Xeris Biopharma Holdings Inc. Q1 2023 Earnings Call
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Okay.
And a warm welcome, Missouri spire pharma Holdings' first quarter question Shree financial results Cool My name's, Lisa and I'll be the operator for today, if you would like to ask the question you'll have yoga she wants.
Once we reach the question and answer portion Kony Press Star followed by one on your telephone keypad should you wish to ask a question.
And now I have the pleasure of hunting right.
Hey, Allison Wey senior Vice President or was that sort of relations and corporate communications to begin Anderson. Please go ahead when you're ready.
Thank you Lisa good morning, and welcome to Zurich, Biopharma first quarter financial results conference call and webcast a press release with the company's financial results was issued earlier. This morning can be found on our website. We are joined this morning by Paul Edick, Chairman and CEO and Steve Clark, Our CFO , Paul provide opening remarks, Steve will provide.
Details on our financial results then we will open the call for Q&A.
Before we begin I would like to remind you that this call will contain forward looking statements, which may include but are not limited to statements concerning our business practices future expectations plans prospects clinical approval commercialization corporate strategy and performance, which constitute forward looking statements within the meaning of the private.
Acuity of the litigation Reform Act of 1995.
Actual results may differ materially from those indicated by the forward looking statements made during this call as a result of various factors, including our financial position and need for financing, including to fund our product development programs or commercialization effort, whether our product will achieve and maintain market acceptance and a competitor.
Business environment.
Third party suppliers, including single source supplier, our reliance on third parties to conduct the clinical trial the ability of our product candidates to complete successfully with existing and new drug adverse effects of macroeconomic conditions on our business operations and clinical activities and our and collaborative collaborating with ability to protect.
Our intellectual property and proprietary technology as well as other risk factors set forth in our filings with the Securities and Exchange Commission any forward looking statements in this call represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date.
Subject to obligations under applicable law, we disclaim any obligations to update such statements.
Like to turn the call over to Paul.
Thanks, Alison you can take a breath.
Good morning, everyone and thank you for joining us today.
Before I highlight our achievements for the first quarter I think it's important that I reiterate what we're trying to build its erez.
Everyday everyone at <unk> is intensely focused on building a substantial patient centric commercially focused.
Self sustaining.
Pharma enterprise with multiple products commercial products in multiple therapeutic areas.
Highly targeted development pipeline that has significant long term promise.
Increasingly a significant value added technology partnership business literally a three dimensional enterprise.
You will hear today is that we are continuing to progress very successfully on that journey, we are executing on our vision.
As I said, just a few short weeks ago. When we reported outstanding 2022 results. Our momentum from 2022 has set us up for a great 2023 first quarter 2023 delivered another record quarterly revenue strong underlying demand for <unk> and recall of another potentially.
Very valuable <unk> partnership and a continued healthy cash position.
Here are the headlines.
We have achieved first quarter total revenue of $33 $2 million, representing 50% growth compared to first quarter of 'twenty two.
We ended first quarter 2023, with $95 1 million in cash cash equivalents and short term investments.
We announced a research collaboration and option agreement with Regeneron for <unk> formulations.
And we are affirming our 2023 guidance of total revenues of 135 million to $165 million cash utilization from operating activities of between 57% and $77 million and year end cash cash equivalents and short term investments of between 45 and 65 million.
Steve will go into those in greater detail as we progress.
Let's start with the commercial portion of our business, which generated $32 million in the quarter, representing a 47% increase over last year in the first quarter.
<unk> <unk> had another record quarter of net revenue in prescriptions, just over $15 million and net revenue at 21% increase compared to first quarter of 'twenty two.
Total prescriptions for the first quarter were just shy of 46000 growing 50% compared to the same period last year and a 10% increase from fourth quarter of 'twenty, two which is a very good sign since the first quarter market growth has historically flat to the fourth quarter of the prior year.
Since the beginning of the year market growth is back to double digits with <unk> continuing to outpace all other products and driving that market growth.
At the end of April <unk> market share of new and total prescriptions in the glucagon market grew to approximately 30% and 29% respectively.
Ready to use glucagon products now represent over 75% of the total new prescription market for glucagon.
<unk> is also off to a good start in the second quarter, having recently top 4000 prescriptions per week for the first time and for two consecutive weeks.
I mentioned this on our fourth quarter call in a few weeks ago, but due to the significance I believe it bears repeating especially since we are entering an important conference period.
While more and more patients on insulin are getting ready to use glucagon such as evoke there are still over 7 million people on insulin who remain at high risk and don't have a ready to use G book available just in case.
