Q2 2022 Xeris Biopharma Holdings Inc Earnings Call

and having AirCorps as our commercial partner. Having OGLO in the hands of a well-capitalized company dedicated to the diabetes space is a very positive step forward for the millions of patients with diabetes in the UK and EU, in our view. And we're working closely with AirCorps to ensure a smooth transition and no disruption of commercial activities, and we will continue to support the commercial efforts going forward. From a development perspective, a few words about our Xerisol Levothyroxine. As I mentioned previously, we dosed the last cohort in the phase one pharmacokinetic study of our potential once-weekly subcutaneous levothyroxine product candidate. We will compile all the data from a range of doses to assess dose proportionality early in the fourth quarter. This latest data should provide us an increased level of confidence that we have a product candidate with a potential of once-weekly dosing. This is an important starting point for developing our phase two, three program with the FDA. And we are using this information to support our FDA meeting request regarding a registration strategy, which we will anticipate having in the early part of 2023. Exercise-induced hypoglycemia. Based on our earlier phase two data and our discussions with the FDA, we have an agreed plan for an additional phase two study in order to collect additional utilization data later this year. We're in the process of planning the initiation of that study. That said, initiation of the EIH study and further development of the EIH program is being reviewed as part of our clinical prioritization and commercial opportunity assessment later this year, taking the requirements that we've gotten from the FDA and cost into consideration.

Before I turn the call to Steve for detail on our second quarter financial performance, I'd like to reiterate. Zaris has a record quarter on several fronts as I just reviewed. We are prioritizing our spend to accelerate the growth of our enterprise. We remain confident in our ability to achieve our guidance for the year for both revenue and ending cash position.

delivering on these two commitments affirms our expectation that we will achieve cash flow breakeven by year end 2023 without the need to raise additional equity.

We believe our performance is a clear demonstration that we are building an increasingly valuable enterprise energetically and aggressively but with discipline.

Now I'll turn this call over to Steve. Thanks, Paul. Good morning, everyone. I will focus my remarks on a few of the key financial results, the details of which are in the press release issued this morning.

Total net product revenue was $25.3 million for the second quarter, representing a 34% increase over the same quarter last year on a pro forma basis.

This growth was driven by strong underlying patient demand for both Gevoke and Cavais, and patients starts on therapy for Recoralev.

Breaking it down by product, Gevoke net revenue for the quarter was $11.5 million, or a 30% increase compared to the same period last year.

This increase was driven by continued growth in prescriptions topping 34,000 for the first time, more than a 60% increase compared to prior year Q2, partially offset by a decrease in net pricing, which I will explain in detail later.

Year-to-date net revenue for GEVOKE was $23.9 million, or a 42% increase compared to the same period last year.

This increase was again driven by growth in prescriptions, more than a 73% increase compared to the same period prior year which was partially offset by a decrease in that pricing.

Let me provide more context on the decrease in that pricing for Gevoke this year.

As discussed last quarter, we made adjustments to our returns reserved based on actual results.

This is driving a portion of the net price decrease relative to last year.

Additionally, in order to continue to maintain unrestricted access for patients that want G-VOTE,

We have made decisions regarding our payer strategy that are resulting in higher commercial and government rebates.

These rebates started to impact our net pricing in the latter half of Q2.

Looking forward, we expect GVOC demand to continue to grow, and we expect the net pricing to begin to stabilize in Q3 once all the new payer agreements take effect.

assuming of course a consistent payer mix.

Moving to Cavellas.

That revenue for the quarter was $12.8 million, or a 28% increase compared to the same period last year on a pro forma basis.

On a year-to-date basis, Cubaeus Net revenue was $22.1 million, or a 20% increase compared to the same period last year on a pro forma basis.

We continue to see increases in the number of patients on Cabeus.

These patient increases coupled with a net pricing increase contributed to this revenue growth.

Looking forward, we are confident in our ability to continue to maintain and grow our Cabeus business.

Moving to Recoralev.

Recently launched for Corelip Net revenue for the quarter was 1 million, or 1.1 million year to date.

We are pleased with our initial financial performance through June . We are also encouraged by the outlook of Recorlev given the weekly growth of referrals and new patients coming into therapy.

As Paul mentioned, we are reaffirming our guidance of net product revenue of $105 to $120 million.

Moving down to P&L, cost of goods sold was $11.1 million for the six months ended June 30, 2022, an increase of approximately $5.9 million compared to the same period in 2021. This increase was primarily driven by increased sales of our products, as well as product mix and increased costs.

