Xeris Biopharma Holdings, Inc. (XERS) Q2 2026 Earnings Report, Transcript and Summary

Hello everyone, thank you for joining us and welcome to Xeris Biopharma Second Quarter Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Allison Wey, Senior Vice President of Investor Relations. Allison, please go ahead.

Thank you, Leah. Good morning everyone and welcome to Xeris Biopharma Second Quarter Financial Results Conference. Early this morning, we issued a press release detailing our results. This press release can be found on our website. Joining me on today's call is John Shannon, our Chairman and Chief Executive Officer; and Steve Pieper, our Chief Financial Officer. Following our prepared remarks, we'll open the call for your questions. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements regarding Xeris' future expectations, plans, strategies, objectives, and financial performance. These forward-looking statements are based on management's current assumptions and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For discussion of these risks and uncertainties, please refer to the risk factors described in our filings with the SEC. Any forward-looking statements made on this call speak only as of today's date, and except as required by law, the company undertakes no obligation to update or revise these statements. In addition, during today's call, we will reference certain financial measures that are presented on a non-GAAP basis. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in our earnings release. And with that, I'll turn the call over to John.

Thank you, Allison, and good morning, everyone. The second quarter was another record-breaking quarter for Xeris, one that demonstrated once again that the commercial momentum we have built is durable and accelerating. Total revenue reached $92 million with net product revenue of $91 million, representing 34% growth year-over-year. Recorlev led the way with 81% growth, Keveyis delivered another quarter of steady, reliable performance, and Gvoke improved sequentially, as we expected. But the second quarter was more than a commercial story. It was a quarter of meaningful strategic progress. We made significant strides in strengthening our intellectual property portfolio across both our commercial franchise and our pipeline. And shortly after quarter end, we completed the full retirement of our convertible notes, simplifying our capital structure and eliminating nearly $3 million in annual interest expense. The progress we achieved reflects the breadth and defensibility of our science, the financial strength we have earned, and reinforces our confidence in the long-term value of what we're building. Taken together, a record commercial performance, a stronger IP portfolio, and an enhanced balance sheet, the second quarter reflects the disciplined, compounding progress we are making to build a high-value biopharmaceutical company. In other words, we're executing and we're just getting started. Based on our strong first half performance and our conviction in the growth trajectory of this business, we are raising the bottom end of our full year 2026 total revenue guidance to $385 million to $390 million. This reflects our confidence in this team, the performance of our diversified commercial portfolio, and the long-term growth outlook of our business. With that, let's turn to our brands, beginning with Recorlev. Recorlev continues to demonstrate exceptional momentum and in the second quarter it delivered yet again. Recorlev net revenue increased to nearly $57 million in the quarter, representing 81% growth year-over-year, an increase of over $25 million. Behind that number, Recorlev had a record number of referrals, new patient starts, patients on therapy, new prescribers, and total prescribers. Quarter after quarter, Recorlev has delivered sustained growth that speaks to the execution of our commercial team, and most importantly, the deepening confidence prescribers have in Recorlev as their treatment of choice for endogenous Cushing's syndrome. We believe Recorlev should be the standard of care, and we intend to build on that. Importantly, we are still in the early stages of realizing the benefits of the commercial expansion we completed in January. Throughout the second quarter, our focus was on training and deploying our expanded team. Execution is tracking in line with our expectations, and we are increasingly well positioned to accelerate growth as these investments gain traction in the second half. Turning to Gvoke. After a slow start to the year, Gvoke rebounded nicely in the second quarter, delivering net revenue of approximately $23 million and prescription growth of 10% versus the first quarter. I am proud of the team's