This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk14: for the 2020 financial results conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question and answer session. As a reminder, this call is being recorded today, May 2nd, 2024. I'll now turn the call over to Lisa DeFranchesco, Head of Investor Relations and Strategy for Lexicon. Please go ahead, Lisa.
spk01: Thank you, Jamie. Good afternoon and welcome to the Lexicon Pharmaceuticals first quarter 2024 financial results conference call. Joining me today are Lanell Coates, Lexicon's Chief Executive Officer and Director, Jeff Wade, Lexicon's President and Chief Financial Officer, Dr. Craig Granowitz, Lexicon's Senior Vice President and Chief Medical Officer, and Tom Garner, Lexicon's Senior Vice President and Chief Commercial Officer. Earlier this afternoon, Lexicon issued a press release announcing financial results for the first quarter of 2024, which is available on our website at .lexpharma.com and through our SEC filing. A webcast of this call along with the slide presentation is available on our website. During this call, we will review the information provided in the release, provide a corporate update, and then use the remainder of our time to answer your question. Before we begin, let me remind you that we will be making forward-looking statements, including statements related to the safety, efficacy, clinical development, regulatory status, and therapeutic and commercial potential of MPEFA, Soda Glyphosine, Zinquista, Alex 9211, Alex 9851, and our other drug programs. These statements may also include characterizations and projections relating to our commercial launch of MPEFA and heart failure, as well as the clinical development, regulatory status, and market opportunity for all of our drug programs. This call may also contain forward-looking statements relating to our growth and future operating results and discovery and development of our drug candidates, strategic alliances and intellectual property, as well as other matters that are not historical facts or information. Various risks may cause our actual results to differ materially from those expressed or implied in such forward-looking statements. These risks include uncertainties related to our commercial launch of MPEFA, our discussions with the FDA, and other regulatory authorities regarding our drug programs, the timing and results of clinical trials, and pre-political studies of our drug candidates, our dependence on strategic alliances and other third-party relationships, our ability to obtain patent protection for our discoveries, limitations imposed by patents owned or controlled by third parties, and a requirement of substantial funding to conduct our planned research, development, and commercialization activities. I would now like to turn the call over to Lenell. Lenell?
spk04: Thank you, Lisa. Good afternoon, everyone, and thank you for joining us on the call. Now, before I begin our discussion on Lexicon's results for the first quarter of 2024, I want to acknowledge the press release that went out earlier this week, announcing my retirement from Lexicon, which will be effective on my upcoming 10th anniversary with the company on July 7th. I am truly blessed to have had the opportunity to spend the last decade leading this remarkable company. I've had the privilege to work with an outstanding board that contains to support the company and the many amazing and talented employees who are dedicated to Lexicon's mission. It was important to me as I made the decision to embark on the next phase of my personal journey that I lead this company in the strongest possible position. I am happy to say Lexicon has never been stronger than it is today. As we outlined at our recent Investor Day, Lexicon has a significant portfolio and pipeline of exciting opportunities. We have a remarkably strong leadership team with the capital to execute on these opportunities to create value for stakeholders. With that, I'd like to turn this call over to our president and CFO, Jeff Wade, to begin our discussions of the results.
spk09: Thank you, Lonnell. As Lonnell mentioned, Lexicon has never been stronger than it is today, and we have made very substantial progress just in the past quarter. We continue to make progress on our heart failure launch with expanded market access, which we expect to broaden significantly starting mid-year and continuing thereafter, providing the key to potentially unlock a substantial inflection in our launch trajectory in the second half of this year. We see encouraging leading indicators supporting that potential, which Tom will discuss shortly. We achieved a path forward this past quarter for a resubmission of our new drug application for Zinquista for type 1 diabetes, offering the potential for another near-term and very substantial commercial opportunity for the company. We expect to be in a position to achieve a mid-year resubmission of the NDA, seeking the approval of Zinquista as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and chronic kidney disease. We believe the approval of Zinquista would help address significant unmet needs in a population with no real treatment options beyond insulin to manage their blood sugar. We have also begun our efforts to expand Sotaglipelosan's label into hypertrophic cardiomyopathy, part of an overall strategy to seek medically important and high-value indications that are both unique to Sotaglipelosan among S-Gel T-inhibitors and for which there is evidence for an advantage in inhibiting S-Gel T1. Startup activities for our pivotal phase three study in HCM are well underway, and we expect to begin patient enrollment around the middle of this year. We are making continued good progress in the enrollment of our phase two B study of LX9211 for diabetic peripheral neuropathic pain, which continues to be on track for top-line data in the second quarter of 2025. We are increasingly confident in the opportunity for LX9211 to address a tremendous area of unmet need, both in DPNP, the focus of this study, but also in neuropathic pain more broadly. At our investor day two weeks ago, we revealed LX9851, a promising new oral drug candidate for chronic weight management that addresses a novel target, ACSL5, with compelling biology. LX9851 provides additional evidence that Lexcon's unique Genome 5000 Discovery Platform, founded in a systematic approach to mammalian genetics, continues to produce. And finally, but very importantly, we were able to raise $250 million in an oversubscribed offering with strong shareholder participation to support the execution of these exciting programs. I'll now turn the call over to Tom Garner, Lexcon's Chief Commercial Officer, to talk more about InPEPA for heart failure and where we are with the launch. Tom?
