Lexicon Pharmaceuticals, Inc.

Welcome to the Lexicon Pharmaceuticals First Quarter 2025 Financial Results Conference Call. At this time, all participants are in not 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 13, 2025. I will now turn the call over to Lisa D. Francesco, SVP, Investor Relations and Corporate Communications for Lexicon. Please go ahead, Lisa.

Thank you, Shannon. Good afternoon and welcome to the Lexicon Pharmaceuticals First Quarter 2025 Financial Results Conference Call. Joining me today are Dr. Mike Exton, Lexicon's Chief Executive Officer and Director, and Scott Chianti, Senior Vice President and Chief Financial Officer. Dr. Craig Granowitz, Senior Vice President and Chief Medical Officer, will join us for Q&A. Earlier this afternoon, Lexicon issued a press release announcing our financial results for the first quarter of 2025. which is available on our website at www.lexpharma.com and through our SEC filing. A webcast of this call, along with a slide presentation, is also 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 questions. 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 pilivapidin LX9851 Cetagliflozin, and our other drug programs, as well as our business generally. These statements may include characterizations and projections related to the clinical development, regulatory status, and market opportunity for our drug programs, and the commercial performance of Impefa for heart failure. This call may also contain forward-looking statements related to our growth and future operating results, 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, and we refer you to our most recent annual report on Form 10-K and other SEC filings for detailed information describing such risks. I would now like to turn the call over to Mike Exton. Mike?

