Lexicon Pharmaceuticals, Inc. (LXRX) Earnings Call Transcript & Summary

Good day, and welcome to the Lexicon Pharmaceuticals Inc. top line results for LX9211 from the RELIEF-PHN-1 trial conference call. [Operator Instructions] . After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Jeff Wade. Please go ahead, sir.

Good afternoon. I'm Jeff Wade, Lexicon's President and Chief Financial Officer. And joining me on the call today are Lonnel Coats, Lexicon's Chief Executive Officer; and Dr. Craig Granowitz, our Senior Vice President and Chief Medical Officer. Earlier this afternoon, we issued a press release announcing top line results of our RELIEF-PHN-1 Phase II study of LX9211 in postherpetic neuralgia. A webcast of this call, along with the slide presentation is available on our website. And during this call, we will review the information provided in the press release 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 RELIEF-PHN-1 study results and the safety, efficacy, development plans, regulatory status and therapeutic and commercial potential of LX9211 and other drug candidates. This call may also contain forward-looking statements relating to our growth and future operating results, discovery and development of our other drug candidates, launch and commercialization plans for an improved products, strategic alliances and intellectual property as well as other matters that are not historical facts or information. Various risks may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. These risks include uncertainties relating to the timing and results of clinical trials of LX9211 and our other drug candidates, the regulatory status of our NDA for sotagliflozin in heart failure, the success of our commercialization efforts with respect to any approved products, 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. For a list and description of the risks and uncertainties we face, please see the reports we have filed with the Securities and Exchange Commission. Go to the next slide. So our agenda today, first, we're going to review briefly the novel target for neuropathic pain that is targeted by LX9211. We'll go through RELIEF-PHN-1. Craig Granowitz will lead us through the study design, demographics and baseline patient characteristics and the top line efficacy and safety results, and will talk about some conclusions. Next, so just to reorient you that LX9211 targets a novel target, AAK1, AP2-associated protein kinase 1, which is a novel target for neuropathic pain. AAK1 regulates clathrin-mediated endocytosis. We started this program by identifying that AAK1 knockout mice were resistant to the development of neuropathic pain. And in the work that we've done so far, we have established that the mechanism of action does not involve the opioid pathway and does tie into the alpha-2 adrenergic receptor pathway. And LX9211 is a potent highly selective small molecule inhibitor of this target. We have identified in the course of our preclinical research that AAK1 inhibition and LX9211 specifically have potential across a broad range of potential indications within neuropathic pain. And we have previously gone through results and presented full results from another study in peripheral -- in painful diabetic neuropathy. This -- which is supported by some preclinical work. This is another indication. Postherpetic neurology is another indication within neuropathic pain that's supported by preclinical work we've done. And there are multiple other types of neuropathic pain for which we haven't yet taken the breakthrough to develop in clinical development. But we believe that LX9211 has the potential across broad [ range ] of neuropathic pain and the study that we'll talk about today is the second study that's demonstrating that effect. And so we're very pleased to have the opportunity to share those results with you today and with the results themselves. So I'll turn it over to Craig to go through the RELIEF-PHN-1 study.