spk06: Thank
spk09: you, Jeff,
spk06: and good afternoon, everyone. It's a pleasure to be able to speak with you all today. As you will see, Q1 represented another quarter of continued positive progress with the ongoing launch of InPEPA. As a reminder, the commercial organization is fully aligned and focused on two key areas as it relates to the ongoing launch, namely driving an awareness and demand for InPEPA amongst the cardiology community, while also working hard in parallel with major payers to secure profitable and equitable access for patients who can benefit from this medicine. We've also taken thoughtful and deliberate steps to evolve and significantly strengthen the commercial organization to ensure that we can maximize the opportunities that exist for InPEPA, and more broadly, Lexcon, in both the near and midterm. Beginning on the next slide, you can see that heart failure remains a significant burden in the United States today. You can see that there are about seven million patients suffering with heart failure in the United States in 2019. This number is expected to grow by nearly 27% by the end of the decade to about eight and a half million patients, reflecting a growing and very substantial patient population where unmet needs remain. That anticipated growth is also projected to have a substantial impact on the healthcare system as a whole. At the start of the decade, heart failure costs were estimated to be about $44 billion, and by the end of the decade, this number is expected to increase to nearly $70 billion. This clearly reflects a significant drain on resources, and we believe that InPEPA is very well-possessioned as a cost-effective solution, which brings me to the next slide. On slide seven, you can see how hospitalizations and readmissions are driving the majority of these heart failure-related costs. In fact, according to the latest estimates, hospitalizations account for nearly 80% of overall costs, and when patients leave the hospital, in many cases, they are readmitted very quickly, with up to 25% returning within 30 days. As we've shared previously, much of our clinical data for InPEPA, specifically from the soloist trial where the NNT was four and hospital readmissions reduced by 50% at both 30 and 90 days is received very positively, both for clinicians who are treating patients in the inpatient setting, but also for those who are treating patients in the outpatient setting with the goal of preventing readmissions, which is one of the objectives central to guideline-directed medical therapy. Turning to the next slide, you can see that treatment with SGLTs is really in its infancy in terms of uptake for the treatment of heart failure. InPEPA is now one of three SGLT medications that are referenced in the ACC guidelines. As the only dual inhibitor of SGLT-1 and SGLT-2, coupled with compelling clinical evidence, we believe that InPEPA offers significant value to HCPs, to patients, and to payers. Despite the strong recommendation within the heart failure guidelines as one of the four pillars of guideline-directed medical therapy, the SGLT class still remains somewhat under-penetrated. As of today, only around 11% of patients are actually being started on SGLT therapy for heart failure, representing a significant future opportunity for the class, including InPEPA. This is an area where the medical community is really pushing very hard. The American Heart Association has a -the-guidelines program for heart failure with the primary goal of ensuring the updated guidelines are consistently pulled through interclinical practice, with the goal of improving patient care and outcomes. Turning to slide nine, we're very excited about two recent additions to the joint guidelines established in 2022 by the American College of Cardiology, or ACC, the AHA, and the Heart Failure Society of America. Firstly, last year, the ACC released a consensus statement for the treatment of heart failure with preserved ejection fraction, which went even further than the 2022 joint guidelines in recommending SGLT inhibitors as first-line foundational therapy for all patients who have HEF-PEPH. And then just a few weeks ago, we were also very pleased to see the updated consensus statement for HEF-REF, which reclassified the SGLT2 class as the SGLT class in express recognition of InPEPA's differentiated mechanism of action, inhibiting both SGLT1 as well as SGLT2. Taken together, we anticipate this continued support from experts in the heart failure community will result in continued growth and accelerating adoption for the SGLT inhibitor class as a whole, including InPEPA, across the spectrum of heart failure patients. Now pivoting to our results for the quarter, we continue to observe encouraging results from our efforts to accelerate adoption of InPEPA for the treatments of heart failure. Awareness of InPEPA continues to trend positively upwards and has grown by nearly 10% since January and is now in the 88% range. At the same time, we are also seeing that intention to prescribe is increasing as more of our target customers are reached by our sales specialists and our non-personal efforts. Encouragingly, once cardiologists have started a patient on InPEPA, they indicate very high product satisfaction, which is above similar benchmarks for comparable products in the cardiology space at this point in the product life cycle. Taken together, these metrics give us confidence that InPEPA's differentiated value proposition and core messaging is resonating with our customers and demonstrates the great potential we see for continued growth throughout 2024 and beyond. Turning to slide 11, as a reminder, we have focused our in-person sales efforts on the highest volume heart failure prescribers with a team of highly tenured cardiovascular specialists. The priority focus for this team is on segments A through C where we see the highest volumes of heart failure patients with the A and B targets alone accounting for more than 60% of the overall heart failure volume in the United States. As we move to the next slide, you will see that this focus strategy is starting to pay dividends. As you can see from the chart on the left, nearly 80% of the InPEPA script volume is currently coming from our A through C highest volume heart failure treaters. Moving to the chart on the right, you can see how we are penetrating each priority segment. Encouragingly, we are seeing increased adoption of InPEPA amongst these top tier customers. We focused on the very most important segment A and B customers, adoption of InPEPA within this group grew by over 40% in Q1 versus Q4. While we continue to see increasing adoption, we should also note that we have significant room for continued growth across both of these segments. And this is something that the sales team is fully focused on continuing to deliver as we broaden the prescriber base. Moving to slide 13, you can see the continued progress we're making with the adoption of InPEPA across the entire cardiology community as a whole. Through the end of March, we had around 1900 writers of InPEPA, adding in excess of 600 new customers in the first quarter, representing an increase of over 45% versus the prior quarter. This positive momentum has continued through the early part of Q2. We're really pleased with this progress and expect it to continue as we further enhance our in-person promotional tools, our strengthened omni-channel approach, while also working hard to broaden access, which may be still be viewed by customers as a barrier to product adoption at this point in the launch window. On slide 14, you will see that we are continuing to build ongoing prescription volumes, even as we work to improve access conditions for InPEPA. We have