To address this critical situation and motivate health care professionals to do more.
The American Diabetes Association, the Endocrine Society, The American Association of clinical Endocrinology and others have recently updated their guidelines and algorithms to include an important focus on the incorporation of ready to use glucagon into clinical practice.
For example, the Endo Society expanded the definition of those at high risk for severe low blood sugar and strongly recommends that ready to use glucagon should be prescribed for all patients with diabetes, who are on daily insulin or so finding urea is confirming what we've been saying all along.
On to record lows.
<unk> generated $4 5 billion in net revenue for the first quarter, an increase of approximately 18% from the fourth quarter of 'twenty two.
We continue to see a steady increase in referrals.
New patients on drug and unique prescribers are recorded in the first quarter for.
For example, we saw an increase in the number of referrals to record level in the first quarter of nearly 30% from the prior quarter.
Interestingly in the first quarter more than 30% of patients were prescribed <unk> as their first drug therapy.
This means that health care professionals are valuing the core lab as a first line treatment for Cushing syndrome post surgery overall with Korlym is developing exactly as expected.
Moving to convey as first quarter revenue for <unk> was approximately $13 million, which.
Cents, an increase of 37% compared to the first quarter of 'twenty two.
Yes.
Since the first generic was approved in late December It has not had a material impact on <unk> to date in 2023 in fact, our referral rates and patients on drug remained very steady.
That isn't to say there won't be an impact. However, this is a challenging marketplace that requires significant work to identify initiate and maintain patients on therapy.
We have so far only seen glimpses of how generics may impact that process in the market as a whole.
We'll see how it plays out over the course of the year.
That said.
Given the market dynamics historically, we are continuing to invest in <unk>. Despite the entrance of a generic and believe we can maintain a considerable portion of the business. We've worked so hard to build on behalf of the PPP patient community.
And we continue to monitor the landscape.
<unk> is committed to ensuring everyone who needs access to record level <unk> will receive it are.
Our dedicated <unk> care connections team patient advocates and mentors support patients and health care providers through the product initiation reimbursement and titration process and we will continue that effort.
Let's turn to our pipeline and partnered programs.
As you know we are focused on advancing our Zara saw legal thyroxine development program to eventual commercialization.
We recently began recruiting patients in the phase II study.
And hope to dose the first patient before the end of the second quarter.
The primary objectives of this phase II study are to determine a target dose conversion factor for oral from oral levothyroxine to our liquid ready to use subcutaneous levothyroxine.
One week.
Injection and to assess the safety and Tolerability of our zero saw legal thyroxine. After once weekly subcutaneous injections in subjects with hypothyroidism.
The study will also gather insight on each subject's thyroxine or T four and thyroid stimulating hormone TSH levels over the course of the study.
Data from this phase II study will help inform our proposal to the FDA for a pivotal phase III program.
Oral levothyroxine has been the standard of care for treatment of hyperthyroidism for many years and it is one of the most prescribed medicines in the United States generating more than 100 million prescriptions per year.
However, 47% of patients have some gi issue or combined Gi condition.
<unk> oral absorption.
21% report, taking concomitant medications that interfere with absorption.
17% of patients submit to compliance issues with the daily oral regimen, many of whom may be the same patient.
As a result.
Yes.
We believe that our once weekly subcutaneous Legals Iraq scene, if approved will compete in a potential $2 billion to $3 billion market segment.
Now onto our growth growing zero partnership business.
In March we announced the <unk> platform partnership this one with regeneron to enable subcutaneous delivery of potentially several monoclonal antibodies.
Under the terms of this collaboration and option agreement.
<unk> will use our <unk> formulation to develop ultra highly concentrated ready to use small volume subcutaneous injections of two undisclosed monoclonal antibodies developed by Regeneron.
Regeneron has an option to license clinical development and commercial rights to <unk> for these molecules.
And to nominate additional molecules for formulation and potential development and commercialization.
This is our third recently disclosed Zurich technology partnership.
Following collaborations with Merck and horizon, which highlights the unique value proposition of <unk> as well as the investment in progress <unk> been making in advancing <unk> into clinical GMP readiness.
So where are we with mercury horizon programs for Merck, we have completed the <unk> formulation stability assessment of the molecule and at this point Merck is evaluating the product for further clinical development and commercialization.
With the Horizon partnership. We're currently in the initial stages of formulation of <unk> and our <unk> delivery system. Once we meet the agreed upon product profile, we will receive the previously disclosed $6 million from horizon, if they signed a licensing agreement, giving them exclusive rights in the category.
<unk> would be entitled to future development regulatory and sales based milestones as well as royalties on future sales.
