Xeris Biopharma Holdings Inc (XERS) 2021 Q3 法說會逐字稿

Good morning, and welcome to Xeris' Third Quarter 2021 Financial Results and Corporate Update Conference Call and Webcast. A press release with the company's third quarter financial results was issued earlier this morning and can be found on our website. We are joined this morning by Paul Edick, Chairman and CEO; and Steve Pieper, our CFO. Paul will provide opening remarks, Steve will provide details on our financial results, and then we will open up the call for Q&A. We will also be taking questions through the chat function of the webcast portal.

Before we begin, I would like to remind you that this call will contain forward-looking statements concerning the impact of COVID-19 on Xeris' business practices, Xeris' future expectations, plans, prospects, clinical approvals, commercialization, corporate strategy and performance, which constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including the effect of uncertainties related to the COVID-19 pandemic on U.S. and global markets, Xeris business, financial condition, operations, clinical trials and third-party suppliers and manufacturers. Other risk factors include those discussed in our filings with the SEC.

In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements.

I'd like to turn the call over to Paul.

Thanks, Allison. Good morning, everybody, listening today. Let me start by welcoming you all to our first call as Xeris Biopharma. As a result of the overwhelming support and approval of shareholders of both Xeris Pharmaceutical and Strongbridge Biopharma, we are now Xeris Biopharma, operating as one commercially focused biopharmaceutical company with a very compelling value proposition.

For context, I'd like to spend a couple of minutes talking about the profile of the new company. We have a very diversified revenue base. Our current commercial assets, Gvoke and KEVEYIS give us a rapidly growing presence in large addressable markets. That already established strong revenue base has the potential to generate double-digit revenue growth over the next several years. With the additional opportunity for a potential rapid launch of RECORLEV in the first quarter of 2022 if approved by the FDA, leveraging our experienced endocrinology-focused commercial infrastructure. We also have a specialized commercial platform in a robust endocrinology and rare disease-focused infrastructure, including the fully operational patient and provider support teams prime to bring benefits of the company's products to a wider range of patients with unmet needs.

We also have a robust pipeline. In addition to RECORLEV, which is filed and under review by the FDA, for a relatively small and young company, Xeris has an extensive pipeline of development programs. We have the opportunity to extend current marketed products into important new indications and uses as well as bringing new products forward using our formulation technology platforms in support of long-term product development and commercial success.

Importantly, we're also in a very strong financial position. We have forecasted year-end 2021 cash of approximately $100 million, including cash equivalents and investments. We will realize $50 million in pretax synergies by the end of 2022 from the Strongbridge acquisition, resulting from immediate cost savings, cost avoidance, including public company, general, administrative and other infrastructure costs, most notably within the commercial functions. And we have an experienced management team.

This is a unique reporting quarter for us. We are required to report third quarter Xeris stand-alone financials, yet the acquisition of Strongbridge was completed just 1 week into Q4. So to evaluate our performance more accurately, we will provide some pro forma results as well as full year 2021 guidance on key metrics.

With that, I'm happy to say we had a very strong third quarter. Pro forma net sales of Gvoke and KEVEYIS was $22.5 million, $11 million and $11.5 million, respectively. That is a combined growth of 19% compared to the second quarter of 2021 with Gvoke up 25% versus the second quarter and KEVEYIS up 15% quarter-over-quarter.

Other highlights of the quarter and to date include a very healthy cash position, as I stated. Xeris had cash of $93 million at the end of Q3, plus an additional $38 million coming into the company with the close of the acquisition. Steve will go into that in a little bit more detail later.

The FDA approvals of our sNDA for the Gvoke kit, which will be available in Q1 of 2022 as well as an extension of the room temperature shelf life of Gvoke 1 milligram HypoPen and prefilled syringe from 24 months to 30 months. We announced the Ogluo EU partnership with Tetris Pharma, and they're on track to launch in the U.K. before year-end; the initiation and completed enrollment of our potential once-weekly subcutaneous injection for levothyroxine Phase I study; the collaboration with Merck using our XeriJect technology; the achievement of revenue milestones allowing for the extension of our interest-only period on our debt facility, which has a $17 million positive impact on our near-term cash, once again, Steve will go into details; and importantly, the completed integration of the Strongbridge acquisition.

