Okay, we're gonna get started with our next session. I'm Andrew Tsai, senior biotech analyst at Jefferies. Thanks for tuning in. It's my pleasure to have Jeff Wade, President and CFO, of Lexicon. Welcome.
Thank you. Really appreciate having the opportunity to visit with you today about Lexicon.
Same. Yep. So maybe for those in the audience who are less familiar with the story, you want to talk about briefly, your pipeline, their indications, and what milestones we can look forward to?
Sure.
What are the next ones?
So first of all, I wanna dispense with the formalities, that I will be making forward-looking statements that are subject to risks and uncertainties that can be found in our SEC filings. But let's talk about what's happening now and what we've got going on over the next, basically, about a year. We got approval for INPEFA in heart failure in the middle of last year. We're in the middle of the launch of that. We do expect to have some acceleration in that launch the second half of this year as we bring on board some additional access, which is getting broader access, is gonna be an important part of that launch within heart failure.
The profile of the drug, INPEFA, is a dual SGLT1 and SGLT2 inhibitor, and we have really remarkable data in heart failure, with data that's distinguished by having a 50% reduction in 30-day readmissions, a number needed to treat of four, which is really remarkable in cardiovascular medicine. And then also data from the overall studies that showed a reduction in myocardial infarction and stroke, which you don't see with SGLT2 inhibitors. So that's one part, and we expect to see that launch trajectory start to inflect later this year. The second part is talking about what we're doing with sotagliflozin outside of that, one of which is a near-term commercial opportunity in Type 1 diabetes.
Specifically, we're about to resubmit our NDA for Type 1 diabetes and heart failure. This is one of a couple of different things I'll talk about with respect to sotagliflozin that is tied into the strategy that we're pursuing, which is to pursue indications where SGLT2 inhibitors aren't indicated and won't be, and also where the inhibition of SGLT1 provides an advantage. Type 1 diabetes falls in that category because SGLT1 reduces postprandial glucose excursions, and that's an important element in managing Type 1 diabetes. So that's something that we're expecting to resubmit around the middle of this year, so very soon. And it's a resubmission that we expect will have a six-month review, and so is a near-term commercialization opportunity for the company.
The last thing about sotagliflozin is another study that's about to kick off that we expect to start enrolling patients around the middle of the year. It's in hypertrophic cardiomyopathy, and it's a program that last year we went with to the agency with some data from our overall heart failure program, looking at patients who had left ventricular hypertrophy, but wasn't caused by hypertension, which is the primary cause of left ventricular hypertrophy. So this is a patient population that almost certainly includes some undiagnosed hypertrophic cardiomyopathy patients and other people who have that same kind of of phenotype.
The data that we had from the large study showed a reduction that was even more significant than in the overall patient population in terms of cardiovascular death, heart failure events, myocardial infarction, and stroke, but 50% or more reduction in events. So we talked to the agency about a way to get a specific label for HCM, you know, leveraging that data, but also getting data in that specific patient population. So we have a phase III study that's getting ready to start here. As I mentioned, we'll start enrolling patients in the middle of this year.
That is a 500-patient study looking at both obstructive and non-obstructive HCM, with a KCCQ primary endpoint, that we expect to enroll in about 18 months and to get data in 2026. So another opportunity for sotagliflozin. The other significant event for us that's going on right now is that we're enrolling patients in this 400-patient phase II-B dose optimization study for LX9211 in neuropathic pain, and this study is specifically in diabetic peripheral neuropathic pain. This is an asset that really foundation is in mammalian genetics, which is rare in pain, that you have that kind of scientific foundation, and that we've shown promise in multiple types of neuropathic pain models.
We did two proof-of-concept studies that read out favorably in diabetic peripheral neuropathic pain and postherpetic neuralgia, placebo-controlled studies, importantly. And we're doing this dose optimization study that is enrolling patients right now. This enrollment is going very well. We're expecting to finish enrollment this year, and we expect to have data from that program in an area of tremendous unmet need in the first half of this next year. And then the last is we recently announced a development candidate that we're advancing in obesity, chronic weight management, that inhibits a novel target called ACSL5, where we've shown a reduction in body fat with no effect on lean body mass, and also improvements in triglycerides and cholesterol, and other elements that are relevant to metabolic syndrome.
