Xeris Biopharma Holdings - Earnings Call - Q2 2025

Executive Summary

• Xeris delivered record Q2 2025 revenue of $71.5M, up 48.8% year-over-year, with Recorlev driving growth (+136% YoY to $31.4M) and a sharply narrower net loss of $1.9M (EPS -$0.01), versus $15.0M (EPS -$0.10) a year ago.
• The company raised FY 2025 total revenue guidance to $280–$290M (from $260–$275M), citing continued demand momentum, particularly in Recorlev, and operational discipline; management also now expects low-to-mid-teens increases in SG&A and R&D versus prior mid-to-high single-digit guidance.
• Gross margin was 82% in Q2 (vs. 85% in Q1), reflecting non-routine expenses tied to Gvoke capacity expansion; Adjusted EBITDA improved to $12.5M from ($0.4)M in Q2 2024 and from $4.4M in Q1 2025, underscoring stronger operating leverage.
• Street estimates were exceeded: revenue beat by ~$7.96M and EPS beat by ~$0.02 in Q2 2025; management’s guidance raise and Recorlev trajectory are likely catalysts for estimate and sentiment upgrades*.
• Near-term stock reaction catalysts include: a clear revenue beat, raised full-year guidance, sustained Recorlev demand, and confirmation of positive adjusted EBITDA going forward; watch for increased OpEx to fund commercial expansion and XP-8121 advancement.

What Went Well and What Went Wrong

What Went Well

• Recorlev momentum: “RECORLEV continues to lead our growth… reaching over $31,000,000 of revenue in the quarter,” with average patients on therapy +122% YoY; management emphasized “RECORLEV is the right product at the right time”.
• Broad-based demand: Gvoke revenue +17% YoY to $23.5M, supported by prescription growth (+5%) and favorable gross-to-net; CFO expects “favorability to continue for the balance of the year”.
• Profitability improvement: Adjusted EBITDA of $12.5M vs. ($0.4)M in Q2 2024 and $4.4M in Q1 2025; net loss improved to $1.9M vs. $15.0M in Q2 2024, demonstrating operating leverage and disciplined expense management.

What Went Wrong

• Gross margin dip: Q2 gross margin fell to 82% from 85% in Q1 due to non-routine expenses tied to Gvoke capacity expansion; while modest, it softened sequential margin performance.
• Keveyis decline YoY: Keveyis revenue decreased 12.5% YoY to $11.5M due to “a reduction in product shipments,” highlighting ongoing shipment variability despite sequential stability.
• Higher OpEx trajectory: Raised FY 2025 OpEx guidance (SG&A/R&D low-to-mid-teens increase vs. prior mid-to-high single digits) to support Recorlev expansion and XP-8121, which may temper near-term margin gains even as Adjusted EBITDA remains positive.

Transcript

Speaker 5

Hello everyone, and thank you for joining the Xeris Biopharma Holdings second quarter 2025 earnings conference call. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. I'll now hand over to your host, Allison Wey, Senior Vice President of Investor Relations and Corporate Communications, to begin. Please go ahead, Allison.

Speaker 3

Thank you, Sammy. Good morning everyone, and thank you for joining our call today. I'm joined with John Shannon, our CEO, and Steve Pieper, our CFO. Earlier this morning, we issued a press release with our detailed results, which can be found on our website. After our prepared remarks, we will open the lines for questions. Before we begin, I'd like to remind you that this call will contain forward-looking statements concerning the company's future expectations, plans, projects, and financial performance. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. For more information on our risks, please refer to our earnings release and the risk factors included in our SEC filing. Any forward-looking statements in this call represent our views only at the date of this call and subject to applicable laws.

We disclaim any obligation to update such statements. Please note some metrics we will discuss today are represented in a non-GAAP basis. We've reconciled the comparable GAAP and non-GAAP figures in our press release. Please let me pass the call over to John for his opening remarks.

Speaker 6

Thanks, Allison, and good morning everyone. I'm excited to report that the strong momentum we established in the first quarter continued into the second quarter, driving another period of incredible performance and positioning us to outperform our original expectations for 2025. Our total revenue grew 49% to a quarterly record of almost $72 million. This success is being fueled by the strength of our commercial product portfolio, which grew 46% to approximately $68 million in Q2. Our exceptional performance was driven by an increased patient demand across all three products. Recorlev® continues to lead our growth, with very strong demand driven by its differentiation as a much-needed treatment for patients with hypercortisolemia and endogenous Cushing’s syndrome. Gvoke® once again delivered consistent, steady growth, supported by our efforts to increase awareness and reinforce adherence to medical guidelines.

