Good afternoon, everyone. My name is Brandon Folkes. I am one of the equity research analysts here at H.C. Wainwright, and thank you for joining us at our Global Investment Conference. Next up, we have a fireside chat with Xeris, and joining me from Xeris is John Shannon, CEO, and Steve Pieper, CFO. Steve, John, thank you very much for joining me. To start, Xeris has done a tremendous job growing revenue at a tremendous pace recently. With that, we have started to see profitability, even a profitability. Just last week, you introduced a whole another leg to the story. Can you maybe, if we take a step back, talk about the success that has got us here today, but also what could fundamentally be so different over the next 12 to 24 months?
Great, thanks. That is a great question. Thanks, Brandon. Thanks for having us here. This really lies in our strategy, and we kind of laid out our strategy about a year and a half ago of driving the growth of this business, and it starts with our commercial engine. We have three products that are growing, and as you just pointed out, we are guiding to at least 33% growth this year in revenue on top of 50 some growth, 40%, 50% growth last year. We see that growth continuing, and we continue to make that investment. We have three products. All three of them are growing. GVOKE, KEVEYIS, and RECORLEV. RECORLEV is driving the majority of the growth and the product that we really got behind, and we talked about that a year and a half ago.
We see that on path to getting to $1 billion, and we have that product on path with $750 million in total revenue by 2030, with RECORLEV on path to $1 billion. That, coupled with our gross margins, which are 85% and improving, really allows us to invest. Invest not only in our growth going forward, but our pipeline, which is what led us to last week, where we outlined the whole critical development program for XP-8121, once-weekly subcutaneous levothyroxine for hypothyroidism. We drew a picture for an unmet need of 3 million to 5 million people with an unmet need of being able to get into range that leads to a $1 billion to $3 billion opportunity. You see that this growth, the right margins, allows us to invest for growth plus our pipeline, and that is where we are at. This is the next inflection point.
Where is it taking us? It is taking us to a heavy expansion and growth, people across the company to run all the programs we are running, as well as our development program, and we are able to fund it within our company. It is an exciting time as we scale up to kind of get to that next level.
Fantastic. I am going to focus on 8121 here. You laid out a very thorough development plan last week, really laid out the strategy. If we think about that as a $1 billion-$3 billion opportunity, the market definitely is not including that just yet. As we work through Cornerstone, Touchstone, and the real-world evidence, what do you think are the two or three most key points in that development strategy that gets you to the $1 billion, the $3 billion, or somewhere in between or above?
Yeah. We laid out a very comprehensive development plan because we're really focused on developing this product in a way that we can get after the unmet need, which is the people that can't get into range, for TSH specifically. So we laid out a program that gets us regulatory approval. That's the first and foremost thing we got to do, is get through the agency. We've worked that out with them. That's a non-inferiority study with Capstone. That's what we need to get to market because the space is, from a clinical standpoint, it's very intuitive. They have all these patients that they can't get into range. The medical guidelines say if you're out of range, you're at risk, so you need to get them in range.
We're in a scenario where if we just get regulatory approval, it's logical to them that, well, if I bypass the GI with a once-weekly subQ, I can get many of these patients who have GI issues or GI absorption issues getting in the way of getting people in range so that I can get them on, like 8121. So it's very intuitive to them. They don't have a solution today. The daily orals are failing for these patients and in this space, and this is where our product fits in. We just need to get through approval. But that's not good enough. That's why we put in the rest of the clinical program, Touchstone.
We're going to spend a lot between now and approval on real-world evidence to help really identify and be able to lay out what the real unmet medical need is in this space, because nobody's done any clinical work in this ever. Right? Most of the products that are out there, all of them are approved based on—they're pre-DESI, and they're based on PK/PD going all the way back to the original product, SYNTHROID.
Fantastic. You talked about patients don't have other opportunities right now. But if we assume the program is successful and Cornerstone is successful, maybe firstly, what do you think of or how should we think of the initial label? Just given you're running Cornerstone, but also then you are running Touchstone. What does Touchstone need to show to be successful in your mind commercially, and do you have all that data at regulatory submission, and how does that, in your mind, how does the robust development program play into a potential label?
Well, there's a lot in there.
Yeah.
I'm going to miss some things. Somebody catch
I'll follow you.
So let's start with at a minimum. We'll have differentiation in the label because we'll have a once-weekly subQ versus a daily oral. That in and of itself will eliminate some of the things that get in the way of GI absorption. So DDIs and things like that. There'll be differentiation in the label there. Touchstone is designed so that one of the things we saw in our phase II was there was a 40% screen failure. So patients were deemed to be in control on their current therapy, and then once they got into the trial, they weren't. This is a place which we know this is very common here, so Touchstone would be a great place to take people who can't get into control or are deemed not in control to take them in and do another study.
