Xeris Biopharma Holdings Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes to those financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and with the audited financial statements and the notes to those financial statements included in the Annual Report on Form 10-K filed on March 6, 2024 with the U.S. Securities and Exchange Commission. In addition to financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "would," "may," "should," "expects," "focus," "goal," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and terms of similar meaning are also generally intended to identify forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including without limitation, the regulatory approval of our product candidates, our ability to market and sell our products and product candidates if approved, and factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 and elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statements contained herein speak only as of the date hereof, and Xeris expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes to those financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and with the audited financial statements and the notes to those financial statements included in the Annual Report on Form 10-K filed on March 6, 2024 with the U.S. Securities and Exchange Commission. In addition to financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "would," "may," "should," "expects," "focus," "goal," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and terms of similar meaning are also generally intended to identify forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including without limitation, the regulatory approval of our product candidates, our ability to market and sell our products and product candidates if approved, and factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our other subsequent filings with the U.S. Securities and Exchange Commission, including elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statements contained herein speak only as of the date hereof, and Xeris expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Previous wording

XP-8121 is a novel formulation for subcutaneous administration that could potentially mitigate many of the challenges associated with oral formulations, such as identification of an ideal dose due to absorption variation and medication adherence for patients who have difficulty maintaining a stable, therapeutic serum level. Preclinical studies of XP-8121 showed a sustained plasma exposure profile and similar highest concentration of a drug in the blood, or Cmax, when compared with equivalent doses of the oral formulation. We conducted a Phase 1 study of XP-8121 to evaluate the pharmacokinetics, safety and tolerability, and potential for weekly dosing in the treatment of hypothyroidism.

Current wording

XP-8121 is a novel formulation for subcutaneous administration that could potentially mitigate many of the challenges associated with oral formulations, such as identification of an ideal dose due to absorption variation and medication adherence for patients who have difficulty maintaining a stable, therapeutic serum level. Preclinical studies of XP-8121 showed a sustained plasma exposure profile and similar highest concentration of a drug in the blood, ("Cmax"), when compared with equivalent doses of the oral formulation. We conducted a Phase 1 study of XP-8121 to evaluate the pharmacokinetics, safety and tolerability, and potential for weekly dosing in the treatment of hypothyroidism.

Previous wording

In October 2022, we reported positive topline Phase 1 data of XP-8121. The data showed that subjects receiving XP-8121 subcutaneous had slower absorption, lower peak plasma, and higher extended exposure compared to Synthroid PO at the comparable dose of 600 μg. In addition, exposure was proportional over the range of ascending XP-8121 doses studied. Simulations based on a population pharmacokinetic model indicated that exposure from weekly XP-8121 1200 μg SC doses overlapped daily Synthroid PO 300 μg suggesting a dose conversion factor of 4x. Importantly, single SC doses of XP-8121 at all doses were generally well-tolerated and the XP-8121 doses studied were generally comparable to Synthroid 600 μg PO with respect to the safety findings. In June 2023, we initiated a non-randomized, open-label, single arm, self-controlled Phase 2 study to determine a target dose conversion factor from stably dosed oral levothyroxine to XP-8121 in patients with hypothyroidism and also assess the safety and tolerability after once-weekly subcutaneous injections. The data established an average once-weekly SC dose of XP-8121 and confirmed previous Phase 1 study of a 4x target dose conversion factor when switching from once-daily oral administration of levothyroxine. Participants who completed the study rated higher treatment satisfaction with XP-8121 compared to oral and a majority (72%) indicated a strong preference for the subcutaneous route of administration. An FDA End-of-Phase 2 interaction to facilitate a Phase 3 pivotal study program is expected by year-end.

