Get started on our last session for the day. I'm Andrew Tsai, Senior Biotech Analyst here at Jefferies. Thanks for joining me today. Next up, we have Lexicon Pharmaceuticals. Jeff Wade, President and Chief Financial Officer, to the right of me, and to the right of him, Tom Garner, SVP and Chief Commercial Officer. So my understanding is, Jeff, you will be giving a brief intro with slides first, and then we can dig into Q&A afterwards.
I'll be very brief with the slides. Thanks for joining us today. I really appreciate the opportunity to visit with you about our progress. I'll be making, we will be making forward-looking statements today that are subject to risks and uncertainties that are reflected in our SEC filings. We'll talk about two different things today. One is INPEFA, which was approved earlier this year for the treatment of heart failure. Importantly, INPEFA was approved with a very broad label for a broad patient population within heart failure, which includes both patients with heart failure with reduced ejection fraction and heart failure with preserved ejection fraction, and patients with and without diabetes.
One of the key studies was the SOLOIST-WHF study, and in that study, I'll talk briefly about that, but that study reduced the risk of cardiovascular death, hospitalization for heart failure, and urgent visits for heart failure by one-third compared to placebo in very well-treated patients who were very well-treated with standard of care. One of the unique aspects of that study is it initiated patients in the hospital or promptly following discharge. There are recently adopted guidelines that include SGLT inhibitors like INPEFA, and specifically include INPEFA in those guidelines as a recommended treatment for all heart failure patients, and specifically cite that SOLOIST-WHF study. Heart failure, just from a market opportunity perspective, hospitalization with heart failure is a very significant challenge.
There are about seven million people with heart failure in the U.S., that number is projected to increase to about eight million by the end of this decade. It's the leading cause of hospitalizations for Americans over 65, with about 1.3 million hospitalizations a year. And once patients are admitted to the hospital for heart failure, they're very likely to come back, with about 25% being back, within 30 days. And the cost of treating heart failure patients is primarily that hospitalization cost. About 80% of heart failure treatment costs are associated with, hospitalizations. I just wanted to highlight that we are continuing to publish, and so are, people external to us, publish on our data.
This also is something that frames the way that we think about heart failure and was recently published in the Journal of the American Heart Association. It's really thinking about heart failure as more like cancer than a lot of cardiovascular diseases. With people with acute heart failure, the prognosis is actually very, very negative, and it is something that we can do something about. And that was the point of this article. And I wanna highlight the data that were included in this article, upper left-hand quadrant of this are the data from the SOLOIST-WHF study, which you can see a very significant difference that happened very early on in patients who were hospitalized with heart failure and initiated on INPEFA.
The one other asset that we'll be talking about today is LX9211. It has potential to really redefine what the standard of care is for neuropathic pain. We're very excited about this novel target that we identified. We brought it through development, achieved proof of concept and a couple of proof-of-concept studies in two different indications within neuropathic pain. And this has the opportunity to be the first new mechanism of action for neuropathic pain in over two decades. And it's a novel, non-opioid approach. We're taking it into late-stage development now, and we've aligned FDA feedback for the phase III development program that this first study is going to be part of that program.
This initial study is a phase 2B study to select doses going forward and to, and to, to advance this program towards late-stage development, with the long-term extension on this, expected to satisfy long-term safety requirements for an NDA filing. So very excited about this opportunity, tremendous area of tremendous unmet need, and, we have Fast Track designation, in diabetic peripheral neuropathic pain. The study is up and running right now. We expect to have patients enrolled in this study, by, by next month, actually. So we're looking forward to advancing that study and getting data from the study first half of 2025.
One of the things that I think is important to note about this study that's a little bit differentiating is that like the proof of concept studies, patients who are on stable dose diabetic peripheral neuropathic pain medications can remain on those through the study. And so the proof of concept that we've seen so far is a real-world proof of concept. It's looking at patients who are on the therapies that they're on, adding this on top-
A nd showing a benefit both for patients who are not on another medication and for patients who are on a medication like gabapentin or pregabalin. We believe that that's a more real-world test of the mechanism and of how this would be used in the market. So looking forward to questions from Andrew. So we'll-
Thanks. So we'll start with, you know, empagliflozin for heart failure, approved June of this year. Launched,
Approved May.
Approved May, launched in June. So what aspects of the label to you are differentiating compared to the other SGLT inhibitors, so Farxiga, Jardiance, and how are you leveraging the label you have to?