Going a little deeper into the specifics, I'll start with Gvoke. We continue to see strong demand for Gvoke quarter-over-quarter in terms of prescription and market growth. We owe that to a few factors. Our product, we believe, is the best product period. Our message Gvoke for all insulin-taking patients, which is beginning to make with subscribers. Our extended sales footprint that we increased the field at the end of Q2 and supported by an increasingly impactful inside sales effort. Our improving access to physician offices and our continued excellent payer coverage with over 90% commercial coverage unrestricted.

What does this all add up to commercially? Our Q3 net sales were up 25% to $11 million from Q2. Gvoke prescription growth was up 28% from Q2, topping 27,000 total prescriptions for the first time and up 93% from Q3 of 2020. The glucagon market grew 26% from the second quarter, which is a significant uptick from the 5% growth we saw earlier in the year. Gvoke's growth continues to outpace the glucagon market. And in terms of market share, Gvoke TRxs are up 18% -- are up to 18% as of the end of October. As you know, fourth quarter glucagon market prescriptions tend to decrease from the third quarter year -- on an annual basis. Sitting here today, based on recent prescriptions, I'm comfortable saying that we can maintain or perhaps even slightly increase prescriptions in the fourth quarter over the third quarter.

Let's move on to KEVEYIS. The first and only FDA-approved therapy for primary periodic paralysis, or PPP, a severe condition. We estimate 4,000 to 5,000 people diagnosed each year with PPP. Our established rare disease commercial experience and expertise has driven revenue growth of KEVEYIS quarter-over-quarter and year-over-year. The third quarter 2021 revenue of $11.5 million represents an impressive 42% increase over Q3 of 2020. Year-to-date revenue of $29.9 million is a 33% increase over last year. And given the results, we believe that full year 2021 net sales will be in the range of $38 million to $40 million, exceeding historical guidance of $34 million to $36 million.

Let me talk briefly about our pipeline as well. I'll start with RECORLEV. As we've articulated, a tremendous part of the value of the Strongbridge acquisition is the market opportunity for RECORLEV and the fit with Gvoke's existing commercial infrastructure, which we believe will drive early penetration. I'd like to give some background on the opportunity as well. There are an estimated 25,000 Cushing's syndrome patients diagnosed, of which an estimated 8,000 Cushing's syndrome patients in the U.S. are being treated with prescription therapy. Approximately 3,200 of whom are not well controlled. Many of these patients are treated with unapproved generics, including ketoconazole. However, branded products approved by the CS have been gaining prescribing share in the market once dominated by generics. With our established relationships in endocrinology offices and significant overlap with Gvoke, our 80-plus field reps, medical science liaisons, dedicated patient support services, reimbursement experience, we believe we can drive penetration of RECORLEV and capitalize on what could be a $2 billion addressable market.

Where are we today with RECORLEV? The NDA is currently under review with the FDA, with a PDUFA date of January 1, 2022. We're in full precommercialization preparation mode in anticipation for a first quarter launch. And in terms of our earlier-stage programs, our potential for once weekly subcutaneous levothyroxine, one of the most prescribed drugs in the U.S., we initiated and successfully dosed all participants in the Phase I study of our novel formulation of levothyroxine to evaluate the pharmacokinetic safety and tolerability. And as I mentioned, the potential for weekly dosing in a subcutaneous injection for the treatment of hypothyroidism. We expect results from the Phase I study in the first half of 2022, which will give us an indication of whether or not we can achieve that once-weekly dosing.

For exercise-induced hypoglycemia, we will submit an IND in the first quarter of 2022 and upon clearance, generate more clinical data addressing the management of exercise-induced hypoglycemia in 2022. In October, we announced a collaboration agreement with Merck with an option to license our suspension-based formulation technology XeriJect for use with undisclosed monoclonal antibodies for the purpose of engineering, ultra-high concentration, ready-to-use formulations. As you would expect, we are quite excited to be working closely with Merck on this project.

As I stated earlier in my remarks, we would like to provide some guidance to some important metrics so you can better understand the value of our performance. For the full year 2021, we expect $76 million to $80 million in net sales of which $38 million to $40 million is from KEVEYIS. We also expect to end the year with an impressive cash position of approximately $100 million, and this is after $40 million of onetime deal-related expenses. When we report fourth quarter and full year 2021 in early March, we expect to be providing full year net sales guidance for our combined commercial products and not on an individual product basis.

Now I'll turn the call over to Steve to review details of our financial performance.

