Precautionary 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 . Throughout this document, unless otherwise noted, references to Gvoke include Gvoke PFS, Gvoke HypoPen, Gvoke Kit and Ogluo (glucagon). We are a growth-oriented biopharmaceutical company committed to improving patients lives by developing and commercializing innovative products across a range of therapies. 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 bring new products forward using our proprietary formulation technology platforms, XeriSolTM and XeriJectTM.
Strongbridge acquisition
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 . 30 --------------------------------------------------------------------------------
patents
We currently own 143 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.
Perspectives and strategies
Our goal is to build a leading and profitable biopharmaceutical company that
innovates products that improve the lives of patients. 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 – ready 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
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 business
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,
business focused on endocrinology
infrastructure, in a large and unsatisfied Cushing
syndrome market. 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 a pipeline of development
programs to bring new
products forward using our formulation technology
platforms, supporting long-term
product development and commercial success. XeriSol
and XeriJect have extensive
application and have the potential to be utilized
across a potential range
product candidates in multiple therapeutic areas.
< Collaborate with pharmaceutical and biotechnology
companies to apply our
technology platforms to enhance the formulations of
its patented products and
candidates. We are pursuing formulation and
development partnerships to apply our
XeriSol and XeriJect technology platforms to broaden
our income stream and
enhance the formulation, delivery and clinical profile
from other companies
proprietary drugs and biologics. We currently are
collaborating with several important
pharmaceutical companies on the development of
proprietary formulations
therapeutics with XeriSol or XeriJect. Our strategic
the goal is to finally enter
into commercial licensing agreements with these
partners to success
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-impacting 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") withOxford Finance LLC andSilicon Valley Bank , of which$20.0 million was repaid inJune 2020 and the remaining$43.5 million was repaid inMarch 2022 , and$100.0 million (and access to the additional$50 million remaining) from the Hayfin Loan Agreement inMarch 2022 . For the three months endedSeptember 30, 2022 andSeptember 30, 2021 , we reported net losses of$21.8 million and$26.0 million , respectively. For the nine months endedSeptember 30, 2022 andSeptember 30, 2021 , we reported net losses of$81.7 million and$71.9 million , respectively. We have not been profitable since inception, and, as ofSeptember 30, 2022 , our accumulated deficit was$541.8 million . In the near term, we expect to continue to incur significant expenses, operating losses and net losses as we: 31 -------------------------------------------------------------------------------- 32 -------------------------------------------------------------------------------- < continue our marketing and selling efforts related to
gvoke Marketing,
Keveyis and Recorlev;
< continue our research and development efforts; 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.
Development of candidate products.
Active programs:
< Ready-to-Use Product for Endocrinology
(Levothyroxine; XP-8121): We are currently
in Phase 1 development with product candidate
XP-8121, a potential once a week
sub-cutaneous injection designed to address
maintenance treatment in patients with
congenital or acquired hypothyroidism who require
daily thyroid hormone
replacement. The third dosage cohort has been
done and we are collecting the
data. We have requested a meeting with the FDA
and wait for comments by the end of the year to
end our Phase 1 interaction and propose our Phase 2 and Phase 3 programs.
Unfunded programs:
< Ready-to-Use Glucagon (XP-9164) for
Gastroenterology: We have completed 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.
< Ready-to-Use Glucagon for Exercise-Induced
Hypoglycemia (EIH) in Diabetes: We have
completed Phase 2 for our ready-to-use glucagon
for exercise-induced hypoglycaemia
in diabetes. Based on FDA interactions and
expectations for a record
program to support a mini-dose prevention
indication of Glucagon RTU in EIH,
submitted an IND in February 2022 and received FDA clearance in March 2022 .
Inactive programs:
< XeriSol Pramlintide-Insulin Co-formulation
(XP-3924): We have 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
the formulation patent exists until
least Q4 2032, expected to extend through
2041-2042 with formulation in progress
development work. This product is available for
development license and
commercialization rights in the US.
< Ready-to-Use Diazepam (XP-0863): XP-0863 is a
liquid formulation of diazepam for
intramuscular injection being studied for the
RAS treatment. xeris patent
protected technology XeriSol™ has been used to
develop a stable at room temperature,
ready-to-use, small-volume solution of diazepam
for intramuscular injection
delivered by an auto-injector, which will provide
patients and caregivers
alternative to rectal and nasal administrations
of benzodiazepines. XP-0863 is
designed to address variable absorption, and
Suboptimal pharmacokinetic profiles of
currently marketed formulations of
benzodiazepines, by offering a longer duration
of action, consistent absorption of drug
administered intramuscularly
administration, and a convenient and reliable
autoinjector form factor.
