Good morning, everyone, and welcome to day two of the H.C. Wainwright Global Investment Conference. My name is Brandon Foulks. I'm one of the biopharma analysts here at H.C. Wainwright. Next up, we have a fireside chat with Xeris Biopharma Holdings. With me from Xeris is John Shannon, CEO, and Steve Pieper, CFO. Thank you both for joining me.
Thanks for having us.
Fantastic. Maybe just starting off, you sort of know surprises, maybe where we're going to start the recording with. Obviously, you had fantastic growth recently. You know, how do we think about the sustainability of that growth? You've obviously put out some targets longer term as a company. You know, seeing such strong growth coming out of the quarter recently, how do we think about the sustainability there?
Yeah, first of all, let me just step back and just tell a couple of people who we are. For those of you who don't know us, we're Xeris Biopharma Holdings. We're a fast-growing commercial biopharma company. We have three key products: Gvoke®, which is basically an EpiPen for diabetics; we have Keveyis®, which is for an ultra-rare disease, primary periodic paralysis; and then Recorlev®, which is our biggest and largest and fastest growing product in the space. On top of that, we have a pipeline as well. We have a product in phase 3, XP8121. I think the key thing about us is with our revenue growth, with our great 85% gross margins, we're in a position where we really can fund and drive significant growth of our existing products as well as our pipeline.
We turned adjusted EBITDA positive last year, and we can continue to maintain that and do that. Now, going to Recorlev®, it kind of sets up specifically where that market is going and what the opportunity there is. We laid out a pathway in June this year in our first investor day of where Recorlev® is headed to what we think is a billion-dollar market opportunity, which is significantly different than we thought even a few years ago. That's primarily because the space of hypercortisolemia and Cushing's syndrome is truly evolving at a rapid pace. It's early on in that evolution. Basically, what we're finding is more and more patients are being screened and tested for hypercortisol. If that's the case, then you find them and you want to treat them.
If you want to normalize cortisol, this is where Recorlev® fits in and is kind of the best and right product for doing that.
If we think about that growth and that screening, where are we in terms of the market today? How do we think about the continued growth in the funnel driving multi-year, very strong double-digit revenue growth?
Yeah, we're very early. I think if you step back a couple of years ago, these patients were identified by the physical features that they had when they walked into a clinician's office. Today, that has shifted. You don't have to see those overt physical features. What you're looking for is, do I have a patient in here who is on insulin, high doses, and they're not being effective? Insulin works, so if it's not working, I should look for something else. If they're on a hypertensive med that should be working and it's not, or if they're on a GLP-1 for three to four months and they don't lose weight, something else is going on. That's what's really driving the clinicians to screen and look for cortisol. When you find cortisol levels that are well above normal, then the goal here is to treat.
You mentioned the market opportunity, putting some numbers out at your investor day. Can you just walk us through the assumptions that drove your long-term visibility to put those numbers out? What are some of the pushes and pulls on that? I'm going to ask this, but how conservative may those numbers be, or aggressive, right? I think that's going to be folded into the assumptions.
Yeah, I think, like I said, it's very early on in this space. We kind of saw this coming a little more than a year ago, and we expanded our commercial footprint, enabling us to take advantage of the growing market opportunity. We continue and will continue to do that. It's basically getting to those offices, finding those patients, and having the conversation with a clinician. If you want to normalize cortisol, we're the best option. Like I said, it's just starting to evolve. We're seeing more and more clinicians that are completely open because it makes sense to them, right? If I know this should be working and it's not, I need to look for what else is going on, and I have a good alternative to treat if I see a big advantage.
I don't know how big this, everybody wants to know how big this is going to be. We don't know. Right now we see a tremendous amount of opportunity specifically around diabetes, uncontrolled hypertension, uncontrolled diabetes, uncontrolled obesity. Those are probably the biggest, fastest ones. Cortisol in itself wreaks havoc everywhere in the system. There's a lot of opportunity here.
The other item I'd add is, you know, to get to some of those numbers that we've laid out for investors will require additional investment, which we've already started to make this year and into next year. To kind of fuel that growth, both short term, mid term, long term, is going to require investments. Not only just commercially, but are there other things that we can aid, investments we can make in this evolving market and supporting that market continue to evolve the way it has to date?
You talked about cortisol wreaking havoc in a number of places. Steve, you sort of talked about those commercial investments over time. As we get closer to the peak sales or $1 billion, how large a commercial footprint do you envision, or maybe asked a different way, how many iterations of growth do you expect? Could we see an annual sales force resizing as this growth continues? Is this something that you may invest two, three years at a time and let the sales grow into the commercial footprint? How are you thinking about that?
