Q3 2023 Lexicon Pharmaceuticals Inc Earnings Call

Good day and welcome to the lexicon pharmacy of the Hues third quarter 2023 financial results conference call today our participants will be

Good day and welcome to the Lexicon Pharmaceuticals third quarter 2023 financial results Conference call.

Today, all participants will be in a listen only mode.

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Please note that today's event is being recorded. I would now like to turn the conference over to Carrie, Sarah Goosa. Please go ahead.

Please note that today's event is being recorded.

Wed now like to turn the conference here with you Kerry do so please go ahead.

Thank you, Chris. Good morning and welcome to the Lexicon Pharmaceutical Third Quarter 2023 Financial Results Conference call. Joining me today are Lynelle Coates, Lexicon's Chief Executive Officer, Jeff Wade, Lexicon's President and Chief Financial Officer, Dr. Craig Granowitz, Lexicon's Senior Vice President and Chief Medical Officer, and Tom Garner, Lexicon's Senior Vice President and Chief Commercial Officer.

Thank you Chris Good morning, and welcome to the Lexicon Pharmaceuticals third quarter 2023 financial results Conference call.

Joining me today are Lynn L coats lexicons, Chief Executive Officer, Jeff Wade Lexicons, President and Chief Financial Officer, Dr. Craig Graduate Lexicon, Senior Vice President and Chief Medical Officer, and Tom Garner Lexicon, Senior Vice President and Chief Commercial Officer.

Earlier this morning, lexicon issued a press release announcing our financial results for the third quarter of 2023, which is available on our website at www.lexfarma.com and through our SEC filing.

Earlier this morning lexicon issued a press release announcing our financial results for the third quarter of 2023, which is available on our website at www Dot <unk> dot com and through our SEC filings a webcast of this call along with a slide presentation is available on our website.

A webcast 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.

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'll be making forward-looking statements, including statements relating to the safety, efficacy, clinical development, regulatory status, and therapeutic and commercial potential of Impefa, LX9211, and our other drug programs.

Before we begin let me remind you that we will be making forward looking statements, including statements relating to the safety efficacy clinical development regulatory status and therapeutic and commercial potential of and Pepper, Alex 91, one and our other drug program. Please.

These statements may also include characterizations and projections relating to our commercial launch of Impefa 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 property, as well as other matters that are not historical facts or information.

These statements May also include characterizations and projections relating to our commercial launch. It then pepper in heart failure as well as the clinical development regulatory status and market opportunity for all of our drive programs. This call may also contain forward looking statements relating to our growth and future operating results discovery and development.

Our drug candidates strategic alliances and intellectual property as well as other matters that are not historical facts or information.

Various risks may cause our actual results to differ materially from those expressed or implied in such forward-looking statements.

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 and pepper, our discussions with the FDA and other regulatory authorities regarding our drug programs, the timing and results of clinical trials and preclinical studies.

These risks include uncertainties related to our commercial launch of Empepha, our discussions with the FDA and other regulatory authorities regarding our drug programs, the timing and results of clinical trials and pre-clinical studies of our drug candidate.

Our 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 planned research development and commercialization activities.

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 Lynelle Coe.

Now I'd like to turn the call over to Lynn L cause thank.

Thank you, Kerry. Good morning, everyone, and thank you for joining us on the call.

Thank you Carrie and good morning, everyone and thank you for joining us on the call.

The third quarter represents the first full quarter of the Impa-Fa-Lon.

The third quarter represents the first full quarter of the <unk> launch.

While it is still early, the market is what we expected. Full of near-term challenges, coupled with substantial near and long-term opportunities.

While it is still early the market is what we expect it will have near term challenges coupled with substantial near and long term opportunities.

As expected, market access has proven to be a near-term restraint on early launch growth.

As expected market access has proven to be a near term restraint on early launch growth.

We have dedicated enormous effort to break through and secure broad formulary access.

We have dedicated enormous effort to breakthrough and secure broad formulary access incur.

Incidentally, we have been seeing increasing prescription demand and clinical utilization for in PEPA and notwithstanding limited access, our now-starred-in-the-major formulary wins with some of the more notable becoming effective on November 1st.

Encouragingly, we have been seeing increasing prescription demand and clinical utilization foreign pepper and notwithstanding a limited access are now starting to see major formulary wins with some of the more notable becoming effective on November 1st.

With the MEPHA significant clinical share of voice and publications and medical meetings, coupled with additional expected formillary wins, and an increasing uptake from a broadening base of priority physicians, we are confident the momentum behind MEPHA will continue to accelerate as we enter 2024. Our new chief commercial officer, Tom Garner, will walk you through the early launch dynamics and more detail shortly.

Within Pep a significant clinical share of voice in publications and medical meetings, coupled with additional expected formulary wins and increasing uptake from a broadening base of priority physicians we are confident.

Momentum behind and Pepper will continue to accelerate as we enter 2024 are.

Our new Chief Commercial Officer, Tom Garner will walk you through the early launch dynamics in more detail shortly.

Turning to LX9211, will you have commenced late stage development and diabetic peripheral neuropathic pain with patient enrollment, expected to begin this quarter and a phase 2B dose optimization clinical trial.

Turning to <unk> nine to one one will have commenced late stage development and diabetic peripheral neuropathic pain with patient enrollment expected to begin this quarter and then phase two b dose optimists optimization clinical trial.

Alex 9211 could become the first new non opioid drug from Neuropathic Pain in over two decades.

Alex now 211 could become the first new non opioid drug for neuropathic pain in over two decades.

Neuropathic Paying represents a significant market opportunity. We have lined our development plan with recently received FDA feedback to move forward with a strategy that is designed to optimize development time and efficiency while also maximizing the likelihood of a successful path to regulatory approval.

Neuropathic pain represents a significant market opportunity we have aligned our development plan with recently recently received FDA feedback to move forward with a strategy that is designed to optimize development time and efficiency. While also maximizing the likelihood of a successful path to regulatory.

Tori approval.

I would now turn the call over to Tom Garner, who recently joined Lechicon as Chief Commercial Officer, to provide his perspective on the commercial launch of Inpefe.

