Q1 2023 Lexicon Pharmaceuticals Inc Earnings Call
Speaker 2: deend.
Speaker 3: assistance policing and will conference specialists by pressing the star key followed by zero.
Speaker 4: After today's presentation, it will be an opportunity to ask questions. To ask a question, you may press star and then one using a touchstone telephone. To withdraw your questions, you may press star and two.
Speaker 5: Please also note that today's event is being recorded, and at this time I'd like to turn the floor over to Carrie Stereggusa. Ma'am, please go ahead.
Speaker 6: Thank you, Jamie. Good afternoon and welcome to the Lexicon Farmers Zools' first quarter, 2023 Financial Results Conference call. Joining me today are Linell Coates, Lexicon's Chief Executive Officer, Jeff Wade, Lexicon's President and Chief Financial Officer, and Dr. Craig Granowitz, Lexicon's Senior Vice President and Chief Medical Officer.
Speaker 7: Earlier this afternoon, Lexicon issued a press release announcing our financial results for the first quarter of 2023, which is available on our website at www.lexfarma.com and through our SEC filings. A webcast of this call, along with a slide presentation, is available on our website.
Speaker 8: 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.
Speaker 9: Before we begin, let me remind you that we will be making forward-looking statements, including statements relating to the safety, efficacy, regulatory status, and therapeutic and commercial potential of FOTOGLE-FLOZIN, LX9211, and other drug candidates. These statements may include characterizations of the expected timing and results of clinical trials of FOTOGLE-FLOZIN, LX9211, and our other drug candidates and the regulatory status and market opportunity for those programs.
Speaker 10: 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.
Speaker 11: Various risks may cause our actual results to differ materially from those expressed or implied in such overlooking statements. These risks include uncertainties related to our NDA for SOTA Go Flows-In in heart failure, and our discussions with the FDA regarding SOTA Go Flows-In, LX9211 and our other drug candidates.
Speaker 12: the success of our commercialization efforts with respect to any approved product. The timing and results of clinical trials and preclinical studies of so-to-go flows in, LX9211 and our other drug candidates are dependent upon strategic alliances and other third party relationships.
Speaker 13: our ability to obtain patent protection 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.
Speaker 14: For a list and description of the risks and uncertainties that we face, please see the report to be filed with the Securities and Exchange Commission. I would now like to turn the call over to Lynel Coase. Thank you, Carrie. Good afternoon, everyone, and thank you for joining us on the call. First quarter of 2023 was another significant period for lexicon.
Speaker 15: As we continue to advance in both of our lead programs, SOTOGA flows on our dual SULT1 and 2 inhibitor that we're developing for heart failure, and LX9211, our AAK1 inhibitor, that we're developing for neuropathic pain. Starting with LX9211 program for neuropathic pain, as many of you know,
Speaker 16: We reported on the results of two Phase II proof of concept studies last year in diabetic peripheral neuropathic pain and pulse-herpatic neuralgia.
Speaker 17: Bustered by these results, we have continued to move forward with development plans for LACE STACE development and expect to have feedback from the FDA on these plans in the second quarter of this year.
Speaker 18: Turning to Sotica Flozin as shared in our last quarterly call, we had our late cycle review meeting with FDA in late February for NDA for the treatment of heart failure.
Speaker 19: The agency indicated that there were no substantial review issues and again confirmed that it has no plans to hold an advisory committee meeting. So we believe everything remains on track for our Purdue for Target date.
Speaker 20: on May 27th.
Speaker 21: Now, since our last call,
Speaker 22: We also wanted to highlight the significant progress we have made across all functions of the company to be launched ready for Padufa, including but not limited to very productive label, discussions and negotiations with the FDA.
Speaker 23: appropriate and pre-approval information exchanges with payers across national and regional accounts, government and institutions.
Speaker 24: The recruitment of experienced cardiovascular sales professionals.
Speaker 25: of which the majority are already on board with the company.
