having fun listening to Steve. That's good. We're good.
Why don't we talk about the platform technologies, XeriSol and XeriJect, right? And given that we're in the general session here, maybe everyone's not completely familiar with them. If you could just sort of give the quick overview of the product, and maybe we can segue into some of the partnerships that you've already signed at this point.
Yeah, so easy, easy. XeriSol and XeriJect, two very different formulation sciences at the end of the day. XeriSol is the formulation science is around taking drugs that are not soluble and making them soluble, like a diazepam, which is a gel, or a glucagon, which is a drug that is not stable in solution. We can make it stable in solution. So whereas glucagon, once upon a time, was a reconstituted powder, we made a room temperature stable liquid that lasts for 30 months at room temperature. XeriJect, very different technology, very different formulation science. We have perfected the ability to build an injectable low viscosity paste that acts as a vehicle to get large molecules and a significant amount of large molecules into the body in that suspension.
They reconstitute inside the body as opposed to being reconstituted and delivered in an IV bag, sitting in a chair for three hours. We're able to, with the XeriJect science, highly concentrate the molecule we're dealing with. We don't change the characteristics in any way. We don't get to a new composition of matter. We highly concentrate so we can get a much higher drug load than you've seen from other technologies like a Halozyme, et cetera. Companies that want to get more of their monoclonal antibody or large molecule into the body and get it in faster, that's kind of where our sweet spot is.
Can you maybe touch on at a high level the products that you currently sell that maybe utilize the technology and what's in your pipeline that maybe?
Yeah, so the glucagon, which is our Gvoke product, which is a product for rescue in severe hypoglycemia, is a product of the XeriSol technology. We were able to take that powder form, turn it into a liquid stable form of glucagon, and put it into any number of different presentations. We have it in a prefilled syringe. We have it in an auto injector. We have it in a vial. And it's good at room temperature for 30 months. That is currently marketed in our commercial organization. The other product that's a product of the XeriSol technology is the levothyroxine pipeline product, which we're able to take what is today an oral daily. Patients are not very stable on the daily oral. A lot of side effects, a lot of patients who can't tolerate it.
We've developed a once weekly liquid version that we're putting into an auto injector, a multi-dose pen for weekly injection. We just released data in our phase II study that showed we can do that. We get really good stable blood levels over the course of a week, and we use half as much drug. On the XeriJect side, it's the Amgen partnership and Regeneron partnership. The only actual drug that's been disclosed is Tepezza, which is their thyroid eye disease product, which we've developed a formulation that would be a self-injectable version of Tepezza that we can get a pretty significant drug load into the body in an auto injector, less than 30-second, 27-gauge needle injection.
So you talked about Regeneron. You talked about Amgen, Beta Bionics, you've mentioned, right? So those are your three partnerships at this point. Other than the obvious revenue opportunity, is there any sort of logic or strategy behind partnering with these organizations? And how do you go out and identify which manufacturers you want to partner with?
Yeah, so anybody?
Anybody.
At the end of the day, we target drugs that are either current or pipeline that are IV drugs that could benefit from being a subcutaneous injection, either by way of easier therapy for a clinician or self-administration by the patient. A lot of companies come to us, so Merck, Cytokinetics, Regeneron, et cetera. There have been others that have drugs in their development pipeline that they need to know that they can get it into a subcutaneous form before it can even go into their prioritization process for further development, because IV is no longer going to cut it competitively. The price of entry is a subcutaneous injection. We've had a lot of companies like Merck and the others I mentioned for whom we've formulated so that they at least knew that they were meeting the entry criteria.
Then it's a matter of does that company take that drug forward in their own prioritization process, which Merck did not. But Regeneron came back, and we signed a deal with them. And they're putting several products into our technology because they want to at least be at that hurdle rate of subcutaneous going into the market.
Steve, can you maybe talk about some of the milestone payments that you maybe received and put yourself in our shoes? How should we think about modeling milestone payments around these partnerships?
