Okay. Thanks for tuning in to the next session. I'm Andrew Tsai, Senior Biotech Analyst at Jefferies Financial Group Inc, and it's my pleasure to have the Lexicon Pharmaceuticals, Inc team with me today. To my direct left, Mike Exton, CEO. To his left, Craig Granowitz, CMO. And to Craig's left is Scott Coiante, CFO. Welcome, all of you.
Thank you.
Thank you, Brady.
Maybe spend a couple of minutes talking about the Lexicon story, what you're working on, what you're trying to achieve, and then milestones over the next 12 to 24 months would be helpful.
Yeah, great. Lexicon, as a company, broadly works in the area of cardiometabolic and associated disorders. We have a portfolio of medicines ranging from preclinical, clinical development, and through to commercialization. This year has been an eventful year for us already, just taking us back into the end of the first quarter, where we signed an exclusive worldwide license for LX9851. This is a novel small molecule non-encretin-based asset for obesity and other related conditions. We signed that deal with Novo Nordisk, which we were really pleased with, not only because that allowed us some flexibility on the balance sheet and some pretty significant financial terms for a preclinical asset, but clearly partnering with a leader in this space who really believed in the science and saw a lot of value in this mechanism, which we can talk about going forward in the presentation.
Furthermore, we read out the progress phase II-B study for pilavapadin in diabetic peripheral neuropathic pain, where we were able to achieve a significant reduction versus placebo in the 10 milligram dose and feel confident taking that forward to the FDA for the end of phase II meeting with a full data package, which we'll release later this year in a medical meeting to prepare for the phase III study for that particular indication. We also are really progressing well with our enrollment for sotagliflozin in hypertrophic cardiomyopathy. This is an area that, particularly over the last quarter, really has seen an explosion of data readouts from other companies and other assets.
It really, in our view, demonstrates the potential value of sotagliflozin in both obstructive and non-obstructive hypertrophic cardiomyopathy and the potential for broad adoption of that medicine upon success of the Sonata phase III study, which will conclude at the end of next year, data readout into 2027. With all of those potential catalysts moving forward, we continue to differentiate sotagliflozin in the marketplace via other independent studies. Speaking of sotagliflozin, to wrap out the story, we're continuing the process with the FDA to conclude the discussions around Zynquista and the application that we had at the end of last year. All of those factors really bode well for us moving forward throughout 2025 to continue to progress the pipeline towards finishing clinical studies and into commercialization.
Perfect. Maybe in your remarks, you answered my next question because you and Scott recently joined the company, and I was about to ask, what can you bring to the table that investors might not be appreciating? You did mention you have struck a couple of partnerships. Would there be anything else you'd add? Just curious.
I think, look, just the broad-based experience with these size companies and the flexibility of doing deals and pivoting and just being proactive in what is coming down the pike for us.
Right.
I think Scott is very humble. Since he joined a few short months ago, he's really brought a very strict discipline in resource allocation. I think you saw that with our modeling of what we expect to spend this year. We're delivering on that, and we continue to look to ensure that we're really utilizing cash to drive the portfolio forward. I'm very thankful that you're on board for that reason because it brings an expertise and a discipline to really allow us to use the money in the best possible way.
Perfect.
Andrew, one other comment that I know Mike covered a lot of ground, but our partnership with Viatris, Inc, I think, is also going extremely well. I think it's a real validator of their excitement and interest in sotagliflozin as a molecule going into challenging markets, which are non-Europe, non-U.S. They have certainly referred back to their efforts with sotagliflozin already having filed in the UAE and Saudi Arabia and their plans to file in additional markets this year, such as Canada and Australia. We see that as another validator of sotagliflozin as a molecule, even competing in challenging markets.
Perfect. Very clear. Why don't we dig into your pipeline program, starting with pilavapadin for DPNP and pain?
