UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-40880 XERIS BIOPHARMA HOLDINGS, INC. (Exact name of the registrant as specified in its charter) Delaware 87-1082097 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 180 N. LaSalle Street, Suite 1600 Chicago, Illinois 60601 (Address of principal executive offices) (Zip Code) (844) 445-5704 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value per share XERS The Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ¨ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ As of June 30, 2021, the aggregate market value of the Registrant's common stock held by non-affiliates of the Registrant was approximately $266.0 million based on the closing sales price as reported on the Nasdaq Exchange. As of February 28, 2022, 135,523,511 shares, par value $0.0001 per share, of common stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates certain information by reference from the Registrant's Definitive Proxy Statement to be filed with the Commission in connection with the Registrant's 2022 Annual Meeting of Shareholders. Such Definitive Proxy Statement will be filed not later than 120 days after the conclusion of the Registrant’s fiscal year ended December 31, 2021.
Summary of the Material Risks Associated with Our Business Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. These risks include, but are not limited to, the following: < Our business may be adversely affected by the ongoing coronavirus pandemic. < As a company, we have a limited operating history and limited experience commercializing pharmaceutical products and have incurred significant losses since inception. We expect to incur losses over the next few years and may not be able to achieve or sustain revenues or profitability in the future. < Although we generate revenue from Gvoke, Keveyis and Recorlev, we have not yet generated revenue from any of our current or future product candidates, and may never be profitable. < We may require additional capital to sustain our business, and this capital may cause dilution to our stockholders and might not be available on terms favorable to us, or at all, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts. < Our business depends entirely on the commercial success of our products and product candidates. Even if approved, our product candidates may not be accepted in the marketplace and our business may be materially harmed. < If we are unable to establish or do not maintain sufficient marketing, sales and distribution capabilities or enter into agreements with third parties to market, sell and distribute our products on terms acceptable to us, we may not be able to generate product revenues and our business, results of operations, and financial condition will be materially adversely affected. < Our reliance on third-party suppliers, including single-source suppliers, and a limited number of options for alternate sources for Gvoke, Keveyis, and Recorlev or our product candidates could harm our ability to develop our product candidates or to commercialize Gvoke, Keveyis, Recorlev or any product candidates that are approved. < Reimbursement decisions by third-party payors and consolidation within the healthcare industry and among competitors more generally may have an adverse effect on pricing and market acceptance. If there is not sufficient reimbursement for our products, it is less likely that they will be widely used and pricing pressure may impact our ability to sell our products at prices necessary to support our current business strategies. < Clinical failure may occur at any stage of clinical development, and the results of our clinical trials may not support our proposed indications for our product candidates. If our clinical trials fail to demonstrate efficacy and safety to the satisfaction of the FDA or other regulatory authorities, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of such product candidate. < Gvoke, Keveyis, Recorlev and our product candidates may have undesirable side effects which may delay or prevent marketing approval, or, if approval is received, require them to include safety warnings, require them to be taken off the market or otherwise limit their sales. < Our failure to successfully identify, develop and market additional product candidates, or acquire additional product candidates or enter into collaborations or other commercial agreements could impair our ability to grow. < We operate in a competitive business environment and, if we are unable to compete successfully against our existing or potential competitors, our sales and operating results may be negatively affected and we may not successfully commercialize our products or product candidates, even if approved. < Our success depends on our ability to protect our intellectual property and proprietary technology, as well as the ability of our collaborators to protect their intellectual property and proprietary technology. < We may not be able to successfully integrate and combine the businesses of Xeris and Strongbridge following the completion of the Transactions and we may not realize the anticipated benefits from the Transactions. < Our stock price has been and will likely continue to be volatile, and you may not be able to resell shares of our common stock at or above the price you paid. The summary risk factors described above should be read together with the text of the full risk factors below in the section entitled “Risk Factors” and the other information set forth in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, as well as in other documents that we file with the U.S. Securities and Exchange Commission. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects. 2
