Yahoo Finance Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) Q1 2024 Earnings Call Transcript
Xeris Biopharma Holdings, Inc. (NASDAQ:XERS) Q1 2024 Earnings Call Transcript May 9, 2024
Xeris Biopharma Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello, everyone, and welcome to the Xeris Biopharma First Quarter 2024 Financial Results Conference Call and Webcast. My name is Seth, 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.
Allison Wey: Thank you, John. Good morning and welcome to Xeris' first quarter 2024 financial result conference call and webcast. This morning, we issued our press releases, 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 will open the lines 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 included in our SEC filings in 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.
Paul Edick: 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 healthcare providers we enable, and a 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 three 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 growth, with average patients on drug growing 18% versus the previous quarter and 139% versus first quarter 2023. The number of unique prescribers with referrals also continues to grow. Growth in the first quarter was fueled not only by the significant increase in our patient referral pipeline and new patient starts, but importantly, by a significant increase in the number of unique prescribers who recognize the value in treating patients with Recorlev.
It bears repeating that we see tremendous potential for Recorlev in an increasingly dynamic cushing's market. The key advantage prescribers recognized with Recorlev was that most other products used in the category is that Recorlev actually treats the underlying conditions in Cushing's by normalizing cortisol levels in the body. Increasingly, prescribers recognize this and that Recorlev is an ideal therapy for treatment of patients with Cushing's. Capitalizing on this momentum, we continue to add to our commercial team and patient assistance resources in support of continued Recorlev growth. Moving to Keveyis, the Keveyis brand remains incredibly resilient in the face of generic competition. We're off to a much stronger start in 2024 than we anticipated with Keveyis growing 3% compared to first quarter last year.
I stated last quarter that we expected to see a decline in Keveyis sales in the first quarter and for the year driven by generic competition and payer resets. This didn't happen as rapidly as we expected. Unpredictably underlying patient demand for Keveyis remained stronger in the first quarter than we anticipated, which we believe was driven by our continued ability to find and start new patients as well as retain existing Keveyis patients. This resulted in sales that significantly exceeded our expectations for the quarter. And importantly, we're also seeing this momentum carry well into the second quarter. We're committed to the Primary Periodic Paralysis community and finding new patients continues to be the key to maintaining Keveyis' contribution to our commercial portfolio.
Moving to Gvoke. Gvoke's net sales increased approximately 10% in the quarter compared to prior year, while Gvoke prescriptions grew 27%. This net sales increase was largely driven by Gvoke's gain in market share and the continued growth of the glucagon market in January and February. As of the last published weekly figures in April, Gvoke's share of total prescriptions was over 36%. The total glucagon market started off the year with growth consistent with historical trends as well. For reference, in February, the glucagon market grew a healthy 15% compared to prior year. However, the glucagon market, our script growth, and importantly, the utilization of our co-pay assistance program were all negatively impacted in late February and March when Change Healthcare announced their cyber security breach and shut down their claims processing systems.
For those who are less familiar with the situation, Change Healthcare is the largest US clearinghouse that adjudicates prescription claims between pharmacies and payers. This shutdown essentially prevented the adjudication of many prescriptions by many pharmacies, especially certain chains through normal means starting in February through early April. This meant that many of our retail pharmacy struggled to dispense civil prescriptions and Gvoke patients were unable to utilize our co-pay assistance program for several weeks. Not only did this impact prescription processing, but it also resulted in tightening of inventory by wholesalers. We calculate based on the change in the utilization of our co-pay card that the Change Healthcare cyber security breach had as much as a $3 million temporary impact on Gvoke net sales in the first quarter.
To be clear, this unprecedented situation did not have a similar impact on Recorlev or Keveyis as they are dispensed through a single specialty pharmacy that was able to quickly switch to alternate means of prescription adjudication. Importantly, in late April and early May, we have seen recovery in prescription fulfillment and wholesaler purchases commensurate with script demand. Based on the most recent week of Gvoke new prescription data, new prescription market share for Gvoke has increased to 37%, and we believe the total glucagon market will return to historical growth trends by the end of the second quarter. To be very clear, we are not for the Change Healthcare situation. We believe we would have exceeded expectations for Gvoke in total product revenue in the quarter.
Moving to our technology platforms, our XeriSol and XeriJect platform science is a growing and increasingly important part of our overall enterprise development. Not only is our formulation science what has enabled the development of Gvoke and our Levothyroxine pipeline product, but it's also enabling a growing number of partnerships that could deliver considerable revenue well into the future. On our latest partnerships, on Monday, we announced that we entered into an exclusive worldwide collaboration and license agreement with Beta Bionics for the development and commercialization of a new and unique zero cell-based formulation of a liquid, stable glucagon for use in by hormonal pumps or pump systems. Just to be clear, this is not Gvoke. We are formulating a new glucagon specifically for use in a pump.