Yeah, great question, Glen. So I think the revenue from these partnerships to date have primarily been upfront fees. Last year, we did receive one milestone payment, one success fee for formulating Tepezza. And then in terms of milestones moving forward, it's really based on the pace of the partner. And so at this point, it's not extremely predictable. And once it becomes a little bit more predictable and companies are taking these projects into the clinic, I think then we'll be able to provide a little bit more specificity on milestones.
That being said, take an Amgen, for example. If they take two years to get to market or five years to get to market, it's going to be their pace and how they do it and the way in which they pursue their clinical development. During that period, we stand to receive about $35 million between now and approval in milestones. So if that takes two, three, four years, whatever it is, we'll get that $35 million.
That's with Amgen?
That's with Amgen.
Have you disclosed Regeneron?
Regeneron is a little bit of a different deal because it's multiple products. But there is a similar amount of potential milestones depending on which product goes forward. And I can't really talk about the individual products, so that's hard to do. But there's milestones for that as well.
Is there anything restrictive in any of these agreements that prohibit you from partnering with anybody else? Or is it kind of written in a way that gives you total flexibility?
Yeah, we try to avoid exclusivity. In the Amgen agreement, they have exclusivity for thyroid eye disease, a very narrow indication. Until somebody picks up a license, we really haven't, like with Regeneron, there's no exclusivity because they haven't picked up a license yet. The Beta Bionics deal is an exclusive deal, but it is structured in a way that it would allow for anybody else who develops a pump that can use both hormones would be able to access that version of glucagon also. So each deal is a little bit different.
Hey, Paul, let's switch gears. Let's talk about the products now. Let's talk about Gvoke, right? We're clearly into the next generation. Looking at these ready-to-use products, there's been sunsetting of some of the legacy kits. You're slowly taking market share. There's been movement across one of your primary competitors in this space. So do you just want to set this market up for people and talk about these sort of next generation ready-to-use products and how the market share may be evolving across this category?
Yeah, so the history of glucagon was not really a useful product because of the form factor historically. It was that you have to mix up your own injection. It was a powder that required reconstitution and usually done by a caregiver or a bystander. With the evolution of a liquid stable glucagon in the form of Gvoke or a powdered nasal in the form of Baqsimi, you now have a market that is growing again. For decades, it didn't really grow. It's growing every single year. Pre-COVID, it was growing about 25%. Post-COVID, more low single digits, 10%-ish, but accelerating. And bottom line is there are 15 million people who are either on insulin or sulfonylureas, which puts them immediately at increased risk for a severe low. So anyone who gets a prescription for insulin, for example, should get a prescription for one of these ready-to-use rescue medications.
We're driving most of the market growth. We're taking share. We're growing every quarter. The opportunity remains quite large.
But I think just going back into last year, I think there was some level of disappointment, right, that maybe Eli Lilly wasn't doing much marketing around that Baqsimi product. So we saw the transaction where they sold that product to Amphastar last year. And I thought at the time, maybe at this conference last year, you maybe said, hopefully, we're going to see Amphastar ramp up those marketing efforts on the ready-to-use side. Have you started to see that? I mean, has the market growth rate evolved in any way since that transaction? Or has it kind of been more the same?
Yeah, so going back to last year, we weren't really sure how the handoff was going to happen between Lilly and Amphastar. And as it turned out, Lilly sort of transitioned over the course of several quarters. Amphastar took over late in the year last year. They now have their commercial organization in place, and we see that they're starting to become active. Their focus has been very much maintaining the business that Lilly built in pediatric endocrinology, which is really the smallest portion of the potential business. Our focus is adult endocrinology. They aren't contributing to the noise as much as we would like, but little by little, we think they will be. But their focus has been very much peds.
Have you talked at all about peak sales opportunity for this product? I'm happy to share here, Amphastar has put forth a peak sales number of about $250 million-$275 million for their Baqsimi product. So.