I will now turn the call over to Tom Garner, who recently joined lexicon as Chief commercial officer to provide his perspective on the commercial launch of <unk> Peppa.

Thank you, Lennel, and good morning, everyone. It's a pleasure to speak with you all today.

Thank you Leno and good morning, everyone. It's a pleasure to speak with you all today.

So starting with heart failure market dynamics, yet dated treatment guidelines and growing clinical evidence continue to help fuel the growth of heart failure indicated STLT inhibitors for that indication.

So starting with heart failure market dynamics, you have to pay to treatment guidelines and growing clinical evidence continues to help fuel the growth of heart failure indicated S. T. L T inhibitors for that indication.

SGLT inhibits the use in heart failure has grown by 73% year over year through August of 2023 with the entire heart failure branded market growing by almost 40% from 2021 to 2022 representing a rapidly growing opportunity of at least $3 billion.

S. J O T inhibits you use in heart failure, that's growing by 17, 3% year over year through August of 2023.

The entire heart failure branded market growing by almost 40% from 2021 'twenty to 'twenty, two representing a rapidly growing opportunity of at least $3 billion.

Even with this significant momentum, the utilization of FGLT inhibitors for the treatment of heart failure was only around 10% last year, providing tremendous opportunity for a new treatment like Impepha, which has compelling and differentiated data in this specific patient population.

Even with this significant momentum the utilization of S. G. L. T inhibitors for the treatment of heart failure was only around 10% last year, providing tremendous opportunity for new treatment like in peso, which has compelling and differentiated data in this specific patient population.

On the next slide, you will see two critical focus areas for the MPF launch, namely demand generation and formula access. We are encouraged by the momentum that we are building on both of these fronts.

On the next slide you will see two critical focus areas for the impactful launch, namely demand generation and formulary access.

We are encouraged by the momentum that we are building on both of these fronts.

As we look at demand generation, our teams have been focused on driving awareness and trial of Impepha with high volume writers who treat the majority of our failure patients in the United States.

As we look at demand generation, our teams have been focused on driving awareness and trial of <unk> with high volume writers, who treat the majority of heart failure patients in the United States as.

As a result of these efforts, the number of unique prescribers for Impefa has grown throughout Q3 and will remain a key strategic area focus for our cross-functional teams moving forward.

As a result of these efforts the unique the number of unique prescribers for <unk> Peppa is growing throughout Q3 and will remain a key strategic area of focus for our cross functional teams moving forward.

Importantly, we are seeing meaningful increases in impact of demand, as evidenced by submitted claims data that has outpaced field prescriptions, which is expected as former access continues to build.

Importantly, we are seeing meaningful increases in passenger demand.

Evidenced by submitted claims data that has outpaced filled prescriptions, which is expected as formulary access continues to build.

is worth noting that as we close out the first full quarter of our commercial launch, we have seen an acceleration in our pre-prescription data reflecting improving access conditions for impact.

It's worth noting that as we close out the first full quarter about commercial launch we have seen an acceleration in our paid prescription data, reflecting improving access conditions four in peso.

In terms of former access, the team has been focused on discussions with both national and regional pair plans and has fixed us, fixedly engaged with all targeted plans with multiple layers of engagement throughout Q3.

In terms of former access the team has been focused on discussions with both national and regional payer plans and has success successfully engaged with all targeted plans with multiple layers of engagements throughout Q3.

As we announce in our press release this morning, key formulary access contracts were executed in Q3 in both Medicare and commercial channels, and we expect access to continues throughout Q4. We will also share more information today about integrated delivery networks or IDNs, which also remain a strategic focus given the uniqueness of the solar-ispatient population and valuable re-hospitalization data for MPF.

As we announced in our press release. This morning key formulary access contracts were executed in Q3 in both Medicare and commercial channels.

Access to continue throughout Q4.

He will also share more information today about integrated delivery networks or <unk>, which also remain a strategic focus given the uniqueness of the soloist patient population and valuable re hospitalization data four in peso.

Turning to additional quarterly launch metrics, you will see here a view of X-factory shipments to wholesalers, data on prescriptions and unique prescribers, and a summary of demand data.

Turning to additional quarterly launch metrics, you will see here a view of ex factory shipments to wholesalers data on prescriptions in unique prescribers and a summary of demand data.

Exfactory shipments continued through the third quarter as wholesalers used up the initial orders received in June , a trend that we have continued to see accelerate throughout the quarter.

Ex factory shipments continued through the third quarter as wholesale is used up the initial orders received in June of trends that we have continued to see accelerate throughout the quarter.

As mentioned previously, we are hyper focused on growing the unique prescriber-based brimpefa, which has expanded nearly 500 healthcare professionals through the quarter, the majority of which are from key, high priority, high prescriber target.

As mentioned previously we are hyper focused on growing the unique prescriber base for <unk>, which has expanded to nearly 500 health care professionals through the quarter. The majority of which are from key high priority high prescriber targets.

We have been encouraged to see the growing clinical demand data outpacing our filled prescription data by a ratio of nearly five to one. With contracted access continuing to build with large national payers, we believe that this growing clinical demand will lead to additional filled prescriptions as in PEPA achieves greater form.

We've been encouraged to see the growing clinical demand data outpacing our filled prescription data by ratio of nearly five to work with.

With contracted access continuing to build with large national payers. We believe that this growing clinical demand will lead to additional fill prescriptions and pepper achieves greater formulary coverage.

As you will see on the next slide, Philip Prescriptions continued to grow week over week throughout Q3 2023, with an acceleration in the last few weeks of the quarter.

As you will see on the next slide filled prescriptions continue to grow week over week throughout Q3 2023.

As an acceleration in the last few weeks of the quarter.

It's also worth noting that this number reflects prescriptions being reported directly through IQVR and Symphony alongside those that are going through our specialty pharmacy, which are not invisible to third-party age.

It's also worth noting that this number reflects prescriptions being reported directly through out Cuba and symphony alongside those that are going through a specialty pharmacy, which are not in visible to third party agencies.

