Good morning, everyone. My name is Carvey Leung, a biopharma associate here at Canaccord. Thank you for hosting a fireside chat with us at our annual healthcare conference. To start, can you please tell us your role to the company?
Sure. Mike Exton, CEO of the company. I've been with Lexicon for two months.
Craig Granowitz, Chief Medical Officer.
Tom Garner, Chief Commercial Officer, and I'm coming up on my one-year anniversary here at Lexicon.
Congrats! All right. For those who aren't familiar with the story, maybe you can give us an overview of the company and your business plan.
No, absolutely, it's a pleasure. So Lexicon, you'd be surprised to know, is nearly three decades old. And interestingly enough, it commenced its life as a genomics company. And around the turn of the century, when the human genome was being described, it had the audacious goal to generate 5,000 knockout mouse lines of 5,000 genes of interest and see what happens. And from that sort of 10-year period, it has evolved significantly, initially into a drug discovery company, which developed some lead assets for various targets that it had described. Then secondly, more recently, a drug development company taking our medicines through clinical development, and then most recently, as a full commercialization organization. So we have medicines that are both commercialized as well as in development.
In fact, we have, in a way, a three-by-three portfolio. We have three important medicines that are in development or on the market at the moment, and each of those has three unique indications, so we have small molecules that represent a pipeline and a pill opportunity for a number of patients across cardiometabolic and neuroscience therapies.
So Mike, you've been the new CEO for two months now. What are your most immediate priorities? How do you plan to do things differently?
Look, when I first came on board, the most immediate priority was to look at all of our opportunities across both commercialization and discovery and development, and really ensure that we were focusing our resources appropriately. We had a lot of things going on, a lot of exciting opportunities for the company, and yet, as a small company, we needed to be focused. And so we immediately developed what we're calling the Lead to Succeed strategy, and that is really making sure that we're playing in therapeutic white space, in areas where there's little or no competition, in areas where, for decades and many years, there's been no innovation, and so patients are really crying out for these medicines.
And so making sure that we're focused in on delivering value for patients where there has been no innovation for some time, gives us a leverage and a competitive advantage to make sure that we can take that all the way through commercialization and be successful as a company. And then following that reorganization, we now have a series of catalysts that are really going to be transformational for the company moving forward.
Great. And at your last earnings call, you talked about progress in INPEFA's launch. Maybe you can share some of the highlights, the latest updates.
Yeah, sure. All right. So maybe at a high level, INPEFA in heart failure was one of those decisions that we made, when we looked to focus the company. Heart failure is a very competitive space within the SGLT class, and, we felt the need to refocus some of our energy into type 1 diabetes and hypertrophic cardiomyopathy. But maybe, Tom, you can talk us through the progress so far.
Yeah. So we continued to see kind of modest growth for INPEFA. As Mike mentioned, you know, as we think about circular flows and as a whole, INPEFA was our first indication, and we've built a commercial infrastructure that is now working well to support the launch of that product. And we'll now be leveraging that skill set and those tools that we've already developed to make sure that as we look ahead now to the Zynquista launch, which is right around the corner, that we're leveraging that in our favor as well. We still believe in the long-term value of the heart failure marketplace.
Obviously, it's a very significant opportunity for us in the long term, especially as we think about the bridge from heart failure to hypertrophic cardiomyopathy, just given the fact that the cardiology community that treats heart failure is largely gonna be the same that treats HCM as well. So we definitely see INPEFA as a long-term growth opportunity within heart failure, but our near-term focus from a commercial point of view, for the time being, will now be readying, you know, the best-in-class launch that we're planning for Zynquista.
Great. To narrow down, can you talk about the main competitive advantages to this product? What strategies are in place to maintain and strengthen its market share?
For INPEFA, I mean, the first thing I would say is the product's unique. We are the only approved SGLT1 and 2 medicine versus the, the SGLT2 only products. And we still believe in the profile of INPEFA very strongly for, for heart failure. I mean, Craig and the medical and clinical teams have continued to generate new data that supports the use of this product, both in heart failure across both HFrEF and HFpEF, and then looking to the future with HCM as well.
So we think just given where we are in the life cycle of this product, which is very early on in comparison to our competitors, we have a tremendous runway ahead of us, which then goes back to the strategy that Mike has mentioned in terms of the pipeline in a pill approach and the Lead to Succeed strategy that we have for each of the assets that we have in development.
I think it's important for Craig to comment on HCM and how that relates to what we've already observed in HFpEF.
