Q2 2023 Lexicon Pharmaceuticals Inc Earnings Call
Innovations of our commercial launch of and Pepper 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 discovery and development of our drug candidates strategic alliances and intellectual prop.
30, 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 <unk>, our discussions with the FDA and other regulatory authorities regarding our drug programs.
The timing and results of clinical trials and preclinical studies of our drug candidates our dependence upon 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 the requirements of substantial funding to conduct our planned research.
Development and commercialization activities I would now like to turn the call over to the lineal coats.
Thank you Carrie and good afternoon, everyone and thank you for joining us on the call.
Quarter of 2023 was an important and productive quarter for lexicon with the achievement of a transfer transformational milestone for the company and important advancements for our business first we received FDA approval of <unk> for the treatment of heart failure.
And Pampa was granted a broad label across the full range of left ventricular ejection fraction and for patients with and without diabetes.
We are fully launched into the market with product made available and sales representatives deployed within 30 days of approval.
Our ability to swiftly launch and to market was a direct result of the significant investments we've made over the last 12 months and a dedication across all of our teams to bring a new innovation into the heart failure market.
Turning to <unk> nine to one one we have also announced this quarter our plans to move into late stage development and diabetic peripheral neuropathic pain.
Clinical program that was designed to Derisk phase III based on FDA feedback and accelerate time to completion for 2027 filings.
Neuropathic pain is a very large market opportunity and we have aligned our development plan with the FDA feedback and are moving forward with a strategy that is designed to optimize development time and efficiency, while increasing the likelihood of a successful path to regulatory approval.
I will now turn the call over to Jeff to review additional key milestones from this quarter.
Thank you Leno as.
As highlighted on the slide we delivered on a number of key milestones this quarter, including the closing of a public offering and concurrent private placement. The resulted in aggregate gross proceeds of $143 $7 million, providing capital to invest in both our commercial launch of <unk> Peppa and our clinical development.
Plans.
And as <unk> noted earlier, we continued our execution on launch readiness activities for and pepper, enabling launch of product in the market within 30 days of FDA approval.
These launch readiness activities included appropriate preapproval information exchanges with payers across national and regional accounts government and institutions and continuation of the groundwork that enabled us to make bid submissions within days of FDA approval.
We brought on board trained and deployed a field force of experienced cardiovascular sales professionals.
We finalized wholesaler and distribution agreements and put product in the channel.
And we launched a number of promotional resources, including our HCP facing website, highlighting our key messages and differentiation.
And finally, we launched our in Pep It together program patient support offerings, which we'll talk more about shortly.
Turning to the Fda's approval of <unk> Peppa, we wanted to summarize four key critical elements first in purple was granted a broad label in heart failure across the full range of left ventricular ejection fraction, including pass and half for us and for patients with and without diabetes.
Second in an important and differentiating element of that label and Peppa reduce the risk of total occurrence of cardiovascular death hospitalization for heart failure, and urgent heart failure visits by 33% compared to placebo and the soloist Debbie HFF study of worsening heart failure.
Who initiated on therapy in the hospital or promptly following discharge.
Third recently adopted guidelines support the use of <unk> inhibitors, like and Pepper and all heart failure patients. The only class of therapy recommended as foundational treatment, regardless of lesson tricolor ejection fraction and they specifically cite the solo SWT HFF study.
Finally, a reminder that in Peppa is the first compound to demonstrate a reduction on both mortality in heart failure events were initiated during or shortly after discharge from a heart failure hospitalization.
Just on <unk>.
Post hoc analysis looking at cardiovascular death, and heart failure events occurring within 30, and 90 days post discharge and Peppa resulted in a significant relative risk reduction versus placebo of approximately 50% the composite of cardiovascular death, and readmission for heart failure at both 30 and 90.
Days following hospital discharge.
These findings are unique and underscore the benefits of early initiation of evidenced based heart failure therapy.
When looking at the heart failure market dynamics, the updated guidelines and growing clinical evidence continues to help fuel the growth of the heart failure indicated <unk> inhibitors.
Houston Heart failure of the two other <unk> inhibitors approved for that indication has more than doubled since the beginning of 2022 and the heart failure branded market has grown by almost 40% from 2021 2022.
