Q4 2021 Lexicon Pharmaceuticals Inc Earnings Call
Your lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If he would like to ask a question during that time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question press. The pound key. Thank you I will now turn the call over to Chas Schultz. Please go ahead Sir.
Thank you April good morning, and welcome to the Lexicon Pharmaceuticals fourth quarter 2021 financial results Conference call.
Joining me today are Lanell coats lexicons, Chief Executive Officer, Jeff Wade Lexicons, President and Chief Financial Officer, and Dr. Craig bandwidth lexicon, Senior Vice President and Chief Medical Officer.
Earlier this morning lexicon issued a press release announcing our financial results for the fourth quarter of 2021, which is available on our website at www Dot Lex pharma dot com and through our SEC filings.
<unk> cast of this call along with a 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 questions.
Before we begin let me remind you that we will be making forward looking statements, including statements relating to the safety efficacy and the therapeutic and commercial potential of <unk>, Alex 91, one and other drug candidates.
These statements May include characterizations of the expected timing and results of the clinical trials of surgical close them, Alex 91, one and other drug candidates and the regulatory status and market opportunity for those programs.
This call May also contain forward looking statements relating to our growth and future operating results discovery and development of our drug candidates launch and commercialization plans for any approved products 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 the timing and outcome of our planned NDA submission resubmission for soda to float and heart failure, and our discussion with the and our discussions with the FDA regarding political flows in relating to heart failure and type one diabetes. The success of our commercialization efforts with respect to any approved products.
The timing and results of clinical trials and preclinical studies of <unk> <unk> 91, one and other drug candidates.
Our dependence upon strategic alliances and other third party relationships, our ability to obtain patent protections for our discoveries.
Limitations imposed by patents owned or controlled by third parties and the requirements of substantial funding to conduct our research development and commercialization activities.
For a list and a description of the risks and uncertainties that we face. Please see the reports we have filed with the Securities and Exchange Commission.
I would now like to turn the call over to Lanell coats.
Chad Good morning, everyone and thank you for joining us on the call.
I will first like to discuss what is likely on the top of all of your mines and that is our decision to voluntarily withdraw and resubmit our NDA for <unk>.
This decision was necessary to ensure the completeness of our NDA submission.
We recently identified a technical issue with our NDA submission, which was not related to the clinical results or the interpretation of the underlying clinical data.
The company identify supportive documents related to site monitoring visits that were inadvertently not included in the submission with.
We promptly notified the FDA about the issue and have been in discussions with the agency to correct. The submission. Unfortunately, the issue was discovered near the end of our 60 day filing review period, which did not allow a sufficient amount of time for us to correct. The submission and for the FDA to complete its filing review after <unk>.
<unk> with the FDA, we determined that the withdraw of the NDA and a subsequent resubmission would be the most appropriate action to provide a complete submission for review.
I would like to reiterate that this technical issue does not involve the substance or the analysis of the clinical results and it does not impact our conclusions from our soloist nor scored phase III outcome studies, we plan to correct. This issue and promptly resubmit the NDA by early second quarter.
Now, let me turn our attention to Alex nine to one one which is a selective inhibitor of a K one.
Despite neuropathic pain affecting millions of people there remains a high level of unmet need for those suffering from the condition. The current therapies are limited by a lack of efficacy compounded by debilitating side effects and in the case of opioids risk potential abuse and addiction. We believe Alex <unk> has the potential to overcome many of the <unk>.
Short comings of current therapies and become it could become a welcome new innovation, but those suffer from neuropathic pain on a daily basis, we have made significant progress over the last few months and our two ongoing phase II proof of concept studies and expect top line results in a very near term.
For relief VPN, one our study in diabetic peripheral neuropathic pain I am very pleased to report that we are completing recruitment. This week, we expect to report top line results by the end of Q2 2022.
For ALLETE PHN, one are studying Postherpetic neuralgia, which is a global study we are continuing to enroll patients and expect to report top line results in the third quarter of 2022.
I would now like to invite Jeff to take us through the financial results for the fourth quarter of 2021.
Thank you <unk> I will provide some key aspects of our fourth quarter 2021 financials more financial details can be found in the press release that we issued earlier today and then our upcoming 10-K SEC filings.
We ended the year with $86 $7 million in cash and investments and no debt.
While we will require additional capital as we approach the launch of surgical Pleasant, we can manage our operations over the next 12 months within our existing capital resources.
As indicated in our press release. This morning, we had minimal revenues for the fourth quarters of both 2021 and 2020.
Research and development expenses for the fourth quarter of 2021 increased to $16 5 million from $1 million for the corresponding period in 2020.
The R&D expense in the fourth quarter of 2020 reflected a reduction in estimates for external clinical development costs, primarily related to sudden pleasant R&D expenses.
Selling general and administrative expenses for the fourth quarter of 2021 increased to $8 8 million from $6 4 million. The same period in 2020, primarily due to higher legal fees.
And total net loss for the fourth quarter of 2021 was $25 6 million or <unk> 17 per share as compared to a net loss of $5 5 million or <unk> <unk> per share in the corresponding period of 2020.
