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

Thank you so much for joining us. My name is Jason Zemansky. I'm one of the newest mid-cap analysts here at BofA. And it's my pleasure to both kick off our 2024 healthcare conference as well as introduce our first speaker of the day, Jeffrey Wade, President and Chief Financial Officer of Lexicon Pharmaceuticals. Jeff?

Thanks, Jason. Very happy to be here today and have the opportunity to present about Lexicon and importantly, on behalf of the creative and committed people of our company, which really make it a great company. I will be talking today -- I will be making some forward-looking statements today, which are subject to risks and uncertainties that are outlined in our SEC filings, and we refer you to those filings for understanding of those risks and uncertainties. So a little bit of background on the company. The company was really founded on a foundation of mammalian genetics to understand the functions of genes and mammalian physiology behavior to identify new drug targets to bring those -- bring forth discovery efforts around those targets and to bring those into clinical development. And at this point, we brought 2 products all the way from our own labs into market. We have other ones that are in development, which I'll talk about today and some really exciting opportunities ahead, which I'll get into a little bit more detail around. This is looking at what our pipeline is. We have -- right now, we have an approved product INPEFA, sotagliflozin. It's approved for heart failure. It's launched in a large and fast-growing market, and we're excited about the opportunity for INPEFA in heart failure and are continuing to make progress on that launch. Zynquista is sotagliflozin, which we're going to be resubmitting for type 1 diabetes approval around the middle of this year. And we believe that this is a tremendous opportunity in an area of great unmet need as an adjunct to insulin therapy for people who have type 1 diabetes and chronic kidney disease. And we'll be -- I'll talk a little bit more about that as well. And then another opportunity for sotagliflozin life cycle management opportunity is in hypertrophic cardiomyopathy, where we're starting and study this year looking at patients with both obstructive and non-obstructive hypertrophic cardiomyopathy. And we believe that sotagliflozin has an opportunity to really make a difference in the standard of care for these patients. Going further back into our pipeline, LX9211 addresses a novel target, Adapter Associated Kinase 1 for neuropathic pain, we have a study ongoing that is a dose optimization Phase IIb study that we -- has been enrolling patients. We expect to complete enrollment this year, and we're expecting data at beginning of -- or the first half of next year for that program. And then just recently announced at our Investor Day about a month ago is LX9851, which addresses another novel target, ACSL5. We believe that this has a really compelling profile for chronic weight management and treatment of obesity. We're taking that into IND-enabling studies. Again, another target that came out of our discovery pipeline and for which we've brought forth a development candidate that will now be going into preclinical and then clinical development. So this year has been a big year for the company. We have been continuing to make progress on the commercial launch of INPEFA and heart failure. As I mentioned, we're about to resubmit the NDA for Zynquista around the middle of this year. This follows on a couple of rounds of discussions with the FDA about the path forward for Zynquista in type 1 diabetes. And we're starting up the study in a Phase III study of sotagliflozin in hypertrophic cardiomyopathy. And that enrollment is expected to begin around the middle of this year. That's a study that we just launched this year and was, among other things and has been supported by the capital that we raised earlier this year, $250 million of capital that allows us to bring forward these programs. We are continuing enrollment of the Phase IIb study of LX9211 in diabetic peripheral neuropathic pain. As I mentioned, we expect data second quarter of 2025. And then LX9851 is an asset that we're now bringing into IND-enabling studies. Looking forward to catalysts for the company through the next year. We have -- we expect to have a potential launch inflection for INPEFA in the second half of 2024 as we continue to make progress with payers and with coverage. We are expecting to begin the study for hypertrophic cardiomyopathy midyear with Zynquista, we expect to have that NDA resubmitted middle of this year. And because of the nature of the resubmission, we expect that, that would be a 6-month review, which means that we have an opportunity to launch in type 1 diabetes patients with chronic kidney disease in the first quarter of next year if that is approved. In LX9211, we're expecting the enrollment to complete this year, top line data second quarter of next year. And this is a program where we believe that the opportunity is really for a partnership because the mechanism of action and all of the data that we have preclinically and from 2 clinical proof-of-concept studies suggest that this will have broad application across multiple types of neuropathic pain. And with a partner, we would have the opportunity to develop those different types of neuropathic pain in parallel. And so we think that after this study is complete, that's real opportunity for us to -- and generate a partnership around that asset. And then, as I mentioned as well, LX9851, we are beginning IND-enabling studies. This compound has a really promising profile that we're excited about. And it's also something that has generated a lot of early potential partnership interest since we announced the program. So we are really focused now that we've brought in the capital to be able to execute against this. We're focused on several key elements. First of all, really executing seamlessly against that plan, bringing forward all of these assets to achieve the catalyst that we've outlined here. We're looking as well to be very targeted in our capital allocation to support near-term value creation. And as I mentioned as well, we have a number of assets where there are opportunities for partnership and that we believe have an opportunity to create greater value and partnership than we might be able to achieve on our own. And that's core part of our business plan. So with that, I'm going to give the opportunity to have a few questions, and I look forward to having a further conversation about some of the assets and opportunities ahead of the company.