Research and development expenses increased 0.6 million or roughly 6% for the six months ended June 30, 2022, compared to prior year.

The increase was primarily driven by higher personnel related costs offset by lower product development costs.

Selling general and administrative expenses increased by $23.9 million, or roughly 53%, for the six months ended June 30, 2022, compared to the same period in 2021. We incurred $19.6 million of increase in personnel-related costs due to the G-VOTE field expansion in the third quarter of 2021 and the inclusion of our CVEAS and Recoralev commercial infrastructure.

The company also incurred increased marketing spend driven by the Recoralev launch.

As of June 30, 2022, ZERUS had total cash, cash equivalents and short-term investments of $111.6 million compared to $132.1 million at March 31, 2022.

We are in a strong cash position.

Looking forward, and consistent with prior guidance, we plan to draw the additional $50 million available under our Haytham Debt Facility by the end of this year.

and finish the year within our previously communicated cash guidance of $90 to $110 million.

We expect our cash position to adequately fund our operations as currently constructed to cash flow breakeven by year end 2023.

I will now turn the call back to Paul.

Thanks, Steve. As you just heard from both myself and Steve, the first half of 2022 has been one of steady growth and commercial.

and operational execution, and we're on track to achieve our guidance.

Operator, we'll now take questions.

Thank you for our Q&A. If you would like to ask a question, please press star followed by 1 on your telephone keypad now.

If you change your mind, please press star followed by 2.

When preparing to ask your question, please ensure your device is unmuted locally.

Our first question comes from Rowanna Ruys from SVB Securities. Your line is open, please go ahead.

Great morning, everyone. So two quick questions for me. First on G Vogue, I was curious about the sales in the quarter and the impact on net price. Could you talk a little bit about the relative magnitude of net price change that you're seeing and do you expect to see that trend a little bit into three cube or could it normalize?

Yes, so Rowana, you know, the impact, there's a couple things, if we look at it just from a quarter over quarter perspective, a couple things were going on there. So in this in the first quarter, we actually had revenue to that was related to our

sales to our European partner Tetris at the time. That was a stocking order that didn't repeat in the second quarter. So that was a little north of a million dollars. So that impacted the quarter over quarter growth. That's included in our GEVO line. And then in terms of our net pricing, just to remind everybody, you know.

We had last year in the first half of last year, we had a reversal to our returns reserve that ultimately increased our revenue. As we discussed last quarter, we had an adjustment this this in the first half of this year that based on actual returns.

We expect that that's actually normalized. What happened in the second quarter was, we made decisions around our payer agreements and that was a bit of a drag on our net pricing. But we expect that once those kind of flush through on a full quarter basis in the third quarter that our net pricing will stabilize. I wouldn't expect.

as a material movement from the second quarter to the third quarter in terms of that price. It may bounce around a couple percentage points, but nothing material.

Okay, great, helpful. And then wanted to ask a question about Recoralev. Could you discuss a little bit the titration process that you're observing for early patients that are receiving Recoralev and how long do you estimate that it might take individual patients to get to their specific ideal maintenance dose?

Hey, Ron, it's Paul. And I may ask John Shannon to help me with this question because he's a little closer to it. The, the, our original, excuse me, our original assumptions on titration.

were based on the clinical studies. And in the clinical studies, people got to an average dose of about 600 milligrams.

As you would expect in a clinical study, it's very prescribed and controlled, and patients return to the offices on a routine, scheduled basis.

So you have a pretty easy way of seeing the titration and managing the titration.

in that context, it's a controlled environment. In actuality, in the wild, as we say, in normal practice, patients don't go back to the office as frequently and it takes a little longer. So far, we're seeing people begin to titrate up, but on average, I think they're pretty much at the starting dose still. Given that we're basically one quarter in.

we'll have a better sense of how that titration is going as we get closer to the end of the year. Right now, I think John would agree it's a little slower than we anticipated, but it's one quarter.

Great, helpful. Thanks.

Our next question comes from Oren Livnett from HC Wainwright. Your line is open.

Thanks. I have a couple questions. Just to follow up quickly on Recorlev, are you able to give us any more color on the, I guess, sort of...

volume or acceleration of patients in the funnel, you know, with regards to referrals into your hub services and what kind of success or proportion of patients are successfully getting coverage and getting drug and I guess to dig into that.

Further, what sort of renewal requirements are you seeing or expecting to see on those prescriptions? For some drugs, insurance companies require every month to reauthorize. Are you seeing that or are they getting chronic sort of indefinite authorization and coverage? I have a Gmail follow-up.