Our net loss for the fourth quarter of 2021, and 2020 included noncash stock based compensation expense of $2 $2 million and $2 $7 million respectively.
I'd now like to turn the call back to Leno, Thanks, Jeff before taking any questions. Let me close out by summarizing our key anticipated milestones and events.
First let me say the team has been working diligently since discovering the technical issue with our NDA submission and we are working very closely with the FDA to correct the issue and promptly resubmit the NDA early in the second quarter the.
The resubmission of the NDA will likely result in our planned launch of soda go flows are in heart failure if approved occur.
Occurring in the first half of 2023.
We are expecting top line results from our relief VPN. One study by the end of Q2 2022 and shortly thereafter, we anticipate the top line results for relief PHN won in Q3 of 2022.
The news today is certainly disappointing to us, but I want to be clear. This delay does not change the value proposition of soda flolan.
We believe cycle flows and unique dual mechanism of <unk>, one and <unk> two inhibition provides important and differentiating benefits for patients with heart failure living with type two diabetes, especially those patients with recent and worsening heart failure.
With that I'll stop and open the floor for questions and turn it over to the operator.
As a reminder to ask a question. Please press Star then the number one on your telephone keypad.
And your first question is from Yigal.
<unk> with Citi.
Great. Good morning. This is Carly on for Yigal. Thank you for taking our question. We have one clarification question on the heart failure Mds can you just walk through what needs to be done in order to.
Correct.
We'll issue and resubmit the NDA.
Great question, we've been working with the FDA since notifying them of this matter and we have already started the process of going back and in putting all of the information that's required to make the application complete so we know exactly what the issue or what the issue is and now we will start to work to two two.
Repair those issues.
Get this back to the FDA as soon as we can.
Okay, Great and then where do you stand with that.
Ex U S partnership discussions for heart failure could you broadly characterize the level of interest or a ceiling there.
Jeff you want to talk about that.
Yes, we're continuing to have discussions regarding ex U S.
It is something that I would say is not eminent but global will continue to have dialogue, we do intend for outside of the U S to rely on partnerships and collaborations that don't have any ambition of commercializing on our own outside of the U S.
Okay got it that's helpful. And then if I could just ask one more on the pain trials. We're curious if theres any reason mechanistically to believe that Alex Knight to bottom line would be more likely to show a therapeutic effect.
Jan for VPN.
Great question, Craig do you want to take that.
Certainly thank you correlate.
As we've shown in a number of publications and discussions.
We believe that based on both the knockout mice the biochemical data that's been done in the animal models.
That some of the liabilities that are seen in these.
Prior studies of animal models, and preclinical development differentiate potentially.
<unk> nine to one one from a risk benefit standpoint, certainly the liability of addiction potential compared to opiate.
And some of the other liabilities that are related to Gaba <unk> acid and Tricyclics, we don't seem to see those in similar animal models.
Again I'll hold on the human experience other than whats been published in the rising single and multiple doses, which showed good tolerability.
In those clinical studies that have been presented publicly.
And then also we have very good results in preclinical models for both diabetic peripheral neuropathic pain and post herpetic neuralgia.
There is.
Theres more heterogeneity in the population that has diabetic peripheral neuropathic pain, which is part of the reason why we did a larger study in that indication.
Where there is neuropathic pain with some level of specificity and so DPM is going to be critical to in terms of the initial success, then certainly PHN success will deter.
Determined just how big the opportunity might be for us in terms of the market size.
Perfect. Thank you so much.
You bet.
Your next question is from Jessica Fye with J P. Morgan.
Good morning, everyone. This is Daniel for Jessica Fye. Thanks for taking our question a couple of clarifying questions on the technical issue found in the NDA submission.
Where the site monitoring visits that were not included related to manufacturing quality analysis or some other sites.
No these were clinical sites.
Okay and was the visit completed by the FDA, but not recorded in the NDA or was the visit not completed by the agency to begin with.
Now these are visits that need to be completed by the sponsor.
Okay.
The test that we have the source document, yes, just didnt make it in India.
Got it Okay and was there a potential to correct the issue while the NDA is westerlund submission meeting.
After you have considered a correction of the technical issue.
As a major amendment.
That was that the reason why it was pulled.
No you don't you don't amend a filing a submission you can certainly do that on the on the other side of it but you don't amended the submission I think it was a timing issue we were very very close to.
Two the 60 day date that we had on record and that just was not enough time for the update of completeness review nor for us to go back and do the inputs. So.
The best answer was to to pull it and get it done and get it back in.
One of the things I will say the.
Conversations with the agency.
I was.
Very encouraging because they they felt very confident about.
I would just characterize it a conversation is one of confidence and that the company came forward and disclosed it and working directly with them on it given that the file was under review for excuse me. The submission was under review for filing. So I think my hope is that certainly gained some goodwill. So we can keep moving with the speed that we <unk>.
<unk>.
Great.
One last question on this issue.
How did you detect this issue before the FDA.
Our great question prior to any.
You make a submission you pull your team together and you go through all of what you've submitted so you can get ready for FDA inspection and you make sure. There's no gaps in what you've done and you go through that again and Thats, how we discovered it.
