Hello and welcome to the Xeris Biopharma Third Quarter 2024 Financial Results Conference Call. My name is Harry and I'll be your operator today. All lines are currently in listen-only mode and there'll be an opportunity for Q&A after management's prepared remarks. [Operator Instructions]. I would now like to hand the conference over to Allison Wey, Senior Vice President of Investor Relations and Corporate Communications. Thank you, please go ahead.

Thank you, Harry, and good morning. We appreciate you joining our third quarter results call today. I'm joined by John Shannon, our CEO; and Steve Pieper, our CFO. This morning we issued a press release with our detailed results which can be found on our website. After our prepared remarks, we will 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 Release and Risk Factors included in our SEC filing. Any forward-looking statements in this call represent our views only as the date of this call and subject to applicable law. We disclaim any obligations to update such statements. Let me now pass the call over to John.

Thanks Alison and good morning everyone. I'm excited and proud to report another record-breaking quarter with total revenue of over $54 million and product revenue of nearly $53 million, led by strong demand of Recorlev and Gvoke. Our product revenue growth of 27% marks the 12th consecutive quarter of over 20% growth. That's right, 12 quarters in a row of over 20% growth, with the last two quarters accelerating to 26% and now 27% respectively. The entire Xeris team is focused on driving growth, and I'm so proud to see them executing on all fronts. In addition to our outstanding commercial success, we also significantly advanced our lead pipeline product, XP8121, our once-weekly Subcu Levothyroxine, and executed as planned on all of our technology partner programs. Over the last several months, our primary focus has been executing the three strategic priorities I outlined back in August. When I became CEO, as a reminder, these priorities are, first, the rapid and sustained growth of our commercial franchises; second, enhancing our financial discipline while ensuring we maintain a strong balance sheet to fund our strategic growth investments; and third, enhancing our communications and transparency with you, our stakeholders. So, let's get in how we're doing, starting with priority one. I'm pleased to report another record quarter of product sales, hallmarked by the accelerating growth of Recorlev, the ongoing rapid growth of Gvoke, and the continuing durability of our Keveyis brand. Across all three products, the commercial team continued to execute our plans, resulting in a 27% product revenue growth this quarter compared to Q3 last year. Looking specifically at each of our products. In line with Recorlev's best-in-class profile, we saw a record number of new referrals in the third quarter. In addition, the team has been focused on ensuring the smoothest…

Thanks, John, and good morning, everyone. As John highlighted earlier, we are very pleased with our third quarter results and the positive momentum we are seeing with our business. We ended Q3 with net product revenue of $52.9 million and total revenue of $54.3 million, increasing by approximately 27% and 12% respectively compared to prior year. This marks the 12th consecutive quarter with greater than 20% product revenue growth. On a year-to-date basis, net product revenue was $139.6 million and total revenue was $143 million, increasing by approximately 26% and 20% respectively compared to prior year. Remember that last year in the third quarter, we recognized $6 million for achieving the pre-specified target product profile milestone from Horizon. Excluding that non-recurring item, total revenue increased by 28% and 26% for the quarter and year-to-date versus prior year. Moving to our products. We are excited by the acceleration we are seeing from Recorlev. For the quarter, Recorlev net revenue was $17.7 million and for the year was $41.7 million, both more than doubling compared to prior year periods. On a sequential basis, Recorlev net revenue increased by over $4 million compared to Q2. For reference, last quarter, Recorlev net revenue increased by $2.7 million compared to the first quarter. This acceleration quarter-over-quarter is a result of our growing pipeline of referrals and our ability to convert them into more patients on Recorlev. We continue to see an increase in new patients, growing 25% versus Q2, and we expect with the recently completed Recorlev commercial expansion that this momentum will continue. Gvoke net revenue was $22.9 million for the quarter and $59.6 million on a year-to-date basis, representing a 29% and 23% increase compared to the same periods last year. This growth was primarily driven by an increase in total Gvoke prescriptions.…

Thank you, Steve. [Operator Instructions] Our first question today will be from the line of Chase Knickerbocker with Craig-Hallam. Please go ahead. Your line is open.