Thanks, Paul. Good morning, everyone. My remarks this morning will focus on a few of the key financial results, the details of which are in the press release issued this morning and our Form 10-Q that will be filed later today. Due to the timing of the closing of the Strongbridge Biopharma acquisition, which, as a reminder, was October 5, the financial results I'm covering today reflect financials for Xeris on a pre-acquisition basis as of September 30, 2021. I will, however, comment on net sales as it relates to pro forma financial results. And additionally, we'll provide year-end guidance for net sales and cash.

We continue to build momentum in the third quarter for Gvoke and reported another strong quarter from a net sales perspective, reporting $11 million in Gvoke net sales in the third quarter, which is up approximately 25% from the second quarter of '21 and up approximately 17% from the third quarter of 2020, which, as a reminder, was the quarter we initially launched the Gvoke HypoPen. The $11 million of Gvoke net sales in the third quarter was driven by strong underlying patient demand as evidenced by over 27,000 Gvoke prescriptions generated in the third quarter, a new record high for Gvoke. Gvoke net sales on a year-to-date basis through September 30 was $27.9 million, which is an increase of approximately 114% versus the 9 months ended September 30, 2020.

This is again being driven by continued growth of underlying patient demand for Gvoke. KEVEYIS had another outstanding quarter in net sales with $11.5 million in the third quarter, representing a 42% increase in net sales versus the third quarter of 2020. KEVEYIS net sales on a year-to-date basis through September 30 was $29.9 million, which is an increase of approximately 33% versus the same period last year. From a pro forma perspective, with the inclusion of both KEVEYIS and Gvoke, third quarter net sales were $22.5 million. This represents a 29% growth versus the third quarter of 2020. Pro forma year-to-date product net sales through September 30 were $57.8 million, which includes both Gvoke and KEVEYIS and represents 63% growth versus the 9 months ended September 30, 2020.

As we look ahead and as Paul mentioned, we expect that KEVEYIS will exceed the high end of historical guidance provided for full year net sales estimates of $34 million to $36 million. And Xeris is estimating a new range of $38 million to $40 million for full year 2021. On a combined basis, Xeris with both Gvoke and KEVEYIS will generate $76 million to $80 million in net sales for the full year 2021. As a reminder, my comments on cost of goods sold, operating expense and net loss results through September 30, 2021, are on a stand-alone pre-acquisition basis for Xeris.

As we move down the P&L, cost of goods sold was $3.2 million for the 3 months ended September 30, 2021, an increase of $0.4 million compared to the 3 months ended September 30, 2020. Cost of goods sold was $8.4 million for the 9 months ended September 30, 2021, an increase of $2.5 million compared to the 9 months ended September 30, 2020, which included primarily standard costs for products sold.

Turning our attention to expenses. Total operating expenses increased by approximately $11.8 million in the third quarter 2021 to $32.2 million compared to $20.4 million for the same period in 2020. This increase was primarily driven by increases to selling, general and administrative expenses of $10.1 million, which includes approximately $2.3 million in costs related to the Strongbridge acquisition. Year-to-date, 2021 operating expenses were $86.6 million, which represents an increase of $15.1 million versus the 9 months ended September 30, 2020. This increase is driven entirely by increases in SG&A expenses, which includes approximately $6.2 million in costs related to the Strongbridge acquisition.

R&D expenses for the 3 months ended September 30, 2021, were $5.7 million compared to $3.9 million for the same period in 2020. The increase was primarily driven by higher expenses associated with our clinical trials and pharmaceutical process development costs. R&D expenses for the 9 months ended September 30, 2021, were $15.1 million compared to $15.8 million for the same period ended September 30, 2020. The decrease was primarily driven by a reduction in personnel-related costs of $1.2 million due to lower head count and declining clinical trial expense of $0.7 million, partially offset by higher pharmaceutical process development costs of $1.3 million.

SG&A expenses for the 3 months ended September 30, 2021, were $26.5 million compared to $16.5 million for the same period in 2020. The increase of $10 million was primarily driven by an increase of $6.5 million and personnel-related costs due mainly to an increase in sales force head count and the aforementioned Strongbridge acquisition-related expenses of $2.3 million and an increase in marketing and selling expenses of $2 million. SG&A expenses for the 9 months ended September 30, 2021, were $71.5 million compared to $55.7 million for the same period in 2020. The increase was primarily driven by an increase of $10 million in personnel-related costs due primarily to an increase in sales force head count and Strongbridge acquisition-related expenses of $6.2 million, partially offset by lower marketing and selling expenses of $2 million due to a decrease in advertising.