Through this partnership, we have the potential to receive payments through clinical development and low double-digit royalties on future sales of Xeris glucagon for pumps and pump systems. Some other notable developments in the quarter, as we announced in January, Amgen executed the exclusive license agreement to develop, manufacture, and commercialize a subcutaneous formulation of teprotumumab using our XeriJect technology in thyroid eye disease. With Regeneron, we have completed formulation development for both initial molecules. Regeneron's stability and non-clinical valuations will take place over the next six months, assuming continued success that could lead to their potentially executing a license option for further clinical development, commercialization of any of the molecules in the platform, which would trigger additional one-time milestones.
Now on to an update of our XeriSol Levothyroxine program, a potential once weekly subcutaneous injection, we successfully completed the Phase 2 clinical study and data will be available by the end of the second quarter. As a reminder, this oral dose conversion data will help inform our proposal to the FDA for a pivotal Phase 3 program. We anticipate requesting an end of Phase 2 meeting later this year. If we gain alignment with FDA on a Phase 3 study design, we can start that study as early as mid 2025. Here is my overriding message today. Our commercial product portfolio is generating significant growth, and we are adding new meaningful technology partnerships. We continue to meet or exceed expectations across the board despite the temporary impact of external uncontrollable events such as Change Healthcare.
That continued performance and our future outlook is what gives us confidence in tightening our revenue guidance for 2024. We are raising the low end of our total revenue range from $170 million to $175 million. Our revised total revenue guidance is now $175 million to $200 million. Our overall strong business performance is also enabling us to make incremental investments in our commercial business, our technology business and our internal pipeline while maintaining our cash guidance of $55 million to $75 million at year end 2024. We continue to build a healthy self-sustaining enterprise. I'll now turn the call over to Steve for additional details on our financial performance.
Steven Pieper: Thanks, Paul, and good morning, everyone. As Paul mentioned, we are off to a great start. All three 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 quarter. This performance continues to reinforce the strength of the Keveyis brand, including Xeris CareConnectionS, which offers the best-in-class therapy and support for Primary Periodic Paralysis patients. Moving to GVOG. Gvoke net revenue was $16.6 million for the first quarter, representing a 10% increase compared to the same period last year. Importantly, in the first quarter, Gvoke prescriptions grew 27% compared to the same period last year. And Gvoke ended the quarter with market share of 33%, a 5% share increase from the same period last year. As Paul mentioned, we believe that Gvoke's growth and net revenue was negatively impacted by the Change Healthcare cybersecurity breach, which we estimate had as much as a $3 million temporary impact on Gvoke'S net sales in the first quarter.
Looking ahead to the second quarter, we are seeing strong demand for Gvoke in underlying patient prescriptions, which exceeded 5,000 in the most recent weekly data as well as increased orders from our wholesalers. We believe that the temporary effects of the Change Healthcare cybersecurity breach impacts will be largely resolved by the end of the second quarter. Looking ahead to the full year, we are tightening our total revenue guidance by raising the low end of the range with revised guidance going to $175 million to $200 million from the original guidance of $170 million to $200 million. We are tightening our guidance to reflect the strong performance of Recorlev, the continued resilience of Keveyis, and the expected contributions from our technology partnerships.
Moving down the P&L, cost of goods sold in the fourth quarter was $6 million, a 12% increase compared to the same quarter last year. This increase was driven by higher product sales. Research and development expenses were $7.8 million for the quarter, an increase of $3 million compared to the same period last year. Consistent with my remarks in March, we continue to make strategic investments in our pipeline, notably Levothyroxine and our emerging technology partnership business, which has and will result in an increase in our R&D costs this year. Selling, general and administrative expenses were $38.4 million for the quarter, an increase of $4.8 million compared to the same period last year. This increase was driven by rent expense related to our headquarter lease, which commenced in April 2023, and a higher personnel cost, primarily driven by modest field expansion in the fourth quarter.
Looking ahead for the full year, we are projecting a modest increase to SG&A this year, which includes the impact of the incremental investment we are making in the Recorlev business to drive growth in 2024 and beyond. Moving to cash, we ended the quarter with $87.4 million in cash, which included net proceeds from the Haven term loan refinancing of approximately $35 million. From a cash guidance perspective, we continue to maintain our previous guidance of $55 million to $75 million, which considers our revised revenue guidance as well as the additional investments we are making in our Recorlev business. We are able to make these investments as a result of strong revenue growth combined with continued disciplined expense management of our enterprise service.
Xeris is off to a great start in 2024, and we look forward to continuing to build on this momentum. With that, operator, please open the lines for questions.
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