Yeah. Again, I think the strategy overall is unique mechanism, unique data, unique indication. I think that's been the consistent theme throughout, and I think the issue that we've seen with SGLT1 and SGLT2 is that SGLT1 is expressed in the GI tract on endothelial cells, platelets, and in the myocardium. And that's why we believe is the foundation of why we are pursuing the types of indications that we're pursuing. But to go back in the heart failure area, to Mike's point, is that we believe that because of the SGLT1 expression in the myocardium, that it's going to be an inherently better drug in heart failure than just SGLT2 inhibition. Similarly, the fact that there are SGLT1 receptors in the GI tract, we're gonna be an inherently better drug for treating type 1 diabetes because you're flattening the glucose uptake curve.
We also believe that in that regard, the benefits in stroke and MI in reducing the stickiness of platelets and endothelial cell is we are the only SGLT that has a reduction in both heart failure endpoints and stroke and MI endpoints. Going back to the heart failure and the HCM, we've presented data on this point already, and this was some of the data we brought down to FDA as the underpinning of why pursuing indication in HCM, both obstructive and non-obstructive, is that if you look in a group of patients out of our large heart failure program, there were several hundred that had left ventricular hypertrophy and normal blood pressure. Now, the most common reason for having LVH is hypertension, so you have to come up with a reason beyond it being hypertension.
So that was a great group that models what an HCM patient would look like, which is largely a diastolic dysfunction. And what you see in that group is a 50% reduction in heart failure events with sotagliflozin and a 50% reduction in stroke and MI. So first of all, those are unprecedented numbers in a group that is very similar to an HCM group. And when you couple all of that together with the SGLT1 effects on myocardial energetics, and you think about HCM as ultimately an energetics issue, right? You have a hyperactive myocardium, and that's how the CMIs work and some of the other drugs. It was a perfect fit to try to pursue that as a single phase III enabling study with a very broad population of both obstructive, non-obstructive, with an EF down to 50% in a drug that prevents heart failure.
That would be a perfect fit in that unmet need.
Great. As INPEFA gains momentum post-launch, what are the next critical milestones that you aim to achieve in terms of sales, market penetration, geographic expansion?
Look, I think it's important for us now to really refocus our efforts on Zynquista, on our opportunity for type 1 diabetes. We have a little catchcry in the company, which is nothing new since 22, that's 1922 . Because really, for type one diabetics, apart from reformulations of insulin, there's been nothing for glycemic control in over a 100 years, and sotagliflozin has the opportunity to be the first and only adjunct therapy to insulin. Now, that is not only incredibly powerful for patients who are in desperate need of glycemic control, to prevent sequelae such as MI, stroke, renal dysfunction, neuropathies, et cetera, but also from a commercial view, this reflects our Lead to Succeed strategy, where really we will be the first and only medicine that will be approved.
It allows us a free runway into this patient group, and that's what we're focused on going into the AdCom in October.
Great. Ad Com, and then you have PDUFA coming up in December. Maybe you can talk about how big the market and how big is it-- would it be for Zynquista?
Yeah, great. Maybe Tom, you can comment on the market, and then, Craig, talk a little bit about the process leading up to the AdCom.
Sure. So, let me start by saying the commercial team will be ready for a launch in early Q1. I can tell you there's a significant amount of energy being poured into launch preparation, as you would imagine. It's a very significant opportunity, and to Mike's point, it's largely untapped because remember that there has not been any approved adjunct to insulin ever. So as we think about kind of that white space opportunity that Mike mentioned at the beginning, I mean, this really is kind of the poster child for that. So we're really excited by the opportunity. We've had a ton of engagement with the clinical community already, with the advocacy community.
We started initial discussions with payers, and we're really excited by the fact that we're already appreciating that the dynamics that we're gonna face with T1D are gonna look very, very different to what we faced with heart failure because there isn't any competition, and I think there is a recognition already of the unmet need that these patients face. So we do anticipate quicker access. We actually anticipate better access at, you know, better GTNs than we have to kind of pay down from a rebate perspective, as you think about T1D versus heart failure. The other thing that we are really focused on as a company is making sure that patients have good, equitable access very early on, and we appreciate that the co-pays for the T1D community in particular, given that they're already on background insulin, are really gonna matter here.
So we are gonna be pushing very, very hard for preferred status from the very beginning. So, we're excited by the opportunity, and the team is gonna be ready to go.
