XERIS BIOPHARMA HOLDINGS, INC. Cautionary statements for forward-looking information
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and notes to those financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and with the audited financial statements and the notes to those financial statements included in the Annual Report on Form 10-K filed onMarch 11, 2022 with theU.S. Securities and Exchange Commission . In addition to financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "would," "may," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and terms of similar meaning are also generally intended to identify forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including without limitation, the regulatory approval of our product candidates, our ability to market and sell our products and product candidates if approved, the effect of uncertainties related to the current coronavirus pandemic, or any other health epidemic, onU.S. and global markets, our business, financial condition, operations, third-party suppliers or the global economy as a whole, and other factors discussed in Item 1A of Part II of this Quarterly Report on Form 10-Q. Any forward-looking statements contained herein speak only as of the date hereof, and Xeris expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
Unless otherwise indicated, references to "Xeris," the "Company," "we," "our" and "us" in this Quarterly Report on Form 10-Q refer toXeris Pharmaceuticals, Inc. ("Xeris Pharma") when referring to periods prior to the acquisition ofStrongbridge Biopharma plc , an Irish public limited company ("Strongbridge") (discussed below) onOctober 5, 2021 and toXeris Biopharma Holdings, Inc. when referring to periods on or subsequent toOctober 5, 2021 . Also, throughout this document, unless otherwise noted, references to Gvoke® include Gvoke PFS, Gvoke HypoPen®, Gvoke Kit and Ogluo® (glucagon). 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 onlyU.S. Food and Drug Administration ("FDA") approved therapy for primary periodic paralysis ("PPP") and Recorlev, approved by the FDA inDecember 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.
Acquisition of Strongbridge
OnMay 24, 2021 , Xeris Pharma and Strongbridge entered into the Transaction Agreement together withXeris Biopharma Holdings, Inc. , aDelaware corporation ("the Company"), andWells MergerSub, Inc. , aDelaware corporation ("MergerSub") (the "Transaction Agreement") whereby we would acquire Strongbridge (the "Acquisition") pursuant to a scheme of arrangement (the "Scheme") under Irish law. Under the terms of the Transaction Agreement, (i) the Company acquired Strongbridge by means of the Acquisition pursuant to the Scheme and (ii) MergerSub merged with and into Xeris Pharma, with Xeris Pharma as the surviving corporation in the merger (the "Merger," and the Merger together with the Acquisition, the "Transactions"). As a result of the Transactions, both Xeris Pharma and Strongbridge became wholly owned subsidiaries of the Company. The Company acquired all of the outstanding Strongbridge ordinary shares ("Strongbridge Shares") in exchange for (i) 0.7840 of a share of the Company's common stock ("Company Shares") and cash in lieu of fractions of Company Shares due to a holder of Strongbridge Shares per Strongbridge Share and (ii) one (1) non-tradeable contingent value right, worth up to a maximum of$1.00 per Strongbridge Share settleable in cash, additional Company Shares, or a combination of cash and additional Company Shares, at the Company's sole discretion. OnOctober 5, 2021 , pursuant to the Transaction Agreement, we completed the Transactions. Through the Acquisition, we added Keveyis (dichlorphenamide) to our commercial product portfolio. Keveyis is the first and only treatment approved by FDA for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis ("PPP"), a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis. In addition, we added a clinical-stage product candidate for rare endocrine diseases, Recorlev. Recorlev (levoketoconazole), the pure 2S,4R enantiomer of the enantiomeric pair comprising ketoconazole, is a next-generation steroidogenesis inhibitor which serves as a chronic therapy for adults with endogenous Cushing's syndrome. Levoketoconazole has received orphan designation from the FDA and theEuropean Medicines Agency . Recorlev was acquired as an in-process research and development asset and subsequently approved by the FDA onDecember 30, 2021 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 was commercially launched inJanuary 2022 . 32 --------------------------------------------------------------------------------
Patents
We currently own 141 patents issued globally, including a composition of matter patent covering our ready-to-use glucagon formulation that expires in 2036. Upon completion of the Transactions,Xeris Biopharma Holdings, Inc. controls the patents ofXeris Pharma and Strongbridge Dublin Limited , the latter of which has 53 granted patents globally related to proprietary formulations of levoketoconazole (the active pharmaceutical ingredient in Recorlev) and the uses of such formulations in treating certain endocrine-related diseases and syndromes. This includes US Patent No. 11,020,393, which was granted onJune 1, 2021 , and which provides patent protection through 2040 for the use of Recorlev in the treatment of certain patients with persistent or recurrent Cushing's syndrome.