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.

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.

Great. And then maybe… [Multiple Speakers]

You talk about the pipeline in the Q.

Go ahead. Your turn.

Yeah, I should – so with respect to the pipeline in Q4, we're accelerating on both. So we've been like that's the top of that pipeline, or we like to call it the top of the funnel, is driving those referrals and we continue to accelerate that level. We're accelerating at both ends. So it's looking great.

Great. And then Steve, maybe help us think a little bit about kind of the path to breakeven. You essentially guided to cash flow breakeven positive in Q4, kind of within that implied cash guidance. And then as we kind of go into ‘25, as we kind of balance potential Levo Phase 3 program, and kind of the continued inflection you guys are showing in margins, kind of walk us through how investors should think about your business getting to a cash flow breakeven position on a go-forward basis sustainably.

Yeah Chase, thanks for the question. And I appreciate you asking me to guide on ‘25. As I had mentioned in my prepared remarks, we're not prepared to provide that ‘25 guidance yet. Specifically with Levo, there's still work to be done there, FDA discussions underway. So we expect to provide a more fulsome update in the first half of ‘25, and how that factors into our thinking for ‘25. But I think you hit on something that yeah, we're really confident in the trajectory of the business, particularly on the top line, coupled with a strong margin profile. And in my prepared remarks, I mentioned that our operating expenses were relatively flat when you back out a couple one-time charges in the quarter. So I think we see that path, and we'll provide more detailed guidance in March of next year. But we're sitting here feeling very confident about the financial profile of Xeris and where we're heading.

Thanks, guys.

The next question will be from the line of Leland Gershell with Oppenheimer. Please go ahead. Your line is open.

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.

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.

Got it. And, John, I know that there's going to be clarity. We'll be coming into on 8121 as you continue with FDA discussions and we get into early next year. But just wondering if at this point, you could share just broad brushstrokes of what you may see for pivotal clinical trials for 8121. Thank you.

Yeah, I'm not prepared to get into that, because like I said, we're in discussions and it's an iterative process in terms of kind of what we want to accomplish with this product in terms of things you want in the label, things like that. So, I don't want to give an opinion on any of that stuff right now.

Fair enough. Thanks for taking the questions.

The next question today will be from the line of Oren Livnat with HC Wainwright. Please go ahead. Your line is open.

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. Thanks.

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.

Okay. And you talked about the makeup between... [Multiple Speakers] Oh, go ahead, sorry.

No, we're just not having payer pressure stuff. So it must be just timing of where…

The patients.

Okay. And I think in the past you've talked about being pretty excited about seeing first-line patients already. Can you just give us an update on the overall makeup of the patient base now between first-line and switchers? And for the latter, what do you think is the main reason patients would switch? And I guess that it's for both uncontrolled patients, more likely, but even maybe controlled patients, which is a larger portion of the overall Cushing's market. Is it possible that some of them would even switch over just given this approved therapy versus off-label keto?

So, I don't have the exact mix, but we get a lot of naive-to-drug new patients, and we're getting a lot of switches. So it's significant amongst both of them. I don't know the percentages exactly, but – so the reason we're getting them is, especially on the new patients, if physicians really want to normalize cortisol and inhibit cortisol production, Recorlev is the best choice. On these switches, it's usually they are not in control, and they are switching to something else, and they want to again normalize cortisol, and again, Recorlev is the great choice there.

All right. And on Gvoke you've talked ad nauseum about – well, not ad nauseum, but you've continued to point out the under-penetration of the overall Glucagon market, right. Why doesn't it look more like EPIPEN with its huge at-risk population, but it's not standard of care clearly yet for these at-risk patients to get rescue? The overall market is probably including old generics, probably in the low single digits now. And I'm just wondering, given that's in the guidelines now, what will it take, and how long do you think it will take for this market to accelerate, so we start seeing more new insulin or new at-risk patients to an existing one starting to get prescribed rescue therapy?

