J.P. Morgan Healthcare Conference 2023 Transcript

Transcription may have some errorsapologize in advance

Paul Edick – I would remind everyone to pay attention to our forward looking statements. Investing is always a risk. We’ll start out with an overview of the company. Xeris has a very diversified revenue base. We have three marketed assets, all growing record level. I’ll talk a little bit about it’s in the launch stage and this year we have guided to 105 or 2022. We’ve got it to 105, 210. We’ll finish at the top end of that range. We have a specialized commercial platform, endocrinology, and in neurology we’ll go into some of the products. Our pipeline is emerging. We’re developing. We have underlying technologies that I’ll talk about XeriSol and XeriJect. We’re developing products for our own commercialization, but we’re also developing products with partners using our XeriJect technology that I’ll spend a couple of minutes on as well. We’re in a strong financial position. I won’t go through all the pieces, but we’re going to end the year. We guided to 110 to 120 million in cash. By the end of the year. We’re going to end above that. So very healthy capital position and an experienced management team that’s been there done that a few times. I’ll first talk about our approved products. We have three, the first one being Gvoke. The most important product that we have, it’s for severe hypoglycemia, for people who are on insulin, predominantly in three forms a an auto injector, a prefilled syringe and a vial of liquid. We also have a drug in the name of conveyance for peri primary peripheral paralysis. Say that three times fast and recall live for Cushing’s syndrome. I’ll talk about all three of them in some detail. Let’s talk about. It’s ready to use liquid glucagon for the treatment of severe hypoglycemia. If you’re familiar with glucagon at all, for hypoglycemia, historically there’s only been a mix kit, a kit that you have lyophilized after remix, draw it out in a syringe, etc. If you’re having a severe event as a low blood sugar, you’re not going to be able to do that. These ready to use products are really what are going to be the mainstay going forward and Gvoke is the primary one in the market. Very easy to do. It’s like it’s easier than an EpiPen. People refer to it as the EpiPen for diabetics. You pull off the red cap, you press the yellow and on abdomen, thigh arm. You hold it down for 5 seconds. You hear a click, the window goes red. You’ve been treated very easy, very convenient. And it’s incredibly important when you think about it. There are 8.4 million people in the United States today who are on insulin. The number one side effect of being on insulin is low blood sugar. And anyone who is on insulin that experiences a low blood sugar can go severely low at any moment. You can go for ten years and never have a severe low and then all of a sudden you do. So it isn’t a category where you can predict who is more at risk than others, because the mere fact of being on insulin puts you at severe risk. The unfortunate thing is of those 8.4 million people historically and even now post pandemic, and I think the pandemic has had a lot to do with not really getting this market energized the way it should. But only about a 10% of that population actually has ready to use glucagon for an emergency. And that, to a large degree, is really sad at the end of the day, because there are over 250,000, as much as 300,000 hospital emergency room visits every year for severe hypoglycemia. Somewhere between 25 and 30,000 people die every year from severe hypoglycemia. Yet physicians are not yet motivated enough that every time you prescribe an insulin product, you should prescribe it ready to use glucagon for rescue in particular that want. This is what the market has looked like historically. You can see the blue line at the top is 2022. We’re really we’re starting to see growth. We’re starting to see acceleration. We’re almost at double digit growth. A lot of that has been muted. If you see the green line down there, that was 2020, I believe, which was just a terrible year because of COVID. But now that we’re out of the pandemic, we think this market is going to start to grow again. It’s us and Lilly at the end of the day that are really going to drive it. If you look at new prescriptions the next year, Lilly is is the red line. They have a product called Baqsimi, which is a nasal version. We are the blue line and together we have about 70, 75% of new prescriptions. And the old legacy kits are the purple line that is declining and that’s going to keep declining. What that results in is a market that is predominantly the new ready to use products. Now the old legacy kits down below 40% and continuing to decline and us and Lily And you can see that on the previous slide and on this slide, the gap between their market share and our market share is starting to close. We anticipate over time that we’re going to split this market and that 80 to 90% of the market will be the new ready to use products that lend themselves to easy administration, but also self-administration. The ability to rescue oneself has never existed until these ready to use products. Moving on to Keveyis. Keveyis is approved for the treatment of hyperkalemia and hyperkalemia related clinic issues related to primary periodic paralysis. This is a very interesting, rare, rare, just rare condition. That. And that unique thing about Keveyis and unique thing about PPE is doctors. Clinicians don’t identify these patients. They treat all of the symptoms, they treat the periodic paralysis, they treat the the events of paralysis in the extremities. They treat some of the other side effects, but they don’t recognize the constellation of issues. What we do is we, through the analysis of payor data, through the analysis of CPT for an ICD ten codes, we’re able to go in and identify a