Okay, good morning, everybody. For those of you who don't know me, my name is Mike DiFiore. I'm one of the senior biotech analysts at Evercore ISI. Welcome to the third day of our healthcare conference. I have the pleasure of hosting the management team of Lexicon Pharmaceuticals. With us in attendance are Mike Exton, CEO, and Craig Granowitz, CMO. Gentlemen, welcome. Thank you so much for making the trip down here.
Yeah, pleasure.
And for spending some time with us. But listen, before we kind of delve into Q&A, I would love to kind of hear your thoughts on highlights of the business and what we could look forward to in 2025.
Yeah, great. So it's been an interesting time at Lexicon over the last couple of months, obviously, with the AdCom, for Zynq uista, and the recent decision to stop our commercial activities because of the expectation that we'll receive a CRL, and to really pivot towards our strong pipeline, near-term and longer-term pipeline in both HCM and neuropathic pain, diabetic peripheral neuropathic pain, which have, as you know, next year a readout in Q1, accelerated that trial into Q1, which will be a really important readout of the phase II-B study in diabetic peripheral neuropathic pain, and continuing our IND enabling work for 9851 in obesity. It's a non-incretin mechanism, complementary, supplementary to GLP-1s. We see the activity in submitting that IND mid-2025, so really the focus now on executing those development programs with excellence and bringing value.
Got it. Thank you for that, Mike. So just to get this out of the way, so I mean, now that you're in the process of restructuring, what's your cash burn rate look like? What's your runway look like? And are you going to operationalize things?
It's, in a way, the unfortunate upside of having to restructure is we extend our cash runway pretty significantly, and so now we have cash well beyond the end of 2026, which allows us, as we said, to double down, focus on our development plans, execute them, and look to supplement the post-phase II-B with starting up what the either open label extension for 9211 and potentially into the phase 3 program.
Got it. So kind of drilling down on 9211 for DPNP, again, you have your phase II-B reading out relatively shortly, the first quarter of next year?
First quarter, yep.
So for folks not too familiar with the story, kind of just briefly review the design and what we could expect based on prior data.
Yeah, great. Craig, I'll let you take that one.
Yeah. 9211 is a reuptake inhibitor. So again, a very different mechanism of action than a channel, like a sodium channel blocker. And in that regard, we've demonstrated the activity across a range of both animal models and now two phase II-A trials, both in DPNP and in postherpetic neuralgia. This trial was really designed to do two things. The first was to determine whether that loading dose, that 10 times the first day loading dose that was used in the pilot study, is the cause of most of the dizziness, which is what we anticipated based on looking at the pharmacodynamics that the Cmax was driving the dizziness. And the second was to pick a final single dose to run into phase III. And we believe that the trial is well-structured and well-powered to answer both of those questions.
Got it. Got it. Okay. I know, and this is called the PROGRESS study, correct?
That's correct.
That's okay. So what effect size, if you haven't disclosed it, if you can disclose it, what's the powering and the effect size estimated to be in the study?
Yeah. Yeah. It is very similar to what we did in the pilot trial, looking at a placebo-adjusted reduction of 0.6 to 0.7. We've controlled the Type 1 error at 0.05, and the power, at least as initially powered, was similar to the pilot study at 80%, but we significantly over-enrolled the trial, and the power will be commensurately greater than what was initially anticipated with an enrollment of 416 as opposed to an enrollment of 494. I'll just give a bit of context in that the trial design was so favorable from the medical community and all the sites participating. We enrolled the trial a couple of months early and over-enrolled by over 80 patients in the study, and the reason the over-enrollment was so large is that we did not want to cut off anyone who entered the screening phase.
There were so many patients that were entering into the trial that we ended up with that level of over-enrollment.
Yeah. And I'm sure, not taking it ahead of ourselves, but that'll probably influence your plans and the strategy for a larger phase 3.
The phase III, you know, again, based on the effect size that we're seeing in our discussions with the FDA so far, is we're really looking at two parallel trials, two arms each, one active, one placebo. Very simplified design. You really only need about 300 patients per arm per trial. You're looking at two parallel trials of roughly 600 patients each. The primary endpoint is at 12 weeks. These are not particularly large trials. They're not particularly long trials. We have a lot of experience now running these trials. We're taking roughly the same design in for a third time. Each time we've gotten smarter as we've learned from talking to the study sites and the patients about how to make these trials even better.
Mike, if you don't mind, I would like to put a finer point on the effect size because I think a number of people, in my mind, somewhat erroneously compare across different trial paradigms. And in pain, that's particularly difficult because the effect size is pretty much determined by the way the trial is structured. And if you don't have a placebo control, it's more or less impossible to make any kind of conclusions about what that effect size is. And just to give by way of an example, if you take any meta-analysis of pregabalin, the effect size is going to be about 0.6, 0.7. So that is what the standard of care is currently looking at. And other trials that compare themselves to pregabalin will likely have a placebo-adjusted effect size of 0.6 or 0.7.