At the same time, Keveyis® remained strong as we continued to add new patients, which led to an increase in the average number of patients on therapy in Q2. Building on this strong foundation and the exceptional results from both Q1 and Q2, we are raising our full-year revenue guidance to reflect the very positive trajectory we see ahead. Our revised outlook anticipates total revenue in the range of $280 to $290 million, surpassing the high end of our previous guidance and representing year-over-year growth of 40% at the midpoint. This significant upward revision reflects our confidence in the growing demand for our commercial products and our operational discipline as we execute against our strategic priorities. Now let's turn to a more detailed review of performance by product, beginning with Recorlev®. In the second quarter, Recorlev® grew an impressive 136% year-over-year, reaching over $31 million of revenue in the quarter.

The average number of patients on therapy grew by more than 122% year-over-year, reinforcing our confidence that Recorlev® is solidifying its position as an important treatment option for patients with Cushing’s syndrome. As we outlined during our June analyst day, Recorlev® is the right product at the right time. It's uniquely positioned to capitalize on the fast-growing hypercortisolemia and Cushing’s syndrome market. We are making deliberate and strategic investments to drive sustained growth for Recorlev® over the near and long term. These efforts are focused on deepening engagement with healthcare professionals to accelerate patient identification while simultaneously strengthening our support model for patients as they navigate their therapeutic journey. Turning to Gvoke®, Gvoke® posted another great quarter with revenue of $23 million, a 17% increase compared to the second quarter of last year.

Prescription volume continued its steady upward trend, driven by both growth in prescribers and increased adoption among existing ones. We expect Gvoke® to remain a strong and dependable driver of our overall performance throughout the remainder of the year. Given the extensive number of people with diabetes that don't yet carry ready-to-use glucagon, Gvoke® is well positioned for steady long-term growth for many years to come. Now let's turn to Keveyis®. Keveyis® continues to demonstrate its importance in the treatment of patients with primary periodic paralysis. With revenue of more than $11 million in the second quarter, we saw a modest increase in the average number of patients on therapy, along with growth in new patient starts, underscoring the strength of the Keveyis® brand and our team's focus on execution.

In fact, today is the 10-year anniversary of Keveyis®' FDA approval, and Keveyis® remains an important part of our portfolio, consistently serving patients with PPP and reinforcing our commitment to addressing the needs of this ultra-rare community with a dependable and proven therapy. In addition to strong commercial execution, as I mentioned earlier, the second quarter was also defined by an important strategic milestone: our first-ever analyst and investor day. This event was a pivotal moment for us as we outlined our long-term vision and key growth drivers, most notably Recorlev® and our lead pipeline asset, XP8121. The engagement we received from the investment community underscores the excitement we feel about the opportunities ahead. As many of you heard on investor day, we believe that XP8121, our novel once-weekly subcutaneous therapy in development for the treatment of hypothyroidism, is a very special product in the making.

Of all the patients with primary hypothyroidism in the U.S., we estimate that three to five million of them are ideal candidates for this therapy because of their inability to achieve control with daily oral levothyroxine due to gastrointestinal absorption issues. We believe XP8121 represents a transformative opportunity in a space that has seen little to no meaningful innovation for decades, despite there being a significant unmet medical need. This is not for lack of trying, but because the technical challenges are substantial. We've invested the time and resources to solve for those challenges, leveraging our proprietary XeriSol® technology to develop a novel formulation and a high-precision delivery system capable of reliably administering a wide array of doses.

Our clinical program will also generate a wealth of meaningful data, including regular thyroid hormone monitoring and quality of life assessments, which we believe can improve patient care, enhance our regulatory submission, and potentially support differentiated claims. Before I turn the call to Steve, I want to reiterate that our strong performance in the first half of the year further reinforces our confidence in the strength of our business and growth opportunities ahead of us. The increase in our 2025 revenue guidance reflects the momentum we've built by remaining focused on our strategic priorities, executing with discipline, and delivering value for patients, providers, and shareholders. With that, I will now turn the call over to Steve, who will provide a comprehensive review of our financial performance for the quarter and provide detail around our updated guidance and outlook.

Speaker 4

Thanks, John, and good morning everyone. We had another record-breaking quarter. On a year-over-year basis, total revenue grew 49% to $71.5 million, while net product revenue increased 46% to $67.7 million. Recorlev® net revenue was $31.4 million, representing a 136% increase year over year. Sequentially, revenue grew by a record $5.9 million. This performance was primarily driven by a higher average number of patients on Recorlev®, which increased 122% compared to the prior year and 24% compared to the prior quarter. Recorlev® has continued its strong momentum into August with no signs of slowing down. Gvoke® net revenue was $23.5 million, increasing 17% versus last year. This increase was attributable to total Gvoke® prescriptions growing 5%, coupled with some favorability in our gross-to-net. Keveyis® net revenue was $11.5 million, a slight uptick compared to the first quarter of 2025.

