xeris glucagon

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Xeris Pharmaceuticals is developing a stabilized glucagon, with an NDA filing targeted for late 2013; glucagon competitive landscape overview – June 8, 2012

Executive Highlights

§ Xeris Pharmaceuticals is developing a stabilized glucagon solution and targeting an NDA filing in 4Q13. Particularly striking about their company is the move to create a “mini-pen” with small shots available to treat mild to moderate hypoglycemia.

Xeris Pharmaceuticals is developing a soluble formulation of glucagon for use in an auto-injector rescue pen for severe hypoglycemia (the G-Pen) and a mini-dose pen for moderate hypoglycemia (the G-Pen Mini). Xeris is taking a unique approach to stabilizing glucagon in solution, described in a late-breaking abstract that will be shown at ADA (47-LB). Instead of a water-based formulation, Xeris is mixing glucagon powder with an FDA approved, biocompatible, non-aqueous solvent. According to the company, the novel formulation remains stable and free of fibrillation after incubation at 104 degrees Fahrenheit (40 degrees Celsius) for at least two months, and stability data at room temperature predict a shelf-life of at least two years. This would represent among the best impressive non-refrigerated glucagon stability we’ve seen to date. As we understand it, the company will attempt to use the faster 505(b)(2) regulatory pathway. Xeris is currently awaiting IND approval from the FDA (expected in 3Q12) and plans to conduct small phase 2 and 3 studies (~30 patients) before filing an NDA in 4Q13.

Xeris aims to take a three-step, staged approach with its glucagon program. The G-Pen, its first product, will be an auto-injector, EpiPen-like device for the treatment of severe hypoglycemia. This would represent a major improvement over the current glucagon kits, which require around nine steps to administer, some prior training (or excellent instruction reading capabilities), and fairly steely nerves and dexterity in an emergency situation (the current product is very “high hassle”).

We are very intrigued by Xeris’ follow-on product, the G-Pen Mini, designed for use in moderate hypoglycemia. Conceptually, the G-Pen Mini is a major win in our view – the ability to precisely dose glucagon could help many patients spend more time in zone and less time on the “roller coaster” pattern of hypoglycemia, carb overtreatment, hyperglycemia, overcorrecting with insulin, hypoglycemia, etc. Development risk certainly exists, given regulatory barriers for new products, but we believe interest will be very high from multiple parties. Indeed, survey responses from the dQ&A Patient Panel suggests considerable enthusiasm for this use of glucagon among over 1,100 type 1 and over 520 type 2 patients on insulin.

Notably, Xeris is targeting the dual-chamber pump market and bi-hormonal artificial pancreas through partnerships with two insulin pump companies and Dr. Ken Ward at Oregon Health and Science University (Dr. Ward’s team also has their own late-breaking abstract [48-LB] at ADA on a pH-based approach to stabilizing glucagon). Though a bi-hormonal AP is likely more than five years away from real-world use, we view these partnerships as encouraging. Glucagon is dramatically underpenetrated in type 1s (<10%) and type 2s (<2%), and better products would certainly help expand the market. In



our view, the transformative shift for glucagon would really happen if the G-Pen Mini and AP indications can be developed, taking it from a just-in-case product to an everyday product.

• Austin, Texas-based Xeris Pharmaceuticals’ business model centers around a four-step process using the 505(b)(2) regulatory pathway and hopefully culminating in the out-licensing of its proprietary formulations: (1) identify a target product for reformulation; (2) develop a non-aqueous formulation; (3) conduct initial clinical trials to demonstrate safety and efficacy; (4) out-license the target to a larger pharmaceutical partner that can manage the NDA-enabling clinical trials prior to NDA submission for FDA approval.

• Preclinical pharmacology studies of Xeris’ glucagon formulation have shown equivalent pharmacokinetics and pharmacodynamics to aqueous formulations. Injection of Xeris’ glucagon formulation in a preclinical animal study demonstrated rapid absorption (Tmax ~5 minutes) and elevation of blood glucose levels within 15 minutes. The non-aqueous formulation’s apparent degradation rate at room temperature is also quite low at ~0.3% per month (about 3.6% per year), similar to dry powders of glucagon and a key benefit of using a non-aqueous solvent. As we understand it, the FDA-approved diluent is fairly commonly used and approved at volumes ~200 times greater than what Xeris is using. It’s also approved for chronic use, whereas the rescue indication would involve acute use. This seems encouraging from a regulatory perspective, though it’s always tough to accurately gauge FDA’s view. Xeris’ approach is also valuable in that it allows the company to easily vary the glucagon concentration for its different products (i.e., while the rescue G-Pen may need one concentration of glucagon, the G-Pen Mini and artificial pancreas formulations may require more diluted versions).