Thank you, Jeff. And on the slide that you're seeing right now, this is the study design for the trial. Now as Jeff already mentioned, this post-hepatic neuralgia study is a reflection of damage to the nerve this time caused by the shingles or the chickenpox virus. As I think many of you are aware that in most people who are infected with the chicken pox virus early in life, the virus remains dormant for most people through most of life, but in a subset of patients that viruses reactivated later in life and this causes the disease shingles. In most patients, shingles resolves over a relatively short period of time with no long-term sequelae. But in a subset of patients, they go on to develop a chronic pain condition that is associated with underlying damage to the nerve. So unlike painful diabetic neuropathy, where it is the diabetes and consequence of the diabetes that damage the nerve, in the case of PHN, or post-herpetic neuralgia, it is probably the chickenpox or varicella virus that is what is associated with long-term nerve damage. So very different etiology, different presentation, but both are involving some sort of damage to the nerve. That damage to the nerve is associated with inappropriate firing of those sensory nerves, which is then ultimately perceived in the brain as pain. So that is sort of a primer on what post-herpetic neuralgia is versus diabetic -- painful diabetic neuropathy. So again, very different causes, but similar clinical manifestations of dysregulation of sensory neuronal function. The trial design of this study should look familiar to those that were familiar with the DPN study. Patients were adults. In this case, these were adults with moderate to severe pain that was secondary to post-herpetic neuralgia. After a 2-week single-blinded run-in period to establish a number of criteria, but particularly the persistence of moderate to severe pain, the patients were randomized into 1 of 2 arms, either placebo or a matched drug. In this case, it was the -- what we called in the DPN study, the high-dose arm, which, on a single dose on day 1 was 200 milligrams of LX9211, followed daily every day for 6 weeks by 20 milligrams per day of LX9211. What we'll be presenting today are the top line results, which are the results only from the blinded -- double-blinded 6-week treatment phase. We'll be presenting the 5-week follow-up sometime in the first quarter. So again, very similar to how we disclose the top line results from the DPN study. If you move forward to the next slide, the inclusion criteria is these are adult patients, both men and women, that had post-herpetic neuralgia at screening, and that disease condition with moderate to severe pain have been present for at least 3 months, and that moderate and severe pain was not only confirmed at the screening visit but in the patient completing the ADPS score for 2 weeks during that run-in period. The patients who were excluded, who had other potentially conflicting pain conditions, and as is similar to many of studies of this sort, those with the history of a major depressive disorder, active psychiatric disorder or substance abuse disorder were excluded. If you look at the use of other medications, the patients were allowed the use of 1 prescribed non-opiate PHN medication. The vast majority of those would be gabapentin or tricyclics. We'll certainly have more data on that as we have the 5-week follow-up. But I will give you the top line results with the PHN drug use. As I already mentioned, opioids were not allowed in the 2 months prior to the screening visit or at any time during the duration of the study for the treatment of pain. Similarly, non-steroidals on a chronic basis were not allowed if are continued up to a minimum of 2 weeks prior to the screening period. But during the protocol, during the running of the study, at the discretion of the investigator, patients were allowed to be administered up to 3 grams per day of acetaminophen as a rescue medication. Moving on to the baseline demographics of the study. The average age of the trial was in the mid-60s. The gender, 60% were women, 40% men. The baseline pain score, about 75% were moderate pain at baseline with an ADPS of 5 to 7, 25% had a baseline score that was severe of 8 or 9, and roughly 1/3 of the patients were on an underlying PHN medication, as I mentioned, either gabapentin or a tricyclic. Moving on to the primary end point of the study, which was the ADPS score at week 6. That was a point estimate at that single point in time. If you look, both arms had a significant drop, the placebo being on the left, the clear box; the LX9211 arm on the right, in the shaded box, both had a highly significant reduction in their baseline by week 6. The time course, I'll show you on the next slide. But if you see, the patients on placebo had a reduction of 1.6 points. But the active arm had a reduction of 2.42 points, with a placebo-adjusted difference of 0.8, which is clinically meaningful in many of the studies. Based on the way that this trial and the statistics were run, it was trending with a p-value of 0.12, but not significant with a p-value to find for the study of 0.05. If you look across the range of the 6-week arm, what you see in the next slide, in the box, which is the LX9211 arm, placebo is in triangles. You can see that both groups continued to improve across the entire 6-week dosing interval, which again is consistent with what is seen in many pain studies, including our prior DPN study. But similar to the DPN study, there was a significant reduction by week 1 or at week 1 of 0.8 points, and that difference from placebo of roughly 0.8 was maintained at every weekly dosing point across the 6-week trial interval. If you look across the total duration of the study, that 0.8 point in ADPS was consistent, and it had a p-value across a range of 0.03, which is the average effect over the entire time course. We believe that these are clinically meaningful and important elements that show the drug is active. Next slide. As a reminder on the efficacy slides before I move on to safety, these were all done on an intent-to-treat basis, which includes all patients who received at least 1 dose of study medication. So either the patients only receive 1 dose or the full course of treatment, all of those patients were included in those efficacy analysis. This was not a completer analysis that only patients with finished therapy were included. Moving on to safety. The adverse event profile was consistent with that observed in prior studies. Dizziness was the most commonly reported adverse event. Dizziness was the adverse event most frequently associated with patient dropouts, and it was more common in those treated with LX9211, and more common in those who are on an underlying DPNP medication. Importantly, there were no serious adverse events reported and no deaths reported in the study. I'll turn it back over to Jeff for the conclusions.

