Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter and Full Year 2019 Results Conference Call. At this time, all participants' lines are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Allison Wey, Senior Vice President of Investor Relations and Corporate Communications. Thank you and please go ahead ma'am.

Thank you. Good morning and welcome to the Xeris' fourth quarter and full year 2019 financial results and corporate update conference call. A press release of the company's fourth quarter 2019 results was issued earlier this morning and can be found on our website. We are joined today by Paul Edick, Chairman and CEO and Barry Deutsch, CFO. Paul will provide opening remarks adn Barry will review the financial results, then we will open the lines for questions. Before we begin, I would like to remind you that this call will contain forward-looking statements that concern 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 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. We now turn the call over to Paul.

Thanks Allison. Good morning, everyone. 2019 was a transformative year for Xeris. We had a number of major accomplishments and milestones of which the most significant achievement was the FDA approval of our first product, Gvoke, the first and only approved liquid stable glucagon for rescue in severe hypoglycemia in two presentations. The Gvoke pre-filled syringe and the Gvoke HypoPen auto-injector. It is important to note that both presentations were approved in September with the Gvoke pre-filled syringe selling now and the Gvoke HypoPen coming available in July. Since our September 10th approval and throughout the fourth quarter, the focus of our commercial team has been on the critical foundational elements needed for successful launches of both the pre-filled syringe and the HypoPen. First, getting the sales force hired and trained, which we completed in mid-November; second, executing all of our wholesaler agreements to enable distribution of Gvoke PFS now and HypoPen in July; third, verifying Gvoke pre-filled syringe and HypoPen availability in retail computer systems; fourth, confirming that Gvoke PFS and HypoPen are in physician's electronic health record systems as well as establishing Xeris within the endocrinology offices. And fifth, securing and executing on national payer contracts for both Gvoke PFS and HypoPen. In addition, we have distributed in the fourth quarter and to date over 5000 sample units to endocrinology offices, for patients who are not yet covered by insurance or may not have insurance at all, so that that physician can meet their needs. Essentially, the fourth quarter was all about making sure that Gvoke pre-filled syringe was made available, accessible, prescribe able and deliverable, as well as reimbursable for patients. You will note in our financial results that we also saw some modest early prescribing and unit sales and we know that most of the sample…

Thanks Paul. We generated total revenue of $1.9 million for the fourth quarter of 2019 and $2.7 million for the full year of 2019. Net sales of Gvoke PFS were $1.6 million for both the fourth quarter and full year 2019 as we launched Gvoke PFS in November of the fourth quarter. $1.6 million exceeded analyst consensus estimate of $600,000. Net sales represent gross product sales less estimated allowances for our copay assistance program, fund pay discounts, payer rebates and chargebacks, distributor service fees and product returns. We took a conservative approach in accordance with GAAP to estimating our potential returns. We recorded a return reserve above the level indicated by the return history of comparable products to address the factors associated with the initial stocking of inventory for launch, this being our first product launch, the launch taking place late in the year, and our main focus in the fourth quarter being on securing formulary coverage. Grants and other income was $0.2 million for the fourth quarter and $1.1 million for the full year 2019. In 2018, grant and other income was $0.8 million for the fourth quarter and $2.4 million for the full year. Total operating expenses were $33.1 million for the fourth quarter of 2019 and $123.5 million for the full year of 2019 compared to $21.1 million and $61.8 million for the fourth quarter and full-year 2018 respectively. R&D expenses for the three months and full year ended December 31, 2019 were $12.4 million and $60.4 million respectively compared to $12.4 million and $40.7 million for the same periods in 2018. The annual increase was driven by manufacturing cost for Gvoke prior to commercialization, increased expenses associated with clinical and preclinical trials, and increases in compensation and other personnel costs, partially offset by reduction in professional…