I've mentioned on the price line, top line demand has outpaced the number of prescriptions filled with nearly 5,000 submitted claims through Q3, clearly demonstrating the impacts of our field teams and customer belief in the clinical value offered by MPa.

As mentioned on the prior slide topline demand cause that outpace the number of prescriptions filled with nearly 5000 submitted claims through Q3, clearly demonstrating the impacts of our field teams and customer belief in the clinical value offered by in peso.

Turning to our progress on payer coverage, we have been pleased to see coverage for MPEFA grow throughout Q3 across both commercial and Medicare formularies.

Turning to our progress in payer coverage, we have been pleased to see coverage from pepper grow throughout Q3 across both commercial and Medicare formularies.

The additions to Medicare plans are particularly significant given that these are early additions outside of the normal contracting process with major national payers.

The additions to Medicare plans are particularly significant given that these are early additions outside of the normal contracting process with major national payers we.

We do expect additional plan coverage to be added through Q4 and into next year.

We do expect additional playing coverage to be added through Q4 and into next year.

Turning to audience.

Idean integrated delivery networks remain a key component of our launch stresses.

Hi, Dan our integrated delivery networks remain a key component of our launch strategy.

Given the typical new to market block for IDN former editions, our primary focus in Q3 has been on building the foundations for coverage.

Given the typical new to market blocks of idea and formulary additions our primary focus in Q3 has been on building the foundations for coverage.

The team has initiated contract negotiations with all four major group purchasing organizations, two of which have already been fully executed.

The team has initiated contract negotiations with all four major group purchasing organizations two of which have already been fully executed.

The executed contracts represent around 60% of heart-failing lives in our target and institution.

The executed contracts represents around 60% of heart failure lives and are talking to us and institutions.

Once GPO contracting is completed, IDN systems will be able to evaluate and petha both clinically and financially during their formally product reviews, which we expect to begin later this year and into 2024.

Once GPO contracting is completed adia and systems will be able to evaluate in peso, both clinically and financially during that formally product reviews, which we expect to begin later this year and into 2024.

In summary, Q3 was an important quarter for the launch of Impeffer with meaningful progress made on the execution of the launch strategy across the entire commercial organization.

In summary.

Q3 was an important quarter for the launch of in peso.

With meaningful progress made on the execution of the launch strategy across the entire commercial organization.

We are pleased by the positive reception given by the clinical community to Impefa as the only SGLT-12 inhibitor indicated for the treatment of heart failure.

We are pleased by the positive reception given by the clinical community to <unk> as the only S. G. L. T. One two inhibitor indicated for the treatment of heart failure.

The team remains laser focused on further accelerating the post-opementum with the gun to build since launch and helping even more patients with worsening heart failure wherever they may be kept.

The team remains laser focused on further accelerating the positive momentum we've begun to build since launch and helping even more patients with worsening heart failure wherever they may be careful.

I will now turn the call over to Craig to give an overview of the most recent scientific and medical data releases for Impepha. Thank you, Tom, and great to have you on the team.

I will now turn the call over to Craig to give an overview of the most recent scientific and medical data releases for Peppa.

Thank you Tom and great to have you on the team.

We're continuing to communicate meaningful and differentiated scientific and medical data on and pepper to the broad scientific community.

We're continuing to communicate meaningful and differentiated scientific and medical data on and pepper to the broad scientific community.

As you can see on this slide, our data presentations over the last several months have focused on four key differentiating areas for Empepha, clinical analyses, real world evidence, pharmacoeconomic data including both cost effectiveness and budget impact and mechanism of action.

As you can see on this slide our data presentations over the last several months have focused on four key differentiating areas foreign pepper clinical analyses real world evidence pharmacodynamic data, including both cost effectiveness and budget impact and mechanism of action.

Quite recently, we supported a post-tock analysis of our Phase III scored study at the Heart Failure Society of America annual scientific meeting that looked at the reduction in the risk of cardiovascular events in patients with left ventricular hypertrophy without hyperb...

Quite recently, we supported a post hoc analysis of our phase III scored study at the heart failure Society of America annual scientific meeting that looked at the reduction in the risk of cardiovascular events in patients with left ventricular hypertrophy without hypertension.

This data is of particular interest to heart failure specialists and to Lectricon as we evaluate future opportunities for broadening the use of INPEPA.

This data is of particular interest of heart failure specialists and to lexicon as we evaluate future opportunities for broadening the use of and pepper.

At the American Managed Care Pharmacy Nexus 2023 meeting, we presented cost effectiveness data and budget impact modeling data for Empepha, which were also published in the Journal of Managed Care and Specialty Pharmacy.

At the American managed care Pharmacy, Nexis 2023 meeting, we presented cost effectiveness data and budget impact modeling data foreign Pepper, which were also published in the journal of managed care and specialty pharmacy.

These studies serve as evidence that MPEFA is an affordable treatment that offers important clinical value for heart failure patients and significant value for payers.

These studies serve as evidenced that in Peppa isn't affordable treatment that offers important clinical value for heart failure patients.

And significant value for payers.

Last weekend, the American Society of Neurology held this annual kidney week meeting where lexicon supported several presentations addressing the challenges and complications of diabetes and chronic kidney disease.

Last weekend, the American Society of Nephrology held its annual kidney week meeting, where lexicon supported several presentations addressing the challenges and complications of diabetes and chronic kidney disease of note a S. N itself selected one of the presentations for a featured independent.

of note, ASN itself selected one of the presentations for a featured independent press release and highlighted the analysis of SOTILA-FOSEN and kidney and cardiorenal outcomes from the SCORED trial. We are proud of this independent recognition from ASN as we continue to study the clinical benefits of SOTILA-FOSEN and we, Alexa, on our committed to working diligently to inform broadly the scientific evidence demonstrate.

Yes release and highlighted the analysis of soda will close in and kidney and cardio renal outcomes from the scored trial. We are proud of this independent recognition from a S. N. As we continue to study the clinical benefits of soda propulsion and we at lexicon are committed to working diligently to inform brought.

Lee scientific evidence demonstrated.

Now, turning to the future, we are also looking forward to the American Heart Association's scientific sessions that are starting in just a few days.

