Hello, everyone, and welcome to the Xeris Biopharma's First Quarter 2024 Financial Results Conference Call and Webcast. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand the floor over to Allison Wey to begin the call. Please go ahead when you're ready.

Thank you, John (sic) (Seb). Good morning, and welcome to Xeris' First Quarter 2024 Financial Results Conference Call and Webcast. This morning, we issued our press release, which can be found on our website. We're joined this morning by Paul Edick, Chairman and CEO; and Steve Pieper, our CFO. After our prepared remarks, we'll open the line for questions. Before we begin, I would like to remind you that this call will contain forward-looking statements concerning the company's future expectations, plans, prospects and financial performance. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. For more information on such risks, please refer to our earnings press release and risk factors including in our SEC filings and our annual report on Form 10-K that will be filed following this call. Any forward-looking statements in this call represent our views only as of the date of this call and subject to applicable law. We disclaim any obligations to update such statements. I'll now turn the call over to Paul.

Thanks, Allison. Good morning, everyone, and thank you for joining us today. Let me start again by thanking everyone who contributed in some meaningful way to us delivering an outstanding quarter for the company, including the patients we serve, the health care providers we enable and the dedicated Xeris team that executes at a high level every day. The headline for today's call was 22% growth in total revenue versus last year, with momentum already building in the second quarter, giving us confidence to tighten our total revenue guidance, raising the bottom from $170 million to $175 million, making for a great start to 2024. At a high level, we have continued our strong commercial performance across all 3 of our products. Recorlev, Gvoke and Keveyis together grew net sales by a combined 25% in the first quarter compared to last year. On Monday, we announced another technology partnership entering into a new collaboration and license agreement with Beta Bionics. And you'll recall that in January, we announced Amgen had executed the exclusive worldwide license agreement to develop, manufacture and commercialize a subcutaneous formulation of TEPEZZA using our XeriJect technology in thyroid eye disease. I'm excited by the momentum we've already generated, the continued momentum into April, and I believe we're well positioned to deliver on all fronts in 2024. Let's start with the performance of our commercial products in the first quarter. We're going to start with Recorlev today. We grew Recorlev net sales to $10.6 million in the quarter, a 137% increase compared to last year. We're very excited with Recorlev's progress, driving a quarterly record of patient -- for patient referrals and converting those referrals into new patients on drug at a record pace. As patient referrals continue to grow, the underlying patient demand has shown increasing…

Thanks, Paul, and good morning, everyone. As Paul mentioned, we are off to a great start. All 3 of our commercial products grew revenue in the first quarter compared to last year. We ended the quarter with net product revenue of $40.3 million, a roughly 25% increase compared to last year, and total revenue of $40.6 million, a 22% increase compared to last year. Starting with Recorlev revenue, Recorlev net revenue was $10.6 million for the first quarter, a 137% increase compared to prior year, and an 8% increase from the fourth quarter 2023. This growth was primarily driven by the average number of patients on Recorlev increasing 139% from last year and 18% compared to the fourth quarter. We continue to be encouraged by the patient demand growth for Recorlev, which has been fueled by a consistently increasing pipeline of referrals, growing 93% compared to last year and 10% compared to the fourth quarter. Based off the early success of our fourth quarter Recorlev field expansion, and a strong start to the second quarter, we will continue to add field and patient support resources this year to drive revenue growth in 2024 and beyond. Moving to Keveyis, Keveyis net revenue for the quarter was $13.1 million, representing a 3% increase compared to the same period last year. Keveyis continues to be resilient and actually beat our internal estimate in the first quarter. Our strategy to invest in Keveyis and defend brand continues to be successful. Starting in the fourth quarter and continuing into the first quarter, we saw a slight decrease in patient demand due to generic pressure. However, this decrease was lower than we anticipated and was offset by an increase in pricing. Our patient referrals increased 27% compared to prior year and 35% compared to the fourth…

[Operator Instructions] The first question comes from Oren Livnat from H.C. Wainwright.

I got a couple. First, on the guidance. Can you just clarify, tightening up the bottom end, is that essentially maintaining your conservative assumptions on Keveyis, tightening up the bottom as it outperformed in Q1, but essentially continuing to assume a significant decline going forward from generic impact? And I have follow-ups.

Actually, Oren, it's Paul. The -- raising the bottom is being less conservative on Keveyis. We're pretty excited about what happened in the first quarter. It exceeded what we anticipated. And contrary to what we guided previously, we have said that we thought we'd get hit in the first quarter and some decline thereafter. The first quarter hit wasn't even close to what we thought, therefore, the decline will be a little bit less than what we thought. Still, there is some softening there, but we're very pleased with, and a little bit surprised by how resilient Keveyis is.