Thanks very much, Craig. So really, together with the study that we have previously reported, RELIEF-DPN-1, this study supports both the mechanism as a potential new mechanism of action for multiple neuropathic pain conditions now in 2 different neuropathic pain conditions, and it also supports advancement of LX9211 in development across neuropathic pain more generally. So this is now 2 indications where we've got good evidence for advancing LX9211 in neuropathic pain. And as we have discussed with you previously, our ambition and our thought here is that we potentially could get an indication that crosses over multiple types of neuropathic pain. So the data support, both from this study and from prior studies, support LX9211's potential with a novel non-opioid mechanism of action to become an important future addition to treatment options for patients who have neuropathic pain. So with that, we'd love to turn it over to questions and answers and happy to take your questions.

[Operator Instructions] And the first question will come from Yigal Nochomovitz with Citi.

This is Carly on for Yigal. First, can you just help put the 0.8 point placebo-corrected change into a bit more context, then maybe how you would benchmark these data to trials for approved agents for PHN? I know you mentioned complement in medications were allowed. So maybe just talk a little bit more about how we should be thinking about that and trying to compare the data to the benchmarks.

Thank you. Well, I think one of the elements is that it's hard to make cross-trial comparisons here, especially since the other agents that have been improved in this space were developed 20 years ago and they were developed when those agents weren't available, so -- and we're on top of the standard of care. So the reduction that we saw in this study from baseline -- from the patient's own baseline was about 2.4 points, which is a pretty meaningful reduction. And from all of the discussions we've had with key opinion leaders and others, a 0.8 reduction placebo-adjusted is quite meaningful and significant one.

Yes. I think, Carly, I'll just add a couple of points. And I think the fact that the separation was so rapid and so consistently maintained across the study, we believe, is another set of confirmatory metrics that this is clinically meaningfully important difference in response between the placebo and the active arm. So that number is meaningful is at least as large as was anticipated in the statistics that were done for the study and based on our discussions with key opinion leaders would be something that would be seen as clinically meaningful.

Okay. Great. That's very helpful. And then can you also elaborate a bit on the use of rescue medication during the study? Was that fairly balanced between the 2 arms?

Yes. The use of the rescue medication was greater in the placebo, similar to what we saw with the DPN study, and the use of that rescue medication started really at the very beginning of treatment. As weeks go on in the treatment, we become less confident in that because then you have the issue of patients dropping out in different arms. And obviously, if they dropped out, there is going to be a selection bias against the use of the rescue medication because they're no longer in the study. But the fact that we saw even in the first couple of weeks before there were significant dropouts, greater use of the rescue medication option in the placebo, we think is -- gives us far more confidence that, that is clinically, again, supportive of the activity of LX9211 in this indication.

Okay. Great. And then just our last question is on next steps. Can you talk about how you're thinking about prioritizing PHN relative to DPN? Or if you think there is an opportunity to maybe study both indications within the same registrational study and what that would look like?

Well, we would definitely study them in separate studies. I mean in the past, which is not still active, but the most recent guidance from FDA suggested that you could get a broad neuropathic pain indication if you demonstrate effect in 3 different types of neuropathic pain. This particular indication is really more of a means to an end as far as that goes. Diabetic -- peripheral diabetic neuropathy and diabetic neuropathic pain is about 50% of the overall market. It means a very large indication. Post-herpetic neuralgia itself is a pretty small indication. It's about 2%, maybe, of the opportunity here. But is a means to potentially giving a broad label, which would be an opportunity to do something that hasn't been done before. So that's really the way that we think about post-herpetic neuralgia. As we think about development, this is one of the reasons why we're talking to potential partners about LX9211 because if we do have a partner in place, then there's potential to develop multiple types of neuropathic pain in the parallel because the resources would be more significant than just going after a single indication such as painful diabetic neuropathy. But it's definitely something that we're thinking about is the overall strategy for the program is looking at a potential broad label within neuropathic pain.

And the next question will come from Yasmeen Rahimi with Piper Sandler.