Speaker 26: presentations at two major medical meetings including a feature presentation on the time to clinical benefit of SOTICA-PLOSEN, which Dr. Granowitz will speak further about shortly. And finally, we finalized, we're finalizing host-seller and distribution agreements to be ready to ship product within the U.S. shortly following approval.
Speaker 27: We look forward to continuing to work with the FDA over the next few weeks and to turn a review period and are planning to commercially launch SOTOGA Flosen in the US in the second quarter promptly following regulatory approval.
Speaker 28: review of the soda-couplosin program and to further review the status of our commercial launch preparations. Jeff? Thanks a lot, Alan.
Speaker 29: There are nearly 7 million people in the United States living with heart failure, a number that is expected to increase to 8 million by 2030. Heart failure is the leading cause of hospitalization for Americans over 65 with approximately 1.3 million hospitalizations for heart failure annually. Patients who are hospitalized for heart failure are highly likely to return with approximately 25% of patients being readmitted to the hospital within 30 days of discharge and 65% within one year.
Speaker 30: Hospital readmissions are burdensome not only for patients, but also to the health gear system. Annual costs from heart failure expected to increase to nearly $70 billion by 2030 with 80% of those costs due to hospitalizations.
Speaker 31: There is a substantial unmet need for better treatment options for patients and as these data make clear, a strong incentive for providers, hospitals and payers to identify new approaches to reduce hospital readmissions.
Speaker 32: We also know that it is important to prioritize when patients are started on therapy in order to increase the likelihood that they remain on therapy following a hospitalization.
As you can see from the data shown on this slide from the Journal of American College of Cardiology Treatments for Supports
Starting patients on therapy at the time of hospital discharge results in significantly higher percentage of patients receiving appropriate treatment at 60 and 90 days and at 12 months follow-up.
I will now turn the call over to Craig.
to discuss recent updates to the heart failure treatment guidelines and decision pathways prioritizing SGLT inhibitors and to review important data from two recent major scientific meetings. From the AHA meeting late last year, regarding soda conflose and effects in reducing cardiovascular mortality and the risk of hospital readmissions at 30 and 90 days following discharge, and from the ACC meeting in March regarding soda conflose and time-to-clinical benefit and consistent effects across left ventricular ejection fraction. Thank you, Jeff.
Heart failure is a multi-billion dollar market that is poised for substantial growth.
Along with the increasing disease prevalence, this anticipated growth is being driven by new guidelines recently issued by major cardiovascular societies in the United States and Europe , recommending the use of SGLT inhibitors as a pillar of care for treating heart failure.
entitled 2023 ACC Expert Consensus Decision Pathway on the Management of Heart Failure with Preserved Ejection Fraction.
The consensus recommended that SGLT inhibitors should be initiated in all individuals with HEFPF lacking contraindications. Together with the previous consensus guidelines.
The SGLT class is the only medical therapy recommended in all HF patients, regardless of ejection fraction.
It is also important to note that the soloist worsening heart failure study of SOTO will close in in recently hospitalized patients.
resulted in significantly lower total number of deaths from cardiovascular causes and hospitalizations.
and urgent visits for heart failure than placebo, regardless of left ventricular ejection fraction. Currently, of those 1.3 million hospitalizations a year due to heart failure, data suggests that fewer than 10% of these patients are currently discharged.
with a prescription for an SGLT inhibitor. This provides an exceptional opportunity for soda buffoons and given its unique data showing its significant impact on that transition of care patient population. Turning to the next slide, as you can see.
This group of patients from the soloist trial, while improving in their clinical journey, remains at risk for future heart failure events, as Jeff has noted in prior slides.
As a reminder, the SOLOIS trial enrolled approximately 1,200 patients who had been hospitalized for heart failure and were transitioning out of the hospital. Double-blind randomized treatment began either in the hospital or within three days following their discharge.doc.co.uk
As you can see in this slide and as a reminder, the primary endpoint of the trial was achieved with a statistically significant and clinically meaningful reduction of 33% in the composite total cardiovascular death, hospitalization for heart failure, and urgent heart failure visits with the need to treat only four patients for one year to avoid one endpoint event, a finding which is unsurpassed within the SGLT inhibitor class.