Outlook and strategies
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 the 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 biotechnologycompanies 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 collaborating with several major
pharmaceutical companies on the development of formulations of their proprietary
therapeutics with XeriSol or XeriJect. Our strategic goal is to ultimately enter
into commercial licensing agreements with these partners upon successful
completion of formulation development.
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.
Financing
We have funded our operations to date primarily with proceeds from the sale of our preferred and common stock and debt financing. We have received gross proceeds of$253.0 million from public equity offerings of our common stock (including ourJune 2018 initial public offering ("IPO") and ourFebruary 2019 ,February 2020 ,June 2020 ,March 2021 offerings),$30.0 million from a private placement of our common stock inJanuary 2022 ,$104.9 million from sales of our preferred stock,$86.3 million from ourJune 2020 Convertible Notes offering,$63.5 million from the Amended and Restated Loan and Security Agreement (as amended, the "Amended Loan Agreement"), of which$20.0 million was repaid inJune 2020 and$43.5 million was repaid inMarch 2022 and$100.0 million from the Hayfin Loan Agreement inMarch 2022 . For the three months endedMarch 31, 2022 and 2021, we reported net losses of$33.7 million and$18.4 million , respectively. We have not been profitable since inception, and, as ofMarch 31, 2022 , our accumulated deficit was$493.8 million . In the near term, we expect to continue to incur significant expenses, operating losses and net losses as we: 33 -------------------------------------------------------------------------------- 34 -------------------------------------------------------------------------------- < continue our marketing and selling efforts related to
commercialization of Gvoke,
Keveyis and Recorlev;
< continue our research and development efforts;
< seek regulatory approval for new product candidates and product enhancements; and
< continue to operate as a public company. We may continue to seek public equity and debt financing to meet our capital requirements. There can be no assurance that such funding may be available to us on acceptable terms, or at all, or that we will be able to commercialize our product candidates, if approved. In addition, we may not be profitable even if we commercialize any of our product candidates.
Product developments
< We are currently in Phase 1 development with product
candidate XP-9164, an
early-stage compound for gastroenterology. XP-9164 is intended to address unmet
needs in the growing procedural gastroenterology market.
< We are developing ready-to-use glucagon for
exercise-Induced hypoglycemia(EIH) in
diabetes. Based on FDA interactions and expectations for a registrational program
to support a mini-dose indication for Glucagon RTU in EIH, we submitted an IND in
February 2022 . We received FDA clearance inMarch 2022
and are actively planning
to initiate a new phase 2 clinical program by the end of 2022 to further address
the management of EIH in people with diabetes who use insulin.
< We are currently in Phase 1 development with product
candidate XP-8121, an
early-stage program designed to address maintenance therapy in patients with
congenital or acquired hypothyroidism who require thyroid hormone replacement.
< Xeris Pharma has developed a novel, investigational
fixed-ratio co-formulation of
pramlintide and regular human insulin (XP-3924) to improve glycemic control in
adult and pediatric patients with diabetes mellitus (T1D and T2D). Xeris'
proprietary formulation technology (XeriSol™) enables the 2 peptides (pramlintide
and insulin), which require different aqueous pH environments for optimal
stability, to be co-formulated in a stable ready-to-use solution. The current
formulation patent exists through at least Q4 2032, expected to extend to 2036
with successful prosecution of the currently pending continuation application, and
through 2041-2042 with the ongoing formulation development work. We are currently
seeking partners to license the development and commercialization rights to
XP-3924 in the US.
