Q3 2022 Xeris Biopharma Holdings Inc Earnings Call
So this morning and can be found on our website. We're joined this morning by Paul <unk>, Chairman and CEO and Steve <unk>, Our CFO , Paul will provide opening remarks, Steve will provide details on our financial results and after a few closing remarks by Paul We will open up the call for Q&A.
Before we begin I would like to remind you that this call will contain forward looking statements concerning <unk> business practices, there through future expectations plans prospects clinical approvals commercialization corporate strategy performance and the impact of COVID-19 on <unk> business practices, which constitute forward.
Looking statements for the purposes of the Safe Harbor provision under the private Securities Litigation Reform Act of 1095 actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including the effect of uncertainties related to the COVID-19 pandemic on us.
In global markets <unk> business financial condition operations clinical trials third party suppliers and manufacturers and other risk factors included those discussed in our filings with the SEC.
In addition, any forward looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as any subsequent date, we specifically disclaim any obligations to update such statements I will now turn the call over to Paul.
Thanks, Alison good morning, everyone and thank you for joining us today before getting into the results.
The quarter I want to reiterate a few things we talked about on our second quarter call regarding what we're trying to build <unk>.
Number one the most important aspect of building multiple successful companies as a team over the years has been knowing where we are where we want to be how we plan to get there and executing against that strategy with absolute clarity.
We have evolved considerably over the last few years growing from a development company with one and a phase two asset.
And two very unique technologies to a full fledged commercial business with Regrowing products targeted pipeline development and potentially meaningful technology partnerships.
Iterating, what I said on our second quarter call, where we want to want to be and what we focus on at the beginning and end of each day.
<unk> is building a substantial patient centric commercially focused self sustaining biopharma enterprise with multiple products in multiple therapeutic areas are highly targeted development pipeline that has significant long term promise and increasingly value added technology partnerships.
What you will hear today is that we are continuing to progress very successfully on that journey, we are executing on our vision.
Our 2022 momentum continued through the third quarter and into the early part of the fourth quarter. We continued delivering record growth in patient demand and net revenues for all three of our marketed products through the quarter. We also continued advancement of our legal thyroxine pipeline program.
With the solid year to date performance of all three products and the disciplined management of expenses and cash we're confident we can achieve the following.
As I've said on previous calls I believe that the result at any point in our range of net product revenue guidance would be an exceptional commercial performance of 2022.
At this point in the year, we have good line of sight to where we may end the year and are thus narrowing our net product revenue guidance from $105 million to $120 million to $105 million to $110 million.
At the same time, we are raising the previous year end 2022 cash balance guidance, which was 90% to $110 million and is now $110 million to $120 million in cash.
And we are reiterating our expectation that our cash position is adequate to fund our operations to cash flow breakeven.
Currently expected to happen by year end 2023, without the need to tap the equity markets for the purpose of funding ongoing operations.
Now.
I'll go into some specific highlights for each product behind this performance.
<unk> had another strong quarterly performance with record revenues and prescriptions.
<unk> net revenue in the third quarter was a record $13 7 million, a 24% increase compared to Q3 last year and a 19% increase from last quarter.
Year to date <unk> net revenues increased 35% compared to the same period last year.
In the third quarter <unk> total prescriptions were over 38000 growing more than 40% compared to the same period last year.
Year to date <unk> total prescriptions were over 103000 growing approximately 60% compared to the same period in 2021.
The total glucose glucagon market grew an additional 9% in the third quarter versus prior year fuelled considerably by G box performance <unk> continues to outpace and drive market growth quarter after quarter.
<unk> market share grew to approximately 24% at the end of October .
And the ready to use glucagon products are now approximately 70% of the glucagon market.
It's great to see that more and more people with diabetes, who are on insulin and therefore at serious risk of a severe low blood sugar event or getting a ready to use glucagon prescription such as <unk>. However, we have a long way to go until all patients on insulin who are all at high risk have a ready to use <unk> available just in case.