Thanks Barry. Before we open the line for questions, I'd like to address the impact of the coronavirus on our business in particular. Let me start by saying that we have no business or exposure in China, neither our API nor any components are coming from affected countries. Importantly, we have four to five months of finished goods on hand. We have four to five months of work in process, which means product currently being manufactured, and an additional six to nine months of components and API on hand. So we feel good about where we stand from a supply chain perspective. At minimum, we have commercial supply for the balance of 2020. In addition, the external components of the HypoPen are manufactured in Taiwan with the cartridge made in the U.S. and final assembly in the U.S. and to date there have been no work interruptions in our manufacturing for the HypoPen in Taiwan. We see the only possible impact of the coronavirus is the degree to which commercial operations could be impacted in the U.S., the potential need to reduce domestic travel or otherwise curtails sales force movement in and out of medical facilities. Being that our reps are in cars by themselves most of the time and calling on endocrinology offices only, at this time we don't see this as an issue for us, and however we're monitoring the situation closely. In summary, we believe the fundamentals of our enterprise are very sound. We have approved products capable of generating revenue. We are in the field calling on doctors, patient educators, and engaging with the diabetes community every day. We're growing Gvoke pre-filled syringe scripts in a growing market. We're growing Gvoke units sold and units per prescription. We have several data readouts upcoming in the first half of this year. We are on track for a July launch of the Gvoke HypoPen. We have no supply chain issues and importantly we have cash. With that, operator if you would please open the line for questions.

Thank you. [Operator Instructions] And our first question comes from the line of Ami Fadia with SVB Leerink. Your line is now open.

Good morning. Thanks for taking my questions. Firstly, I wanted to see if you could give us some additional clarity around some of the factors that might impact the weekly prescription data that we are seeing? And you mentioned something about samples that have been distributed in the channel to date as well as some prescriptions that are not being filled as written. Can you elaborate on that and help us understand how that might be impacting these prescription levels?

Hi Ami. Good questions, I appreciate it. Let me take the sample one first. When I say sample, it’s a complete unit, a pre-filled syringe and we distributed through the fourth quarter and to date through February just over 5000 sample units. The reason we did that is, until such time, which I think now is getting to be that time, we have over 65% of commercial lives covered at this point, but up until now, we thought it was important that physicians have access to Gvoke PFS in that they be able to provide it to patients that either their insurance wasn't yet covering it, we weren’t on formulary yet, or patients who don’t have insurance. We do know that a few of the sample units were reserved in some of the endocrinology offices. We know that a couple of them have actually been used by endocrinologists the staff to rescue patients in their office, so which is a good thing. But the vast majority of those 5000 got to patients. So that does impact our number of prescriptions. Those 5000 patients don't have a prescription. So we understand that, but we thought it was in the best interest of our business and the goodwill that we get from the endocrinology community and from the diabetes community. As far as the prescriptions that are being filled as written, there is - early on we did see and I think we saw in one of the recent weeks, a little bit of an increase in the legacy mix kits the GEKs and we're finding that when patients in some situations and it is more anecdotal than anything else, but in some situations when patients are presenting a Gvoke prescription at pharmacy level and they haven't stocked it on their shelves, they are actively working to convert that prescription to the Lilly GEK. And that's a process that we – it is unfortunate, but we just have to work through that and our reps are calling on pharmacies as well as physicians every single day making sure that pharmacists know about Gvoke and can find it in their computer system and make sure they have it on the shelf.

Okay, if I could just followup with two other questions, firstly what can you do or why do we still have such a big proportion of the population filling the old kits? Is it lack of awareness of your and better products becoming available or is it that some of these scripts are just automatically being refilled with your kit without a conversation with the physicians?

