Xeris Pharma's Gvoke: Strong Approval Chances, But This Is A Highly Competitive Space

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About: Xeris Pharmaceuticals, Inc. (XERS), Includes: LLY, NVO, ZEAL
by: Avisol Capital Partners
Summary

Xeris Pharma’s Gvoke is a stable and ready to use glucagon self-injector therapy.

It has shown non-inferiority to Lilly and Novo Nordisk products, which are much more difficult to use.

However, approval of BAQSIMI, an intranasal dry powder form, and another upcoming NDA, create a highly competitive market.

Xeris Pharmaceuticals Inc. (XERS) has a PDUFA on September 10, 2019, for a device-drug combo that delivers room-temperature, ready-to-use glucagon to hypoglycemia patients. Last year, around September, a month before its NDA was accepted by the FDA, the stock traded at its all-time high of around $28. Then it fell. It had a brief rally around October, when the NDA acceptance news came out; then it started falling. The free fall continued all the way till February, when the company announced a secondary. Then it fell some more. Finally, the stock found bottom at around $8, and stabilised around June, then it again fell another few percentage points after the PDUFA got delayed by three months.

I give this story in order to show that the stock does have potential to double from here, but given its lackluster performance as the NDA approached in June, I am not sure there's going to be huge upside in the next seven days. The day the delay was announced, the stock went down to $7 from the previous month's $13, a 50% drop. Currently, it is back trading at $12. The PDUFA acceptance may or may not take it up a little higher. That could mean a quick investment on XERS and Gvoke, its therapeutic candidate.

If approved, it would be the first room-temperature stable liquid glucagon in an auto-injector formulation.

Paul R. Edick, Chairman and CEO of Xeris Pharmaceuticals, says:

"Compared to the current glucagon rescue option for people with diabetes who are at risk for severe hypoglycemia, the Xeris glucagon rescue pen would eliminate the need for reconstitution and dramatically simplify the preparation and administration process."

In order to see the drug's potential, let's run it through the IOMachine.

Catalyst

PDUFA date for Gvoke is on 9/10/2019. It was supposed to be on June 10, but the company submitted more trial data on the FDA's request, and the three-month extension is to review this material.

The company is also preparing for commercial launch in 4Q-2019.

Pipeline

Xeris has multiple ongoing clinical studies, including a phase 3 study of Gvoke in the EU, and four phase 2 studies of the same device in the following additional indications:

  • Management of severe hypoglycemia.
  • Post-bariatric hypoglycemia (PBH).
  • The rare disease of congenital hyperinsulinism (CHI).
  • Hypoglycemia-associated autonomic failure (HAAF).

Some of these studies will report phase 2 data this year.

Source

Previous trial data

Design: Gvoke 1mg was compared to Novo (NYSE:NVO) glucagon 1mg on severely hypoglycemic subjects with plasma glucose < 54 mg/dL (3 mmol/L) administered with regular insulin.

Efficacy

From PR dated 17-June-2019:

The results demonstrated comparable efficacy between the two groups for achieving a plasma glucose of >70 mg/dl or ≥20 mg/dl increase in plasma glucose concentration within 30 minutes of glucagon administration. The study also found that time to resolution of hypoglycemia symptoms as well as time to resolution of the overall feeling of hypoglycemia was comparable between Xeris RTU glucagon and the marketed emergency kit. Overall, no safety or tolerability concerns were noted.

Another study (N=80) found comparable efficacy between GAI- and GEK-treated patient groups with all patients being successfully rescued from insulin-induced hypoglycemia without other rescue therapy. Almost all patients (97.4%) who received GAI achieved a plasma glucose >70mg/dL or at least a 20mg/dL increase within 30 minutes of glucagon.

Trials involving Lilly's (NYSE:LLY) drug have also been noted.

Results:

Arm/Group Title

Xeris G-Pen

Lilly Glucagon

Arm/Group Description:

A single 1 mg subcutaneous (SC) injection of G-Pen™ (glucagon injection)

A single 1 mg subcutaneous (SC) injection of Lilly Glucagon

Overall Number of Participants Analyzed

78

79

Primary outcome:

Number of subjects with an increase in plasma glucose concentration from below 50 mg/dL to greater than 70 mg/dL within 30 minutes after administration of glucagon

74 (96.1%) of 77

78 (100.0%) of 78

Number of subjects with either an increase in plasma glucose concentration from below 50 mg/dL to greater than 70 mg/dL or an increase in from baseline in plasma glucose concentration of at least 20 mg/dL within 30 minutes after administration of glucagon

76 (97.4%)

79 (100.0%)

Secondary outcomes:

Pharmacodynamic endpoint of plasma glucose AUC from baseline to 90 minutes following administration of glucagon (At -5, 0, 10, 20, 30, 45, 60, and 90 minutes following administration of glucagon)

Mean (Standard Deviation)

Unit of Measure: mg*min/dL

11651.4 (2406.9)

12260.4 (2134.2)

Pharmacodynamic endpoint of plasma glucose Cmax from baseline to 4 hours following administration of glucagon (At -5, 0, 10, 20, 30, 45, 60, 90, 120, 180 and 240 minutes following administration of glucagon

Mean (Standard Deviation)

Unit of Measure: mg/dL

202.7 (41.8)

193.5 (42.2)

Pharmacodynamic endpoint of plasma glucose Tmax from baseline to 4 hours following administration of glucagon (At -5, 0, 10, 20, 30, 45, 60, 90, 120, 180 and 240 minutes following administration of glucagon)