<unk>.
Moving to <unk>.
<unk> had another record quarter with $13 $4 million in net revenue and increased excuse me of approximately 17% compared to third quarter 2021, and an increase of 4% from last quarter.
Year to date <unk> net revenue has grown 19% over the same period in 2021 on a pro forma basis.
Comparing third quarter, 2022% to third quarter 2021, we saw a 9% increase in patient demand.
In 2022 on a year to date basis.
<unk> patient demand has increased 10% compared to the same period in 2021.
Looking at <unk> during the quarter, we continued to generate a meaningful number of patient referrals and an increase in number of patients. Starting on therapy were also seeing patients that have started on therapy begin to titrate up their average daily dose, which is a very good sign.
This performance resulted in $2 $5 million and net revenue for the third quarter a 160%.
Revenue growth from the second quarter.
It's still very early in the launch of launch but record load continues to grow and show great long term growth potential.
Now I'd like to turn to turn to zero saw Levothyroxine.
A few weeks ago, we reported very encouraging results from the phase one pharmacokinetic comparison of oral synthroid versus subcutaneous XP $81 21.
Our small volume ready to use formulation of Levothyroxine utilizing <unk> technology.
Study results offer initial proof of concept that our novel subcutaneous formulation of Levothyroxine has the potential to provide patients with a once weekly dosing potentially improving treatment adherence as well as bypassing the gastrointestinal tract and mitigating the limitations of oral therapy.
Excuse me.
In the first phase of the study we compared to single 600 microgram doses of crossover in a crossover design with normal volunteers.
Subcutaneous XP $81 21 provided a lower maximum concentration or C. Max longer time to maximum concentration or T. Max and a more sustained sustained exposure profile relative to oral synthroid.
We continued to study with two additional <unk> ascending doses of XP 80, 121, and we confirmed linear dose proportionality between 600 1200 500 micrograms throughout the course of the study no major safety concerns were identified.
All data from this phase one study, we then combined to develop a population pharmacokinetic model.
This model allowed us to perform simulations of various chronic dosing scenarios.
Based on comparable exposure at steady state the model estimated that 200 micrograms of once weekly XP 81, 'twenty one could provide similar exposure to 300 micrograms of daily oral synthroid, implying a four X conversion factor between once daily and once weekly dosing.
At present, the FDA has granted our request for a type C meeting to review our phase one data and proposal for a single phase three registration study and other requirements to enable an NDA we expect.
Their feedback by the end of the at the end of this year.
Our regulatory strategy is based on Fda's previous findings of safety and effectiveness for Synthroid.
FDA published guidance for in vivo pharmacokinetic assessment of Levothyroxine products and precedent FDA approvals for products, comparing daily oral versus weekly or longer administration.
Our levothyroxine has been the stance excuse me oral levothyroxine has been the standard of care treatment for hyperthyroidism for several decades.
Generally safe and effective oral levothyroxine presents several challenges type of thyroid patients in managing their condition, including inadequate absorption of levothyroxine in the gastrointestinal track either due to a concomitant gi condition or interfering concomitant medications as well as compliance issues.
Levothyroxine patients remain in need of improved treatment options.
Yes, we will.
<unk> remains one of the most prescribed medicines in the United States with over 100 million prescriptions dispensed every year.
What does this mean in terms of the potential market opportunity.
Conservatively, if we take 10% of those patients with multiple issues as I've described or approximately 7 million prescriptions of this market at current branded pricing.
This could be at $2 billion to $3 billion market segment in which we believe our once weekly subcutaneous legal thyroxine could compete very effectively.
I know thats, a mouthful and legal thyroxine, but I think it's important for us to detail that once again.
At this point I'll turn it over to Steve for details on our financial performance.
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 a record $29 6 million for the third quarter, representing a 31% increase over the same quarter last year on a pro forma basis.