• Xeris’ first product, the G-Pen, is an auto-injector, EpiPen-like rescue device; the pen will not need refrigeration, and Xeris is targeting a two-year shelf life. The device will be prefilled with Xeris’ glucagon formulation, and administering a dose will require two steps: removing the cap and firmly pressing the device into the body – this is a notable improvement to the approximately nine steps required to administer glucagon with the current kit. Management plans to have a very small diameter (27-gauge) needle for the G-Pen, though depending on the final viscosity this could be brought down to a 29-gauge needle. A smaller diameter needle and smaller injection volume (0.2 ml) mean less pain upon injection and a shorter injection time. We understand that there is very little chance of a 25-gauge needle, which is good news from a pain perspective although with severe hypoglycemia, speed of injection is is more important than pain on injection.

• Xeris’ G-Pen Mini, a follow-on product for the treatment of moderate hypoglycemia, is particularly noteworthy in our view. Management forecasts this could be approved anywhere from 18 months to three years after the G-Pen. The G-Pen Mini will allow patients to take mini doses of glucagon to correct low blood sugars without having to eat. This ability to precisely dose glucagon should (a) help avoid the roller coaster pattern of glycemic control that results from over-treating lows; and (b) hopefully prevent some of the weight gain associated with eating or drinking too many calories to correct hypoglycemia. The G-Pen Mini is a major win in our view. Xeris is targeting a 31-32 gauge needle for this indication. We are especially interested to see FDA’s perspective on the G-Pen Mini. While the rescue indication looks like a very straightforward regulatory process, we suspect FDA requirements will be more stringent for a repeated-dose glucagon product like the G-Pen Mini. We would guess larger clinical studies in people with diabetes would also be required, rather than the bio-equivalence studies in ~30 non-diabetic individuals for the rescue indication.

• Market research data collected by dQ&A and sponsored by Xeris suggests strong patient enthusiasm for the G-Pen Mini to correct mild to moderate hypoglycemia. The



survey was given in 4Q11 and received responses from more than 1,100 type 1s and more than 520 type 2s on insulin.

• 84% of type 1s and 75% of type 2 insulin users said they would be likely or definitely likely to get and use a product like the G-Pen Mini

• “The ability to dose glucagon precisely to correct hypoglycemia” and “Convenience/portability” were reported by the highest percentage of survey-takers as the most important attributes of the G-Pen Mini.

• 90% of type 1s and 82% of type 2s believed they would use a product like the G-Pen Mini one or more times per week

§ There are a number of companies at work on various glucagon solutions – we believe more than one can certainly be successful and that to date, work and focus on this area has been very under-optimized.

§ It was great from our view to hear that Xeris intends to develop a glucagon formulation for the artificial pancreas. The company is working with Drs. Ken Ward and Jessica Castle at Oregon Health and Science University, and is also in discussions with several insulin pump companies that are focused on the dual-chamber pump opportunity. Dr. Ward is highly respected in the diabetes world, and his involvement bodes quite well for Xeris. Although its pump won’t be launched until ADA 2012, we are also aware that Tandem is moving toward increasing involvement in AP research. We learned at ATTD (see page 18 of our report at http://bit.ly/yQtkcM) that Drs. Steven Russell and Ed Damiano will be using two Tandem t:slim insulin pumps in their upcoming outpatient, bi-hormonal AP studies. Additionally, we have heard from Dr. Russell that Tandem is working on a dual-chambered pump to house both 300 units of insulin and 100 units glucagon. This is certainly looking into the future, but we are very glad to see the momentum for a bi-hormonal closed loop continuing to build. We believe that a bi-hormonal AP – above and beyond an insulin-only AP – will add an important incremental benefit to closing the loop in type 1 diabetes. This was underscored by data from the Helmsley Charitable Trust’s T1D Exchange at ATTD showing the very high prevalence of severe hypoglycemia: in the last 12 months, over 7.5% of patients in the registry had experienced at least one severe hypoglycemic episode (for more information, see page 33 of our report at http://bit.ly/zEKWOB).

§ Aside from Xeris, the competitive landscape for glucagon includes several other players: Arecor, Biodel, Enject, Latitude, and PhySci (formerly Marcadia). Biodel, Xeris, and Enject expect to file an NDA with the FDA around late 2013 or early 2014, though the formulation approaches are different.

• Arecor: As we understand it, Arecor is working on developing a stabilized glucagon, though we have been unable to find specific information on the company’s program. Arecor’s Arestat-T technology is designed to stabilize biologics in solution “by controlling the rate of interactions with surrounding molecules.” In December 2011, Arecor formed a collaboration with Lilly to develop “stable aqueous or higher concentration formulations of emerging protein and peptide drug candidates developed by Lilly…[and] offer improved formulations of Lilly’s existing therapeutic proteins in several therapeutic areas.” Lilly’s glucagon is not specifically mentioned in the announcement, though we would assume it is part of the partnership. The company is also applying its technology to create heat stable insulin analogs: a case study using Arecor’s technology shows 80%+ recovery at 14 weeks at 104 degrees Fahrenheit (40 degrees Celsius) with three different analogs, compared to 30-40%



recovery without Arestat. This seems like encouraging data, and we look forward to hearing more about the company’s technology and partnership with Lilly.