Current wording

In October 2022, we reported positive topline Phase 1 data of XP-8121. The data showed that subjects receiving XP-8121 subcutaneous had slower absorption, lower peak plasma, and higher extended exposure compared to Synthroid PO at the comparable dose of 600 μg. In addition, exposure was proportional over the range of ascending XP-8121 doses studied. Simulations based on a population pharmacokinetic model indicated that exposure from weekly XP-8121 1200 μg SC doses overlapped daily Synthroid PO 300 μg suggesting a dose conversion factor of 4x. Importantly, single SC doses of XP-8121 at all doses were generally well-tolerated and the XP-8121 doses studied were generally comparable to Synthroid 600 μg PO with respect to the safety findings. In June 2023, we initiated a non-randomized, open-label, single arm, self-controlled Phase 2 study to determine a target dose conversion factor from stably dosed oral levothyroxine to XP-8121 in patients with hypothyroidism and also assess the safety and tolerability after once-weekly subcutaneous injections. The data established an average once-weekly SC dose of XP-8121 and confirmed our previous Phase 1 study of a four-time target dose conversion factor when switching from once-daily oral administration of levothyroxine. Participants who completed the study rated higher treatment satisfaction with XP-8121 compared to oral levothyroxine and a majority (72%) indicated a strong preference for the subcutaneous route of administration. An FDA End-of-Phase 2 interaction to facilitate a Phase 3 pivotal study program is expected by year-end.

Previous wording

We currently own 178 patents issued globally, including composition of matter patents covering our ready-to-use glucagon formulation that expire in 2036. Included in the total patents, we have 64 granted patents globally related to our platform technologies and 8 patents granted in the United States and listed in the United States FDA Orange Book covering proprietary formulations of levoketoconazole (the active pharmaceutical ingredient in Recorlev) and the uses of such formulations in treating certain endocrine-related diseases and syndromes. The latter includes United States Patent Nos. 11,020,393, 11,278,547 and 11,903,940, which were granted on June 1, 2021, March 22, 2022, and February 20, 2024, respectively, and which provide patent protection through 2040 for the use of Recorlev in the treatment of certain patients with persistent or recurrent Cushing's syndrome.

Current wording

We currently own 179 patents issued globally, including composition of matter patents covering our ready-to-use glucagon formulation that expire in 2036. Included in the total patents, we have 64 granted patents globally related to our platform technologies and 8 patents granted in the United States and listed in the United States FDA Orange Book covering proprietary formulations of levoketoconazole (the active pharmaceutical ingredient in Recorlev) and the uses of such formulations in treating certain endocrine-related diseases and syndromes. The latter includes United States Patent Nos. 11,020,393, 11,278,547 and 11,903,940, which were granted on June 1, 2021, March 22, 2022, and February 20, 2024, respectively, and which provide patent protection through 2040 for the use of Recorlev in the treatment of certain patients with persistent or recurrent Cushing's syndrome.

Previous wording

For the six months ended June 30, 2024 and June 30, 2023, we reported net losses of $34.0 million and $36.7 million, respectively. We have not been profitable since inception, and, as of June 30, 2024, our accumulated deficit was $651.0 million. In the near term, we expect to continue to incur significant expenses, operating losses and net losses as we:

Current wording

For the nine months ended September 30, 2024 and September 30, 2023, we reported net losses of $49.7 million and $48.9 million, respectively. We have not been profitable since inception, and, as of September 30, 2024, our accumulated deficit was $666.7 million. In the near term, we expect to continue to incur significant expenses, operating losses and net losses as we, among other things:

Previous wording

The following discussion sets forth certain components of the statement of operations of Xeris for the three and six months ended June 30, 2024 and 2023 as well as factors that impact those items.

Current wording

The following discussion sets forth certain components of the statement of operations of Xeris for the three and nine months ended September 30, 2024 and 2023 as well as factors that impact those items.

Previous wording

Royalty and contract revenue is recognized as earned in accordance with contract terms when it can be reasonably estimated and collectability is reasonably assured. Revenue generated from various collaboration and technology partnerships are included in this line.

Current wording

Royalty and contract revenue is recognized as earned in accordance with contract terms when it can be reasonably estimated and collectability is reasonably assured. Revenue generated from various collaboration and technology partnerships are included in this line item.