I think we have so far just been scaling with it, with the growth, and we'll continue to do that. You'll see that in 2026, you'll see that in 2027. We'll continue to keep up with the right amount of footprint that it takes to basically identify these patients and get them started on drug. That takes a lot of different resources beyond just sales reps, but patient services, reimbursement services, pharmacy, you have to look at all these things. These are very complex patients that need to be managed, and you need to be able to provide all that capability to help the clinicians get them started. We'll just keep scaling as we go and manage it.
OK. If we think about the sort of mechanism of action, you know, how is it positioned in the market in terms of competitive dynamics right now?
Yeah, this is one of those opportunities where I think we got the right product at the right time in this space. We have a unique mechanism of action that allows us to slow down and bring down the synthesis of cortisol. That's really important to bring cortisol down in a manageable level and be able to measure it as it's coming down, so that the clinician can not only see what they're trying to accomplish, but also see the improvement in the comorbidities. Recorlev® is the perfect product for that. It hits synthesis in three different places and allows you to slow it down. If you take it down too fast, people are going to have cortisol withdrawal, so they're not going to feel great. You've got to manage through that. To bring it down slow and get it in the normal range is the game.
Other products on the market block cortisol at the receptor level out in the tissue, so it's still running around. The clinician cannot manage and see the reduction in cortisol. If you hit it too hard at one point and really hit stop it hard, you could see cortisol withdrawal and other side effects of going below, getting cortisol down too low. It's kind of like almost the perfect little mechanism of action that really fits in there. That's the story. When we meet with the clinicians, if they're tracking someone and they're 1.8 above normal, and you know, what do you want to do? Do you want to normalize cortisol? Let's talk about using Recorlev®.
Yeah, and that's obviously competing with the products on the market right now. How are you looking at the competitive dynamics ahead in the near term, and sort of as we look out longer term to that peak sales number?
Yeah, so obviously there's other competitors coming out, potentially one by the end of this year. That one also looks like it will be, if approved, competing and blocking at the receptor level. First of all, more and more noise at screening and detection is good. That'll just add to that as well as all the companies in this space are really driving that. That's good for all of us. We still have a great story in terms of, you know, if you want to slow down and normalize cortisol, we're the best option in that respect. You can continue to monitor that, like I said before. We see it as a good thing for the market and the opportunity and not a terrible threat to us in particular.
Great. I do want to shift gears a little bit to XP8121. Maybe firstly, just introduce the product, let us sort of get a bit of an overview on it. If you could just incorporate sort of the feedback you've received from endocrinologists on the once weekly approach.
Yeah, so XP8121 is our next pipeline product. It's a phase 3-ready asset that we look to begin phase 3 next year. It's designed and was developed using our XeriSol® technology where we can highly concentrate liquids into subcutaneous injections. We were able to take levothyroxine and formulate that into a once-weekly subcutaneous injection. Why is that important? There's a tremendous amount of people on daily orals of levothyroxine who just can't be managed in range because of GI absorption issues. Either they have a physical GI obstruction of some sort, or they're on some meds that are preventing them from absorbing this product. To have a once-weekly subcutaneous could be really beneficial to those patients. We estimate that there's somewhere between 3 and 5 million of the 20 million people on levothyroxine on daily orals that just can't be managed because of the GI absorption challenges.
When we did the research with clinicians, we found out that it was a really significant hassle for the clinicians as well because they're constantly measuring TSH levels on these patients. They're constantly adjusting doses up and down. There's a real opportunity to not only meet a patient need, but also a clinician need in these busy endocrinology offices. We're developing that. We have the capabilities to do that through our technology. Plus, it's a drug-device combination product, which we have proven capabilities in with respect to how we do Gvoke® in the rescue med, which also uses XeriSol®. Putting all that together, it's the perfect, you know, kind of opportunity. It's in endocrinology where we have the majority of our business. It's a perfect fit to leverage all of our capabilities and really invest in that asset.
We see this, like I said, as a $1 to $3 billion market opportunity if you develop it in a way that you like a blockbuster, like you would in a blockbuster scenario. There's been no real clinical development in this space for decades. The original products are DESI and their PK, you know, studies, bioequivalency studies to the DESI product. We'll be generating for the first time a real significant amount of data on TSH levels, T4 levels, and the impact they have on kind of the clinical aspects of that and outcomes type work. We're going to do this the right way. It's going to take us, you know, it's a one-year-long study. It's going to be a very big study.
This is the right way to approach this to make sure that you can really, you know, set this apart for treating this unmet medical need in the space.
Fantastic. I do want to dig down a little bit into the phase 3 trial. The biggest question is the gating factors to dosing the first patient. Maybe before you get there, just walk us through the trial design in detail, the primary endpoints. You mentioned it's a one-year trial, but given the size, when could we see data?