The average number of patients on therapy modestly increased, and we continue to capture a healthy number of new patient starts. Royalty, contract, and other revenue generated in the quarter was $3.8 million. As we announced in March, Xeris Biopharma Holdings received FDA approval for Gvoke Vial DX, which triggered a one-time milestone payment from our commercial partner, American Regent, that accounted for the majority of other revenue in the quarter. Turning to gross margin, gross margin in the quarter was 82%, slightly below the first quarter due to expenses associated with Gvoke® capacity expansion efforts that were non-routine. On a year-to-date basis, gross margin was 84%. Research and development expenses were $8.1 million for the quarter, a $2.2 million increase versus last year. This increase primarily reflects our continued investment in our pipeline, namely XP8121 and our products.

Selling, general, and administrative expenses were $44.4 million in the quarter, an increase of 11% compared to prior year. The increase in SG&A expenses primarily reflects the impact from the Q3 2024 Recorlev® commercial expansion, as well as other personnel-related costs. On a sequential basis, SG&A expenses were flat. Turning to adjusted EBITDA, I'm pleased to report that adjusted EBITDA in the quarter was a positive $12.5 million. Compared to prior year, this reflects an improvement of nearly $13 million. This further demonstrates our ability to translate strong top-line performance into meaningful bottom-line results. That operational efficiency empowers us to reinvest strategically in high-impact organic growth opportunities. Before moving to our near-term outlook and guidance, I want to reiterate that our strong financial position gives us the flexibility to execute on our strategic priorities with confidence.

We are taking deliberate, value-driven actions to advance Xeris Biopharma Holdings to its next phase of growth. By leveraging our operational and financial strengths, we are well positioned to realize the full potential of our portfolio and pipeline. Our focus remains clear: to drive meaningful, durable growth and deliver lasting value for our shareholders. Turning to our near-term outlook and guidance, we are revising our full-year 2025 outlook to account for the strong year-to-date performance. We are raising our total revenue guidance to $280 million to $290 million from the previous range of $260 million to $275 million. This new range represents year-over-year growth of 40% at the midpoint and reflects our confidence in the growing demand for our products, particularly the continued acceleration and adoption of Recorlev®. From a gross margin perspective, we continue to expect a modest improvement in gross margin compared to 2024.

As we highlighted during investor day, we will continue to make incremental value-driven investments. Given the outperformance of our commercial products this year, we are accelerating investments in both Recorlev® and XP8121. This will result in a modest year-over-year increase in total SG&A and R&D expenses. We now anticipate a low to mid-teens % increase year over year compared to our prior expectations of a mid to high single-digit increase. This reflects continued investment in further expanding our Recorlev® commercial footprint and ensures we remain on track to initiate patient dosing in our pivotal phase 3 trial for XP8121 in 2026. It is important to note that with our raised revenue guidance and deliberate incremental value-driven investments, we remain committed to delivering continued positive adjusted EBITDA going forward. With that, I'll now hand the call over to the operator for Q&A. Operator?

Speaker 5

Thank you very much. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Chase Knickerbocker from Craig-Hallum. Your line is open. Please go ahead.

Thanks for the question and good morning. Congrats on the nice quarter here. Maybe just first on Gvoke®, can you talk about that gross-to-net benefit? Is that going to be something that's kind of one-time or something you can hold on to?

Speaker 4

Yeah, Chase, this is Steve. I'll just take that question. Yeah, we anticipate that favorability to continue for the balance of the year.

Got it. If I think about kind of the script growth that was seen in the quarter, is that kind of the way that we should think about the Gvoke® franchise in the back half? Just some general thoughts on Gvoke®, and then I've got to follow up on Recorlev®. Thanks.

Speaker 6

Chase, you know on Gvoke®, the third quarter is always a bigger growth quarter with the back-to-school movement. You definitely see a script growth that will increase in Q3 and then usually is consistent into Q4. I think you're going to see an increase coming up and then, you know, getting back to more kind of that, you know, I think it's in that high single-digit, you know, growth rate on a quarter-to-quarter basis.

Helpful. Good to see the continued, pretty impressive momentum, obviously, in Recorlev®. Can you just give us an update on where your prescriptions are coming from from a physician perspective? Is this still very much majority endo? Any sort of update you'd be willing to give us just on the average dosage per patient or average, call it, WAC price per patient at this point?

Yeah, it's pretty much endo. At least half of our patients are new to therapy. Again, all of our growth is coming from new starts, so there's really no movement that leads to virtually no movement in kind of the increase in dose. I think that's, you know, with the amount of people we're adding on new and the way they go low and titrate up, we don't think we're going to see real material movement in the dose range, at least for some time. I don't know, maybe it's next year or sometime, but it's definitely out. It'll be out for a while.