Mean (Standard Deviation)

Unit of Measure: minutes

111.3 (33.5)

100.4 (42.7)

Pharmacodynamic endpoint of time to achieve a plasma glucose concentration > 70 mg/dL following administration of glucagon (At -5, 0, 10, 20, 30, 45, 60, 90, 120, 180 and 240 minutes following administration of glucagon)

Mean (Standard Deviation)

Unit of Measure: minutes

19.9 (8.5)

14.2 (4.3)

Time to resolution of mean autonomic, mean neuroglycopenic and mean total hypoglycemia symptom scores from baseline through 90 minutes following administration of glucagon (At 0, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75, 80, 85 and 90 minutes following administration of glucagon)

Mean (Standard Deviation)

Unit of Measure: minutes

Autonomic Symptoms 16.0 (11.5)

Neuroglycopenic Symptoms 16.7 (10.2)

All Symptoms 19.8 (11.7)

14.2 (9.4)

14.3 (9.0)

17.0 (8.9)

Time to resolution of the overall sensation of hypoglycemia following administration of glucagon (At 0, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 55, 60, 65, 70, 75, 80, 85 and 90 minutes following administration of glucagon)

Mean (Standard Deviation)

Unit of Measure: minutes

16.8 (10.7)

15.7 (8.3)

Number of subjects with either an increase in plasma glucose concentration from below 50 mg/dL to greater than 70 mg/dL or resolution of all neuroglycopenic symptoms of hypoglycemia within 30 minutes after administration of glucagon (At 30 minutes following administration of study drug)

78 (100.0%)

79 (100.0%)

So, trial results are quite conclusive that Gvoke is non-inferior to these other approved therapies.

Financials/Execution

Cash position: As of June 30, 2019, Xeris reported total cash, cash equivalents, and short-term investments of $124.5 million compared to $112.6 million at December 31, 2018. There was a $56mn raise through a dilutive offering in February. The burn is as follows:

  • R&D expenses for the three and six months ended June 30, 2019, were $19.3 million and $32.5 million, respectively, compared to $8.7 million and $17.4 million for the three and six months ended June 30, 2018, respectively.

  • SG&A expenses for the three and six months ended June 30, 2019, were $15.0 million and $27.5 million, respectively, compared to $4.5 million and $7.7 million for the three and six months ended June 30, 2018, respectively.

So, it does have enough cash for the approval, and then marketing processes. About 50% of the company is held by funds, and another 7% by insiders.

Competition

There are two emergency glucagon products available to treat severe hypoglycemia: Eli Lilly's GEK and Novo Nordisk's GlucaGen. The procedure for making and delivering either is complex, and is described by Xeris as follows:

"Each kit is sold as a vial of lyophilized, glucagon powder with an exposed syringe/needle 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. Additionally, once reconstituted, the glucagon must be used immediately because once the lyophilized glucagon is combined with water, the solution becomes unstable and can fibrillate, rendering it inactive and potentially toxic."

Anybody who has ever faced a hypoglycemic attack will know how useful Gvoke could be. This author has at least twice been in such a situation - once while trekking in the wilderness early in the morning without food, once at a train station, again in the early morning. You lose complete control of your body, you have a terrifyingly dizzy sensation in your head, you can't see anything, you feel extremely weak - and I can assure you, you don't feel like doing what is described in the above paragraph.

Another product, an intranasal glucagon dry powder from LLY, has been approved in July. This product, BAQSIMI, while equally easy to use like Gvoke, has a drawback: it has been approved for adults as well as children, and in a phase 1 clinical trial, "a pediatric subject failed to achieve a >25 mg/dL rise in glucose because he blew his nose immediately after a 2 mg intranasal dose administration." This anecdotal evidence shows that due to such pediatric-situation accidents, or even otherwise, a nasal dry powder may not deliver the adequate amount of dose required to overcome hypoglycemia. Gvoke has an advantage here.

However, that advantage may be short-lived. Zealand Pharma (ZEAL) is developing an SC dasiglucagon, a stable analog of human glucagon, in an auto-injector. NDA has not yet been filed, but the company announced positive data in May, and then again in June, and will announce pediatric data in September. NDA should be filed in early 2020. This makes the product one year behind Gvoke, and this is an equivalent product.

IP/Patents

The company has a composition of matter patent for its device that is expiring in 2036, and a host of other issued and applied patents in the US and globally.

Risks

The company has a number of loans and grants agreements which it has to service; the latter is conditional upon approval, the former is not. However, these are minor risks compared to the competition scenario we discussed. In this highly diversified market, where there are three existing products, one of which is almost as easy to use as Gvoke, and all of which are marketed by big pharma, it is difficult to see how Gvoke can manage to win a large chunk of the market. Even if it does, there's the specter of competition from Zealand, and this is a product that is just as good as Gvoke. So, this one-year advantage is all it gets. It could be a make-or-break year for the company; if it manages to gain a foothold, and its product is accepted by the market as a good product, maybe assuming no major price differential, Gvoke can keep its foothold even after Zealand's approval.

Opinion

Now we can see why the stock's price has been depressed despite the upcoming PDUFA - the market is not happy with the competition. If the product had been approved back in June, it would have forged ahead of the new Lilly product. Now it has been delayed. However, there may still be some positive price action before the PDUFA. So, a small position with a very small window may be suggested.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.