< XP-0863 is a liquid formulation of diazepam for intramuscular injection being
studied for the treatment of ARS. Xeris' patent protected technology XeriSol™ has
been used to develop a room-temperature stable, ready-to-use, small-volume
solution of diazepam for intramuscular injection delivered by an auto-injector,
which will provide patients and caregivers an alternative to rectal and nasal
administrations of benzodiazepines. XP-0863 is designed to address variable
absorption, and suboptimal PK profiles of the currently marketed formulations of
benzodiazepines, by offering a longer duration of action, consistent absorption of
drug delivered through intramuscular administration, and a convenient and reliable
form factor of the autoinjector. XP-0863 has been granted an orphan designation by
the FDA for the treatment of ARS and Dravet syndrome in patients with epilepsy. We
are currently seeking partners to license the development and commercialization
rights to XP-0863 in the US.
Impact of COVID-19
The COVID-19 pandemic has presented a substantial public health and economic
challenge around the world and has impacted our business operations, employees,
patients and communities as well as the global economy and financial markets.
The COVID-19 pandemic continues to evolve and has led to the implementation of
various responses, including government-imposed quarantines, stay-at-home
orders, travel restrictions, mandated business closures and other public health
safety measures.
To date, we and our suppliers and third-party manufacturing partners have been
able to continue to supply our products and product candidates to our patients
and clinical trials respectively, and currently do not anticipate any
interruptions in supply. However, while our third-party contract manufacturing
partners continue to operate at or near normal levels, with enhanced safety
measures intended to prevent the spread of the virus, we are seeing increasingly
long lead times. While we currently do not anticipate any interruptions in our
manufacturing process that would impact supply of our products and product
candidates, it is possible that the COVID-19 pandemic, response efforts related
to COVID-19 and its repercussions such as supply chain delays, may have an
impact in the future on our third-party suppliers and contract manufacturing
partners' ability to supply and/or manufacture our products and product
candidates.
We believe that customer demand for our products has been adversely impacted by
the COVID-19 pandemic due to the disruption the pandemic has caused in patients'
normal access to healthcare as well as our sales and marketing personnel's
access to customers. Initially, we suspended in-person interactions by our sales
and marketing personnel in healthcare settings. We were engaging with these
customers remotely, via webinar programs and virtual meetings, as we sought to
continue to support healthcare professionals and patient care. As parts of the
country reopened, some of our sales and marketing personnel began to reengage
with a limited number of in-person interactions. However, with the emergence of
variants, some areas have implemented or reintroduced restrictions and may again
in the future, which may impact our sales and marketing personnel's access to
customers. Remote interactions generally are not as effective as in-person
interactions. In addition, several conferences and other programs at which we
intended to market our products have been postponed, canceled and/or
transitioned to virtual meetings. We also have revised our Gvoke patient copay
assistance program to offer a copay card with a buy-down to $0 for commercially
eligible patients in response to the COVID-19 pandemic.
In addition to our sales and marketing personnel, we moved quickly to transition other employees to a remote work-from-home environment excluding essential services, such as personnel in our laboratory. We have since reopened our offices on a voluntary basis
35
--------------------------------------------------------------------------------
and have implemented safety measures designed to comply with applicable federal,
state and local guidelines in response to the COVID-19 pandemic. We may be
required to take additional actions that may impact our operations as required
by applicable laws or regulations or which we determine to be in the best
interests of our employees.
We have incurred operating losses since inception, and we have an accumulated
deficit of $493.8 million at March 31, 2022 . Although we believe that our cash,
cash equivalents, investments, and expected revenue from sales of Gvoke,
Keveyis, and Recorlev will enable us to fund our operating and capital
expenditure requirements for at least the next 12 months, we cannot predict the
impact of the COVID-19 pandemic on our future results of operations and
financial condition due to a variety of factors, including the health of our
employees, the ability of suppliers to continue to operate and deliver, the
ability of Xeris and our customers to maintain operations, continued access to
transportation resources, the changing needs and priorities of customers, any
further government and/or public actions taken in response to the pandemic, the
emergence of variants and acceptance of vaccines, and ultimately the length of
the pandemic. As further detailed in "Liquidity and Capital Resources" below, we
have relied on equity and debt financing for our funding to date and completed
concurrent convertible debt and equity offerings in June/July 2020 under which
we raised gross proceeds of $109.4 million and a registered direct offering in
March 2021 under which we raised gross proceeds of $27.0 million . On January 3,
2022 , we entered into a securities purchase agreement in connection with a
private placement for aggregate gross proceeds of approximately $30.0 million .