XERIS BIOPHARMA HOLDINGS, INC. Index to Annual Report on Form 10-K Year Ended December 31, 2021 Page Cautionary Statements for Forward-Looking Information 4 Part I. Item 1. Business 6 Item 1A. Risk Factors 39 Item 1B. Unresolved Staff Comments 75 Item 2. Properties 75 Item 3. Legal Proceedings 76 Item 4. Mine Safety Disclosures 76 Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 76 Item 6. Selected Financial Data 76 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 77 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 86 Item 8. Financial Statements and Supplementary Data 88 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 124 Item 9A. Controls and Procedures 124 Item 9B. Other Information 124 Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections 124 Part III. Item 10. Directors, Executive Officers and Corporate Governance 125 Item 11. Executive Compensation 125 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 125 Item 13. Certain Relationships and Related Transactions, and Director Independence 125 Item 14. Principal Accountant Fees and Services 125 Part IV. Item 15. Exhibits and Financial Statement Schedules 126 Item 16. Form 10-K Summary 126 Index to Exhibits 127 Signatures 132 Solely for convenience, the trademarks and trade names in this Annual Report on Form 10-K (this “Annual Report”) are referred to without the ® and ™ symbols, but absence of such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. The trademarks, trade names and service marks appearing in this Annual Report are the property of their respective owners. 3
Cautionary Statements for Forward-Looking Information This Annual Report on Form 10-K contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forwardlooking statements. Forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, statements about: • the rate and degree of market acceptance and clinical utility of Gvoke, Keveyis and Recorlev; • the pricing and reimbursement of Gvoke, Keveyis and Recorlev or any of our product candidates, if approved; • the effect of uncertainties related to the current coronavirus pandemic, or any other health epidemic, on U.S. and global markets, our business, financial condition, operations, third-party suppliers or the global economy as a whole; • our estimates regarding the market opportunities for Gvoke, Keveyis and Recorlev and our product candidates; • the commercialization, marketing and manufacturing of Gvoke, Keveyis and Recorlev and our product candidates, if approved; • our ability to manufacture, or the ability of third parties to deliver, sufficient quantities of components and drug product for commercialization of Gvoke, Keveyis and Recorlev or any of our product candidates, if approved; • our expectations related to the anticipated launch of Ogluo in certain European countries; • the rate and degree of market acceptance and clinical utility of any of our product candidates for which we receive marketing approval in the future; • the initiation, timing, progress and results of our research and development programs and future preclinical and clinical studies; • our ability to advance any other product candidates into, and successfully complete, clinical studies and obtain regulatory approval for them; • our ability to identify additional product candidates; • the implementation of our strategic plans for our business, product candidates and technology; • the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; • our ability to use the proceeds of our public offerings and borrowings in ways that increase the value of your investment; • our expectations related to the use of proceeds from our public offerings and borrowings and estimates of our expenses, future revenues, capital requirements and our needs for additional financing; • our ability to maintain and establish collaborations; • our financial performance; • our ability to effectively manage our anticipated growth; • developments relating to our competitors and our industry, including the impact of government regulation; and • other risks and uncertainties, including those listed under the section entitled “Risk Factors” (refer to Part 1, Item 1A, of this Annual Report on Form 10-K). In some cases, forward-looking statements can be identified by terminology such as "will," "would," “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” and terms of similar meaning. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section entitled “Risk Factors”. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. While we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report on Form 10-K. 4
This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business and the markets for Gvoke, Keveyis and Recorlev and our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. 5
PART I ITEM 1. BUSINESS Overview We are a biopharmaceutical company committed to developing and commercializing innovative solutions to enhance the lives of people with life-threatening diseases. Our primary focus is on therapies for patient populations in endocrinology, neurology, and gastroenterology. We currently have three commercially available products, Gvoke, a ready-to-use liquid glucagon for the treatment of severe hypoglycemia, Keveyis, the first and only U.S. Food and Drug Administration (“FDA”) approved therapy for primary periodic paralysis (“PPP”) and Recorlev, approved by the FDA in December 2021 for the treatment of endogenous hypercortisolemia in adult patients with Cushing’s Syndrome. We also have a pipeline of development programs to extend our current marketed products into new indications and uses or bring new products forward using our proprietary formulation technology platforms, XeriSolTM and XeriJectTM. Commercial Products Our number one priority is maximizing the commercial potential of our three commercial products: Gvoke, Keveyis and Recorlev. • Gvoke (Gvoke HypoPen, Gvoke PFS, Gvoke Kit) is the first ready-to-use liquid stable glucagon for severe hypoglycemia. The product is indicated for use in pediatric and adult patients with diabetes age 2 years and above and can be administered in 2 simple steps. The estimated total addressable market for this therapy is approximately $4.0 billion in the United States. Throughout this document, unless otherwise noted, references to Gvoke include Gvoke PFS, Gvoke HypoPen, Gvoke Kit and Ogluo. • Keveyis is the first and only therapy approved in the United States to treat hyperkalemic, hypokalemic, and related variants of PPP. PPP is a rare genetic, neuromuscular disorder that can cause extreme muscle weakness and/or paralysis; some forms are also commonly associated with myotonia or muscle stiffness. The estimated total addressable market for this therapy is greater than $0.5 billion in the United States. • Recorlev is a cortisol synthesis inhibitor proved for the treatment of endogenous hypercortisolemia in adult patients with Cushing’s syndrome for whom surgery is not an option or has not been curative. Endogenous Cushing’s syndrome is a rare but serious and potentially fatal endocrine disease caused by chronic elevated cortisol exposure. The estimated total addressable market for this therapy is approximately $2.0 billion in the United States. Recorlev was approved by FDA on December 30, 2021 and launched in the United States in January 2022. Our pipeline The following table summarizes key information about our internal products and product candidates. † Orphan Drug Designation *Through Tetris Pharma 6