With a great first quarter behind us and from where we stand today I want to reiterate that we are affirming our total revenue guidance of $135 to $165 million.
Cash utilization.
<unk> of 57% to $75 million, a year end cash position in the range of $45 to $65 million and achieving cash flow breakeven in the fourth quarter without the need for additional capital to fund our operations.
I will now turn the call over to Steve for additional details on our first quarter performance.
Thanks, Paul Good morning, everyone I.
I will focus my remarks on key financial results for the first quarter 2023, the details of which are in the press release issued this morning.
Total revenue was a record $33 2 million, representing a 50% increase over the same quarter last year.
Strong underlying patient demand across all three products, coupled with revenue from our collaboration partnerships drove this growth in total revenue.
<unk> net revenue for the quarter was a record $15 million, representing a 21% increase compared compared to the same period last year.
Continued growth in <unk> prescriptions and market share drove this increase chievo prescriptions top 45000 for the first time, a 50% increase compared to the same period in 2022.
<unk> ended the quarter with total retail market share of approximately 28% compared to approximately 21% in March of 2022.
The total glucagon prescription market grew 3%.
Compared to the fourth quarter of 'twenty, two notably <unk> total prescriptions grew 10% in the same period once again significantly outpacing the market.
More promising we are seeing this momentum continue into the second quarter as Paul mentioned with <unk> weekly prescriptions exceeding 4000 prescriptions and consecutive weeks.
Moving to <unk> <unk> net revenue for the quarter was $12 8 million, representing a 37% increase compared to the same period last year. This.
This revenue growth was driven by an increase in the number of patients on <unk>.
To date, we have not experienced any material negative impact to <unk> from the launch of a generic we continue to proactively monitor and defend <unk> against generic competition, while seeking patents to restore our exclusive rights.
Moving to record levels.
<unk> net revenue for the quarter was $4 5 million, which represents an 18% increase over the fourth quarter.
This growth was primarily driven by increases in the number of patients on <unk>.
As Paul mentioned, we continue to see a steady increase in referrals with a 30% increase over the fourth quarter. Additionally over 30% of our patients in the first quarter were prescribed for core lab as their first drug therapy, we believe that healthcare professionals are valuing record <unk> as a first line <unk>.
Treatment for Cushing syndrome post surgery.
In addition to total product revenue of $32 3 million, we recognized 900000 of revenue from collaborations and partnerships.
Additionally, we were pleased to announce another partnership with Regeneron in March.
Looking ahead for the full year 2023, we affirm our guidance of total revenue between $135 million to $165 million.
Moving down the P&L cost of goods sold was $5 3 million a $1 million decrease compared to the same quarter last year. The decrease was attributable to a onetime contract credit and favorable product mix offset by an increase in product sales.
Research and development expenses was $4 3 million, a $1 $4 million decrease compared to the same period last year. This decrease was driven by lower product development costs in the period, we continue to practice disciplined prioritization and are focusing our 2023 R&D on funding the levo to Iraq.
Scene program.
The completion of the <unk> optic study and continued development work of our proprietary formulation science, we expect these initiatives to drive modest year over year increases in R&D expenses.
Selling general and administrative expenses were $33 6 million or $2 $3 million decrease compared to the same period last year. This decrease was primarily driven by no restructuring expense in 2023, when compared to 2022.
As we discussed in March we continue to expect total SG&A to be relatively flat in 2023, when compared to 2022.
From a cash perspective as of March 31, 2023, we had total cash cash equivalents and short term investments of approximately $95 million compared to $122 million at December 31, 2022.
Consistent with our experience in prior years and reflected in our March commentary cash utilization in the first quarter was higher due to changes in working capital.
Reiterating our position from March we expect cash utilizations utilization to moderate through the middle of 2023 until the fourth quarter. When we expect to achieve cash flow breakeven with that said, we are affirming our guidance of total cash cash equivalents and short term investments to end the year in the range of four.
$5 million to $65 million in cash utilized from operating activities to be between 57% and $77 million.
Assuming we are performing to our guidance, we project to reach cash flow breakeven in the fourth quarter 2023 and from that point on we will be a self sustaining enterprise.
As we have discussed we do not plan to raise capital to fund our operations as we become a self sustaining up enterprise.
Operator, please open the lines for questions.
If you wish to ask a question. Please press star followed by one on your telephone keypad now if you wish but Youre also your question has been answered <unk> question on the pace.
To ask a question. Please ensure your microphone is on muted like kidney.
Our first question for today comes from Oren <unk> with H C. Wainwright. Please go ahead. Your line is open.