That development candidate is going into IND-enabling studies, and we expect to be able to move that into the clinic within about the next year. So there's a lot going on over the next 12 months here at Lexicon.
Right. Okay, very good. Before we dive into each program, you know, there was a recent news that CEO Lonnel is retiring. So where are you in the CEO search, and what are you looking for in the new CEO?
So that search is ongoing.
Mm-hmm.
Lonnel is retiring on his tenth anniversary of the company, on July 7th. We are doing a search, and our board is doing the work to evaluate internal and external candidates, and hopefully, make a decision in the relatively near future.
Near future. Okay. And so let's talk about the heart failure launch because that, you know, the inflection could perhaps be a catalyst- for later this year. Remind us what sales were in first quarter, and how does that cadence or curve, how could that evolve in Q2, Q3, Q4?
Sure. So we had a little over $1 million in net sales in the first quarter. We're expecting that to grow during the course of this year. But really, what is required to get the real inflection there is to have broader access. And the context for this is we have about overall 40% coverage, but a lot of that is subject to step edits before we contract. We've been working with payers who do recognize the value and the differentiation of INPEFA, and we're negotiating now on a normal bid cycle for 2025, and we expect if the winning bids in 2025 will have, and we don't already have access, we'll have that pulled forward this year.
The 40% roughly covered, a lot of that's subject to step edits. So, among the 30, a little over 30% that we have in commercial lives, a little over 10% are not subject to step edits. So removing that utilization management is going to be one of the priorities. So it's a little bit about expanding coverage, but it's also a lot about removing utilization management, and we believe we're making good progress in discussions with payers, who, as I mentioned, do recognize the differentiation and value of INPEFA.
Mm-hmm.
And that is having broader access and without utilization management is gonna be the key to really being able to inflect that launch going forward.
Can you quantify or provide range kind of?
So we're not providing guidance. We haven't provided guidance for this year, which is still, we're still in about the first year of launch. But we do expect that that access environment to improve very significantly and therefore to be able to really open up the opportunity to expand the net sales.
Right. There are existing SGLTs in the market, so remind us how Sota or INPEFA is differentiated?
Yeah.
Any aspects of the label that you can?
Sure, sure. So, one aspect of the label is the mechanism of action. INPEFA inhibits both SGLT2, like Jardiance and Farxiga, which are primary competitors, but it also inhibits SGLT1. And SGLT1 is expressed in the GI tract, where it's a primary transporter for glucose uptake, but it's also expressed in the endothelium and in the heart. You go back to, like, human genetic data, people who have reduced function mutations in SGLT1 have a lower rate of heart failure. So there's evidence from human genetics, from preclinical models, from mechanistic models, and on through to our data, and the data are distinguished in a couple of characteristic, couple of ways. One was we had a study that was initiated in patients in the hospital.
We have a very early onset of effect. Patients who were initiated in the hospital or upon discharge had a 50% reduction in hospital readmissions. There's no other SGLT2 inhibitor that's shown any effect on 30-day readmissions, so that's distinguishing, and that's in a patient population that is in very much need of intervention, and it's important to the healthcare system too, because hospitals are evaluated on 30-day readmissions. So that's one element. The number needed to treat of four is to avoid one event of... So treat four patients for one year to avoid an event of cardiovascular death, hospitalization for heart failure, or urgent heart failure visits. That's distinguishing. That's the, that is a you know, pretty much unheard of number needed to treat in cardiovascular medicine.
As I mentioned, we have reduction in cardio, in myocardial infarction and stroke hadn't been seen with SGLT2 inhibitors. So those are the key elements that, within our current indication, distinguish-
Mm-hmm
... sotagliflozin and INPEFA from our competitors.
Mm-hmm. What would you say is the peak sales opportunity for INPEFA?
We think it's very substantial. It's a big market. There are about 7 million people in the U.S. who have heart failure. That's expected to grow to over 8 million by the end of this decade. At this point, you know, we're talking about. To give you some context, you know, Entresto, which has a relatively modest share of heart failure scripts, is a billion-dollar drug per quarter in the U.S. So this is early in the adoption curve for SGLT2 inhibitors, and it's really, it's Jardiance, Farxiga, and INPEFA are the approved drugs for heart failure. We think that the opportunity is quite significant.
