Good evening or good afternoon. And welcome to the Xeris Biopharma Third Quarter 2022 Financial Results Call. My name is Adam, and I will be your operator today. [Operator Instructions] I will now hand the floor over to Allison Wey, Senior Vice President of Investor Relations and Corporate Communications to begin. So, Allison, please go ahead when you are ready.

Thank you, Adam. Good morning. And welcome to Xeris Biopharma’s third quarter 2020 financial results and corporate update conference call and webcast. A press release with the company’s third 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 after a few closing remarks by Paul, we will open up the call for Q&A. 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 everyone and thank you for joining us today. Before getting into the results of the quarter, I want to reiterate a few things we talked about on our second quarter call regarding what we are trying to build at Xeris. Number one, the most important aspect of building multiple successful companies as a team over the years has been knowing where we are, where we want to be, how we plan to get there and executing against that strategy with absolute clarity. We have evolved considerably over the last few years, growing from a development company with one end of Phase II asset and two very unique technologies to a full-fledged commercial business with three growing products, targeted pipeline development and potentially meaningful technology partnerships. Reiterating what I said on the second quarter call, where we want to be and what we focus on at the beginning and end of each day, is building a substantial, patient-centric, commercially focused, self-sustaining biopharma enterprise, with multiple products in multiple therapeutic areas, a highly targeted development pipeline that has significant long-term promise and increasingly value-added technology partnerships. What you will hear today is that we are continuing to progress very successfully on that journey. We are executing on our vision. Our 2022 momentum continued through the third quarter and into the early part of the fourth quarter. We continued delivering record growth in patient demand and net revenues for all three of our marketed products through the quarter. We also continued the advancement of our levothyroxine pipeline program. With the solid year-to-date performance of all three products and the disciplined management of expenses and cash, we are confident we can achieve the following. As I have said on previous calls, I believe that a result at any point…

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 a record $29.6 million for the third quarter, representing a 31% increase over the same quarter last year on a pro forma basis. This increase was driven by growth of all three of our products, strong underlying demand, patient demand for both Gvoke and Keveyis, and new patient starts on therapy for Recorlev were the key drivers for total product revenue growth in the quarter. Breaking it down by product. Gvoke net revenue for the quarter was $13.7 million, representing a 24% increase compared to the same period last year. This increase in revenue was driven by continued growth in prescriptions, topping $38,000 for the first time, more than a 40% increase compared to the same period in 2021. This growth in demand was partially offset by a decrease in net pricing, which I explained in detail on our last call. To be clear, we believe that our net pricing has stabilized. Year-to-date, Gvoke net revenue was $37.6 million, representing a 35% increase compared to the same period last year. This increase was again driven by growth in prescriptions, approximately a 60% increase compared to the same period in 2021, which was partially offset by a decrease in net pricing. Moving to Keveyis. Keveyis net revenue for the quarter was $13.4 million, representing a 17% increase compared to the same period last year on a pro forma basis. On a year-to-date basis, Keveyis net revenue was $35.5 million, representing a 19% increase compared to the same period last year on a pro forma basis. We continue to see increases in the number of patients on Keveyis. These…

Thanks, Steve. As we finish the year and head into 2023, we expect to build upon our 2022 momentum and continue creating shareholder value through continued revenue growth, careful allocation of resources and prudent expense management. Operator, would you please open the line for questions at this point.

Of course. [Operator Instructions] And our first question today comes from Glen Santangelo from Jefferies. Glen, your line is open. Please go ahead.

Oh! Yeah. Thanks for taking my question. Paul, I wanted to dive into the glucagon market a little bit more. You said that this quarter, your total market grew 9%. It seems encouraging, but it’s also a slight deceleration from where we were in 2Q and 2Q decelerated somewhat from where we were in 1Q and so I am wondering if you could talk about that from a high level. But beyond that, speaking with one of your competitors who manufactures a legacy -- a generic legacy kit, they seem to be very excited about the fact that two of the manufacturers are going to sunset their legacy kits here soon. And it’s their view that the price differential between the ready-to-use products and the generic products are big enough that maybe that will be enough to stem the tide towards these ready-to-use products. So I was wondering if you could just sort of give us your assessment of this market, how you think it shapes up for 2023 given all the moving parts? Thanks.