A couple of questions for you. Maybe the first place to start off would be is, did you look at a number of secondary endpoints that you think are also critically important, like similar like you shared with us at a later time point in the diabetic neuropathy pain studies that really show differentiation, if you could allude to what else will measure it and the significance of those assessments, and when we should be seeing them, that's sort of bucket 1. And then bucket 2 is down with 2 positive data sets on neuropathic pain? Or are there other pain indications within the umbrella of neuropathic pain that you're saying is derisked with these 2 readouts that you have interest in further developing?

Craig, do you want to?

I'll take the first part, Jeff. Thank you. And thank you, Yas, for your questions. One of the reasons we really wanted to talk about the impact across the range is we think that is a very important secondary endpoint to the study. We also want to be very mindful of the fact that this was a small study. It was only 79 total patients in the trial, and we don't want to, in a sense, torture the data beyond the point of feeling confident that it really is representative. I think a couple of them we've already touched upon. The use of the rescue medication is consistent. The impact across the range was consistent. The magnitude of the 0.8 drop, I think, is numerically large, especially in the context of the significant placebo effect that persisted throughout the treatment period. We will certainly be looking at a number of the other parameters, including efficacy by PHN use and underlying PHN use. We'd be looking at the time course of the completer analysis as well in those patients that did complete treatment. So I think there are a number of other analyses that we're going to continue to look at quite carefully. I think the other area now that we can look at is how do we further optimize the benefit of treatment now that we have 2 studies and we have some additional pharmacokinetic data. I think there'll be a very high probability that we'll be talking more about that early in the upcoming new year as well and how that is influencing our thinking, looking at effect size by drug levels, looking at dosing strategies that we might consider in terms of looking at benefit. So I think there is a bit more data that we'll have from the DPN study with the detailed pharmacokinetics that we hope to have at major medical meetings as well as some of the modeling work that we're doing thing about dosing going into the future. So I think there's a lot more data to come as we go forward from not only the DPN study, but this study as well.

And then if I may- Yes. sorry, Jeff, go ahead. No, you go ahead and then I'll...

In terms of other indications within neuropathic pain, we've evaluated quite a few of them. We're thinking about what makes the most sense. One of the more common is painful radiculopathy. There's -- we have evidence. We published evidence relating to specificity which kind of crosses over here in the spinal cord injury and in multiple sclerosis-related spasticity. So there are other areas within neuropathic pain, where we have some pretty interesting preclinical evidence, and we'll be evaluating in collaboration with potential partners as well, which of those we pursue and in what order. But we've got broad data that suggest that this utility would be broad within neuropathic pain across a number of different types of neuropathic pain. And so far, we're 2 for 2 as far as these studies go. So we're pretty excited about that.

And just a quick follow-up. How important was this data set in a patient population for strategic discussions. If you could just speak about that, that would be helpful. And I'll jump back into the queue.

For partnership discussions, I think this is going to be very supportive. If you look at the pattern of the results here, the pattern of results is very similar to what we saw in the painful diabetic neuropathy study. This was a lot smaller study. And probably, unfortunately, we only have the high dose in the study as opposed to the 2 doses because the other dose actually performed better in the painful diabetic neuropathy study. And so we would expect it to do the same here. So I think we are pretty confident about a path forward in terms of being able to optimize the dosing regimen. And we're also pretty confident in the consistency of the data across 2 different types of neuropathic pain. And I think that, that's going to resonate as we go forward.

Yasmeen, it's Lonnel. The only other thing I would add is that the drug continues to perform consistently on what we understand about AEs. So there are no surprises here, which is important in the partnership arrangement is that you know how the drug behaves. And once you learn how to dose it, you can then optimize to the point that Craig is making. We believe we can optimize efficacy, and we also can reduce AEs. And if we're able to achieve that, then we're on our way to a fairly sizable opportunity.

The next question will come from Joseph Stringer with Needham & Company.

First one is, what were the discontinuation rates in each arm? And then secondly, is potential partnership, is that a gating factor to further development in LX9211 in pain specifically?

Craig, do you want to take the first part of that? And I'll take the second.