We're included in guidelines and including specific reference to INPEFA, and we think that the opportunity is quite significant, but still early in the adoption curve for that indication.
Makes sense. Okay, and so we'll wait until payer access eases. Sales should inflect later this year.
Yeah.
So, moving on to your Type 1 diabetes program, you're filing. Is it considered an NDA or sNDA shortly?
It's an NDA.
NDA.
It's actually, the NDA is on file. We're resubmitting it-
Right.
... for Type 1 diabetes.
How many months... Let's just say you submitted, how many months until approval?
We expect it to be a six-month review cycle.
Okay. And how confident are you in an approval at the end of the day?
So we feel pretty positive about this, and maybe a little bit of history would be useful. So, the drug was tested in the largest ever phase III program of an oral adjunct to insulin in Type 1 diabetes. We had a total of about 3,000 patients in the study. The studies themselves were highly successful. We had, on the primary endpoint, which is an A1C endpoint, but also basically all the secondary endpoints. We had favorable measures on some elements of safety, including things that are important, like severe hypoglycemia. But we did have an incremental risk of diabetic ketoacidosis, and that's the reason why we got a... When we sought approval for this originally, we got a complete response letter.
And subsequent to that, because we did believe that the benefit risk was favorable, we appealed that decision, and it's been going through the appeals process for some time. When we were going through, there's been a lot of change between then and now. One of the things is we think that the evidence around the risk of diabetic ketoacidosis has been evolving. One of the things that was interesting to us is when we were going through the heart failure approval process, the agency took out the limitation on Type 1 diabetes that we had in our draft label, and that made us think, "We probably need to go back and have a discussion on this.
Maybe their views on this are evolving a bit." The second piece is that we generated a tremendous amount of data in Type 2 diabetes patients that showed the benefits that we're leveraging now, and benefits on heart failure, reduction in MI and stroke, reduction in progression of chronic kidney disease, that's relevant. It's a different patient population, but still relevant to benefit risk. And at the same time, there's been additional data that's come out in the interim that demonstrates following Type 1 diabetes patients, showing the importance of better glycemic control in patients who have Type 1 diabetes and chronic kidney disease. So people who better manage glucose are gonna have a slower progression of chronic kidney disease.
Type 1 diabetes patients who have poorer management of glucose have much more rapid progression. So all of these pieces of data have come together and allowed us to address one of the options that the FDA gave us on the complete response letter, which was a patient population that has a better benefit. It's a greater benefit, it's in terms of benefit risk.
Mm-hmm.
So, after we got the approval in heart failure, we went back to the agency in the context of the dispute resolution procedure that we had ongoing and talked to them and said, "We have an idea about what- how we might be able to satisfy that concern." They asked us for some supporting data, which we provided. They agreed that this made sense for us to go back and talk to the division, which we did. We had a couple of Type A meetings with the division to really hone in on, you know, basically providing data, answering questions, and really refining what population would be the right population to resubmit for. Following that, we got to an alignment around what would be appropriate for us to resubmit for. That resubmission is coming soon.
Okay.
Because of this ongoing dialogue that we've had, and because of the strength of the data that we have from the very beginning, all the way through this process, we feel pretty confident about the opportunity here.
Right. And so let's just say it did get approved around year-end. You launch it in 2025. Should we expect an acceleration of an acceleration, basically? Because heart failure scripts should accelerate later this year.
Yes.
Then you have Type 1 diabetes coming after.
Yeah, I think. Well, there's a couple of different aspects. So in heart failure, we're in a competitive marketplace, and this would be, like, the first and only oral adjunct insulin. And patients in our studies really loved the drug. It addresses a lot of the key unmet needs for people who have Type 1 diabetes. And payers don't manage Type 1 diabetes very tightly.
Mm.
We think that being able to get access and being able to get prescriptions written and get adoption is likely to be pretty rapid in Type 1 diabetes. The patient population is extremely engaged in their own care. They have to be. And we provide this drug has shown benefits in the clinical studies that really translate to some of the things that are important to patients. So we think this is an opportunity to have a quite significant market opportunity for us.