Now turning to the future. We are also looking forward to the American Heart Association scientific sessions that are starting in just a few days.

We will be supporting data presentations across all domains we have identified as differentiating, that is clinical, real world evidence, pharmacoeconomic data, and the IMPEPA mechanism of action.

We will be supporting data presentations across all domains. We have identified is differentiating that is clinical real world evidence pharmacopeia economic data and the impact of mechanism of action.

We expected the oral presentation of data assessing sootical postence effect on early clinical benefit for heart failure and affliscerotic events will be a particular interest to the scientific and medical community.

We expect that the oral presentation of data assessing surgical potent effect on early clinical benefit for heart failure in atherosclerotic events will be of particular interest to the scientific and medical communities.

Well, I have just shared with you data that Lexicon and our academic collaborators have been publishing on in PEPFAR. I'd now like to share with you data that the academic community itself has published independently of Lexicon regarding the opportunity that exists in addressing the needs of patients with heart failure.

Well I have just shared with you data that lexicon and our academic collaborators have been publishing on and Pepper I'd now like to share with you David that the academic community itself is published independently of lexicon regarding the opportunity that exists in addressing the needs of patients with heart failure.

A recent publication in the Journal of the American Heart Association entitled Acute Heart Failure is a malignant process, but we can induce remission. Noted that acute heart failure due to both increasing prevalence and early readmission and death rates of greater than 30% annually make heart failure a malignant condition.

A recent publication in the journal of the American Heart Association entitled Acute Heart failure is a malignant process, but we can induce remission.

Noted that acute heart failure due to both increasing prevalence at an early readmission and death rates.

Greater than 30% annually make heart failure, a malignant condition.

Beyond the poor medical outcomes of heart failure patients, the publication also noted that acute heart failure represents one of the largest drivers of health care costs globally.

Beyond the port medical outcomes of heart failure patients. The publication also noted that acute heart failure represents one of the largest drivers of health care costs globally.

The publication also examined several studies recently published in the peer review literature, which have demonstrated that remission in this malignant process can be induced if therapy is instituted rapidly.

The publication also examined several studies recently published in the peer review literature, which have demonstrated that remission and this malignant process can be induced if therapy have instituted rapidly.

It is important to note that two studies from the SGLT class were included in this analysis, including the SOLILISTH-WHF study of Impefa that is seen in panel A of the figure.

It is important to note that two studies from the S. G. L. T class were included in this analysis, including the soloist WH F study of Pepper that is seen in panel a of the figure.

Data from the soloist WHOF study, which included stabilized patients, hospitalized for heart failure, or included in this composite figure, and show the evidence of soda lephosins early benefit in this at risk population. This represents a key differentiating aspect in our promotional strategy.

Data from the solo SWA, Jeff study, which included stabilized patients hospitalized for heart failure are included in this composite figure and show the evidence of cervical closings early benefit in this at risk population. This represents a key differentiating aspect and our promotional strategy.

The publication concludes that there is an urgent call for all stakeholders to come together to address the gaps in implementation and enable healthcare providers to induce durable remissions in patients with acute

The publication concludes that there was an urgent call for all stakeholders to come together to address the gaps and implementation and enable health care providers to induce durable remissions in patients with acute heart failure, we strongly support this messaging and will continue to support the community.

We strongly support this messaging and we'll continue to support the community by providing continuing medical education about the importance of the early initiation of SGLT inhibitors like Impepha at discharge are promptly following an acute heart failure event.

By providing continuing medical education about the importance of the early initiation of S. G. L. T inhibitors like in Peppa at discharge are promptly following an acute heart failure event.

Now we will turn briefly to an update on LX9211.

Now, we will turn briefly to an update on <unk> nine to one one.

We believe LX9211 has a promising profile based on two completed proof-of-concept studies and a substantial market opportunity.

We believe Alex 91, one as a promising profile based on two completed proof of concept studies and a substantial market opportunity.

LX9211 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 DPNP, on a daily basis.

<unk> 91, one 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 D. P. N P. On a daily basis, this large and growing market with high unmet medical need of more than 20 million.

this large and growing market with high unmet medical need of more than 20 million Americans experiencing neuropathic pain and approximately 5 million with DPNP in the U.S. in 2022 alone. As a reminder, Lexicon has been granted fast-track designation by the FDA for the development of LX9211 in DPNP.

Americans experiencing neuropathic pain in approximately $5 million with D. P. N P. In the U S. In 2022 alone as a reminder, lexicon has been granted fast track designation by the FDA for the development of Alex 91, one in D. P. M P.

As we have shared in previous updates, we are advancing LX9211 into late-stage clinical development with a program directed toward DPNP regulatory approval. Our plan is reflective of the feedback recently received from FDA, including ADPS remaining the primary endpoint of future studies and targeting a DPNP population similar to that enrolled in our phase two proof of concept study.

As we have shared in previous updates we are advancing <unk> nine to one one into late stage clinical development with a program directed toward D. P. M. P regulatory approval. Our plan is reflective of the feedback. We recently received from FDA, including ADP S remaining the primary endpoint in future studies.

And targeting a D. P. M. P population similar to that enrolled in our phase II proof of concept study the.

The FDA also agreed with the potential for inclusion of the phrase early onset pain relief with persistent effect in the label, if supported by clinical evidence, and our approach for dose selection of the Phase 3 studies.

The FDA also agreed with the potential for inclusion of the phrase early onset pain relief with persistent effect in the label if supported by clinical evidence and our approach for dose selection of the phase III studies.

The first late stage trial named Progress.

The first late stage trial named progress.

We'll be a dose optimization study with an extension design to satisfy ICH guidelines for long-term exposure requirements that will run in parallel with the plan next-age phase three trials. As a reminder, the progress study was specifically designed to enable a more efficient phase three study execution, as well as to de-risk investment while maintaining overall program timelines and costs.

We will be a dose optimization study with an extension designed to satisfy ICA ICH guidelines for long term exposure requirements that will run in parallel with the plan next stage phase III trials.

As a reminder, the progress study was specifically designed to enable a more efficient phase III study execution as well as to Derisk investment, while maintaining overall program timelines and costs.

