Xeris Biopharma Holdings, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Commercial Success: Record-breaking quarter with total revenue over $54 million and product revenue nearly $53 million. 12th consecutive quarter of over 20% product revenue growth. Recorlev saw 126% increase in new patient starts, Gvoke had 29% revenue growth, Keveyis remains durable despite generic competition.
• Pipeline Advancements: XP8121, the once-weekly Subcu Levothyroxine, had positive Phase 2 clinical data, initiated FDA discussions for Phase 3 registrational program. Technology partner programs progressing as per agreements.
• Strategic Priorities: Focus on rapid commercial growth, financial discipline with strong balance sheet, and enhanced transparency. Raised total revenue guidance to $198M-$202M from $190M-$200M.

Segment Performance

• Recorlev: Q3 2024 net revenue was $17.7 million, with YTD net revenue of $41.7 million, both more than doubling compared to prior year periods. Sequential growth was over $4 million from Q2. Driven by record new referrals and a 126% increase in new patient starts. Revenue contribution: significant, with targeted commercial investments accelerating growth.
• Gvoke: Q3 2024 net revenue was $22.9 million, YTD $59.6 million, representing a 29% and 23% increase compared to the same periods last year. Growth primarily driven by an increase in total prescriptions, with new prescription market share at over 37%.
• Keveyis: Q3 2024 net revenue was $12.2 million, YTD $38.4 million. Modest increase in patients, but impacted by generic competitive pressure leading to a modest negative impact to net pricing.

Guidance

• Raised total revenue guidance to $198 million to $202 million from the previous $190 million to $200 million.
• Confident in continuing growth driven by strong product performance of Recorlev, Gvoke, and Keveyis, along with pipeline advancements of XP8121.

Risks

• Cost of goods sold as a percent of total product revenue increased, with a $3.6 million write-off of Gvoke components due to manufacturing process changes.
• Generic competition impacting Keveyis net pricing.
• Uncertainties in pipeline development timelines and market adoption of new products.

Question and Answer Q: Good morning. Thanks for taking the questions, and congrats on a really great quarter here. John, maybe just first, help us think about kind of the specific drivers for Recorlev, and specifically, obviously within your business, kind of peel back the curtain a little bit for us on kind of what you see as market growth here and what you see as kind of specific, your team's execution. And kind of talk a little bit about the pipeline kind of entering Q4, because seemingly, this market it has a really attractive growth profile from here. And I think investors can think that this inflection sort of continues. Just kind of speak to your confidence level there.

A: Yeah, I think I really kind of think about this as tailwinds in terms of the market growth. And we're riding on that with a product that is, Recorlev, is a great product if you really want to normalize cortisol and inhibit cortisol production, right, and maintain that. So we're riding on that market expansion in that respect. And our success is really driven by our team of people out there identifying these people with hypercortisolemia, who have Cushing's, as well as our patient access people who are really helping them get them started. So as you hear in my script, and as we've talked a lot about, we're filling the top of the pipeline with referrals, and we're getting better and better at pulling those referrals into new patient starts. So those two aspects are 100% driven by our team and our support services out in the field.

Q: Hey, thanks for taking my question, and great execution on another quarter here. Just a question on the P&L, the cost of goods seeded after you back out that $3.6 million from the Gvoke write-off. Looks like the gross margin may have been a little bit lesser than it had been earlier this year. Just wondering if you can comment. I wish to think about that maybe through the fourth quarter and going forward. Thanks.

A: Yeah, I would say the write-off in the third quarter was, just the size of it was probably a little bit higher. But I think as a biopharmaceutical company that has particularly with Gvoke, with the supply chain, you have write-offs from time-to-time. We don't anticipate the same degree of write-off in the fourth quarter. And I think, look, we don't comment typically specifically on product level gross margin. But look, I think it's fair to assume that as we continue to sell more Recorlev, that that should improve our overall gross margin. So, on balance, we look at it as healthy gross margins north of 80%, and we should continue to remain in that spot.

Q: Sorry, I just got on mute there. Thank you. On Recorlev, a really impressive growth year-over-year. Can you talk more about the moving parts within that year-over-year and sequential growth? Maybe some of the pushes and pulls with regards to average dose versus gross to nets? I know there was a price increase in the July, yet net sales were just slightly lower than the total patient growth year-over-year. I'm just curious if that's just a lumpiness in terms of timing of pull-through or payer dynamics? And I have a follow-up.

