Xeris Biopharma Holdings, Inc. Common Stock 2026 Q2 Earnings Call

Good morning, everyone, welcome to Xeris Biopharma second quarter financial results conference call. 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, Steven 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 a 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, 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. With that, I'll turn the call over to John.

Thank you, Allison, 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, Gvoke improved sequentially as we expected. 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. 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-$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. 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. 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 1 million or so do. Closing that gap remains an important opportunity for us. More importantly, a meaningful way to improve patient outcomes. 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 continued to build an even stronger intellectual property estate around this important product and our proprietary formulation technology. On July 28, 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 multibillion-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 9, we will host a dedicated XP-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 Steven, 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. 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. With that, I'll turn the call over to Steven.

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.