Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) Q1 2024 Earnings Call Transcript

Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) Q1 2024 Earnings Call Transcript May 5, 2024

Lexicon Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, everyone, and welcome to the Lexicon Pharmaceuticals First Quarter 2024 Financial Results Conference Call. At this time all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, May 2, 2024. I’ll now turn the call over to Lisa DeFrancesco, Head of Investor Relations and Strategy for Lexicon. Please go ahead, Lisa.

Lisa DeFrancesco: Thank you, Jamie. Good afternoon, and welcome to the Lexicon Pharmaceuticals First Quarter 2024 Financial Results Conference Call. Joining me today are Lonnel Coats, Lexicon’s Chief Executive Officer and Director; 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. Earlier this afternoon, Lexicon issued a press release announcing financial results for the first quarter of 2024, which is available on our website at www.lexpharma.com and through our SEC filings. 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. Before we begin, let me remind you that we will be making forward-looking statements, including statements related to the safety, efficacy, clinical development, regulatory status and therapeutic and commercial potential of INPEFA, sotagliflozin, Zynquista, LX9211, LX9851 and our other drug programs. These statements may also include characterizations and projections relating to our commercial launch of INPEFA in 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.

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 INPEFA, our discussions with the FDA and other regulatory authorities regarding our drug programs, the timing and results of clinical trials and preclinical studies of our drug candidates. Our dependence upon strategic alliances and other third-party relationships, our ability to obtain patent protection for our discoveries, limitations imposed by patents owned or controlled by third parties and the requirement of substantial funding to conduct our planned research, development and commercialization activities. I would now like to turn the call over to Lonnel Coats.

Lonnel?

Lonnel Coats: Thank you, Lisa. Good afternoon, everyone, and thank you for joining us on the call. Now before I begin our discussion on Lexicon’s results for the first quarter of 2024, I want to acknowledge the press release that went out earlier this week announcing my retirement from Lexicon, which will be effective on my upcoming 10th anniversary with the company on July 7th. I am truly blessed to have had the opportunity to spend the last decade leading this remarkable company. I’ve had the privilege to work with an outstanding Board that continues to support the company and the many amazing and talented employees who are dedicated to Lexicon’s mission. It was important to me as I made the decision to embark on the next phase of my personal journey that I’ll leave this company in the strongest possible position.

I’m happy to say Lexicon has never been stronger than it is today. As we outlined at our recent Investor Day, Lexicon has a significant portfolio and pipeline of exciting opportunities. We have a remarkably strong leadership team with the capital to execute on these opportunities to create value for stakeholders. With that, I’d like to turn this call over to our President and CFO, Jeff Wade, to begin our discussions of the results.

Jeffrey Wade: Thank you, Lonnel. As Lonnel mentioned, Lexicon has never been stronger than it is today, and we have made very substantial progress just in the past quarter. We continue to make progress on our heart failure launch with expanded market access, which we expect to broaden significantly starting midyear and continuing thereafter, providing the key to potentially unlock a substantial inflection in our launch trajectory in the second half of this year. We see encouraging leading indicators supporting that potential, which Tom will discuss shortly. We achieved a path forward this past quarter for a resubmission of our new drug application for Zynquista for type 1 diabetes, offering the potential for another near-term and very substantial commercial opportunity for the company.

We expect to be in a position to achieve a midyear resubmission of the NDA, seeking the approval of Zynquista as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and chronic kidney disease. We believe the approval of Zynquista would help address significant unmet needs in a population with no real treatment options beyond insulin to manage their blood sugar. We have also begun our efforts to expand sotagliflozin’s label into hypertrophic cardiomyopathy, part of an overall strategy to seek medically important and high-value indications that are both unique to sotagliflozin among SGLT inhibitors and for which there is evidence for an advantage in inhibiting SGLT1. Start-up activities for our pivotal Phase 3 study in HCM are well underway, and we expect to begin patient enrollment around the middle of this year.