This increase was driven by growth of all three of our products strong underlying demand patient demand for both <unk> and new patient starts on therapy for core lab, where the key drivers for total product revenue growth in the quarter.
Breaking it down by product <unk> net revenue for the quarter was $13 7 million, representing a 24% increase compared to the same period last year.
This increase in revenue was driven by continued growth in prescriptions topping 38000 for the first time more than a 40% increase compared to the same period in 2021.
This growth in demand was partially offset by a decrease in net pricing, which I explained in detail on our last call to be clear, we believe that on that pricing has stabilized.
Year to date <unk> net revenue was $37 6 million, representing a 35% increase compared to the same period last year. This increase was again driven by growth in prescriptions, approximately a 60% increase compared to the same period in 2021, which was partially offset by it.
Kris and net pricing.
Moving to <unk> <unk>.
Net revenue for the quarter was $13 4 million, representing a 17% increase compared to the same period last year on a pro forma basis.
On a year to date basis <unk> net revenue was $35 5 million, representing a 19% increase compared to the same period last year on a pro forma basis.
We continue to see increases in the number of patients on <unk>. These patient increases coupled with a net pricing increase contributed to this revenue growth.
Where korlym that revenue for the quarter was $2 5 million more than double compared to the second quarter of 2022, and a direct result of the steady growth of patients on therapy.
Year to date <unk> net revenue was $3 6 million.
We continue to be pleased with our initial financial performance of <unk> and we're also encouraged by the outlook over Korolev given the weekly growth of new patient referrals in new patients coming onto therapy.
As Paul mentioned, we are tightening our guidance of total net product revenue of 105 to 110 still within our previous range of $105 million to $120 million moves.
Moving down the P&L cost of goods sold increased by $7 9 million for the nine months ended September 30, compared to the same period in 2021. The increase was attributable to an increase in sales as well as product mix and the increased costs.
Research and development expenses increased.
$9 million roughly 6% for the nine months ended September 30, compared to the same period in 2021 consistent with prior quarters. The increase was primarily driven by higher personnel related costs offset by lower product development costs.
Selling general and administrative expenses increased by $31 8 million or roughly 45% for the nine months ended September 30, compared to the same period in 2021, we incurred $24 $2 million of increase in personnel related costs due primarily to the <unk> field expansion in Q3 of last year.
Here and the inclusion of our <unk> and <unk> commercial infrastructure as this change is not on a pro forma basis. The company also incurred increased marketing spend driven by the launch of her korolev.
From a cash perspective as of September 30, <unk> had total cash cash equivalents and short term investments of $93 4 million compared to $111 6 million at June 32022 weeks.
We continue to maintain a strong cash position are delivering on the synergies from the strong big Strawbridge acquisition and have a healthy balance sheet, even as we are faced inflationary headwinds.
Based on our current cash position forecasted spend and our previous guidance to draw the additional $50 million available under our <unk> debt facility by the end of this year, we expect to end 2022 with more cash than previously guided.
We are increasing our year end 2022 cash guidance from a range of $90 million to $110 million to a new range of $110 million to $120 million.
We feel that service is in a unique position with a healthy balance sheet and three growing commercial assets that we believe will ultimately to cerus, reaching cash flow breakeven by the end of 2023.
I will now turn the call back to Paul.
Thanks, Steve as we finished the year and head into 2023, we expect to build upon our 2022 momentum and continue creating shareholder value through continued revenue growth.
Careful allocation of resources and prudent expense management.
Operator would you. Please open the line for questions at this point.
As a reminder, if you'd like to ask a question today. Please press star followed by one on no telephone keypad.
To ask a question. Please ensure your headsets you put in in a muted locally.
I'll, let Mike wanted to ask a question.
First question today comes from Glen Santangelo from Jefferies. Your line is open. Please go ahead.
Yes, thanks for taking my question.
Wanted to dive into the glucagon market a little bit more you said that this quarter. The total margin grew 9%.
