Jefferies: 'We see this as a positive for XERS'

Jefferies analyst Glen Santangelo reiterated a Buy rating and $10.00 price target on Xeris Pharmaceuticals (NASDAQ: XERS).

The analyst comments "What happened? Competitor CORT reported a CRL was received for relacorilant, for treatment of hypertension patients secondary to hypercortisolism. CORT notes the FDA "could not arrive at a favorable benefit-risk assessment" for the drug with data from the Phase III trials (GRACE and GRADIENT), without CORT providing additional evidence of effectiveness. This could imply an additional clinical trial would be needed for a resubmission (TBD), which would further delay a potential launch by several years. It's unclear as CORT isn't hosting a conf call but CORT will meet with the FDA to discuss the regulatory path forward soon. We see this as a positive for XERS since the market should continue to grow but with one less competitor. We see substantial growth in the Cushing's market as it's currently $1B in the US, but there's decent visibility it could reach $3B by 2030 from growing awareness + diagnoses. All players should benefit, including XERS, which has a minority share of the market but are making substantial commercial investments. Notably, XERS plans to double its Recorlev reps by early 2026, which in our view may have been in part to counter the new relacorilant launch - but now that relacorilant has been delayed, we expect stronger salesforce traction from XERS, which suggests 2026 Recorlev estimates of $230M might be conservative. Note Cushing's patients typically cycle through multiple drugs (i.e. XERS noted it gets switch patients from Korlym, Isturisa, etc.), so with one less drug on the market, there's one fewer switch option and should theoretically benefit Recorlev adoption. Near term, we wonder if relacorilant's CRL might put even greater focus on the CORT vs TEVA case. For context, TEVA won a patent infringement suit vs CORT and has launched generic Korlym albeit with minimal uptake. CORT appealed, with the hearing taking place over the summer, and we expect an appeal decision potentially in the next few months. Should CORT win the appeal, its authorized generic, which is priced at a 30% discount from list, would be pulled from the market, thus removing a lower-cost option that other branded drugs may have needed to step through, i.e., this could be a (+) for branded drugs like Recorlev."

For an analyst ratings summary and ratings history on Xeris Pharmaceuticals click here. For more ratings news on Xeris Pharmaceuticals click here.

Shares of Xeris Pharmaceuticals closed at $7.31 yesterday.

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