Okay, good morning and welcome to the Piper Sandler Healthcare Conference. I forget what year this is, I think the 34th or 35th year, but we've been doing this, 36th, thank you, it's right there. But we've been doing this a very long time, so we're delighted that we have another year that we're doing this. This is David Amsalem from the biopharma team here at Piper, and our first company fireside chat is Xeris Pharmaceuticals. We have Kevin McCulloch, who, newly minted Chief Operating Officer, that's right, and Steve Pieper, CFO. So thanks, gentlemen, for joining us. So I'll start briefly. I know we have a lot to run through in 25 minutes, but Kevin, just give us an opportunity to reintroduce Xeris, high-level intro, and then we'll go into my questions.
Great, thanks, David. I appreciate it, and thanks for the opportunity to be here today, and hope you had a good Thanksgiving. So my name is Kevin McCulloch. I'm the President and Chief Operating Officer at Xeris Pharmaceuticals. I've been at Xeris now for more than six years, and previous to this role, I was its Chief Commercial Officer. So I've had a great opportunity to see this company grow up from really what was a devco more than six years ago to what is now sort of a fast-growing biopharmaceutical company with several commercial products in the marketplace. I was attracted to Xeris initially for much of the same reason that I'm excited to be here even today, in that a lot of what I saw when I first joined is a lot of what's starting to come true now.
It was a company with great underlying technology and its formulation sciences, which we continue to put to work at our backbone every single day, and we leveraged it for purpose in creating our very first product, Gvoke, which I know we'll talk more about in a little bit, but we have three commercial products in the marketplace today, and for a company that's fast-growing, plus or minus $200 million this year, having three distinct products in three distinct arenas is pretty special. Recorlev, our product for Cushing's syndrome, just very much feels like the right product at the right time, and a great product in a very dynamic marketplace. Again, something I know we'll talk more about, and the fact that it was more than 100% year-over-year last quarter tells us that that's starting to find another gear.
I think many of your investors know Xeris as a function of Gvoke, which was our first product and leveraged our formulation technology XeriSol to create it. And it's a possible lifesaving medicine for people with diabetes that I'll be excited to talk about because it continues to be this very steady, constant, fast-growing product for us. And last but by no means least is KEVEYIS, a very special ultra-rare medication for a genetic neurological condition called primary periodic paralysis that has proven extremely resilient in the face of generic competition that's been available for two years. The last comment I'll make about Xeris, overarchingly, is that we have a pretty rich pipeline, again, for a company of our size, anchored on the back of our formulation technology. And the real tip of that spear is our phase III ready, affectionately known as XP-8121.
We like referring to it that way. It's a once-weekly subcutaneous levothyroxine product for hypothyroidism, which I know we'll talk more about in a little bit.
Okay, that's a great overview. So let's talk about the commercial business first. There's Recorlev and Cushing's and also Gvoke, those are your two high-growth assets. I really wanted to focus initially on Recorlev. So you've seen some acceleration in sales growth. Can you talk to new starts and more specifically the greater awareness of hypercortisolism among practitioners and how that's playing a role in your business?
Yeah, so there's a lot in there because there's a lot going on in a marketplace that for a long time there may not have been so much going on. So Recorlev is, I mentioned initially, it's starting to find another gear. Its growth is absolutely accelerating, and we think it's accelerating primarily for two reasons. The first is Recorlev itself. So Recorlev is unique. It's the only product in the marketplace actually indicated for Cushing's syndrome. So whether the problem is at the pituitary or the adrenal gland, Recorlev is there for that. And it gets to the heart of the matter, the heart of the matter being, can we normalize cortisol levels? This is a condition of hypercortisolism, cortisol levels that are too high. So the root of the problem is cortisol, and Recorlev has been proven to bring that cortisol into normal ranges. That's very, very important.
So it's getting to the root of the problem, first and foremost. And almost all of our growth that we're seeing is entirely a function of bringing on new patients. So it's almost entirely new patients who are finding their way to Recorlev because of its, we expect its ability to provide a benefit where they may not have been before. But you touched on something else because there's so much going on in this marketplace. This Cushing's marketplace is evolving very, very rapidly. And I think the biggest change has been some recent studies that have shown that some stubborn chronic conditions are being associated with hypercortisolism as a possible underlying culprit. Stubborn diabetes, stubborn cardiovascular disease, stubborn weight gain, some of these things appear to have an element of hypercortisolism associated with them.