Maybe briefly, high level, summarize the efficacy that you've seen with this compound across studies, why it's a clinically meaningful signal that gives you the conviction it will succeed in a set of phase III studies in DPN pain.
Yeah. Maybe let me just provide some context of DPNP upfront, and Craig can comment a little bit on the results of the studies across the phase II program. Clearly, there's a lot of need, both from a patient and caregiver, but importantly, from a political will and access for non-opioid medications for both acute and, in our case, chronic neuropathic pain. There's been no options, no new options in neuropathic pain for two decades. The current options that people have are really inadequate. They don't have great efficacy, and they have pretty poor tolerability and dosing profiles. It behooves us to really look to explore the opportunity for a new non-opioid mechanism in neuropathic pain that commercially has a very significant and broad applicability. We're delighted to be in this space and continue to deliver for folks with diabetes.
We have what we think in our hands a very promising clinical candidate for neuropathic pain.
Great. Yeah. I'll sort of backstop what Mike just said with some of the science in that AAK1 is a really novel, really interesting mechanism of action and is associated with clathrin endocytosis. And we believe that this drug is acting in neuropathic pain and related states by increasing the duration of neurotransmitter occupancy in the cleft between the neuron and the cell. And we believe that that is a critical component of why pilavapadin is effective in neuropathic pain. The other important element in neuropathic pain is that you need to have an agent that is acting both centrally and peripherally. And some of the other agents that are out there that people are talking about are only acting in the peripheral nervous system, not the central nervous system.
When it comes to the trials, we now have over 600 patients that have been dosed with pilavapadin at various dose levels in patients with DPNP. We have been able to demonstrate repeatedly in three separate dosing arms at 10 milligrams that the drug has a rapid and meaningful, clinically significant, statistically observable, and meaningful deviation from placebo and also from baseline. When you think about the drops in pain score from baseline, you are really talking about a one and a half to nearly two-point drop in pain score from baseline, which is certainly clinically meaningful for patients because that is what they experience. That is within six to eight weeks of treatment. We know that the efficacy trials are really out to about 12 weeks, and that reduction in pain score continues throughout the entire eight-week dosing interval.
We also demonstrated in the recently completed progress study that the loading dose is not necessary for efficacy and is largely the cause of the tolerability issues, particularly at the 10 milligram dose, in that the completion rates of the 10 milligram dose were identical to placebo at nearly 90% of both groups completing treatment in the eight-week treatment phase. We look forward to sharing all of this data later in the year, as Mike mentioned, at major medical meetings.
Perfect. Any hints which medical meeting that would be later in the year and any other secondary analyses you plan to share at the medical meeting?
Yeah, I think you can look to the major both endocrinology and pain or pain overlap endocrinology meetings that will be taking place in the second half of the year, some in Europe and some in the U.S. I think the additional analyses we're really doing right now, and as a reminder to the listeners, we reported, just like we did out of the RELIEF, the pilot trial, there was a treatment phase and then a four-week follow-up phase. We've only reported the top-line results so far for the treatment phase. We continue to get all of the data in from the follow-up phase, as well as, as we shared last time, more detailed efficacy and safety based on exposure because it's very important to look at not just the liver dose, but actually exposure.
I think, as you saw when we did that from the RELIEF trial, there was some additional good insight that we had, and we hope to be able to share the same. Those analyses are ongoing right now.
Understood. With this data set, you plan to meet with the FDA when? When do you think you can get feedback from them to start the phase III's?
Yeah. We obviously are waiting to complete all the secondary analyses so that we can make that submission. That will then determine the time it will take to meet with the FDA. We expect it'll be obviously later in the year, probably sort of end Q3, moving into the start of Q4, around that type of time frame. That seems to be how we're shaping up right now.
This should be fair to assume a straightforward meeting. Your base case is FDA says, "Okay, start phase III's." Is that your thinking as well? Is there an upside case for you guys?