It seems encouraging but it's also a slight deceleration from where we were in <unk> and <unk> decelerated somewhat from where we were in <unk> and so I'm wondering if you could.
Talk about that from a high level, but beyond.
Beyond that.
With one of your competitors who manufactures.
Legacy generic legacy kit they seem to be very excited about the fact that two of the manufacturers are going to sunset the legacy kits here.
Soon and it's their view that the price differential between the ready to use products on the generic.
Products are big enough.
That will be enough to stem the.
Tied towards these ready to use products. So I was wondering if you could just sort of give us your assessment of this market. How you think it shapes up for.
<unk> three given all the moving parts.
Yes, thanks Glenn.
I'll take that in reverse order because I think.
At the end of your comments are probably the most pertinent at the end of the day to kind of the dynamic in the marketplace.
I would describe the legacy products relative to the new ready to use products as impossible to use products. There is no issue of price.
In this marketplace and you can tell by the.
The speed with which 70% of this market has gone from the legacy products to the ready to use products.
And when I say impossible to use.
When you look at the human factor studies that have been done by us and other manufacturers.
<unk>.
In almost any study the best that you could best outcome you could get was approximately three out of seven three out of every 10 people could actually execute and deliver the proper dose using those kits.
The critical need in the marketplace is a usable form factor it's not price.
And what has made the difference has been.
The nature of the new us ready to use products, they're easy to use for a caregiver, they're easy to use for a medical professional and they're easy to use for self administration and also self administration has never really been an option because of the complicated nature of the kit and the <unk>.
Major of a severe hypo people are losing cognitive function they can execute the kit.
So I think that's critically important to how people view this market.
As far as the growth we've had we've had growth pre and pre pandemic was as high as 25% to 30% and we've had consistent growth in double digits throughout the Covid period.
But it has been up and down and we've had a couple of quarters, where it's gone below double digit that that doesn't scare us at all we think thats going to reverse and continue to grow.
The Matt the.
The fact of the matter is <unk> are shouldering the majority of the growth that's happening in the marketplace.
As Lilly gets more active with there.
Nasal and Novo comes in gets more active we will have more a louder voice in the marketplace.
And the bottom line is there are 7 million people on insulin who are at high risk for.
A severe low that should have one of these ready to use products such as <unk> sooner or later that message will get through to clinicians.
Okay.
Paul maybe if I can just ask one quick follow up on the guidance.
In your prepared remarks, you seem to be.
Suggest that anything within the original guidance range was very encouraging and I guess I generally agree, but just sort of looking at the guidance reduction rate you lowered the midpoint by five and the top end of the range by $10 million and so I'm just kind of curious as to maybe what changed in your mind.
Relative to what you might have been thinking.
90 days ago, and then and then lastly.
Stephen Thanks for the update on the on the cash, but could you give us to that number as of today that'd be great. Thanks.
Yes, I think the answer to your question Glenn as was in your first question.
We expected double digit market growth to continue.
And we saw high single digit market growth.
No.
Top end was.
The original guidance had more substantial market growth built in.
Okay.
And then on the debt, we currently have with <unk> and $100 million outstanding and then we have a convert that has roughly 47.
As I mentioned in my remarks, we plan to draw the additional 50 available to us under the <unk> facility. So we will have 150.
And I would I would just reiterate relative to that guidance.
We've said from the very beginning that.
With two launch products, especially <unk>.
G box still being in launch mode that we had a fairly wide guidance range.
Anticipating that there would be some variability, but the bottom line is all three products continue to grow they all are growing incredibly well double digits versus prior year.
And I have said from the beginning anywhere in that range would be excellent performance for us as a company.
Great. Thanks for the responses.
The next question comes from David <unk> from Piper Sandler David Your line is open. Please go ahead.
Hey, Thanks, So just a few first can you talk about payer dynamics surrounding <unk>.
What youre seeing there and what you can do to continue to grow.
Underlying.
Patient usage and just talk generally about what youre hearing in the field about.
Overall.