Finally, turning to the PROGRESS study design, it will have an eight-week treatment duration and will enroll adult patients with either type 1 diabetes or type 2 diabetes who have moderate to severe diabetic peripheral neuropathic pain.

Finally, turning to the progress study design it will have an eight week treatment duration and will enroll in adult adult patients with either type one diabetes or type two diabetes, who have moderate to severe diabetic peripheral neuropathic pain.

Our teams have been hard at work completing the start-ups of the study throughout Q3, and we expect initiation of dosing in early December 23, and early data readout expected in Q2 2025.

Our teams have been hard at work completing the startup of the study throughout Q3, and we expect the initiation of dosing in early December twenty-three and early data readout expected in Q2 2025.

I'd now like to turn the call over to Jeff to take us through the financial results for the third quarter of 2023.

I'd now like to turn the call over to Jeff to take us through the financial results for the third quarter of 2023.

Thank you, Craig. I will review some key aspects of our third quarter 2023 financial.

Thank you Craig I will review some key aspects of our third quarter 2023 financial results more financial details can be found in the press release that we issued earlier today and then our 10-Q that will be filed shortly with the SEC.

We ended the quarter with $218.4 million in cash and investing.

We ended the quarter with $218 $4 million in cash and investments.

We believe that our existing capital resources provide us with the appropriate level of funding to support the commercial launch of MPEPA and to make our planned investments in research and clinical development.

We believe that our existing capital resources provide us with the appropriate level of funding to support the commercial launch of and pepper and to make our planned investments in research and clinical development.

Our loan facility with Oxford Finance, which offers up to $50 million in the initial borrowing capacity, provides financial flexibility as we continue the launch of the PEP.

Our loan facility with Oxford, Finance, which offers up to $50 million in additional borrowing capacity provides financial flexibility as we continue the launch of and pepper.

We anticipate that our existing cash and investments together with capacity under the loan facility will provide a sufficient resources to manage our operations well into 2025.

We anticipate that our existing cash and investments together with capacity under the loan facility will provide sufficient resources to manage our operations well into 2025.

As indicated in our press release this morning, we had $160,000 in revenues in the second quarter of 2023 compared to minimal revenues in 2020.

And as indicated in our press release. This morning, we had $160000 in revenues in the second quarter of 2023 compared to minimal revenues in 2022.

And PEPA net revenues from launch in late June through September 30th total approximately $400,000.

And pepper net revenues from launch in late June through September 30th.

Total approximately $400000.

Research and development expenses for the third quarter of 2023 increased to $17.6 million from $10.6 million for the corresponding period in 2022, primarily due to higher manufacturing costs and higher external R&D expenses related to the LX9211 program, partially offset by a lower-

Research and development expenses for the third quarter of 2023 increased to $17 6 million from $10 $6 million for the corresponding period in 2022, primarily due to higher manufacturing costs and higher external R&D expenses related to the <unk> nine to one one program partially.

Offset by lower professional and consulting fees.

Felling, General, and administrative expenses for the third quarter of 2023 increased to $32.2 million from $12.6 million for the corresponding period in 2022. Primarily due to increases in personnel, professional and consulting and marketing costs relating to the commercial launch of MPAP.

Selling general and administrative expenses for the third quarter of 2023 increased to $32 2 million from $12 $6 million for the corresponding period in 2022, primarily due to increases in personnel professional and consulting and marketing costs related to the commercial launch.

And pepper.

In total, net loss for the third quarter of 2023 was $50.5 million or 21 cents per share, as compared to net loss of $23.4 million or 13 cents per share in the corresponding period in 2022.

And total net loss for the third quarter of 2023 was $55 million or 21 six per share as compared to a net loss of $23 4 million or <unk> 13 per share in the corresponding period in 2022.

For the third quarters of 2023 and 2022, net loss included non-cash stock-based compensation expense of $3.9 million and $2.6 million for respect.

For the third quarters of 2023, and 2022 net loss included noncash stock based compensation expense of $3 $9 million and $2 6 million respectively.

As with the prior quarter, we are also including a view of our 2023 full year expense guide.

As with the prior quarter, we are also including a view of our 2023 full year expense guidance. This includes expected R&D expenses of between 60 and $70 million SG&A expenses of between 110 $120 million and total operating expenses of between 100.

This includes expected R&D expenses of between $60 and $70 million, SG&A expenses of between $110 and $120 million, and total operating expenses of between $170 and $190 million, a $10 million reduction from our prior guidance.

70, and $190 million, a $10 million reduction from our prior guidance. This.

This includes non-cash expenses of $17 million to $18 million for stock-based compensation, depreciation, and amortization. I would now like to open up the call.

This includes noncash expenses of 17 million to $18 million for stock based compensation depreciation and amortization.

I'd now like to open up the call to take your questions.

We will now begin the question and answer session.

We will now begin the question and answer session.

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Today's first question comes from EGAL. No to move it with city, please proceed.

Today's first question comes from Yigal <unk> with Citi. Please proceed.

team. This is Carly on Per Yagal. Thanks for taking our questions. We just wanted to drill down a bit on the market access side. You mentioned about 25% of lives covered, I think, at the end of the quarter, and that's...

Hi team. This is carly on for Yigal, Thanks for taking our questions.

I just wanted to drill down a bit on the market access side, you mentioned about 25% of lives covered I think at the end of the quarter and that's expected to increase further in the fourth quarter I'm. Just curious when you would expect it to really have that the vast majority of lives covered.

increase further in the fourth quarter. Just curious when you would expect to really have the vast majority of lives covered, and we could potentially really see an inflection point in the launch. Thank you.

We could potentially really see an inflection point in the launch thank you.

Currently that's a great question.

If you call from the last conference call, we said you should pay very close attention to the first quarter next year.

If you recall from the last conference call. We said you should pay very close attention to the first quarter of next year.

I think based on the rate that we're moving on at this point in time, I think where you'll see...

I think based on the rate that we're moving on at this point in time, I think where you'll see probably the vast majority of the opportunity for us to capture.

probably the vast majority of the opportunity for us to capture.

of coverage will be in the first half of next year. I think that's when you'll start to see the real shift happen for the brand. You know, to the point that Tom made, you know, we're very encouraged that the demand is there, we know that.