Yes, there are a couple of different things going on in there and you kind of hit it on the head. Towards the end of the year, there were a lot of prescriptions just get automatically refilled because people spending accounts et cetera before the end of year. And in a lot of the physician office systems, the patients have a renewable prescription that just happens automatically. And what we've got to do is office by office we've got to get them to change those standing orders, so to speak, in their computer systems. So that a process that we're going through. And the other thing that's happening, and I think it's not necessarily a bad thing, physicians are hearing from both Lilly and Xeris about glucagon and they're remembering to prescribe glucagon for more and more of their patients. But they don't always remember the name Gvoke or the name Vaxini [ph] for that matter. I think they remember Lilly's product better because it's Lilly. But over time they will remember the brand names better and we're working with every physician's office to make sure that everybody in the office, not just the physician, knows the name Gvoke, that takes time. So that is some of what's going on.

Got it. Last question and then I'll stop there. Just with regards to the diazepam, can you help us understand what data set we should be looking for and what the development part after that would look like if it is successful? Thank you.

Yes, so it’s the diazepam study is the Phase 1b and what we're looking for is we're doing a weight based dosing this time around. We're looking for onset of actions similar to the reference product which is the rectal suppository. We're looking for peak blood levels that are similar and we're looking for a longer tail of the drug staying around a little bit longer. The reason being is we do want to have a product that has impact on the ongoing seizure, but most products are not going to actually stop the seizure that is in progress. What we really want to do is prevent follow-on seizures and that's why we're looking for that kind of a drug profile. We saw that in the first Phase 1 study with everybody getting the same dose, but it wasn't as closely aligned to the reference product. It was very positive, but not where we'd like to see it. In the weight based dosing we think we are going to get a little bit better curve. And once we have that, then it is a matter of going to the FDA with a proposed forward-looking plan. Our proposal would be for safety study only, given that there's a ton of efficacy information and data already available about diazepam used in this way. And we'll see what the FDA says, if they will allow that shortened critical path forward or if they'll require something more.

Got it.

Thank you.

And our next question comes from the line of Randall Stanicky with RBC Capital Markets. your line is now open.

Great, thanks. Paul, just given – to start on the auto-injector, given that that July timing is important given back-to-school and also in that it represents a catalyst for the stock, which you are confidence of hitting that July timing, that's on the one? And then number two, how are you going to approach this launch? Any change in your thinking relative to the pre-filled syringe or you'll just think about more DTC? And the insurance coverage I would assume should be the same. And then finally, just a follow on to one of the prior questions, what percent of docs who received samples have written scripts? Thanks.

So let me take the July question first. We remain confident that we can hit that timing. As I've said previously, all of the components have been, are being manufactured in Taiwan during January and February. I think the last component was in the process of being manufactured, molded, so to speak in the first part of February. They are in the process of assembling what they call subassemblies and those are being tested during March. And then it’s a matter of making the subassemblies and shipping them to Florida for final subassembly and that should happen in May early June and we’re still on that timing. As far as launch approach, I think the most important thing for our launch of the HypoPen is, we will have had six or eight calls on every physician that's actually available that we can see. We will be in the wholesaler systems. We’ll be in the retailer systems. We will be already in all of the managed care formularies. So the ability to talk to a physician, get them to prescribe the auto-injector and have it be immediately available and reimbursed is going to be dramatically different than what we've experienced with the pre-filled syringe. The pre-filled syringe has kind of been the lead in cutting down – cutting the path through the forest here a little bit or through the jungle. So we think a lot of those things are going to already be behind us. In terms of the percentage of physicians who got samples who have actually written a prescription, I don't have that at my fingertips. I would say basic, probably a significant percentage of physicians who get a sample have eventually written a prescription.

Could I ask one follow-up, the 65% unrestricted coverage, where do you think you can get that to by the end of the year?