seen encouraging upward momentum in TRX volumes throughout the quarter and have seen this trend continue into the early part of Q2. Accelerating and improving patient pull-through will remain a critical focus for the team to ensure that we not only continue to accelerate new to brand script demand, but are able to continue and retain ongoing scripts for InPEPA prescribers and for their patients. The InPEPA Together program has been carefully designed to ensure that patients prescribed InPEPA can be appropriately started and supported on their treatment journey, irrespective of their insurance type. So, as you can see from the previous slides, we are pleased with the continued positive momentum in leading indicators for InPEPA demand, as customers become ever better acquainted with the clinical value proposition that InPEPA offers for their patients. It's worth noting that our overall access did not change considerably from the roughly 40% as of last quarter, yet we have continued to see ongoing increases in total script volumes. We're currently in the midst of the 2025 Medicare bid cycle, with the Value and Access team fully engaged in important and meaningful discussions with all major BBMs across both the commercial and Medicare books of business. We've been pleased by the receptivity payers have indicated to the product, as they recognize there is clinical differentiation with InPEPA and that the value proposition is compelling. They continue to express interest in reviewing InPEPA for coverage and increasingly adding InPEPA to their formatories. With that, I will hand over to Jeff to talk about Type 1 in Zincwista.
spk09: Thanks, Tom. It has been a particular passion of our company to improve the lives of people with Type 1 diabetes and we are pleased to have found a path forward for the resubmission of our NDA for Zincwista as an adjunct to insulin therapy for the substantial proportion of this population who also suffer from chronic kidney disease. Type 1 diabetes is a substantial opportunity in an area of high-end met need. Because Type 1 diabetes involves complete insulin deficiency due to the autoimmune destruction of beta cells in the pancreas, people with Type 1 diabetes rely entirely on insulin therapy, either multiple daily injections or insulin pumps to provide the insulin they need. But while insulin is life-saving, it is also very challenging to manage with the result that between 75 and 80% of people with Type 1 diabetes failed to meet targets for A1C, a measure of average glucose. The difficulties in managing insulin therapy also mean that unmet needs for glycemic control in Type 1 diabetes go far beyond A1C, with glucose variability and maintaining time and range being particular challenges. Maintaining good glucose control is important to the -to-day lives and well-being of people with Type 1 diabetes, but it is also important for reducing long-term complications, which include diabetic retinopathy, diabetic neuropathy, higher rates of cardiovascular disease, and chronic kidney disease. Notably, among the 1.7 million adults with Type 1 diabetes, between 20 and 25% have chronic kidney disease, and many more are at risk for progression. Moving to slide 18, following a series of discussions with the FDA, we are preparing to resubmit our NDA for patients living with Type 1 diabetes and chronic kidney disease in the middle of this year. In doing so, we are leveraging the extensive clinical data generated in what was and remains the largest ever Phase III program of an oral adjunct insulin in Type 1 diabetes. We have the opportunity to reference a tremendous amount of additional supportive data that were generated after our original filing for approval in Type 1 diabetes. In a separate population, but still relevant, providing evidence of benefits on cardiovascular death, heart failure, myocardial infarction and stroke, and kidney protection. And we have the benefit of recently published additional data from long-term longitudinal studies that shows the importance of better glycemic control in slowing the progression of chronic kidney disease in the Type 1 diabetes population. Together, these elements open the opportunity for our resubmission for the use of Zinquista as an adjunct insulin with potential to improve glycemic control for people living with Type 1 diabetes and chronic kidney disease. On slide 19, the significant unmet needs in Type 1 diabetes more broadly are shared by, and often have particular importance in, the population of people who also have chronic kidney disease. These needs include reaching A1C goals, reducing glycemic variability, including time and range, controlling complications, and reducing weight gain with the overall goal of preventing further conditions or complications, including cardiovascular and kidney-related diseases. The data from our Phase 3 program of Soda Globulosin in Type 1 diabetes provide compelling evidence addressing many of these unmet needs, with results consistent among the overall Type 1 diabetes population studied and also the subgroup with Type 1 diabetes and chronic kidney disease. On slide 20, you can see from the patient journey in Type 1 diabetes that there are no real treatment options beyond insulin therapy to improve glycemic control and thus potentially prevent the complications that ultimately result from suboptimal glycemic control, and that Soda Globulosin has a unique opportunity to fill a gap and address an important area of need in this population. I'd like to pivot beginning with slide 21 to discuss our plans for a potential commercial launch. The treatment of Type 1 diabetes is highly concentrated among endocrinologists where the top 1,000 are treating about two-thirds of Type 1 diabetes patients and the top 3,000 are treating over 90%. The concentration of prescribers in their geographic distribution supports a focused, modest-sized field force, likely 120 or fewer in size. We are continuing our planning and preparations for commercialization as we prepare to resubmit and post-acceptance and through the review process and expect to hire the T1D-focused field force very close to the potential launch early next year. Moving to slide 22, we are not the only ones who are enthusiastic about the opportunity for Soda Globulosin to benefit people with Type 1 diabetes. There are a number of studies, including some large studies, focused on outcomes beyond glycemic control in the T1D population that are utilizing Soda Globulosin, and from which we expect to add to our body of evidence over the next several years. This includes a study called Sugar and Salt, which is designed to assess the outcomes of treatment with Soda Globulosin in patients with Type 1 diabetes and chronic kidney disease, SOFAS, which looks at heart failure in Type 1 diabetes, and STEN-01, which looks at a reduction in cardiovascular risks in Type 1 diabetes. To summarize on slide 23, we expect to resubmit our NDA mid-year, and given the nature of the resubmission, anticipate a six-month review. Pre-launch planning activities are well underway, and we expect further investments related to field force to occur closer to potential approval. There is a significant unmet need and substantial advocacy group support for treatment to manage glycemic control for people that have Type 1 diabetes and chronic kidney disease, and we expect the body of evidence will continue to grow and expand over time. We couldn't be more excited here at Lexcon to be on this journey to bring Soda Globulosin to people with Type 1 diabetes. I will now turn the call over to Craig to talk about hypertrophic cardiomyopathy and why we believe that this is a great opportunity to improve care for patients who still need better treatment options.