constellation of treatment. Episodes and a constellation of issues that people are having. We can go to a physician and say, look, we’ve analyzed your practice and based on that analysis and this constellation of things you’re treating, we think you’ve got a patient. Can we figure out who that patient is? Get him into the office, get him identified, get him on treatment. So the only way these patients are identified is through our analysis of billing and diagnosis data. Once identified, then physicians are very willing to put them on therapy. You can see over the last several years, this product has grown dramatically, continues to grow. You see nine months through 20, 22, 35 million that was reported in the third quarter and it continues to grow. We had a great fourth quarter. One thing to note, that was a generic that was approved for Keveyis. The important thing to understand about a generic and anywhere category is most of our products are only provided through a specialty pharmacy one specialty pharmacy. Most physicians write dispense as written for these kinds of patients because they want to make sure they get the product they’re intending. So there are a lot of barriers to entry, and the average payer only has two or three of these patients. So getting getting payers to really be active is is going to be a challenge for anybody. So we believe we can defend this business and even grow it in the future. Moving on to Recorlev, Recorlev levels of cortisol synthesis inhibitor. Basically what we do with with Recorlev is we normalize cortisol in Cushing’s syndrome. Okay. For those of you who are familiar with Cushing syndrome, you know that it’s a serious rare endocrine disorder caused by the overproduction of cortisol. Most of these patients have surgery and in Cushing’s causes, all kinds of different issues from heart attack, stroke, obesity. I can go on and on. And it’s a debilitating condition. It’s a debilitating disease. And to a large degree, the products that have been on the market have not been terribly effective at. Normalizing cortisol. That’s what Recorlev does. And if you look at the population, it’s a relatively small population at the diagnosis level. But by the time you get down to the therapeutically treated population, it’s only about 8000. And then those who are targeted that we’re targeting are the ones that are not well controlled, are not seeing control of and or normalization of cortisol. That in and of itself is about 40% of the population about that are uncontrolled, and that represents better part of a $2 billion opportunity. If you look at the market, you see a number of products, several of which that are used, several of which are not indicated. Recorlev of has been studied in Cushing’s has been approved in Cushing’s as a label in Cushing’s. It’s indicated in Cushing’s and is highly effective with relatively low side effects. When you compare that to some of the other products, there are some that will patients feel good, but the cause of their cortisol is not being controlled or normalized. There are other products that are doing something relative to cortisol normalization, but with a lot of side effects histories of, for example, very high androgenic side effects, hirsutism hair growth. So and the other thing you’ll see when you look at this chart is there’s a lot of products, both generic and brand. There’s room for a lot of improvement in terms of patient satisfaction. And like I said, it’s easily 30% of the patients that are on drug are not being satisfied. They’re not getting to normalized cortisol and they’re not having, you know, relief of side effects. So and that I already said this slide. So despite the availability of new therapies, there’s still a great deal of switching and churn and unmet need in this category. 27% of patients discontinue for whatever therapy they’re on, which is incredibly high. So we think the record level fills this unmet need very effectively. So provides the best opportunity for active long term cortisol, normalization, rapid and sustained reduction of cortisol. We surround the patient with both patient resources, partner resources like mentors, a buddy system. There’s a number of things we do to make sure that patients are can get on therapy and stay on therapy effectively. And Recorlev, even in the label, has good monitoring protocol. So we were very excited about it. For all of it’s off to a very good start in a couple of quarters. We reported 2.5 million in the third quarter. One of the important things to keep in mind, to look at that and say, oh, it was like a million, only a couple of million. These patients are once identified. There’s a refer. It’s not a prescription. They don’t go to Walgreens. It’s a referral. That referral has to have lab work, has to have an EKG. Patients got to be go through payor authorization. We need to get authorization for payment from whatever their insurance is, and then they’re put on therapy. That takes time, sometimes two, three, four months for a patient, depending on the difficulty of clearing insurance. The other thing that’s got to happen is these these patients are started on a low dose and they’re titrated up slowly. It takes several months before they’re ever going to get to the maximum dose of the most effective dose. So this is a one patient at a time. Nice slow growth, but high very, very big opportunity down the road. Oops. Backwards. Sorry. The other two. Just just a quick mention. We’ve built a relatively large commercial organization to support all three of these brands. Gvoke between field sales, inside sales that we built during the pandemic because you couldn’t call on doctors, retail trade, medical fairs, there’s approximately 175 teams in there. Recorlev has a dedicated organization, very similar pharmacy services, patient support, medical affairs, about 30 FTEs, and Keveyis has a dedicated organization