In March 2022 , we entered into a Credit Agreement and Guaranty which provided
for the lenders to extend $100.0 million in term loans to us on the closing date
and up to an additional $50.0 million in delayed draw term loans during the one
year period immediately following the closing date. Given the impact of COVID-19
on the U.S. and global financial markets, we may be unable to access further
equity or debt financing if and when needed.
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of
our business, including the impact on our operations and the operations of our
customers, suppliers, vendors and business partners. We may take further
precautionary and preemptive actions as may be required by federal, state or
local authorities. In addition, we have taken and continue to take steps to try
and minimize the current environment's impact on our business, including
devising contingency plans and backup resources.
We do not yet know the full extent of potential delays or impacts on our
business, our clinical trials, our research programs, healthcare systems or the
global economy, and we cannot presently predict the scope and severity of any
potential business shutdowns or disruptions. The full extent to which the
COVID-19 pandemic will directly or indirectly impact our business, results of
operations and financial condition, including sales, expenses, reserves and
allowances, manufacturing, clinical trials, research and development costs and
employee-related costs, will depend on future developments that are highly
uncertain, including as a result of new information that may emerge concerning
COVID-19 and the actions taken to contain or treat it, as well as the economic
impact on local, regional, national and international markets. If we, or any of
the third parties with whom we engage, were to experience shutdowns or other
business disruptions, our ability to conduct our business in the manner and on
the timelines presently planned could be materially or negatively affected,
which could have a material adverse impact on our business, results of
operations and financial condition.
Components of our Results of Operations
The following discussion sets forth certain components of our statement of
operations of Xeris for three months ended
Product revenue, net
Product revenue, net, represent gross product sales less estimated allowances for patient copay assistance programs, prompt payment discounts, payor rebates, chargebacks, service fees, and product returns, all of which are recorded at the time of sale to the pharmaceutical wholesaler or other customer. We apply significant judgments and estimates in determining some of these allowances. If actual results differ from our estimates, we make adjustments to these allowances in the period in which the actual results or updates to estimates become known. Cost of goods sold Cost of goods sold primarily includes product costs, which include all costs directly related to the purchase of raw materials, charges from our contract manufacturing organizations, and manufacturing overhead costs, as well as shipping and distribution charges. Cost of goods sold also includes losses from excess, slow-moving or obsolete inventory and inventory purchase commitments, if any. Manufacturing costs for Gvoke and Recorlev incurred prior to approval and initial commercialization were expensed as research and development expenses.
Research and development expenses
Research and development expenses consist of expenses incurred in connection
with the discovery and development of our product candidates. We recognize
research and development expenses as incurred. Research and development expenses
that are paid in
36
--------------------------------------------------------------------------------advance of performance are capitalized until services are provided or goods are delivered. Research and development expenses include:
< the cost of acquiring and manufacturing preclinical
study and clinical trial
materials and manufacturing costs related to commercial production and scale-up
until a product is approved and initially available for commercial sale;
< expenses incurred under agreements with contract
research organizations ("CROs")
as well as investigative sites and consultants that conduct our preclinical
studies and clinical trials;
< personnel-related expenses, which include salaries, benefits and stock-based
compensation;
< laboratory materials and supplies used to support ourresearch activities;
< outsourced product development services;
< expenses relating to regulatory activities, includingfiling fees paid to
regulatory agencies; and
< allocated expenses for facility-related costs.
Research and development activities are central to our business model. We expect
to continue to incur significant research and development expenses as we advance
our pipeline candidates and in particular plan and conduct clinical trials,
prepare regulatory filings for our product candidates, and utilize internal
resources to support these efforts. Our research and development costs have
declined as compared to previous levels as a result of directing significant
funding to our commercial activities, with the approval and launch of Gvoke and
as we have concluded ongoing clinical programs and not yet initiated any new
studies. Based on FDA interactions and expectations for a registrational program
to support a mini-dose indication for Glucagon RTU in EIH, we submitted an IND
in February 2022 . We received FDA clearance in March 2022 and are actively
planning to initiate a new phase 2 clinical program by the end of 2022 to
further address the management of EIH in people with diabetes who use insulin.
Our research and development expenses may vary significantly over time due to
uncertainties relating to the timing and results of our clinical trials,
feedback received from interactions with the FDA and the timing of regulatory
approvals.