Our Strategy Our goal is to build a leading and profitable biopharmaceutical company that innovates products that transform the lives of people with life-threatening diseases. To achieve our goal, we are pursuing the following strategies: < Maximize the commercial potential of our three commercial products. We have built out a robust endocrinology and rare disease-focused commercial infrastructure – including fully operational patient and provider support teams – primed to bring the benefits of our products to a wider range of patients with unmet needs. Our sales, marketing, market access and patient service capabilities in the United States are positioned to drive the growth of our products. We believe that our ability to execute on this strategy is enhanced by the significant commercial experience of key members of our management team. < Create momentum through commercial execution leading to profitability. We have three innovative commercial assets: Gvoke, Keveyis and Recorlev. Gvoke and Keveyis are growing in large untapped addressable markets. We are executing a rapid launch of Recorlev, leveraging our experienced, endocrinology-focused commercial infrastructure, in a large and unsatisfied Cushing Syndrome marketplace. Through the momentum created by the execution of our three commercial products, we believe we will have a path to profitability. < Continue to leverage our technology and expertise to develop a portfolio of product candidates. We have an extensive pipeline of development programs to extend the current marketed products into important new indications and uses, and bring new products forward using our formulation technology platforms, supporting long-term product development and commercial success. XeriSol and XeriJect have broad application and have the potential to be utilized across a range of potential product candidates in endocrinology, neurology and other therapeutic areas. < Collaborate with pharmaceutical and biotechnology companies to apply our technology platforms to enhance the formulations of their proprietary products and candidates. We are pursuing formulation and development partnerships to apply our XeriSol and XeriJect technology platforms to broaden our revenue stream and enhance the formulation, delivery and clinical profile of other companies’ proprietary drugs and biologics. We currently are working with several major pharmaceutical companies on feasibility programs to evaluate the formulation of their proprietary therapeutics with XeriSol or XeriJect. Our strategic goal is to enter into broader development and ultimately commercial licensing agreements with these partners upon successful completion of the feasibility programs. We believe these four pillars of our strategy can bring new products to market and transform the lives of patients with life-threatening diseases and ultimately drive value for Xeris’ shareholders. Pursuing these strategies provides Xeris with a range of value driving opportunities that are incremental to the value already realized by the Xeris enterprise. Business Combination On May 24, 2021, Xeris Pharmaceuticals, Inc. (“Xeris Pharma”) entered into a definitive agreement with Strongbridge Biopharma plc (“Strongbridge”) to acquire Strongbridge (the “Transaction”). Following consummation of the Transaction on October 5, 2021, Xeris Biopharma Holdings, Inc. (“Xeris Biopharma”) became the parent company of both Xeris Pharma and Strongbridge. The common stock of both Xeris Pharma and Strongbridge were de-registered after completion of the Transaction. On October 6, 2021, Xeris Biopharma’s common stock, par value $0.0001 per share, commenced trading on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “XERS.” Xeris Pharma was determined to be the accounting acquirer in the Transaction. For further discussion on the Transaction, refer to “Item 1A. Risk Factors,” and “Note 3 - Business combination” in the Notes to Consolidated Financial Statements. Our Technology Platforms Overview Our proprietary non-aqueous formulation technology platforms are designed to address the challenges presented by current aqueous formulations of certain drugs. Injectable pharmaceuticals have conventionally used aqueous delivery systems to administer drugs and biologics, but, in the presence of water, many drugs have poor solubility and low stability. To optimize their stability and enable longer-term storage, many of these products are freeze dried into a powder and, when needed, must be reconstituted with a liquid diluent, which is often a challenging multi-step procedure with the potential for error. Furthermore, the drug product begins to break down once combined with water, which requires the drug to be used immediately or otherwise refrigerated. In addition, these products can require complicated formulations and large injection volumes to make them soluble. For many products, these volumes are too large for SC or IM delivery and instead necessitate IV infusion over several hours. These drugs can be difficult or painful to administer and have limited portability, resulting in an overall poor experience for patients and caregivers. Our proprietary XeriSol and XeriJect platforms offer the opportunity to eliminate the need for reconstitution and refrigeration, enable long-term room-temperature stability, significantly reduce injection volume and allow for a more convenient SC or IM administration as opposed to IV infusion, all of which we believe are distinct advantages over existing aqueous formulations of marketed products and development-stage product candidates. We believe that our technology platforms can lead to products that will improve outcomes and enable easier administration while reducing costs for payors and the healthcare system. 7