of about 30 as well, with a lot of the same things. Patients support, patients, pharmacy services. All in all, about 230 customer recent customer facing resources in the company and room to grow. So. Those are our commercial assets. We also have several development assets based on our technologies. We have two approaches to formulation chemistry, one that we call as XeriSol and one that we call XeriJect. XeriSol we take products that are not stable in solution, maybe not terribly soluble. We can make them stable and soluble. Part of that is taking the water out of formulations, putting in liquids that act like water but aren’t really water that’s glucagon. For example, there was never no one has ever been able to develop a ready to use liquid room temperature, stable glucagon. We were the first and only ones to be able to do that. Then we have an approach to chemistry called XeriJect. If you listen to the news we’ve seen the press releases. We did a deal with Merck to take one of their large molecules that’s currently in IV therapy and turn it into a prefilled subcutaneous injection. We’re working with a company called Horizon on a drug called Tepezza, which is currently about a $3 billion franchise to once again take that from infusion in I.V., which takes an entire day eight infusions over the course of five months and turn it once again into a subcutaneous injection will take 15 seconds. If you compare that, for example, to other kinds of technologies, we compare very favorably to a household name. Everybody knows Halozyme is on our product can potentially be self-administered. Halozyme product is still kind of a long 55 to 50 minute infusion. We can do a 50 to 30 second injection. We have room temperature stability. They don’t really challenge stability and it’s ready to use, you know, potentially for self-administration and whatever, depending on the drug. This slide is for demonstration purposes because we wanted to kind of characterize the time it takes and also who’s in control at the end of the day. These are partner programs, the Partners in control. And you can see at the bottom there are several programs for working with companies that have large molecules that really have we’ve hit what we need to do, but they haven’t necessarily decided whether they’re going to take the product forward into full clinical development and into regulatory, you know, commercialization. So we wait at whatever point they decide to go forward. Then there’s preclinical phase one, phase two, etc. Pretty normal programs, Merck and Horizon are in the formulation development stage. That takes time and could be anywhere from a year to two years. We’ve got to formulate, we’ve got to optimize. They’re probably going to do preclinical work in terms of getting R&D, enabling studies done. So before they’re going to pick up the option to take it into clinical development and commercialization. But all of these deals there will be, we believe, at some point, especially with the Merck and Horizon deal, those come with development milestones, regulatory milestones, commercial milestones. So this piece of the business could be quite valuable down the road in the way we’re using our technology for our own portfolio currently is developing our lead asset, which is a once weekly liquid subcu liquid levothyroxine for subcutaneous injection. So taking what is today an oral therapy that anywhere from 15 to 30% of patients either don’t absorb the oral properly, can’t handle the side effects of the oral gastrointestinal. It’s a very large subset of patients that our market research says would be very open to a once weekly subcu injection. We’ve developed that. We’re moving into dose ranging in phase two. We hope to get that study started early in the second half of the year. The Levothyroxine is the second, first or second most prescribed drug in the United States. Huge opportunity. If we just take the 30% of patients that are experiencing problems, it’s easily a two or $3 billion market segment that we would have a product for. So very excited about that. And it’s moving through the clinical program as aggressively as we can move it. It’s a large market. We’ve already demonstrated proof of concept. The dose conversion is is perfectly linear. We’ve studied the three doses in an ascending manner. The it’s perfectly linear in terms of 4 to 1 conversion. So we think in the dose finding, we’ll see the same result as we get into that next study. Our portfolio or the entire portfolio, both with XeriJect, XeriSol and any drug we work on for a partner is is the patent estate is huge. We patent our process with every individual drug we patent. How we get to that drug with XeriSol, for example. We patent the method of administration because XeriJect is a delivery mechanism. At the end of the day, we don’t change the molecule. What we do is we get it into the subcutaneous tissue. Our medium goes away and the drug reconstitutes in the body. So very excited about that and really strong intellectual property of state. The team that we’ve assembled has been together in various forms for 30 years. We’ve done several companies together, very experienced team, built and developed many products and many companies. So in conclusion, what I would say is we have a very diversified current revenue base with multiple marketed products in multiple therapeutic areas. We’ll do upwards of $110 million when we announced 2022. We have a specialized commercial platform that can cover both neurology and endocrinology and some high value primary care. We’re building a diverse pipeline both for our own use and for partners, which gives us a very, very good amount of flexibility in the future. We’ve we’ve got a lot of cash. We’re going to report over 120 million at the end of 2022, and we’ve got an experienced management team. So with that, I would say thank you and open it up to questions. The.

