Ladies and gentlemen, thank you for standing by. And welcome to today's Xeris Pharmaceuticals Fourth Quarter Final Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker, Allison Wey, Senior Vice President of Investor Relations. Please, go ahead.

Thank you, Mae. Good morning and welcome to Xeris' Pharmaceuticals fourth quarter and full year 2020 financial results and corporate update conference call. A press release with the company's fourth quarter and full year 2020 results was issued earlier this morning and can be found on our website. We are joined this morning by Paul Edick, Chairman and CEO; and Barry Deutsch, CFO. Paul will provide opening remarks, Barry will provide details on our financial results, and then we will open the line for Q&A. Before we begin, I'd like to remind you that this call will contain forward-looking statements concerning the impact of COVID-19 on Xeris' business practices, Xeris' future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy and performance, which constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. 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 the U.S. and global markets, Xeris' business, financial condition, operations, clinical trials and third-party suppliers and manufacturers, and other risks factors including 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 of any subsequent date. We specifically disclaim any obligations to update such statements. Now, I'll turn the call over to Paul.

Thank you, Allison, and thank you everybody for joining us today. I hope you and yours have been able to stay safe and healthy during these challenging times. My headline for you today regarding Xeris performance in 2020 and the fourth quarter in particular, is that I believe we achieved a great deal, and performed very successfully in the face of multiple headwinds. I couldn't be more pleased or proud of the efforts of the entire Xeris team, which enabled us to make great progress throughout 2020 and positioned us well for a very strong 2021. And they did so, despite the year long pandemic, which continued to strengthen in the fourth quarter, into the first quarter of 2021, periods of civil unrest and nature periodically being hacked. The consistent growth of Gvoke Pre-Filled Syringe and the work done to get tremendous unrestricted payer coverage in the first half of 2020, set us up for a great start to the Gvoke HypoPen launch in July, and you will hear continued growth in the early stages of the launch during the fourth quarter and into the first quarter of 2021. I'd like to first point out some of the fourth quarter highlights and recent developments. In the fourth quarter, we grew Gvoke prescriptions 11%, while the glucagon market actually declined as a function of normal seasonality of the market in the fourth quarter and the unusual impact of the resurgent pandemic. We'll talk a little bit more about that later in my remarks. In the fourth quarter, we recorded $7.1 million in net sales, which brought us to over $20 million for the full year. Given the unusual circumstances and 100% virtual nature of our sales effort during the year, we consider this to be a very positive start to our…

Thanks, Paul. We commercially launched Gvoke prefilled syringe and Gvoke HypoPen, the treatment of severe hyperglycemia in people with diabetes in November 2019 and July 2020, respectively. Total net sales of Gvoke were $7.1 million and $1.6 million for the fourth quarters ended December 31, 2020 and 2019 respectively. Net sales for Gvoke were $20.2 million and $1.6 million for the years ended December 31, 2020 and 2019 respectively. Net sales represent gross product sales less estimated allowances for patient copay assistance programs such as the $0 copay program implemented during the COVID-19 pandemic, prompt payment and other discounts, air rebates, chargeback, product returns, all of which are recording at the time of sale – particular wholesaler or other customer. We apply significant judgments and estimates in determining some of these allowances. As Gvoke is the first product we have launched, we have limited history with regard to these allowances and will continually refine our estimates moving forward as more information becomes available. Cost of good sold was $3.4 million for the quarter ended December 31, 2020, which included $0.7 million related to excess and obsolete inventory for the quarter ended December 31, 2019 cost of goods sold was $1.6 million. Cost of good sold was $9.3 million for the year ended December 31, 2020, which included $2.3 million related to excess and obsolete inventory and under absorb overhead costs of $1.5 million. For the year ended December 31, 2019, cost of goods sold was $1.6 million, which included under absorbed overhead costs $0.6 million. Manufacturing costs for Gvoke incurred prior to approval and initial commercialization were expensed as incurred as research and development expense. Total operating expenses were $23.1 million and $94.7 million, respectively for the quarter and full year ended December 31, 2020, compared to $33.1 million and…

Thanks Barry. In conclusion, we had an impressive year in spite of the challenges 2020 represent -- presented to us. In 2021, we still expect to steadily grow demand for the Gvoke brand, as I said previously, continue to seek development in commercialization partners for our pipeline programs. As I said, advanced ready-to-use glucagon for prevention of hypoglycemia prepared to partner or launch in Europe, and continue to advance our technology platforms through external partnerships. We're looking forward to another year of progress and success in 2021. And I will now ask the operator to open it up for questions.