How that lands in the label, to be determined. We got to do the study, see where that lands, and see what it would add to the label. But it would be additive to the label that you would expect for levothyroxine hormone replacement. So that would be additive data. As well as any secondary endpoints we'll pick up in this year-long clinical trial in Cornerstone, those would be all additive and could be added into the label. But to be determined there as we get through the data.
Fantastic. Whilst there's not a lot of competition, and there's no competition really on the horizon here, one discussion we've had with investors is the insurance profile, right? There's going to be generics on the market, generics that potentially, whilst it's the same API, are not controlling patients well. So what do you think you need to show for insurers for them to allow or sort of not push back enough yet that it doesn't create excessive friction?
Yeah. We know going into this that the patients are failing on the generics, and that's already documented in their charts. They're coming into their clinician, they're having TSH levels measured, and they're out of range. So that's well documented, and in that 3 million to 5 million people that we are focused on that really need to get into range. So from a payer perspective, we think all we'll have to show is that they failed on the generic and that we have a product that will work for them, an alternative for them that'll work for them. You have to go through a prior authorization and all the things, and we're well prepared to do that and planning to do that, but that's what we would have to go through.
Okay. When we think about an uncontrolled patient in practice, how are those patients being treated now, and what is the threshold do you feel like when there's an alternative to try an alternative in that patient who may present today and be outside of range, there's not really an alternative to move that patient to?
No, and I think clinicians struggle with these patients, so they adjust dose up and down, because it's also overproduction as well as under. So they adjust patients. They move from brands to generics to other generics to other brands. So they do move around to try to solve this problem, and that's where this really fits in. We've talked to over 500 physicians in the process of kind of developing this development plan and preparing from a commercial perspective, and almost every one of them, it's very intuitive. As soon as you start talking to them, they're like, "Yeah, I know exactly what patient I'm going to put on this immediately. " Because they've been wrestling with it for years in many cases. So those patients are well-defined. They're already being treated. They're already in the chart.
We have what we need to get through the payer as well as the physician that'll go quickly into their mind on who's the right patient, and that's a really important aspect is who's the right patient? Because we're not looking to get all of the, or the big chunk of the 20 million people out there that are on daily orals. These are the people they can't get into control, and they fall in that 3 million to 5 million people.
Okay. Coming back to Cornerstone, when we think of the clinical trial design, how should we think about the well-controlled patient who stays on the oral levo? Just what's your thinking on those responses there? What does that do to showing non-inferiority in Cornerstone, not only get you regulatory approval, it gives them an option in that 3 million to 5 million, but does that not also say to the physician, "You could actually use this in any patient"?
Well, we will show non-inferiority to people in control on daily orals. That was what the agency wanted us to lay out, and we do it at two time points, 48 and 54 weeks. It's an and. If we show that and show non-inferiority, you can use it for anybody, right? But again, the real focus on this is because we're going to have to go through payers and other things, is the people that you can't get into range. That's the medical problem we're solving with this product, and that's what we focus on.
That's a very big patient population to start even.
Yeah.
Yeah. You mentioned the timing of the endpoints in the clinical trials. Can you just talk about the patient response you're expecting in the XP-8121 arm in the first 24 weeks or, asked differently maybe, how should we think about titration of XP-8121 in the clinical trials and practice?
Yeah. In this space, whether you're on oral or on XP-8121, the first 24 weeks, clinicians will titrate patients to get them into range. We expect we'll see a bunch of titration in that phase. We really focus on starting at 24 weeks all the way to 54, the next 30 weeks of looking for that continuous stabilization of TSH in those patients, because again, that's what we're trying to solve for. That's the way the trial is designed, and that's the way we worked it out with the agency.
Okay. Fantastic. When we think about an uncontrolled patient, that 3 million to 5 million, can you just help us think, are those 3 million to 5 million, are they bouncing in and out of being controlled? Is there a patient population, or if it's a sub-segment in there that are just so hard to continue to be well-controlled? I guess, just how durable or how consistent is that 3 million to 5 million range of patients that are out of control?
Yeah, I think it's pretty consistent when you talk to clinicians. They'll identify at least 10% to 20% of their patient population are out of control at some point for some reason. We're going to learn a lot between now and when this gets approved, because we're going to invest in real-world evidence data to really start to frame where the opportunity is, what are those segments of patients, how often are they out of range? We're going to spend time and energy on that so that we can, again, launch this into a space where it's well-defined on who this is right for.