Great. Uh-
Of course, we need to get through the AdCom first, which I must say we're very confident in the developments that we've had since the CRL in 2019, and, Craig, maybe talk about the preparation that's gone on there.
Yeah, you know, FDA has always been very supportive of trying to develop adjuncts insulin for glycemia. And I think we've seen the limit of technology for insulin, and that it still comes up wanting. So even with all the devices, continuous glucose monitoring, long-acting insulins, up to and including once-weekly insulins from some of the biggest insulin players that have been in this field for decades, if not all the way back to the early 1920s, insulin alone is not enough. The vast majority of patients with Type 1 diabetes do not get adequate glycemic control, as measured either by A1c in the target range, which is around seven, or time in range, which is the number of hours per day between 80 and 180 mg/dL of glucose. FDA has recognized that.
In the last five years, what also has changed is that the health consequences Mike already mentioned of not having tight glycemic control are not only microvascular but macrovascular. So what you've seen is a recognition of the tremendous risk that after three decades, two to three decades or more of Type 1 diabetes, these patients are at extraordinarily high risk of end-stage kidney disease and end-stage heart disease, both heart failure, stroke, and MI. So it's not only the loss of your vision and your neuropathy, which seem to be microvascular related, these are macrovascular-related diseases. So all of that has come together, and what FDA asked us is, they said, "Look," when they gave us the CRL, just like everybody else, they said, "Find a path forward." You got two paths. One is lower the risk of diabetic ketoacidosis.
The other is find a patient population where that benefit of the ketoacidosis or the risk of the ketoacidosis is outweighed by the benefit, and so we did the latter because, with the former, the rates of DKA are really low. You're talking about three cases per 100 patient years. To try to do a clinical trial in a statistically significant way to show an intervention to reduce that is essentially not possible, but we found a group of patients, and I think it's an important distinction that we are not treating kidney disease with this. We're using the patient with kidney disease as a marker of a high-risk patient. Like cardiovascular disease, secondary prevention is someone who has had an ACS event or has had a stroke, right? That group of patients is extraordinarily high risk.
In that group of patients where you know glycemic control is really important, that's the group that we've honed in on, and we've had a lot of engagement with the FDA. And I can tell you that FDA would not have even accepted our file if they didn't think this was a reasonable thing to look at. So we've had a lot of engagement. We're really looking forward to the advisory committee because I think it is important for us, the general public, and the FDA to have an open airing over a full day of all of these issues, get the patient and the community voice in this and their perspective of unmet need, and we're really looking forward to a robust interaction with the agency on Halloween night, October 31st.
Great. So heading into the AdCom, how has your team prepared for this, you know, big day? Do you guys have everything in place, or is there more work to do?
They're on fire, I have to say. You'll be very humble, but look, it's a very quick turnaround, honestly. And despite that relative pace or relative speed we've needed to adjust to, everything is well on track. And I'm really impressed with the team cross-functionally in how they're preparing. And we're really going to look forward to the first marks that we'll have and preparing to turn up to the FDA and really show our case.
Great. Assuming it goes well, and you guys get the product approved- You mentioned it will launch almost immediately.
Mm-hmm. Yeah, we are planning for a Q1 launch. Obviously, the PDUFA is December 20th.
Right.
So we will hopefully just give the team a chance to have Christmas off. But come the new year, we will be coming at this full steam ahead, and the plan is to go with the team that we already have, that we've already mentioned. So they will then shift their focus from INPEFA to Zynquista, and we've already kind of reoriented the sales structure and organization to be focused on the 4,000 endocrinologists that we believe are gonna be using this product from the very beginning. So excited to get that out there, and I think it would be remiss of me just not to mention the commercial leadership team that we have in place. They have a ton of launch experience.
I've lost count of how many launches across the entire team we've been part of, but it's significant, and that gives me great confidence that the approach that we're taking here for Zynquista will be the right one to really drive this launch in the way that we expect.
So now my question would be pricing? Since it shares the same active ingredient as INPEFA, so how will it be priced?
Yeah. So we haven't yet fully landed on, you know, a price. What I would say is that we anticipate that the WAC will probably be fairly similar to what we have for INPEFA, but this will be under a separate IND. It's a separate NDC code, so, you know, that gives us some latitude as well. And as I mentioned a few minutes ago, we've already started early engagement with payers, and I think that they recognize that there is gonna be a premium that they're willing to accept for this, this group of patients versus heart failure, just given some of the dynamics that have already been set in the heart failure marketplace, which Mike mentioned earlier on.