What's happening is that this awareness of this phenomenon is growing, and more and more healthcare providers are now looking for hypercortisolism, testing for it, and intending to treat. When they go to treat, Recorlev is there to get after the underlying problem, which is elevated cortisol.
So it sounds like it's clearly this awareness is having an impact.
No question. I think this combination of a growing awareness of hypercortisolism as a problem with a product that goes after cortisol levels, somewhere in there is the magic.
Let's talk about the payer landscape for Recorlev. It's priced squarely as a rare disease product. I'm interested if you're pulling in patients who have not been previously treated with the legacy form of ketoconazole, the racemic ketoconazole. You talked to that.
Yeah, absolutely. So you know what we've discovered with the payer landscape for Recorlev is that so far it hasn't proven much different to us than payer landscapes generally are for products for rare disease. They're complex. You have to navigate payer landscapes. On balance, the Recorlev experience hasn't been dramatically different than what we expected. And we learned a lot in the commercialization of KEVEYIS about orphan medicines and payer landscapes and how to navigate them. And it hasn't proven wildly different. And the other thing I want to point out is that it's important to know that the payer landscape, as you know, it's not one thing. One payer might think one way, a different payer might think another way. It's a bit of a hodgepodge of approaches.
That said, sometimes payers require patients to step through other therapies before they can get to Recorlev, and sometimes they don't. Sometimes they have us stepping through ketoconazole or even other products, and sometimes they don't. And what we're finding is that the path to Recorlev is achievable as long as you navigate the payer requirements.
And to be clear, you've got a hub in place and all of the.
All of it.
Bells and whistles.
Yeah, well, we built it all up on the back of KEVEYIS initially, enjoyed some success with that, and so we just built right on top of all that capability when it came to Recorlev.
That's very helpful. What about the target physician audience for Recorlev? Talk through how many practitioners you're calling on. And also, you talked to an increase in commercial resources. So maybe if you can provide some specifics on that, that would be helpful.
Yeah, so let's see. So it was some months ago that we communicated that we were expanding our commercial footprint by 50%. And that was across both efforts to create awareness among HCPs, provide support to patients, provide specialty pharmacy services support. It was an increase across the board. And those resources are coming up to speed quickly and increasingly becoming what we think will be an important catalyst for continuing growth into next year. Cushing's syndrome is still principally a condition treated by endocrinology. And so the target HCP universe is primarily endocrinologists. And with our recent expansion, it's enabled us to largely cover the endocrinology, the adult endocrinology universe. But to our earlier discussion about how this marketplace is evolving, we're noticing that as awareness of hypercortisolism as a culprit in these stubborn diseases grows, more and more subspecialties are starting to look for it.
They're testing for it, and we're noticing more and more subspecialties are starting to diagnose and want to treat it, so I expect that the dynamic of probably historically all endocrinology will start to evolve over time as a more wide awareness of the condition and a wider awareness of the treatability of the condition continues to grow, and more and more of these subspecialties are going to come into the mix.
It's interesting because one of your competitors talked about calling on this larger group of diabetologists, which they may or may not be endocrinologists, but that's certainly a wider audience. Is that something you're starting to do?
We're paying attention to them, I think, is the right way to think about it. So we're noticing that they're, and they would be a great group to expect to be testing and looking more because of the big study that just came out that said that stubborn diabetes, a quarter of people with stubborn diabetes, may actually have underlying hypercortisolism.
Sure. Okay. Well, let's move on to Gvoke and another growth driver here. Maybe talk to what's driving your growth here. Is it mainly type 1 diabetes patients? Are you pulling in type 2 patients? And just in general, talk to your overall penetration in both of these subgroups in this ready-to-use glucagon setting.
Yeah. So I mentioned earlier, I expect a lot of your investors know Xeris through Gvoke, right? So it's been an important brand for us, remains an important brand for us for more than five years now. But in order for, I think, everybody to understand it right, I think we should just talk about the marketplace for Gvoke to make sure we're grounded there. So I'm going to throw out a couple of stats. So the ADA recently declared that there's plus or minus 30 million people in the United States diagnosed with diabetes. We estimate that about half of them, 15 million of them, are at outsized risk of having their blood sugar go too low and are potentially in harm's way. Low blood sugar is super dangerous. It's a crisis emergency event.