Yeah. Thanks, Glen. I will take that in reverse order, because I think the end of your comments are probably the most pertinent at the end of the day to kind of the dynamic in the marketplace. I would describe the legacy products relative to the new ready-to-use products as impossible to use products. There is no issue of price in this marketplace. And you can tell by the speed with which 70% of this market has gone from the legacy products to the ready-to-use products. And when I say impossible to use, when you look at the human factor studies that have been done by us and other manufacturers, in almost any study the best that you could -- best outcome you could get was approximately three out of seven -- three out of every 10 people could actually execute and deliver the proper dose using those kits. The critical need in the marketplace is a usable form factor. It’s not price. And what has made the difference has been the nature of the new user -- ready-to-use products. They are easy to use for a caregiver, they are easy to use for a medical professional and they are easy to use for self-administration. And also self-administration has never really been an option, because of the complicated nature of the kit and the nature of a severe hypo people are losing cognitive function, they can’t execute the kit. So I think that’s critically important to how people view this market. As far as the growth, we have had growth pre-pandemic that was as high as 25% to 30% and we have had consistent growth in double digits throughout the COVID period, but it has been up and down and we have had a couple of quarters where it’s gone below double-digit. That doesn’t scare us at all. We think that’s going to reverse and continue to grow. The fact of the matter is, Gvoke and Xeris are shouldering the majority of the growth that’s happening in the marketplace. As Lilly gets more active with their nasal and Novo comes in, gets more active. We will have more louder voice in the marketplace. And the bottomline is there are 7 million people on insulin who are at high risk for a severe low that should have one of these ready-to-use products such as Gvoke. Sooner or later, that message will get through to clinicians.

Okay. And Paul, maybe if I can just ask some quick follow-up on the guidance, I mean, in your prepared remarks, you seem to be -- suggest that anything within the original guidance range was very encouraging and I guess I generally agree. But just sort of looking at the guidance reduction, right, you lowered the midpoint by $5 million and the top end of the range by $10 million. And so I am just kind of curious as to maybe what changed in your mind or relative to what you might have been thinking 90 days ago? And then lastly, Steven, thanks for the update on the cash, but could you give us the debt number as of today, that would be great? Thanks.

Yeah. I think the answer to your question, Glen is, was in your first question. The -- we expected double-digit market growth to continue and we saw high single-digit market growth. So the top end was -- of the original guidance had more substantial market growth built in.

Okay.

And then on the debt, we currently have with Hayfin $100 million outstanding and then we have a convert that has roughly 47%. But as I mentioned in my remarks, we plan to draw the additional $50 available to us under the Hayfin facility. So we will have $150 million.

And I would just reiterate relative to that guidance, we have said from the very beginning that, with two launch products, especially Recorlev, Gvoke still being in launch mode that we had a fairly wide guidance range, anticipating that there would be some variability. But the bottomline is, all three products continue to grow. They all are growing incredibly well at double digits versus prior year. And I have said from the beginning, anywhere in that range would be excellent performance for us as a company.

Great. Thanks for the responses.

Next question comes from David Amsellem from Piper Sandler. David, your line is open. Please go ahead.

Hey. Thanks. So just a few. First, can you talk about payer dynamics surrounding Recorlev, what you are seeing there and what you can do to continue to grow underlying patient usage? And just talk generally about what you are hearing in the field about overall receptivity to the product. And if there’s any patient-specific metrics or prescriber metrics that you could share that would also be helpful? And then just going back to the glucagon market, so Amphastar noted that they are going to be doubling their glucagon capacity, and I -- your comments regarding the kits are not lost on me, but is it your view that with the kits being discontinued by Novo and Lilly that the ready-to-use products will capture the lion’s share of that or do you think it will be sort of a mix of business going to the generic hit and the ready-to-use products. I mean, how -- ultimately, how do you see that shaking out as we move through 2023? Thanks.