spk03: Thank you, Jeff. We shared a lot of detail on our rationale to pursue Soda Globulosin and HCM at our recent Investor Day a couple weeks ago, which is still available for review on our website, so I'll just briefly summarize here. Our enthusiasm about HCM as an opportunity for Soda Globulosin was driven in part by a post-hoc analysis of our scored data demonstrated that Soda Globulosin reduced the risk of cardiovascular events in patients with left ventricular hypertrophy without hypertension. This cohort shares phenotypic and physiologic traits of patients with HCM and may actually include undiagnosed cases of HCM. This analysis provides insight into the potential efficacy of Soda Globulosin in patients with HCM. And there are a lot of other physiology that would support the impact of SGLT1 expression on HCM and why Soda Globulosin might work on the myocardium itself to achieve that end. After reviewing this data and discussing with the FDA, we believe that Soda Globulosin has the potential to address key unmet needs with the scientific rationale to support development. The timing of our study could also be beneficial as heavy disease awareness efforts currently underway in the industry through new treatments as new treatments become available that also provide additional benefit. We believe that the rate of diagnosis of HCM will likely outpace the growth of the disease itself. Moving to the study design on slide 26, our proposed indication is to improve symptoms and physical limitations, which is what all of the agents that are currently approved are designed to do. All the CMIs and all of the other agents have been designed and approved to improve physical functioning, not improve long-term outcomes. We have already demonstrated long-term CV outcomes from our vast heart failure clinical data set. And importantly, we are including both obstructive and nonobstructive HCM patients in the upcoming trial. So we have a single 500 patient study with 200 patients each with obstructive and nonobstructive hypertrophic cardiomyopathy. Our KCCQ primary endpoint has been validated by the FDA as an endpoint for nonobstructive hypertrophic cardiomyopathy in registration trials of other agents. And importantly, a much broader group of patients are eligible to be included in our trial than those of the current CMIs because we're allowing patients actually to remain on a CMI, to remain on their beta blocker and to be on their CCB. And we will allow an injection fraction inclusion criteria down to 50%, not the 60% that is in the CMIs, because the major risk of use of CMIs is that patients may develop heart failure and we're actually indicated to reduce the development of heart failure. Moving to slide 27, we believe that there are significant stakeholder needs and opportunities in the HCM treatment paradigm for which Soda Glyphosine can address. For patients, Soda Glyphosine has the potential for symptom improvement with very limited or no added side effects. It also has the potential to be cost effective without the need for significant patient monitoring. In this case, there would be no significant added burden to HCP offices and payers and all stakeholders could potentially benefit. Because of the way that it will be studied, it would also be available for use across the treatment paradigm of HCM, regardless of their current therapy or obstructive or non-obstructive HCM status. Moving now to LX9211. We believe that LX9211 has a promising profile based on two completed proof of concept studies and a substantial market opportunity. LX9211 has the potential to overcome many of the shortcomings of current therapies and could become a welcome new innovation for those suffering from diabetic peripheral neuropathic pain or DPNP on a daily basis. Lexicon has been granted fast track designation by the FDA for the development of LX9211 for DPNP. Diabetic peripheral neuropathic pain is a large and growing market with significant unmet medical need. It is estimated that more than 20 million Americans experience neuropathic pain and approximately 5 million DPNP patients were identified in the US in 2022. LX9211 has the potential to be a first to market novel, non-opioid therapy in a multi-billion dollar market. Our progress phase two B study has an eight week treatment duration and is enrolling adult patients with a diagnosis of type one or type two diabetes with moderate to severe diabetic peripheral neuropathic pain. It is a forearm placebo controlled study with approximately 400 patients or 100 per arm. It also allows patients to remain on their underlying DPNP therapy, which reflects a more real world use approach. As we have shared in previous updates, we have advanced LX9211 into late stage development with a clinical program directed towards DPNP regulatory approval. The progress study began enrollment in December. It is designed to be a dose optimization study in order to enable a more efficient phase three study execution, increased probability of success, as well as de-risked investment while maintaining overall development program costs and timelines. Enrollment remains on track and we expect a top line data in Q2 2025. Now, moving on to LX9851 for obesity and weight management. Beginning on slide 34, we recently revealed an exciting pipeline opportunity, a novel oral development candidate for chronic weight management, which we are calling LX9851. With this ACSL5 inhibitor, we see the potential to address the significant opportunities beyond weight loss with GLP1 receptor agonists. An oral agent, production in body fat that spares lean muscle mass, an improved metabolic profile, and benefits beyond weight loss, including potential in additional related indications such as metabolic syndrome and MASH. Our work here begins with an assessment of the compelling phenotype we observed in knocking out the ACSL5 gene in mice, representing what we might expect from a drug inhibiting the protein target encoded by that gene. The observed phenotype suggested that an ACSL5 inhibitor had the potential to counter all aspects of metabolic syndrome, to reduce obesity, improve glucose tolerance, and reduce cholesterol and triglycerides, among other metabolic benefits. In particular, as seen in slide 36, in our large scale assessment of nearly 5,000 different genes, we saw much lower cholesterol