We are making continued good progress in the enrollment of our Phase 2b study of LX9211 for diabetic peripheral neuropathic pain, which continues to be on track for top line data in the second quarter of 2025. We are increasingly confident in the opportunity for LX9211 to address a tremendous area of unmet need, both in DPNP, the focus of this study, but also in neuropathic pain more broadly. At our Investor Day two weeks ago, we revealed LX9851, a promising new oral drug candidate for chronic weight management that addresses a novel target ACSL5 with compelling biology. LX9851 provides additional evidence that Lexicon’s unique Genome5000 discovery platform founded in a systematic approach to mammalian genetics continues to produce. And finally, but very importantly, we were able to raise $250 million in an oversubscribed offering with strong shareholder participation to support the execution of these exciting programs.

I’ll now turn the call over to Tom Garner, Lexicon’s Chief Commercial Officer, to talk more about INPEFA for heart failure and where we are with the launch. Tom?

Tom Garner: Thank you, Jeff, and good afternoon, everyone. It’s a pleasure to be able to speak with you all today. As you will see, Q1 represented another quarter of continued positive progress with the ongoing launch of INPEFA. As a reminder, the commercial organization is fully aligned and focused on two key areas as it relates to the ongoing launch, namely driving an awareness and demand for INPEFA amongst the cardiology community, while also working hard in parallel with major payers to secure profitable and equitable access for patients who can benefit from this medicine. We’ve also taken thoughtful and deliberate steps to evolve and significantly strengthen the commercial organization to ensure that we can maximize the opportunities that exist for INPEFA and, more broadly, Lexicon in both the near and midterm.

Beginning on the next slide, you can see that heart failure remains a significant burden in the United States today. You can see that there were about 7 million patients suffering with heart failure in the United States in 2019. This number is expected to grow by nearly 27% by the end of the decade to about 8.5 million patients, reflecting a growing and very substantial patient population where unmet needs remain. Thus anticipated growth is also projected to have a substantial impact on the health care system as a whole. At the start of the decade, heart failure costs were estimated to be about $44 billion. And by the end of the decade, this number is expected to increase to nearly $70 billion. This clearly reflects a significant drain on resources, and we believe that INPEFA is very well positioned as a cost-effective solution, which brings me to the next slide.

On Slide 7, you can see how hospitalizations and readmissions are driving the majority of these heart failure-related costs. In fact, according to the latest estimates, hospitalizations account for nearly 80% of overall costs. And when patients leave the hospital, in many cases, they are readmitted very quickly with up to 25% returning within 30 days. As we’ve shared previously, much of our clinical data for INPEFA, specifically from the SOLOIST trial, where the NNT was four and hospital readmissions reduced by 50% at both 30 and 90 days, is very — is received very positively both for clinicians who are treating patients in the inpatient setting, but also for those who are treating patients in the outpatient setting with the goal of preventing readmissions, which is one of the objectives central to guideline-directed medical therapy.

Turning to the next slide, you can see that treatment with SGLTs is really in its infancy in terms of uptake for the treatments of heart failure. INPEFA is now one of three SGLT medications that are referenced in the ACC guidelines. As the only jewel inhibitor of SGLT1 and SGLT2, coupled with compelling further clinical evidence, we believe that INPEFA offers significant value to HCPs, to patients and to payers. Despite the strong recommendation within the heart failure guidelines is one of the four pillars of guideline-directed medical therapy, the SGLT class still remains somewhat underpenetrated. As of today, only around 11% of patients are actually being started on SGLT therapy for heart failure, representing a significant future opportunity for the class, including INPEFA.

This is an area where the epic medical community is really pushing very hard. The American Heart Association has a Get With The Guidelines program for heart failure with the primary goal of ensuring the updated guidelines are consistently pulled through into clinical practice with the goal of improving patient care and outcomes. Turning to Slide 9. We’re very excited about two recent additions to the joint guidelines established in 2022 by the American College of Cardiology, or ACC, the AHA and the Heart Failure Society of America. Firstly, last year, the ACC released a consensus statement for the treatment of heart failure with preserved ejection fraction, which went even further than the 2022 joint guidelines and recommending SGLT inhibitors as first-line foundational therapy for all patients who have HFpEF.

And then just a few weeks ago, we were also very pleased to see the updated consensus statement for HFrEF, which reclassified the SGLT2 class as the SGLT class in express recognition of INPEFA’s differentiated mechanism of an action inhibiting both SGLT1 as well as SGLT2. Taken together, we anticipate this continued support from experts in the heart failure community will result in continued growth and accelerating adoption for the SGLT inhibitor class as a whole, including INPEFA across the spectrum of heart failure patients. Now pivoting to our results for the quarter. We continue to observe encouraging results from our efforts to accelerate the adoption of INPEFA for the treatment of heart failure. Awareness of INPEFA continues to trend positively upwards and has grown by nearly 10% since January and is now in the 88% range.