Our XeriJect formulation platform is best suited for drugs and biologics consisting of large molecules, such as proteins, monoclonal antibodies and vaccines. XeriSol is best suited for peptides and small molecules that currently encounter formulation challenges. With XeriJect, we routinely formulate suspensions with a protein concentration in excess of 400 mg/mL, far exceeding current aqueous formulation systems with maximum achievable protein concentrations of 50-250 mg/mL. These biocompatible non-aqueous, injectable solutions or suspensions formulated using our technology platforms can then be packaged for administration in a commercially available auto-injector, pre-filled syringe, vial, multi-dose pen or infusion pump. Our Products Gvoke Gvoke offers ready-to-use, room-temperature stable glucagon that is designed to be administered subcutaneously in a simple two-step process via a pre-filled syringe (Gvoke PFS), auto-injector (Gvoke HypoPen) or soon-to-be available single dose vial and syringe kit (Gvoke Kit). In our human factors studies, 99% of users were able to successfully administer the full dose with either Gvoke PFS or Gvoke HypoPen. Conversely, in published human factors studies of traditional emergency liquid glucagon kits, only 6% to 31% of users were able to successfully administer the full dose. We believe we can establish Gvoke as a preferred emergency glucagon product and drive greater adoption and penetration of emergency glucagon therapy for patients and caregivers. Gvoke was approved in September 2019 by the FDA for the treatment of severe hypoglycemia, a potentially life-threatening condition, in pediatric and adult patients with diabetes ages two years and older. We began the field launch of Gvoke PFS and Gvoke HypoPen in January 2020 and July 2020, respectively. Both presentations are available in two doses: a 0.5 mg/0.1 mL dose for pediatric patients and a 1 mg/0.2 mL dose for adolescent and adult patients. On August 23, 2021, we announced that a supplemental new drug application (sNDA) of Gvoke Kit was approved by the FDA. Gvoke Kit will be sold as a 1 mg/0.2 mL single dose vial and syringe kit. Gvoke Kit contains one (1) single-dose sterile syringe with markings for 0.1 mL (0.5 mg pediatric dose) and 0.2 mL (1 mg adult dose), and one single-dose vial containing 0.2 mL of solution. The Gvoke Kit will be available in March 2022. On July 19, 2021, we announced that we had entered into an exclusive agreement with Tetris Pharma Limited (“Tetris”) for the commercialization of Ogluo in the European Economic Area, United Kingdom, and Switzerland (the “Territory”). Under the terms of the applicable agreements, Xeris will be responsible for product supply and Tetris will be responsible for commercialization of Ogluo in the Territory. Subject to the terms and conditions set forth in the agreements, Xeris will receive consideration tied to the first commercial sale and other time-, launch- and sales-related milestones and collect a royalty on sales. We commercially launched Ogluo in United Kingdom through our commercialization partner, Tetris, in December 2021. We plan to pursue development and commercialization collaborations for most, if not all, of the non-U.S. markets we seek to enter. Overview of Hypoglycemia Diabetes is a widespread condition that affects an estimated 537 million people worldwide with an estimated 22 million drug-treated people in the United States. Among people with diabetes in the United States, essentially all of the approximately 1.6 million people with T1D and 5.4 million people with T2D require insulin therapy to lower their blood glucose levels to achieve normal blood sugar levels and avoid hyperglycemia. Insulin treatment in people with diabetes can also lead to hypoglycemia, a deficiency of glucose in the bloodstream, which is more common in people with diabetes who are treated with insulin or substances that promote production of insulin. Hypoglycemia is the primary adverse reaction associated with insulin. 8
Hypoglycemia is categorized by level of severity, expressed as mild (Level 1), moderate (Level 2) or severe (Level 3) hypoglycemic events. Definitions, symptoms and treatment recommendations for hypoglycemia per the Americans with Disabilities Act ("ADA") and the American Association of Clinical Endocrinologists ("AACE") are summarized in the figure below: Hypoglycemic events of any severity are a daily concern for people with diabetes. Severe hypoglycemic events are extremely frightening for patients and caregivers and can result in cardiovascular disease, seizure, coma, and, if left untreated, death. Fear of hypoglycemia and the morbidity and mortality risks associated with it are a constant reality for people with diabetes. According to scientific literature, fear of hypoglycemia is a critical impediment to psychological well-being and quality of life and represents the greatest barrier to optimal glycemic control. Studies have shown that only 14% of those aged 18–25 years and 29% of those aged 26– 50 years achieved optimal glycemic control by taking insulin. While patients can take preventive measures, hypoglycemic events still occur. On average, people with T1D experience an episode of mild or moderate hypoglycemia twice per week and 30% to 40% of people with T1D experience one to three episodes of severe hypoglycemia per year. On average, half of people with T2D treated with insulin experience an episode of mild or moderate hypoglycemia and 20% experience at least one severe episode a year. According to recent statistics, hypoglycemia demanded 242,000 visits to the emergency department in 2018, and resulted in approximately $1.8 billion dollars in direct costs associated with emergency care, inpatient care, and ambulatory care in 2009. Additionally, severe hypoglycemia has been attributed to 27,000 deaths per year. The ADA Standards of Medical Care in Diabetes recommends that glucagon be prescribed for all individuals at increased risk of Level 2 or Level 3 hypoglycemia so that it is available should it be needed. Glucagon works to raise the glucose levels in a person’s blood by inducing the liver to convert glycogen, a type of stored sugar in the body, into glucose. Limitations of Existing Emergency Liquid Glucagon Kits Because of the urgent nature of severe hypoglycemia, the majority of severe hypoglycemic events are treated on an emergency basis, outside of a healthcare facility. Prior to the FDA's approval of Gvoke in September 2019 and Eli Lilly's Baqsimi, a nasally administered glucagon powder, in July 2019, there were only two emergency glucagon products available to treat severe hypoglycemia: Eli Lilly’s Glucagon Emergency Kit ("GEK") and Novo Nordisk’s GlucaGen® HypoKit®. Each of these products is sold as a vial of