Okay. Well, let me start with glucagon first again. What you have seen over the course of the last couple of years is regardless of whether Lilly or the Amphastar generic entry, et cetera, the legacy kit type of delivery has continued to decline. And we believe and we believe we are seeing evidence of it in the marketplace that the ready-to-use products like the nasal and like Gvoke are going to continue to take a greater percentage of the market. And the Lilly discontinuation of their kit is a clear signal to prescribers that the biggest company in the business does not believe that, that kit is an appropriate form factor for patients. So where the rubber meets the road is with the prescriber. And if they are prescribing the ready-to-use products, they are not going to be converted to the old legacy generic kits. So we expect that portion of the market to continue to decline and we expect the ready-to-use to take the lion’s share. And we have always said a little bit of it might linger, but I don’t think anyone anticipated that it would be 70% in ready-to-use in such a short period of time. In terms of Recorlev payer -- patient usage, patient usage on Recorlev is patient referrals are strong, patient initiations are strong. The difference that we are seeing is we had anticipated that people would titrate up to their optimal dose a little bit faster. But we are not concerned about that at all. Physicians are taking an appropriate approach to stepwise dose titration. That’s good medicine. We are working very effectively with payers, clearing insurance. Nobody gets Recorlev until the insurance is cleared. There is a process to being -- to a patient starting on Recorlev. There’s the initial referral and then the patient has to go through some testing. They need to get an EKG and physicians are busy, patients are busy and those repeat visits are -- they take time. So we have said from the beginning that it can be weeks to months from a patient referral to an actual patient on drug. Receptivity has been outstanding. We have got no pushback from physicians. It’s a matter of them getting a good sense of Recorlev and how they can best utilize it in their practice. We think we have got a better product than Isturisa, which has a lot of androgenic side effects. We think we have a better product than Korlym, which when you think about it, the goal in Cushing’s is to normalize cortisol. Korlym doesn’t do that. So we think we have got a very competitive product. In fact, we know we do, and we are encouraged by the results so far. And payer dynamics have been as expected. It’s a negotiation one at a time.

Okay. Helpful. Thank you.

The next question comes from Oren Livnat from H.C. Wainwright. Oren, your line is open. Please go ahead.

Thanks. I have a few questions. If we could just talk big picture, you have reiterated your guidance for year-end cash flow breakeven or 2023 year-end breakeven, which I think is probably a major upside to current street expectations. So can you just talk about the main drivers of that growth in your mind? Should it safe to assume that’s largely year-over-year Recorlev growth in there? And I guess, main -- the main drivers of that is that versus the current trends we are seeing, is that just the conversion of maybe a backlog of patients as they get on through insurance and that product accelerates quickly now or is up titration a major component of that? And I have a couple of others.

Yeah. Oren, it is -- Recorlev plays an important role in that and it is a lot about the time from referral to patients on drug. The more efficient we get at that, the better we get at that, the better -- the more we negotiate with payers, et cetera. And importantly, the rate of titration to the optimal dose, more patients getting to where they need to be over time is going to be a pretty big driver, as well as…

Okay. And…

…continued growth in Gvoke as a -- yeah. Continued growth in Gvoke as well, Oren.

Okay. And following up on the Recorlev conversion and up titration, at any point, should we expect to get numbers on patients referred and/or patients on drug or is that going to be something you maintain close to the vest even going forward? And you talked about having a superior drug. Can you comment on just any pushback in the adjudication phase -- the insurance adjudication phase with regards to off-label ketoconazole out there? Is that an issue you face or is it just normal we are trying to put a patient on a very expensive drug and that’s a process?

