Xeris Biopharma Holdings, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone Q4 report. Xeris acquired Strongbridge on October 5, 2021; accordingly, 2021 results include Strongbridge only from the acquisition date, while 2020 is the predecessor Xeris business and is not directly comparable.
Business context
Xeris develops and commercializes therapies, primarily in endocrinology, neurology and gastroenterology, using its XeriSol and XeriJect formulation platforms. Its marketed products were Gvoke for severe hypoglycemia, Keveyis for primary periodic paralysis, and Recorlev for endogenous hypercortisolemia in adults with Cushing’s syndrome. Recorlev was FDA-approved on December 30, 2021 and launched in January 2022. The Strongbridge acquisition added Keveyis and Recorlev and expanded the company’s pipeline.
Financial results and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Total revenue | $49.6 million | $20.4 million |
| Net product revenue | $49.3 million | $20.2 million |
| Cost of goods sold | $13.3 million | $9.3 million |
| Gross profit / gross margin | $36.3 million / approximately 73% | $10.8 million / approximately 54% |
| Research and development | $25.2 million | $20.9 million |
| Selling, general and administrative | $125.7 million | $73.7 million |
| Operating loss | $(115.2) million | $(83.5) million |
| Net loss | $(122.7) million | $(91.1) million |
| Basic and diluted loss per share | $(1.55) | $(2.14) |
| Cash used in operating activities | $(95.5) million | $(80.6) million |
Revenue increased $29.2 million, primarily from higher demand and the addition of Keveyis. The comparison is affected by the October acquisition and does not represent a full-year combined-company comparison. SG&A rose $52.0 million, including approximately $24.4 million of acquisition-related costs and $16.8 million of increased commercial spending. The company reported an accumulated deficit of $460.1 million.
At year-end, cash and cash equivalents were $67.3 million and short-term investments were $35.2 million, for combined cash and investments of $102.4 million. Current assets were $142.6 million and current liabilities $79.0 million (current ratio approximately 1.8). Total assets were $304.4 million, total liabilities $209.1 million and stockholders’ equity $95.2 million. Debt at carrying value was $88.1 million, comprising $47.2 million of 5% convertible notes due 2025 and $43.5 million under a secured loan, less unamortized issuance costs. Operating cash use exceeded net loss partly because of working-capital movements and non-cash expenses. Investing cash flow was positive $98.0 million, including $38.5 million of cash acquired and investment maturities; financing cash flow was positive $27.2 million.
Material changes, outlook and risks
- Acquisition and integration: Strongbridge was acquired for consideration valued at approximately $169.1 million, including shares, assumed options and warrants, and contingent value rights (CVRs). The purchase allocation included $121.0 million for Recorlev in-process R&D, $11.0 million for Keveyis, and $22.9 million of goodwill. Restructuring and transaction costs materially increased expenses.
- Management outlook: The company expected continued significant expenses and net losses, but stated that year-end working capital and expected product revenue were expected to fund operations and capital expenditures for at least 12 months from the financial-statement issuance date. It gave no quantified revenue, earnings or profitability guidance. Management’s path-to-profitability thesis depends on commercial execution across the three products, reimbursement and market acceptance.
- Subsequent financing: In January 2022, the company raised approximately $30 million gross in a private placement, issuing 10.2 million shares and warrants for 5.1 million shares. In March 2022, it entered a Hayfin facility with $100 million initially drawn and up to $50 million in delayed-draw loans, repaid the prior $43.5 million secured facility, and granted a first-priority lien over substantially all assets subject to exceptions. The new loans carry floating rates and include covenants and prepayment provisions.
- Development and products: The company reported plans to begin a new Phase 2 program for mini-dose glucagon in exercise-induced hypoglycemia by the end of 2022, following FDA clearance in March 2022. Recorlev carries a boxed warning for hepatotoxicity and QT prolongation; liver enzyme elevations and QT changes were observed in trials.
- Principal risks: Continuing losses and potential need for further capital; dilution and debt obligations; commercial uptake, pricing and reimbursement; COVID-19-related demand and access disruptions; reliance on single-source or limited suppliers; clinical and regulatory uncertainty; competition and intellectual-property challenges; and integration risks. Keveyis orphan exclusivity was due to expire in August 2022. The company reported no material legal proceedings. KPMG issued an unqualified opinion on the financial statements; management concluded internal control over financial reporting was effective, but the auditor was not engaged to attest to that assessment.
Important facts for investors to verify
- Obtain the full-year combined-company revenue and product-level sales trends; reported 2021 results include Strongbridge only after October 5, and the filing does not provide a clear full-year pro forma product breakdown.
- Assess cash runway and operating cash burn against the timing and terms of the 2022 equity and Hayfin financings, including floating interest, covenants, liens and potential dilution.
- Track Recorlev launch, access and safety performance, and whether the sales thresholds underlying the CVRs are achieved: $40 million Recorlev net sales in 2023 and $80 million in 2024, among other milestones.
- Evaluate Gvoke and Keveyis demand, reimbursement, competitive position, and supplier continuity, particularly around Keveyis exclusivity expiration.
- Review pipeline progress and the assumptions supporting acquisition valuations, intangible assets and contingent consideration.