65% is really good in terms of unrestricted. I think if you add in Medicare and Medicaid as they come online we can get to, in terms of total commercial – total insurance 75% to 80% would be excellent in the pharmaceutical business period. There are some percentage of people who are going to restrict access no matter what. And keep in mind the primary restriction is a prior authorization that the physician office has to fill out. It's a piece of paper – it's the paperwork that basically says the patient has gotten the previously available Lilly GEK kit, the mixed kit. It's not appropriate for the patient and now they need Gvoke or the Vaxini [ph] for that matter or eventually the auto-injector. So the degree to which physician offices are willing to do that paperwork makes it a little bit easier. But it isn't an enormously difficult process. And I think we're seeing about half of those prior authorizations going through in under 48 hours. So it's not horrible. And we – the reps are talking to all the offices about – making sure that they're doing those and that they're getting through. To your previous question by the way, Mary Beth [ph] just handed me a note, 68% of physicians who got samples have said they've prescribed Gvoke.

That helpful, thanks very much.

Yes and as of March 6, just FYI, we're already at 70% of commercial covered lives. So I was just handed an update, real-time news.

Thank you. And our next question comes from the line of David Amsellem with Piper Sandler. Your line is now open.

So thanks. I have a few questions. First, can you walk us through your thinking on the mix between pre-filled syringe and HypoPen? Once HypoPen is in the market I mean, do you expect there's going to be an audience for the pre-filled syringe product and will that be a meaningful part of the mix, once HypoPen is launched? That's number one. Number two, can you talk about Medicare Part D access and what your overall target is for access there? I know that there is a lag time between commercial access and Part D, but just help us understand your thinking regarding payer wins, Part D wins as the year progresses and then just steady state? And then lastly on gross to net, what are your thoughts on steady state gross to net how should we be thinking about that? Thanks.

Thanks David. Let me take the Medicare question first. In terms of Medicare, we're already at about 27% preferred. We've had some really early – keep in mind that the Medicare process is a little bit different these days than it used to be. Used to be, you had to get your company approved on the national formulary, then you had to get the product on the national formulary before any of the downstream providers would cover you. These days, you don't necessarily need to do that. If you can get some of the downstream providers to add you to their provider formulary, there is a lot of other providers that are followers. So once it's on one of the big formularies, then you get a lot of people who will follow on. And we've had a few wins early on. So we're already getting some traction in Medicare. As far as the, the ratio of pre-filled syringe versus HypoPen, we're seeing that there is a reasonable percentage of the population that actually prefers a needle. That they're used to needles. They are still using needles for their insulin and they like to see that the needle go in, it gives them confidence. It's a great deal of assurance. We also have and it's interesting we were just in San Diego with our key holders the online influencers, and several of them indicated that they actually prefer the pre-filled syringe. Two who are parents of young children with diabetes actually prefer the pre-filled syringe in conversation. So I think there will be a percentage. Will it be 80/20, 70/30? I don't know yet. I don't think any of us know yet. That will shake out in the – over time. I don't think it will – I’ll tell you – based on the market research we've had historically and what we're seeing and what we're hearing, I don't think it will be more than probably a 60/40, 70/30 between the PFS and the HypoPen, the HypoPen taking the larger percentage. And gross to net, I'll turn it over to Barry for that answer.

Yes hey, David. Yes so gross to net as I mentioned in my opening remarks includes your traditional types of deductions, and I think as we – your question was on a steady state basis. We’ll certainly envision the returns reserve that we took. You know going way down, again there are a number of factors related to our launch and being our first launch why we took a conservative approach to the returns reserve. So moving forward, anticipate that coming down quite a bit, but then everything else should be sort of normal industry types of discounts in terms of prompt pay, wholesaler fees, government-related Medicare et cetera and co-pay type of fees.

Yes and David, there are some one-timers in the wholesaler fees that we won't experience again. A couple of the wholesalers charge a slotting fee, that's a one-time thing. So it will settle back in. The biggest thing is that the reserve for the potential returns of stocking merchandise in the initial stages, that will come way down so.

Okay, that's helpful. I just wanted to ask a quick follow-up on the Medicare Part D question is should we think about that 65% or more access that you cited with commercial, I mean is that a reasonable target or a reasonable floor for Part D access over time?

Yes, over the course of a year to 18 months, probably not in the near term. It's going to take time.