Last thing for me, John, there's a potential for an existing competitor to launch a new drug, obviously, around the end of the year. Can you just kind of refresh us on your thoughts on how or if you think that changes the competitive environment in the hypercortisolemia market towards the end of the year here?

Yeah, I think, you know, more voice in this market because it's growing so quickly and there's so much attention on testing for cortisol in situations where, you know, things you're on today that should be working aren't working, specifically thinking about, you know, if you're on insulin and it's not working, what's going on? Let's look for, you know, things like cortisol levels. When you find elevated cortisol, that is really generating the market movement and the dynamics in this marketplace. Another player in this space brings more noise to that situation, and I think that's good for all of us.

Great. Thanks, Sammy. Questions?

Speaker 5

Our next question comes from David Amselin from Piper Sandler. Your line is open, David. Please go ahead.

Hi, thanks so much. This is Alex on for David. Just one for us, from us. With the hypercortisolemia market expanding, how are you envisioning long-term spend to support Recorlev®? Do you foresee any headcount or promotional expansion in the near term? In that vein, do you have plans to call on general practitioners in the future? Thank you.

Speaker 6

Alex, you know, we outlined in our investor day back in June that we would continue to invest into this space, given the dynamics of the marketplace. Yes, we anticipate, and we said we will be increasing our commercial footprint. We are, we've begun that process. We're working through that and making sure that we continue to expand to support the dynamic growth in this marketplace. We'll be making tremendous investments over the next several years as we continue to build the Recorlev® brand. Because as I said in our comments at investor day and again today, we think Recorlev® is the right product at the right time coming into this marketplace. It's right for the investment, and we will be making those.

Speaker 5

Our next question comes from Christian Clark from Leerink Partners. Your line is open, Christian. Please go ahead.

Good morning. This is Chris Clark on for Ruanna Ruiz. Just have one question. Do you have any plans to generate further clinical data to further solidify Recorlev®'s value proposition beyond cortisol normalization, particularly in patients with secondary comorbidities like stubborn diabetes?

Speaker 6

Long term, yes. I mean, even in our own existing data, things like diabetes, those comorbidities are resolved. That's, you know, that exists in our current data sets when you treat the elevations in cortisol. Yes, we'll continue to generate more and more data around that.

Thank you very much.

Speaker 5

As a reminder, to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Jason Doerr from Oppenheimer. Your line is open, Jason. Please go ahead.

Hey, good morning. It's Jason here on for Lulinger Shell, and thank you for taking the question. A couple of questions on Gvoke®. How do you see the treatment landscape evolving over the next two to three years, especially in regards to competitors? Can you provide any additional color on how the revenue might look in the next two to three years with the Gvoke Vial DX collaboration with American Regent? Thank you.

Speaker 6

I'm going to try to break that down. The first question was with respect to Gvoke® and the opportunity in patients with diabetes, is the way I heard it. As you know, and as we've talked a lot about, there are 15 million patients out there today that should have a ready-to-use rescue glucagon on hand just based on the medical guidelines. From our estimates, probably only about a million of them actually have something on hand. Our job, along with our competitors, is to find those patients who are not currently protected with a rescue med and get them protected. That's a lot of work getting to the clinicians to basically help them understand the guidelines in some cases, and then also, you know, assure that they're adhering to them in a way that their patients get protected. That's the process. That's what we're doing.

That's what the competitors should be doing. That's the long-term landscape. There's a lot of runway there to continue to do that. As for the Gvoke Vial DX opportunity out there, more to come on that as we go. Our partner is going to launch by the end of the year. As they get out there in the marketplace, we'll be able to give further guidance. For this year, there's not much more impact to our revenues than we've already seen. In out years, we'll probably be in a better position next year and beyond to really give some guidance on where that's going and how that's performing.

Really appreciate it. Thank you.

Speaker 5

We currently have no further questions, so I'll now hand back to John Shannon for some closing remarks.

Speaker 6

Thanks. As I look back on my first year leading Xeris Biopharma Holdings, I'm incredibly proud of what we've accomplished together. Stepping into this role, my priority was to build on the company's strong foundation while positioning us to deliver robust growth across the commercial franchise and advancing our pipeline. Q2 was another great quarter for Xeris Biopharma Holdings, underscoring the continued momentum of our business. Our performance reflects not only strong execution across our commercial portfolio, but also our unwavering commitment to delivering meaningful value to patients, healthcare providers, and shareholders alike. We remain committed to driving meaningful growth and operational excellence. Our team is energized and aligned around executing our strategic priorities, ensuring that our differentiated products continue to improve patient outcomes. Thank you again for your time this morning.

Speaker 5

This concludes today's call. We thank everyone for joining. You may now disconnect your lines.