Looking ahead from an operating expense perspective, as I mentioned in my remarks last quarter, we expect that we will continue to incur costs related to the Strongbridge acquisition, a majority of which are expected to hit in the fourth quarter. As a reminder, the acquisition closed on October 5, and there were onetime expenses triggered by the actual closing of the deal for both Xeris and Strongbridge. However, we believe that the $50 million in deal-related synergies will be reflected in our operating expenses and will be fully realized by the end of 2022. Additionally, our operating expenses will include in the future, cost for preparing for the potential launch of RECORLEV in Q1 and supporting the continued growth of both Gvoke and KEVEYIS.

From a debt perspective, at the end of the third quarter, we had debt totaling $90.7 million, consisting of $47.2 million of convertible debt and $43.5 million under our senior credit facility with Oxford and SVB. As we announced earlier today in our press release, due to the continued strong performance of both Gvoke and KEVEYIS, Xeris has achieved a full 12-month interest-only extension on our debt facility with Oxford and Silicon Valley Bank, which pushes out principal repayment to start no earlier than Q1 2023 and avoids approximately $17.4 million in principal payments in 2022.

From a net loss perspective, for the 3 months ended September 30, 2021, Xeris reported a net loss of $26 million or $0.39 per share and a net loss of $72 million or $1.11 per share for the 9 months ended September 30, 2021. The net loss and per share figures include transaction-related expenses of $2.3 million or $0.03 per share and $6.2 million or $0.10 per share for the 3 and 9 months ended September 30, 2021, respectively.

As of September 30, 2021, Xeris had total cash, cash equivalents and investments of $93 million compared to $133.8 million at December 31, 2020. Xeris received an additional $38 million from Strongbridge at the close of acquisition on October 5, putting Xeris in a healthy cash position. Xeris anticipates year-end cash, cash equivalents and investments of approximately $100 million. This estimate is inclusive of onetime costs for both companies of approximately $40 million, including the extinguishment of debt by Strongbridge.

As a reminder, Strongbridge paid off its remaining debt facility with Avenue Venture Opportunities Fund upon close of the transaction. This payoff amount, including fees, totaled approximately $11 million, but we will continue to incur acquisition-related costs in 2022, including severance. A majority of the cash impact from the transaction-related costs will be realized by this year-end. As we have mentioned, we expect that our 2021 year-end cash, cash equivalents and investments to be approximately $100 million. We project the rate of cash burn to improve over the course of 2022 as our revenue base continues to grow and generate cash. Let me remind you that we will be launching RECORLEV in Q1, if approved. However, as we affirmed in our press release this morning, the company believes that its current cash resources, including cash, cash equivalents and investments are sufficient to sustain operations through at least the end of 2022. The revenue growth from our current marketed and potential future marketed products will ultimately determine when we will be cash flow breakeven.

To summarize, we had a great quarter in terms of net sales for both Gvoke and KEVEYIS, and we anticipate both products will finish 2021 on a high note. We have integrated Strongbridge quickly into Xeris and are already realizing the synergies we committed to delivering and the full effect of those synergies will be fully realized by the end of 2022. We are in a solid position from a cash perspective and further strengthen our cash position with deferring over $17 million in principal payments for the Oxford/SVB debt into 2023 at the earliest. We believe our current cash position, along with the cash generated from 2 growing commercial products in Gvoke and KEVEYIS, and the potential cash generated from RECORLEV, if approved, will allow us to continue to fund the commercial infrastructure necessary to drive Gvoke, KEVEYIS and RECORLEV, if approved, fund our R&D pipeline and lastly, fund our overall corporate infrastructure necessary to effectively run a public company.

I will now turn the call back to Paul.

Thanks, Steve. As you heard, Xeris fundamentals have never been stronger. We have 2 growing products. We're generating revenue with both Gvoke and KEVEYIS. They're both in large addressable markets. Our guidance for year-end 2021 net sales has improved. We also have some near-term catalysts, the U.K. launch of Ogluo at the end of the year, potential for RECORLEV approval early in the first quarter, the availability of the Gvoke kit in the first quarter, data from the Phase I study of levothyroxine in the first half of next year and additional work on the EIH program. And we're in a healthy cash position.

So with that, I'll turn it over to the operator for any questions that we may have from people listening in. Thank you very much.

