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Preheat oven to 350°F and grease a 9x13 inch baking dish.
Arrange biscuits at the bottom of the prepared dish.
In a large skillet, cook and stir the sausage over medium-high heat until browned and crumbly (5-7 minutes). Drain and discard the grease. Spread the sausage over the biscuits and top with 1 cup of cheese.
Whisk together eggs, milk, salt, and pepper in a bowl and pour over the cheese layer.
Mix water and gravy mix in a saucepan and bring to a boil. Reduce heat and simmer until thickened (1-2 minutes), adding more water for a thinner consistency. Pour over the egg layer.
Sprinkle remaining ½ cup of cheese over the casserole.
Bake for 30 minutes or until the eggs are fluffy and the cheese is bubbly.