and triglyceride and moderately lower body fat with no effect on lean body mass on a standard diet. And in slide 37, evaluating the effects of a high fat diet revealed another important characteristic of the target, substantially lower body fat, 25% less with no difference in lean muscle mass. We have broadly reproduced these weight loss and metabolic effects with small molecular inhibitors of ACSL5, and our drug discovery efforts have now yielded a development candidate called LX9851. As we think about the opportunity for chronic weight management, the data from one of our more recent studies helped demonstrate that opportunity with LX9851 producing weight loss on its own, but importantly also being additive to the weight loss scene with GLP-1 receptor agonist semaglutide, with the combination of LX9851 and semaglutide having a greater reduction in body fat overall than either agent on its own. And in slide 39, as we considered the opportunity specifically for weight management after initial weight loss with a GLP-1 receptor agonist, you can see when we stopped treatment with semaglutide after day 14, we saw a return to baseline weight similar to what has been seen in humans after discontinuation of a GLP-1 receptor agonist treatment. However, when we added LX9851 after initial weight loss with semaglutide, we saw a preservation of weight loss. In summary, we have identified a promising new development candidate for chronic weight management addressing a novel target that is entering IND enabling studies that address many of the most important opportunities beyond initial weight loss with a GLP-1 receptor agonist, an oral agent that reduces body fat and spares lean muscle mass, that leads to an improved metabolic profile and has benefits beyond weight loss and potential in additional related indications like metabolic syndrome and MASH. We presented these results at our investor day two weeks ago with significant additional details and we have already received a considerable amount of interest in the target in compound from potential partners. I'd now like to turn the call over to Jeff to take us through the financial results for the third quarter of 2024.
spk09: Thank you, Craig. I will review some of the key elements of our first quarter 2024 financial results. You can find more financial details in the press release that we issued earlier today in our 10-Q that's filed with the SEC. We ended the quarter with $355.6 million in cash and investments. We believe that our existing capital resources provide us with the appropriate level of funding to support the commercial launch of MPEPA, to prepare for and potentially launch cinquista and type one diabetes and to make planned investments in research and clinical development, including our phase three study of psotococcus in HCM and our phase two B study of LX9211 in diabetic peripheral neuropathic pain. We anticipate that our existing cash and investments together with expected product revenues will provide us with sufficient resources to manage our operations into 2026 and potentially significantly longer if we achieve the partnerships that may be optimal for certain programs, for example, enabling the phase three global development of LX9211 across multiple types of neuropathic pain. As indicated in our press release, we had $1.1 million in revenues in the first quarter of 2024, almost all from net sales of MPEPA and had minimal revenues in the same period of 2023. Research and development expenses for the first quarter of 2024 increased to $14.4 million from $12 million for the corresponding period in 2023, primarily due to higher external R&D expenses. Selling general and administrative expenses for the first quarter of 2024 increased to $32.1 million from $19.1 million for the corresponding period in 2023, reflecting our investment in the commercial launch of MPEPA, including higher salaries and benefits associated with the addition of the MPEPA Salesforce and other increased primarily commercial headcount, as well as increased travel and marketing costs. In total, net loss for the first quarter of 2024 was $48.4 million or 20 cents per share as compared to a net loss of $31.9 million or 17 cents per share in the corresponding period of 2023. For the first quarters of 2024 and 2023, net loss included non-cash, stock-based compensation expense of $4.3 million and $3.4 million, respectively. As we typically do with our first quarter earnings, we are introducing our current view of our 2024 full-year expense guidance. This includes expected R&D expenses of between $70 and $80 million, SG&A expenses of between $140 and $155 million, and total operating expenses of between $210 to $235 million. These figures include non-cash expenses of $18 million to $20 million for stock-based compensation, depreciation, and amortization. As we near the end of our prepared remarks, I think it's worth highlighting the extent of our accomplishments to date and what remarkable opportunities we have ahead. We have an approved and marketed product in M-PEPA that originated from our own discovery engine in a large and fast-growing market. In addition, we have a strong and deep pipeline encompassing label expansion and lifecycle management opportunities for Soda Gaflozin along with promising drug candidates addressing novel targets in large markets with high-endment needs like LX9211 for neuropathic pain and LX9851 for obesity and weight management. Together, these assets offer remarkable opportunities both for growth and for value-generating partnerships. As we wrap up on slide 45, you can see the significant number of potential catalysts that you'll be able to track and use to measure our progress over the next 18 to 24 months. An expected inflection in the M-PEPA launch in the second half of this year, our NDA resubmission and type 1 diabetes and initiation of enrollment in our study in HCM, both in the middle of this year, expected completion of enrollment this year for LX9211 and diabetic peripheral neuropathic pain with top-line data in the second quarter of 2025, and progress on our new development candidate for obesity and weight management. We are looking forward to a productive remainder of the year and to sharing our progress and achievements with our stakeholders. I would like to now open up the call to take your questions.