Receptivity to.
The product and if theres any patient specific metrics or prescriber metrics that you can share that would also be helpful. And then just going back to the glucagon.
Market. So <unk> noted that theyre going to be doubling their glucagon capacity.
Your comments regarding the kits or not.
On me, but.
Is it your view that with the kits being discontinued by Novo and Lilly that the ready to use products will capture the lion's share of that or do you think it'll be sort of a mix.
Business going to the generic kit and.
The ready to use products I mean, ultimately how do you see that.
Shaking out as we move through 2023.
Okay.
Well, let me start with glucagon first again.
What you've seen over the course of the last couple of years is regardless of whether Lilly or the <unk> generic entry et cetera. The legacy kit type of delivery has continued to decline.
And we believe in.
We believe we are seeing evidence of it in the marketplace that.
The ready to use products like the nasal and like <unk> are going to continue to take a greater percentage of the market.
And the Lilly discontinuation of their kit is a clear signal to prescribers. The biggest company in the business does not believe that that kit is an appropriate form factor for patients. So.
Where the where the rubber meets the road is with the prescriber.
And if they are prescribing the ready to use products. They are not going to be converted to the old legacy generic kits.
So we expect that portion of the market to continue to decline, we expect the ready to use to take the lion's share.
And we've always said.
A little bit of it might linger, but.
I don't think anyone anticipated that it would be 70% in the ready to use in such a short period of time.
In terms of.
Recall of payer patient usage.
<unk>.
Patient usage under Korolev as patient referrals are strong patient initiations are strong.
The difference that we're seeing is we had anticipated that people would titrate up to their optimal dose a little bit faster.
But.
We're not concerned about that at all physicians are taking.
And appropriate approach to stepwise dose titration, that's good medicine.
We're working very effectively with payers clearing insurance nobody gets correlate until the insurance is cleared.
There is a process to being two of patients starting on record low.
There's the initial referral.
And then the patient has to go through some testing.
To get an EKG.
And physicians are busy patients are busy and those repeat visits are they take time.
So we've said from the beginning that it can be weeks to months from a patient referral to an actual patient on drug.
Receptivity has been outstanding.
We've got no pushback from physicians, it's a matter of.
Them getting a good sense of record levels and how they can best utilize it in their practice, we think we've got a better product than is Teresa, which has a lot of.
Androgenic side effects, we think we have a better product than korlym, which when you think about it the goal in Cushings is to normalized cortisol Korlym doesn't do that so we think we've got a very competitive product. In fact, we know we do and we're encouraged by the results so far.
And payer dynamics have been as expected.
It's a negotiation one at a time.
Okay helpful. Thank you.
The next question comes from <unk> <unk> from H C. Wainwright. Your line is <unk>. Please go ahead.
Thanks have a few questions if I could just talk big picture, you've reiterated your guidance for year end cash flow breakeven or 2023 at year end.
Which I think is probably a major upside to current street expectations. So can you just talk about.
The main drivers of that growth in your mind is it safe to assume that's largely year over year record level growth.
And there and I guess.
The main drivers of that is that versus the current trends. We're seeing is that just the conversion of <unk>.
Maybe a backlog of patients as they get on through insurance and that product accelerates quickly now or is up titration, a major component of that and I have a couple others. Thanks.
Yes.
Yes. It is recorded that plays an important role in that.
And it is.
What about the time from referral to patient on drug.
And the more efficient we get at that better we get at that the more we negotiate with payers et cetera.
And importantly, the rate of titration to the optimal dose.
More patients getting to where they need to be.
Over time is going to be a pretty big driver.
Yeah.
As well as <unk>.
Yes continued growth in <unk> as well as foreign.
Okay.
And following up on their core lab.
Conversion an up titration.
At any point should we expect to get numbers on patients referred and or patients on drug or is that going to be something you maintain close to the vest even going forward and.
You talked about having a superior drug can.
Can you comment on just any pushback in the <unk>.