Previous wording

Cost of goods sold primarily includes product costs, which include all costs directly related to the purchase of raw materials, charges from our contract manufacturing organizations, and manufacturing overhead costs, as well as shipping and distribution charges. Cost of goods sold also includes losses from excess, slow-moving or obsolete inventory and inventory purchase commitments, if any. Manufacturing costs for Gvoke and Recorlev incurred prior to approval and initial commercialization were expensed as research and development expenses.

Current wording

Cost of goods sold primarily includes product costs, which include all costs directly related to the purchase of raw materials, charges from our contract manufacturing organizations, and manufacturing overhead costs, as well as shipping and distribution charges. Cost of goods sold also includes losses from excess, slow-moving or obsolete inventory and inventory purchase commitments, if any.

Previous wording

Research and development expenses consist of expenses incurred in connection with the discovery and development of our products and product candidates. We recognize research and development expenses as incurred. Expenses that are paid in advance of performance are capitalized until services are provided or goods are delivered. We track external research and development costs by project, however, personnel related expenses related to research and development are not allocated by project. Research and development expenses include:

Current wording

Research and development expenses consist of expenses incurred in connection with the discovery and development of our products and product candidates. We recognize research and development expenses as incurred. Expenses that are paid in advance of performance are capitalized until services are provided or goods are delivered. We track external research and development costs by project, however, personnel related expenses related to research and development are not allocated by project. Research and development expenses primarily include:

Previous wording

The following table summarizes our results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

Net revenue decreased by $0.6 million or 2.3% for the six months ended June 30, 2024 compared to the same periods ended June 30, 2023. The decrease was due to lower volume ($2.2 million or 8.3%) partially offset by an increase in net pricing ($1.6 million or 6.0%).

Current wording

Net revenue decreased by $3.7 million or 23.1% for the three months ended September 30, 2024 compared to the same period ended September 30, 2023. The decrease was due to lower volume ($2.9 million or 18.0%) and unfavorable net pricing ($0.8 million or 5.1%).

Previous wording

Net revenue decreased by $1.0 million or 6.8% for the three months ended June 30, 2024 compared to the same periods ended June 30, 2023. The decrease was due to lower volume ($1.3 million or 9.4%) partially offset by an increase in net pricing ($0.3 million or 2.6%).

Current wording

Net revenue decreased by $4.3 million or 10.1% for the nine months ended September 30, 2024 compared to the same period ended September 30, 2023. The decrease was due to lower volume ($5.4 million or 12.6%) partially offset by favorable net pricing ($1.1 million or 2.5%).

Previous wording

Cost of goods sold increased by $0.2 million or 3.1% and $0.9 million or 6.9% for the three and six months ended June 30, 2024 compared to the same periods ended June 30, 2023, respectively.

Current wording

Cost of goods sold increased by $5.4 million or 65.7% and $6.3 million or 29.8% for the three and nine months ended September 30, 2024 compared to the same periods ended September 30, 2023, respectively.

Previous wording

Cost of goods sold as a percent of total product revenue decreased by 3.7%, to 16.7% for the three months ended June 30, 2024 compared to 20.5% for the same period ended June 30, 2023, primarily due to higher sales of products with a lower cost of goods sold ($0.7 million or 2.0%).

Current wording

Cost of goods sold as a percent of total product revenue increased by 6.0%, to 25.7% for the three months ended September 30, 2024 compared to 19.7% for the same period ended September 30, 2023, primarily due to the write-off of Gvoke components as a result of manufacturing process changes required to support Gvoke capacity expansion efforts ($3.6 million or 6.8%), offset by higher sales of products with a lower cost of goods sold (0.8%).

Previous wording

Cost of goods sold as a percent of total product revenue decreased by 2.8%, to 15.9% for the six months ended June 30, 2024 compared to 18.6% for the same period ended June 30, 2023, primarily due to higher sales of products with lower cost of goods sold ($1.3 million or 1.8%).