Yeah. So, let me start with where you started. It should be the standard of care just based on the guidelines. It should be the standard of care. What we're trying to do is make it the standard of practice for clinicians, and we're trying to drive that. We're the only ones doing it to be honest. And so, any growth in this marketplace is being driven by the Xeris team, by going into physicians' offices, alerting them of the standard of care, and getting them to change practice and make it part of their standard of practice. That's the game we're out there for. And how long is it going to take? When's it going to pop? I don't have an answer for you, but what I can tell you is, we have a long runway and a lot of time to get it done. And we're going to work on this until we run out of runway. And the Gvoke team gets out there every day and really fights for the patients to make sure the ones that aren't protected are protected, and that we'll continue to do that. So I don't know exactly how long, but we're in for the fight.

All right. Just one last quick one. It sounds like you are planning to give some more detail and guidance for next year in March. Is that most likely just going to be a product breakout hopefully, given a little more visibility on your Recorlev in particular, or can we also hope for maybe OpEx and margin guides as well, that TBD?

Great. It's a great question and let me answer it. We've got a lot of – as I said in my remarks, we've talked to a lot of investors in the last 90 days. And we've got a lot of advice on what we need to report on, and we're taking all that into account. And we will look at what are the key metrics of our business going forward that we really should communicate, so people can truly understand the value that we're creating for shareholders, not only short term, but also long term. So, I'm not going to give you the exact measures, but I will tell you they'll be more and different.

Great. I appreciate it. I look forward to it. Congrats on another great quarter.

Thanks, Oren.

Thanks, Oren.

Our next question will be from the line of Roanna Ruiz with Leerink Partners. Please go ahead. Your line is open.

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?

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.

Oh, 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.

Got it. That's helpful. And then for Gvoke, any differences you saw this year in terms of the back-to-school dynamics relative to prior years? I think you mentioned having 37% of the market as of October. So I'm curious, what your outlook is on gross to net for Gvoke in the coming quarters and whether you could continue to grow share from here into 2025. Thanks.

Yeah, I think there's – I think Q3 was almost identical to every other Q3, the way things work, the way share moved, and we're back to gaining share again. Because as I said before, we're the ones out there driving the market growth, and with that growth, it's becoming share. The other – the kits and the vaccine, it’s not growing share, not growing. So that's just us at this point right now. So, I see that as again, how do we continue to do that? And of course, we're capturing all of that growth. So we'll continue to pick up share every quarter like we have been in the past.

Yeah. And then gross to net, I think, was your other question, Nik. We continue to maintain our gross to nets kind of where they've been over the last 12 to 18 months. It's always a tradeoff of access versus discounting. And so we're pretty strategic about those decisions that we make to protect price, but also try to ensure patients have access to our products. So, I would say, just long-winded way of saying, we don't anticipate significant changes to our gross to nets looking ahead.

All right. That's helpful. Thanks.

Thanks. [Operator Instructions] And our next question will be from the line of David Amsellem from Piper Sandler. Please go ahead. Your line is open.

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.

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.

Okay. I appreciate it. Thank you.

Thanks, David.

With no further questions on the line, I will now hand the call back to John Shannon for closing remarks.

Thank you. In closing, the entire Xeris team is executing on all fronts, resulting in another record quarter of revenue, setting us up well for a very strong finish in 2024. In addition to our outstanding commercial success, we are also significantly advancing our lead pipeline product, XP8121, and executing as planned on all our technology partner programs. We are excited to be increasingly recognized as a unique biopharmaceutical company with multiple fast-growing products and a promising pipeline. I'm confident we are well positioned to create significant shareholder value in both the near and long term. Thanks for being with us this morning.

This will conclude the Xeris Biopharma Third Quarter 2024 Financial Results Conference Call. Thank you to everyone who was able to join us today. You may now disconnect your lines.