Advancing Recorlev, Gvoke And XP-8121 Will Drive Future Demand

Key Takeaways

• Strategic investments in Recorlev and untapped Gvoke markets may significantly boost long-term revenue, aligning with medical guidelines to meet growing patient demands.
  
• Advancements in XP-8121 for hypothyroidism and improved margins could enhance financial health and earnings, transitioning Xeris to sustainable, profitable growth.
  
• Strategic investments drive Recorlev growth, yet market access challenges, rising costs, and potential pricing pressures threaten Xeris Biopharma's overall revenue and net margins stability.

Catalysts

A commercial-stage biopharmaceutical company, engages in developing and commercializing therapies for chronic endocrine and neurological diseases in Illinois.

• The strategic investments in the Recorlev commercial organization, alongside expanding market dynamics, are expected to fuel growth for Recorlev. This should significantly impact revenue positively as patient demand is set to grow further in 2025.
  
• The untapped market for Gvoke, with 14 million unprotected patients who should have prescriptions according to new medical guidelines, implies potential for substantial revenue growth. Efforts to align with these guidelines and the multiyear strategic partnership with the ADA aim to drive this expansion.
  
• The completion and progression to Phase III for XP-8121, addressing a significant unmet need in the hypothyroidism market, could open a large revenue opportunity. Its innovative nature predicts potential long-term impact on earnings as it could effectively change current treatment paradigms.
  
• Gross margin improvements due to a favorable product mix could help enhance net margins, as Xeris anticipates further strengthening and sustaining their attractive margin profile into 2025.
  
• Projected adjusted EBITDA positivity signals financial health and self-sustaining growth capabilities, potentially boosting EPS as Xeris transitions from a cash burn phase, with disciplined capital management driving shareholder value without dilution.

Xeris Biopharma Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Xeris Biopharma Holdings's revenue will grow by 22.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -27.0% today to 15.8% in 3 years time.
• Analysts expect earnings to reach $59.1 million (and earnings per share of $0.36) by about May 2028, up from $-54.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $70.6 million in earnings, and the most bearish expecting $39.6 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.2x on those 2028 earnings, up from -13.4x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 17.2x.
• Analysts expect the number of shares outstanding to grow by 3.83% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.21%, as per the Simply Wall St company report.

Xeris Biopharma Holdings Future Earnings Per Share Growth

Risks

• Keveyis revenues declined by 13% year-over-year despite efforts to maintain the number of patients, indicating potential challenges in maintaining or expanding its market presence, which could pressure revenue and net margins.
  
• While there's excitement about XP-8121, significant financial investments will be required to advance this product through clinical trials, potentially affecting future earnings if the product does not meet expectations.
  
• Recorlev’s strong growth is partly due to strategic investments, yet ongoing expansion and increased sales force costs will pressurize operating expenses, which could negatively impact net margins if revenue growth does not offset these costs.
  
• The company faces the risk of reimbursement pressures and net pricing challenges for Keveyis, which could negatively affect revenue and profitability.
  
• The 2025 revenue guidance is contingent upon continued strong demand for Recorlev and Gvoke, but any market access challenges or underperformance could hinder revenue growth, impacting overall financial stability.

Valuation

• The analysts have a consensus price target of $6.25 for Xeris Biopharma Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $4.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $373.1 million, earnings will come to $59.1 million, and it would be trading on a PE ratio of 22.2x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $4.71, the analyst price target of $6.25 is 24.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.