lyophilized glucagon powder with an exposed needle/syringe that contains a liquid diluent. The glucagon powder must be combined with the liquid diluent at the time of use and drawn into a syringe in accordance with a complex multi-step reconstitution and dose calibration procedure. Long-term storage of the combined solution is impractical because once the lyophilized glucagon is combined with water, the solution becomes unstable and can fibrillate, rendering it inactive and potentially toxic. The multi-step reconstitution and dose calibration procedure required for traditional glucagon kits can be intimidating, particularly in an emergency situation, for likely glucagon kit users, a group that includes caregivers, co-workers, friends, teachers or other bystanders. In 2018, we conducted a quantitative study with 700 caregivers and people with diabetes evaluating the market perceptions of traditional glucagon kits, which we refer to as our Caregiver and Patient Perceptions Study. In that study, only one third of respondents had a highly favorable opinion of the traditional kits and only half were confident that a glucagon kit user would be able to correctly administer the traditional emergency glucagon products. Furthermore, in three published comparative human factors 9
studies with traditional kits, only 6% to 31% of users were able to successfully administer the full dose of glucagon. In other words, in these studies, test subjects failed to deliver the full dose of glucagon 69% to 94% of the time. Accordingly, a diabetes patient experiencing a severe hypoglycemic episode who relies on a bystander to administer glucagon may not receive the full dose of glucagon needed to restore their blood glucose levels. Failure to promptly treat severe hypoglycemia leaves the person at critical risk of irreversible brain damage and heart problems, especially in people who already have coronary artery disease. If emergency medical treatment is not successful, the severe hypoglycemic event can be fatal. Of the units of glucagon rescue products dispensed in the United States at the end of 2021, legacy kits and Baqsimi represented approximately 42% and 38%, respectively, Gvoke represented approximately 20% and Zegalogue represented less than 1%. Gvoke Key Features and Benefits Leveraging our patented XeriSol technology, we believe Gvoke offers an important advancement in the treatment of severe hypoglycemia. Gvoke is the first ready-to-use, room-temperature stable liquid glucagon product approved that can be administered via a pre-filled syringe (Gvoke PFS), auto-injector (Gvoke HypoPen) or single dose vial and syringe kit (Gvoke Kit). Gvoke is currently available in two doses: a 0.5 mg/0.1 mL dose for pediatric patients and a 1 mg/0.2 mL dose for adolescent and adult patients. These innovative formats are designed to provide the reliability of a ready-to-use liquid glucagon while allowing patients or caregivers to administer it quickly and simply. The key features of Gvoke PFS and Gvoke HypoPen are: < Ready-to-use: With its two-step administration process, the user of Gvoke HypoPen, pulls off the cap and pushes down on the skin for five seconds until the viewing window turns red, or with Gvoke PFS, pulls off the cap, inserts the needle at a 90-degree angle and pushes the plunger down as far as it will go. There is no reconstitution required at the time of emergency. < Reliable administration: In our human factors studies, 99% of users were able to successfully administer the full dose. < No dose calibration required: Gvoke is offered in two pre-measured doses: 0.5 mg/0.1 mL dose for pediatric patients and 1 mg/0.2 mL dose for adolescent and adult patients. < 24 to 30 months room-temperature stability: No refrigeration is required at any time. In addition, key features specific to the Gvoke HypoPen are: < No visible needle: The needle in the Gvoke HypoPen is not visible to the user. < Auto-retraction: The needle auto-retracts after administration for safety. < Auto-locks: The device auto-locks after use for safety. In our Caregiver and Patient Perceptions Study conducted in 2018, more than 75% of subjects responded that they would prefer Gvoke HypoPen over the then-existing traditionally available glucagon kits. Also in 2018, we conducted a quantitative study of over 400 healthcare professionals, which we refer to as our Healthcare Professional Perceptions Study. In that study, results indicated that glucagon would be prescribed to more people across all clinically appropriate patient segments if Gvoke HypoPen was available. Based on this market research, we believe that the glucagon market will become more penetrated and that Gvoke HypoPen will become the preferred emergency glucagon delivery solution to the existing traditionally available glucagon kits. Gvoke Market Potential Based on current market data as well as our Caregiver and Patient and Healthcare Professional Perceptions Studies, we believe that Gvoke has the opportunity to increase penetration of the glucagon market in severe hypoglycemia by increasing the number of people with diabetes who have a filled glucagon prescription and by increasing the number of glucagon rescue devices they have on hand. There are approximately 22 million drug-treated people with diabetes in the United States, and the annual growth rate in incidence of diagnosed and treated people with diabetes is approximately 4% per year. An additional 96 million people in the United States are prediabetic and may progress to T2D. The ADA recommends that glucagon be prescribed for all individuals at increased risk of Level 2 or Level 3 hypoglycemia so that it is available should it be needed. Based on our Healthcare Professional Perceptions Study, we believe all people on insulin are considered clinically appropriate for glucagon. In the United States, there is an estimated 1.6 million people with T1D who are treated with insulin because their bodies do not naturally produce insulin and approximately 5.4 million additional people with T2D who are treated with insulin because their bodies do not use insulin properly. In the aggregate, we estimate that the potential target population for emergency glucagon therapy totals approximately 7.0 million people in the United States. We believe every person who is on insulin therapy should have ready-to-use glucagon available for a potential severe hypoglycemic episode. With such an expansion in glucagon prescriptions, and also by increasing penetration into the market for emergency glucagon kits, the United States potential market opportunity may be up to $4.0 billion. Despite the risk of experiencing a severe hypoglycemic event, we believe that emergency glucagon therapy is under-appreciated, under-evaluated and under-taught, resulting in a market that is underpenetrated. In the United States, approximately 693,000 total 10