Current wording

Cost of goods sold as a percent of total product revenue increased by 0.6%, to 19.6% for the nine months ended September 30, 2024 compared to 19.0% for the same period ended September 30, 2023, due to the write-off of Gvoke components as a result of manufacturing process changes required to support Gvoke capacity expansion efforts ($4.4 million or 3.2%), offset by higher sales of products with a lower cost of goods sold (2.6%).

Previous wording

Research and development expenses decreased by $0.3 million or 5.4% for the three months ended June 30, 2024 compared to the same period ended June 30, 2023, primarily driven by lower spending for our pipeline ($0.5 million), primarily XP-8121 ($0.9 million) offset by other projects ($0.4 million), and our technology development ($0.6 million) offset by an increase in personnel related expenses ($0.4 million).

Current wording

Research and development expenses increased by $0.9 million or 17.0% for the three months ended September 30, 2024 compared to the same period ended September 30, 2023, primarily driven by higher spending for our pipeline ($0.6 million), primarily XP-8121 ($0.4 million), and personnel related expenses ($0.5 million), offset by lower spending on our technology development ($0.3 million).

Previous wording

Research and development expenses increased by $2.7 million or 24.3% for the six months ended June 30, 2024 compared to the same period ended June 30, 2023, primarily driven by higher spending for our pipeline ($1.3 million) and personnel related expenses ($1.1 million).

Current wording

Research and development expenses increased by $3.5 million or 22.0% for the nine months ended September 30, 2024 compared to the same period ended September 30, 2023, primarily driven by higher spending for our pipeline ($1.9 million) and personnel related expenses ($1.5 million).

Previous wording

The following table summarizes our research and development expenses by type for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our research and development expenses by type for the three and nine months ended September 30, 2024 and 2023:

Previous wording

For the three and six months ended June 30, 2024 and June 30, 2023, amortization of intangible assets were both $2.7 million and $5.4 million, respectively.

Current wording

For the three and nine months ended September 30, 2024 and September 30, 2023, amortization of intangible assets were both $2.7 million and $8.1 million, respectively.

Previous wording

For the three and six months ended June 30, 2024, interest expense increased $1.4 million or 22.0% and $2.3 million or 17.7% compared to the same periods ended June 30, 2023, respectively. The increases in both periods were primarily due to a higher principal amount and increased interest rates.

Current wording

For the three and nine months ended September 30, 2024, interest expense increased $0.9 million or 13.7% and $3.2 million or 16.3% compared to the same periods ended September 30, 2023, respectively. The increases in both periods were primarily due to a higher principal amount and increased interest rates.

Previous wording

For the three and six months ended June 30, 2024, change in fair value of contingent value rights was a gain of $0.6 million and $4.0 million, respectively, compared to $0.8 million and $2.1 million for the three and six months ended June 30, 2023, respectively. The gain in the first half of 2024 were primarily due to the remeasurement of the CVR liability as a result of changes in our stock price prior to issuance of the common stock issued in settlement of the CVR and the revaluation of the CVR liability related to Recorlev 2024 sales milestone.

Current wording

For the three and nine months ended September 30, 2024, change in fair value of contingent value rights was a gain of $0.4 million and $4.4 million, respectively, compared to $0.9 million and $3.1 million for the three and nine months ended September 30, 2023, respectively. The gains were primarily due to the remeasurement of the CVR liability as a result of changes in our stock price prior to issuance of the common stock issued in settlement of the CVR in the first quarter 2024 and the revaluation of the CVR liability related to the Recorlev 2024 sales milestone.

Previous wording

For the six months ended June 30, 2024, deferred refinancing costs were $2.7 million related to the third party debt arrangements for advisory and legal fees.

Current wording

For the nine months ended September 30, 2024, deferred refinancing costs were $2.7 million related to the third party debt arrangements for advisory and legal fees.