So we feel good not only about kind of how we're coming to market in terms of market access, but also the early signals that we're getting from payers as we've started having those discussions.
It's the benefit of being the first and only. In fact, that's the cornerstone of our Lead to Succeed strategy, and it makes sense for us as a small company commercially to play in those places where we can get favorable access, bring innovation to patients quickly, so.
Great. Back in August, you announced a resource refocus plan. Maybe you can walk through the details, including the programs that were advanced and which were not.
We fully invested in all of our R&D programs. That's ongoing, and there was no halt to that. It was really very much focused about our commercial footprint and refocusing our efforts for Zynquista launch. And so that resulted in approximately 70 people in the field, unfortunately, no longer being with us. But what we did is retain a very good sales force, ready to go, ready to launch Zynquista at the end of the year, beginning of next year, and they're hyper pumped to really get into this market where they know they're going to bring a meaningful difference to patients.
Switching over to your clinical, regarding the pivotal HCM study, how many additional patients could potentially be added to sotagliflozin's addressable market?
For HCM?
Yeah, yeah, for HCM, so HCM is an interesting space. Obviously, over the last few years, I think it's really kind of ballooned in terms of interest as we've seen the launch of the CMIs. If you look at kind of the overall prevalent population, if you look across both non-obstructive and obstructive HCM, and there's estimated to be around a million patients in the U.S. Now, the challenge is identification of those patients, and I think when you start taking those cuts, you're probably talking about half of that number that is potentially already identified.
I think if you look to where we will be as this data reads out and we potentially launch, obviously there is a significant amount of investment being placed in terms of appropriate identification of HCM patients, and I think we'll be able to piggyback onto the back of that. And then, as you think about the profile, you know, we will have a product here that is well recognized. SGLTs are used very broadly across the heart failure community already. They're seen as safe, they're seen as cost-effective, and as you think about the white space that exists between beta blockers, calcium channel blockers at the start of treatment, all the way through to CMIs, we believe that that white space that sits in between the two will be an area where we can play, either in combination or as a monotherapy treatment. So as y ou know, we're excited by the opportunity that we have here.
And, when can we expect data from the phase III, and, would it be sometime next year?
Study is open now and enrolling. We're opening first in the United States with 30 sites, and we'll ultimately be in 20 countries and 120 sites. Trial is targeted to be 500 patients, 250 each of obstructive and non-obstructive, and we're looking to enroll the trial in about 18 months. The good news, again, is that trials are relatively short, and our endpoint is really a very straightforward, simple one, which is the KCCQ-CSS score, which, again, we don't have all the issues of CPET. We don't have to go out for 52 weeks like the other trials, and a lot of the other accompanying laboratory and diagnostic and radiographic testing.
So we believe that we should have data in the first quarter of 2027, which really wouldn't put us far behind some of the other agents that are in development for non-obstructive HCM. And again, I think it's important to stress that we are seeking in a single indication, symptomatic patients with both obstructive, non-obstructive disease, with an ejection fraction down to 50%, whether or not they are on an underlying therapy, including CMIs.
You're also developing LX9211 in diabetic neuropathic pain. Maybe you can talk more about this phase II-B study.
Yeah, absolutely. So, before I do that, just let me sort of summarize what you heard firstly for sotagliflozin, because it's part of the three-by-three, lead to succeed strategy. So for sotagliflozin, we've got three major indications: heart failure, type one diabetes, and HCM. Likewise, for 9211 , we have three indications, three areas that this, medicine will be, investigated for: neuropathic pain, postherpetic neuralgia, as well as spasticity. So it's going to be a very large program, but specifically to 9211 and the PROGRESS II-B trial, it's going incredibly well. Craig, your baby, you, you describe how it's going.
I think overall, we've taken it just like we're doing with HCM, a pragmatic approach consistent with clinical care. And the feedback we've gotten both on the HCM trial and the PROGRESS II-B trial is that this is a trial that is easy for them to enroll. We're not asking patients to stop underlying therapy, and I think that's particularly important in neuropathic pain, where most programs, including those that are in phase II now, force the patients to get off of their underlying DPNP medications. And I think that really makes the studies less appealing to participate in, and I think it also complicates interpreting the results of the trials, because when you stop the underlying therapies, the pain score goes up.
