Good morning, everyone, and thank you for joining me at the H.C. Wainwright 28th Annual Global Investment Conference. My name is Joshua Corson, and I am a Senior Equity Research Associate. Today with me, I would like to introduce our presenters, Dr. Mike Exton, Chief Executive Officer, and Dr. Craig Granowitz, Chief Medical Officer of Lexicon Pharmaceuticals. The floor is yours.
Yeah, great. Well, thanks a lot. Meeting season is well underway here, and we are really happy to be here with H.C. Wainwright this week and appreciate the invitation. Actually, this meeting comes at a very important juncture for Lexicon in our transformation towards a focused cardiometabolic company. Although we have a number of products across the development life cycle, I want to focus, or we want to focus, really on our two late-stage programs for sotagliflozin in two indications where SGLT1 in this dual SGLT1 and 2 inhibitor are really important, and that is in type 1 diabetes, and most particularly, which we will focus on today in hypertrophic cardiomyopathy or HCM.
HCM has become an area of huge interest for investors, for physicians, patients alike as the diagnosis, particularly non-obstructive HCM, increases rapidly and really a therapeutic modality, a nascent therapeutic modality, where there is a lot of potential new treatments, including sotagliflozin moving forward. We are really right at the forefront of this. We will obviously make some forward-looking statements throughout this presentation. Before we dive into HCM, allow me to really recap where we are at in 2026, and we are marching towards achieving our objectives this year. Firstly, for SOTA, as I will refer to it, we have completed enrollment in SONATA-HCM, which is the phase III trial for HCM. I will talk about this in greater depth shortly.
A third-party study, STENO1, has just completed the recruitment and exposure required in that particular study for SOTA, that will allow us to go back to the FDA with a resubmission in type 1 diabetes. We continue to really drive forward in our partnerships, both with Viatris and Novo Nordisk, which are going exceptionally well. We are currently continuing the dialogue for pilavapadin and AAK1 as a mechanism, where in diabetic peripheral neuropathic pain and in further potential indications where we have some very interesting preclinical data that we will present later this year to really demonstrate the foundational role of AAK1 in human biology. All the while, remaining incredibly operationally disciplined to use our resources in the most appropriate way that provides value to all of our stakeholders.
So let's just dive in a little bit on what has been going on in the company before we get into HCM. Firstly, for SOTA, as I mentioned, we completed enrollment in SONATA-HCM. This is a trial that aimed to enroll 500 patients across obstructive and non-obstructive disease. In fact, we substantially over-enrolled that trial. That was complete at the end of July. It's a 26-week study, which allows us and affords us top-line data in Q1 of 2027. As we go throughout this year, there are a number of interesting and important HCM-focused medical meetings. So once we have the baseline data cleaned, we will look to present some of those baseline demographics at one of those meetings. In type 1 diabetes, STENO1, a Danish cardiovascular outcome study, has now recruited sufficient SOTA patients with enough exposure.
In fact, exposure resembling what we saw in our total phase III program, inTandem, that was discussed with the FDA that will allow us to resubmit for approval in type 1 diabetes. All along, because this is an open label study, we've been able to observe that the DKA rates in the SOTA group are the same or similar, I should say, to standard of care, and in fact, much less than what was observed in the inTandem program. So both of those attributes give us strong confidence that we can move forward with a submission in Q4 of this year. Excuse me. For heart failure, Viatris has done an incredible job of submitting and getting approval in the UAE and Bahrain, and those submissions across many ex-U.S. and ex-EU countries continue strongly.
For LX9851, our novel non-incretin mechanism for obesity and related conditions, Novo has really taken that program and advanced it very quickly. Lots of enthusiasm around that particular mechanism. In fact, it features quite often in their quarterly earnings. This year we've received three $10 million milestone payments on top of the $45 million that we received last year. Just as a reminder, that deal in total is $1 billion in biobucks. About 50% of those are for clinical milestones, which is obviously going to ramp up as we potentially move into phase II, or they potentially move into phase II with that program, and about 50% in commercial milestones and high single digit to low double digit sales royalties on top of that. So we're super pleased with how that program is progressing.