Hey, good day, everyone. Thanks for joining us. As those of you following Lexicon know, the first quarter of 2025 was a busy and productive one for us. starting with our most recent announcement. At the end of March, we announced an exclusive license agreement with Novo Nordisk for LX9851, our first-in-class oral non-incretin candidate for obesity and other metabolic conditions. Now, this agreement grants Novo an exclusive worldwide license to develop, manufacture, and commercialize 9851 in all indications. Under the terms, Lexicon was eligible to receive upfront near-term milestone payments of up to $75 million of which $45 million was received in April, and up to $1 billion in aggregate upfront and development regulatory and sales milestone payments, as well as tiered royalties on future net sales of 9851. Lexicon will be responsible for completing agreed upon investigational new drug application enabling activities for 9851 and providing clinical supply to Nova Nordisk at an agreed upon transfer price for a limited time period while Novo will be responsible for filing the IND and conducting all further development, manufacturing, and commercialization of LX9851. Now, we couldn't be more pleased with this collaboration. Novo Nordisk's experience and global capabilities in obesity make them an ideal partner to maximize the value of LX9851. This truly is a validation of the science and the potential of this novel asset. We're gratified that we have continued to make great progress in our partnering strategy to find the highest quality partners that augment our capabilities and realize the full value of our assets. Now, the other major development in the first quarter was the top line readout of our progress phase 2b study of pilavapidin, which is our oral non-opioid drug candidate for DPNP. We're pleased to have identified a well-tolerated dose that is repeatedly showing clear evidence of effects take forward in phase three studies. Once we have the full data package later in Q2, we look forward to engaging the FDA on the phase three design using 10 milligrams of pilavapidin. And finally, we completely revised our cost structure to reflect our pivot to an R&D-focused company by reducing our operating costs and utilizing the upfront payment from the Novo Nordisk Agreement to reduce our debt. while ensuring we have the cash runway to meet our objectives and support continued development of our R&D programs. So all in all, we ended the first quarter in a very strong position. We have a clear path forward for Pilavapidin and DPNP, having cleared the hurdle of identifying the appropriate dose for phase three. We improved our balance sheet and are on a strong financial footing for the milestones ahead. So I'd like to dive a little bit deeper now into our DPNP program primarily reiterate two key points here. First, and importantly, across both the relief and progress studies, we've now demonstrated three times that a 10 milligram dose shows early and sustained separation versus placebo. And second, while absence of a day one loading dose improved the tolerability of all pilavapidin arms in progress, that 10 milligram dosing schedule was particularly well tolerated showing placebo-like completion rates. Collectively, in our view, these data de-risk our advancement into phase three with a 10 milligram dose and give us great confidence in the potential pill of ApoDen to be the first novel oral non-opioid DPNP medication in more than two decades. I can't emphasize enough the opportunity for innovation in this market. As I talk with patients, caregivers, and payers, it's absolutely clear that there's a tremendous need for new non-opioid treatment options for neuropathic pain. DPNP is a relatively common complication of diabetes, impacting one in every four people with diabetes. Today, there are approximately 9 million people in the US with DPNP, and that number is expected to grow to 13 million by 2035. This is a chronic and progressive pain disorder that severely impairs people's quality of life. Not only is it painful, but it's unrelenting and burdensome to patients and can lead to other complications like a loss of sensation, falls, fractures, even limb amputation. And so the message from all stakeholders is loud and clear. The community needs new and better medications to manage DPNP. For 70% of people with DPNP, currently available treatment options don't provide adequate relief. 60% have tried multiple therapies, either by switching or by adding on to their treatment regimen. But people with DPNP often feel like they're stuck in a cycle of trial and failure with different treatments. But the need for new non-opioid treatments for pain is also underscored by recent proposed legislation such as the Alternatives to Pain Act, that's been proposed supporting greater access to non-apioid therapies. We're committed to advancing our Pilavapidin development program as quickly as possible with the aim of providing a novel oral treatment that can improve the lives of people with DPNP. So we look forward to providing further updates as the year progresses, including full data from the progress study at an upcoming medical meeting. We're targeting a phase three study initiation for Pilavapidin in DPNP later this year. following our end of phase two review meeting with the FDA. Moving on now to sodagliflozin. We remain on track with enrollment in our global pivotal Sonata HCM study of sodagliflozin in hypertrophic cardiomyopathy, or HCM. HCM represents an area of significant opportunity and need, where we feel soda has the potential to offer a differentiated treatment option. Now, in the U.S., there are just over a million people with HCM, and of those, approximately a third have non-obstructive HCM, which the heart muscle is thickened but doesn't block flow, whereas two-thirds are diagnosed with obstructive HCM, in which the thickening of the heart muscle wall blocks or reduces blood flow from the heart. An important characteristic of HCM that may not be fully appreciated is that as a chronic, progressive disease, HCM can deteriorate over time. leading to other complications including heart failure. Indeed, 43% of people with HCM also have progressive heart failure. Now, we have great confidence in soda as an option for HCM. As you're all aware, there have been a number of innovations that target the sarcomere being developed for this disease, one of which is approved for the treatment of obstructive HCM. Nevertheless, despite significant investment and increasing awareness in HCM, these novel agents have only penetrated about 1% of the market. So we believe the potential approval of SOTA would significantly expand the population treated with novel agents. Our confidence derives from a number of SOTA's features. First of all, besides its approval in the US for heart failure, there are important data that give us confidence that SOTA will be effective in both obstructive and non-obstructive HCM. Namely, we've observed significant benefit of sotagliflozin in heart failure and MACE in patients with left ventricular hypertrophy with normal blood pressure. Furthermore, mechanistically, soda appears to reduce cardiac work and improve cardiac metabolism. Importantly, we would expect no REMS for soda in HCM, consistent with our heart failure label, which would provide access to a broad prescriber base. And finally, we can have confidence that to date in clinical trials and post-marketing experience, soda has not been associated with an increased risk of atrial fibrillation. Therefore, we expect soda has the potential to become a disruptor in this space and become widely used in the market across the spectrum of disease. The next slide provides an overview of our global phase three Sonata study of soda in HCM. Sonata is enrolling at full speed with EU and LATAM sites either already online or imminent. Now we expect that all of the phase three sites will be up and running by the third quarter of this year. So we're pleased with that progress. Sonata is the only ongoing study evaluating a treatment in both obstructive and non-obstructive HCM. We feel that there's potential for this study to support an SNDA with a broad label. Once the Sonata study is complete and we have that data in hand, we will also have an opportunity to revisit the totality of the soda flows and potential opportunity across indications in the U.S., where we continue to build differentiating evidence that the mechanism of dual inhibition of SGLT1 and 2 does have different outcomes in MACE events, including MI and stroke, as most recently published in The Lancet. Now touching briefly on business development. As I mentioned at the top of our call, we're very pleased with our recently announced collaboration with Novo Nordisk for LX9851, which both strengthens our financial position and provides LX9851 the best possible chance of success by benefiting from the expertise, resources, and capability of Novo Nordisk, an established leader in the obesity market. As the obesity treatment landscape continues to grow and evolve, we expect to see an opportunity for next-gen treatments to build on the success of the earlier incretin-based therapies. Based on 9851's unique mechanism, oral administration, preclinical findings to date, and possibility for both monotherapy and combination applications, we feel LX9851 has the opportunity to occupy a unique space in the treatment landscape for obesity and metabolic conditions. We look forward to working with Novo to maximize the potential of this innovative medicine. So zooming out to look at business development more broadly, our innovative and flexible partnership approach is unlocking long-term value for Lexicon. Beatrice has been a committed and collaborative partner for Soda outside of the US and Europe and is extending the geographical reach for Soda across cardiometabolic and other indications. This agreement included a $25 million upfront payment and potential milestone payments of up to almost $200 million. This collaboration leverages Beatrice's global scales and capabilities, allowing us to reach more patients worldwide. Beatrice recently announced it's been preparing regulatory approval applications for soda in a number of ex-US markets. Filings in the UAE and Saudi Arabia have been submitted, and the filing in Canada is expected to be submitted shortly. So as you can see, we've been working closely with Beatrice and making significant progress together. Now, as I just noted, our partnership with Novo has the potential to generate significant value for LX9851 in obesity and for Lexicon as a partner. And as we look to our future partnerships, we're heavily focused on Pilavapidin, where our aim is to unlock value globally across multiple indications with a partner that has complimentary capabilities, therapeutic area expertise, and a global commercial footprint to help fully realize Pilavapidin's pipeline and appeal potential. With our significant clinical expertise in the space, we have flexibility in the types of partners that would be a great fit for this asset. We've been having a significant amount of interest and dialogue with these potential partners. And with that, I'd like to now turn it over to Scott to walk you through our financial results for the quarter ended March 31, 2025.