Yeah. The prime difference in the label is that we have—and the only labeled study of an SGLT inhibitor in patients who were initiated in the hospital or upon discharge. So that's a unique label, and we have, in that label, the data that we were talking about in terms of early, very early separation from placebo. That is a unique aspect of our label, and we believe that it's tied into the differentiated mechanism that we have as well.
Mm-hmm.
Maybe just to add to Jeff's comment, the sales team have been hyper-focused on that SOLOIST dataset as we've got out the gates. And in particular, the messages around an NNT of one and the rehospitalization of 33 and 50 for the 30- and 90-day, is really resonating with customers. And I think they are able to make the link between this unique mode of action, SGLT1 and 2, the only drug that does it, and the fact that we are seeing this growing body of evidence that points to benefit in terms of cardiovascular endpoints.
Thanks. At this juncture, are you marketing that to physician centers right now, or does more... Is there a bottleneck that needs to happen before you can actually, you know, have for physicians to prescribe it early in the hospital discharge?
So we're working through that, as you would imagine. As with most new drugs, there's a six-month moratorium, new to market block that we're facing. We're getting towards the end of that window now, so I've started active dialogue with major target centers across the United States. We think that there's different ways that we can actually see INPEFA being utilized quickly within that group. One is to actually get the drug on formulary so that inpatients can actually start drug there. The alternative is we could also get INPEFA added to discharge protocols, which is actually easier than having to go through the whole P&T process. So we're actually working both ends of that process, as it stands at the moment, so that patients leave the hospital with INPEFA in their hands.
We know that these patients are gonna be largely persistent, given the fact they've just had a major heart failure incident, and they do feel better on SGLT treatment. So there's also a feel benefit that patients would see.
I see, and that makes sense. And so, you know, in terms of precedent to get on the formulary, P&T committees and stuff, how long did it take Farxiga, Jardiance to get on those formularies? Is it the same timeframe in your view, for INPEFA, before your scripts inflect?
Yeah. I mean, it's exactly the same situation. And the one point I would make is that if you think about where patients are being treated today and where the volume of SGLTs is being used for heart failure, it's actually outside of the hospital. At the moment, about one in ten patients who are discharged from a cardiac care unit are actually discharged in an SGLT. Now, that number is increasing exponentially, but we think that we're actually launching INPEFA at the right time to be able to capture that opportunity. And the vast majority of the patients that we've seen prescribed to INPEFA so far have actually been outside of the hospital as we work through this process.
So I think it also shows that the interest and willingness to actually try INPEFA for heart failure in recently diagnosed patients is actually there as well. So-
Mm.
I think that that's a good leading indicator intent to use the product more broadly.
I see. And, end goal, just to be clear, to have this used earlier, in the hospital setting, because patients do stay controlled, so there's no reason for them to—let's just say they're discharged from the hospital, no reason for them to switch to another SGLT. You have this patient basically by treating them early.
Exactly that. And we know that some patients who maybe do come out to the hospital, they're still not fully meeting the guideline-directed medical care.
Mm-hmm.
At that point, if you've not used an SGLT already, INPEFA should be the SGLT of choice.
Okay. Remind us, you know, you've had a full quarter of a launch, what your sales number was, how that should grow in Q4 as well as 2024. When do we get an inflection in your view?
So maybe I'll start on that one. So Q3 for us was about two kind of strategic pillars. One was driving demand, you know, driving awareness, trial, and usage of INPEFA in this fairly competitive marketplace. The second piece was obviously driving access as broadly as we could. I think we're making good progress on both fronts. So in terms of awareness and usage, we said by the end of the quarter, we had nearly 500 individual prescribers who had actually started a patient. That's about 5% of our initial target customer audience that we're going after, so significant headroom for growth there. In terms of access, you know, we've been chipping away at access. Some more recent wins aren't actually going live until November 1st. Some others, we're anticipating January 1st. It's essentially those two pieces moving together.
One is just growing demand, willingness to use the product. That's what the sales team are doubling down on. Our access team are working very, very hard on access. So you put the two together, that's why we've signaled that we would kind of see an inflection first half of next year.
Mm. Okay.
Okay.
Makes sense. And, back in the recent quarterly call, you did mention how you have 5,000 claims-
Mm-hmm.
But, you know, ultimately, 100 have gotten INPEFA so far.
1,000, yeah.
Oh, sorry, thousand.
five to one.
five to one . So, for the remaining 4,000, how long does it take for them to convert, be reimbursed? Or what proportion of those will get reimbursed in your view?