Note that in our trial, we are on top of standard of care. This is an additional effect on top of what you're already getting with standard of care.
Got it. Got it. How have you controlled? I mean, this is pain neuralgia we're talking about. How have you controlled for possible placebo effect there?
Yeah, it's a great question, Mike. And again, if you look at our II-A study, we actually did a very good job controlling the placebo effect. And as Mike mentioned, the way that the trial is constructed and how you bring patients in has a large impact on the placebo effect. As Mike was mentioning, if you look across the range of pregabalin studies, and that's the largest number of trials that have been done, the placebo effect, so this is just the placebo effect itself from patient baseline, varies from 0.7 to 1.5. And that all depends on the design. And what we've done in both the pilot and in this trial was we first of all had a longer run-in period. And that then gets out a lot of the variability of the data. The second is by allowing an underlying DPNP medication, you have two benefits.
The first, if you take the patient off their underlying DPNP medication, their pain score goes up, and you also increase the standard deviation or the variance of the placebo effect. The second is two-thirds to a half of the patients in our pilot study were on top of gabapentin. Gabapentin is seen as a more potent drug anyway than pregabalin. So, while in the publication we put out in Diabetes Care last year had the effect size both on DPNP medication or not, and there was a larger effect size when the patients were on or not on a DPNP medication. Since the numbers are relatively small and the study wasn't powered for it, it wasn't statistically significant.
But what you do see is if the patients are on an underlying DPNP medication, the placebo effect is smaller, and the Delta of LX9211 on top of that is also smaller. So we believe we've actually minimized the placebo effect, right? 0.7 as opposed to 1.5. And the variance of the data is much smaller.
That's huge in neurology and pain trials particularly.
Right. And so to put that in context, sorry, you got me excited now and going.
No, please.
If you look at the PHN, I know it's early. If you look at the PHN trial that we did, it was a smaller number of patients. There were fewer patients on DPNP medications just by enrollment. The placebo effect went from 0.7 to about 1.5. And we lost significance even though the point estimate was larger. It was 0.8. But the variance was so much greater that we lost significance. And I think these are the kinds of things, it's kind of the art of running trials in pain, as you've already pointed out, that are really important. I think if those are the kinds of messages that people can walk away from here, really important.
Yeah, no, I didn't appreciate the fact that adding 9211 on top of standard of care really kind of minimizes variability and really kind of minimizes placebo. I don't think the street really appreciated that as well.
It's one of those things, and it's fair. We've been talking a lot over the last six months about sotagliflozin and in heart failure, in type 1 diabetes, and that's taken a lot of attention. Now we have the opportunity that we've refocused to really inform the street on some of these details that really matter when interpreting the pain space and our data in particular.
Got it. I know this phase II-B study is eight weeks in duration, correct?
That's correct.
Just given the chronic nature of pain, I mean, how should we think about possible attenuation of effect or tolerance? And have you seen any inkling of that or no?
If you look at the pilot study, the pain scores continue to decrease throughout the duration of the trial for both the placebo and the drug effect, but the delta between the drug and the placebo continued to be maintained. There's a couple of important elements here. The first is that the registrational trials that are done are only 12 weeks. So that's the standard. That's what FDA and our discussions with FDA have gone forward. And I think other companies that are looking at even pivotal trials, it's 12 weeks. The good news is we've done a five-week runoff. Having that longer half-life, we actually demonstrate even when you're off drug, you're maintaining effect for two to three weeks because that's two to three half-lives before the drug effect continues to mitigate. The importance of that also is that if you stop the drug, you don't get a rebound.
As you know, with a lot of CNS drugs, including pain drugs, when you stop their underlying medication, you get often an overshoot on pain. For drugs that need to be dosed two or three times a day, having a once-daily drug with a long half-life that if you miss a dose, it doesn't cause you to have the fear of pain, which in essence then creates pain by itself, I think is another real attribute that 9211 has that other molecules don't have.
And Craig, I know dizziness is most prominent or notable, I should say, in the pilot study. So aside from dizziness, what's the AE profile look like in terms of what patients could expect?
That was really, and again, the publications out there, that was really the most common adverse event that was seen above and beyond placebo. Remember, you've got a group of patients that are underlying their health status is not great. Anyone that's got neuropathy, they've got generally significant nephropathy and other cardiovascular diseases. But we believe, and we've already talked about this in other settings, that when we look at the blinded data from this trial, the primary reason for running it was if you remove the 10 times daily loading dose on day one, does the dizziness go away? I think we feel pretty confident that the answer is yes, which again, wasn't a huge surprise. You generally don't give a CNS-acting drug 10 times the maintenance dose on day one.
I guess, will that removal of the loading dose kind of sacrifice efficacy?