Yes, I would just add to that, Oren, that we're seeing that momentum really continue into Q2 as well across all of our brands, and that gives us confidence to raise the bottom end.

Great. And on levo, I think you said that you successfully completed Phase II, and I guess you're still waiting for a couple of months to see more data. Can you just remind us what you need to see? What does success entail? And is there any delay in -- I guess, seeing this data, is there anything to work through still at this point? Or is it just a matter of data crunch?

It's just a matter of data crunch. We've -- last patient, last visit, successful completion is, we hit the number of patients we needed. We've gotten everybody through the study. We've got all the patient records. Now it's a matter of just crunching through all the data. If you recall, the purpose of the study was to confirm the conversion ratio from oral to liquid. In our Phase I healthy volunteer study, that was a 4x conversion. This study is designed to confirm whether that is still the case when we do it at multiple doses or multiple different dosage levels in actual hypothyroid patients.

Can you say if there was any difference between healthy and thyroid patients at this point?

We have not gotten the top line data yet.

All right. Great. And just lastly, on Gvoke, thanks for quantifying that impact. I know you had already expected a little destocking this quarter, and it sounds like this cyberattack caused additional headwinds. Can you just say was that $3 million impact inclusive of normal seasonal destocking? Is that all in the sort of net impact of everything versus what sort of the underlying demand sales would have been that $3 million?

It's all in, yes. So it's the underlying demand, which you would see in scripts as well as wholesaler destocking, which was significantly more pronounced than we've historically seen. And the timing of it was pretty directly correlated with the timing of the cyber attack.

So going forward, should we -- I mean, obviously, the scripts look great. On top of that, should we expect some rebound and maybe stock in, in 2Q? And is there any hangover from net unit economics perspective in general? Like do you have to do additional or different patient assistance than you would normally be doing in 2Q to salvage patients that you might have lost or otherwise right to ship?

Yes. We don't have to do anything extra, we don't believe. The co-pay card is a pretty good barometer of what's going on with patients, and we're already starting to see it rebound. The -- whether or not we get back those prescriptions that may have been stacking up the pharmacies, we'll see. We believe we'll get some of them, but there may be a period of a little bit of increased abandonment. But if there was a prescription written for a patient, even if they don't pick up that one, they're probably going to get another one written. So we'll still get those patients.

Yes. And what I would say, Oren, to your first question around wholesaler inventory levels, I would say that, in total, our wholesalers are running at historically low inventory levels. Whether or not they build inventory up remains to be seen. We don't anticipate it going any lower, is what I would say. So no downside there, but if anything, potential for upside, but that really remains to be seen.

Our next question comes from Clarissa Ruiz from Leerink Partners.

So I wanted to ask about the collaboration with Beta Bionics. So what is the approximate time line to possible commercialization of this glucagon pump? And how big do you think that market opportunity could be?

Well, I think that is a little bit more of a question for Beta Bionics at the end of the day. What we've done is Beta Bionics, obviously, they've been in the process of developing a bi-hormonal pump that would provide with an algorithm that detects your insulin and detects your glucose and can give you a little bit of each as necessary. It really has been something that has been a pursuit in the control of -- in glycemic control for decades. They have perfected the pump, and they have it on the market with one hormone being the insulin component. Our deal will facilitate the second hormone. So we have the glucagon that is liquid-stable glucagon that can be put in the pump to facilitate further clinical development, Phase II, Phase III of the pump with both hormones. At some point, hopefully in the next few years with approval, it could be an important part of glycemic control for a lot of patients. Anybody that's on a pump today, could very well want to have a closed-loop system with 2 hormones included. So for us, it's an important partnership because it could mean for significant sales of our new different formulation of glucagon in the future.

Got it. That helps. And second question on Recorlev. It seems to be showing some really great traction. Could you talk about the weekly growth trends that you saw in patient referrals in the recent quarter? And if you're seeing anything going into second quarter, and what you expect for the rest of the year?

Yes. So I don't have the weekly data right here in front of me. We track it like a hawk, as you could imagine. But the growth in referrals has been outstanding. And April has been even more encouraging. We're not going to preview what April did, but if you -- sitting here today, April for both Recorlev and Keveyis and Gvoke for that matter, are all looking great.

Our next question comes from David Amsellem from Piper Sandler.