XP-0863 has been granted an orphan designation by
the FDA for the treatment of ARS
and Dravet syndrome in patients with epilepsy. At
this time we are not actively
seeking a license agreement for this development project. 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, over time, led to the implementation of various public health responses. 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, 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 COVID-19 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. Remote interactions, when required, generally are not as effective as in-person interactions. In addition, several conferences and other programs at which we intended to market our products were postponed, canceled and/or transitioned to virtual meetings. We have incurred operating losses since inception, and we have an accumulated deficit of$541.8 million atSeptember 30, 2022 . Although we believe that our cash, cash equivalents, investments, and expected revenue from sales of Gvoke, Keveyis, and Recorlev 33 -------------------------------------------------------------------------------- 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 if COVID-19 persists. 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 inMarch 2021 under which we raised gross proceeds of$27.0 million . OnJanuary 3, 2022 , we entered into a securities purchase agreement in connection with a private placement for aggregate gross proceeds of approximately$30.0 million . InMarch 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. 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. 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 Xeris statement of operations for the three and nine 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
34
--------------------------------------------------------------------------------
advance payments are capitalized until the services are rendered or the 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 scaling
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
carry out our preclinical
studies and clinical trials;
< personnel-related expenses, which include salaries,
benefits and share-based
compensation;
< laboratory materials and supplies used to support our
Research activities;
< outsourced product development services;
< expenses relating to regulatory activities, including
filing 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.
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 increased expenses, including higher payroll, legal and compliance, accounting, insurance and investor relations costs. We expect that some of these costs will continue to increase along with our anticipated growth and complexity as a public reporting company.
Amortization of intangible assets
Amortization of intangible assets relates to the amortization of our products: Keveyis and Recorlev. These two intangible assets are being amortized over a five-year and fourteen-year period, respectively, using the straight-line method.
Other income (expenses)
Other income (expense) consists primarily of interest expense related to our
convertible debt, Hayfin Loan Agreement, Amended Loan Agreement, interest income
earned on deposits and investments, and the change in fair value of our warrants
and CVRs.
35
--------------------------------------------------------------------------------
Results of Operations
The following table summarizes our results of operations for the three and nine months ended
Three Months Ended September 30, Change Nine Months Ended September 30, Change
2022 2021 $ % 2022 2021 $ %
Product revenue:
Gvoke $ 13,663 $ 11,035 $ 2,628 23.8 $ 37,595 $ 27,921 $ 9,674 34.6
Keveyis 13,371 - 13,371 nm 35,506 - 35,506 nm
Recorlev 2,520 - 2,520 nm 3,623 - 3,623 nm
Product revenue, net $ 29,554 $ 11,035
25 146 nm 380 240 140 58.3
Total revenue 29,725 11,060 18,665 168.8 77,104 28,161 48,943 173.8
Cost and expenses:
Cost of goods sold, excluding 5,260 3,220 2,040 63.4 16,343 8,429 7,914 93.9
amortization of intangible assets
Research and development 6,043 5,663 380 6.7 16,011 15,078 933 6.2
Selling, general and administrative 34,491 26,535 7,956 30.0 103,388 71,539 31,849 44.5
Amortization of intangible assets 2,711 - 2,711 nm 8,132 - 8,132 nm
Total cost and expenses 48,505 35,418 13,087 37.0 143,874 95,046 48,828 51.4
Loss from operations (18,780) (24,358) 5,578 (22.9) (66,770) (66,885) 115 (0.2)
Other income (expense):
Interest and other income 472 66 406 nm 735 243 492 202.5
Interest expense (3,989) (1,798) (2,191) 121.9 (10,958) (5,384) (5,574) 103.5
Change in fair value of warrants 9 81 (72) (88.9) 1,746 91 1,655 nm
Change in fair value of contingent 118 - 118 nm (7,569) - (7,569) nm
considerations
Total other expense (3,390) (1,651) (1,739) 105.3 (16,046) (5,050) (10,996) 217.7
Net loss before benefit from income (22,170) (26,009) 3,839 (14.8) (82,816) (71,935) (10,881) 15.1
taxes
Benefit from income taxes 339 - 339 nm 1,086 - 1,086 nm
Net loss $ (21,831) $ (26,009) $ 4,178 (16.1) $ (81,730) $ (71,935) $ (9,795) 13.6
1 nm: not meaningful
Product revenue, net
Gvoke net revenue increased by $2.6 million or 23.8% and $9.7 million or 34.6%
for the three and nine months ended September 30, 2022 compared to the same
periods ended September 30, 2021 , respectively. Gvoke prescriptions grew 40.9%
and 59.2% during the three and nine months ended September 30, 2022 compared to
the same periods ended September 30, 2021 . The growth in product demand was
partially offset by a decrease in net pricing.