Speaker 2 – Thank you, Paul. We’ll open the floor for any questions. I can kick things off volume mentioned about the Keveyis product. Could you please talk more about the Stonebridge acquisition and your strategy to defend the growth franchise for the foreseeable future? And also, please elaborate on any IP risks.

Paul Edick – So the Strongbridge acquisition was, an enabling acquisition for us in terms of enterprise development, it was the perfect addition of a company. We were able to acquire the Keveyis product which was intact and growing for commercial asset, and we acquired Recorlev of product that was in front of the FDA. We had a high degree of confidence that it would be approved. We had an endocrinology commercial organization. So and we were able to realize $50 million of synergies through that acquisition. We were able to get the deal at a relatively inexpensive, very low premium. So it really did it did accelerate our entire enterprise development.

Speaker 2 – Thank you. Just going back to the. The press release, which was done last week. And then also you mentioned about it earlier in the presentation, thought that at the end of 2020, do the cash and cash equivalents would be approximately 120 million. So how do you protect your cash runway?

Paul Edick – We’ve got plenty of we’ve got more than enough cash to get to cash flow break even. We’ve said we’re going to get the cash flow breakeven by the end of 23. We will do that. We’ve got cash to get to profitability. So one of the things people always ask about little companies like us is when’s the next time you’re going to raise money? And we’ve been pretty emphatic we’re not going to. So we can run our operations. We can run our our company to profitability with the cash that we have and the cash flow we generating.

Speaker 2 – Okay. Thank you. In terms of Recorlev, there was that chart with Q1, Q2 and Q3 sales. Could you please help us understand the sales cycle? And then also what what the expansion and the growth strategy would be for that product?

Paul Edick – Yeah, Recorlev of it’s an interesting product. It’s a rare disease. So the the the the patient journey, the process, once a patient is identified, the physician has to do a series of lab tests. They have to do an EKG. A lot of times physicians have those those labs, they do the labs in their office. They might have an EKG, but very frequently they will still schedule a patient to come back for labs or they’ll send them to an outside lab or the schedule and to come back to the EKG, or they’ll send them to the clinic for an EKG. So the patient journey takes a little bit of time. There’s several visits. Then a referral is generated. That referral goes to the specialty pharmacy, and the specialty pharmacy has to clear insurance. And then the specialty pharmacy and our patient partners engage with the patient to initiate the process of clearing insurance. Once insurance is cleared, all the tests are done, the referral is complete. Then the patient is started on the lowest dose of the drug and they’re monitored to see how they’re doing. And the physicians will begin to titrate up until they hit the most effective dose. And it’s on an individual patient basis. So some patients, they could be from diagnosis to on therapy a few weeks to a month. And there are some patients that could be 4 to 6 months before they’re really on therapy and beginning their titration.