Finally for pilavapadin, again, a novel small molecule against AAK1, where we have the path forward into phase III for diabetic peripheral neuropathic pain. We've been very diligent throughout this year in rounding out the potential for that mechanism with a number of other indications that we will present publicly a little later this year. But it really demonstrates the foundational nature of AAK1 in a number of human biological processes, really demonstrating the importance of that novel mechanism for which Lexicon is the most advanced company in developing that particular program. So really a lot going on, but like I mentioned, I do want to focus on hypertrophic cardiomyopathy. Let me lead off by saying with top line data in Q1 of next year, clearly we are focused on doing some pre-launch or pre-commercialization activities.
I am pleased to say that Rachel [Martens], who has been leading our partnership and strategy function for the last couple of years across Viatris and Novo Nordisk, has been promoted to Chief Commercial Officer. She has got a ton of experience in the cardiometabolic space, particularly in diabetes, having run the insulin business for Sanofi for many, many years. Complementing her, we now have a Head of Marketing and have just hired a new Head of Access, and both of these characters are incredibly well qualified and are going to add a ton to the organization. They will really do the pre-launch planning, the market research, the figuring our positioning, and we will start to talk about that in greater detail as we go through this year.
We have also hired five MSLs, which is important as we demonstrate and describe the importance of SGLT1, and why that differentiates from a pure play SGLT2 inhibitor, and how it differentiates from the currently approved CMIs in obstructive disease. Really moving forward at pace. I do want to bring us back down to the foundation in HCM, because I think the community has really been educated around these two distinct entities of obstructive and non-obstructive HCM, when in fact they are not two distinct entities. Just like in heart failure, where there is a continuum of ejection fraction between HFrEF, HFmrEF, and HFpEF, the same happens in obstructive and non-obstructive disease. Truly, at the end of the day, the core problem and core feature that you see in HCM is diastolic dysfunction and left ventricular hypertrophy.
The inability to fill the left ventricle creates a number of downstream issues and number of symptomatic issues as the pressures build up back into the lungs and you get congestion and the like. As we take HCM forward with diastolic dysfunction as being the key driver, we have to recognize that, in fact, the difference between obstructive and non-obstructive is not any difference in disease, it is purely anatomy and where the thickening of the left ventricle primarily takes place. Where in obstructive disease, it takes place higher up close to the valve, thereby creating some obstruction to blood flow, but the underlying diastolic dysfunction is the same, Craig.
Yeah, absolutely, Mike. I think that is really the most important point, is that the disease historically has been defined by the treatment options for surgery and now what I would call a negative inotrope that reduces the contractility of the heart. But the fundamental issue is really the energetics of the heart. sotagliflozin is acting through a number of different mechanisms, which I think matches the heterogeneity of HCM, because HCM is a clinical diagnosis, not a physiologic diagnosis. By acting through the SGLT2 effects, both on the cardiorenal benefit and the decongestion effects of patients with heart failure, and directly on the myocardium to improve energetics, and we have demonstrated that in a number of human genetic studies, in animal model studies, in tissue explant studies, through modifying things like the calcium flux, sodium flux, ketone utilization, fibrosis markers, inflammation markers.
It is acting through a number of different mechanisms to reduce the symptoms, and we've demonstrated in heart failure patients, at least, the long-term outcomes in those patients. Which again, is different than any of the other agents that have either been approved or in therapy that have only been demonstrated in short-term studies to alleviate symptoms.
Yeah, absolutely. With that, we reflect back on SONATA, which is the largest HCM trial across both obstructive and non-obstructive HCM. Over 500 patients, as we mentioned, that significantly over-enrolled, improving the powering of the study. A substantial majority of these patients did have non-obstructive form of the disease, which really reflects current practice. The study sites here have access to CMIs. And obviously with a treatment for obstructive disease, the ability to enroll patients with non-obstructive HCM is more prominent. It's a classic randomized double-blind design, 26-week with a KCCQ endpoint.
As we mentioned in Q1 of 2027, we're expecting top line from this important study, which really we think is incredibly complementary to current drugs that have been approved, certainly in obstructive disease, and offers some important differences and options for physicians and patients alike, because SGLT1 is acting inside the heart, and SGLT2, as Craig mentioned, on the cardiorenal axis. So it's the only drug potentially that could be approved for HCM that will work inside and outside of the heart with SGLT1 acting directly on the myocardium to modify cellular energetics. And really the fact that, as Craig also mentioned, this drug has a strong safety profile in heart failure, where it's currently approved.