Previous wording

Our primary uses of cash are to fund costs related to the manufacturing, marketing and selling of products, the research and development of our product candidates, general and administrative expenses and working capital requirements. Historically, we have funded our operations primarily through private placements of convertible preferred stock, public equity offerings of common stock, and issuance of debt.

Current wording

Our primary uses of cash are to fund costs related to the manufacturing, marketing and selling of products, the research and development of our product candidates, general and administrative expenses and working capital requirements. Historically, we have funded our operations primarily through private placements of convertible preferred stock, public equity offerings of common stock, and the issuance of debt.

Previous wording

We have incurred operating losses since inception, and we have an accumulated deficit of $651.0 million at June 30, 2024. Based on our current operating plans and existing working capital at June 30, 2024, we believe that our cash resources are sufficient to sustain operations and capital expenditure requirements for at least the next 12 months. We expect to incur substantial additional expenditures in the near term to support the marketing and selling of Gvoke, Recorlev and Keveyis as well as our ongoing research and development activities. We expect to continue to incur net losses for at least the next 12 months. Our ability to fund marketing and selling of Gvoke, Recorlev and Keveyis, as well as our product development and clinical operations, including completion of future clinical trials, will depend on the amount and timing of cash received from product revenue and potential future financings. Our future capital requirements will depend on many factors, including, but not limited to:

Current wording

We have incurred operating losses since inception, and we have an accumulated deficit of $666.7 million at September 30, 2024. Based on our current operating plans and existing working capital at September 30, 2024, we believe that our cash resources are sufficient to sustain operations and capital expenditure requirements for at least the next 12 months. We expect to incur substantial additional expenditures in the near term to support the marketing and selling of Gvoke, Recorlev and Keveyis as well as our ongoing research and development activities. We expect to continue to incur net losses for at least the next 12 months. Our ability to fund the marketing and selling of Gvoke, Recorlev and Keveyis, as well as our product development and clinical operations, including completion of future clinical trials, will depend on the amount and timing of cash received from product revenue and potential future financings. Our future capital requirements will depend on many factors, including, but not limited to:

Previous wording

Net cash used in operating activities was $30.7 million for the six months ended June 30, 2024, compared to $39.9 million for the six months ended June 30, 2023. The decrease in net cash used in operating activities was primarily driven by reduced working capital usage, partially offset by changes to the fair value of contingent value rights. For a discussion regarding product revenue, net and increases in spending, refer to "Results of Operations" included in this "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part I of this Quarterly Report on Form 10-Q.

Current wording

Net cash used in operating activities was $39.0 million for the nine months ended September 30, 2024, compared to $54.5 million for the nine months ended September 30, 2023. The decrease in net cash used in operating activities was primarily driven by reduced working capital usage. For a discussion regarding product revenue, net and increases in spending, refer to "Results of Operations" included in this "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part I of this Quarterly Report on Form 10-Q.

Previous wording

Net cash used in investing activities was $15.0 million for the six months ended June 30, 2024, compared to net cash provided by investing activities of $35.5 million for the six months ended June 30, 2023. Cash used in investing activities in 2024 was primarily due to net purchases of short-term investments.

Current wording

Net cash used in investing activities was $5.1 million for the nine months ended September 30, 2024, compared to $20.9 million for the nine months ended September 30, 2023. Cash used in investing activities in 2024 was primarily due to net purchases of short-term investments.

Previous wording

Net cash provided by financing activities was $35.9 million for the six months ended June 30, 2024, compared to net cash used in financing activities of $0.3 million for the six months ended June 30, 2023. The cash provided by financing activities in 2024 was primarily due to the net proceeds of $38.2 million of the debt refinancing from the Amended and Restated Credit Agreement.

Current wording

Net cash provided by financing activities was $35.8 million for the nine months ended September 30, 2024, compared to net cash used in financing activities of $0.4 million for the nine months ended September 30, 2023. The cash provided by financing activities in 2024 was primarily due to the net proceeds of $38.2 million from the term loan made to the Company on the closing date of the Amended and Restated Credit Agreement.