• Biodel: Biodel is also developing an auto-injector for a stabilized glucagon. The company’s approach will use an aqueous solution. Biodel’s formulation has achieved stability out to 18 months refrigerated, and management is targeting a formulation that will ideally remain stable for 24 months at room temperature. This has not been achieved before and we remain very interested in watching what emerges. As far as we know, Biodel has not specifically mentioned how long its formulation can remain stable at room temperature. Slides shown on March 14, 2012, at the ROTH 24th Annual OC Growth Stock Conference, suggest that Biodel’s glucagon has ~90% stability out to ten days (the x-axis goes to 12 days but the line does not extend any further) and light obscuration begins to increase around 40 days. Given this data, we believe Xeris’ two-month stability at room temperature is an important advantage over Biodel’s current formulation. Of course, Biodel is still optimizing its glucagon formulation and may be able to achieve comparable stability at room temperature. For more on Biodel’s glucagon program, see our report on the company’s mid-March update at http://bit.ly/JxRTme.

• Enject: Enject is developing an autoinjector that automates the reconstitution of lyophilized glucagon (essentially automating the cumbersome process required with currently marketed kits from Lilly and Novo). Using a lyophilized product assures portability beyond the refrigerator, and simplifies the regulatory process, especially if partnered with the manufacturers of the currently marketed products that are manually reconstituted in the same manner, and that would make it a simple line extension. The autoinjector, which was shown to participants at a social media summit at ADA last year, reduces the number of steps to three – mix, uncap and inject. As we understand it, the formulation is optimized for rapid reconstitution without the need for agitation, and the caregiver will be easily able to observe reconstitution and the injection occurring in a window. The autoinjector also has a needle shield that triggers the automatic injection, while eliminating primary and secondary needle stick risk (and also removes the need for sharps disposal). We understand that the company recently had a Type C meeting at FDA to review and confirm the approval pathway for the auto-injector. Recent improvements in the autoinjector design were also presented to FDA for input prior to moving into human factor testing. The company anticipates filing an NDA by the end of 2013.

• Latitude: Latitude announced on April 3, 2012, that it had developed “the first ever, ready-to-inject, stable liquid glucagon formulation (Nano-G).” The formulation is a pH-neutral, isotonic, detergent-free, aqueous formulation that includes only FDA-approved ingredients. Nano-G uses Latitude’s nanoemulsion drug delivery platform, designed to stabilize highly insoluble compounds. Latitude believes its product is suitable for both an auto-injector pen and for use in the artificial pancreas. The company has completed six-month real-time and accelerated stability testing, which it believes predicts a two-year shelf life (it’s unclear if this was at room temperature, but we would assume not). The Nano-G will fall under the 505(b)(2) regulatory pathway, and the company is “now seeking partners to commercialize this exceptional multi-billion dollar opportunity.”

• PhySci (formerly Marcadia): Eli Lilly and Marcadia signed a development agreement in July 2010 for Marcadia’s novel short-acting glucagon analogs, including MAR531



(see our reports at http://bit.ly/JP4NM7 and http://bit.ly/LgDA9f). As of our September 2010 report, Marcadia had completed stability testing and had proceeded into IND-enabling work. However, Roche subsequently acquired Marcadia in December 2010 (see our early report on the acquisition at http://bit.ly/J1ai7T and Roche 4Q10 at http://bit.ly/wPKFLX), and since then, we have not heard an update on the status of Marcadia’s glucagon analog compounds. Roche has thus far prioritized Marcadia’s GLP- 1/GIP dual agonist (MAR701/RG7685), which completed a phase 1 study in 4Q11. We are not clear on the status of the glucagon program at this time.

§ Both Xeris and Biodel have estimated the potential market size for various indications of a stabilized glucagon. According to Biodel’s F2Q12 earnings call (see our report at http://bit.ly/MkY7sh), the current market for glucagon is about $120 million for the rescue kit and about $80 million for vials sold for diagnostic and various GI procedures in the hospital. In our view, this market is very under-optimized based on major hassle factor associated with the current systems. We believe both estimates are conservative, as we believe are the artificial pancreas estimates extremely conservative. Additionally, we believe the market for moderate hypoglycemia could be a major one and we’re very interested to see where this heads, as we are for the bi-hormonal artificial pancreas. While once a reliable bi-hormonal artificial pancreas it approved and reimbursed and in use, there may be less need for glucagon for moderate hypoglycemia, we believe this time is fairly far off; additionally, this could be a very useful back-up device and certainly a cheaper solution prior to approval of the AP, which will itself come incremental stages. Ultimately, the glucagon market, both for severe and moderate hypoglycemia, has been untapped for far too long and we’re very pleased to see so much interest in the area of late. We look forward to seeing Xeris’s late-breaker this ADA and to seeing more data at next year’s meeting.

Xeris’ Market Estimate Biodel’s Market Estimate

Rescue from severe hypoglycemia

$300 million per year $200-350 million per year

Moderate hypoglycemia $700 million per year Not provided

Bi-hormonal artificial pancreas

$500 million per year $400-600 million per year

Closed-loop glucagon-only pump

Not provided $200-350 million

--by Adam Brown and Kelly Close

Editor’s note: We were not able to reach every company discussed in this report; we will update this piece if more information becomes available.

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