Our coverage will be the first half of next year, I think thats when youll start to see the real shift.

And for the brand.

And the point that Tom made we're very encouraged that the demand is there we know that the.

The access has to match the demand and when that happens then you have a we should have a very significant bend in the curve.

The access has to match the demand and when that happens then you have we should have a very significant bend in the curve.

And so my projection would be we'll have the majority of what we need to have covered by the second quarter of next year.

So my projection would be we will have the majority of what we need to have covered but by the second quarter of next year.

Okay, got it. That's helpful. Um, and then just as a follow up, cruise

Okay got it that's helpful. And then just as a follow up curious.

Is there any insight that you have into the profile of the initial patients that are being prescribed in PEPA? If there's any sub-groper consistency in terms of patient characteristics, where you feel like the demand is...

If theres any insight that you have and to the profile of <unk>.

The initial patients that are being prescribed <unk>.

If there was any subgroup for consistency in terms of patient characteristics, where you feel like the demand is.

Particularly strong.

I'll turn it over to Tom. Yeah, good morning. Thanks for the question. I think I mean, the initial profile seems to be, as you would expect, kind of the heart failure patient, who is either recently out of hospital or could be being discharged from hospital. I mean, that's where obviously the solar state, I think speaks most loudly. But if you look at kind of...

I'll turn it over to Tom Yeah. Good morning. Thanks for the question I think I mean, the the initial profile seems to be as you would expect kind of the heart failure patient who is high the recently I also of hospital or it could be being discharged from hospital I mean, that's where obviously the soloist data I think <unk>.

<unk> most loudly, but if you look at kind of.

where we've been focused. I mean, it's been both inpatient and outpatient as we consider kind of where those patients sit to then how they move through the system. So nothing specific at this point in time that's kind of calling out an impeffer patient versus a jar of a figure patient, but I think we will learn considerably more of the coming period.

Strategically where we've been focused I mean, it's been both inpatient and outpatient as we consider kind of where those patients sit today and how they move through the system. So nothing specific at this point in time, those kind of calling out an <unk> patient versus a majority in sort of a sega patient, but I think we will learn considerably more over the coming period.

Okay, Great. That's helpful. Thank you for taking the questions.

The next question comes from Andrew Tsai with Jeffries. Please proceed.

The next question comes from Andrew Tsai with Jefferies. Please proceed.

Hey, good morning. Thanks for taking our questions. So, maybe two questions. The first one is more about the Q3 sales breakdown. How much inventory build or drawdown was there in the quarter? And then secondly, what were their growth to Nets like? Were they below 50%?

Hey, good morning, Thanks for taking our questions. So maybe two.

Questions. The first one is.

More about the Q3.

Sales breakdown, how much inventory buildup or drawdown was there in the quarter and then secondly, what were the gross to nets like where they are below 50%.

And then secondly, interestingly, in one of your slides, it looks like there are 5,000 claims as of key three whereas 1,000 have been filled. So the question is, what percentage of those 5,000?

And then secondly, interestingly in one of your slides it looks like there are 5000 claims.

Q3, whereas a thousand have been filled.

So the question is what percentage of those 5000.

would or could get converted and how quickly could they get converted. Thanks.

Or could get converted and how quickly could they get converted.

Great question. Jeff, let me have you take the first part of that. Okay. So, Greston had the same as it was last quarter. It's in the low 40% range. And we, so that's like, keep us.

Great question, Geoff Let me have you take the first part of that Okay. So gross to net the same as it was last.

Yes.

This quarter, it's in the low 40% range.

And.

So that's like.

The.

First part of your question, the...

First part of your question.

inventory. The inventory that actually the inventory has been drawn down quite a bit. And so basically we started off with an inventory build.

Inventory and the inventory actually the inventory has been drawn down quite a bit and so basically we we started off with an inventory build.

and so to be have drag in the channel is

So the B pad drug in the channel.

As that has gone through the system, we're probably now towards a more steady state in terms of where we are right now and that a lot of what got filled out of the.

That has gone through the system. We're probably now towards a more steady state in terms of where we are right now. And that a lot of what got filled out of the

in the third quarter was drawn down the inventory bill. So we're replacing that on a regular basis now. And so that's where, at this point, I would say, after that initial fill of the channel, then it's probably a closer to study state now. Maybe I'll take the second question. So in relation to the 5,000 claims, so as we mentioned, we're encouraged by the fact that

In the in the third quarter was the drawdown of the inventory build but we're.

Replacing that on a regular basis now.

And so that's we're kind of at this point I would say after that initial.

Fill up the channel then it's probably closer to steady state now.

Maybe I'll take the second question so in relation to the 5000 claims so as we mentioned we're encouraged by the fact that doctors are putting pen to paper. They clearly see the value for in Petro and they want to try for a heart failure. So that's very encouraging.

Doctors are putting pen to paper, you know, they clearly see the value for IMPEFRA and they want to try for heart failure, so that's very encouraging.

As we stated, as we exited Q3, our coverage was about 25% within the quarter, as we exited. And that didn't obviously reflect some of the bigger wins that we've announced over the last few weeks. So that number is going to improve pretty dramatically. We do want to stay through this quarter and then beyond. So.

As we stated.

X to Q3, our coverage was about 25% within within the quarter as we exit and that didn't obviously reflect some of the bigger wins that we've announced over the last few weeks. So that number is going to improve pretty dramatically. We do anticipate through this quarter and then beyond so.

Rather than being a 20% conversion rate, that will continue to pick up towards the 30s and the 40s and even higher as we gain further wind. So we do anticipate that that will continue to grow pretty quickly, quite frankly, especially with ESI going live last week, which is a pretty major win and we have others on the way as well. So that's kind of how we see this developing over time.

Rather than being a 20% conversion rate that will continue to tick upwards since the <unk> and the <unk> and even higher as we gain further wind. So we do anticipate that that will continue to grow pretty.

Quite frankly, especially with Esri going live last week.