A: It's not payer dynamics. And the other parameters you were asking about is things like dose, things like persistence and things like that are all still similar and same. What's really driving Recorlev growth right now is adding new patients at the top of the funnel and pulling them through to new patient starts. I can't emphasize that enough. That's the game right now, and that's where we're really having great success. Over time, some of those other things are going to move. But when you are adding new patients so quickly Oren, and physicians start low and go slow in terms of raising things up, dosing and things like that are going to take time to come up and that's fine. Our goal right now is to get the patients on and get them started, get them referred and get them started.

Q: Hey, good morning. This is Nik Gasic on for Roanna. Thanks for taking our questions. Maybe first on Recorlev. I'm curious what the outlook is on salesforce expansion going forward and whether you'd continue to add more reps from here. And then could you also comment on how long it's taking physicians to try to treat patients to stable doses in the real world? And if any sense around where the doses land in relative to the maintenance doses you looked at in clinical trials?

A: Let me start with the last one. We're not at the doses, and we've been really clear on that, because clinicians are starting low and going slow. So we're definitely at lower dosing. We're getting – physicians are finding really strong results in treating their patients. I don't know how long it'll take to ever get up to that level, but again, the reason it's going to stay low for some period of time is because of the new patients we're bringing on. And again, they are coming in at low doses and being titrated up. So, as long as our rates of, what do we say, 126% increase in new starts, that's going to drive that number down, keep that number where it's at for some period of time. What was the other part of it? Expansion. You know what, we had great foresight as we were looking at what's going on in the market and made two expansions over the last nine months in order to meet that demand, and I think we got it. I think we're in a good spot right now, so. But I can tell you that if things continue to accelerate at levels that even exceed our expectations, it's a good place for us to invest in terms of driving the growth of this product and getting more and more people on Recorlev, which is really what that expansion would drive.

Q: Hey, thanks. And I joined late, so sorry if you had addressed these two questions. One, can you just talk about how you are thinking about the trajectory of Keveyis longer term, just given the competitive landscape? So, that's number one. Just high-level, your thoughts about the sustainability of that product. And then number two, just a big-picture question on the Cushing space. We've seen a lot of acceleration in Mifepristone [ph] sales, and there are, of course, other products that are in development, such as Relacorilant. You also have Prenetics with an asset in development, that's further downstream. But I guess the question here is how concerned are you about other modalities potentially creating more in the way of noise for Recorlev longer term? Thanks.

A: Yeah, let me answer Keveyis first, and I think we've said this the last two quarters. We have a lot of confidence in the durability of Keveyis. And the way you look at this and measure when you've got generic competition is can you continue to keep patients? Do patients come back, go generic and come back? And can you continue to find new patients and get them started on brand? So it's about patients, and it's about what's being reimbursed at the pharmacy level and how that impacts. And what we've been saying for at least the last two quarters now is that we can keep the patients. And in some cases, we're slightly growing the patient. So we're maintaining our patient base by, again, bringing on news and some people coming back. So we're maintaining at that level. Getting some pressure on the price, which we saw in the numbers this quarter, and that's just a result of pricing pressures down to the pharmacy level, that on reimbursement by the payer. So we're seeing a little bit of pressure. We think that – we think again, it's durable. There are people – the value of Keveyis is all the support services around it, and that's deeply valued by not only the patients, but the healthcare providers. And that's why we are – why this brand is being so durable. We think it can be and continue to be durable. If more and more generics come out and come after it, you know I don't know, but I can tell you right now that, right now we're winning that fight on behalf of the patients. Recorlev, I think all this activity in the space is good. I mean, you heard me refer to it as tailwinds. What's going on with respect to recognizing cortisol as a culprit in things like resistant diabetes, in resistant obesity, in Cushing's, all of these areas are good for our Recorlev brand. Recorlev is in our opinion, one of the best at inhibiting the synthesis of cortisol, and that's really the end game here, is can you inhibit that cortisol level and really help the patients. And that really will drive kind of managing the comorbidities of hypercortisolemia and Cushing's. So I think it's all good. Happy to have it. We benefit from it, because it brings a lot more awareness to testing, and that's a good spot for us.