The objective of the post hoc analysis presented by Dr. Burke Pitt at last year's American Heart Association Scientific Sessions was to evaluate the efficacy of sotoliphosin versus placebo at reducing hospital readmissions and mortality within 30 and 90 days after discharge.
from a heart failure hospitalization among the patients who began study treatment on or before the date of discharge. As a reminder, there were no differences between these two groups of patients for baseline characteristics or the primary endpoint. Presented here are the results for cardiovascular death.
You can see the sotaglifosin arm in blue begins to separate from placebo arm in red very early on and showed that treatment with sotaglifosin resulted in a statistically relative risk reduction versus placebo of approximately 50% for readmission for non-fatal heart failure events and for the composite of cardiovascular death and readmission for heart failure at both 30 and 90 days following hospital discharge. These findings are unique. They also underscore the benefit of early initiation.
of evidence-based heart failure therapy. SOTILA FLOSEN is the first compound to demonstrate a reduction on both mortality and heart failure events for treatment initiated during a heart failure hospitalization.
Finally, we wanted to highlight key data just presented at the American College of cardiology seventy second annual scientific session held in March of twenty, twenty three on the time to clinical benefit of photos.
The study authors concluded that treatment with soda lephosin led to a statistically significant reduction in the risk of the primary outcome by day 27 post-randomization. These results were consistent across the left ventricular ejection fraction range, a finding that aligns with the recent ACC consensus statement that was just recently referenced. We believe that these data support and further extend the 30-day reduction in re-admission results for soda lephosin presented at the 2022 AHA meeting that treatment with soda lephosin results in an early...
and significant reduction in heart failure events and cardiovascular death in the high-cost, high-risk, recently hospitalized patient with worsening heart failure. I'll now turn the call back over to Jeff to share more about our commercial launch preparations.
done to date, we feel confident that we have the right talent and resources to be ready for a very successful commercial launch following regulatory approval in the coming weeks.
To summarize, we believe we have a tremendous opportunity for SODA-PLEZEN, bolstered by three key factors.
1. Updated heart failure treatment guidelines 2. A growing and met medical need with S-shell T-adoption still in the early part of the adoption curve.
And three, a unique data set for pseudonopluson, specifically addressing the effectiveness in patients hospitalized for heart failure.
Capitalizing on those three factors, we are making launch preparations with a focused commercial strategy.
using targeted messaging based on areas of clinical differentiation and where our value proposition is expected to have the most impact, including with cardiologists and hospital systems and payers that bear the cost of hospitalizations and re-hospitalizations. We will now turn briefly to our LX9211 program.
LX9211 achieves high levels of drug in the CNS and importantly the mechanism of action of LX9211 is independent of the opioid pathway. In Phase 1 studies, LX9211 was shown to be well tolerated with a pharmacokinetic profile supportive of once daily dosing. Lexicon has been granted fast track designation by the FDA for diabetic peripheral neuropathic pain. From a market perspective, the neuropathic pain market is expected to grow by more than 13% worldwide between 2020 and 2026 and is projected to be worth more than $13.2 billion.
Currently available therapies are limited by lack of efficacy, side effects, and potential for abuse.
As a result, there is a tremendous opportunity for new and innovative treatments such as LX-9211 to enter this growing market with a great and metney.
I will now turn the call back to Craig to briefly review the key results from our phase two studies in two distinct types of neuropathic pain that read out last year. Thank you, Jeff.
As we discussed during our last quarterly call, the primary endpoint of the Relief DPN1 study was achieved, with a statistically significant reduction in the average daily pain score or ADPS at week six, compared to placebo in the low dose arm.
There was an absolute reduction in ADPS from baseline of 1.39 points with a p value of 0.007 compared to placebo.
High dose arm achieved a reduction from baseline of 1.27 points with a p-value of 0.03 compared to placebo, narrowly missing the significant threshold in the study of 0.028 but showing consistent effects. We also noted during the blinded five week placebo...
serious adverse events or deaths were reported in the trial.