Selling, general and administrative expenses
Selling, general and administrative expenses consist principally of compensation and related personnel costs, marketing and selling expenses, professional fees and facility costs not otherwise included in research and development expenses. We expect to continue to incur significant marketing and selling expenses in the near term related to the commercialization of Gvoke, Keveyis and Recorlev inthe United States .
As a public reporting company, we have incurred greater expenses, including increased payroll, legal and compliance, accounting, insurance and investor relations costs. We expect some of these costs to continue to increase in conjunction with our anticipated growth and complexity as a public reporting company.
Other income (expense)
Other income (expense) consists primarily of interest expense related to our
convertible debt, Amended Loan Agreement and Hayfin Loan Agreement, interest
income earned on deposits and investments, and the change in fair value of our
warrants.
37
--------------------------------------------------------------------------------Results of Operations
The following table summarizes our results of operations for the three months
ended
Three Months Ended March 31,
2022 2021 $ Change
Product revenue, net $ 21,910 $ 8,051 $ 13,859
Royalty, contract and other revenue 163 144 19
Total revenue 22,073 8,195 13,878
Cost and expenses:
Cost of goods sold, excluding amortization of 6,273 1,826 4,447
intangible assets
Research and development 6,250 4,032 2,218
Selling, general and administrative 35,913 19,077 16,836
Amortization of intangible assets 2,711 - 2,711
Total cost and expenses 51,147 24,935 26,212
Loss from operations (29,074) (16,740) (12,334)
Other income (expense):
Interest and other income 68 100 (32)
Interest expense (3,521) (1,791) (1,730)
Change in fair value of warrants 1,221 20 1,201
Change in fair value of contingent considerations (2,816) - (2,816)
Total other expense (5,048) (1,671) (3,377)
Net loss before benefit from income taxes (34,122) (18,411) (15,711)
Benefit from income taxes 408 - 408
Net loss $ (33,714) $ (18,411) $ (15,303)
Product revenue, net
Product revenue, net were $21.9 million and $8.1 million for the three months
ended March 31, 2022 and 2021, respectively. The $13.9 million increase was the
result of higher sales of Gvoke and sales attributable to the products, Keveyis
and Recorlev, that we acquired in fourth quarter 2021.
Cost of goods sold
Cost of goods sold were
Research and development expenses
Research and development expenses increased$2.2 million for the three months endedMarch 31, 2022 when compared to the three months endedMarch 31, 2021 . The increase was primarily driven by higher pharmaceutical process development and clinical service costs across multiple programs of$2.0 million .
Selling, general and administrative expenses
Selling, general and administrative costs increased$16.8 million for the three months endedMarch 31, 2022 when compared to the three months endedMarch 31, 2021 . We incurred$11.5 million of increased commercial-related costs, including an increase to our sales force and increased commercial support for Gvoke, Keveyis and the launch of Recorlev. In addition,$2.3 million of the increase 38 -------------------------------------------------------------------------------- related to the acquisition of Strongbridge, primarily restructuring and related employee costs. The remaining change was due to an increase in general expenses given the growth of the Company.