Yeah, I'll start from the end. Or in the renewal process, once a patient is on therapy.

it's not really a prescription-based process. They're on therapy and it's approved by the payer, and then it's a continuous process from there. You don't have to renew the prescription.

At least not so far, we haven't seen it in the category.

Coverage so far, we haven't had a lot of losses, and most everybody that we've put through the process we're being pretty successful at getting patients through the insurance process. There are hurdles, as we anticipated, but we're getting through them reasonably efficiently. In terms of volume, we're not gonna disclose patient numbers we think that's a competitive thing that we don't want our competitors to know where we are.

will continue to give you dollars. We're seeing rapid increase in referrals, and we're seeing referrals convert to patients on drugs at an increasing rate.

Okay, that's encouraging. And I meant Caveya's follow-up, actually. Impressive quarter, up nicely quarter over quarter. You said a couple times in the script, you emphasized that you were looking to maintain and grow this franchise. I think the general consensus expectation for this product is erosion starting next year. I'm wondering if you have any updated thoughts on the potential timing and or impact of any competition. Are you?

this business in the face of a generic competitor no matter what.

And we have a lot of reason to believe that's the case. It's an ultra rare disease, it's one specialty pharmacy, the patients are hard to find, we're the only ones finding them, up to and including our own authorized generic if at some point we feel that's necessary. So we bought the company and knowing full well that Caveus was going to lose exclusivity and we believe we can grow the product.

Thank you, appreciate the color.

Our next question comes from David Anselm from Piper Sandler. Your line is open.

Thanks, so just had a couple. So he just talk anecdotally about.

what you're hearing in the field from practitioners about Recorlev and you know specifically you know where you know patients are coming from you know are they switchers from the racemic ketoconazole are they de novo patients and just overall you know receptivity that's number one

Number two is, as we think about GEVO,

in a longer term, what's your view on

you know, just overall penetration of these ready-to-use modalities. You know, it seems like the pandemic sort of kind of threw a wrench into uptake. So do you expect, you know, now that we're sort of emerging from it, you know, more growth in just penetration of these ready-to-use modalities overall? And just how are you thinking about it longer term? Thank you.

Thanks, David. I'll start right at the beginning with Recoralev. The receptivity to Recoralev has been...

great. It's been very high, doctors are very interested in the product. We're getting great reception. In terms of where are we getting the patients, we're getting them from everywhere. We're getting de novo patients, we're getting switch patients. So, you know, doctors see this as a valuable and alternative that they're eager to use.

So, you know, we're very pleased with the very early days, you know, we're basically one quarter of actual selling. Moving on to Jeebok, you're right, the pandemic did have an impact on the move to the ready-to-use and the growth of the category. The category has grown throughout the, that said, the category has grown throughout the pandemic. Maybe it dipped to single digits for a period, but it's continued to grow.

I think one of the things that you may have seen recently that really speaks volumes about what's going to happen with this category, Lilly just announced that they're going to withdraw their kit, the old kit that's been around forever. They're going to withdraw it from the market. They're going to discontinue distribution of that kit. That signals a commitment by Lilly to the ready-to-use category in a major fashion.

You know, and as we've all discussed, those kits are almost impossible to use. You know, it'll be interesting to see if other companies withdraw their products and discontinue distribution of kits altogether. But that says a great deal about the Ready to Use category, and we're happy to see it.

Okay, that's helpful. If I may just seek in a follow-up, just regarding that discontinuation, do you think that's more of a function of the fact that...

Amphistar has a generic and Lily's kit is the reference of the drug or do you think it's really about you know the migration to the ready-to-use modalities.

I think at the end of the day it's probably some of both, but the fact of the matter is they are taking it off the market and they are emphasizing the ready to use. At the end of the day...

Lilly is the reference product for the generic, so I don't see how the Amphistar product can continue to grow. I think it's going to decline.

Our perspective is Novo and Amphistar should withdraw theirs and discontinue distribution of theirs as well.

They're not good for patients.

Thanks Paul.

Thanks, Paul. Thanks, David.

Drive carefully.

This concludes our Q&A. I'll now hand back to Paul Edick, CEO , for final remarks.

Okay, thank you. Thanks to everyone for joining the call this morning and for your continued support as we execute on our growth strategy to create a profitable pharmaceutical company with products in multiple therapeutic categories that meet the needs of patients and their caregivers. Thank you very much.

The call is now concluded. We would like to thank you for participating.