With the approval and then pepper and its broad label, we can compete across all of heart failure. However, our primary focus at launch is on the sweet spot of care, which is the transition of care patient.
Based on the unique data in our soloist WHS trial patients who are hospitalized for heart failure are ideal candidates for peppa once stabilized and before leaving the hospital or soon thereafter.
Summarize we believe we have a tremendous commercial opportunity for <unk> peppa bolstered by updated heart failure treatment guidelines, a growing unmet medical need with <unk> T adoption is still in the early part of the adoption curve.
A unique clinical dataset for and pepper, specifically addressing patients recently hospitalized for heart failure.
And we are combining these factors into a focused commercial strategy using targeted messaging based on areas of clinical differentiation and directed to those providers, where the messages are expected to have the most impact, including cardiologists and those systems that bear the cost of hospitalizations and re hospital.
<unk>.
As mentioned earlier, a key platform we launched at the end of June was our collection of patient support offerings, which we have launched under the name and Peppa together.
These programs are designed to reduce barriers for healthcare professionals and their patients who are prescribed and pepper and can be accessed through our and pepper together website to help address each patients unique situations.
We rapidly pursue payer coverage. These programs will be important to ensure eligible patients are able to fill their prescriptions and.
And provide options if and Peppa is not yet covered by their insurance plan.
These programs include an option for a 30 day voucher under which patients may receive their first 30 day prescription of pepper for no out of pocket costs.
Finally, and importantly, we wanted to provide an update on the key launch metrics, we are committed to sharing.
The data is limited this quarter as it represents activity from only our first week of launch.
Does show the early impact we were able to have in that short timeframe.
Ex factory shipments, which translated into our gross sales were approximately 200 bottles shipped to 15 distribution partners.
These initial shipments to wholesalers and our distribution partners, where the first step in enabling a patient to obtain access gen and purpose script from pharmacies across the United States.
Looking at prescription activity, we saw six new prescriptions in the first five days of launch in addition to the prescription activity available at UBS. We will also share in future calls certain internal data from our <unk> together program offerings, which represent additional scripts not captured in the publicly available.
<unk> dataset.
Turning to our market access discussions for planned coverage.
We are currently submitted 16 bid submissions covering 198 million lives across both commercial and Medicare books of business and across both national and regional accounts.
As shared at the time of our launch during 2023, we will be focused on gaining access and this quarter. We have made important steps in the contracting process with several payers, which are a key first step in order to have and pepper added to formularies.
We will continue to actively pursue insurance coverage and pepper and expect to have new updates on our coverage status in our next quarterly call.
We also continue to pursue access to and pepper on formularies within integrated delivery networks and have identified several key accounts, where we expect to have the opportunity to achieve wins for and purpose in the next few months.
We look forward to sharing with you additional updates on our launch progress in our upcoming calls.
We will now turn briefly to our Alex 91, one program.
Alex 91, one is a potent highly selective small molecule inhibitor of a novel target adaptor associated kinase, one or <unk> one.
And a number of relevant animal models of neuropathic pain, Alex 91, one demonstrated consistent significant reductions in pain scores, even when compared to positive controls such as gabapentin.
Alex 91 achieves high level of the drug in the CNS and importantly, the mechanism of action of <unk> nine to one one is independent of the opioid pathway.
In Phase one studies, Alex Knight to one one was shown to be well tolerated with a pharmacokinetic profile supportive of once daily dosing.
<unk> has been granted fast track designation by the FDA for diabetic peripheral neuropathic pain.
We believe Alex 9211 has a promising profile based on two completed proof of concept studies and a substantial market opportunity.
<unk> 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 <unk> on a daily basis.
This is a large and growing market with a high unmet medical need with more than 20 million Americans.
<unk> neuropathic pain, and approximately 5 million <unk> patients in the U S in 2022.
I would now like to turn the call over to Craig to provide further details about these late stage clinical development plans for <unk> nine to one one.
Thank you Jeff.
As we shared a few weeks ago, we are advancing <unk> into late stage development in the second half of this year and our clinical program directed towards <unk> regulatory approval.