Amortization of intangible assets
For the three months ended
Other income (expense)
For the three months ended
Liquidity and Capital Resources
Our primary uses of cash are to fund costs related to the manufacturing, marketing and selling of products, the research and development of our product candidates, general and administrative expenses and working capital requirements. Historically, we have funded our operations primarily through private placements of convertible preferred stock, public equity offerings of common stock, and issuance of debt. InJune 2018 , we completed our IPO of 6,555,000 shares of our common stock at a price of$15.00 per share for aggregate net proceeds of$88.9 million after deducting underwriting discounts and commissions as well as other equity offering expenses. InFebruary 2019 , we completed an equity offering and sold an aggregate of 5,996,775 shares of common stock at a price of$10.00 per share. Net proceeds from this equity offering were$55.5 million after deducting underwriting discounts and commissions as well as other equity offering expenses. InSeptember 2019 , we entered into the Amended Loan Agreement that provided for term loans of up to an aggregate of$85.0 million , of which$60.0 million was drawn inSeptember 2019 and of which$20.0 million was repaid inJune 2020 . Additional tranches of$15.0 million (the "Term B Loan") and$10.0 million (the "Term C Loan") were contingent on achievement of certain revenue targets which were not achieved. InAugust 2019 , we filed a shelf registration statement on Form S-3 with theSEC , which covered the offering, issuance and sale by us of up to an aggregate of$250.0 million of our common stock, preferred stock, debt securities, warrants and/or units. We simultaneously entered into a Sales Agreement withJefferies LLC , as sales agent, to provide for the offering, issuance and sale by us of up to$50.0 million of our common stock from time to time in "at-the-market" offerings under the shelf. As ofOctober 5, 2021 , the acquisition closing date, we have sold an aggregate of 204,427 shares of common stock in at-the-market offerings under the shelf for gross proceeds of$1.8 million . The shelf ceased to be available upon the consummation of the Transactions. InJanuary 2022 , we filed a shelf registration statement on Form S-3 with theSEC , which was declared effective onFebruary 7, 2022 , and which covers the offering, issuance and sale by us of up to an aggregate of$250.0 million of our common stock, preferred stock, debt securities, warrants and/or units. InFebruary 2020 , we completed an equity offering and sold 10,299,769 shares of common stock. Net proceeds from this equity offering were$39.8 million after deducting underwriting discounts and commissions as well as other equity offering expenses. InJune 2020 , we completed a public notes offering and sold$86.3 million aggregate principal amount of 5.00% Convertible Senior Notes, including$11.3 million pursuant to the underwriters' option to purchase additional notes which was fully exercised inJuly 2020 . Concurrently with the public notes offering, inJune 2020 , we completed an equity offering and sold 8,510,000 shares of common stock, including 1,110,000 shares pursuant to the underwriters' option to purchase additional shares of common stock which was also fully exercised inJuly 2020 . Net proceeds from bothJune 2020 offerings (including the net proceeds from the exercise of the underwriters' over-allotment options inJuly 2020 ) were$102.8 million after deducting underwriting discounts and commissions as well as other offering expenses. During the second half of 2020,$39.1 million in principal amount of Convertible Notes were converted into 13,171,791 shares of our common stock. InMarch 2021 , we completed a registered direct offering of 6,553,398 shares of our common stock, the net proceeds of which were$26.9 million . As ofMarch 31, 2022 , the outstanding balance of Convertible Notes was$47.2 million . InOctober 2020 , we entered into a fourth amendment to the Amended Loan Agreement which provided for an additional$3.5 million term loan which was drawn inNovember 2020 . OnJanuary 2, 2022 , we entered into a securities purchase agreement in connection with the Private Placement with Armistice for aggregate gross proceeds of approximately$30.0 million and completed the transaction onJanuary 3, 2022 . InMarch 2022 , we, Xeris Pharma and certain subsidiary guarantors, entered into a Credit Agreement and Guaranty (the "Hayfin Loan Agreement") with the lenders from time to time parties thereto (the "New Lenders") andHayfin Services LLP , as administrative agent for the New Lenders, pursuant to which we and our subsidiaries party thereto granted a first priority security interest on substantially all of our assets, including intellectual property, subject to certain exceptions. The Hayfin Loan Agreement provided for the New Lenders to extend$100.0 million in term loans (the "Initial Loan") to us on the closing date and up to an additional$50.0 million in delayed draw term loans during the one year period immediately following the closing date (the "Delayed Draw Term Loans" and, together with the Initial Loan, the "Loans") in no more than three drawings of no less than$10.0 million per drawing subject to us being in pro forma compliance with the financial covenants and other conditions set forth therein. In conjunction with the execution of the Hayfin Loan Agreement, the Amended Loan Agreement balance of$43.5 million was repaid in full and fees of$2.1 million in connection with the loan repayment were paid. In addition to utilizing the proceeds to repay the obligations under the Amended Loan Agreement in full, the proceeds will otherwise be used for general corporate purposes. After repayment, the Loans may not be re-borrowed.