[Operator Instructions] Your first question is from David Amsellem with Piper Sandler. Your line is open.

Thanks. So, just a few here. When you talk about unrestricted access to Gvoke, can you just elaborate, I mean, is there -- have you seen any kind of -- does that mean hassle free, are there any real prior ops, utilization, management, how should we think about that? That's number one. And then secondly, can you elaborate on the 40 -- additional 40 reps and how many doctors they're targeting and sort of how are you envisioning the role of the expanded sales organization? And then lastly, in terms of the trajectory of Gvoke, can you talk about where inventory levels stand right now? And if we should think any more destocking pressure if at all in the first quarter? Thanks.

Thanks David. Unrestricted access, I'll take that one first. Unrestricted, non-restricted, no prior authorizations, there's no step at it. There's nothing to get in the way of a patient's ability to get Gvoke -- to get 80% or better is about as good as you can do in the industry in just about any therapeutic category. Rarely will do we see upwards of 90% unrestricted coverage. There are some small plans that just require prior authorizations as a matter of course. So, that's almost as good as it gets. In terms of the additional representatives, these are inside sales only. They're 100% virtual, a lot less expensive, and they are either on the phone, on their computers, emailing, doing FaceTime, doing Zoom calls, doing teams calls. And they're a combination of either they cover their own white-space places where we don't have regular field rep, or they're partnered with two or three of the field reps to cover additional -- to get more breadth and depth of coverage in our -- in the field. I think we're moving from somewhere in the neighborhood of 11,000 to 12,000 targets, with these additional people we can get upwards of 30,000 to 40,000 targets that we can get to by phone or email. And then in terms of the trajectory of wholesale inventories, I think we saw a fairly significant buy in at the beginning of the Gvoke HypoPen launch. That's worked itself down in the fourth quarter, probably will work its way the rest through in the first quarter, and then we should see things start to get back to normal.

Okay, that's helpful. Thanks.

Your next question comes from Ami Fadia with SVB Leerink.

Hi. Can you hear me, okay?

Yes.

Okay, great. Thank you. Maybe just a follow-up from the previous question. Can you just give us a sense of whether the inventory levels are more in line with where the demand is at, or do you simply think that there would be some destocking in the channel before we get to kind of a more of a steady state? And just separately with regard to the pipeline, it seems like the update that you gave with regards to the PBH and EIH, Exercise-Induced Hypoglycemia type of incremental updates that do you intend to initiate a study for at least one of the two, do you think you have been implemented Bariatric from the FDA and what to do there?

Ami, you were breaking up a little bit, but let me try to answer the second part first. Our discussions with the FDA on Post-Bariatric Hypoglycemia and Exercise-Induced Hypoglycemia have gone quite well. We're in the final stages of trying to get alignment on what the Phase 3 program will look like for both. Our preference, as we've said before, is probably to take the Exercise-Induced Hypoglycemia program forward. It is potentially most straightforward study that we could do. And we'll make that decision in the second quarter. As far as inventory, I wouldn't describe it as a large amount of inventory, it let us way through in the fourth quarter and a little bit into the first quarter. We should get back to them tracking pretty equally by the end of the quarter – this quarter. As you know, IQVIA is still understates units anywhere from 20% to 50%. And until we have more history and more buying history, that gap is not going to narrow, but it will narrow over time.

Okay, great. Well, I have one more question. You obviously put in more insulin first on the marketing front and you've indicated that ultimately the growth, the significant potential in this market will come from overall market expansion. Can you talk about what you are doing to drive that as the economy sort of opens up and as physicians visits start to come back?

Yeah. As we've said in the past, if you talk to endocrinologist during the pandemic, they're really focused on a small number of things. They're focused on making sure insulin patients are actually getting their insulin. That's the most important thing. They're focused on making sure that if they've got a CGM, they're paying attention to CGM. They're focused on the people with pumps. They're just not initiating a lot of new anything, as there is very much maintenance mode, trying to take care of patients. And if you can imagine the person with diabetes, there's 10 things at least that the physician has to talk to them about. And now they've got to do a lot of that virtually. If you go back in time to pre-pandemic, when Lily and us were out detailing actively face to face with physicians, you saw double-digit growth in the market. And it was almost 100% new to glucagon. So we fully expect that as we get back out into the field, hopefully, late second quarter, early third quarter, that we'll be face to face with healthcare professionals again, and some of that market growth will continue. Right now, most of the change and most of our growth has been converting the legacy kits. That's been the easiest thing to do when you can't get physicians to do something new.

Got it. Thank you.

Your next question is from Randall Stanicky with RBC. Your line is open.