Yes. Great question, Joey. I think the first thing that we had questioned in our own mind is how different is this group of patients and their sensitivity to medications than the DPN study. And it is interesting because they -- both arms, both the placebo and the drug treatment group, actually had higher rates of dropout than was in the DPN study. And there's lots of theories for that. But if you think about painful diabetic neuropathy, these are chronically ill patients for many, many years. A lot of people that have post-herpetic neuralgia are relatively well on a population-adjusted age weight basis and they are really not used to being on lots of medications and living with chronic pain for decades. So the placebo dropout rate actually was quite a bit higher than was in the DPN study, and there was a commensurately higher rate as well in the treatment group arm. The rates were consistent on a percentage basis of what we saw in the DPN, but the whole thing was shifted up. Now what that ultimately means is that a significant fraction of the patients did discontinue treatment in the higher dose arm, which means even on the completers analysis when we finish analyzing that data is going to look even commensurately better. So clearly, the dropout rates impacted the primary endpoint, both in terms of the fact that there were fewer patients on treatment at 6 weeks, but also as the treatment -- the number of patients shrinks the variability of the data grows. So one of the issues that happened at the sixth week and probably the reason we lost the p-value is even though the effect size was as large or larger as we put into our statistical planning, the dropout rates were higher. And that increase in variability sort of dragged the p-value from a 0.5, or at the case of the very early time points when almost all the patients were on treatment with a highly significant p-value and sort of dragged that just above the p-value that was determined to be significant.

Well, what I would add is I think what we've learned, one of the things we were testing here, Joey, is this high dose. And we pushed it to see what -- how it performed. What we know consistently now, we have to dose differently because you want to, early on and consistently, control the AEs. The #1 reason for discontinuation in this program was dizziness. And we believe that's consistent with the loading dose and the high dose. And if we're able to control that by modifying what we think we need to do, particularly from what we learned from DPN in the lower dose, we ultimately think we can reduce the AEs, reduce the dropouts and increase the overall effect. If we're able to achieve that again, then I think we have pretty much a home run.

Yes. In that regard, what we -- and I think we talked about this previously, once we got past the loading dose effect at the low dose in DPN study, there really wasn't any difference in dropout rates between the 10-milligram dose and placebo. And so we kind of know that, that 10-milligram dose, daily dose is going to be one that's tolerable. And we also have a pretty good idea that having a big loading dose, 10x loading dose on day 1, is not going to be the way to go forward. But those are things that we learned from this -- from the prior study and then has been confirmed in this study. I think you had -- maybe had 1 other question. I'm not sure that I have answered the second one.

Yes, this -- with the partnership, is that seeking a partner, is that gating to the further development of...

So we are moving forward to get ready for Phase III, and we are getting teed up. We're getting ready for regulatory interactions first half of next year to outline our Phase III program. We're making the investments to be able to be prepared to start those studies next year, and we're making the investments to have the drug supply available for the start of those studies to all begin next year. So that's something that we're doing regardless. I think where it would be important and helpful for us to have a partner is because we do believe the opportunity is very broad and encompasses multiple types of neuropathic pain. And ultimately, we're going to need to have a partner in a number of geographies and want to have a partner as it relates to primary care, the primary care elements of this indication that a partner is going to help us be more aggressive in that development program. And so -- so while we are moving this forward and getting ready to go into Phase III and we're proceeding in parallel with those discussions, and that doesn't require a partnership to be in place. Ultimately, a partner will allow us to be able to develop this more broadly with the neuropathic pain and more aggressively in terms of doing things more in parallel instead of doing them sequentially.

And Joey, the only thing I'd add is the quickest way to a partnership is keep moving. We have delivered on the results now consistently, and our objective is to keep advancing the program. And if we do that well, then I think the partnership will come along the way.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Lonnel Coats for any closing remarks. Please go ahead.

Well, let me say happy holidays to everybody. It's -- we've gotten a tremendous gift here at Lexicon with these results. This was -- the PHN study was a fairly small study. We did it that way because we wanted to see, is there a strong signal here where we can broaden the pursuit into a broader neuropathic pain indication. We've achieved that. We took great risk with DPN and did a big study to be able to see whether or not we have something special here, we achieved that. So I think we're in a strong position going into the new year to advance another innovation out of Lexicon's own pipeline. And I feel very confident that these data will lead to us moving expeditiously with the regulatory agency to find a pathway forward to Phase III. And ultimately, I believe we will find the right partnership that allows us to extract value sooner than later in achieving that. So I thank you all for joining us and wish you all a wonderful holiday season, as I give our team some needed rest as we push toward the end here to get things done before we got into the Christmas break. With that being said, thank you all, and appreciate your support.

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