At the same time, we are also seeing that intention to prescribe is increasing as more of our target customers are reached by our sales specialists and our nonpersonal efforts. Encouragingly, once cardiologists have started a patient on INPEFA, they indicate very high product satisfaction, which is above similar benchmarks for comparable products in the cardiology space at this point in the product life cycle. Taken together, these metrics give us confidence that INPEFA’s differentiated value proposition and core messaging is resonating with our customers and demonstrates the great potential we see for continued growth throughout 2024 and beyond. Turning to Slide 11. As a reminder, we have focused our in-person sales efforts on the highest volume heart failure prescribers with a team of highly tenured cardiovascular specialists.

The priority focus for this team is on the segments A through C where we see the highest volumes of heart failure patients with the A and B targets alone accounting for more than 60% of the overall heart failure volume in the United States. As we move to the next slide, you will see that this focused strategy is starting to pay dividends. As you can see from the chart on the left, nearly 80% of the INPEFA script volume is currently coming from our A through C highest-volume heart failure treaters. Moving to the chart on the right, you can see how we are penetrating each priority segment. Encouragingly, we are seeing increased adoption of INPEFA amongst these top-tier customers. We focused on the very most important segment A and B customers.

Adoption of INPEFA within this group grew by over 40% in Q1 versus Q4. While we continue to see increasing adoption, we should also know that we have significant room for continued growth across both of these segments. And this is something that the sales team is fully focused on continuing to deliver as we broaden the prescriber base. Moving to Slide 13, you can see the continued progress we are making with the adoption of INPEFA across the entire cardiology community as a whole. Through the end of March, we had around 1,900 writers of INPEFA, adding in excess of 600 new customers in the first quarter, representing an increase of over 45% versus the prior quarter. This positive momentum has continued through the early part of Q2. We’re really pleased with this progress and expect it to continue as we further enhance our in-person promotional tools, our strengthened omnichannel approach, while also working hard to broaden access, which may be still be viewed by customers as a barrier to product adoption at this point in the launch window.

On Slide 14, you will see that we are continuing to build ongoing prescription volumes even as we work to improve access conditions for INPEFA. We have seen encouraging upward momentum in TRx volumes throughout the quarter and have seen this trend continue into the early part of Q2. Accelerating and improving patient pull-through will remain a critical focus for the team to ensure that we not only continue to accelerate new-to-brand script demand, but are able to continue and retain ongoing scripts for INPEFA prescribers and for their patients. The INPEFA together program has been carefully designed to ensure that patients prescribed INPEFA can be appropriately started and supported on their treatment journey irrespective of their insurance tie-up.

So as you can see from the previous slides, we are pleased with the continued positive momentum and leading indicators for INPEFA demand as customers become ever better acquainted with the clinical value proposition that INPEFA offers to their patients. It’s worth noting that our overall access did not change considerably from the roughly 40% as of last quarter, yet we have continued to see ongoing increases in total script volumes. We’re currently in the midst of the 2025 Medicare bid cycle with the Value and Access team fully engaged in important and meaningful discussions with all major PBMs across both the commercial and Medicare books of business. We’ve been pleased by the receptivity payers have indicated to the product as they recognize there is clinical differentiation with INPEFA and that the value proposition is compelling.

They continue to express interest in reviewing INPEFA for coverage and increasingly adding INPEFA to their formularies. With that, I will hand over to Jeff to talk about type 1 in Zynquista.

Jeffrey Wade: Thanks, Tom. It has been a particular passion of our company to improve the lives of people with type 1 diabetes, and we are pleased to have found the path forward for the resubmission of our NDA for Zynquista as an adjunct to insulin therapy for the substantial proportion of this population who also suffer from chronic kidney disease. Type 1 diabetes is a substantial opportunity in an area of high unmet need. Because type 1 diabetes involves complete insulin deficiency due to the autoimmune destruction of beta cells in the pancreas, people with type 1 diabetes rely entirely on insulin therapy, either multiple daily injections or insulin pumps to provide the insulin they need. But while insulin is life-saving, it is also very challenging to manage with the result that between 75% and 80% of people with type 1 diabetes fail to meet targets for A1c, a measure of average glucose.