prescriptions for emergency glucagon were written in 2021, or an 7% increase from 2020. In 2021, a total of approximately 1 million units of emergency glucagon products were dispensed in the United States, representing total sales of approximately $281 million. We commercially launched Ogluo in the United Kingdom through our commercialization partner, Tetris, in December 2021. Considering the European Economic Area, United Kingdom, and Switzerland, we estimate that there are an additional 5 million people with diabetes on insulin. However, annually there are only approximately 1.2M units of glucagon sold in the retail setting, which we believe indicates that the market for emergency glucagon products is significantly underpenetrated in the Territory. Commercial Strategy Our commercial strategy is to increase the number of prescribed and dispensed emergency glucagon products, specifically Gvoke, for people on insulin therapy. Our sales force is focused on driving awareness and adoption of Gvoke by healthcare professionals. We began the field launch of Gvoke PFS in January 2020, Gvoke HypoPen in July 2020 and Gvoke Kit in 2022. Our strategy for Gvoke includes the following: < Drive awareness, adoption and utilization of Gvoke. We plan to drive awareness and adoption of Gvoke to expand glucagon adoption. o Healthcare Professionals: We are targeting certified diabetes care and education specialists and high insulin and glucagon prescribing healthcare professionals. We are reaching these professionals using our field and inside sales teams. o Patients and Caregivers: We are activating patients through patient advocacy organizations and leveraging channels such as direct-to-consumer advertising, patient influencer content, digital presence, traditional off-line channels, social media and press coverage to drive awareness and communicate our value proposition to patients and caregivers. < Penetrate the market. We believe that the Gvoke market is currently significantly underpenetrated due to the lack of, and limitations in, previous treatment options. We have designed Gvoke to offer healthcare professionals, patients and caregivers a ready-to-use alternative that facilitates administration of the full dose of glucagon every time it is used. We believe this product offering, paired with our commercial focus, has the potential to grow the market in two ways: o Healthcare Professionals: In addition to certified diabetes care and education specialists and high insulin and glucagon prescribing healthcare professionals, we are targeting healthcare professionals who are high mealtime insulin prescribers but who are not high prescribers of glucagon. We are reaching these professionals using our field and inside sales teams. o Patients and Caregivers: We believe there are opportunities to activate patient and caregiver demand for Gvoke. Gvoke is designed as a ready-to-use solution for a segment of patients and caregivers who currently lack the confidence in administering traditional emergency glucagon kits and would rather rely on emergency responders for treatment. < Promote access. Of our target patient population, approximately 60% are commercially insured, approximately 20% are covered by Medicare and approximately 20% are covered by Medicaid and other government programs. We plan to continue our focus on promoting access to Gvoke. We believe that all patients should have access to potentially lifesaving products such as Gvoke. We have engaged with payors to more fully understand their drivers and barriers and convey the health and pharmacoeconomic value of Gvoke. < Impact of the ongoing COVID-19 pandemic. We believe that customer demand has been adversely impacted by the COVID-19 pandemic. Initially, we suspended in-person interactions by our sales and marketing personnel in healthcare settings. We are engaging with these customers remotely, via webinar programs and virtual meetings, as we seek to continue to support healthcare professionals and patient care. Some of our sales and marketing personnel began to reengage with a limited number of in-person interactions. However, with the resurgence of COVID-19 variants in early 2022, our ability to connect with our customers in person became much more limited and we quickly moved back to more remote interactions. In addition, several conferences and other programs at which we intended to market Gvoke have been postponed or transitioned to virtual meetings. Remote interactions may be less effective than in-person interactions. We have also revised our patient copay assistance program to offer a copay card with a buydown to $0 for commercially eligible patients in response to the COVID-19 pandemic. We have established a distribution channel in the United States for the commercialization of Gvoke, which is currently being sold primarily to wholesale pharmaceutical distributors, who, in turn, sell Gvoke to pharmacies and other customers. We use a third-party logistics provider for key services related to logistics, warehousing and inventory management, distribution, contract administration, order management and chargeback processing and accounts receivable management. Keveyis Keveyis (dichlorphenamide) is the first and only therapy approved in the United States to treat hyperkalemic, hypokalemic and related variants of PPP, a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis. Overview of PPP PPP is a rare, genetic, neuromuscular disorder related to a defect in muscle ion channels with multiple variants and subtypes. The disease is characterized by episodes of muscle weakness and paralysis. It often interferes with daily activities and, as patients get older, it can lead to permanent muscle weakness. PPP may be localized (“focal”) or more widespread (“generalized”), and it often 11