It’s what you just said at the end. It’s trying to put a patient on a very expensive drug and it’s a process. We are not getting pushed back on keto, because, in fact, at the physician level, there’s -- we are being embraced as having something that’s actually been studied, has an actual label and it’s being detailed on label, physicians are not comfortable using keto off-label. They just aren’t. And the payer is not really in a good position to require keto in order to get to Recorlev.

Okay. And just one last one on Gvoke. Aside from prescription growth, it looks like your quarter-over-quarter revenue growth was surprisingly strong. It was above our estimates. Can you confirm if there were any inventory dynamics at play or is it just that the net price has stabilized higher than maybe where it was recognized in 2Q and I think you said that should be stable going forward?

Yes. It stabilized in Q3, the net price, assuming a consistent payer mix. Oren, I think, we would expect that it to remain kind of where it leveled off in Q3. But I think what we did see is relative demand. We did see a little bit of inventory build in the quarter. It could be going to alternate channels. But, yeah, we saw a little bit of inventory build in the third quarter and you see that from time-to-time. So particularly…

All right.

… back to flu season.

Perfect. Well, thanks for the help.

The next question comes from Roanna Ruiz from SVB Securities. Roanna, please go ahead. Your line is open.

Great. Thanks. Good morning, everyone. So I did have a couple of questions on Gvoke. Maybe could you talk a little bit about some of the competitive dynamics you are seeing between Gvoke and BAQSIMI? And is there anything that we should expect going into the holiday months end of this year for 4Q?

The competitive dynamics, I think, are pretty much as we expected. Lilly continues to promote BAQSIMI. They are most active during the back-to-school season and their biggest real franchises in pediatric endocrinologists. So that’s usually when they are even more active. Like I said previously, and you and I have talked about, I’d like to see them a little bit even more active, because they are a big voice and they can drive market growth. And we have got a great product and we continue to grow our share of the ready-to-use. So I think the competitive dynamic is playing out. Like we said at the outset, they are going to take a bigger piece of the pie than we are early on. We are going to close that gap somewhat. But if both products continue to grow the way they are and continue to grow the market, we are both going to do extremely well. And it’s pretty much just Lilly and us at this point. And like I said previously, the generic companies can ramp up in their manufacturing as much as they want. They have a product that patients can’t use.

Yeah. Fair point. And I wanted to ask a little bit about Recorlev. So I know you talked a little about the titration going very well. I was curious if you had any insights on what you expect the overall average maintenance dose to be like going into 2023 as more patients ramp up? Any sort of color on that would be super helpful?

Well, what we saw in the clinical studies was patients were titrated up to most commonly 600. We expect that the -- in the -- in practical utilization that will end up somewhere in the 500 to 600 neighborhood and I think it’s playing out that way. And you also asked something about the holiday -- in your previous question, you asked about holiday dynamics. Nothing special, except people are at increased risk during the holidays based on the way they eat and drink, et cetera. But we don’t attack it in any different manner than normal.

Got it. Thanks.

We have no further questions. I will turn the call back to Paul Edick for concluding remarks.

Thank you. I want to personally thank all of our long loyal shareholders and investors for their support over the last few years. We have absolutely appreciate your continued belief in what we are building. We continue to work hard every day to deliver value on your investment. You can see from everything we just discussed that our business is in great shape. We continue to affirm and meet our guidance, which represents excellent continued growth year-over-year. We have plenty of cash and we are managing expenses aggressively. Thanks for joining the call this morning and your continued support as we execute on our growth strategy to build a substantial patient-centric, commercially focused, profitable biopharma enterprise. With multiple products in multiple therapeutic areas, a highly targeted development pipeline that has significant long-term promise and increasing value-added partnerships based on unique technologies and we -- and meeting the needs of patients and caregivers every day. Thank you very much.

This concludes today’s call. Thank you very much for your attendance. You may now disconnect your lines.