I think we could do that as well. I mean, we haven't put out specific guidance, but historically, we've talked about a $200-$300 million drug. It depends on the relative momentum that we get with physicians in terms of their frequency with which they prescribe.
Yeah, that was going to be my next question. What's the catalyst to get people to increase the prescribing patterns?
Where you see.
The penetration within this population.
Yep, where you see it really change is when a physician and the office in general, including the staff, make a rescue ready-to-use glucagon, either us or Baqsimi, sort of standard practice that when a prescription for insulin goes out, it goes out with one of the rescue products as well. Then you see it, you get a consistent amount of prescribing out of an office. But we're seeing that one at a time.
Okay, maybe let's, in the interest of time, let's shift gears for a minute and talk about Keveyis. In your opening remarks, you talked about, or I think Steve talked about, Keveyis has held up maybe better than you ultimately would have thought. Post-LOE , could you maybe talk about the generic landscape here and maybe what's contributing to that product maybe being a little bit more durable relative to what you would have thought?
Yeah, so the generic has not had a ton of impact. We started to see some patient loss in the fourth quarter. We anticipated that there would be additional patient loss and price erosion. We really didn't see much in the first quarter. So it's more resilient than even we anticipated. And we expect that that's going to carry through the balance of the year. As far as the generic landscape, the initial generic, which was Torrent, hasn't really done much. They have since sublicensed to another company that just announced a branded generic at the same price as us. So we're anticipating that this category is going to remain viable for us in a pretty significant way and durable. And I think the company they sublicensed to Cycle is a branded generic company. They approach things in a branded manner. So it could actually be beneficial to the category.
Yeah, so when I think about that 1Q result, which was $13 million, is that a reasonable run rate for us to think about throughout the year where the growth is obviously going to come from the other two products?
Yeah, I think that's one scenario that could play out. And as Paul mentioned, our performance in the first quarter even exceeded our expectations and what we guided to. So I think it's a fair kind of base case to continue to hold that. What we do know is we continue to generate new referrals and new patients on Keveyis. So that speaks to the health of the brand. So I think that's a very reasonable base case assumption.
Obviously, strong growth in Recorlev. Probably need to talk about that for a little bit. So could you maybe, for those that are less familiar, just talk about the cadence since the launch and the progress that you've made, and then I have a bunch of questions on that.
Okay, the cadence has been really good. It is a rare disease. It's a rare category. It's slow because it's one patient at a time, and you've got to clear insurance one patient at a time. And there's a process for testing and evaluation to be considered an appropriate candidate for the drug. And then so we're now on a really good pace. Referrals are increasing pretty dramatically. We're hitting record numbers of referrals. We're clearing insurance and getting insurance authorization at like 60%-60%+ of referrals. And it continues to get better every quarter. There's a little bit of a stair step growth going on because it depends on the mix of patients. We're getting first-line patients sooner than we thought we would because physicians who have used Recorlev are getting excellent results. They're getting good efficacy with modest side effects.
So when it works well for a switch patient, they start using it for their new patients. And that takes longer to clear insurance. So that's where you get a stair step.
Is the patient recruitment about what you thought, a little better, harder than what you thought?
It's better than what we thought. It's really accelerating. Our referrals, we've got a backlog of referrals.
You just said the 60% insurance authorization. I mean, what's the pushback, I guess?
Well, it's rare disease. They're expensive drugs. And not every patient is a perfect candidate for the drug. When the physician does a referral, it might not necessarily meet all the criteria it needs, so it can get rejected. And there are some payers that it's just really hard in terms of some of the step-throughs that they want.
I was going to say, could there be some education with the payers that could ultimately improve that authorization percentage?
Yes, as we get more patients and we deal with that particular payer on a more frequent basis, we learn a lot about what it is they want, what their hot points are, and how to actually work through the system. The bigger our base gets, the easier that's going to get. But clearing 60% in a rare disease category is pretty good. That would equate to kind of like 75% of covered lives in a retail category.