spk14: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask the question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Again, that is star and then one to join the question queue. We'll pause momentarily to
spk02: assemble the roster. Our first question today comes
spk14: from Yajel Mekonovic from City Group. Please go ahead with your question. Hi, Tim. This is Amin Anfar Yigal. Thank you for taking our questions. We have two here. So for the first one, for Impefa, can you talk about a bit more about the grand variety and the main factors that will lead into the inflection in the second half? And the second question is on hypertrophic cardiomyopathy. Can you talk about what mechanistically do you expect any differences in clinical outcomes between the obstructive and non-obstructive types of HCM?
spk04: Thank you, Amin. Let me take the first question and turn it over to Tom. I believe it's, you know, what do we believe in terms of inflection and what's leading us to believe the inflection will happen in the second half? Let me start off the first part. You know, I've said this consistently that we launched in the summer and we launched off cycle. So it's gonna take time for us to build access and coverage. And we're now at that point where we're starting to get that access and coming up very shortly, we feel very confident we're gonna gain even greater access. And to the point that Tom made earlier, we're seeing good growth in the absence of the kind of access that's gonna need to accelerate. But once we get it, then that should be the few that accelerates. But Tom, I will turn it over to you to give more specificity. And then Craig, if you can answer the question around HCM. Tom?
spk06: Thanks, thanks, Lionel. So I think you kind of summarized it well per the comments I shared earlier on. So if we look at how we're kind of doing in terms of driving demand, you know, we are encouraged by some of the leading indicators that we see around just the customer perspective on Impeffa as a whole. Clearly when our reps get in front of our customers, they are converting them into trialists. And I think as we continue to broaden the adoption for the product, you know, with the numbers now increasing all the time, 2,000 writers, we're actually pleased with that kind of continued uptake. And we see on an ongoing basis, you know, accelerating claims, but also we're seeing now accelerating pull through in terms of TRX volume as well. And per Lionel's comments, the team are now very actively engaged with all of the payers, given where we are with the 2025 bid cycle. So I think you pull all of those factors together and just given what we're hearing from payers in particular regarding the value proposition and the fact that they do seem to be quite willing and open to be considering adding Impeffa to their formularies with utilization management taken off the table. I think if we can do that coupled with all of the efforts that we have in this growing prescriber base that we feel good about where we'll be in the second half of the year. So it's that combination of demand and access. And as you're probably well aware, you know, those two things are always linked in a launch window, access begets demand, demand begets access. We're making sure that we're working very hard on both fronts to achieve that. So Craig, maybe I'll hand over to you about
spk03: HTM. Thank you, Tom. So I'll just restate the question that it was about are there mechanistic differences that we believe are in place between obstructive and non-obstructive hypertrophic cardiomyopathy? Great question. And as a reminder, HCM is largely due to a number of gene defects, but most of them relate to actin and myosin and the interaction of actin and myosin. And that results in what is considered diastolic dysfunction. So largely it is an issue of relaxation of the myocardium and limiting the ability of the myocardium to fill adequately in diastole. What is interesting is that a lot of the benefits that are seen mechanistically with sotaglifosin are acting directly on the myocardium, which we believe will actually improve that basic underlying defect. It's also important to note that in many patients with obstructive HCM that undergo septal reduction therapy, they often progress and continue to symptomatically progress. And so again, we believe that there are more similarities in the underlying mechanism for which sotaglifosin might be uniquely beneficial than our differences between what is obstructive and non-obstructive hypertrophic
spk02: cardiomyopathy. Okay, great. Thank you. Thank
spk14: you for answering the questions and congratulations on the retirement of Lanell.
spk04: Thanks, Amin. Appreciate it.
spk14: Our next question comes from Yasmin Ramani from Piper Stanley. Please go ahead with your question.
spk13: Hey, team. This is Jung Juwon for Yaz. Just first wanted to thank Lanell on behalf of the Piper team for your contribution. We have two questions. The first one is, in regards to .5.1, what types of IMG studies still need to be completed and what duration tox package are you aimed to have before entering the clinic? And for the second question, considering there's actually a lot of off-label use for SGLT-2s and non-obstructive patients, is there a biological basis why sotaglifosin and the differentiating mechanism of action could actually possibly work better for these patients?
spk04: Great two questions. Craig, why don't you start with the first one, HCM, and then we have our head of innovation available today to talk about .5.1 to answer your first question. So, Craig, why don't we start with you?
spk03: Yeah, thank you. If you could just... That just a bit garbled at the end, so I didn't catch the whole question. Could you just restate the last part of that on the differences? I just missed the first part of it.
spk13: Yeah, is there a biological basis why sotaglifosin differentiates mechanism of action could actually work possibly better in these non-obstructive HCM patients?