work to put Gvoke back into growth mode, and the sequential improvement gives us confidence that Gvoke is back on the right track. Looking ahead, the back-to-school season should provide its typical third quarter lift as families with children managing diabetes ensure they have a ready-to-use Gvoke on hand for the school year. The long-term opportunity for Gvoke remains unaltered and our commitment to it is unwavering. Of the 15 million people with diabetes who should have a potential life-saving product like the Gvoke HypoPen, only a million or so do. Closing that gap remains an important opportunity for us, and more importantly, a meaningful way to improve patient outcomes. And finally, Keveyis. Keveyis delivered nearly $12 million in net revenue. Once again, demonstrating the remarkable durability of this brand in an ultra-rare market. Maintaining patients on therapy remains the ultimate proof point. And our results continue to reflect both the clinical value of Keveyis and the patient-centric support infrastructure we have built for the PPP community. Our commitment to this brand and this community couldn't be more evident than through our steadfast multi-year effort to secure important IP protection for Keveyis. On June 11, we received a notice of allowance from the U.S. Patent Office for a new patent covering Keveyis. Once issued, it will provide renewed protection for Keveyis through at least 2039. With a clear line of sight to such extended protection and having evidenced such astounding durability during its period of non-exclusivity, we intend to invest incrementally in both Keveyis and the PPP community in order to expand efforts to identify and support even more patients in the future. Turning to our pipeline and specifically XP-8121. The second quarter was a busy period for our program. During the quarter, we continue to build an even stronger intellectual property estate around this important product and our proprietary formulation technology. On July 28th, we received our second U.S. patent covering XP-8121. Just one week earlier, we also received a notice of allowance for an additional patent application, which when issued will be our third U.S. patent. Our expanding intellectual property portfolio speaks to the depth of our innovation and the long-term defensibility of this product. Those achievements build on the significant progress we made during the second quarter. Our technical and clinical teams made great progress in advancing the program through critical milestones. Importantly, we finalized our clinical site selections and those sites are busy preparing in advance of an expected Phase III start by year end. We also maintained a strong presence at key medical conferences throughout the quarter. The feedback we received from the endocrinology community has been exceptional, further reinforcing both our conviction in the significant unmet need in hypothyroidism and the multi-billion dollar commercial opportunity we have laid out. All of this momentum makes our planned XP-8121 program overview that much more exciting. On Wednesday, September 9th, we will host a dedicated 8121 webinar where you will hear directly from an important key opinion leader as well as members of our program team. We will walk you through the unmet medical need, the market opportunity, and our planned Phase III program in detail, including trial design, primary and secondary endpoints, target patient population, as well as expected development and related regulatory timelines. We believe XP-8121 represents a significant advancement in addressing the real and persistent challenges of treating hypothyroidism, and we believe it has the potential to be a blockbuster. Before I turn the call over to Steve, I want to briefly recap the strong progress we are making against the three critical priorities we outlined in March and continue to keep in our focus. First, driving rapid revenue growth. We delivered 33% growth in the first half, and we are now guiding to full year revenue growth of 33% at the midpoint. Our commercial business is growing fast. Second, advancing our pipeline. The XP-8121 program remains on track, and on September 9, we will provide the market with a comprehensive look at the program. We look forward to that conversation. And third, executing with discipline. The full retirement of our convertible notes completed in July is a direct expression of this priority in action. A proactive, planful step made possible by the ever-strengthening financial position of Xeris. With our sustained commercial momentum and disciplined execution against our strategic priorities, I couldn't be more excited about the company we're building. And with that, I'll turn the call over to Steve.