This is Schuyler on for David. First, on Recorlev, can you talk more about the patient footprint just what you're seeing from treatment naive versus experienced and thoughts on the trajectory? And just overall, how you're thinking about the addressable patient population in light of the Catalyst study data shows the prevalence of Cushing's might be much higher than previously understood?

Yes. Great questions. We believe that the addressable patient population is much larger than it's been -- than the way this category has been viewed historically without question. So we see that as a tremendous opportunity. To the first part of your question, we're getting patients who have been on other products. There's quite a bit of churn in this category as you would expect. And these are ill people. They have a lot going on. We are getting quite a few patients from Korlym, simply because our product normalizes cortisol. We don't just treat symptomatically. So that, we believe, gives us an advantage. But in essence, we're getting patients from across the board. And interestingly, physicians who've tried Recorlev are starting to use it first line. So we're getting drug-naive patients, which is early in the lifespan of a product in this kind of category, in this kind of rare disease to already be getting first-line patients. So we're very encouraged by that. And I think that's what's driving the referral pipeline to a large degree.

Great. That is helpful. And then just one more. How are you thinking about the overall growth of the glucagon rescue category, the underlying opportunity there? And what do you think would be some tailwind that will increase the penetration of the overall market?

The rescue category in glucagon, I didn't hear the first part of your question.

Yes, just the overall opportunity there and what you think will increase penetration of that market?

Yes. I mean if you look at what's going on, we've seen some fluctuation in the growth rate of the total market over time. But we fully expect it to get back to double-digit growth. Pre-pandemic, it was growing 25%, 30%. So there's good momentum there. What's even more important is regardless of the potential growth or the rate of growth of the overall market, which we're driving the majority of that growth, our share of new prescriptions is increasing dramatically. If you look at it, it's grown 5% or 6% in the last few months. So as the market growth increases, our share is increasing. So that all bodes really well for the future for Gvoke. And there are 15 million people out there, who need a rescue device and only 1 million actually have one. So there's tremendous opportunity.

Our next question comes from Chase Knickerbocker from Craig-Hallum.

This is Conor on for Chase. It seems like Keveyis continues to hold in there. Can you give us an update on the treatment from payors this year? Are we going to start seeing any forced switching to the generic?

We are seeing -- I mean we're not saying we've had no patient loss, we're seeing some patient loss, but payors are not forcing that conversion as aggressively as we had anticipated. We figured the opportunity with payor insurance resets in the first quarter, payors would take the opportunity to be pretty aggressive about forcing switch. It's just not happening as rapidly as we would have thought. The other thing we're seeing is a reasonably high percentage of patients, who are forced to go to a generic, are actually coming back. And a big part of that is they don't get the support services that they're used to. They don't have a patient mentor anymore. There's a lot that they're surrounded with when they're on the brand that helps support their sort of reentry into life that the generics don't provide. So yes, we're losing some, but we're getting quite a few of them back. And that is a part of the overall resilience that we're seeing, and Keveyis is performing a lot better than we had -- we've been pretty conservative in our 2024 guidance, not knowing what was really going to happen. And we've been a little surprised, but in a good way.

Great. And then maybe can you dive into what else is required for the Beta Bionics partnership on year-end? What do you need to get ready?

Our role is pretty simple. We will -- we are already starting to formulate the new version of glucagon, which will be very different than what is in Gvoke. It's a pump-specific glucagon that will be compatible with all of the components of a pump. We'll formulate that. We expect we can get that done this year. And then Beta Bionics will have to do some testing of their own to make -- to confirm whatever we give them. And then Beta Bionics will move into a Phase II program for the dual-hormone system and then on to a Phase III program, assuming success. That's all 100% Beta Bionics. We will support those programs through advice and consulting and helping them with drug studies and things like that because they're a device company more than they are a drug company. So we'll provide that support and advice in terms of the components of a drug trial. We will manufacture supply for both Phase II and Phase III. But beyond that, we get a low double-digit royalty, and we get a markup on supply, and we'll continue to support them well into commercialization.

Our next question comes from Rohan Mehta from Oppenheimer.

This is Rohan on for Leland Gereshell. Just a couple from me. When you think about the subcu levo opportunity, how are you viewing possible paths forward with respect to either developing the drug in house or maybe engaging in some performance collaboration?

We're open to both. We have the capabilities to develop it in-house, and we believe that we have the financial resources in the future, especially as our commercial assets grow and start to deliver more cash to the balance sheet. We can develop it. By the time it's ready for commercialization, our organization will be more than capable of launching it commercially. That doesn't obviate the potential for a partner not to get it done, but to make it a bigger drug than we would ourselves. We see the segment of patients for whom this would be a perfect option, those who are not getting good absorption, people who have dramatically variable blood levels, people who can't tolerate the oral in the gastrointestinal tract, we think that's about a 25% segment of the overall population, which, even at today's prices, regardless of future prices, could be a $2 billion segment. So we think it's a huge opportunity. And if we choose to partner, it would be for the purposes of making it even bigger.