(Operator Instructions) Our first question is from David Amsellem of Piper Sandler.

So I have a few, starting with Gvoke. Paul, I may have missed this, but I just wanted to get your thoughts on how you think the market, the glucagon rescue market might accelerate, if it accelerates at all, as we move out of the pandemic. Are you looking for some appreciable uptake? Can you just help us think about dynamics for 2022?

Then secondly, can you comment on the potential impact that you're seeing, if any, on the Zegalogue, the Zealand product? And is that a factor in any way?

Then on RECORLEV. Can you just talk to how you're thinking of that access on the payer landscape? It's not lost on me that ketoconazole, the racemic mixture is used with some frequency. So how are you looking at tackling the payer landscape there?

And then the last question is on levothyroxine. I know it's early, but do you have a sense of your time line to a potential NDA filing on that asset and what you might need to do for registration and quality work?

Thanks, David. There's a whole bunch in there, so let me take them one at a time. The market acceleration for glucagon. If you recall, pre-pandemic with just Lilly and Xeris out there, the market was accelerating. It was growing at 25-plus percent, high 20s, almost 30%. We would have anticipated and we did anticipate that by this summer, we'd be back to that kind of growth. Unfortunately, the Delta variant sort of gotten the way, and we had kind of resurgence and doctors' offices didn't really open up and things haven't -- but if you look at the recent growth and you look at what's going on in the market of late, we're starting to see some acceleration. And we think that's going to continue into the fourth quarter. 2022, all things being considered, and if we kind of move a little bit beyond the pandemic, we expect the market to continue to grow, and we think we're going to be part of driving that growth. The important thing that we're focused on in the short term is gaining share.

As I said in my remarks, we're up to over 18% share. And that's our focus right now is to continue to penetrate, gain share, gain share faster than the other companies and be in a position when the market does start to open up and physicians do start to change how they're behaving with patients, we'll be the beneficiary of that growth. So exactly what that's going to look like in '22, we're not projecting yet, but we do expect it to kind of come back.

In terms of Zealand, that product has not been a factor in the marketplace at all yet. So we're not at all concerned about that. As you know, it requires cold chain refrigeration until -- once it's taken out of refrigeration, it only has 1-year-old shelf life. So not a big impact.

Payer access for RECORLEV. What we're seeing with the new branded nongeneric products is payer access is pretty good. Our market research tells us that payers are going to be willing to pay for a better product with fewer side effects. And what payers usually put in place is they'll put a step through. Most people will have already stepped through keto. So will it be easy? Probably not, but we're very confident we'll get payer support for RECORLEV.

And then from a levothyroxine perspective, we don't have a time line. As you would expect, the first study, the Phase I study, is to understand do we have a product? Do we have a once-weekly subcutaneous injection of levothyroxine? That's what this study is designed to show us, can we achieve that goal. And if we achieve that goal within a dose range that's acceptable, then we'll move aggressively into further development, and we'll talk about a time line at that point.

Our next question is from Oren Livnat of H.C. Wainwright.

On RECORLEV coming up, can you just remind us what are your base case assumptions around labeling, particularly with regards to hepatotoxicity and whether you expect class sort of ketoconazole-like labeling or what differentiation you would expect there? And to what extent that even matters commercially in your view, given that one is approved -- that yours will be approved and ketoconazole isn't?

And then just on Gvoke, I know Dave asked about the impact of Zegalogue. I'm just curious what you're seeing, and I know you're gaining share, so it's obviously not a huge problem. But what are you seeing with regards to generic emergency kit availability? And to what extent that is affecting physician or patient access to Gvoke with regards to utilization management? Are there any changes out there? And do you expect that to be a headwind going forward? And I do actually have a follow-up, I'll let you just go from there.

Okay. We haven't even started labeling negotiations, so I'm not going to start to get into the label on RECORLEV. At the end of the day, I really don't think at the end of the day, it's going to matter. You've had nonapproved products out there for a long time that are being used broadly. We're going to have a differentiated product that we're not worried about that.

In terms of generic glucagon, no impact on Gvoke that we can assess. The change in the marketplace has been from the kits, the branded kits to the generic kit. We're not seeing any impact on overall market or on our ability to gain share.