I think the base case is where we're shooting at right now. I think we will take the complete data package to them. As we've had discussions with you previously, we have concepts of what we think the plan going forward could be. Of course, we need to engage with the FDA, and particularly with, although we haven't seen any impact in our engagement across all of our programs with the FDA, we need to have those discussions and see if they're aligning with previous discussions that we've had.
Craig mentioned earlier the 1.5 to 2-point drop seems pretty compelling. Then with this data set, the data that you've generated, could you seek breakthrough therapy designation with this compound, and when would that happen?
Yeah, I think with the breakthrough designation in this indication, we think that would really be contingent upon having something related to opiates. We did not specifically study the opiate dimension to this. While we are certainly going to bring our strongest data package to the FDA, I think the base case should be we would not get breakthrough because based on some of the other conversations we have had, that breakthrough would likely be related to something based on opiate and opiate avoidance.
Your phase III plan that you plan to bring to the FDA in terms of the design, what are some of the similarities or differences in the phase III's that can help maximize the chances of success with the drug?
Yeah. Look, I think we obviously know post-progress now a lot more than we even did post-RELIEF. I think we clearly know the dosing regime that we believe is important. By definition of a phase III trial, it will extend out an additional four weeks, so out to 12 weeks, which we think bodes well for the continued separation of the 10 milligram dose from placebo. Really, I think generally the trial design should be similar with the caveat that this will be placebo versus single active dose design, which is important certainly for managing placebo responses. Because as you can imagine, if you're a patient entering into a pain clinical trial and three of the four arms are active, then your expectation is guided in a way to receive some sort of therapy.
Perhaps that was a contributing factor to the somewhat sizable placebo response, despite the fact that we separated from placebo with the 10 milligram dose. Having a single dose arm versus placebo, I think, helps. It is more executional. Understanding exactly sites that did very well, understanding how you engage the patient to ensure that they are adherent to the protocols, et cetera. It is more executional than trial design, really.
Remind me if there's an open label phase in the phase II and when can we get additional follow-up data on those sets of patients?
You're talking about an extension study, Andrew?
That's right.
Yeah. So we thought long and hard about that, but until we finalized the dose with the agency, we were not going to do a long-term extension because, boy, you would hate to pick the wrong dose for that. Once we get the feedback from the FDA, what we would probably be doing is at the same time launching a long-term extension study with a collapsing of the arms around what would be seen as the most likely outcome. As Mike said, our goal really is to go in with a two-arm trial because that has the most simplified design and maximizes, or I should say minimizes, the placebo effect.
Because as opposed to saying, "I've got a three in four chance or a two in three chance I'm on active drug," and that influences the placebo effect, to say, "I've got a one in two chance," I think, based on past research experience, does lower the placebo effect.
Right. How would you power the phase III this time to show what kind of separation versus placebo?
We believe that what we've seen in even as low as 0.4 is going to be observable and statistically meaningful. I think also clinically meaningful compared to placebo. I think we would be looking to power it like we did with the first, the RELIEF trial. We've talked about a sample size with what we now understand, having run two trials in DPNP with the variability of the data, that we'd be looking at roughly 350 patients per arm in a two-arm trial and probably doing that in duplicate. Two trials, each of two arms active versus placebo.
Right. Remind me if you have what kind of cash position you have. Do you have cash to see this through the phase III studies?
We do. We ended the first quarter with a hair under $195 million in cash, and we are funded to work on and complete the milestone-generating tasks that we have set forth for this year.
Great.
Just to bring a finer point on it, the phase III program, as we've said, we're expecting that that will be done in partnership. Therefore, at the moment, we are not funding the phase III program, and it's not in our sort of forward budgeting exercise. That will be something that we do together with the partner to enable that to happen.
In terms of the type of partnership you would want, would you be willing to give away US rights, or is this more of an ex-US partnership?