Which is a pretty major win and we have others on the way as well so.

That's kind of how we see this developing over time.

Great. Thank you very much.

Thank you Andrew.

The next question is from Joseph Stranger with Needham and Company. Please proceed.

The next question is from Joseph Stringer with Needham and company. Please proceed.

Hi, I think that's just a follow up on the girls in that commentary. You mentioned that it's in the low 40% range for...

Alright, Thanks for taking my questions just to follow up on a gross to net commentary you mentioned that it's in the low 40% range for.

Is this the expectation for what you would expect it to look like at steady state, maybe some additional color there? And then just quickly on the Phase IIb pain trial, can you remind us how similar the patients are going into the Phase IIb relative to the Phase IIa trial in terms of inclusion, exclusion, criteria, and guidance for top-line results from the Phase IIb? Okay.

Third quarter.

It's just the expectation for what you would expect it to look like a steady state.

Some additional color there and then just quickly on the phase IV pain trial.

Can you remind us how how similar the patients are.

Going into the phase <unk> relative to the phase Iia trial in terms of inclusion exclusion criteria.

<unk>.

Guidance for top line results from the phase <unk>. Thanks.

I'll take that first part and just say it's too early to give you steady state on gross to net. We're negotiating agreements every day.

Joe I'll take that first part and just say it's too early to give you a steady state on gross to net were negotiating agreements every day.

And so I think as we get another quarter or two under our belt, then we'll be able to give you some clear guidance. But at this moment, lots of negotiations are ongoing within 10 abroad in the access. So stay tuned on that one. Second part, I'll turn.

So I think as we get.

Other quarter or two under our belt and we will be able to give you some clear guidance, but at this moment lots of negotiations are ongoing with the intent to broaden the access so stay tuned on that one second part I'll turn over to correct. Yes. Thank you Joey Great question and this was one that we've spent a lot of time thinking about with our study sites or the high <unk>.

Yeah, thank you, Joey. Great question. And this is one that we spent a lot of time thinking about.

With our study sites or the high performing sites from our 2ADPNP program that enrolled the majority of the patients and we're including all of our best performing sites. They're all excited to participate in the program.

Performing sites from our <unk> program that enrolled the majority of the patients and we're including all of our best performing sites are all excited.

Dissipate in the program again as well as feedback from our regulatory consultants as well as FDA itself and we really want to focus on those patients similar to the two way with longstanding D. Pnp stable in their diabetes care, whether its type.

as well as feedback from our regulatory consultants as well as FDA itself. And we really want to focus on those patients similar to the two A with longstanding DPMP, stable in their diabetes care, whether it's type of...

type one or type two diabetes, but with significant pain. We're also allowing like the phase 2A study, those to be on an underlying DPNP medication. And we learned a lot in terms of some of the PROs and other metrics that we're putting into the study.

Type one or type two diabetes, but with significant pain. We're also allowing like the phase Iia study those to be on an underlying D. Pnp medication and we learned a lot in terms of some of the P. R OS and other metrics that we're putting into the study. So we're really going with a population that.

So we're really going with a population that has significant unmet medical need, which is also a very large amount of the market. There is a large number of these patients with significant.

Has significant unmet medical need.

Which is also a very large amount of the market. You know there is a large number of these patients with significant need that is not being met by current care and we feel confident based on all of the work that we've done that we can enroll the study in the timeframe that we've set out and the second part of your question related to the <unk>.

need that is not being met by current care and we feel confident based on all of the work that we've done that we can enroll the study in the time frame that that we've set out.

And the second part of your question related to the timing is that we're really looking to have first patient enrolled, as I've already mentioned in early December , all the site validation work and site initiation work has been completed. IRBs are proven to protocol and we expect to have data from that eight week treatment period, second quarter of 25. As I mentioned, all the patients will be the, have the opportunity to roll over until long-term term follow-up study on drug, which allows us both to have additional

Timing is that we're really looking at first patient enrolled as I've already mentioned in early December all the site validation work and site initiation work has been completed IRB beazer proving the protocol and we expect to have data from that eight week treatment period second quarter of 'twenty five as.

I mentioned all of the patients will be the I have the opportunity to roll over into a long term follow up study on drug which allows us both to have additional data, but also there's a good inducement to get patients to participate in a blinded study with a placebo. So we've really tried to optimize based on what we've learned.

but also is a good inducement to get patients to participate in a blinded study with a placebo. So we've really tried to optimize based on what we've learned from our study sites, from the patients, and from the FDA.

From our study sites from the patients and from the F D. A.

Yeah, the only thing I will add to that is we're operating in a non-COVID environment.

Yes.

Only thing I would add to that is.

We're operating in a non COVID-19 environment now.

And so we learned a lot the last time we did this, we were head on inside the COVID environment.

And so we learned a lot the last time, we did this we were head on inside the Covid environment.

the slow of that trial. So we've learned a lot from that and I think that'll help us with some our acceleration. And the second thing is when you have proven, you got to prove in concept, which we have proven in the first study, it's easier to the point that Gregus made to get that IRB support as well as to get this study up and rolling and encourage sites to come on board. So we should have a much more valid opportunity to move a greater speed than we did the first time.

Slowed that trial. So we've learned a lot from that and I think that will help us with some more acceleration in the second thing is when you have proven you got a proven concept, which we have proven in the.

The first study it's easier to the point that Greg has made to get that RMB support.

As well as to get the study up and rolling and encourage sites to come onboard. So we should have.

A much more valid opportunity to move with greater speed and we did the first time.

Great. Thank you for taking my questions.

You bet.

The next question comes from Yasmin Rahimi with Piper Sandler. Please proceed.

The next question comes from Es mean, Rahimi with Piper Sandler. Please proceed.

Hi, team. This is Jinyu on Brias today. Thanks for taking our questions via 2 on R&D. First, could you describe the geology of high focus currently? And our second question is, how are you thinking about partnership interest for Alex 9211 or in PEPA outside the United States?

Hi team. This is Jamie on for yesterday, thanks for taking our questions we have to on our end.

First could you describe the geographies of high focus currently.

