Q1 2022 Lexicon Pharmaceuticals Inc Earnings Call
Good morning, This is Jesse and I will be your conference operator today at this time I'd like to welcome everyone to the Lexicon Pharmaceuticals, Inc. Fourth quarter 2021 earnings Conference call.
Please note all lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session if.
If you'd like to ask a question. During this time simply press the star key followed by the number one from your telephone keypads, if you'd like to withdraw your request you May press the pound key thank you.
I'll now turn the call over to your host chat Schultz Executive Director Corporate Communications and Investor Relations. Sir you May now begin.
Thank you Jessie good morning, and welcome to the Lexicon Pharmaceuticals first quarter 2022 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 graduates lexicon, senior Vice President and Chief Medical Officer.
Earlier this morning lexicon issued a press release announcing our financial results for the first quarter of 2022, which is available on our website at www Dot Lex farm, a dot com and through our SEC filings.
Webcast of this call along with a slide presentation is available on our website.
This call we will review 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 third a couple of them.
91, one and other drug candidates.
These statements May include characterizations of the expected timing and results of clinical trials of soda can flows I'm, Alex 91, one and our 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.
Launching 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 resubmission for so to close and in heart failure and our discussions with the FDA regarding <unk> flows relating to heart failure in 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 Soda Cup loves them, Alex 9211, and our other drug candidates our dependence upon strategic alliances and our <unk>.
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 planned research development and commercialization activities.
We're 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 Lynn L coats.
Thank you Chad and good morning, everyone for joining us on the call.
So let me jump right to slide three we expect that the second quarter of 2022 will be a pivotal quarter for lexicon with major anticipated milestones for both our dual S. Youll T. One and two inhibitor soda good flows and in our 8-K, one inhibitor <unk> nine to one one.
We plan to resubmit, our new drug application for soda good flows and for the treatment of heart failure. This month.
Our dialogue with the FDA regarding the Resubmission has been ongoing and we received confirmation from the FDA in late April that is aligned with our Resubmission plans. This alignment was a significant step and we expect to have a relatively straightforward path to resubmit in the next few weeks.
We believe the data from our soloist phase III trial provides compelling support for unique label for soda flows in and recent and worsening heart failure, which we would which would provide us with a strong entry point into the heart failure market. If approved the overall heart failure market is already a very large multi.
Billion out of market and is anticipated to further grow at nearly 20% per year for most of this decade, which we feel could enable peak blockbuster potential for soda flows it.
Pending market approval from the FDA, we are planning to launch soda. Good flows in the first half of next year.
Also in this quarter, we expect to announce topline results from our phase II study of Alex 91, one in diabetic peripheral neuropathic pain.
Neuropathic pain is a very large market that is extremely underserved and unsatisfied.
We believe Alex 9211 has the potential to provide an innovative approach to treating neuropathic pain without the many.
Treatment issues that we see with the current treatment options.
Slide four.
Let me spend a quick moment on what we are now seeing play out in the heart failure market.
These figures are from our 2019 report in which global data estimated that the heart failure market will grow to $22 billion in 2028.
Representing a compound annual growth rate of nearly 20%.
Not only did they project that the market will grow with this tremendous rate over the next decade.
Also forecasted that that growth would be largely driven by the adoption of <unk> inhibitors for the treatment of heart failure, which we are now seeing play out with major heart failure treatment guideline revisions both in the United States and in Europe .
Let me go to slide five.
Traditionally there have been three pillars of therapy constituting the cornerstones of care in heart failure, Ace Arbs, and Arnie beta blockers and mras.
New guidelines issued by major medical associations of both the United States and Europe have now established S. G. L. T inhibitors as a fourth pillar therapy and the standard of care for heart failure.
The European guidelines were issued in August of 2021, and the United States guidelines were jointly issue by the three largest cardiology societies just this last month.
Ideally patients are prescribed drugs from each of these pillars of care.
To give you a perspective abuse approximately 90% of heart failure patients are on a beta blocker and 80 plus percent are on an ace or arb.
S. T S. T. L. T inhibitors are currently only use and approximately 5% of heart failure patients. So we are currently at the very beginning of a tremendous growth opportunity, but a utilization in this space.
Let's turn to slide six.
And the most recent guidelines <unk> two inhibitors were elevated to first line prevention and treatment of heart failure by the three largest U S cardiology societies.
Specifically.
<unk> two inhibitors received the top endorsement for the prevention of heart failure in patients with high cardiovascular risk.
For the treatment of symptomatic heart failure <unk> two inhibitors were adopted as a standard of care for heart failure with reduced ejection fraction and received a stronger recommendation than any other class of therapy for heart failure with moly reduced injection fraction and heart failure with <unk>.
Preserved ejection fraction.