And I think that when you're looking at change of pain score from baseline, you have an artificially changed baseline when you stop the underlying therapies. So I think with that in part, the enrollment of the trial, we have 110 sites open, all in the United States. The study is actively and
Obesity, weight management for hyperlipidemia, as well as for NASH. So we're seeing very exciting preclinical data for this particular asset. Some notable observations is it's obviously a oral therapy, which is how the field may progress in the future. But also, early indications show that we're getting preservation of lean body mass, which is clearly an issue that has been debated within the obesity world. And importantly, this is a non-incretin mechanism, and it's a completely novel mechanism. And while there's a lot of excitement around GLPs and other incretins, there are not that many mechanisms which are independent and additive to the effects of GLP-1s and other incretins. So, you know, we're incredibly excited about that program.
Like the other assets, it came from a target developed all those years ago at the turn of the century. Of course, like many companies in this space, we see a lot of external interest for that particular program.
Great. So you have a lot going on at Lexicon. Is there a particular project or therapeutic area that you are particularly excited about?
Oh, so many. Look, I think it's important for the external community now to really look towards our AdCom and the PDUFA on December 20. They're the near-term catalyst. We feel very confident now, as Craig mentioned, all the reasons to believe, and we're excited to really have that demonstration publicly of the value that we're going to bring for Type 1 diabetes patients and nothing new since 2022, this will be the first time, and then beyond that, of course, the readout of the PROGRESS II-B study is going to be transformational. We think that puts us in an incredible position to both develop out the development program further across other indications, as well as look towards an accelerated approval pathway for the asset with the FDA.
Yeah, and I think the other one is bringing our 9851 into phase I by the middle of next year. So I see really three major inflection points in valuation on three different assets. One would being, as Mike mentioned, the advisory committee and the PDUFA date at the end of the year for sotagliflozin in Type 1 diabetes, unique. PROGRESS study is, again, readout for second quarter next year, unique in neuropathic pain with a rapid pathway into phase III, and then bringing the weight management asset into human clinicals in the middle of next year. So I think there are really three very interesting opportunities that have very different value drivers.
Great. Looking ahead, what's your long-term vision for the company? How do you see the company evolving over the next five to ten years?
Look, I think we will be a development and commercialization engine. I think we see a mix of assets that we will commercialize ourselves, as well as other assets and geographies that we will partner, depending on the mix that we have, and that then provides the opportunity to continue to drive discovery, and potentially even with a grander vision of looking externally for external innovation to bring into the company as well, so as we said right at the get-go, the next six months is really pretty transformational for the company, in many ways, not only for the short term, but really in that five-year vision, so we're looking forward to it very much.
Fantastic. I'm gonna open the floor to see if there are any questions. Yes.
Yeah. Take that, Craig.
So, it is a pathway called ACSL5, and it really is very much involved in the production and degradation of lipids, and it really is clipping off that two-carbon fragment off of a lipid chain, or is the first step in manufacturing new triglycerides. So that's why it's both in the gut, and it's in the liver, the two areas where you're really packaging and reprocessing lipid. In this regard, we don't know of any other compound that is targeted to this particular enzyme. And in that regard, what we're seeing in the animal models that we've done is the weight management aspect, and as Mike mentioned, there's really an issue on lipids, and you don't see development of plaque in the coronary arteries of susceptible animal models, and you see a rapid reduction of liver fat.
We think those three are all related in a way that you don't see with the incretins. I think the pathway on satiety is something that we're continuing to explore, which is this mechanism called the ileal brake. In humans and in animal models, what you see is, in a fed state, there are signals that go to the brain, separate and apart from the incretin system, that slows down the GI tract and gives you those signals both in the gut and in the brain of satiety. We think that's why we see in the animal models incremental effects above and beyond semaglutide in those animal models of weight loss.
Yeah, so we estimate there's around 400,000 patients in the U.S. who probably fit within our targeted label population. T1D patients, again, are very different to heart failure patients. T1D patients have been living with Type 1 diabetes for a very long time, and they're very well educated in terms of disease progression, time in range, you know, how they need to manage their insulin.
We believe that with the profile of the drug that we'll have here, in being the only adjunct to insulin that improves glycemic control, that this is something that patients will actually be pushing for quite quickly, and this is actually something we've heard directly from patient advocacy groups already, especially as we prepare for the oral hearing, that they actually want to be part of this conversation because they clearly see the unmet need and the need for a product like this to be available.
All right. We're at the top of the hour, so we're gonna end the conversation here. Thank you so much for having us.
Thank you.
Thanks so much. Pleasure.