Adjudication phase the insurance adjudication phase with.
With regards to.
Off label.
Ketoconazole out there is that an issue you face or is it just normal we're trying to put a patient on a very expensive drug and that's a process.
It's what you just said at the end it is trying to put a patient on a very expensive drug and its a process. We are not getting pushback on keto because.
Fact that at the physician level.
There is we're being embraced as having something thats actually been studied has an actual label and that's being detailed on label.
Physicians are not comfortable using keto off label they just arent.
And.
The payer is not really in a good position to require keto in order to get to <unk>.
Sure.
Okay, and just one last one on <unk>.
<unk>.
Prescription growth it looks like your quarter over quarter revenue growth was surprisingly strong I was above our estimates can you confirm if there are any.
Inventory dynamics at play or is it just that the.
The net price.
Babelized higher than maybe where it was recognized in <unk> and I think you said that should be stable going forward.
Yes.
It has stabilized in Q3, the net price.
Assuming a consistent payer mix or and I think we would expect that to remain kind of where it leveled off in Q3, but I think what we did see is relative demand, we did see a little bit of inventory build in the quarter.
It could be go into alternate channels, but yes, we saw a little bit of inventory build in the third quarter and you see that from time to time so.
Particularly back to school season.
Perfect well, thanks for that help.
The next question comes from Roberto Ruiz STB Securities. Please go ahead. Your line is open.
Great. Thanks, good morning, everyone.
I did have a couple of questions on <unk>, maybe could you talk a little bit about some of the competitive dynamics, you're seeing between tivo come back Simi and anything that we should expect going into the holiday months ended this year for <unk>.
The competitive dynamics I think are pretty much as we expected.
Lilly Lilly continues to promote vaccine they're most active during the back to school season.
And they are there.
The biggest real franchises impede pediatric endocrinologists. So that's that's usually when they're even more active.
Like I said previously and you and I have talked about I would like to see them a little bit even more active because they're a big voice and they can drive market growth.
And we've got a great product and we continue to grow our share of the ready to use.
So I think the.
The competitive dynamic is playing out like we said at the outset, they're going to take a bigger piece of the pie than we are early on.
Going to close that gap somewhat but if both products continued to grow the way they are.
And continue to grow the market.
We're both going to do extremely well.
And it's pretty much just Lily and us at this point and like I said previously.
The generic companies can ramp up their manufacturing as much as they want they have a product patients can't use.
Yes fair point.
Wanted to ask a little bit about require less so I know you talked a little about the titration going very well I was curious if you had any insights on what you expect the overall average maintenance dose to be like going into 2023 as more patient to ramp up.
Any sort of color on that would be super helpful.
What we saw in the clinical studies was patients were titrated up to most commonly 600.
We expect that the in the.
The practical utilization that will end up somewhere in the 500 to 600 neighborhood.
And I think it's playing out that way.
You also asked something about the holiday.
In your previous question you asked about holiday dynamics.
Nothing special except.
People are at increased risk during the holidays based on the way, they eat and drink et cetera, but.
We don't we don't attack it in a different manner than normal.
Got it thanks.
We have no further questions I will turn the call back to <unk> for concluding remarks.
Thank you.
Want to personally thank all of our long loyal shareholders and investors for their support over the last few years. We've absolutely. Appreciate your continued belief in what we're building we continue to work hard everyday to deliver value on your investment you can see from everything we just discussed that our business is in great shape, we continue to affirm and meet our guidance with.
Represents excellent continued growth year over year, we have plenty of cash and we're managing expenses expenses aggressively.
Thanks for joining the call. This morning, and your continued support as we execute on our growth strategy to build a substantial patient centric commercially focused profitable biopharma enterprise.
With multiple products in multiple therapeutic areas highly targeted development pipeline that has significant long term promise and increasing value added partnerships based on our unique technologies.
And we and meeting the needs of patients and caregivers every day. Thank you very much.
Yes.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.