The United States guidelines are also highlighted the need to improve optimization of medical therapies during heart failure hospitalizations when changing therapy can have a long term benefit to patients.
This particular point.
Treatment intervention was the focus of our soloist recent heart failure study, which was cited in the guidelines.
I want to provide a quick update Alex none on the next slide Alex not to one one which is our selective inhibitor of a K one.
We believe Alex not 'twenty, one has the potential to overcome many of the shortcomings of current therapies and could become a welcome new innovation for those suffering from neuropathic pain on a daily basis.
We made significant progress over the last few months and our two ongoing.
Phase II proof of concept studies and expect top line results in the near term.
Poor relief D. P. In our study in diabetic peripheral neuropathic pain I am pleased to report that we have completed enrollment in the final patients are now reaching the end of their treatment periods. I can also report that we exceeded our patient number goal for the study and we expect to report top line results by the end.
As of June 2022.
For relief.
In our study in post Herpetic neuralgia, we continue to enroll patients and expect to report top line results in the third quarter of 2022.
With that I'd like to invite Jeff to take us through the financial results for the first quarter of 2022, Jeff.
Thank you Lorne L. I will provide some key aspects of our first quarter 2022 financial results more financial details can be found in the press release that we issued earlier today and in our upcoming 10-Q SEC filings.
We ended the quarter with $86 $5 million in cash and investments.
During the first quarter, we entered into a loan facility with Oxford finance that provides us with up to $150 million in borrowing capacity.
An initial $25 million tranche was funded at closing.
This loan facility provides us with access to committed source of funding to support commercial preparations and the potential launch of sudden pleasant and heart failure.
One with substantial flexible its ability financial flexibility as we approach the planned resubmission of our NDA for surgical pleasant in heart failure and expected top line results from the two phase II proof of concept studies at <unk> nine to one one in neuropathic pain.
Brent capital and the flexibility to draw down from the loan facility upon the FDA acceptance and approval of our planned sudden pleasant new drug application Resubmission, we anticipate that we will have sufficient resources to manage our operations through the planned launch of sudden flows in to market.
As indicated in our press release. This morning, we had minimal revenues for the first quarters of both 2022 and 2021.
Research and development expenses for the first quarter of 2022 increased to $14 9 million from $12 $6 million for the corresponding period in 2021, primarily due to increases in professional and consulting costs related to our new drug application for <unk> Pleasant.
Selling general and administrative expenses for the first quarter of 2022 increased to $8 5 million from $8 3 million for the same period in 2021, primarily due to increases in personnel and external expenses relating to preparations for the commercial launch of sudden pleasant.
And total net loss for the first quarter of 2022 was $23 5 million or <unk> 16 per share as compared to a net loss of $21 million or <unk> 15 per share in the corresponding period of 2021.
Our net loss for the first quarter of 2022, and 2021 included noncash stock based compensation expense of $2 $8 million and $2 9 million respectively.
I would now like to turn the call back till now thanks, Jeff.
Taking your questions I would like to close out by summarizing our key anticipated milestones and events.
First we plan to resubmit, the new drug application for soda go flows on and heart failure. This month and plan to launch cycle flows are in heart failure, if approved in the first half of 2023.
Next we are expecting top line results from our release D. Pn study by the end of June .
And we anticipate the top line results from our relief PHN study in Q3.
With that I'd like to pause now and ask the operator to open the call to take your questions.
Thank you speakers participants we will now begin to question and answer session.
As a reminder, you May press star one from your telephone keypads to ask a question over the phone.
To withdraw your request you May press the pound key.
Speakers. Our first question is from the lineup you call. The charmer bits of Citi. Your line is now open.
Hi, This is carly on for Yigal, Thanks for taking our questions.
I know you don't have too many details at this stage, but we wanted to get your thoughts on this morning's announcement that the liver study for that.
Where.
Does that impact at all how youre thinking about marketing and Gulf War political cycle.
Well Carla Great question, and so let me give some perspective, and then I'll turn it over to Craig our Chief Medical Officer.
We anticipated that they will have success here just like <unk> has success and I give perspective only to say in order for this market to grow the way. We believe it will <unk> across the board have to be consistent to some degree and how it delivers as data relative to this new category of half Mirth and then.
And so we see that's happening and that's consistent and that's good news because that gives everyone confidence.
<unk> truly can become the the primary standard of care in this market. So that's the good news. However, we've always stood by the uniqueness of soda the flows in.
And its ability when you add the STL T. One into the mix you do get some uniqueness, particularly in certain populations such as how we define recent of worsening heart failure with that I'm going to turn it over to Craig to give his perspective.
Thank you and now I just wanted to make sure you can hear me all right.
Yes, we can hear you correct.