Good morning everyone. As John highlighted, our momentum from the first quarter carried into the second, reflecting solid execution and growing confidence in the performance of our business. Net product revenue of $91 million, up 34% or over $23 million year-over-year, is the headline for this quarter. This performance drove total revenue to $92.1 million, representing 29% year-over-year growth and reflects the sustained commercial momentum John just described. Recorlev generated net revenue of $56.8 million, representing growth of 81% year-over-year, an increase of $25.3 million, reflecting continued expansion of our patient base. New patient starts continued at a strong pace and the underlying commercial metrics all support momentum accelerating in the back half of the year where we expect to see incremental contributions from our commercial expansion completed at the start of the year. Gvoke net revenue of $22.5 million in the second quarter, up 8% sequentially, and was in line with our expectations. We expect Gvoke's performance to normalize and track more consistently with historical seasonal patterns in the second half of the year. Keveyis delivered another solid quarter, generating net revenue of $11.7 million, reflecting modest improvements in both net pricing and the number of patients on therapy compared to prior year. Gross margin for the second quarter was approximately 86%, an improvement of nearly 400 basis points compared to last year, driven by favorable product mix. Turning to operating expenses, R&D expenses totaled $10.7 million in the quarter, an increase of $2.6 million compared to prior year. This increase reflects continued investment advancing XP-8121 toward Phase III initiation planned for later this year. SG&A expenses were $61 million for the second quarter, driven primarily by the full deployment of our expanded Recorlev commercial team and patient support infrastructure. Adjusted EBITDA for the second quarter was $19.3 million, an improvement of $6.7 million versus the prior year, representing over 50% growth year-over-year, even as we made incremental commercial and R&D investments this quarter. I also want to take a moment to discuss our balance sheet and specifically the full retirement of our 2028 convertible notes because it will be visible in our GAAP results this quarter. In July, we completed the full retirement of our convertible notes, settled through a combination of cash and equity. As of July 15th, not a single convertible note remains outstanding. The exchange agreement we signed on June 10th with certain holders of the convertible notes triggered a re-measurement of the convertible notes under GAAP, resulting in a one-time non-cash charge of approximately $31 million recognized in the second quarter. This charge does not impact adjusted EBITDA and there will be no additional income statement charge related to these notes in Q3. The bottom line, we eliminated $34 million of debt, creating approximately $3 million in annual interest savings and a meaningfully cleaner balance sheet. This was a proactive step made possible by the consistent financial performance of our business. Moving to our 2026 outlook. We are raising the bottom end of our full year total revenue guidance and tightening the range to $385 million to $390 million. This outlook reflects the strong performance we delivered in the first half of the year, as well as our confidence that this momentum will continue as our expanded Recorlev commercial team moves from build to yield, and we continue to see Gvoke rebound from its slow start this year. On SG&A, at the start of the year, we outlined an expected full year increase of approximately $45 million versus 2025. Based on our strong first half results and current outlook, we are making further incremental investments in our commercial enterprise, resulting in a full year SG&A increase of approximately $50 million. We see meaningful opportunities across our portfolio and remain committed to investing where we can create sustainable long-term value. Let me summarize our full year 2026 guidance. Total revenue is now expected to be between $385 million to $390 million. Gross margin remains consistent with our prior expectation of a modest improvement compared to 2025. R&D remains consistent with prior expectations. We expect an increase of approximately $25 million compared to 2025. SG&A is now expected to increase an additional $5 million versus our prior guidance of a $45 million increase compared to last year. And lastly, we continue to expect adjusted EBITDA to increase on an absolute dollars basis compared to 2025. I want to close with this. Our business continues to strengthen and with it our financial condition. We remain committed to the priorities that John outlined and are confident that we can maintain a path toward a continuing expansion of adjusted EBITDA even as we make incremental investments to support a rapid growth of our enterprise. With that, I'll hand the call over to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Dennis Ding with Jefferies.

This is Georgia Bank on the line for Dennis Ding. I had a question about raising the low end of your guidance. I see that you raised it again to $385 million but held the $390 million top. And given Recorlev's momentum and you said the expansion benefit is still mostly ahead in the second half, I guess, what's capping the ceiling? And then on the expansion, you notice that it's tracking in line still...

Could you repeat? Could you, operator or somebody, we cannot hear this question at all.

Are you able to hear me now?

Yes. Much better. Thank you, Georgia.

Oh, sorry about that. Okay. So on the guidance raise, you raised the low end again in Q2 to $385 million, but held the top at $390 million. Given Recorlev's momentum, and you've said the expansion benefit is still mostly ahead in the second half, I guess what's capping the ceiling there? And then on that sales expansion, you noted that the execution is tracking in line and still early, maybe can you unpack what in line looks like underneath? Which leading indicators, referrals, new starts, et cetera, that you're watching to confirm that the H2 setup is materializing?