Okay. And then just on KEVEYIS. That was -- I know it's a transitional quarter. It looked surprisingly good. I think you took a price increase or they took a price increase going into 4Q. The guidance implies sort of, I guess, flat to even down in fourth quarter. So could you just remind us is that just a lumpy product given sort of the high price point we're at there? Or are there other moving parts? And just longer term, I know a big part of the potential upside to your deal, the Strongbridge was potential lifting of additional IP on that product. I'm just wondering if there's any update on that front. How optimistic are you that there will be anything there listable in the orange book or issued in general to potentially extend the exclusivity? And just remind us what your base case assumptions are for the 2022 and beyond trajectory for KEVEYIS?

Yes. So we're not giving 2022 guidance on KEVEYIS yet. The fourth quarter -- or the third quarter, I think, was mostly patients growth. The price increase didn't really hit until late in the quarter, if not the beginning of fourth quarter. So really no impact there. We think it's going to continue to grow and grow nicely. Our focus is patient acquisition and then persistence.

In terms of IP, there's no update there. We're still prosecuting and appealing and going through the process with the patent examiners office, we think there's an opportunity there. That said, ultra-rare products experience generics probably about 50% of the time. So -- and this particular product is sold only through one specialty pharmacy in the U.S. And the critical aspect of this drug is the patient support piece. You really have to support the patients in terms of therapeutics initiation -- or initiation of therapy. You really have to support them in terms of their -- the first few months in terms of getting stabilized. And you've got to provide support to have consistency and persistence of therapeutic management. So that's a tall order for any potential generic company.

So whatever the total business is, it would decline very rapidly in the generic world, which I think is less attractive at the end of the day. Not to say it won't happen, but we don't see that being a high likelihood at this point.

Our next question is from David Steinberg of Jefferies.

This is Caleb on for David. 2 questions here. The first on Ogluo. It looks like you guys recently out-licensed that to Tetris for the EU. Looks like you're still on track to launch before the year-end. Could you just tell us a little bit more about the terms of the agreement? When do you expect to start receiving milestone and/or royalty payments? And then just more broadly, do you plan to look for more partners for other areas?

And then the second question, just on XeriJect. You recently announced the collaboration agreement with Merck, obviously, a major pharmaceutical company. Can you just describe their interest in the technology and maybe tell us a bit more about XeriJect?

Okay. In terms of Ogluo and Tetris, we haven't gone into specifics of exactly what the different pieces are, but there are launch milestones for the U.K. and key countries in the EU. There is a royalty on sales for the U.K. and the EU. And there are sales achievement milestones that we can get. I think what we reported previously is approximately, if all goes well in upfronts and milestones, we could realize neighborhood of $70 million, $71 million over the next couple of years.

And then in terms of other partners, yes, we are fielding inquiries from numerous companies for other territories around the world. We're interested in licensing our liquid ready-to-use glucagon anywhere in the world that we can. But we're not in any advanced discussions on any other territories as of yet.

And then the Merck collaboration, our XeriJect technology is a suspension-based injectable technology. So if you've got a product, a lot of the monoclonal antibodies require IV administration. So sitting in a chair with an IV over some period of time, getting an infusion in order to get the product where it needs to be. What we believe and what we think we're demonstrating and what companies are interested in is we can take that monoclonal antibody, suspend it in our system and put it in a prefilled syringe for injection where the product reconstitutes using bodily fluids instead of an IV bag. For companies that are in that business, it could be a game changer. And we can put very large molecules into that system and inject them in a very unique way that, frankly, other companies can't do.

(Operator Instructions) Our next question is from Alexandre Bouilloux of Mizuho.

Just a follow-up question on the collaboration with Merck. Could you give us a sense for the time frame of when this license agreement can be exercised?

I can't, not because I won't, but because the first piece of the collaboration is the feasibility piece, which requires that we formulate the product in our suspension that we put it up on stability and that we achieve a certain level of stability over some period of time. So that -- I think, historically, that evaluation period has been anywhere from 1 year to 18 months, but they all vary depending on the product and the process.

Okay. Great. That's helpful. And then just my second question on the peak sales opportunity for Gvoke. Just given the script data you've talked about a little bit earlier, the COVID environment, the launch curve so far. Has anything changed with respect to your view of what this product can achieve commercially at peak?

Not at all. We're bullish on Gvoke. At the end of the day, we say it all the time, I think the other companies say the same thing. There's over 6 million people who are on insulin. Insulin utilization is a risk factor for severe low blood sugar, period. If you are on insulin, you should have a ready-to-use glucagon of some form available just in case. We think the Gvoke HypoPen is the best option. So we think there's a tremendous opportunity. We, like many other companies, have not had the ability to take advantage of that opportunity for the last 18 months to 2 years because we've been in the middle of a pandemic. People -- it's just a fact, but we're bullish as we've ever been.