As you've also discussed in our last quarterly call, our second phase two proof of concept study in post-herpatic neuralgia, relief Ph.N.1, LX9211 achieved a reduction in the average daily pain score of 2.42 points.
From baseline at week six, compared to reduction of 1.62 points in the placebo arm, with a placebo-adjusted difference of 0.8 points and a p-value of 0.12.
Although these results did not achieve statistical significance on the primary endpoint of the study, overall results demonstrated clear evidence of effect and achieved our goal for this small 79 patient study to further support the further development.
Avalix 9211 in another neuropathic pain condition.
The results of the relief PHN1 trial were frequently presented at the Emerging Science section of the American Academy of Neurology Annual Meeting on April 24th of this year, and will also be presented at the British Pain Society 56th Annual Scientific Meeting taking place in Glasgow from May 9th to May 11th.
Notably, as you can see on the slide, LX9211 has shown consistent results across these two studies.
When placing the graphs from the two studies side by side, the separation from placebo and the mean change from baseline create the same shaped curves. In conclusion,
We have now completed two Phase II proof of concept studies of LX9211 that support AAK1 inhibition as a potential new mechanism of action for treating neuropathic pain.
We believe that LX9211 has the potential to overcome many of the shortcomings of current therapies and could be a welcome new innovation for those suffering from neuropathic pain on the daily basis. This is a large and growing market where they high unmet medical needs.
As a result, we are pursuing the rapid advancement of Alex 9211 into the late-stage development for the treatment of neuropathic pain.
preparing to receive feedback from the FDA in Q2 on how best to advance the program into late-stage development as quickly and as efficiently as possible.
I'd now like to turn the call back to Jeff to take us through the financial result for the first quarter 2023.
Thank you, Craig. I will review some key aspects of our first quarter 2023 financial results.
More financial details can be found in the press release that we issued earlier today and our 10Q that will be filed shortly with the SEC. We ended the quarter with $105.9 million in cash and investments. We believe that our existing capital resources provide us with the right level of funding to support continued commercial preparations.
and make appropriate investments in research and clinical development.
Our loan facility with Oxford Finance, which provides up to $100 million in additional borrowing capacity, gives us substantial financial flexibility as we prepare to embark upon the expected launch of soda implosion in the second quarter of this year. We just recently executed an amendment with Oxford that allows us to draw up to...
well into the anticipated launch of Southern Flesin into the market.
As indicated in our press release this afternoon, we had minimal revenues for the first quarters of both 2023 and 2022.
Research and development expenses for the first quarter of 2023 decreased to $12.1 million from $14.9 million for the corresponding period in 2022, primarily due to lower external research and development costs and professional and consulting fees in 2023. Selling general and administrative expenses for the first quarter of 2023.
In total, net loss for the first quarter of 2023 was $32.3 million or $17 cents per share as compared to net loss of $23.5 million or $16 cents per share in the corresponding period in 2022.
For the first quarters of 2023 and 2020 through to net loss included non-cash stock-based compensation expense of $3.4 million and $2.8 million, respectively.
Before we transition to Q&A.
I'd like to take this opportunity to reiterate the great progress we have made since our last call in preparation for the launch of Citroën Closon into the heart failure market. Across every function of the company we have made considerable progress to prepare for our pedophadade of May 27th.
and if approved a prompt launch into the market in Q2 2023. I would like to pause now and ask the operator to open up the call to take your questions.
Ladies and gentlemen, we will now begin the question and answer session. Fast to question, you may press star and then one on your touchstone phones. You are using a speaker phone. We do ask you please pick up your handsets before pressing the keys.
So withdraw your questions. You may press star and two. Once again, that is star and then one. To join the question queue, pause and I'm going to turn it to the symbol of the roster.
Andrew, yes, I think you've characterized it correctly. We've had some outstanding conversations with the FDA. I think what you can expect is we've made a pretty powerful argument that this drug works for heart failure. This will be a cardiovascular drug and nothing else, meaning that we believe that the drug will work across heart failure regardless of diabetes.