Hundreds of thousands of people take ambulance rides and end up in the hospital every year. Sadly, thousands of them pass away because their blood glucose levels go way too low. And according to the revised guidelines, those are the folks who are supposed to be carrying a rescue product like the Gvoke HypoPen with them at all times, 15 million. And what we've discovered is that the universality of these guidelines has also said, and this is getting to your point about type 1 or type 2, that the risk profile isn't actually a function of what type of diabetes they have, whether they use a CGM, whether they take a pump. It's a function of what medicines they principally take. If they take insulin or they take a sulfonylurea, those are the medicines that are powerful blood glucose reducers. They're at outsized risk of going too low.
Those are the folks who are supposed to carry something like a Gvoke HypoPen all the time. Now, the dynamics of this marketplace are such that it's a vast marketplace. And we're out there creating awareness about the guidelines and the availability of ready-to-use glucagon like Gvoke all the time. And really, it's grown steadily and robustly as a function of just this ongoing increasing awareness day in and day out. You touched on something else, though, which is of the 15 million who ought to be carrying something like a HypoPen, really only about one million today do carry glucagon of any kind. So we've got a lot of work to do to keep building awareness and creating standards of practice with clinicians. But the good news is we have a lot of room to run over many, many years to go.
That sort of begs the question, though. I've covered the company a long time, and so certainly Gvoke was the start of everything. Penetration has always been very low. I guess I'm wondering out loud. Here we are, product's been on the market a number of years, there's a nasal spray formulation. I mean, there's a couple of players in this market, and penetration's still quite low. Why do you think that's the case?
Honestly, David, I think it continues to be basically an awareness at a level that is associated with consistent remembrance and habit forming. We find that the number one reason that a prescriber doesn't prescribe Gvoke, it might surprise you, is they don't remember. It isn't any of the other things that you might traditionally associate with barriers to the adoption of pharmaceuticals. It's actually in remembering. Very busy clinicians treating diabetes have a hard time remembering something like this that's brand new when there's really only us. You mentioned there's another product out there, the nasal powder. But it's still really only us out there advocating for the new guidelines and promoting in the space. We're still really not hearing much from others, and we'd welcome more noise out there to create more awareness.
We think this is really just the reason for the delta between who has it and who should have it.
That's an interesting data point about your competitor. I'm going to make sure to ask them about that.
Please.
So let's move on to KEVEYIS briefly. And I did want to get some time in on XP-8121. But just briefly on KEVEYIS. So the product hung in pretty nicely, even with a generic on the market. Just talk briefly, why has it been resilient given the competition?
Yeah. No, it's a great question. I think I'm going to start by just saying how proud I am of the team and what they've done. Because what we've done is we've stayed focused on supporting patients in the PPP community. We've stayed focused on supporting the caregivers who still want to treat PPP. And all of that focused attention has really been the backbone for why KEVEYIS has been so resilient as a brand. What we've really come to learn is PPP is a very tough disease. And it takes more than just the medicine for patients to be successful on therapy. It takes all of the wraparound services that we provide to healthcare professionals, to patients, through the specialty pharmacy. All of these things really, really matter. And we're doing that better than anybody. And when we do that, we create a lot of advocacy out there.
With that advocacy comes stickiness for the brand. That's really the backbone of why it's been so resilient.
And any quick thoughts on the potential for another generic down the road? Anything you're hearing there?
You know, it's always there. But as of now, we're really not expecting that this brand is going to continue to be sticky on balance. And I think this is an important thing, I think, for your investors to know, too, is that as we notice the surge in our expectations for Recorlev, don't hear this as we're in any way, shape, or form going to lessen our commitment to this PPP community and the brand. But KEVEYIS is going to be less and less important overarchingly to the Xeris profile, in particular as Recorlev surges.
Okay. Well, I want to spend the next few minutes on 8121 because that's moving into phase III and pretty important pipeline product, once weekly subcu form of levothyroxine. So you implied in your opening remarks that this has got pretty significant market potential. Obviously, levothyroxine is a vast market. So can you just talk to the market in general and why a once weekly injectable modality could have a real impact here?