Terrific well correlate I think there are three or four main points that I'd like to cover and I think we'll know did a good job framed.
Framing it already is that we believe that the topline announcement from Astrazeneca. This morning via press release.
Reaffirms the importance of SDLP inhibitors as a foundation of care in the treatment of patients with heart failure.
The second is there were no surprises in our view from the deliver results because we believe they are very similar to the emperor preserved population.
And as a reminder, that is the population of patients that have a history of heart failure, but not necessarily recurrent heart failure and in fact, the results from DAP up on the delivered study.
Our only about 10% of the patients had a recent hospitalization for heart failure defined by less than 30 days. So we believe that it reaffirms the uniqueness of the soloist population, where 100% of the patients had been hospitalized and 50.
Percent of them were started on <unk>.
During their hospitalization and the other 50% within three days of the released from the hospital of those patients for a heart failure hospitalization.
The other important difference between soloist.
And the liver.
But similarly between the liver and emperor preserved is that a very low relatively low percentage of patients are on guideline directed medical treatment. When you think about the other pillars of care being beta blockers, ASR Barneys and <unk>. So we believe that the deliver results reaffirm the banner.
For the class.
But also reinforce the uniqueness of the soloist population and frankly it is the value proposition. We believe of the dual inhibition of both <unk>, one and <unk> two with the benefits as we showed at ACC in reduction in stroke and heart attack.
In at risk patients for heart failure, and the uniqueness and the benefit and rapid onset of benefit in those with a recent heart failure event.
Great Greg.
Yeah, and I guess, just one follow up related to that we also wanted to get your latest perspective on that.
Pulse data from Lilly as it seems they now have.
Data from <unk> and.
Pretty similar patient population.
So yes.
How do you plan to make the argument that so that is the better choice.
Therapy in the hospital or very soon after discharge.
Great question Carlos.
I'm going to allow Craig to May.
It may be dismissed some of the similarities you just ex out you just listed Craig.
Yes. Thank you know again, we believe actually reinforces.
The value proposition of soda propulsion and if you look at the Emperor.
The impulse study.
They did not have hard clinical endpoints as their primary endpoint.
Whats called the win ratio, which combines patient reported outcome benefits.
And the hard endpoint.
That composite endpoint of cardiovascular death hospitalization for heart failure.
And unscheduled emergency heart failure visit if you try to compare like versus like which is just the hard endpoints.
That three composite endpoint of cardiovascular death.
Yeah.
And then the others heart failure hospitalization nonscheduled.
<unk> visits if you look at the <unk> results at 30 days, they actually show a P value point estimate that is to the right of one.
So actually they do not show a reduction in those hard endpoints. Unlike surgical closing at 30 days and at 90 days that endpoint still does not achieve significance and I think as we've shown repeatedly with soloist and I hope that other data throughout the year will continue to reinforce that.
As again, we see that benefit in reduction in early <unk>.
Readmissions for heart failure related events that we again are attributing likely to the unique and added benefits of <unk> inhibition.
Got it and then just one last question I guess in terms of that NDA resubmission have there been any.
Unexpected hurdles or or issues in that process.
Another great question Carlin no.
When we found the technical error that we.
We initiated a conversation with FDA.
Withdrew our application we took the time and care to go through there our entire application again go through everything that we did from soup to nuts to.
To make sure that we captured everything we need to capture we didn't ask for a meeting with the FDA because our plan to resubmit, we want to make sure that there was great alignment between us and the agency they granted us that meeting, which was which was which was good for that to happen and then ultimately we walked them through what we have done to make sure that we have gone through our data.
<unk> gone through our entire <unk>.
Submission and we have great confidence that we'll be submitting a high quality application that meeting took place very recently here towards the end of April and now at this point, we have a pretty clear path to refile in the resubmitting the application in the next few weeks.
Perfect. Thanks, so much.
Beth.
Speakers. Our next question is from the line of Jessica Fye of Jpmorgan Your line's now open.
Hey, guys. Good morning, Thanks for taking my question.
Wanted to ask.
One nine Q1, one heading into the phase two data.
Let's see.
FX size or the Delta that you want to see.
I have confidence that this will be a product that can drive the clinically meaningful benefit.
Once you move into a phase III right like do you want to have some cushion in the phase II result to kind of give you that increased confidence and what is that number.
[laughter], Jessica always great questions, and we have not disclosed that number.
What I will say this is the first time that we've put Alex down to under one and two.
Into a phase two trial like this and what we're looking for is that translation of what we saw pre clinically into human use and we've given us ourselves a good chance of being able to see a strong signal we powered ours. Our studies to two to see a signal, but we havent identified openly to what that is but I will say that.
We'll be very clear once we have the data in hand here very shortly.