Our next question is from Kelly Close of Close Concerns.

Congratulations on all of the progress. It's really cool to see. I had a related question on the market size, because I was assuming the 6 million people. And I mean I would like to also assume the people who are on the sulfonylurea that does -- on all of the sulfonylurea also cause hypoglycemia because we now that many of the 230,000 people that go to hospital in the U.S. every year for severe hypoglycemia do take sulfonylureas. So one is, is there any progress or thought about the indication and especially as you start talking to more doctors and all of that and by getting payment for that. So that's one.

But if we assumed that no one would ever use this, which is the hope, and given the massive advantage that this lasts for 2 years, is it reasonable to think that the market, even just using the self-pay price, which is on the lower side, that market, if you assume people only buy it every 2 years, and it's not all the people with sulfonylurea -- I mean the market is certainly approaching well, well, well over the -- like the -- I don't know, I guess the amount of savings rather would be well, well over, you would think the investment required to get this, all those people would be well over what is being spent in ambulance visits, ER visits and hospital stays. I mean I had some estimates on ambulance, ER visits and hospital stays, just to kind of understand what the cost actually are in this U.S. system for each of those because those are pretty different. But I don't know if it's possible to get any help on those estimates, but just wanted to know if this is a reasonable linear way to think about it.

Yes. So you're absolutely correct. People on sulfonylureas are at risk as well. No question about that. We tend to focus on the 6.7 million or 6.8 million because in and of itself, that's a huge number. And you've got less than maybe 10% -- 10% to 15% of those people who are actually getting ready-to-use glucagon. That's where we've got to make change, and that's our focus.

In terms of the savings, you're absolutely correct. The data is really not available in the last couple of years because of the change -- I mean emergence room visits for 2020, you couldn't even go to emergency room. But historically, anywhere from 230,000 to 275,000 people show up at the emergency room every year for severe hypoglycemia. And that's only the ones who are actually coded as hypoglycemia. Our estimates would be even higher. And there has historically been up to 27,000 deaths every year from a severe hypo. So the cost implications are significant. And that's one of the reasons we've had no pushback from managed care. We've had no pushback from payers. Anybody that -- even people who are on sulfonylureas we've had no evidence that there's been any rejected claims for anything because the payers recognize this is a life-saving medication, full stop.

And did you say that you believe that you will be able to continue to really work on being generous about the co-pays and so forth because I don't know if any of the 230,000 patients like expect this to happen to themselves, but having the generosity to patients that they don't have to pay a co-pay is just incredibly helpful.

Yes. Especially during the pandemic, our focus was on patient access, and we extended the 0-dollar co-pay continually through that period. I don't see it lasting forever. But even if we go to normal co-pay support, it'd be relatively low, $20, $30 $40.

Yes. Well, okay. Well, we encourage any learning that we can do in the community as multi-stakeholders to work out what does it actually take from a policy perspective because making it 0 does make it a lot easier just in terms of people acknowledging needs and so forth and especially just given all of the people on sulfonylureas who do need this, who might be coming from more disadvantaged backgrounds and so forth. But thank you very much for all you are doing. It's just really gratifying to hear.

Thanks, Kelly. We appreciate it.

Our final question is a follow-up from Oren Livnat.

I just wanted to quickly touch on just going forward, do you expect sales of Gvoke to generally track the prescription volume going forward? You gave pretty encouraging guidance, but just surprisingly positive that you expect scripts to be flat net worth in Q4, which is impressive given the seasonal contraction we expect to see in the fourth quarter of the whole market. So is it relatively predictable? There's no major inventory moves that scripts should translate to sales in fourth quarter and beyond, at a given value per script?

Yes, I believe so, Oren. I think we've seen the wholesaler adjustments to inventory as we crossed the 1-year mark. They've now got enough history that their inventory management is getting an awful lot tighter. So we think that gap between prescriptions and units is going to narrow somewhat.

We have no further telephone questions, so I will hand back to Paul Edick for closing remarks.

Thank you very much. Thank you for the questions. That was fun. And our message is we have a healthy, growing, attractive company, and we appreciate everybody's time and attention today. Thank you very much.