Speaker 2 – Thank you. And then moving on to the last commercial product in your pipeline Gvoke. In the statement which was released earlier in the week there, but it was mentioned that a better than expected prescription of Gvoke. So how how do you think about the market opportunity for that?

Paul Edick – Yeah, so two things there. One, the opportunity remains huge. There’s 8 million people, over 8 million people on insulin. The number one side effect of insulin is very low blood sugar. That’s what we do is prevent severe low blood sugar. So the opportunity remains huge and you don’t have to find the patients there. They’re there everybody who’s taking insulin, daily insulin. The better than expected growth is if you look at the market, you see that the first quarter is usually a little slow. Second quarter begins to accelerate. The third quarter is pretty good because of the back to school. And people want to make sure that their children have driven before they go to school. And then you usually see the fourth quarter drop, which it did, but not as much as normal. So that was encouraging that the fourth quarter, that’s usually a little down. There’s a lot of short weeks in there. All the holidays, we were encouraged by that. So it continues to grow. And I think 2022, I think on the slide, it’s going to end up being about 9% growth. I think it’s close to double digits pre-pandemic the it was growing between 25 and 30%. So we think eventually we’ll get back to that. Okay.

Speaker 2 – So moving on to the pipeline products for that. XeriJect, you mentioned about the collaboration with Horizon and then also with Merck on the slide. So what what can we expect from those partnerships?

Paul Edick – Yeah, I wish I could tell you more. There’s not a lot that they. So the fact that we could say the name and what we’re working on is a step in the right direction. We’ve got several partners that we can’t say who it is or what we’re working on, but the way it works is we need to hit a target product profile, which is the formulation process and optimization of that formulation. And then Merck, for example, has the has an option to pick up the license. And then once they do, then it’s a traditional development program and we get development, regulatory and commercial milestones and those already agreed to. So once they pick up the option that goes into effect Horizon, you know, similar process, a little bit different, the deal’s a little bit different, but same kind of thing, development, regulatory and commercial milestones that once they signed the license and we had a target product profile that long kick in in terms of what to expect, in terms of announcements and things and points of inflection. That’s one of the reasons we show the one slide where it takes a good year, 18 months, sometimes longer to really get there because of the formulation process and the XeriJect. We can we can formulate just about any large molecule, any monoclonal antibody, because we don’t change the drug in any way. We suspended in our system, injected in the subcutaneous tissue, our system disintegrates and the drug reconstitutes in the body. So we’re confident we can do our part. It’s a matter of whether the company wants to then take it forward in full clinical development that our deal would kick in with with one what what one can argue is significant upside financial benefit.

Speaker 2 – Thank you. Moving on to my last question. It’s it’s for XP-8121. You mentioned that there was a positive phase one data and that you would be entering into phase two sometime later this year. Could you talk more about that pro program? And then and also the plans for the upcoming Phase two trials?

Paul Edick – Yeah, so that’s the label Levothyroxine product. As I mentioned, Levothyroxine is is a huge product and there is a significant percentage of those patients that are not able to stay on it because of the size of it, because of the gastrointestinal side effects or lack of absorption. So our phase one study was to P.K. PD study to be able to see what the dose conversion is. And we did three doses in an ascending manner and we saw a perfectly linear relationship that we know what the what the conversion from oral to liquid will be at any dose. And we were able to model any dose you could think of it. And we went to the FDA with a proposal to go straight to phase three and use that statistical modeling as the phase two and very, very reasonably that the FDA said we’d like a little bit more phase two data, a little bit more dose ranging data, and then come back and we’ll we’ll discuss a Phase three program. So that’s the study we’re going to do. We anticipate that will be the data will be just as good and hopefully we will get that started. I’m pretty sure we’ll get that started in the second half of this year. And then we’ll go back to the FDA with a Phase three proposal. We have the we have the ability and the capability to develop that product ourselves where we can commercialize it ourselves. So we’re really excited. And it’s a $2 billion opportunity.

Speaker 2 – Thank you. If No further questions. This will be the end of the session. Thank you, everyone, for your time.

Paul Edick – Thank you.

Leave a Reply