Got it. And with respect to the Regeneron partnership, should we expect to see any updates this year and maybe anything else on the business development front?

We're always active on the business development front. It took us a while to get the Beta Bionics deal done. We're always talking to people about our technologies it's -- and we're having more and more companies approach us as we do more with that end of the business. Regeneron, I think I already said in my comments, they're -- over the next 6 months, they're doing their stability work. I don't expect any announcements this year from that.

Our next question is a follow-up from Oren Livnat at H.C. Wainwright.

I just want to follow-up on Recorlev. It outperformed a bit our expectations on patients and sales. But I'm curious what you're seeing regarding ongoing up titration of dose -- dose trends over time for longer-term patients now and new patients, obviously that's an important part of the long-term potential of the product? And also, can you expand a bit on -- I think you mentioned the incremental investments you're making this year behind that. Are those mostly on the hub and market access services? Or are you actually putting more reps in the field to broaden or deepen the field presence?

So thanks, Oren. There's like about 3 or 4 in there. The -- so let me start with dose titration. The -- so we are seeing up titration on an individual patient basis. However, we're adding new patients so quickly at the low end, at the starting dose, that the average dose per patient is not moving that fast, because we're adding so many patients so quickly at the point of entry, at the starting dose. Over time, with a larger subset of patients, we'll start to see more impact on the revenue base based on up titration, but that's a ways off. In terms of adding resources, we're adding to the patient support services, and we continue to add a little bit at a time to the field force. We don't want to disrupt the field force, but we will continue to add 10, 15 reps to the field force. We would like to, over time, get up to the 50, 60 range to be -- because the opportunity is just so big.

So how many reps you have now? I'm sorry.

I'm looking at John Shannon to see if I could get this answer, 28, I believe.

Yes, 28 now.

28 as of today. We will add another...

10 to 15.

Yes.

Over time.

Yes.

Okay.

Over the next couple of quarters.

Our next question comes from Kelly Close -- sorry, next question is from Kelly Close.

New CDC data came out earlier this year showing -- from the national diabetes statistics report showing that severe hypo events landing people in the hospital have dropped to 200,000 from closer to 240,000, the last time the data was given. So thank you so much for this. You've had a big impact in this as probably on AID as well. I was just wondering if you could talk about 25% of those people were still admitted to the hospital. It does seem like this number should be 0 going to the hospital. The DKA numbers have gone up, but what else can be done? What else would you like to see in terms of partnerships, maybe philanthropic, maybe other corporate partnerships? This obviously, people -- this number going into the hospital could still change dramatically.

Kelly, thanks a lot. We really appreciate the question. And I do believe we're having an impact. I do believe more people with ready-to-use rescue devices such as Gvoke, HypoPen -- it's going to have an impact. You're absolutely correct. The most important thing that we're trying to focus on right now and have been for a while is getting the health care professionals to really reengage whenever they write a prescription for insulin or sulfonylurea, they should absolutely co-prescribe a Gvoke or a ready-to-use rescue product. It should be mandatory. When you look at the allergy category, if you've got a severe allergy and you don't get a HypoPen, that would be a rare situation. This is an equally life-threatening situation. People are still going to the ER, still getting admitted to the hospital. There are still mortality associated with this, as you know. It is really the job of the health care professional to automatically or make sure it's standing orders in their office prescribe Gvoke, HypoPen whenever they prescribe insulin. That's number one. And number two, I think the community needs to continue to be motivated to say, that could be me. Even if you've been perfectly managing your condition for decades, it can happen to anybody. So those are the 2 things we need to do.

Yes. Thank you so much. I know we're all just really grateful to all of the clinicians, who are really overworked also. So also questions coming from the patient community and so forth, I think it would also be really helpful. And that also seems doable. So thank you very, very much for all of your incredible impact.

Thank you. We appreciate it.

We have no further questions on the call. So I hand the floor back to Paul Edick for closing remarks.

Thank you. As you heard, we've delivered another growth -- quarter of growth, and are very proud of our performance to date. We expect the momentum to continue in the balance of 2024. We've seen a tremendous acceleration in April, and we look forward to another year of growing in enterprise, which we can all be very proud of.

This concludes the conference call. Thank you all very much for joining.