So some will get reimbursed, some we're actually gonna pick up through our patient assistance program. So we have that available as well if a patient qualifies. Obviously, there are various qualifying criteria. Unfortunately, we do end up losing some of those patients because we can't pull all of them through. Obviously, the nuances of Part D just means that with a Medicare patient, we're more limited in what we can offer. But on the whole, you know, it's generally taking, for a patient who can gain access, it's pretty quick. You know, they're probably having to go through a prior approval, and then they're on drug within a few days.
Maybe bigger picture question is, just how big do you think INPEFA can be in terms of sales, despite existing SGLT2s being in the market for years?
Yeah.
Help us frame the numbers on patients and price.
Yeah. So kind of echoing what Jeff shared on the slides, you know, heart failure is a market that is continuing to grow very substantially, both in terms of just the overall patient number, but then you look at branded prescriptions within that category, you know, it's growing all the time. Entresto is still growing at 30%, even though it's, you know, coming up on a decade, a decade old now. SGLTs, I think we're gonna see some very dramatic uptick in terms of their use in heart failure, given the recent guidelines from both AHA and ACC, recommending that they should be a fundamental pillar in terms of heart failure treatment.
So if we estimate there's nine million patients with heart failure in the United States by the end of the decade, I mean, even if we got a relatively modest share, you know, the numbers end up being fairly significant. So-
Mm.
We think at the moment, somewhere between 100,000-300,000 patients is kind of the range, but we're not gonna be satisfied with only 100,000. That's very clear. So, you know, when you start doing the math there, you're looking in the $200 million-$500 million-
Mm-hmm
... within the next few years.
Okay. And speaking, you know, just one more on the potential inflection once you've raised awareness and have locked in more formulary wins or access. So what exactly—when is, does that exactly happen? In your view, in 2024, early 2024 or later in the year? And just how many more formulary wins do you think you need to get before you've got it all?
Yeah. So end of Q3, we obviously stated that we had about 25% of patient lives were covered. That didn't take into account any of the wins that we had announced regarding Express Scripts and others. So that number, as you can imagine, is already higher than that number that we'd shared publicly. In terms of engagement with the plans, I can tell you that the engagements are going well. I think that payers do understand that INPEFA has a unique label in terms of heart failure. They are intrigued by the mechanism of action. They're also, I think, very intrigued by the SOLOIST data, in particular, for those plans that are covering both the pharmacy and the medical benefit, because they don't want to see these patients coming back. That's a very clear goal for them.
So I think you'll see more plans announced over the next three-four months as we come to the end of the year and into Q1.
Mm.
Obviously, we're working very hard wherever possible, to pull plan coverage up, even though we're currently in the 2025, 2026 bid cycle. There is still window there for us to be listed in 2024.
I see. And you—I think you have 150 sales reps. Is that enough? Do you need to get more to grow sales?
So we've been very targeted about where the sales team have been deployed, and we have a very, very experienced sales force in terms of the profile that we've employed to. I think if you look at where they have been deployed, it's around most of the metropolitan centers, which, you know, again, heart failure tends to cluster around where there are more people, and we feel pretty good about where they're focused at the moment.
Got it. And does it make sense to do DTC ads, or you have something differentiating?
So DTC, I think we could consider different ways. I mean, in my prior experience, you know, DTC- DTC dollars get very, very expensive, very, very quickly. But I think we could certainly consider some CTV digital ways, which would be, again, more targeted in scope and focus rather than going linear television, as an example.
Got it. And now, bigger picture. Also, another bigger picture question, as we think about the industry, you know, Farxiga, Jardiance, they do go generic, maybe mid- to late-2020s.
Farxiga's first. It's probably-
2026.
2026.
2026-2028, probably.
Yeah.
So why does that not impact the net price of INPEFA, in your view?
You want to take that one?
Well, I think one of the keys is, and this is a key to both our uptake and our competitiveness, but also the long-term value, is that we believe we have a differentiated product, and that's gonna be an important element of this. We also are going to be continuing to do lifecycle management and generating additional data over time that we think it's gonna add to that value proposition. So we think that we're positioned pretty well for that. I mean, it's, it'll have some effect, right? But we do believe that that the fact that we have a differentiated profile, that we're gonna be promoting, that we are going to be generating additional data that those are all going to help us be competitive for the long run.
Mm-hmm.
Yeah. Maybe just one additional comment, because obviously in that window as well, we have Part D redesign, and we have IRA coming along, and as you would imagine, there's a number of products that we're competing against that are on that first list of 10. I can tell you the discussions that we've had with payers as they think about kind of rebate dollars in the post-IRA world, a product like INPEFA actually offers some meaningful value for them because those dollars are gonna be swallowed up by the government. And having a product like INPEFA, which is obviously gonna be growing substantially during that time, actually gives them a rebate stream. So, you know, these have been discussions that we've had with payers as well, as we just thought about some of the other kind of macro factors that we're up against.