Having an oral once-a-day option with a strong safety and tolerability record really lines itself up with a simple first-line or first option type of treatment, particularly because there's no logistics and no difficulty involved in the REMS. And with the potential in this one study to be approved for both obstructive and non-obstructive disease. Indeed, when you think around where this will fit into the treatment algorithm, Rachel has started the market research, and indeed over the next few months, we'll continue to update as interesting information comes to light. But clearly in obstructive disease, cardiac myosin inhibitors are effective. They have been approved for symptomatic obstructive disease by modulating the actin-myosin engagement.
But clearly, there are some pieces of initiating these medicines in obstructive disease that may limit the utility, mainly because of the drop in ejection fraction, the potential drop in ejection fraction you get with these medicines, and the resulting REMS and the logistics that really restrict somewhat the utilization of these medicines into academic medical centers.
Yeah, Mike, I think that's a great point, and I think it's reflected in the SONATA clinical trial, which has the broadest inclusion criteria of any of the trials that have been done and any of the trials that I would perceive that will be done with sarcomeric inhibitors. As a reminder, we allow patients with an ejection fraction down to 50% in the trial. I think that's an important point that is not often highlighted, is that the CMIs are really only indicated in patients that have hyperdynamic myocardium with ejection fractions well over 60%, which is only a slice of the disease.
By allowing patients both with CMIs into the trial, and there the entry criteria is an ejection fraction of 55%, or those on any other stable medication with an EF down to 50% at the initiation, I think will provide —we have a very much more pragmatic design, but it's a far broader range of patients, which will allow a wider range of underlying therapies, including CMIs, and a much larger inclusion criteria of patients with EFs down to 50%.
Right. And look, that really is starting to be borne out in some of the commercial market research that we are doing. It's no surprise that in, and this is early, early thoughts here, which we will present in more detail going forward over the coming months, but no surprise that physicians see a huge unmet need in non-obstructive disease, for which there are currently no approved options, and the potential and willingness actually to adopt that as a first-line option. As we think about SONATA and what it would look like, I think the bar has been set now where a stat sig difference of 3 points would be a home run for SONATA. And obviously anything above and beyond that would even further strengthen the case for a first-line utilization in non-obstructive, with the flexibility in obstructive disease to be used according in conjunction or alone with CMIs.
So really looking forward very much to reading SONATA out in Q1, which will be a very pivotal moment, clearly not only for the company, but for patients with HCM to give them another option in their treatment. Let me sort of wrap the last pieces up here by talking about type 1 diabetes. Really, as we've talked about a lot, we think this time we've hit the sweet spot in our engagement with the FDA. I think they've always wanted prospective data, and here with STENO1, we've come to alignment on what that data would need to be. We've now achieved that, we believe. With the appropriate exposure in the SOTA group, with DKA rates similar to standard of care and less than inTandem.
Craig and his team are preparing all of the submission or resubmission so that we can prepare that for Q4 of this year with a potential readout, with a potential decision in 2027. So really pleased with that outcome. Look, really the type 1 diabetes and HCM are the leading edge of a path that we set out two years ago, which was to operate in indications where we could be the first or ideally the only in- class in that particular indication, which affords us access and commercial space to be able to win. Really, type 1 diabetes, where SOTA would be the first and only adjunct to insulin for glycemic control, and in HCM, where it would be the only in-class approved for HCM, really gives us a great position commercially to be successful.
If we think now what is ahead for Lexicon, a lot is ahead over the next six months, but if you just sort of fast-forward six months or so to the end of Q1 2027, we certainly will have SONATA read out top line. We may be on the precipice of an approval in type 1 diabetes. We will be about to commence a phase III program in diabetic peripheral neuropathy with a partner and potentially in other indications. Then finally, Novo could be also on the precipice of commencing their phase II program, which not only is a significant financial milestone for us, but really is a de-risking event, moving that program forward, which clearly has significant financial opportunities. So a lot happening with Lexicon over the next six months, w e look forward to providing you guys even more information in that coming time.
Look forward to any questions if there are any. Thank you very much.