No, look, we're pretty open. We have said we've had a lot of discussions with a number of folks so far, and we're going to continue those as we process the secondary data to think around what not only the sort of geographical financial type of commitment could be, but like what we did with Novo Nordisk, what's important to us is how these companies see that program. Because the program, AAK1, as Craig alluded to upfront, has breadth way beyond diabetic peripheral neuropathic pain. For a company that we believe has the scientific rigor and experience and interest to really explore the full breadth of potential is going to be very important to us.
Right. As this is all going on, as I think about the potential NDA filing ultimately, what other peripheral studies would you need to do before you filed an NDA ultimately? Abuse liability studies, DDI studies? What kind of studies?
Yeah, I think you've put your finger on a couple of the most important studies. We don't believe there's any need for us to do anything beyond animal studies on dependency because there's no clinical signals whatsoever.
Makes sense. Okay. That's very clear. We'll shift gears then to HCM with sotagliflozin. Enrollment started, I believe, mid-2024, and then you mentioned earlier data, early 2027. What exactly would you want to see? Or actually, backtrack. Big picture, how do you think this will be positioned in the marketplace ultimately?
Yeah, it's a great question. As I mentioned earlier, there's been really, if you like, an upswing of interest in HCM across the investor and scientific community as a lot of data has been released in Q1. We believe soda has this unique opportunity in HCM to have a broad potential across many different prescribers and many different patients. What do I mean by that? Across many different patients because the Sonata trial is enrolling both obstructive and non-obstructive patients. We believe, and we have a lot of scientific rationale to believe, that soda, as it looks to target the underlying root cause of HCM generally, has the potential to be potentially the first indicated new medicine in non-obstructive HCM, depending on how other trials read out. It has this broad sort of applicability across the patient population.
Perhaps more importantly, and Andrew, as you know, I was the Entresto guy for Novartis. I've been in pretty much every cardiology practice around the country in my seven or so years of doing this. I can tell you categorically that complex initiation and maintenance of a therapy in cardiology, like what happens with the CMI, in my opinion, will always be restricted to a very niche group of practitioners who have the time, ability, money, quite frankly, and desire to implement those therapies. Where sotagliflozin is very unique in this space is it's approved in heart failure, so it has outcomes in heart failure. If we get approved in HCM, we have the potential to be prescribed by every pill-prescribing cardiologist who treats HCM. That's about 20,000 of them.
With a known safety profile and an easy initiation and maintenance protocol that really enables, and a general class of drugs that is very well known by this group of doctors, allows us access to a far broader prescribing population and patient population. That is how I see it in the marketplace. I think the importance of it being a drug that can be used even in addition to other novel therapies like CMIs is also something that is important. Overall, the penetration right now of CMIs in HCM is about 1% after a number of years of launch. I think that gives an indication of where the niche of REMs and other things really will position these agents.
And sotagliflozin, which is in HFpEF also, approved in heart failure, should this make it through the goal line, is the price the same ultimately, or can you charge a higher price somehow?
Yeah, it's a fantastic question. I think I can only use a proxy based on our discussions with Zynquista. And there's a number of similarities here because you're having an, let's back up, in heart failure. We entered into heart failure as really the third of any substance SGLT inhibitor approved for this indication. That becomes problematic at a payer level because you get put in a market basket and you're at the whim of those financial engagements, if you like. With Zynquista, as we were preparing for a potential launch of that last year, the discussions were very different. Why is that? Because you were the first and only approved medicine for that particular indication.
The indication that we had from all of our market research as well as the engagements we had is you could charge up to about a 20% higher WAC, but my feeling at the time was less worry about the WAC and much more about the gross to net, so managing the gross to net dynamics. I believe, I do not have any data to confirm it yet, but I believe, just based on my experience of engaging with them in cardiology now for the best part of a decade, is that HCM will be similar to Zynquista.
Long answer to your question, but it's an important one because the ability to launch and it's this whole catch cry that we started last year of lead to succeed, of being in spaces where the first and only has implications at the physician, the patient, but importantly, the payer level. That's where we're focused moving forward.