We have also received feedback from the FDA that aligns with our proposed development plans, including the average daily pain score or ADP.
Remaining the primary endpoint for future studies and.
And targeting a D pnp patient population similar to those enrolled in our phase II proof of concept study.
The FDA also agreed with the potential for inclusion of the phrase early onset of pain relief with persistent effect in the label as well as our approach for dose selection of the phase III studies.
Turning to the next slide you will see an illustration of our late stage program design that begins with the phase two b dose optimization study and follows through to plan phase III studies to an NDA filing.
The phase <unk> dose optimization study will have an eight week treatment duration that will also include an extension period designed to satisfy ICA requirements for long term exposure.
We plan to continue the extension phase to run in parallel with the pivotal phase III studies.
We expect the startup of the phase <unk> will begin in the third quarter of 2023 with expected initiation of patient dosing in Q4 2023.
In addition, our strategy of employing a phase <unk> dose optimization study with an open label extension running in parallel with the startup phase III is designed to enable satisfaction of regulatory requirements in a timely fashion, leading to a target NDA filing in 2027.
I would now like to turn the call back over to Jeff to take us through the financial results for the second quarter of 2023.
Thank you Craig.
I will provide some key aspects of our second quarter 2023 financial results more financial details can be found in the press release that we issued earlier today and our 10-Q that will be filed shortly with the SEC.
We ended the quarter with $256 $7 million in cash and investments.
We believe that our existing capital resources provide us with the right level of funding to support the commercial launch of <unk> peppa and to make appropriate investments in research and clinical development.
Our loan facility with Oxford, Finance, which offers up to $50 million in additional borrowing capacity provides additional financial flexibility as we continue the launch of <unk> in the second half of this year.
We anticipate that our existing cash and investments together with capacity under the loan facility will provide us with sufficient resources to manage our operations well into the launch of them peppa into the market.
As indicated in our press release. This afternoon, we had $320000 in revenues in the second quarter of 2023 and had minimal revenues in 2022.
Revenues from this quarter included net product revenues of approximately $298000 in royalties and other revenues of approximately $26000.
Research and development expenses for the second quarter of 2023 increased to $14 5 million from $13 $4 million for the corresponding period in 2022, primarily due to manufacturing costs in preparation to market and pepper for heart failure and higher clinical.
External research and development expenses for.
Relating to the <unk> nine to one one program, partially offset by lower professional and consulting fees.
Selling general and administrative expenses for the second quarter of 2023 increased to $30 million from $10 $7 million for the corresponding period in 2022.
Primarily due to the Onboarding of our field sales force as well as marketing and other professional and consulting costs relating to preparations for the commercial launch of and Pepper and heart failure.
And total net loss for the second quarter of 2023 was $44 $9 million or <unk> 22 per share as compared to a net loss of $24 6 million or <unk> 16 per share in the corresponding period in 2022.
The second quarters of 2023, and 2022 net loss included noncash stock based compensation expense of $3 8 million and $2 8 million respectively.
For this quarter, we are also including a view of our 2023 full year expense guidance. This.
This includes the expected R&D expenses of between 60% and $70 million selling general and administrative expenses of between 120 $130 million.
In total operating expenses of between $180 and $200 million.
This includes noncash expenses.
About $17 million to $18 million for stock based compensation depreciation and amortization.
I would now like to open the call to take your questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone and if you are using a speakerphone. Please pick up your handset before pressing the cave if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
We will just pause momentarily at this time to assemble our roster.
Thank you. Your first question comes from <unk> <unk> from Citi.
Please go ahead.
Hi, Tim This is Carly on great. Thanks.
Thanks, so much for taking our questions.
So first can you can you talk a bit more just about your expectation for Caribbean peso launch ramp over the second half of this year and then into next year as well.
Through getting on formularies and just how long you expect it to take to to secure broad payer coverage.
Question and then the second question, obviously, it's still very very early but just curious if you had any insight based on the first month of the launch into the profile of patients where <unk> is being used is it primarily that transition of care hospitalized population studied in <unk>.
Are you seeing.
Water usage, thanks, so much.