Great, thanks. Yeah. Hey Paul, just a more specific follow-up to the prior question. Do you expect -- once the pandemic lift, do you expect the market to go back to where it was pre-pandemic, or could there be some catch up and greater expansion and particularly ahead of the back-to-school season in late summer? That's number one. Number two, how are you guys thinking about the impact on pricing from Amphastar Generic Glucagon Emergency Kit. And then also with Zealands product coming in potentially later this month, I think you’ve talked in the past about more voices in the market is good. But is there a price dynamic that we should be thinking about there as well? Thanks.

Thanks, Randall. In terms of the market, assuming that we and Lilly are both back out talking to physicians and helping them understand why, and it's been interesting both companies, our primary message has been, patients who are on insulin are at-risk for low blood sugar and severe low blood sugar, and new ready-to-use options are now available and patients should have it. As long as both companies including Zealand, if that's our message, there are six million people who don't have glucagon handy. So we would fully expect the same kind of dynamic that we saw when -- before the pandemic would reignite. Assuming that's the case, assuming we're all back out talking to doctors again, what you saw in late 2019 in the first couple months of 2020 was a low double digit growth turned into a mid teens growth, turned into a low 20% growth, and by March, it was at 27% and accelerating. So we would expect the same thing to happen post-pandemic. Including, as far as back-to-school is concerned, I think it's going to be really hard for schools not to reopen. So we're expecting that the majority of schools are going to be open again, comes up, August, September. We're anticipating that if that's the case, we'll have a more normal back-to-school period. So that's very encouraging. As far as the new generic, I guess, the only way to answer that is, the kids have been generic forever. You've got Lilly, you've got Novo spend the same kit; it's always been the same price. I think if there's going to be an impact of the most recent generic, it's going to be on Lilly and Novo, it's not going to be, I don't think, it's going to have much effective any on the new ready-to-use products. And yes, I do believe that if Zealand enters the market and is focused on positioning their products for patients and positioning their product for the 6 million patients who don't have glucagon. Physicians will then have multiple options for making sure that patients who are at risk for severe hypo have some form of glucagon, some form of ready-to-use glucagon. And in that situation, we believe that Gvoke HypoPen is the best option available.

Great. Thanks.

[Operator Instructions] Your next question is from Difei Yang with Mizuho Group. Your line is open.

Good morning. Thanks for taking my question. Just on the phase 3 program for exercise induced hyperglycemia, would you talk a bit about the anticipated duration of this phase 3? A – Paul Edick: Difei, I think the kind of trials we're looking at in phase 3 probably at least 18 months beginning to end, it depends on the final patient numbers, it depends on recruitment rates. So, I wouldn't see us finishing that program inside of two years.

Okay. Thank you. Then separate question on the convertible debt. There's -- there are still convertible debts outstanding, do you have plans to convert them when the time's right? A – Paul Edick: So I -- we, there is still a big chunk of that convert out there, we have no plans at the moment to try to equities them. The conversion date is still a couple years away. So we've got plenty of time to decide what to do with those. And by the way on your first question on the exercise study, if we get to a final with the FDA sometimes in the second quarter, we couldn't even get a study started before the fourth quarter, so it's going to take a little time.

Okay. Thank you, Paul for the clarification.

Our next question is from Jim [indiscernible] Capital. Your line is open. Q – Unidentified Analyst: Good morning. Thank you. Just following up on a prior call in regards to the convertible debt. What led you to equities the initial fees of what preclude you from doing the remainder, it seems like the stock continues to be shorted against that convertible constantly on direct show list, would appreciate your comments on that? A – Paul Edick: Yeah. There were several factors, Jim. The short position on our stock, if you're -- if you were following it, obviously you were -- our stock price went up pretty aggressively, shortly after the convertible deal was done. That made it -- so that the borrow in our stock was quite high. We had a number of bondholders, who approached us to convert or to equitize just on their own. As a result of that, we reached out to a few of the larger holders to see if they wanted to equitize early on -- at rates that we thought were preferable to the company. Several of them chose to do that, because once again the borrow was so high and remained high. So, -- but at the end of the day, they -- a lot of those bondholders did well. The people who are currently holding, they are in the money. So, it wasn't something we set out to do. It sort of came to us by way of the dynamics of the marketplace. The short position was high, the borrow was high, just circumstance.

Thank you.

We have no further questions. At this time, I turn the call back to Paul Edick for closing remarks.

Well, I'd like to say thank you to everyone for listening. We appreciate you paying attention. We appreciate your interest in the company and your investments in the company. And we look forward to discussions again in the future. Thank you very much.

This concludes today's conference call. You may now disconnect.