Great.
Andrew, if I could just add from a scientific standpoint, this is where the MACE data is so important, having a publication in The Lancet, now also having mechanistic data on platelets that differentiate sotagliflozin, which is a dual inhibitor of both SGLT1 and 2, from just pure SGLT2 inhibitors when it comes to platelet aggregation and activation, I think become really defining. Because we believe that we can define our mechanism separate from the CMIs. As Mike already mentioned, we have long-term outcome data. I think the data in non-obstructive is certainly mixed for the other classes that are out there. I think non-obstructive over the long run is going to be seen as far more common than obstructive because obstructive is easy to see because of the outflow tract obstruction and echocardiography.
I think linking those three things together, our data in HFpEF with sota above and beyond that of the SGLT2 inhibitors with near normal ejection fraction, the MACE data, and then having the broad and only indication in the SGLT class for HCM altogether, I think becomes a very compelling profile for payers.
Very good points. At the end of the day, you do have outcomes data, a lot of it. Going back to the phase III study, what kind of what do you need to see to succeed?
The gold standard in HCM has been symptomatic improvement. We already know that in heart failure, we have symptomatic improvement, and we're powering the trial with a primary endpoint of KCCQ and a secondary of New York Heart because those are the things that really matter. As you've already mentioned, we can couple that with outcomes data, both in terms of heart failure outcomes and in terms of stroke and MI and MACE outcomes. I think in that regard, it really is a compelling profile. We already know, based on the nearly 11,000 patient trial in heart failure, what we can expect to see in improvement in KCCQ score with the entry criteria of symptomatic patients with a KCCQ score of 80 or less, which is really New York Heart stage 2 and 3.
I see. And to give us context then, if we think about the CMAs approved for obstructive HCM, what do they show on KCCQ?
They're showing in, again, that rough range. Again, you're better off talking to them rather than me. I think there's a very important element with KCCQ is that some of the data that's been presented is without a placebo. You see very large decrease or improvements in KCCQ score, but there's a very large placebo effect. As Mike already mentioned, we certainly become expert in understanding PROs with large placebo effects. We believe that we have a very good handle on what the placebo-adjusted KCCQ score is in patients with heart failure.
I see. I see. The other drugs do not have outcomes data, which can set you apart.
Absolutely.
Would you expect an efficacy differential between these two subgroups?
You know, I think that's hard to say. As Mike mentioned, the underlying pathophysiology is probably very similar between the two. As some of our PIs like to talk about, when you do septal reduction surgery, 15%-20% of those patients develop heart failure over the next number of years. It is not just about the outflow tract obstruction. It really is probably regarding the underlying genetic defect that leads to an overactive myocardium as well as altered energy dynamics. We have already demonstrated in human explants that was presented at AHA and ACC, a reduction in cardiac work and improved energetics as measured by fatty acid utilization and amino acid utilization in the coronary tissue.
Got it. Is this a program you would launch yourselves, commercialize yourselves, or are you also open to a partnership?
Look, we'll explore both options. I think we feel very strongly that we have both the clinical and scientific expertise. Clearly, we would need to build back up again our commercial footprint. Between myself and Craig and the rest of the leadership team, we're very confident in this space. We will make that judgment call. I think there's lots of promise here for us and all partners.
Maybe final question, just speaking of non-dilute capital. You mentioned earlier you have that nice partnership with Novo Nordisk for the obesity pill. What are the near-term milestone payments you could receive from that program?
We announced that we would have total $75 million in near-term milestones, $45 million of which was received in the form of an upfront payment. That leaves a balance of about $30 million in additional near-term milestones we would expect.
Great.
The first of which being the submission of the IND by Novo Nordisk, which we have had a great relationship so far and expect that once we conclude the studies, that will happen shortly thereafter.
Great. Thank you for your time. It was a great discussion. Thanks, everyone.
Thank you. Thanks, Andrew.