Hello, and welcome to today’s Xeris Biopharma’s Second Quarter 2022 Financial Results Conference Call. My name is Aliet and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to Allison Wey, Senior Vice President of Investor Relations and Corporate Communications. The floor is yours. please go ahead.

Thank you, Aliet. Good morning and welcome to Xeris Biopharma's second quarter 2022 financial results and corporate update conference call and webcast. A press release with the company's second quarter 2022 financial 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 Steve Pieper, our CFO. Paul will provide opening remarks, Steve will provide details on our financial results and then, we will open up the call for questions. Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Xeris’ business practices, Xeris’ future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy, performance, and the impact of COVID-19 on Xeris’ business practices, 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 risk 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. I will now turn the call over to Paul.

Thanks, Allison. Good morning to everybody, and thank you for joining us today. This morning, I want to start with a brief look at what we're trying to build at Xeris. The most important lesson that we've learned as a team in building companies over the years is to know what you are, what you want to be and to execute with absolute clarity. Our goal at the beginning and end of each day is to build a substantial patient centric, profitable, biopharma enterprise with multiple products in multiple therapeutic areas, a targeted development pipeline with promise and value-added partnerships on our unique technologies. With the commercial launch of Gvoke, the acquisition of Strongbridge, the addition of the commercial team for Keveyis, the subsequent launch of Recorlev and the increasing difficult hurdles of cost and complexity in advancing numerous Phase 2 development assets simultaneously, who we are as a company has clearly had to evolve. Where we were once a technology based 505(b)(2) development company, we are now an all-in commercial execution company. That is not to say we are walking away from our unique formulation technologies or product development at all. However, once we cross the line into being a commercial business, our focus absolutely has to be on predominantly on commercial success. Other aspects of the enterprise in turn are scrutinized more harshly in our internal prioritization process. Where once upon a time we had a goal of becoming a fully capable pharma company with equal emphasis on development and commercial, we have evolved to a commercially-driven biopharma company, selling differentiated and innovative products across a range of therapeutic areas. We continue development of a limited number of assets with our unique formulation capabilities and we will take them forward if they prove uniquely differentiated, additionally valuable and…

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 Gvoke and Keveyis and patient starts on therapy for Recorlev. Breaking it down by product, Gvoke 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 Gvoke 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 net pricing. Let me provide more context on the decrease in net pricing for Gvoke 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 Gvoke, 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 Gvoke demand to continue to grow and we expect the net pricing to begin to…

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 will now take questions.

Thank you for our Q&A. [Operator Instructions] Our first question comes from Roanna Ruiz from SVB Securities. Your line is open. Please go ahead.

Great. Good morning, everyone. So two quick questions for me: first on Gvoke, 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 3Q or create normalized?

Yes. So, Roanna, the impact -- there's a couple of things, if we look at it just from quarter-over-quarter perspective, a couple of things were going on there. So 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 $1 million, so that impacted the quarter-over-quarter growth. That's included in our Gvoke line. And then in terms of our net pricing, just to remind everybody, 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 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 balance around a couple percentage points, but nothing material.

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

Hey, Roanna, it's Paul. And I may ask John Shannon to help me with this question, because he is little closer to it. The -- 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 the clinical study, it's very prescribed and controlled and patients return to the office is 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 offices 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 had anticipated, but it's one quarter.

Great, helpful. Thanks.

Our next question comes from Oren Livnat from H.C. Wainwright. Your line is open.

Thanks. I have a couple of 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 and further, what sort of renewal requirements are you seeing or expecting to see on those prescriptions, you know, for some drugs? Insurance companies require every month to be authorized. Are you seeing that? Or are they getting chronic, sort of, indefinite authorization and coverage? And I have a Gvoke follow-up.

Yes. I'll start from the end, Oren 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 going to disclose patient numbers. We think that's competitive thing that we don't want our competitors to know where we are, we'll continue to give you dollars. We're seeing rapid increase in referrals and we're seeing referrals convert to patients on drug at an increasing rate.

Okay. That's encouraging. And I meant Keveyis follow-up actually. Impressive quarter up nicely quarter-over-quarter and you said a couple of times in the script you emphasized that you're looking to maintain and grow this franchise. And I think the general consensus expectation for this product is erosion starting next year. And I'm wondering if you have any updated thoughts on the potential timing and/or impact of any competition? Are you in fact investing more behind this product for a longer runway in your view?

The answer to your question at the end is yes. We are investing more behind the product in anticipation of a healthy runway. We haven't seen any evidence that there is any competitive product coming. We haven't seen evidence of a generic. And as we've said repeatedly, we believe that we can maintain and grow 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. Patients are hard to find. We're the only ones finding them up to end including our own authorized generic if at some point we feel that's necessary. So we bought the company and knowing full well that Keveyis was going to lose exclusivity and we believe we could grow the product.

Thank you. Appreciate the color.

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

Thanks. So just had a couple, so can you just talk anecdotally about what you're hearing in the field from practitioners about Recorlev. And, you know, specifically, you know, where patients are coming from or they switches from the racemic, ketoconazole, and are they de novo patients? And just overall receptivity, that's number one. Number two is as we think about Gvoke in a longer term, what's your view on 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 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 Recorlev. The receptivity to Recorlev 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 doctors see this as a valuable and alternative that they're eager to use. So we're very pleased with very early days. We're basically one quarter of actual selling. Moving on to Gvoke. 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 a dip 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 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. And as we've all discussed, those kits are almost impossible to use. 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 [indiscernible] category. I mean, we're happy to see it.

Okay. And that's helpful. For me just seek in a follow-up. Just regarding that discontinuation, I mean, do you think that's more of a function of the fact that Amphastar has a generic and Lilly's kit is the reference was the drug? Or do you think it's really about 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 they're ready-to-use. At the end of the day, Lilly is the reference product for the generic, so I don't see how the Amphastar product can continue to grow. I think it's going to decline. Our perspective is Novo and Amphastar should withdraw theirs and discontinue distribution of theirs as well. They're not good for patients.

Okay. 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.

This call is now concluded. We'd like to thank for your participation.