Okay.
Alright, thanks for taking the question congrats on a good quarter either SKU.
On guidance, you reiterated a solid growth year over year and I'm, just trying to get some help on the range of that it's still quite wide and you haven't narrowed it a third of the way through the year. So could you just remind us.
The major pushes and pulls there and also I can't remember he had mentioned this in the past, but at the top end does that include revenue recognition and potentially for the horizon formulation and I've got a follow ups. Thanks.
And as Paul Thank you very much good morning, good morning.
The answer to the second part of your question is yes, yes, yes.
Does include that revenue.
In terms of the breadth of the range, we said back in March when we established the range.
At.
As the year progresses, and we'll see.
How <unk> plays out and how the generic plays out.
And.
We will know if we can tighten the range, but there's a lot of unknowns right now.
Yes.
Okay.
<unk> you.
Delighted.
Share gains, which have been impressive maybe even accelerating recently.
And I'm just wondering firstly.
With the sale of vaccine.
Do you think that's going to have any impact on the competitive competitive dynamics in the space, whether it will get better worse or stay the same.
And like you highlighted there was a pretty strong quarter quarter over quarter into your seasonally toughest one so can you comment.
First of all what gross to net better than expected in the first quarter and actually should we expect that to improve through the year as it not only thing.
Steve Yes, I can.
To answer the second question or in the gross to net as we said kind of midway through last year, they've kind of moderated and it kind of leveled off so no. That's not that's not driving it and we don't expect that to improve over the course of 2023.
Okay.
And lastly on they'll have two.
The first part of your question on <unk>.
We need and we have said all along that we want more voices in this marketplace in order to get more market growth I.
I think the value that lilly extracted or their product speaks to the potential for the category.
And having somebody who is dedicated.
Yes.
Two.
Endocrinology and to the category I think can only help so we're anticipating another voice in the marketplace will increase the market growth and that will benefit us in the long run.
Great and on Opex. They were both actually quite late I was surprised to see SG&A down. Despite I think it was the fourth quarter Salesforce expansion can you just talk about I guess.
How lumpy that is going forward I know you gave sort of full year characterization, but did you actually trimmed some.
Core costs across the across the board.
No not at all not at all we're expecting SG&A for the full year to be relatively flat I mean, there could be some lumpiness in terms of <unk>.
Marketing promotional spend quarter to quarter.
But by and large.
When we look at it from a full year perspective, it's going to be relatively flat compared to 2022.
And R&D it sounds like you said, you're focusing on Levothyroxine.
The current run rate until that phase III really kicks in here pretty good to go on R&D, Yeah, Yeah on R&D I expect to see a slight uptick in Q2 and for the balance of the year when youre looking at it from a quarter over quarter perspective.
Primarily in the second half has that phase III program really kicks in.
There'll be an issue.
And the pharmacy.
Yes, I appreciate it thanks.
Feedback.
Thank you for your question Orin. Our next question from today comes from Glenn <unk> of Jefferies. Glenn. Please go ahead.
Yes. Thanks for taking my question Hey, Paul I also wanted to follow up on these reimbursement dynamics for Jabil Kieran when Q right because if I look at your scripts right. They were up 10% and I think there was a price increase.
So we can maybe flesh out the reimbursement dynamics, a little bit more but I would have thought with the scripts being as strong as they were the revenues would have been a little bit better than flat versus sequentially versus <unk>. So if you could flesh that out a little bit that'd be great.
Yes. Good morning, Glenn This is Steve I'll take that question. So yes, what we saw in the first quarter we.
We're working pretty proactively with our wholesalers and I think there was a little bit of shift in channel and channel inventory in the first quarter.
And that happens from time to time, they are wholesalers will tighten up their inventory or bad.
If they if they swing that one or two weeks within the quarter.
Makes a difference and that's what we saw really but nothing nothing unusual.
Nothing concerning about that.
It happens from time to time.
Okay, and then with respect to convey as this is kind of four quarters in a row with revs roughly about 13 million Bucks.
Thank you said Paul in your prepared remarks, right youre not really seeing any evidence of any generic competition. So absent that generic competition is just kind of roughly the right run rate for this product and we should be thinking about or based.
Based on sort of your marketing plans do you see a bigger opportunity here, how should we think about.
The growth of that product going forward sort of absent any any incremental generic competition.
Yes, that's a good question.
We're waiting.
We need it we're taking kind of a wait and see on that.
The potential for <unk>, we think is significantly higher.
And without a generic or without the threat of a generic we would add resources and drive convey is even harder.