spk03: Yeah, great question. As we said in part to the last question, the fact that there are SGLT-1 receptors on the myocardium itself, both at baseline, but are also induced during stress conditions, both experimentally and in patients, as well as Mendelian genetic studies that show that patients that have knocked down mutations in SGLT-1 actually have less heart failure. We believe that the benefits that you'll see with sotaglifosin will be even better than those that you might see with an SGLT-2 inhibitor. So, the combination of both SGLT-1, which is acting directly on the myocardium and on the endothelium and in the GI tract, as well as on the kidney, plus the more systemic effects that you see with SGLT-2 inhibitors and lowering fluid volume, increasing hemoglobin and some other factors, that you can get potentially two bangs for your buck with sotaglifosin, both of which would be beneficial in patients with HCM.
spk05: Allen, you want to take the second question relative
spk04: to .85.1 and IND work? Sure, absolutely.
spk10: So, we're just beginning the IND enabling work. The first part of that is manufacturing the enough GMP material to do the toxicology studies and safety studies, and we're planning to do a one-month talk study in two species. So, that will allow us to treat the first patients for up to one month. This is, I think, the tenth IND that we've done at Lexicon, so we have a
spk00: pretty
spk10: well-oiled machine to do the IND enabling studies.
spk02: Thank you, Allen. Our next question comes from
spk14: Rowana Ruiz from New Rank Partners. Please go ahead with your question.
spk07: Great. Afternoon, everyone. For IMPEFA, I was curious, what feedback are you getting from physicians and reps in the field on IMPEFA's clinical profile and differentiating features, and particularly, what's attracting more prescribers to IMPEFA?
spk04: Great question. Tom, you want to take that?
spk06: Sure. So, I think I mentioned some of the data earlier on. I mean, if you take the two main studies that we have, which is Solowist and SCORD, obviously, Solowist was somewhat unique in that it was the only study of an STLT in patients who have been hospitalized or recently hospitalized. And I think when customers see that data, in particular, the NNT of four, and as I mentioned, the fact that we reduce hospital admissions both at days 30 and at 90, by over 50%, I think that that scene is very compelling when those two data points are taken together. I think when they then look, when customers then see the SCORD data on top, which is obviously more of the kind of patients who you'd be wanting to prevent coming into the hospital, they can clearly see that IMPEFA has a profile that actually fits across the entire range of heart failure patients, whether they be early heart failure patients where you may be looking to prevent them entering the hospital, or they've actually had a episode of hospitalization and they've recently left or about to leave, you may want to prescribe the drug then, or if they've been recently discharged, that you ensure that they go on to the best possible treatment. So I think that those profiles, those kind of key data sets taken together are seen as compelling. The mode of action, I think, is also seen as compelling for those people who appreciate the data that we have, and obviously the evidence that we're continuing to generate around the product, specifically around areas like three-point MACE and stroke, which we have data coming out of ACC is also seen as very differentiating versus the other STLT treatments. So I think that that's the high-level story. On top of that, those messages are also resonating with payers, especially payers that are dealing with both the pharmacy and the medical benefits, because obviously reducing and stopping these patients having to come back into the hospital after a period of hospitalization is something that is a priority across the board. So we're pleased with the general reaction to the profile on this on the whole. And as I mentioned earlier on, we are making significant efforts to really bolster our commercialization efforts, both in terms of in-person selling, but also thinking about third-party and omni-channel approaches as well.
spk07: Interesting, thanks. And one more from me. Given your upcoming phase three in HCM, could you just help frame why KCCQ is an important measure across both obstructive and non-obstructive HCM patients, particularly in the context of the fact that a lot of us have focused on other things like PIKVO2 with some of the CMI trials and things like that?
spk05: Great question, Craig?
spk03: Yeah, thank you, Lynel. And again, I think, Royan, it's a great segue from ending the last question is that physicians who have already started using IMPEFA in the clinic have had really good results, that the patients were satisfied with the therapy. And as Tom mentioned in our prepared remarks, something on the order of over 90% of patients are satisfied, healthcare providers are satisfied with the therapy. And I think that is really another foundational support for why we're so excited about what we're doing with HCM. And as a reminder, what you hear from clinicians and experts is that all of these agents are approved for symptomatic relief. The CMI's are not approved for long-term clinical benefit. And increasing what you're seeing from providers and from the FDA is that some of these other physiologic markers, six-minute walk or PIKVO2, it's very hard to communicate to patients and that being a meaningful benefit. But when you ask them, is your life better? Can you walk another flight of stairs? Do you not get winded? Do you not have a lot of the symptomatic problems that bedevil the daily lives of patients? That's what's most meaningful. And I think that's why the FDA has evolved in their own thinking and in the more recent trials with these agents that they have allowed KCCQ as the primary endpoint. And as a reminder, the inclusion criteria for our study is all symptomatic patients with a KCCQ below 85. And so again, it's not a matter of saying, are we looking for another 10 meters walking in a six-minute walk test? I mean, we're really focusing on the activities of daily living and I got to give the FDA a lot of credit that they've evolved in their thinking about what is most important to patients. And importantly, we have at the key secondary endpoint, the New York Heart Association, which is the counterpoint. So New York Heart is the healthcare provider assessment of patient functionality. KCCQ is the patient self-assessment of functionality. And I think having it in that order with the patient reported outcome as the primary and the healthcare provider assessment as the key secondary is a good way to go. And there's a lot of excitement in the field to participate in this trial.
spk02: Got it, thanks.
spk14: Our next question comes from Andrew Stye from Jefferies. Please go ahead with your question.