I am going to put you on the spot a little bit here.
Yeah.
But if that was today and you're launching today, and you mentioned on the webinar you only need 10% of that.
Yeah.
Three to 5 million to reach your 1 to 3 billion. If you were to go out there today and position the product, the first rep call out there positioning the product, what does that patient look like that gets on XP-8121 in the first six months post-approval? What do you think, if you had to hazard a guess, where do you think clinicians are going to use this first?
Yeah, I think it would sound like this. You'd say, "Hey, Doctor, we've got XP-8121. It's a once-weekly subcutaneous levothyroxine just approved." They're going to go, "Oh, I got some patients that I know are having issues, especially because of GI or because of drugs they're on, drug interactions. I've got a couple patients that this could solve for me." So there's an immediate move they'll go to. I know I have people that have GI absorption issues, and I can get them started right away. They also would look at, I've got a number of patients in the charts that have one, two, multiple TSH out of range that I've been moving up and down for years, maybe. These are another great candidates. A lot of those would jump right into their head.
Bringing that back to the insurance side of it, that patient has a documented history of failing standard of care therapy.
Yeah.
Do you think there's anything else from an insurance perspective for that initial patient that you would need to show, or is it a self-fulfilling prophecy that they've already shown what insurers may ask?
We think it's pretty clear. They're failing.
Yeah.
Patients are failing on today's current oral therapies, and here's an alternative.
Okay. When we think about the market opportunity in the $1 billion-$3 billion market opportunity, we've touched on you're a commercial company, but you've also got a very strong balance sheet to build for this opportunity. How much of the core overlap do you have today versus how much you may look to have to expand the core network through investment over time?
Yeah, I think the first part of this is the overlap for this asset for us as a company is tremendous. We're using our XeriSol technology along with levothyroxine to create a high-concentration once-weekly subQ in a drug-device combination product. That's what we do. That's our wheelhouse. You add to it a commercial infrastructure that goes to general endocrinology as well as specialty with RECORLEV and GVOKE, and you wrap around all of our patient services, reimbursement services. This is a well-designed plan.
to put something right in our hands that is in our wheelhouse, to be able to not only develop but also launch effectively. Then we have the time to build it the right way, with collecting real-world evidence, preparing the market for this launch. Then from a funding perspective, we have a commercial engine that is generating what we need to make this a success, both in the clinic as well as once it gets commercial.
Okay.
We cover almost every endocrinologist. The key people here are pretty much in that space. But we will probably have to expand to be able to handle three products in that space, so to your extent. But that is something we will worry about in 2030, and I am sure we will be well prepared to handle.
Yeah, absolutely. Not a terrible problem to have.
Yeah.
All right. I do want to just touch on RECORLEV because we are almost out of time. But you talked about the $1 billion that RECORLEV in itself could bring in. It seems to continue to exceed expectations, at least from our side. So I guess from your internal expectations, how do you view the success of RECORLEV to date, and what do you think are sort of maybe the two or three real key aspects to continue this growth to that $1 billion?
You want to take this one?
Yeah, I'll take this one.
I'll take a breath.
And a drink of water. RECORLEV has been on an unbelievable journey as the market for Cushing's has really expanded quite fast, and we've been feeding that growth and that expansion. We just recently, early part of the year, doubled our commercial infrastructure, both field and also a lot of what John talked about in terms of patient reimbursement, pharmacy services. That's starting to fuel our growth, and we're seeing that play out exactly as we expected, maybe even a little bit better than we anticipated.
And we think that continuing to fund that growth with additional investments in commercial infrastructure and field force is one part of the strategy. Then also, how do we participate in the market expanding in terms of new data that is being generated, that those type of investments will start to take fold here as we move into 2027 and beyond.
Fantastic. One more from me. With the webinar last week, I think you laid out a very detailed plan and given investors a nice roadmap, but I would be remiss not to ask the company that is generating cash like yourselves, how do you feel about business development bringing any additional assets to the portfolio?
Yeah, I start with we got a lot to do with the stuff we have and we will continue to prioritize those investments first. But we also have this incredible infrastructure that we are building that other assets could benefit from, whether it is endocrinology or rare in those spaces. So we are looking at opportunities on the BD side, but we are focused primarily on our own assets or other things that could quickly generate and deliver revenue growth.
Fantastic. Yep, we are out of time, so thank you very much to both of you.
Yeah. Thanks.
Thanks, Brandon.