Right now we're driving can be used as hard as we can with the current resources that we have and generating good solid quarter over quarter.
Every single quarter like you said 13 ish million.
And we need to see how the whole generic thing plays out and what they do relative to payers and discounting and Rebating.
And whether or not a second generic enters the market.
And then we also have to see if we are successful in our patent application and the appeal that we have going on.
In the middle of this year, so as things play out we could we could substantially upsize our effort and drive a lot more <unk> over time, but that's just not in the cards right now.
Okay. Thanks for the comments.
Okay.
Thanks Glenn.
Thanks for your question. Glenn next question today comes from Robert Routh of SBB Securities. Please go ahead, when you're ready.
Great Good morning, everyone.
So a quick question on Korolev I was curious if you could update us on if youre seeing anything around how long the titration process has been for patients as physicians get more comfortable could that titration period, possibly get shorter and you could get patients on drug more quickly.
Yes, good question, Walter and good morning.
We are starting to see more titration, we're seeing the average dose start to creep up.
And.
That's a very good sign.
The other thing that we're seeing is the maximum dose we're not getting to the higher doses that we thought which I think is also a good sign of the drug is working.
And physicians are starting to use it even for drug naive patients.
So all good signs.
And we are starting to see the titration, whether or not it's going to happen faster versus slower over time, we don't have enough to understand that yet.
Got it Okay, and then wanted to ask a bit more about your new collaboration with Regeneron basically could you give us a rundown of what makes me really excited about this program and the opportunity for possibly multiple products and when might we get more clarity on future steps or milestones.
These programs.
So theres a lot.
Would love to talk about but we just can't talk about but the what excites us about the regeneron deal is it's a platform deal I mean, regeneron is starting out with identification of two products or molecules that they want to put into our system.
The status of which we're just getting started I mean, I think we're just having kickoff meetings and things like that.
To start the formulation of the first.
Molecule.
And then the second molecule to follow on soon.
The real interesting part is they can.
Nominate additional molecules down the road.
Our formulation and continued development so the degree to which it could become a platform of products with <unk>.
Our formulation is very exciting.
And when you think about it each one of those molecules depending on if they take them forward into clinical development and eventual approval and commercialization. Each one comes with its own set of milestones and both development regulatory and commercial milestones as well as royalties.
So the eventual value could be very significant.
Got it thanks very helpful.
Thank you everyone. Our next question today comes from David Aslam with Piper Sandler. Please go ahead.
Hi. Thanks. This is skyler on for David first I was wondering can you talk about the kind of patients who are getting record labs are they mainly those with priority as you've never seen a ketoconazole can you just speak to the overall patient mix and then also what your view is on the potential commercial impact.
Of course next generation cortisol modulator Korlym and if you see that is posing a challenge to our korlym at all thanks.
Good morning, Scott I will take the second half first.
We don't expect the next generation anytime soon of course up product in.
One would expect that it would probably just cannibalize the product that they have we're not seeing that as an additional big competitor in the marketplace.
To your first question in terms of patient mix, we tried to hit that in our prepared remarks, we're very excited about the patient mix because it's not just patients coming from from Quito.
If patients coming from predominantly two areas one other products.
Very specifically korlym, because we have a product that is very effective at normalizing cortisol korlym doesn't do that.
And we've got.
Getting patients from <unk> and others.
The really exciting piece is about 30% of the patients were getting have not been on any drug that we are the first drug therapy post surgery that says physicians are more and more and very quickly. We're only a year into this that one year into experience with core lab physicians are using core lab's first line therapy that is <unk>.
Exciting.
So we think the patient mixes is surprisingly positive.
Did anticipate getting more of the uncontrolled or patients who have been through several products.
But the mix we're getting is is really good.
<unk> very well for the future of the drug.
Got it that's helpful. Thanks, so much.
Thank you Scott we have no further questions I would like to hand back to the management team for any closing remarks.
Thank you very much thanks, all for joining us.
What you heard today confirms once again, we have a durable business on its way to being self sustaining.
Through continued revenue growth careful allocation of resources and prudent expense management, we expect to hit cash flow breakeven in the fourth quarter and by achieving that milestone prove we can be self sustaining biopharmaceutical company I'd also like to take this time to thank all of our patients and caregivers for their support and also the <unk> team for the tire.
This work that they've done over the last several years through just about every headwind you can imagine we're very excited about our business and very excited about our future prospects. So thank you very much and have a great day.
Thank you for joining that concludes today's terrace, Playathons Holdings' first quarter financial results call have a great Matthew a day and you may now disconnect.
Connect.
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Yeah.
Yeah.