goes underdiagnosed and/or undertreated. Types of periodic paralysis are differentiated by criteria including underlying genetic mutations and changes in blood potassium during an episode. The two most common forms of PPP are hypokalemic, when episodes can be induced by low blood levels of potassium, and hyperkalemic, when episodes are associated with elevated levels of blood potassium. We believe, based on our market research, that there are approximately 4,000 to 5,000 patients in the United States diagnosed with PPP. Keveyis Features and Benefits Keveyis is an oral carbonic anhydrase inhibitor that was approved by the FDA in the United States in August 2015 to treat hyperkalemic, hypokalemic and related variants of PPP. The exact mechanism(s) through which oral carbonic anhydrase inhibitors, and Keveyis in particular, decrease the frequency and severity of periodic paralysis attacks is unknown. However, it is believed that their effects are mediated both locally (i.e., in muscle) and systemically. It is not known whether their effects are disease-modifying. Keveyis has received orphan drug exclusivity status in the United States through August 7, 2022. Keveyis has been studied in two separate double-blind, placebo-controlled multi-center studies and proven to be an effective treatment for PPP. Keveyis was shown to decrease the number of PPP episodes. In addition, episodes that did occur were shorter in duration and not as severe. The most common adverse reactions with incidence ≥10% and rates greater than placebo in patients treated with Keveyis were paresthesia, cognitive disorder, dysgeusia, and confusional state. Less than 10% (3/36) of all patients treated with Keveyis in one study withdrew due to an adverse reaction in the double-blind phase; 17% of hyperkalemic patients (2/12) and ~4% (1/24) of hypokalemic patients discontinued treatment. Keveyis Market Potential We believe, based on our market research, that there are approximately 4,000 to 5,000 patients in the United States diagnosed with PPP and we believe that we can address the market by targeting physicians who are managing patients with PPP, including neuromuscular specialists, general neurologists and primary care physicians. Keveyis Commercial Strategy Our commercial strategy for Keveyis is to promote its unique benefits, as well as a concerted effort to raise awareness about the underlying PPP disease among the physician/patient/caregiver community with the goal of increasing the rate of diagnosis when the symptoms may otherwise be overlooked. In addition to a specialty sales force, we established a field-based group of patient access managers and medical affairs liaisons. We use a single, specialty pharmacy to provide reimbursement, clinical and distribution support for Keveyis and to develop cost-sharing and patient assistance programs to support qualified, commercially insured patients, federaland state-insured patients, and uninsured or under-insured patients. We also donate money to independent charitable foundations dedicated to this cause. Our ultimate goal is to ensure that no PPP patient is denied access to Keveyis for financial reasons. We work with the patient community to advocate for patients improving diagnosis, genetic testing and treatment. Recorlev Recorlev (levoketoconazole), the pure 2S,4R enantiomer of the enantiomeric pair comprising ketoconazole. Recorlev is a nextgeneration steroidogenesis inhibitor. The active pharmaceutical ingredient in Recorlev, levoketoconazole, exerts its primary therapeutic effect by blocking the synthesis of cortisol in the adrenal glands, leading to the reduction and, ideally, the normalization of blood cortisol. Levoketoconazole has been granted orphan drug designation by the FDA and the EMA for the treatment of endogenous Cushing’s syndrome. Levoketoconazole inhibits the cortisol synthesis pathway at several points. Based on the results from our SONICS and LOGICS clinical trials, we believe that Recorlev can have a beneficial impact on hypercortisolism, the hallmark of endogenous Cushing’s syndrome, as well as benefits related to several comorbidities of endogenous Cushing’s syndrome, including those associated with cardiovascular disease risk, such as diabetes, weight gain and elevation in LDL-cholesterol. On December 30, 2021 we announced the FDA approval of Recorlev for the treatment of endogenous hypercortisolemia in adult patients with Cushing’s syndrome for whom surgery is not an option or has not been curative. Recorlev is not approved for the treatment of fungal infections. The approval of Recorlev was based upon safety and efficacy data from two positive Phase 3 studies that evaluated a combined study population of 166 patients, which was representative of the adult drug-treated U.S. population with Cushing’s syndrome. The SONICS study met its primary and key secondary endpoints, significantly reducing and normalizing mean urinary free cortisol concentrations without a dose increase. LOGICS, a double-blind, placebo-controlled randomized-withdrawal study that met its primary and key secondary endpoints, confirmed the efficacy and safety of Recorlev in normalizing and maintaining therapeutic response compared with placebo. Overview of Endogenous Cushing’s Syndrome There are two variants of Cushing’s syndrome: exogenous, which is caused by factors outside the body (e.g., corticosteroid or cortisol-like medications) and endogenous, which is caused by factors within the body. The signs and symptoms may be the same in both forms. The much more common form is exogenous Cushing’s syndrome, which is often found in people taking cortisol-like medications for long periods of time or for shorter periods of time using more potent forms. Cortisol-like medications are often used to treat inflammatory disorders such as asthma and rheumatoid arthritis. Unlike endogenous Cushing’s syndrome, exogenous Cushing’s syndrome may be alleviated by withdrawing the inciting medication. 12
