Xeris Biopharma Holdings, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied filing text does not provide standalone fourth-quarter results. Financial amounts below are in U.S. dollars.
Business context
Xeris develops and commercializes biopharmaceutical products and proprietary non-aqueous formulation technologies. Its marketed products are Gvoke for severe hypoglycemia, Recorlev for endogenous Cushing’s syndrome, and Keveyis for primary periodic paralysis. XP-8121, a once-weekly subcutaneous levothyroxine candidate, was in a Phase 2 study that was more than 85% enrolled in November 2023; management expected completion in the first half of 2024. Xeris also pursues pharmaceutical partnerships using its XeriSol and XeriJect platforms.
Financial performance and liquidity
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Total revenue | $163.9 million | $110.2 million | +$53.7 million; +48.7% |
| Net product revenue | $153.4 million | $109.3 million | +$44.1 million; +40.4% |
| Gvoke revenue | $67.0 million | $52.5 million | +27.6% |
| Keveyis revenue | $56.8 million | $49.3 million | +15.1% |
| Recorlev revenue | $29.5 million | $7.4 million | +297.7% |
| Operating loss | $(44.0) million | $(81.9) million | Loss narrowed $37.9 million |
| Net loss | $(62.3) million | $(94.7) million | Loss narrowed $32.4 million |
| Net loss per share, basic and diluted | $(0.45) | $(0.70) | Improved $0.25 |
| Cash used in operating activities | $(47.0) million | $(102.9) million | Use decreased $55.9 million |
Gross profit, calculated as total revenue less cost of goods sold, was approximately $135.3 million, or 82.5% of revenue. Calculated operating and net margins were approximately -26.8% and -38.0%, respectively; the filing does not present these margins as reported metrics. Interest expense rose to $26.6 million from $14.1 million, primarily due to higher debt principal and interest rates.
At December 31, 2023, cash and cash equivalents were $67.4 million, short-term investments were $5.0 million, and current assets were $156.3 million versus current liabilities of $95.2 million (approximately 1.64 current ratio). Cash, cash equivalents and restricted cash totaled $71.7 million. Stockholders’ equity was a deficit of $6.8 million, compared with positive equity of $45.2 million a year earlier.
Long-term debt, net of issuance costs, was $190.9 million on the balance sheet. The disclosed principal balances were $150.0 million under the Hayfin facility and $48.8 million in convertible notes. The notes included $15.2 million of 5.00% notes due 2025 and $33.6 million of 8.00% notes due 2028. Hayfin borrowing carried a floating rate; its effective rate including issuance costs was approximately 11.8%.
Changes, outlook and notable items
- Revenue growth reflected increased demand across all three products. Gvoke prescriptions grew approximately 48.9%, partly offset by lower net pricing. Recorlev growth primarily reflected more patients on therapy; Keveyis growth reflected higher demand and net pricing.
- Royalty, contract and other revenue increased to $10.6 million from $1.0 million, including $6.0 million recognized for a collaboration milestone with Horizon Therapeutics, subsequently acquired by Amgen.
- Operating cash use declined substantially, primarily due to lower working-capital use. Cash and cash equivalents fell by $54.5 million during 2023. Inventory increased to $38.8 million from $24.7 million.
- Other income and expense included a $5.2 million gain from remeasurement of contingent value rights (CVRs), versus a $3.2 million loss in 2022, and a $2.8 million loss on debt extinguishment. The CVR liability was $20.5 million at year-end and is sensitive to estimated product revenue growth.
- In September 2023, Xeris exchanged $32.0 million of 2025 convertible notes for $33.6 million of 8.00% notes due 2028. In a material subsequent event, on March 5, 2024, it entered into an amended and restated Hayfin facility providing $200.0 million in term loans, including continuation of the existing $150.0 million balance, and up to $15.2 million in additional loans to redeem the 2025 notes. The new facility has a stated maturity of March 2029, subject to earlier-maturity conditions tied to the convertible notes.
- Management said existing working capital at year-end was expected to fund operations and capital expenditures for at least 12 months from the financial statement issuance date. Xeris nevertheless expected continued net losses for at least the next 12 months and said additional financing may be needed; availability and terms are not assured. No numerical revenue or earnings guidance is provided.
- Key risks include reliance on a small customer base (four customers accounted for 97% of gross product revenue and 99% of year-end net receivables), single-source or limited suppliers, reimbursement and pricing pressure, competition, and ongoing losses. A generic Keveyis competitor is on the market following loss of orphan exclusivity in 2022.
- The FDA issued an untitled letter in June 2023 concerning Recorlev website claims; the company revised the relevant pages, and the FDA issued a close-out letter in August 2023. The filing reports no material legal proceedings. The audit opinion was unqualified, and management and the auditor concluded internal control over financial reporting was effective.
Important facts for investors to verify
- Whether product demand and net pricing sustain growth, particularly for Recorlev and Gvoke, and how Keveyis performs amid generic competition.
- Cash runway assumptions and financing needs, including the terms, interest burden, covenants, and early-maturity triggers under the March 2024 Hayfin facility and the convertible notes.
- Customer concentration, receivables collectability, inventory levels, and the adequacy of return, rebate, and other revenue reserves; management estimates a 1% change in the returns rate would affect 2023 revenue by $1.5 million.
- XP-8121 Phase 2 completion and results, and progress toward potential commercial licensing agreements for XeriSol and XeriJect collaborations.
- CVR milestone status and valuation assumptions, including the revenue estimates that drive the recorded $20.5 million liability.