Okay got it.
And a bigger picture when we think about the shift in timeline for a potential NDA resubmission to early QQ and launching.
Hello launch in first half 'twenty three what are the some of the considerations to keep in mind regarding cash runway.
Jeff I'll turn it over to you.
Well.
And in either of those scenarios, we're going to need to.
To be able to bring in additional cash as we get closer to launch.
We have the ability to get to manage our operations to get through a three year.
But we will need additional capital from a cash runway perspective.
Other than that this is really a matter of a.
The delay of a few months.
And it doesn't really change any of the.
One I'll say it doesn't change the value proposition doesn't change.
Any of the opportunity for the product.
Its a delay.
Yes, I think when you.
When you do have a delay unfortunately delay you are spending all of the.
The work that we're doing that start to bring teams on board to get ready for the launch that August delayed, which which delays out of us having to make the spin and therefore allows us to extend our cash runway.
Got it okay. Thank you very much for taking my question.
You bet.
Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Your next question is from Joseph Stringer with Needham.
Hi, Good morning, Thanks for taking my questions two quick ones from us.
Just given the slight delay here in the surgical flows in.
Program.
Can you just put that into context, just given the.
Competitor programs that are out there and sort of their timelines what does that mean for overall strategy for lexicon and heart failure. There has anything changed there and secondly on the pain program.
Would you need to see data from the phase two.
PHN trial.
Before deciding on next steps for the pain program or would the DPM trial give ya.
If that were positive could you sort of proceed into next steps there. Thank you.
It's a great question, let me start with the second one first the.
The <unk> study is the most critical study I think for us to make a decision as we go forward.
<unk> study is more of a complementary study in terms of our ability to show the drug can be broadened to.
To other areas of neuropathic pain.
We have to have a win on VPN.
As for your first question I'm going to turn it over to Jeff.
This doesn't really change the strategy for us.
We anticipated that <unk> would get a broader label and we have data that is unsurpassed.
That the same category in terms of.
Benefit that we saw in the study in heart failure with preserved ejection fraction really across the entire spectrum of lesson trigger an ejection fraction, but one of the things that's unique and our program is that we have the soloist study and it's in recent recent worsening heart failure, and it's hard to outcomes and that recent immersing heart failure study and that.
It's been one of the areas of focus for our commercialization strategy and thats not going to change and there's really not anything out there that is.
That is comparable to that study.
So we.
We anticipated that <unk> would get a broader label it actually.
A benefit to us because this is going to be the first.
First time.
Couple of different drugs, including setting a pleasant are going to.
You have the opportunity to be available for patients with that have been underserved and not well served or maybe not it won't all served by existing therapies and that's going to be a growing market and we're going to get to.
To leverage that that growing market.
Yeah.
Yes, the other thing I wanted to ask.
Okay.
Go ahead, Craig Alright.
Yes, one other comment I would just like to add that I'm sure. This is might be able to announce comment as well as even in the fda's own press release on <unk>.
The head of the review Division noted that this was not a solution for all heart failure.
And I think that leaves certainly the door open for additional innovation, particularly as Jeff mentioned.
What we believe is the incremental value of surgical folks across even a broader range of left in that.
Ventricular ejection fraction as well as particularly the group of highest risk, which was not specifically covered in the <unk>, even revised label of recent and worsening heart failure.
Yes, I think we will take this opportunity as we start to rework our resubmission.
And even strengthened.
Even more strengthen the focus on.
What we believe should be a priority review for our application, particularly in the recent of worsening heart failure that we see the <unk> data, we're even more convinced that we have a differentiated compounds. So.
This could be an opportunity for us to make it even stronger argument and hopefully leads to the outcome that we intend to have once approved.
If it should be approved.
Great. Thanks for taking our questions.
Okay.
Your next question is from Julian Harrison with BTG.
Hi, Good morning. Thank you for taking my question you kind of just answered it there I just wanted to confirm that this need to resubmit. The critical fluids, an NDA does not affect potential eligibility for priority review upon acceptance.
Yes.
We have to make the argument anytime you submit you've got to make the argument.
Our show you, we'll be making the argument.
Even stronger way once we resubmit.
And there are no further questions at this time.
So I want to thank everyone for joining us on the call.
There is no greater priority for the organization into.
The issue that we identified we are working.
Very quickly to resolve it I think we've had very collaborative conversations I would characterize them with the FDA.
And I think if we are able to move with the speed and the quality that we intend to move with <unk>.
Our objective is to keep moving as fast as we can and doing that we have outlined that the potential to re submit will be in the early part of the second quarter.
And then from there I think to the point that was just made recently it really is an opportunity as well for us to make.
Given that we are seeing what's what's now been approved for us even make a strong argument for why we think we should have a prior to review, particularly for patients who recently recent and worsening heart failure.
So we're going to take this as it's a slight setback in a delay but it also could be an opportunity for us to strengthen our application.
So with that being said I want to thank you again for joining us and we look forward to updating you on our next call.
This concludes today's conference call. Thank you for participating you may now disconnect.