Thank you currently appreciate that very much.
Let's see the first question was.
Relating to launch we have launched ramp so I think at the last call. I had said this launch is going to be about access and then when we get access will be by access again, and so we are right, where we thought we would be it's going to be about access and that's why we've done together.
And Pepper program, we're trying to make these programs available to patients as we work on access, but I will tell you I would say that the conversations that we're engaged in for contracting are actually growing much better that I assume they would have gone and so I think that we will have a great opportunity to have access to Medicare populations. This.
Year going into next year, So I think the real gauge for how well. This launch go will be better estimated in the first quarter of next year over the next few months is all going to be about ensuring we get access and.
Signed contracts, particularly good access to Medicare lives I think we have a good chance to do that.
I would tell you is that we're very excited that some of the integrated delivery networks actually reached out to us and so we are engaged in conversations with some of the major.
And across the country to do something with them on a contract basis and so we'll have more to say about that in the next quarter as I feel pretty confident we're going to get some of them on board as well. So I think those conversations are going fairly well, but it will impact net trade sales until we do get broad access so the best way to judge this launch will probably be more.
More likely in the first quarter next year. When we can tell you exactly how much access we've actually achieved that then allows us to run even faster and getting the growth curve on the net trade sales.
For the second question I'll turn it over to Greg Great Jeff Wade.
Alright.
Can you remind me what the second question working station profile ensure patient profile. So.
Yeah at this point, because we are not yet on the hospital and IBM formularies.
Sure.
And a mix of patients, but not primarily and that hospitalized patients. Although we are seeing some indications where people are doing med <unk> beds type program in patients who are getting they are starting to get drug in the hospital, but as we get closer to the time when we get.
On the hospital formularies, that's going to shift a little bit more from that chronic patients and more into that transition of care patient.
Share of our patient starts so hopefully thats a helpful answer.
I'd also say I didn't I know six or a new <unk> new Rx.
Brand doesn't look great, but it's more than I thought we would get in the first few days.
Without any contracted business and not a lot of noise in the marketplace and so that was a great indication to me that people are paying attention and once we do get contracted business, we're probably not we're pretty pretty good rent.
Okay, Great. That's helpful. Thank you Sir.
Okay.
Thank you. Your next question comes from Andrew Tsai from Jefferies.
Please go ahead.
Alright. Thanks, Good afternoon I appreciate you taking my question so.
Maybe just.
Just out of curiosity what percentage.
Of your scripts.
Do you include non type two diabetes patients versus just type two diabetes are you seeing kind of.
Usage across the board and secondly.
Is it fair to assume if we were to reconcile you mentioned 200 bottles were shipped in the first.
Compared to reconcile that with IMS data is it fair to assume that nearly all of their your reported revenue. This quarter was due to stocking and then secondly, how much stocking shall we expect.
Q2 compared to organic sales.
Thanks.
So I'll take the last one so unnecessarily.
The net sales for the second quarter were mostly due to stocking because we only were out in the field for a week.
So that was really the initial stocking by wholesalers to make the drug available and then we had the field force going out.
In that final week, and then we've continued to see.
Continued uptake over over at overtime.
That.
That <unk> that part of the question.
Yes, I think trying to characterize the six scripts.
It would be hard to definitely hearts.
I'm just glad I got the six but I will say Andrew it's a great question as we get into the next quarter when I expect to see a much broader swath of.
Prescriptions and also as we start the Nelson contracted business will be able to tell you exactly where it's coming from.
So I'll just answer Andrew.
Just looking at all of the medical information requests that are coming in that's not one of them. So it does not seem to be an issue out in the field of people, saying is this only for diabetes or non diabetes and heart failure. I think people are excited about the drug the only questions that are coming up related diabetes is don't you have great data in <unk>.
Troll and diabetes as well so we're not getting the question of Gee I can't use you in.
In patients without diabetes, that's just not just not come across an issue.
Explicitly clear we can be used in all patients regardless of diagnostics.
Thanks, Greg.
Okay.
Really quick and then in Q3 then.
Gross to net can you give us any flavor on where it could fall.
Then over time, what's your latest thinking about.
Steady state thank you.