Yeah, so we are very, very excited about 8121. I think one of the most important things is to ground us on what is it about 8121 that could be so special, and it's important that investors appreciate what makes it special isn't that it's once weekly. It isn't about its long-acting capability and the fact that it can be once a week. It's about the fact that it bypasses, as a subcutaneous injection, the oral route of administration, the route of administration that all other forms of levothyroxine must pass through. That's the source of its greatest value. Because as a synthetic hormone going through an oral route of administration, all of what goes on through that oral route of administration complicates the degree to which that levothyroxine works well and can bring people into good control.
We just presented a poster at the American Thyroid Association meeting in which we shared some interesting results from our phase two program. What we showed was that 40% of patients thought to be in control at initial enrollment of study were found to not be in control when we actually looked to see what their TSH levels were. 40%. So there's a widespread, very large subpopulation of people with hypothyroidism who are not in normal range, who aren't actually in control, and we believe this is what the real source of differentiation will be for 8121, is that we're going to be able to bring people into control who heretofore weren't able to be in control.
It's interesting. I mean, it sort of leads me to my next question, which was about how you're thinking about patient subgroups who have hypothyroidism and might be on an oral form of levothyroxine, who would be most appropriate. But it sounds like, if I'm hearing you correctly, it's a big, big number. So I guess the question here is, is it this 40% that don't have control? And there's patients who are experiencing tolerability issues because of suboptimal dosing. Dosing, of course, is very individualized. So maybe talk to how you're thinking about who's the most appropriate commercially.
Yeah, it's a really great question, and so we think that the unmet need is bringing into control folks who are otherwise unable to get in control, so that's the key. And the ability to do that is by bypassing the oral route of administration, so it's a pretty large subgroup, so lots of things matter when you take oral levothyroxine: time of day, what you eat, what you drink, what other medications you're on, what other conditions might you have, right? Do you have IBS? Do you have lactose intolerance? Do you have celiac disease? All kinds of things can complicate the absorption of levothyroxine through the oral route. All those complications are what kind of interfere with people's ability to get in control. That patient population, it could be as large as 40%, excuse me. We've seen studies in the neighborhood of 20% or more.
Important to note, we believe it's a sizable subgroup of a massive marketplace. The levothyroxine category is the single largest medicine category in the United States, more than 100 million prescriptions annually for levothyroxine, so importantly, we have a subgroup for whom we think we can do good, and that subgroup will be plenty large for us to be viewing 8121, really very much in terms of blockbuster.
Just real quick, in broad strokes, can you talk to what a phase three program would look like for 8121?
Yeah, I wish I could. We're still in the middle of conversation with the FDA. And so as soon as we can, I know that we'll share it.
Okay, and question for Steve. The company's guiding to about a $200 million sales footprint this year. Talk to your timeline of cash generation, and particularly as you advance your levothyroxine product. How does that program factor into your profitability timeline?
No, thanks for the question, David. So there's a couple of questions in there. So we'll break them apart. First is really around timing to profitability. And so let's tackle that first. So what I would start with is the management team is fully committed to achieving profitability in the not-too-distant future and achieving this without diluting investors. To the question of timing, we'll provide guidance in March when we announce full year results. But it's probably in the not-too-distant future. And really, I think what's important is for folks to understand how we see this business evolving from where we are to where we're going. As you mentioned, we're plus or minus $200 million in revenue this year with greater than 20% growth. And as Kevin outlined, that's not slowing down anytime soon. We have a healthy gross margin of greater than 80%.
Combine this outlook with an expectation we end 2024 with $70 million in cash on the balance sheet. And you can see why we believe profitability is achievable. The second question is around 8121 and how that fits into this picture. So we still, as Kevin mentioned, have lots to sort out with the FDA. So timing around the questions around when that trial will start, how much it's going to cost. But given the picture I just outlined, and combining that with an increasingly bullish view on Recorlev, we should be able to meet whatever funding requirements are there for 8121 and 2025 without materially jeopardizing our profitability goal. So that's how we see things evolving.
Terrific. Certainly promises to be an exciting next few months and year for Xeris. Well, we're out of time. I'll leave it there. Thanks, gentlemen, for joining us. And thanks, everyone in the audience.
Thanks, David.
Thanks, David.
Appreciate it.