Again, I think so there's two elements to the efficacy. The first is with any of these drugs, you get a placebo effect. So patients did not drop off the placebo for lack of effect. That was the concern in the trial of why you wanted to get to therapeutic doses so quickly. But if you look, patients didn't drop off for placebo. The second is we know that Cmin is associated with efficacy, and you're achieving Cmin within either one week when you give the 20 mg dose arm or two to three weeks with the 10 mg dose arm.
Got it. Makes sense. In the interest of time, I kind of want to pivot to 9851 for obesity. I know that you said this is a non-incretin, but maybe just elucidate the MOA a little clearer. What's the exact target that we're dealing with here?
Yeah, so this targets ACSL5 in the gut. And importantly, this is complementary to GLP-1s. GLP-1s that we see in our hands preclinically, if you add 9851 on top of semaglutide, you get additional weight loss. If you give semaglutide and then you remove it and then give 9851, you get a continuation of weight loss where semaglutide, as you know, will return back to baseline quite rapidly. And so for both of these reasons, having a potentially oral once-daily medication that gives both additional weight loss on top of the maximal dose semaglutide or as a potential maintenance therapy we see as something that clinically, as this disease state evolves, could be quite important.
But Mike, if I could just comment a bit more on what Mike was saying clinically, from a mechanistic standpoint, there's a really clear MOA on this drug. So ACSL5 is the most important signaling enzyme of creating triglycerides. So basically, it adds this two-carbon backbone onto a growing triglyceride chain. So again, from a mechanism standpoint, you have two areas where you're doing most of your metabolism of triglycerides. The gut, right, as you absorb it from your food, and then in the liver, when you repackage the triglycerides into lipoprotein particles, which then go around the body, that's where the enzyme is found. And by doing that, you are affecting lipid metabolism, which is why you see satiety, you see reduction in liver fat, and you actually see reduction of plaque generation in susceptible animal models, which is all related to lipoprotein modeling.
And also from the triglyceride from your diet, there is a mechanism called the ileal brake, which is when triglycerides get further down in your gut, there is a signal that's sent both hormonally and neuronally that slows your gut down and gives you the sense of satiety, that you're no longer hungry. So we believe that there is really strong mechanistic rationale for the loss of weight, for the potential to affect liver fat, and the potential to prevent arterial plaque.
Correct me if I'm wrong, the ACSL5, has that target been prosecuted a lot in the past?
No.
No.
So you guys are kind of pioneering here.
That's correct. Just like we are with AAK1 with 9211.
Right. Interesting. And just thinking about the MOA, I mean, any potential or theoretical possibility of disruptions in nutrient absorption, GI function, or any other unintended metabolic consequences here?
Yeah, so we've looked at that, and obviously, that's going to be a key question for the phase one. We don't see anything in the animal models. They lose weight, but they otherwise are healthy, and it is one of the key questions, obviously, in any drug that's acting in this category, which is GI tolerability in phase one.
Again, so this IND is going to be filed next year or by the end of this year?
Mid next year.
Mid next year. Okay. Any red flag in terms of animal tox signals or any metabolites we should be worried about?
No, none at all. It's so far very clean.
Very good. Very good. Okay. So I mean, and I'll obviously kind of looking ahead here. I mean, you're not even in phase one yet, but could this be? It sounds like this could be developed both as monotherapy and combo therapy. It sounds like it's probably more suited for combo therapy at this point.
Yeah. Look, I think it's a little bit of a crystal ball in how this field will evolve over time. My thinking is what we're seeing in the data at the moment is that there is certainly scope for combination therapy, as is typically the case in any of these chronic sort of cardiometabolic conditions, whether it's hypertension, heart failure, diabetes, you tend to use combination therapies and have different drugs that are being used for different folks at different times. So we certainly see that as a potential avenue. I think the other piece that will come into play is, as an oral therapy, how does that look like as a maintenance therapy? And that's going to be a very interesting piece of it as folks look at getting their weight loss initially through these powerful GLP-1 class of drugs.
Then from a maintenance perspective, thinking around, okay, I can switch to a once-daily simple oral medication that's going to keep the weight off. I think that could be a really attractive possibility.
Again, I know it's super early, but any insights to how this may affect lean body mass versus fat mass?
Yeah, there is some indication that this mechanism does preserve lean body mass. I don't want to stand too high on that ground at the moment because it is pretty early data at the moment. But there is some indication that we do get lean body mass preservation.
Got it. Got it. Okay. Since I'm not a covering analyst, any nuanced key thing that you would like to highlight that I didn't ask about?
Yeah, I think the only other piece is to remind folks that we've got a phase three trial in hypertrophic cardiomyopathy with sotagliflozin happening at the moment. We're very confident in that study, and it's enrolling as we speak. We look forward to seeing that data at the end of 2026, so really looking forward to progressing the development pipeline here.
Got it. Well, hey, Mike, Craig, this has been immensely helpful. Thank you so much for making the effort to come down here and.
It's our pleasure.
Speak with me. But wish you the best of luck in next year.
Yeah, thanks, Mike. Appreciate it. Cheers.