Well, perfect. Thank you, Jeff, for a great presentation. I think a topic that's easily top of mind for most investors. Let's turn to the -- your planned Phase III in hypertrophic cardiomyopathy. Can you tell us a little bit about the study as it is and sort of what prompted it? Obviously, I think SGLT2s have been looked at for that indication, but thinking about the differentiated profile of sotagliflozin, what gives you confidence that you could have a differentiated profile there?

Yes. So this is important because what we're -- in terms of our long-term strategy with sotagliflozin, we are looking for opportunities where there there's no indication for SGLT2 inhibitors and where there is really good evidence that having an SGLT1 inhibition is going to add to or create value for that asset. So hypertrophic cardiomyopathy is one, so is type 1 diabetes, because of the SGLT1 mechanism, improving glycemic control and reducing glycemic excursions. In hypertrophic cardiomyopathy, the opportunity is really related to the data that we saw in HFpEF, in heart failure with preserved ejection fraction. So we have really compelling data and across the full range of left ventricular ejection fraction from our very large heart failure program, which involved 2 studies and about 12,000 patients in total -- almost 12,000 patients in total. So when we looked at the data there, we saw in the patients who had left ventricular hypertrophy without hypertension, hypertension being the most common cause of left ventricular hypertrophy. So you kind of carve out hypertension, but you look at the other ones had left ventricular hypertrophy. The causes of those -- of that hypertrophy things like HCM. So we probably had a number of undiagnosed HCM patients in that program. We probably have other causes that are similar and have similar phenotypes in that patient population. And what we saw was between a 50% and 60% reduction and the key outcomes endpoint and cardiovascular death, heart failure hospitalizations, myocardial infarction and stroke, which is an area in which sotagliflozin is distinguished from SGLT2 inhibitors and the like. And so with that in hand, we took that -- those data to the FDA and had a discussion with them about what would we need to do to get a label within HCM. So leveraging the existing data that we had from our heart failure program with outcomes and then looking at symptoms in patients who had HCM. So we aligned around a single 500-patient study, half the patients would be on placebo, half of them would be on sotagliflozin. And they would -- this would be on top of standard of care. So that would include beta blockers and calcium channel blockers for those patients who are receiving those, which is most. And CMIs to the extent that they were still symptomatic and we're able to be in the study. So the full spectrum of existing medical therapies and looking at both obstructive and non-obstructive patients in a single study. So a very broad label, a very broad opportunity for the program. And so we aligned around this study. That's the study that we're taking forward. We are looking at the primary endpoint is KCCQ score, which we have demonstrated a benefit in the heart failure studies. And we're also looking at NYHA class as a key secondary endpoint. So that -- with that -- the success of that study would enable us to get a label in HCM. We would be uniquely labeled. And based on the data that we have from the heart failure population and the differentiation that we see in the heart failure with preserved ejection fraction population, we believe that this would really be uniquely useful among SGLT inhibitors in that indication.

Interesting. And you kind of mentioned the label would be rather broad in terms of optionality there, but where is the sweet spot? I mean, in between beta blockers and the CMIs, there's a lot of open space. And as you said, you can take it in -- along with in combination with these agents. But where do you think the ideal sweet spot is?