Xeris Biopharma Holdings, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Unaudited results are compared with Q1 2021. Comparability is limited: Strongbridge was acquired in October 2021, so the 2022 results include Keveyis and Recorlev, while the 2021 results do not.
Financial performance
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $22.1 million | $8.2 million |
| Product revenue, net | $21.9 million | $8.1 million |
| Cost of goods sold, excluding intangible amortization | $6.3 million | $1.8 million |
| Gross profit and margin, calculated as revenue less reported cost of goods sold | $15.8 million; 71.6% | $6.4 million; 77.7% |
| Research and development | $6.3 million | $4.0 million |
| Selling, general and administrative | $35.9 million | $19.1 million |
| Operating loss | $29.1 million | $16.7 million |
| Net loss | $33.7 million | $18.4 million |
| Net loss per share, basic and diluted | $0.25 | $0.30 |
| Net cash used in operating activities | $48.4 million | $24.0 million |
Revenue growth of $13.9 million reflected higher Gvoke sales and revenue from acquired Keveyis and Recorlev. Recorlev launched in January 2022; Ogluo, the European brand of Gvoke, launched in the UK in December 2021. SG&A rose $16.8 million, including $11.5 million in higher commercial costs and $2.3 million related primarily to Strongbridge restructuring and employee costs. R&D increased $2.2 million, mainly from process development and clinical services. Q1 2022 also included $2.7 million of intangible-asset amortization and $3.5 million of interest expense.
Liquidity, debt and capital
- Cash and cash equivalents were $103.8 million at March 31, 2022, versus $67.3 million at year-end; short-term investments were $28.4 million. Together these totaled $132.1 million.
- Current assets were $177.6 million and current liabilities $66.5 million. The filing reports total liabilities of $241.2 million and stockholders’ equity of $96.5 million.
- Long-term debt, net of issuance costs, was $137.6 million. Debt principal shown in the debt schedule totaled $147.2 million: $47.2 million of 5.00% convertible notes due 2025 and $100 million under the Hayfin facility. Hayfin bears a floating rate; its effective rate, including debt discount and issuance costs, was 12.1% and its stated maturity is March 2027, subject to an earlier-maturity condition tied to the convertible notes.
- In March, the company borrowed $100 million under the Hayfin facility, repaid the former $43.5 million loan balance and paid associated fees. The agreement permits up to $50 million of additional delayed-draw loans, subject to conditions, and grants lenders a first-priority security interest over substantially all assets, including intellectual property, subject to exceptions.
- Financing cash flow was $78.2 million, including $30 million gross proceeds from a January private placement and $97.3 million of debt proceeds, partly offset by $43.5 million of debt repayment and issuance costs. Shares outstanding increased to 135.5 million from 124.9 million at year-end.
Outlook, risks and unusual items
- Management expects continued net losses for at least the next 12 months, but believes available resources are sufficient to fund operations and capital expenditures for at least 12 months from issuance of the financial statements. The filing provides no specific revenue, earnings or profitability guidance.
- The company plans to commercialize Gvoke, Keveyis and Recorlev, continue development programs, and pursue formulation-technology collaborations. It received FDA clearance in March for an investigational ready-to-use glucagon study in exercise-induced hypoglycemia and planned to start a Phase 2 program by the end of 2022.
- Management cited COVID-19-related demand and supply-chain uncertainty, longer supplier lead times, geopolitical instability, rising interest rates and tighter lending standards. The company relies on third-party manufacturers, including single-source suppliers for certain products.
- Operating cash use increased to $48.4 million. Management attributed the increase to working-capital changes and higher losses, including personnel and restructuring costs. The accumulated deficit was $493.8 million.
- Strongbridge-related restructuring costs were $1.4 million in Q1; the company estimated total plan costs of approximately $11.1 million and expected the restructuring to be substantially complete by Q4 2023. Remaining Keveyis supply-agreement obligations were $8.0 million.
- The fair value of contingent value rights (CVRs) rose to $25.3 million; the Q1 remeasurement resulted in a $2.8 million loss. CVR payments depend on specified Keveyis and Recorlev milestones and may be settled in cash, shares or both. Keveyis orphan exclusivity was expected to expire in August 2022.
- After quarter-end, on May 11, 2022, the company entered into an at-the-market sales agreement allowing up to $75 million of common stock sales at its discretion. Any sales could dilute shareholders.
- Management reported no material legal proceedings and concluded disclosure controls were effective as of March 31, 2022.
Key facts for investors to verify
- Product-level sales, especially Gvoke growth and the early commercial uptake, net pricing and reimbursement of Recorlev and Keveyis; the filing’s discussion does not provide a clear product-by-product revenue breakdown.
- Cash burn, working-capital movements and whether management’s stated 12-month liquidity outlook remains supported as commercialization and clinical spending continue.
- Hayfin’s floating-rate costs, covenants, collateral provisions, delayed-draw conditions and the 2025 maturity interaction with the convertible notes.
- Potential dilution from the January private placement warrants, convertible notes, other warrants and the $75 million ATM program.
- Progress toward CVR milestones, the associated liability valuation, Keveyis exclusivity and supply obligations, and execution of the Strongbridge integration and restructuring.