Thanks for the questions, Georgia. On the guidance, yes, I mean just another great quarter gave us the confidence to raise the bottom end, and we've tightened it. We've to a range of $5 million at this point, and we're confident that we can hit that. It still reflects some significant growth in the back half of the year. And again, that points to the contributions we're expecting from the Recorlev commercial expansion as well as growth from Gvoke in the back half of the year. So yes, really confident in the guidance that we provided and it reflects over 30% revenue growth. And then on the second question, I think the second question was just around Recorlev and what we're seeing. Yes, I think we're seeing early signs of contributions from that expansion. We saw that in the second quarter. Again, this is our third time doing this expansion and the contributions we're seeing are tracking exactly in line with our expectations. And we see it continuing into the third quarter, which gives us all the confidence in the world to meet the revenue guidance that we outlined.

Your next question comes from the line of Brandon Folkes with H.C. Wainwright.

Congratulations on the quarter. Can you just further detail the second half of the year, the core of the growth drivers, just how much is driven by prior territories versus sort of the new sales reps? Any way to just characterize where those new reps are in terms of productivity? And then any other tailwinds you're expecting in the second half of the year, whether it be average dose, persistency, just how those sorts of metrics are tracking?

Yes, Brandon, thanks for the question. In terms of the back half of the year, we made this expansion to increase not only the breadth of our calls, so we expanded our targets, but the depth within our calls. So it's going to come across existing prescribers and new prescribers, and it's going to come across all territories, new and existing. So we see it coming across everywhere. And that's kind of how we set up the expansion. In terms of changes to anything like dosing or anything else like that, with the amount of expansion we're going through and the number of new starts, we are watching all those metrics, but we don't expect them to materially change in this time and period of growth at these rates, so we continue to monitor those, we track them, and all of those trends are tracking as we expected and within line, and until they become more material, we really won't change our expectations around some of those things.

Great. And maybe just one on 8121. Can you just elaborate on what still needs to be done before the Phase III initiation? And do you expect all of that to be done by the time you host the webinar? And if not, sort of how should we think about timing for what needs to be done?

Yes, I think I've said this before is, we're not going to start that Phase III trial till we have the go-to-market commercial presentation ready to go into that Phase III trial. And that's what we're doing, is we're going through all of the work it takes to be able to have the commercial ready, product, device, formulation, everything. And we will be in a real -- we're in a great position by the webinar to tell you where exactly all those timelines are. I will tell you they're all on track. They're all tracking to what we said back last June in terms of start of the trial, data, regulatory submissions, and approval. So we're still on track for all that for our 2030 launch.

Your next question comes from the line of David Amsellem with Piper Sandler.

So just a couple for me. First on Recorlev, can you talk about prescriber breadth and depth? And sorry if I missed this, can you give color on how many prescribers there are and repeat prescribers? So that's #1. #2 is on 8121, can you talk to how long you think it's going to take to enroll the Phase III and do you think results could be a 2028 event? And then lastly, business development, M&A, just given the commercial infrastructure in place, how aggressive are you going to be in terms of looking for assets where you can leverage that infrastructure?

Okay. Start with Recorlev, so what we have said is we have 12,000 targets that we basically aligned our sales efforts against. And what I can tell you is that those are new and existing prescribers, and they're all good targets for cortisol normalization and hypercortisolemia and Cushing's syndrome. So we are targeting those. We are successfully covering them and it really goes to us having a record quarter of new prescribers as well as existing prescribers, so all of those metrics are growing and growing at the pace that we expected in our guidance. So we continue to see that for the balance of the year and going forward as we go deeper and deeper in those accounts. The next question was on 8121, and I think it was related to data by '28. We'll be able to give you a lot more clarity around that whole clinical program and timing on September 9. You'll be able to see all that, so the clinical and regulatory timelines will be really, really clear at that point. And then as business development, and we've said this before, is we're focused on driving top line growth and making investments that will continue to drive more and more growth within our company. And so from a business development standpoint, and with our financial position where it's at, we're looking at more and more opportunities that can deliver growth between now and even before the launch of 8121 in 2030. And all those are all the kinds of things that we would focus on, especially ones that leverage our endocrinology footprint and or our rare product capabilities that we have within Xeris.

Your next question comes from the line of Chase Knickerbocker with C.H.