spk11: Hi, thanks. Congrats, Lamel on the retirement. Best wishes to you on everything. It's been a pleasure. Maybe the first question is about MPEFA. You've directionally guided sales to accelerate in second half 2024. So just how much do you think sales can inflect specifically in Q3 and Q4? Just curious how you would define an acceleration from the current sales trajectory. And then secondly, would you need to rebuild or refocus on payer access again if type 1 diabetes was approved? Or can you leverage the work you've done in heart failure and apply it to type 1 diabetes? So, and that's the question is just trying to gauge how much sales can accelerate even further immediately if you launched in type 1 diabetes, thanks.
spk04: Andrew, first let me say thank you for the well wishes. And I'm looking forward to my retirement, but because of those tough questions. But I think Jeff has an answer to that. So let me turn it to him.
spk09: So I think when you're looking at our overall coverage, it's around 40%. But a lot of that is subject to utilization management in the terms of step edits, which in this area where the step through drugs have only been approved for heart failure relatively recently or are still early in the adoption curve, that's a pretty big obstacle. And when we're negotiating and working with payers to get on formularies with contracted coverage, we're eliminating those step edits. So when you're kind of looking at our Medicare being single digits and it has a chance to multiply many fold. And very opportunity to very significantly increase the commercial as well when you're thinking about access without those kinds of restrictions. We think that there's an opportunity to really multiply the opportunity to multiply many fold what we're looking at in terms of the revenues we're getting from MPEP. So that I think is an important element. The second thing is type one diabetes, and this is to address your second question. Type one diabetes is kind of a different market because unlike in heart failure where we're competing in type one diabetes, we're gonna be potentially the only game in town. And it's also an area where payers are really interested. I mean, we're already having discussions. The minute that we announced that we were resubmitting these payer discussions, they're asking us about type one diabetes. We think that we will be able to have more favorable access in type one diabetes than we have in heart failure because it's not a competitive space in terms of, particularly as we think about the rebates required to be able to get access. And we're doing the groundwork now to be prepared for that launch. We think that that is gonna be an easier road by a good margin as it relates to access in type one diabetes. So hopefully that answered your question.
spk04: Yeah, the only thing I would add is that we will leverage our infrastructure. We've built an incredibly talented team of people both on the access side, the medical side. So that infrastructure will be leveraged to go into T1D. Most important decision we've made in the last eight, nine months was bringing an incredible executive like Tom who knows how to bring all those pieces together well in advance of the launch. So we definitely will be leveraging the infrastructure along with the other things that Jeff laid out.
spk05: Great, okay, thank you guys. You bet, Andrew, thank you.
spk14: And our next question comes from Joseph Stringer from Needham and Company. Please go ahead with your question.
spk12: Hi, thanks for taking our questions. You provided some data on the commercial opportunity for Zinquista and T1D, but I suppose how should we think about your commercial strategy targeting patient subgroups or how should we think about the stratification of patients that you would target? For example, what patients would you consider early adopters versus potential late adopters to the drug? Assuming approval and is it fair to think about it in terms of say CKD stage or are there other important factors that we should think about? And then last one is on pricing, assuming approval on T1D, how should we think about a price and pricing strategy? Thank you.
spk09: So I'm gonna address the first question is how do we think about this market? So there's 1.7 million adults who have type 1 diabetes and about 20 to 25% of those have chronic kidney disease and most people who have type 1 diabetes are at risk for progression to chronic kidney disease. What I would encourage you to think about is this is not about treating chronic kidney disease. This is about providing benefit to patients, people who have type 1 diabetes to manage their blood glucose control who have chronic kidney disease, but that's one of multiple different things that they're dealing with. And the benefit in this patient population is greater because they're at greater risk of progression than chronic kidney disease. But the benefits that are valued by the patient are really about improving their A1C, improving time and range, improving basically reducing their risk for complications across a broad range of areas. So it's really about providing benefits on glycemic control addressing the core and met needs in type 1 diabetes patients in a population that's at greater risk for progression and chronic kidney disease. So that's the way I would encourage you to think about it. So one of the advantages in this market is that people with type 1 diabetes are very engaged in their own care. They have to be. They don't really have a choice. And so that obviously people who are more engaged are probably more likely to be early adopters than people who are less engaged. But because people with type 1 diabetes, even the people who are less engaged have to be pretty much engaged in their care. And because they wanna avoid hypoglycemia, they wanna feel better, they wanna reduce glucose variability, we think that there's gonna be an opportunity to really have a pretty rapid uptake in this patient population. But the important part really is to frame this as this is not a chronic kidney disease drug. This is a type 1 diabetes drug that would be indicated in the population that has chronic kidney disease. On pricing, we're still doing pricing work there. We're gonna, we'll do some refinement of that. But we think mostly that our net pricing is just gonna be more favorable. That's the main thing that we think will be different. But we're gonna do some additional work around how we look at wholesale acquisition costs and also about the level of rebates that would be required.
spk02: That answer your questions?
spk12: Yeah, that's great. Thank you for taking our questions. Thank you, Joey.
spk14: And ladies and gentlemen, at this time and sharing no additional questions, I'll be turning the floor back over to Jeff Wade for any closing comments.
spk09: Well, thank you everyone for joining us on today's call and really for your continued support of Lexcon. And as we wrap up, I just wanna reemphasize how Lexcon really has never been stronger. The company has never been in a better position to focus on next steps. We have a strong management and leadership team in place committed to growth and expansion. And that includes seamless execution, targeted and smart capital allocation and exploring and leveraging partnerships to add even more value to the Lexcon assets and to the company. And so we really appreciate you joining us. And thank you for your attention.
spk14: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
Disclaimer