When we think about the growth algorithm, right, increasing the titration of these existing patients was part of that algorithm. Could you talk about the role that that's played?
It is. What we're seeing is patients aren't being titrated as high or as fast as we would have anticipated because physicians are getting the performance they want at lower doses. And we're adding so many patients at the starter dose that the overall population hasn't gotten up that high yet.
The average titration.
The average titration. So it's going to happen, but it's just going to happen over time.
You recently announced the expansion of the sales team here. Could you talk about maybe how big it is today, how big it's going, how much incrementally that will cost, and what the rationale is?
So we added eight or nine, eight-10 in the fourth quarter last year, and they were productive by the end of the year. So really fast. And some of that is we added territories, but we took experienced reps from our other sales forces to populate those new territories. So we already knew they were good reps. We didn't go out and get them from the outside by and large. We're going to do the same thing this time. We're adding, I think, about.
14.
14. Mid-year. We anticipate they'll be productive before the end of the year like we saw previously. So it's almost a no-brainer. And if you look at our major competitor, Korlym, they're at 100, 120, something like that. So our goal is to get to 50 or 60.
Did you present some data this past weekend at the Endocrine Society meeting?
Yeah, so one of the things that Korlym is doing is, and I think others, and last year's Endo meeting was really a Cushing's meeting at the end of the day. A lot of papers on Cushing's, a lot of papers on diagnosing Cushing's. The net result is people are seeing that mild to moderate patients are really good candidates for these drugs also. So you're seeing the expansion in the category. Instead of targeting 3,500-5,000-8,000 potential patients, we're now targeting a population of closer to 35,000. And the data that we presented was important because the question is, are you effective across that range? And does the side effect change across that range? And do you have any other liver issues across that range? And the answer is no, no, and no.
We're effective, no side effect changes, and no significant change in liver toxicity. So all good.
Yeah, I just got a couple more questions. Every quarter, you always seem excited to talk about the pipeline development of levothyroxine, right? You've recently announced some phase II data. Could you maybe just, for those who are less familiar, just talk about that asset and the most recent data you discussed?
Yeah, the phase II study, which was to find to make sure we can confirm the conversion from oral to liquid and to see if we were going to be able to get stable TSH levels at the end of therapy. And can we do that with the conversion being the same at every single different dose? And the answer was yes across the whole thing. The other thing, so the conversion allows us to treat for once weekly subcutaneous injection instead of daily oral with half as much drug. And we also found that the target population is real because we had 140 potential subjects to get 44 in the study, which says there are a lot of these patients that are not stable on current therapy on the oral. And that has to do with the bioavailability of the drug.
It's a narrow therapeutic range, and our once weekly liquid keeps that within range a hell of a lot better.
Steven, really quickly, we've been focused on the balance sheet, right?
Yes.
$87 million in cash last quarter. Paul sort of talked about having enough cash maybe to get to that pathway of cash flow break-even. So could you maybe just talk about the operating expenses in 1Q, how we should think about them for the balance of the year and that pathway to cash flow break-even?
Yeah, I'll touch on it maybe more so on a full-year basis because quarter- to- quarter things go in and out. But I think what we've guided to on the R&D side is a slight increase to R&D this year to support Levo as well as the technology partnership business. And then on the SG&A side, we initially guided to flat, but because we made the decision to expand the Recorlev commercial footprint, we're going to see a modest increase more in the second half of the year to SG&A this year. We guided to $55-$75 year-end cash. We didn't raise cash like we did revenue in terms of tightening in the first quarter. We'll reassess that in August, but more than enough cash to run the business and support the growth.
Okay, Paul, I'm seeing triple zeros on the clock. So I want to give you 30 seconds on the last word. Anything you want to leave with the investment community here? Any final thoughts to close us out?
I would say if you look at.
No pressure.
I would say if you look at our business.