This is Jake on for Chase. First, just on Recorlev, I was hoping that you could characterize the growth in the market. We are seeing, as you all do have better data than us, how many patients do you think are currently on therapy for hypercortisolism and what share of new patient starts do you think you are capturing?

Wow. We haven't really dug into that in the past. And it's really hard to triangulate that because we don't have good external data sources that could tie back to that. But what I will tell you is that more than 60% of our patients are new to therapy, first time on drug. So I would say that points to a couple of things. One is the majority of our patients are market growth and us capturing a significant share of those. And the fact that the dynamics in this marketplace with everybody growing in it says that there's still a lot of opportunity for market growth. And having said that, there doesn't seem to be an increase in switching, and/or -- so we're all getting and driving more screening, more detection, and more growth in the marketplace, and really kind of positioning our product in a sense to kind of win those new patients.

And then second, how do you think we should think about the new Keveyis patent? Obviously this represents a barrier to any potential future generic. Should we also be thinking about this as relevant to the current generic that's on the market right now?

Well, I think the way we think about it is with this kind of protection, we for sure are really confident in investing more, in finding more patients and getting them on therapy, so from that perspective, we have maintained this brand for the last 1.5 years based on driving new patients in a space with a non-exclusive situation. So we know we can grow it in a non-exclusive situation, and it only gets better if it somehow becomes more exclusive later on. But for now, we're excited in and of itself that we can continue to grow this and really drive some growth in the future.

Your next question comes from the line of Roanna Ruiz with Leerink.

You have Ryan on for Roanna. Congrats on the quarter. Maybe just two from us. Can you help frame how discontinuation rates are looking for Recorlev? And are you seeing any signs of patients reentering the funnel that may have previously dropped off therapy? And then maybe as you think about peak sales for Recorlev, like what are the key levers here that could potentially accelerate the timeline to that peak sales of a billion dollars?

So discontinuation rates have been pretty steady and stable. We don't really see any movement in that. We do see small amounts of patients that go off and come back and things like that. So again, none of those trends have really changed, but they've been pretty consistent. In terms of peak, I think this is an important point for everybody is this is a market where it takes a lot of effort. These are complex patients that need to be diagnosed, screened, and treated, so it's more of a scalable kind of process to get these patients on drug and get them stabilized on drug, get them titrated, and keep them on drugs. So it's one of those areas where continued investment will be required both from a commercial standpoint, but also from a data generation and or data dissemination standpoint. Those are critical aspects to really sustaining the long-term growth of this category.

Your next question comes from the line of Leland Gershell with OpCo.

This is Tracy on for Leland. Congrats on the quarter. Just one from us. Can you give us a sense of how to think about the XP-8121 Phase III program's impact on OpEx going forward?

Yes, so I think Tracy, thanks for the question. I'll take this one. We guided to an increase in R&D this year of $25 million. That increase is almost entirely for XP-8121 and starting the trial later this year, so it's everything that goes into that. As the trial unfolds next year, I think it's reasonable to expect a similar increase in R&D spend as the trial ramps up. And so we'll lay that out in terms of our guidance early next year specifically and you'll be able to understand exactly how that kind of tracks out with everything that we're laying out in terms of the program in September at the webinar.

There are no further questions at this time. I will now turn the call back to John Shannon for closing remarks.

Thanks everyone. As you just heard, the second quarter marked another remarkable period for Xeris, underscoring sustained commercial momentum and disciplined execution against our strategic priorities. Recorlev is growing and driving the business, Gvoke is back on track, and Keveyis has delivered a landmark IP win. At the same time, we continue to advance the next phase of our growth story. Our XP-8121 program is progressing well, and with Phase III initiation expected before year end, we believe we're approaching an important inflection point for the program. Our XP-8121 program overview on September 9 will provide investors with a closer look at what we are building. In closing, we entered the second half of 2026 with strong commercial momentum, a strengthened financial foundation, and a pipeline that positions us well for continued growth. Thank you for joining us today, and thank you for your continued support and interest in Xeris Biopharma.

This concludes today's conference. Thank you for attending. You may now disconnect.