And why wouldn't Jardiance, Farxiga guys just follow suit?
I don't think they will. I mean, they're late in their life cycle. We have two advantages in this regard, in this subpopulation, Type 1 diabetes with chronic kidney disease. One of them is that we had the largest-ever phase III program in this. We had 3,000 patients in our Type 1 diabetes phase III program. The second is that as kidney function declines, so as chronic kidney disease progresses, the ability of an SGLT2 inhibitor to provide glycemic control declines. So lower kidney function, the less A1C benefit that a SGLT2 as a mechanism is able to provide. However, SGLT1 is completely independent. The benefits associated with the SGLT1 inhibition are completely independent of kidney function, and so they are preserved in patients who have chronic kidney disease.
Mm.
So we think that both from a mechanistic perspective and from the size of the population perspective and from the point in the life cycle, that this is gonna be the only one that gets approved.
Got it. And so, INPEFA is also now going after HCM. You're starting the phase III data in 2026. So what would be the pricing strategy be, because you have three distinct populations also?
Sure. So I guess one thing is, what's known for sure is that we intend to pursue a separate brand for Type 1 diabetes-
Mm.
... that and a separate label because the risks and benefits associated with that patient population are quite different. And, we think that the pricing is likely to be differentiated in that for that use in that patient population. We'll establish that later for HCM. You know, we think that the pricing is likely to be from a wholesale acquisition cost perspective is likely to be similar in HCM as it is in heart failure.
Mm.
So it'll be a disruptive opportunity. But, you know, ultimately, we'll make that decision as we get closer.
Right. And you have 150 sales reps for heart failure. How many more do you need for each additional indication?
So, those 150 sales reps that we have for heart failure, they're cardiovascular specialty reps who are addressing a total audience of about 6,000 cardiologists, and that represents about two-thirds of heart failure scripts written. Concentrated more heavily on about half of that group, but in general, covering that 3,000, that 6,000. In endocrinology and for Type 1 diabetes, there are about 1,000 endocrinologists who are responsible for about two-thirds of the scripts, and about 3,000, so half the number in cardiology, are responsible for 90%+. So it's gonna be a more modest, differently structured, field force. But we're gonna be able to leverage a lot of the commercial infrastructure that we already have for heart failure, so that won't have to be repeated.
It's really gonna be the focused group that's addressing that call point.
Okay. So we'll move on to the pain asset now in the last two minutes. You know, pain has gotten a lot of buzz from the Vertex side. You've shown some phase II data. You're running it. We're gonna get data later in Q1 or Q2?
It's first half of next year.
Right, first half of next year. What would you say... How does your drug compare to Vertex's NaV1.8?
Well, the first thing I would say is we do have two placebo-controlled proof-of-concept studies, so that's distinguishing. The design of the studies that we pursued in the proof-of-concept studies and again in this study and that we'll be using in phase III takes patients as they are. So they're on stable dose. If they are on a stable dose DPNP medication, they can stay on that. So when they come in, we're not disrupting the way they are. They're stable coming into our study. We are not withdrawing them from their existing therapies, which may not be providing adequate benefit, but might be providing some benefit.
So that is a stable patient coming in, and then we're looking at results that are consistent with or without an underlying therapy. That's aligned with how people wanna use these drugs in practice, but it's also aligned with it's basically to be more predictable. 'Cause we're starting with a stable patient rather than withdrawing them from their underlying therapy, which means that their baseline is not reflective of stability.
Right. Their baseline is higher, more room for improvement.
Sure. Yeah.
Yeah.
Even just with the placebo, you would expect a significant improvement if you withdraw them from their meds.
Makes sense. Okay, maybe last 30 seconds, with cash position.
So we completed an offering in March, a $250 million offering. So at the end of this past quarter, we had a little over $355 million in cash. We believe that that runway is going to allow us to get into 2026. And there's potential, you know, given that we have a program that's likely to draw a partnership interest, that it takes us farther than that if we end up partnering LX9211 after this current study.
Very good. Thanks, Jeff, for all these insights. Lots of things coming up.