Yes, so the gross to net for.
For this first quarter, which is based on assumptions for this year.
Is.
That less than 50%.
The biggest contributor to that in the course of this year. When we were getting a lot of patient starts is the 30 day voucher.
Part of that so the ultimate gross to net will be something that develops over time and we will.
Will develop as we get more contracted business.
It will have an effect on that but to start off with this first quarter. It's.
Less than 50%.
Yes, Andrew I think we will be able to give you a very good color color on that as we get towards the end of the year and start knocking down some of this contracted business and we will have a pretty good sense of how we're going to land on that as we go into the new year.
Makes sense. Thank you. Thank you.
You bet.
Thank you. Your next question comes from Yasmin Rahimi from Piper Sandler.
Please go ahead.
Hi, guys. This is Lauren on for Yeah, just a few from us.
First what's the current payer coverage status what do you expect in the next few quarters.
And then what are the docs pressing in terms of questions about and pathway currently as your sales reps are out in the field.
And what percent of these current hospitalized cardiologists have been called on and are going to be called on.
Great questions Jeff.
So.
To answer the last question first which is we have a.
As a target list of.
Of.
Physicians that we're trying to reach that are the highest prescribers for <unk> for heart failure and we when we went into this we had over 20000 appointments that were setup.
Sure.
<unk> falling.
The approval and so we've reached a good chunk of those and we're continuing to work towards reaching the balance of those kind of a and B segment prescribers in the CS segment prescribers.
Amount to over 10000 physicians that are the key treaters for heart failure, So we're making really good progress.
And reaching.
That group of.
Physicians, but still have some more to go to get through that entire group.
I also would say that.
When we we don't have a lot of great coverage right because we just started.
So I wouldn't expect that to be the case, but what I will say is the number one question that reps are encountering sales represented our accounting as western coverage.
This is why this is an access battle. It is why we have focused a lot of our resources on bidding across the board both Medicare lives and commercialized is why we're in a very important position coming right out of the gate to start making those bids because we did a lot of the pre work to set ourselves up to make those bids.
It's a pretty good situation and going into these discussions is going to take time for us to do it over the first two quarters, but that is the number one question that comes up with salespeople. It is also why we have implemented the together in Peppa together program. So that a physician can write in purple with great confidence knowing that they're actually going to receive a prescription.
And so these are temporary programs as we worked through the coverage, but I'm very very encouraged by the conversations we're having with the major payers, particularly the Medicare payers.
Yes.
We're starting we've already gotten and we're already have access in some areas that it will increase particularly as we get into the into the fall and towards the end of the year and then by January one we're expecting to have pretty significant payer coverage in place right.
Alright, thanks, so much guys.
Thank you that concludes our question and answer session for today I would like to turn the call back for some closing remarks. Thank you.
Well. Thank you everyone for joining us on our call today and we really appreciate your continued support.
I'll close out by summarizing our upcoming key milestones and events first.
We are moving forward with late stage development <unk>, one in diabetic peripheral neuropathic pain. This is another large and growing market is still in need of innovative treatments. We were extremely pleased with the engagement, we have with the FDA, which allowed us to really put together a program that we've laid out to you now and we're pretty confident about it.
We are highly focused on delivering on our successful launch of <unk> we.
We have had a focused commercial strategy that leverages, our unique clinical data and are entering a market is just beginning to reflect the growth driven by the new treatment guidelines, which include <unk> as a pillar of heart failure treatment.
We're rapidly pursuing market access foreign pepper across all channels and expect to be able to share incremental news about our progress on coverage in the fall as I said the first call we will be as transparent as we certainly can be and we intend to talk to not only about the <unk> scripts that you will be seeing but what data we are collecting in.
Eternally relative to the together and Pepper program.
Finally, and importantly <unk>.
Lexicon is in a strong cash position with the ability to fund our operations well.
<unk> initial launch of Impella.
This has been an important quarter for our organization and for our stakeholders as we move closer to the key milestones still ahead in 2023, and we look forward to continuing to update you on our progress overcoming months. Thank you.
Thank you that concludes our conference for today. Thank you for attending you may now disconnect your lines.