Keveyis, which was added to our commercial product portfolio through the Acquisition, had net income of
Recorlev, which received FDA approval inDecember 2021 , had net revenue of$2.5 million and$3.6 million for the three and nine months endedSeptember 30, 2022 , respectively. Cost of goods sold Cost of goods sold were$5.3 million and$16.3 million for the three and nine months endedSeptember 30, 2022 , respectively. The increases were attributable to an increase in sales as well as product mix and increased costs. 36 --------------------------------------------------------------------------------
Research and development expenses
Research and development expenses increased$0.4 million or 6.7% for the three months endedSeptember 30, 2022 when compared to the same period endedSeptember 30, 2021 . The increase was primarily driven by clinical services costs. Research and development expenses increased$0.9 million or 6.2% for the nine months endedSeptember 30, 2022 compared to the same period endedSeptember 30, 2021 . The increase was primarily driven by higher personnel related costs, offset by lower product development costs.
Selling, general and administrative expenses
Selling, general and administrative expenses increased$8.0 million or 30.0% and$31.8 million or 44.5% for the three and nine months endedSeptember 30, 2022 , respectively, compared to the same periods endedSeptember 30, 2021 . Personnel-related costs increased by$4.6 million and$24.2 million , respectively, primarily to support Keveyis, acquired inOctober 2021 , and Recorlev, launched in 2022, as well as an expansion of our endocrinology sales force. We also had a$2.6 million and$4.5 million increase in marketing expenses, respectively, primarily to support the launch of Recorlev.
Amortization of intangible assets
For the three and nine months endedSeptember 30, 2022 , amortization of intangible assets was$2.7 million and$8.1 million , respectively, from Keveyis and Recorlev, each of which was acquired as part of the Strongbridge Acquisition inOctober 2021 . Other income (expense) For the three and nine months endedSeptember 30, 2022 , interest expense increased$2.2 million or 121.9% and$5.6 million or 103.5% in comparison to the same periods endedSeptember 30, 2021 , respectively. The higher interest expenses in both periods was primarily due to higher interest expense related to theHayfin loan.
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 . 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 ofSeptember 30, 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 . 37 -------------------------------------------------------------------------------- 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 "Lenders") andHayfin Services LLP , as administrative agent for the 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 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. OnSeptember 29, 2022 , the Company entered into Amendment No. 1 to Credit Agreement and Guaranty, which provides for the Lenders' consent to and allows for the issuance of the letter of credit that was issued to the landlord under the Amended and Restated Lease datedSeptember 29, 2022 .
Capital resources and financing requirements
We have incurred operating losses since inception, and we have an accumulated deficit of$541.8 million atSeptember 30, 2022 . Based on our current operating plans and existing working capital atSeptember 30, 2022 and access to the additional$50.0 million remaining from the Hayfin Loan Agreement, we believe that our cash resources are sufficient to sustain 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: < our degree of success in commercializing Gvoke, Keveyis
and Recorlev;
< the successful integration of the Acquisition and
achievement of expected income
and synergies;
< the costs of commercialization activities, including
product marketing, sales and
distribution;
< 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 and
market;
< the emergence of competing technologies and products
and other adverse market
developments; and
< the costs of preparing, filing and prosecuting patent
applications and
maintaining, enforcing and defending intellectual
property-related claims.
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
Nine Months Ended September 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (86,772) $ (66,589)
Net cash provided by investing activities 25,293
61,362
Net cash provided by financing activities 78,317 27,122 Operating activities Net cash used in operating activities was$86.8 million for the nine months endedSeptember 30, 2022 , compared to$66.6 million for the nine months endedSeptember 30, 2021 . The increase in net cash used in operating activities was primarily driven by higher 38 -------------------------------------------------------------------------------- personnel related costs from increased headcount and restructuring costs related to the 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."
Investment activities
Net cash provided by investing activities was$25.3 million for the nine months endedSeptember 30, 2022 , compared to$61.4 million for the nine months endedSeptember 30, 2021 . The decrease in cash provided by investing activities in 2022 was primarily due to a lower number of investments maturing or being sold.
Financing activities
Net cash provided by financing activities was$78.3 million for the nine months endedSeptember 30, 2022 , compared to$27.1 million for the nine months endedSeptember 30, 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$92.5 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.
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 RULES
Refer to "Note 2 - Basis of presentation and summary of significant accounting policies and estimates", for a description of recent accounting pronouncements applicable to our financial statements.
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