When we communicate we will communicate exactly what that Delta is this is a very unique mechanism is a very different mechanism. A K. One is a very different mechanism. We're running it in multiple studies, because we want to validate.
What are you finding one study you want to validate any other because the neuropathic pain market is a very large market made with many different indications.
And if we can show a signal across the board in this market than it would inform us of how do we prepare for phase III study. So we will give you a lot more clarity once we present the data when we have it in house.
Great. Thanks, a lot.
Beth.
Again participants its star one to ask a question over the phone or the pound key to withdraw your request.
Next question is from the line of Joseph Stringer of Needham <unk> Company. Your line is now open.
Hi, Good morning, Thanks for taking my questions two quick ones from US one can you provide us with any updates on <unk>.
Ex U S partnership discussions.
Those have been playing out and then secondly on the pain program.
The.
You do see the.
Assuming positive signals from the DPM trial in July excuse me in June .
With the Postherpetic neuralgia results in <unk> 22.
Be gating in any way to sort of advancing the pain program. Thanks for taking my questions.
Let me, let me turn both those over to Jeff.
So the first your first question on the ex U S partnership.
Im assuming youre talking about central floods and so.
So to disclose them.
Product that we so we as a company don't really have any ambition that commercializing outside of the U S and so our intention is to try to find a partner.
Our expectation is that going through the FDA process and getting.
And getting.
An approval in <unk>.
In heart failure is going to bolster that effort and so we're moving along.
Activities on the partnering front in parallel with the with our work on the NDA.
So I think thats still something that we have an ambition to do but I wouldn't.
Tried to lead people to think that it's going to happen in the very near term.
The second is.
Relating to.
<unk>.
91, one and the two different studies.
These studies are they're independent views from two different types of neuropathic pain.
Alright.
Diabetic peripheral neuropathic pain is a more heterogeneous indication.
And.
It has more variability, which is one of the reasons why we did a larger study.
And we're also doing dose ranging in that study postherpetic neuralgia tends to be more homogeneous.
Smaller study I think both of these have the ability to independently support.
The.
The mechanism in neuropathic pain, obviously diabetic peripheral neuropathic pain is more attractive indications. So that's one of the reasons why we invested so much in that indication, but but both of them have important things to tell us scientifically that the mechanism.
I would not say that post herpetic neuralgia.
Study is gating it anyway, it's going to provide us with additional information.
But if first if we succeed in diabetic peripheral neuropathic pain study.
Going to stand on its own and be independent evidence of the value of the mechanism.
Hopefully that provides a little bit perspective, do you have any other questions to follow up happy to take those yes, I think if I would add is that.
What we've always said once we have a good clear signal.
It really indicates multiple areas that we can approach with this with this target and this compound.
All across neuropathic pain as you know when you start to produce or to working in this area for phase III studies, you have to do a number of phase III studies, and so studying that signal and the level of segment you get across.
Two unique populations.
We will help inform how we would develop further phase III studies. It also inform how we also look at other indications that we may pursue with this with this mechanism. So the field is very very broad broad broad large and very opportunistic should we get a strong signal.
Either in dire need of these and both of these then I think it'll set the pathway for phase III development.
Great. Thank you.
Yeah.
Thank you participants I will now turn the call back over to CEO Lanell coats for any closing remarks.
Well as always thank you for joining us this morning, we appreciate it.
People working very hard here to advance our near term milestones I think we are a wonderful opportunity to continue to engage with the FDA.
And resubmit, our application and to have further dialogue on the other side of resubmitting the application to make sure we have the opportunity of the Alberta crude product.
A very expensive and growing market.
Meaning that we see today in terms of what deliver has just come out with is predictable and benefit that we see for soda good flows and holds the.
The value proposition, we've always shared about going into hospitals and pushing out from hospitals with the soloist data that holds the.
The three large cardiology societies coming on board at this point was much faster than we thought they would come on board very consistent with the.
The ESC in Europe , and so we continue to see a remarkable growing market and growing opportunity in our remark with pathway for soda flows. It then so Alex now to one one to the questions that were asked.
Shall we get the strong signals that we're looking for and TPN and certainly if that carry forward to the ph and it really informs us on further development of the compound and the investments that we need to make to really turn this into some remarkably special very unique target that was discovered in our collaboration with BMS, a 10 year discovery collaboration.
Operations that lexicon has fully wholly owned our rights to that asset.
And therefore anything that comes out of that that we think will be substantial will create a substantial new opportunity.
Two to advance a unique therapy.
Therapeutic option in neuropathic pain so.
So a lot.
Up in the next couple of months and so we will keep communicating as we have more to say thank you very much again.
In the call here.
Thank you speakers. This concludes today's conference call. Thank you all for joining you may now disconnect.
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