Capital Resources and Funding Requirements
We have incurred operating losses since inception, and we have an accumulated deficit of$493.8 million atMarch 31, 2022 . Based on our current operating plans and existing working capital atMarch 31, 2022 , we believe that our cash resources are sufficient to sustain 39 -------------------------------------------------------------------------------- operations and capital expenditure requirements for at least the next 12 months. We expect to incur substantial additional expenditures in the near term to support the marketing and selling of Gvoke, Keveyis and Recorlev as well as our ongoing research and development activities. We expect to continue to incur net losses for at least the next 12 months. Our ability to fund marketing and selling of Gvoke, Keveyis and Recorlev, as well as our product development and clinical operations, including completion of future clinical trials, will depend on the amount and timing of cash received from product revenue and potential future financings. Our future capital requirements will depend on many factors, including: < the successful integration of the Acquisition and
achievement of expected revenue
and synergies
< the costs of commercialization activities, includingproduct marketing, sales and
distribution;
< our degree of success in commercializing Gvoke, Keveyis and Recorlev;
< the costs, timing and outcomes of clinical trials and
regulatory reviews
associated with our product candidates;
< the effect on our product development activities of actions taken by the FDA or
other regulatory authorities;
< the number and types of future products we develop andcommercialize;
< the emergence of competing technologies and products
and other adverse market
developments; and
< the costs of preparing, filing and prosecuting patentapplications and
maintaining, enforcing and defending intellectual property-related claims.
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. Also, as we continue the
marketing and selling of Gvoke, Keveyis and Recorlev, we may not generate a
sufficient amount of product revenue to fund our cash requirements. Accordingly,
we may need to obtain additional financing in the future which may include
public or private debt and/or equity financings. There can be no assurance that
such funding may be available to us on acceptable terms, or at all, or that we
will be able to successfully market and sell Gvoke, Keveyis and Recorlev. Market
volatility resulting from the COVID-19 pandemic or other factors could also
adversely impact our ability to access capital as and when needed. The issuance
of equity securities may result in dilution to stockholders. If we raise
additional funds through the issuance of additional debt, which may have rights,
preferences and privileges senior to those of our common stockholders, the terms
of the debt could impose significant restrictions on our operations. The failure
to raise funds as and when needed could have a negative impact on our financial
condition and ability to pursue our business strategies. If additional funding
is not secured when required, we may need to delay or curtail our operations
until such funding is received, which would have a material adverse impact on
our business prospects and results of operations.
Cash Flows
Three Months Ended March 31,
(in thousands) 2022 2021
Net cash used in operating activities $ (48,409) $ (23,956)
Net cash provided by investing activities 6,716 26,301
Net cash provided by financing activities 78,194 26,661 Operating activities Net cash used in operating activities was$48.4 million for the three months endedMarch 31, 2022 , compared to$24.0 million for the three months endedMarch 31, 2021 . The increase in net cash used in operating activities was primarily driven by a change in working capital and an increase in net losses due to higher personnel related costs from increased headcount and restructuring costs related to Strongbridge acquisition. For a discussion regarding product revenue, net and increases in spending, refer to "Results of Operations" included in this "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations."
Investing activities
Net cash provided by investing activities was$6.7 million for the three months endedMarch 31, 2022 , compared to$26.3 million for the three months endedMarch 31, 2021 . The decrease in cash provided by investing activities in 2022 was primarily due to a less number of investments maturing or being sold in the current period.
Financing activities
Net cash provided by financing activities was$78.2 million for the three months endedMarch 31, 2022 , compared to$26.7 million for the three months endedMarch 31, 2021 . The increase was primarily due to the net proceeds of$30.0 million from theJanuary 2022 private placement of our common stock with an affiliate of Armistice, proceeds net of debt issuance costs of$92.9 million from theMarch 2022 Hayfin Loan Agreement, partially offset by the payoff of the principles on the Amended Loan Agreement of$43.5 million inMarch 2022 , as compared to the proceeds of$27.0 million from theMarch 2021 registered direct offering of our common stock. 40 --------------------------------------------------------------------------------
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES AND ASSUMPTIONS
Our Annual Report on Form 10-K for the year endedDecember 31, 2021 describes the critical accounting policies for which management uses significant judgments and estimates in the preparation of our consolidated financial statements. There have been no significant changes to our critical accounting policies sinceDecember 31, 2021 .
NEW ACCOUNTING STANDARDS
Refer to "Note 2 - Summary of Significant Accounting Policies", for a description of recent accounting pronouncements applicable to our financial statements.
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