Those are the two broad perspectives I would say investors should look for when we turn the cards over and finish on negotiations with the agency. Great. So let's just say it does get approved. First, do you think there is a low-hanging fruit of patients that you're, I believe, 100 sales reps can tackle?
Thank you.
Yeah, two things. One is that given that 90% of the market is still absent SGLTs regardless of the guidelines, so I think that's a huge low-hanging fruit for us to try to achieve. The place we're going to focus is not in the broader area of cardiovascular.
competition and heart failure. It's really going to be in that transition of care, patient that's inside the hospital. That's where we have very unique data. And I think that is our opportunity to not only have impact on patient, but also have impact on systems and bringing costs down. And therefore, we will spend most of our time to do that. In 2023, it'll be less about how much net sales you move. It'll be more about how well we're able to penetrate.
the IDNs, how well we're able to penetrate into Medicare and get coverage. And so we've been out in market and appropriate conversations trying to lock and load and get ready for that.
And so what we're going to lay out for you when we get approval is what are the metrics that you should really look for? Number one will be our ability to penetrate and get coverage in 2023. We do that well. 2024 will be all about net trace sales at that time.
Last one is, will IKIVIA sales be trackable for the scripts?
And last one is will IKIVIA sales be trackable or the scripts? Jeff, I'll turn it over to you.
We expect that a QVO will be able to track sales in terms of the scripts. But again, a lot of this is what we're going to be focused on. It's going to be in terms of what we talk about. We'll be talking about getting access and getting formulary coverage. Right. Makes sense. Thank you very much. Now I'll start from Matthew. I will see if the preparation day will be good. Don't worry, I'll see.
Thank you, Andrew. Our next question comes from Yagul Nakumovit from Citigroup. Go ahead with your question.
Hi, I'm Alan Johnson, team. Thanks for taking the questions. On 9211, I'm just curious to mention you're going to have feedback from the FDA in this quarter on the past forward. Could you talk a little bit more about what you expect there? Have you proposed a specific phase 3 plan for both indications? What additional validation or clearance are you expecting from the FDA?
We are outlining with FDA the key elements of the plan going forward into late-stage development. And it's mostly focused on the largest of these indications, which is diabetic peripheral neuropathic pain and the other work that we need to do to advance the program going forward.
So that's really been the area of focus. And we, in addition to that, we're continuing dialogue with potential partners. And we'll be proceeding with those discussions as we get further into the development. But in the meantime, we are continuing to take steps to push this forward into development.
and we're committed to doing that going forward. And we'll do that with the feedback that we get from the agency later this quarter. So you would wait for a partner for starting a Phase III or not necessarily? You might go ahead yourself. We are pushing forward with the...
Okay, but you're focusing on on on DPN. Yeah
Yeah, Hugo, I think for us DPN is the biggest opportunity and to Jeff's point, we're not going to, we shouldn't wait for a partner, we've been waiting forever trying to negotiate the proper value I think we can achieve with this program. The best way to do this is to get the FDA feedback, make sure that we're aligned.
around that feedback and keep developing the program forward so that we can be in the best position to achieve the value we think this drug will have going forward. So DPN will be our focus. I think what a partnership really provides for us, if we should achieve that, is it allows us to go broader than DPN. It allows us to go beyond DPN to PHN, which is why we did that work, and pursue a broader neuropathic pain indication.
Okay, great. And then on heart failure, so obviously a big day coming up in I guess 25 days. So I wanted to drill down a little bit into this slice of the market, this transition of care and the recently worsening heart failure. I just want to get a better understanding. How much of a white space is this in terms of entrenched competitors? What are you hearing from the channel checks as far as are SGLTs being used off label here or is this really an area where you're just going to come in and be able to take share quickly given the unique value proposition that you've outlined both with the guidelines as well as with the strong data at AHA.