Okay great, that's helpful. Thank you.

Thank you. And our next question comes from the line of Difei Yang with Mizuho Securities. Your line is now open.

Hi, good morning and thanks for taking my question. Paul, just a couple of questions, the first one is related to, if you would help us to understand the back-to-school phenomenon, was it mainly driven by Type 1 patients or primarily younger aged patients or do you foresee that to change as more of the Type 2 get on therapy? And then number two is related to the samples. Do you plan to give out more samples or the 5,000 is done, it's all you're planning to give out?

Yes, good question. As of the end of the first quarter, we will cut back fairly dramatically on samples. We want to have a period of time when we can see the effective sampling and historically sampling in just about any therapeutic category has been positive impact on prescriptions. We’ll cut back to only a small percentage of that maybe 10%-ish of what we've done historically. So, but over time we'll monitor those physicians who have gotten samples and if it has a positive impact on their prescribing, then we'll look at other ways of continuing that program in a modest fashion, but we're going to cut back pretty aggressively in the second quarter. The back-to-school phenomenon, during the months of August and September prescribing for glucagon is 40% higher than during any other period in the year, 30% to 40% higher. So it is a real phenomenon and it is both Type 1 and Type 2. With these new products, especially Gvoke and especially the HypoPen, we think it's going to expand into more of the Type 2 and go and our product goes down to two years old. So it can go younger as well, but it is a real phenomenon. And the other thing too, in terms of the samples going back to that for a second, samples have created a lot better access to normally hard to see physicians as well, so that should benefit us down the road also.

Okay great, thank you for taking my questions.

Thank you. And our last question comes from the line of David Steinberg with Jefferies. Your line is now open.

Okay, thanks so much. I have three questions. The first one revolves around marketing. So when your reps are in the doctor's office are introducing themselves to doctors for the first time, what's the number one item that doctors are most excited about when they learn about the product? And conversely, what's the biggest pushback your reps are getting from endocrinologists? And related to that what is Lilly counter-detailing I guess and if so what is their message trying to blunt your launch? And then secondly on advertising, I think you've started a social media campaign and some DTC advertising. Could you give us some more color on the DTC effort? And finally, I believe you said you think that the HypoPen will have some sort of inflexion with expansion, kind of how steep do you see that curve, once the HypoPen is in the market this summer? Thanks.

Thanks, David. Let me take those one at a time. In terms of the reps in the field, I think physicians and staff, especially the educators in the offices are most excited about the fact that somebody is talking about glucagon again, because getting more patients to actually have glucagon handy just in case they have an issue is critically important. And for us, the convenience factor and the confidence that people have that they can actually most importantly self-administer. The mix kits almost exclusively require a caregiver or a bystander. Gvoke pre-filled syringe is, it's a 2-step process. You pull off the cap and you give yourself a shot. And even when we talk to patients and we talked to the key holders this past week, self administration and earlier use of glucagon, not waiting until you're passing out is a tremendous upside. In terms of pushback, I think the number one thing that we're seeing is prior authorizations. Physicians are inundated these days with prior authorizations. There are people in these offices that's pretty much their job is to just do prior authorizations and the way we refer to it is, when we go into the office and we get that pushback what it sounds like is we don't want to do prior authorizations. What they're really saying is, we're already doing a pile of them. We're already doing them for Lilly, because they have insulin, et cetera. And why should we add a little bit Xeris to our pile. I mean that's real life, and we're working through that. When we get done talking about Gvoke PFS, we have a good argument as to why they should add us to their pile and they are. In terms of the counter detail, the good news is Lilly isn't…

Okay, thank you.

Thank you. And this concludes today's question-and-answer session. I would now like to turn the call back to Paul Edick for closing remarks.

Thank you. Thanks everybody for the questions. Thanks everybody for joining us today. We appreciate your time. We appreciate your interest in [indiscernible] in Xeris and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.