And our second question is how are you thinking about partnering and transport, Alex 91, one or an outside of the United States.

The first question was geography of the sales team? Yeah, of course. Oh, prescribed.

So the first question was geography.

The sales team.

Yes, that's correct for prescribers.

Yeah. So.

As per, you know, most major cardiac conditions of which are fairly as one, you do see, you do, you do see a clustering around major metropolitan centers. So if you kind of look at our...

As you know in.

Most major cardiac conditions of which heart failure is one you do see you do tend to see a clustering around major metropolitan centers. So if you kind of look at our geographic distribution of both of the sales team and our prescribers today as you would imagine there is a clustering within kind of the eastern seaboard of the U S and along the west.

Geographic distribution, both of the fails team and of prescribers today, as you would imagine, there's a clustering within the East and Sea Board of the US and along the West Coast as well. Although I would also add that as you move from East to West, we do see significant opportunity within major centers there as you move through the Midwest. So encouragingly, we're seeing usage from across the country both in larger academic institutions,

Coast as well.

I would also add that as you move from east to West we do see significant opportunity within major centers. There as you move kind of through that through the Midwest. So.

Encouragingly, we're seeing usage from across the country. Both in large academic institutions, but also within the community setting as well, which I think again talks to the value of the <unk> clinical story that we're able to share and the fact that our clinicians really do understand the differentiated profile that we have.

but also within the community setting as well, which I think, again, talks to the value of the MPEFA clinical story that we're able to share and the fact that our clinicians really do understand the differentiated profile that we have in this specific population. So obviously it's early days, 5,000 claims, as you've heard, with from around 500 writers. We do anticipate that that number is gonna increase pretty markedly through this quarter, and we look forward to be able to share more information with you early next year.

In this specific population so.

Obviously, it's early days 5000 claims as you've heard with from around 500 writers. We do anticipate that that number is going to increase pretty markedly through this quarter and we look forward to pay up share more information with you in early next year.

I would add on their second question on LX921 in terms of partnering. There remains very good interest in LX9211. You know, from our perspectives, we have to think about how do we continue to develop this to maximize value for stakeholder?

I would add on there a second question on <unk> 201 in terms of partnering.

There remains very good interest in <unk> to one one from our perspective is we have to think about how do we continue to develop this to maximize value for stakeholders.

From our perspective, we have an effective dose. We already know that. What we're doing now is to create an op-

From my perspective, we have an.

An effective dose we already know that what we're doing now is to create an optimal dose that allows us to have an efficient phase III program and I think in doing that then sets us up to have.

that allows us to have an efficient phase 3 program. And I think in doing that, that then sets us up to have an asset that I think has broader and bigger value.

Asset that I think has broader and bigger value.

particularly if we want to expand beyond just DPNT because I think the drug has application and all of Neur... not all of them, but a big part of Neuropathic pain in order to do that we would then need a partner.

Particularly if we want to expand beyond just <unk>, because I think the drug has a <unk>.

Implications and all of them.

Big part of neuropathic pain.

In order to do that we would then need a partner for.

But for DPNP, I think this next step it needs to stay in our hands for us to get that optimal dose. And doing that, it would be successful. I think that opens up a much broader and bigger opportunity for us. If we move.

<unk> I think this next step that needs to stay on our hands for us to get that optimal dose.

And doing that should would be successful I think that opens up a much broader and bigger opportunity for us. If we move I think too fast on this that I think we will be less optimal in terms of what value we will achieve with it so.

I think too fast on this, then I think we will be less optimal in terms of what value we will achieve with it. So at this point in time, I think we need to execute well on this study, get on the other side of it and keep the partners at bay until we get that done.

At this point in time, I think we need to execute well.

On this study.

On the other side of it and keep the partners at Bay until we get that done.

Hi, Thank you so much for the clarification.

You bet.

Okay.

At this time, we are showing new further questionnaires in the queue, and this does conclude our question and answer session. I would now like to turn the conference back over to Mr. Lanelle Coates for any closing remarks.

At this time, we are showing no further questioners in the queue and this does conclude our question and answer session.

I'd now like to turn the conference back over to Mr. Lanell coats for any closing remarks.

Well, let me say thank you to everyone for joining us on a call today and your continued support of lexicon. Let me close up by summarizing our upcoming key milestones and events. First, we are on target with the laystage development plans. We share for Alex 9211 and diabetic purifier pet pain. This is another large and growing market still in need of an innovative treatment. And we expect the progress study to begin enrollment in December of this year.

Well, let me say, thank you to everyone for joining us on our call today.

Your continued support of lexicon, let me close out by summarizing our upcoming upcoming key milestones and events first we are on target with the late stage development plans, we share for Alex now to one one in diabetic peripheral neuropathic pain. This is another large and growing market still in need of an innovative treatments and we expect that.

Progress study to begin enrollment in December of this year.

Second, we are highly focused on delivering on a successful launch of Impepha. We have a focus commercial strategy that leverages our unique clinical data. And we're entering a market that is just beginning to reflect the growth driven by the new treatment guidelines, which include SELTs as a pillar of heart failure treatment.

Second we are highly focused on delivering on our successful launch of on paper, we have a focused commercial strategy that leverages our unique clinical data.

And we're entering a market that is just beginning to reflect the growth driven by the new treatment guidelines, which include <unk>.

As a pillar of heart failure treatment.

We are pursuing market access for MPETHRA across all channels and have been able to see early access additions throughout this quarter and expect to be able to share incremental news as we move into 2024.

We are pursuing market access for <unk> across all channels and have been able to see early access additions throughout this quarter and expect to be able to share incremental news as we move into 2024.

Our remaining remarkably encouraged, and I'm very pleased that Tom Garner has chosen to join us as we make efforts to accelerate this launch in 2024. Finally importantly, Lexicon is in a strong cash position with the ability to fund operations well into 2025. Thank you.

I remain remarkably encouraged and I am very pleased that Tom Joyner, Tom Joyner, Tom Garner has chosen to join US as we make efforts to accelerate this launch in 2024.

Finally, importantly, lexicon is in a strong cash position with the ability to fund operations well into 2025.

Thank you very much.

The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

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