And, you know, what's been the... You mentioned some early discussions, as you said, with the IDNs and reimbursement and Medicare and so on. What's been the receptivity so far in terms of the value proposition to covering this and filling this gap in the treatment channel that you've talked about? Right. So.
for that transition of care patients. And most of the argument for it has been that it's better to get people on therapy at hospital or upon discharge because they're likely to stay on therapy if that happens. We're gonna bring our unique data that shows benefits on hard endpoints into that setting. And that's what we're gonna leverage.
as we proceed with the commercial launch of sodium plosum as our area of focus. But it's already starting to pick up in that area. The second part of the question was receptivity among payers and hospital systems.
I would characterize that receptivity as being very encouraging. We have a unique value proposition there. We will be publishing data about cost-effectiveness and be talking about the value that we bring, but the unique data from Soloist.
and the proof that we have from the studies that we ran, and from SOLOS in particular, that shows this benefit in hospital readmissions, and not only overall, but also the 30 and 90 day hospital readmission data that were presented to AHA last year. So that value proposition, what we can bring to the table.
from an economic perspective for payers and hospital systems has been resonating very well.
Yeah, I'll just add a couple other points to what Jeff was saying. I think it's important to put in context how recent these guideline changes are.
that the first guidelines that were the European guidelines only came out less than two years ago. The US combined guidelines around US of SGLT inhibitors at all really only came out a year and a half ago. And this consensus statement in the HEPF category only came out last week. I think when you think about the fact as Jeff mentioned, the penetration of SGLT inhibitors is less...
the SGLT inhibitors as a class.
is quite profound and a huge tailwind at our back. I think on top of that the value proposition with SOTOVAFOSAN in that transition of care patient which is the highest unmet need. 25% of these patients coming back to the hospital in 30 days, 65%
within a year, 100 events per 100 patient years in that group of patients. The payers all know there's a problem there and our data set is unparalleled. There is no other SGLT that can present a data set like ours in that group of patients. So we think that there is a really strong class rationale,
attributes of soda flozan as a new agent that support its uptake in use. The only thing I would add and I think my colleagues have you know been very clear is in that class there's only three SGLTs that's going to be in this class fighting this fight. We know Giardience is one and the other one certainly would be tobacco flows and the third will be soda.
flows and the uniqueness of his data is falling into these guidelines absent the drug even being approved. And so we will have these guidelines and the weight of these guidelines.
pretty much as a significant, so this can value propositions we go into market. That is remarkable unique.
And so we're feeling pretty confident at this stage is about locking the loading and getting ready for what we believe the FDA will deliver to us and for us and we'll certainly have a lot more to say once that happens. Great. Thank you.
potential label scenarios for soda. You kind of outlined your best case broad label scenario. I guess you feel that you need to have that best case broad label in order to be differentiated from the approved competitor drugs and be commercially successful.
or if so that does get approved with a more narrow label. Do you still think that you could be differentiated in capture market share and ultimately be commercially successful?
Thank you, Joseph. Let me first say I'm pretty confident that the scenario I gave you is the scenario that should be. However, I would say that...
Paces are going to cycle on these compounds and given the growth rate and the size of this market, the cager that we see, just the cycling of these compounds, we will have a significant opportunity. But the uniqueness of our data should we achieve what I've already laid out to you will indeed create a significant opportunity for so to go frozen and quite a quite a large.
quite a large product over time. So I'm pretty confident in my view around where we're going to land and that's going to be the optimistic scenario.
Great. Thanks for your hearing. You bet. And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to the management team for any closing remarks.
As always, I want to thank everyone for joining us. This is such an awesome opportunity for Lexicon and our stakeholders this year. LX9211 will advance into late-stage development.
We're feeling pretty good about that. We'll get the FDA feedback here shortly and we'll know exactly how we want to advance Alex 9211. I feel confident that if we move into partnership, it would be one of the terms that we think is important for us to generate value for all of our stakeholders. The second one is for SOTAGFLOWSEN. We're feeling pretty bullish and therefore we have made the investments. Are people on board?
They're ready to go. The conversations with the FDA has been remarkably productive.
And we're feeling, as I said, pretty confident that we are a short period away from turning the cards over and sharing with you what we've always believed is that we have a remarkably unique compound that we can bring to the market and begin to live our mission and ask to ensure that patients have an opportunity to improve their lives with one of our innovations.