Yeah, we haven't laid out the trial detail and design. We gave out a few key points for people, and I'll go through those. When we are ready to launch the trial, we'll put all the details out there. We see this as a one-year-long trial. The goal is to get the product approved. We'll go for non-inferiority, and it'll be at least 1,000 patients. We put all that out publicly because that's what it's going to take to for sure make sure you get approval no matter what. That's our key focus. We're also working diligently before we start that trial to make sure that when we start that trial, we do it with the device and the drug that's going to go to market. We've already formulated it. We've got all that covered.
Now you got to make sure that you can deliver a wide range of doses because there's all kinds of dosing that goes on in this space in a neurotherapeutic window, in a device that's a cartridge that you would dial. It gives the physician flexibility. We're doing all of that work now up front so that we don't have to go back and bridge later on when we do the phase 3 trial and then bridge back. No, let's do it right. Let's do it that way and then put that into the clinical trial. Did I answer all your question or what did I miss?
You didn't miss anything, but I'm always going to have more.
All right. There's a few highlights there, right? Blockbuster potential, non-inferiority trial, not a lot of innovation in the space. Putting those three together, my question comes as sort of what do the payers think of sort of innovation in the space? Do you design elements into the trial from a payer perspective? Otherwise, how do you position it commercially to maximize the value here?
Yeah, you know, payers don't like innovation. This is, again, a unique opportunity for us because, you know, when you think about it, it's somewhere between 20% and 40% of the people just cannot manage within range due to these GI absorption issues. From a payer perspective, as we design the trials, we'll be able to, there's going to be plenty of patients that have multiple TSH tests out of range. They're ideal candidates right away for this product because obviously they failed the daily orals in that respect. That's one area where we'll have real good leverage against the payers. We'll continue to build a bunch of other data as we go through this and through this development program that will give us what we need to get through the payer challenges.
Again, if you really do hit an unmet medical need, the payers are really, it's really hard for them to get in the way of that.
They'll try.
They will try.
It sounds like you've got the sort of evidence generation to address that. I do want to just move on in the interest of time to, you mentioned the other products. Maybe if we can just talk about Gvoke® quickly, you know, again, sort of seeing good growth. Can you just talk about the strategy behind that product and maybe just folding Keveyis® in there as well, just in the interest of time?
Yeah, let me start with Gvoke®. Gvoke® is a great product and it's what we started the company on. It's basically an EpiPen for diabetics if you go low. This is a marketplace where the medical guidelines are in place and say, if you're on insulin, if you're on a sulfonylurea, you should have one of these ready-to-use just in case. The problem is the market's got decades of having those old chemistry kits out there that nobody could do and they'd rather call 911. Our job is really to continue to educate in the space. There's 15 million people on insulin and sulfonylureas and less than 1 million of them have a ready-to-use glucagon on hand.
The opportunity is long, but it's challenging in respect to changing decade-old medical practice and helping the clinicians, A, understand the guidelines, especially where most of these patients are treated in primary care, and then being compliant with the guidelines. We continue to see strong growth. We see that, you know, in the, I don't know, double digits, low double-digit growth for a long period of time. We continue to grind out there. The Gvoke® team is working on behalf of the patients every day in order to do that. We see that as a long-term, you know, kind of contributor to our business. Keveyis® is just a great asset. It's so resilient. It treats an ultra-rare disease, primary periodic paralysis. I got to say that a lot. Not PPP.
It's one of those products where we help define and find the patient and help the clinician identify them and then get them on treatment and keep them on treatment. Even though we've had now three years of generic competition, we continue to hold that product strong. We continue to add new patients every week and continue to even get patients back who have left the generic and come back. It's a really, really solid asset for us. We continue to see that, you know, kind of deliver significantly for us.
Fantastic. Only someone with your growth profile would describe 17% year-on-year growth as grinding out growth.
Yeah, yeah.
Maybe just to sort of put this all together, we come back. Can you just talk about your balance sheet that you have right now? You've obviously, we've talked about the blockbuster potential product you have on market. We've talked about the blockbuster potential product you have in your pipeline. How do you think about capital deployment with the balance sheet you have right now?
Yeah, thanks for the question. We're clearly entering this new phase of growth. We've guided to 40% growth year over year at the midpoint, very attractive gross margin profile, and really creating this kind of self-funded business profile. It gives us a ton of flexibility to deploy capital to the highest ROI opportunities ahead of us. We've touched on our top two priorities today, which is first and foremost Recorlev and continuing to fuel that growth, and then funding XP8121, our pipeline asset. The great news is we can do that with our own balance sheet because we're at a point of critical mass on the back of that nice revenue growth. That's how we're allocating our capital for the foreseeable future, those two assets.
Fantastic. I thank both of you for being up here today, and congrats on all the success to date.
Thanks, Brandon.
Appreciate it. Thanks, Brandon.
All right.