Mm-hmm. And you mentioned lifecycle management opportunities. I feel, if I recall correctly, there are SGLT2s being combined with GLPs for CKD. Is that an avenue that you'd pursue, or I could be wrong about that.
Yeah, I haven't really seen them being combined in like fixed dose, I mean, fixed-dose combination, because then you'd have to have an oral GLP.
Mm-hmm.
There has been use of the two agents in diabetes, in particular, with good results. That is true. But, I mean, both of them are important classes of medications.
Mm-hmm. Okay. And maybe, remind us your cash runway for the launch.
We had $218 million in cash at the end of this past quarter, which we believe will take us well into 2025.
Okay. Moving on to pain in the last five minutes.
Mm-hmm.
The question is: What did you see for this AAK1 asset, novel non-opioid, in the phase II to have... You know, where you have the conviction that the phase III will succeed? What was the primary endpoint? What did you see on that?
Yeah. So I think this is where I was talking about the design of the studies actually is relevant to this question. So we had patients who came into this study with, and that we had two studies, but in the one that's diabetic peripheral neuropathic pain, patients who had, a lot of them had pretty long-standing diabetic peripheral neuropathic pain. Some of them were already on medications for diabetic peripheral neuropathic pain, like gabapentin, pregabalin, or duloxetine. And we did not withdraw them off of those medications, which you sometimes see where people withdraw the medications, there's a spike in the pain, then you provide the other agent that's being looked at and versus placebo. We chose not to do that. That's not gonna be the way that these drugs get used in the real world.
In the real world, people who are getting benefit from an existing agent are gonna stay on that agent, and you're looking for something additional. So, we had about half the patients who were on gabapentin, pregabalin, or duloxetine, and about half who weren't. They both had a consistent benefit, and we saw statistically significant benefits, and we saw benefits that were consistent across age, sex. We saw consistent benefits across if they were on gabapentin or pregabalin and not. So it's very consistent across the board, and we had significant results, which, you know, frankly, you don't see very often, in neuropathic pain.
Mm-hmm.
On top of which, we had results that were consistent across two different types of neuropathic pain. So we have a high degree of confidence that this mechanism, which we identified using mammalian genetics, is translating to human therapeutic use. And the main thing for us to do now is really to optimize going into phase III for something that we consider to be a really valuable addition, potential addition to treatment for neuropathic pain.
For the Phase II-B, what did you power the study to show drug versus placebo on pain?
So it's basically powered to show the kind of difference that we saw in the proof of concept study. It's with, you know, 80% power. So, and we're looking. Really, the question here is to be able to improve the tolerability, dose initiation tolerability profile. If we can do that, which we believe we will be able to do, and show results that are consistent with the results we've already seen in the proof of concept study, we think this is gonna be a tremendously successful study.
Mm-hmm. Maybe one last question on this one is, pain from phase II- phase III. Any CNS indication, almost any placebo can be a little tricky. So in what ways have you controlled for placebo response?
So first of all, one of the elements of this is these studies that we've done on the proof of concept study and this current study are large studies, so they're not a whole lot different size-wise than a phase III study. So the proof of concept study in diabetic peripheral neuropathic pain was roughly 300 patients. This study is gonna be roughly 400 patients, so these are large, well-powered studies. To manage the placebo effect, one of the things we're doing to manage the placebo effect actually is not withdrawing people from their pain medications. So but basically, taking patients as they are is actually, we think, is gonna end up being a benefit to managing that.
In the proof of concept studies, we had a placebo run-in that was part of the design for that single-blind placebo run-in. Part of the design for that, we're ensuring that patients have. When they come into the study, patients need to continue to have a moderate to severe pain score, so that we can-- but that in itself weeds out some of the placebo patients or placebo-responsive patients. But you are gonna see some placebo effect, and we did, too. I mean, we saw a decline in pain scores during the course of this study. We expect that we'll see that in this study as well. That's part of doing pain studies. That's always been the case. You see it also in pregabalin and gabapentin studies.
Okay. So, to wrap it up, we'll continue monitoring the launch progress.
Mm-hmm.
2023, 2024 timeframe, and then, the pain data comes, first half 2025?
Yes.
Okay, very good. Well, thanks for the updates, and thank you everyone for listening.
Thank you.
Thank you very much.
Thank you.
Thanks.
Thank you. Nice to meet you.