8-K: Xeris Biopharma Secures $215 Million Refinancing, Reports Strong 2023 Revenue Growth

Xeris Biopharma refinanced its debt, securing $215 million in new capital and reported a 49% increase in full-year revenue for 2023.

Summary

• Xeris Biopharma has entered into an amended and restated credit agreement with Hayfin Capital Management, securing a total of $215.2 million in term loans.
• The new agreement refinances the existing $150 million debt, providing $200 million at closing and an additional $15.2 million available to redeem convertible notes due in 2025.
• The company's full-year 2023 revenue reached approximately $164 million, a 49% increase compared to the previous year.
• Fourth-quarter revenue was over $44 million, a 34% increase year-over-year.
• Xeris ended 2023 with over $72 million in cash, cash equivalents, and short-term investments.
• The company achieved positive cash flow of over $6 million in the fourth quarter of 2023.
• Xeris has provided full-year 2024 revenue guidance of $170 million to $200 million and expects to end the year with $55 million to $75 million in cash.
• The new loan has a maturity date of March 5, 2029, but may be accelerated to January 15, 2025, or January 15, 2028, depending on the status of outstanding convertible notes.
• The interest rate on the new loan is a floating rate equal to 6.95% plus the greater of the 3-month SOFR rate or 2.00% per annum.
• Xeris entered into a worldwide license agreement with Amgen for its XeriJect technology, potentially earning $75 million in milestones and royalties.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong revenue growth, successful refinancing, and a significant licensing agreement. The company's future outlook is also positive, with revenue and cash guidance for 2024.

Positives

• The refinancing provides Xeris with additional capital and reduces its overall cost of capital.
• The company experienced significant revenue growth in 2023, with a 49% increase year-over-year.
• Xeris achieved positive cash flow in the fourth quarter of 2023.
• The licensing agreement with Amgen for XeriJect technology has the potential to generate substantial revenue through milestones and royalties.
• Gvoke prescriptions and market share have shown strong growth.
• Recorlev patient numbers have increased significantly, indicating strong market adoption.
• The company has provided positive revenue guidance for 2024.

Negatives

• The company's cash balance decreased from $122 million at the end of 2022 to $72.5 million at the end of 2023.
• The company reported a net loss of $62.3 million for the full year 2023.
• The new loan agreement includes restrictive covenants that limit the company's ability to take certain actions.
• The loan maturity date could be accelerated if certain convertible notes are not addressed.

Risks

• The company's financial position and need for financing could impact its ability to fund product development and commercialization efforts.
• The success of the company's products depends on achieving and maintaining market acceptance in a competitive environment.
• Xeris relies on third-party suppliers and may be impacted by supply chain disruptions.
• The company's ability to protect its intellectual property and proprietary technology is crucial for its long-term success.
• The company's future performance is subject to various risks and uncertainties, including market conditions and regulatory changes.

Future Outlook

Xeris expects to grow total revenue in the range of $170 million to $200 million in 2024 and anticipates ending the year with a cash position between $55 million and $75 million. The company plans to continue investing in all aspects of its business.

Management Comments

• Paul R. Edick, Chairman and CEO of Xeris Biopharma, stated that 2023 was another year of exceptional performance and growth for Xeris.
• Steven M. Pieper, Xeris Chief Financial Officer, said that the upsized facility, along with cash generation from existing products and partnerships, allows greater flexibility to continue to invest in the growth of the business.
• Steven M. Pieper also noted that the company reduced its borrowing interest rate by 2.05% per year, validating the strong creditworthiness of the company.
• Andrew Merrill, Managing Director of Healthcare at Hayfin, expressed pleasure in continuing to invest in Xeris through the new senior secured loan.

Industry Context

The refinancing and revenue growth highlight Xeris's position as a growing biopharmaceutical company. The licensing agreement with Amgen for XeriJect technology demonstrates the value of Xeris's proprietary formulation platforms. The company's focus on commercializing innovative products aligns with the broader industry trend of developing and bringing new therapies to market.

Comparison to Industry Standards

• Xeris's 49% revenue growth in 2023 is significantly higher than the average growth rate for many established pharmaceutical companies, which typically see single-digit growth.
• The company's focus on specialty pharmaceuticals, such as Gvoke, Keveyis, and Recorlev, places it in a niche market with higher growth potential compared to generic drug manufacturers.
• The licensing agreement with Amgen is similar to other deals in the biotech industry where smaller companies leverage their technology through partnerships with larger players.
• The refinancing with Hayfin is a common strategy for growth-stage companies to secure capital for expansion and product development, similar to companies like BioMarin and Vertex Pharmaceuticals who have used debt financing to fund growth.
• Xeris's cash position of $72.5 million at the end of 2023 is relatively modest compared to larger pharmaceutical companies, but is adequate for a company of its size and stage of development, similar to companies like Horizon Therapeutics at a similar stage.

Stakeholder Impact

• Shareholders will benefit from the company's improved financial position and growth prospects.
• Employees may see increased job security and opportunities for advancement.
• Customers will have access to innovative therapies.
• Suppliers may see increased business opportunities.
• Creditors will have a more secure investment due to the company's improved financial health.

Next Steps

• Xeris will continue to execute its business plan, focusing on commercializing its existing products and advancing its pipeline programs.
• The company will use the proceeds from the new loan to invest in growth opportunities and for general corporate purposes.
• Xeris will participate in investor conferences in March and April 2024.
• The company will issue approximately 7.5 million common shares to Strongbridge Biopharma shareholders on or about March 27, 2024.
• Xeris will continue to monitor the status of its convertible notes due in 2025 and 2028.

Key Dates

Keywords

Xeris Biopharma, refinancing, debt, revenue growth, biopharmaceutical, Hayfin Capital, Gvoke, Keveyis, Recorlev, XeriJect, Amgen, term loan, convertible notes