Endogenous Cushing’s syndrome is a rare endocrine disorder characterized by sustained elevated blood cortisol. Cortisol is a hormone produced in the adrenal gland and is naturally secreted as an end-product of the activity of the hypothalamic-pituitary-adrenal axis. Corticotropin-releasing-hormone (“CRH”) is secreted from the hypothalamus and stimulates the secretion and release of adrenocorticotropin (“ACTH”) from the pituitary gland, which in turn stimulates cortisol (and other hormone) secretion from the adrenal gland. Cortisol itself exerts negative feedback control on both CRH in the hypothalamus and ACTH in the pituitary gland, thereby reducing CRH and ACTH secretion, keeping cortisol levels in a normal range. The most common form of endogenous Cushing’s syndrome is called Cushing’s disease, which is typically caused by a benign pituitary tumor that secretes ACTH autonomously. Cushing’s disease represents approximately 70% to 80% of patients with endogenous Cushing’s syndrome. Other causes of endogenous ACTH-dependent Cushing’s syndrome include extrapituitary tumors producing ACTH, known as ectopic ACTH, or less often CRH (ectopic CRH). The source of ectopic ACTH/CRH secretion is most often small-cell carcinoma of the lung or bronchial carcinoid tumors, but neuroendocrine tumors found in many different organs can also be sources. In a smaller number of cases, approximately 20%, endogenous Cushing’s syndrome is ACTH-independent, meaning that it does not arise through tumor secretion of ACTH but rather results from excess autonomous secretion of cortisol itself in the adrenal gland by adrenocortical tumors, either benign or malignant, or by non-malignant enlargement of the adrenal glands called hyperplasia. In patients with endogenous Cushing’s syndrome, the normal feedback mechanisms of the hypothalamic-pituitary-adrenal axis are disrupted. This causes chronic exposure to high circulating cortisol levels that give rise to the clinical state of Cushing’s syndrome. The most common signs and symptoms of the syndrome include: weight gain, sometimes with unusual fat accumulation in the upper body with a rounded face (“moon face”) and extra fat on the upper back and above the collarbones, along with abdominal fat; high blood sugar or diabetes mellitus; high blood pressure or hypertension; thin bones or osteoporosis; muscle loss or sarcopenia; thin, fragile skin that bruises easily; purple-red stretch marks called striae, usually over the abdomen and under the arms; depression and difficulty thinking clearly; too much facial hair, or hirsutism, usually noticed only in women; irregular or absent menstrual periods and infertility; reduced sex drive or libido; and in children, poor height growth. An estimated 25,000 patients in the United States are diagnosed with endogenous Cushing’s syndrome. When first diagnosed, patients are most commonly adults aged 20 to 50 and five times more often women than men. However, endogenous Cushing’s syndrome is believed to be underdiagnosed due to lack of disease recognition, resulting in a delay in diagnosis of six years on average. Endogenous Cushing’s syndrome patients are believed to have a mortality risk two to three times that of the age-and-gender-matched general population, with cardiovascular disease, including venous thrombosis and infections being the primary causes of death. Current Treatment Landscape and Limitations of Current Treatment Options Treatment of endogenous Cushing’s syndrome varies depending on the cause of the disease. For patients with Cushing’s disease, initial treatment is almost always the attempted surgical removal of the pituitary tumor. In anticipation of surgery and when surgery is not effective or not an option, drug or radiation therapy, or both, is used to suppress excessive cortisol production and the accompanying clinical symptoms. A typical approach to drug therapy is to inhibit cortisol synthesis through the oral administration of an inhibitor of enzymes that regulate adrenal cortisol synthesis. Although approved in the European Union for this indication, ketoconazole is not approved for this indication by the FDA and is therefore prescribed “off-label”. The percentage of endogenous Cushing’s syndrome patients treated with ketoconazole monotherapy who achieve normalized levels of cortisol, assessed by measuring UFC has been reported from retrospective, uncontrolled studies, with varying definitions of normalization, to be between 33% and 100%. Metyrapone is another cortisol synthesis inhibitor that blocks cortisol in a different way than ketoconazole or Recorlev. It is not approved for treatment of Cushing’s syndrome in the US but is used off-label. Metyrapone is approved for use in the United Kingdom and certain other countries as a therapeutic drug for CS. Elsewhere, including in the US, it is approved as a diagnostic agent in Cushing’s disease. A drug that works through a similar pathway as metyrapone, called Isturisa (osilodrostat), was granted a marketing authorization in the European Union on January 15, 2020 and in the United States on March 6, 2020. Etomidate is an intravenously administered sedative that potently inhibits 11β-hydroxylase, like metyrapone and osilodrostat, and is highly effective to reduce cortisol, but its use is typically limited to the inpatient setting. An alternative medical approach to treating Cushing’s syndrome targets pituitary tumors that produce ACTH (i.e., in Cushing’s disease). Among Cushing’s disease patients, the dopamine agonist cabergoline, which is not approved for use to treat Cushing’s disease in the United States, has been shown to achieve normalization of UFC levels, gold-standard evidence of disease control, in about 30% of patients. The SSA (somatosatin analog) pasireotide, which is marketed as Signifor and Signifor LAR for the treatment of Cushing’s disease in the United States, has shown normalization of UFC levels with stable dosing of the immediate-release formulation in 15% of patients at a dosage of 600 μg twice-daily and in 26% of patients at a dosage of 900 μg twice-daily over a sixmonth period. Certain SSAs, including Signifor, are known to have undesirable side effects on glucose metabolism. Forty percent of patients with Cushing’s disease treated with Signifor in its Phase 3 clinical trial reported the occurrence of hyperglycemia-related adverse events, and in the cohort receiving Signifor 900 μg twice-daily, glycated hemoglobin (“HbA1c”) increased from 5.8% at baseline to 7.3% at Month 6. Another alternative drug therapy, Korlym, or mifepristone, works by inhibiting the action of cortisol at the cortisol-receptor level but does not lower blood cortisol levels, which actually tend to increase during therapy. As a result of this mechanism of action, it is not possible to monitor response (i.e., effectiveness and safety) to Korlym by measuring UFC or cortisol levels (from blood or saliva), which are the standard ways clinicians monitor disease progression and response to treatment. As a result, Korlym is usually titrated 13
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