The difficulties in managing insulin therapy also mean that unmet needs for glycemic control in type 1 diabetes go far beyond A1c with glucose variability and maintaining time and range being particular challenges. Maintaining good glucose control is important to the day-to-day lives and well-being in people with type 1 diabetes, but it is also important for reducing long-term complications, which include diabetic retinopathy, diabetic neuropathy, higher rates of cardiovascular disease and chronic kidney disease. Notably, among the 1.7 million adults with type 1 diabetes between 20% and 25% have chronic kidney disease and many more are at risk for progression. Moving to Slide 18. Following a series of discussions with the FDA, we are preparing to resubmit our NDA for patients living with type 1 diabetes and chronic kidney disease in the middle of this year.

In doing so, we are leveraging the extensive clinical data generated in what was and remains the largest ever Phase 3 program of an oral adjunct to insulin in type 1 diabetes. We have the opportunity to reference a tremendous amount of additional supportive data that were generated after our original filing for approval in type 1 diabetes in a separate population, but still relevant, providing evidence of benefits on cardiovascular death, heart failure, myocardial infarction and stroke and kidney protection. And we have the benefit of recently published additional data from long-term longitudinal studies that shows the importance of better glycemic control in slowing the progression of chronic kidney disease in the type 1 diabetes population.

Together, these elements open the opportunity for our resubmission for the use of Zynquista as an adjunct to insulin with potential to improve glycemic control for people living with type 1 diabetes and chronic kidney disease. On Slide 19, the significant unmet needs in type 1 diabetes more broadly are shared by and often have particular importance in the population of people who also have chronic kidney disease. These needs including — include reaching A1c goals, reducing glycemic variability, including time and range, controlling complications and reducing weight gain with the overall goal of preventing further conditions or complications, including cardiovascular and kidney-related diseases. The data from our Phase III program of sotagliflozin in type 1 diabetes provide compelling evidence addressing many of these unmet needs with results consistent among the overall type 1 diabetes population studied and also the subgroup with type 1 diabetes and chronic kidney disease.

On Slide 20, you can see from the patient journey in type 1 diabetes that there are no real treatment options beyond insulin therapy to improve glycemic control and thus potentially prevent the complications that ultimately result from suboptimal glycemic control and that sotagliflozin has a unique opportunity to fill a gap and address an important area of need in this population. I’d like to pivot, beginning with Slide 21, to discuss our plans for a potential commercial launch. The treatment of type 1 diabetes is highly concentrated among endocrinologists where the top 1,000 are treating about two-thirds of diabetes — type 1 diabetes patients and the top 3,000 are treating over 90%. The concentration of prescribers and their geographic distribution supports a focused, modest-sized field force, likely 120 or fewer in size.

We are continuing our planning and preparations for commercialization as we prepare to resubmit and post acceptance and through the review process and expect to hire the T1D focused field force very close to the potential launch early next year. Moving to Slide 22. We are not the only ones who are enthusiastic about the opportunity for sotagliflozin to benefit people with type 1 diabetes. There are a number of studies, including some large studies focused on outcomes beyond glycemic control in the T1D population that are utilizing sotagliflozin and from which we expect to add to our body of evidence over the next several years. This includes a study called SUGARNSALT, which is designed to assess the outcomes of treatment with sotagliflozin in patients with type 1 diabetes and chronic kidney disease; SOPHIST, which looks at heart failure and type 1 diabetes; and STENO1, which looks at a reduction in cardiovascular risk in type 1 diabetes.

To summarize on Slide 23, we expect to resubmit our NDA midyear and given the nature of the resubmission, anticipate a six month review. Prelaunch planning activities are well underway, and we expect further investments related to field force to occur closer to potential approval. There is a significant unmet need and substantial advocacy group support for treatment to manage glycemic control for people who have type 1 diabetes and chronic kidney disease and we expect the body of evidence will continue to grow and expand over time. We couldn’t be more excited here at Lexicon to be on this journey to bring sotagliflozin to people with type 1 diabetes. I will now turn the call over to Craig to talk about hypertrophic cardiomyopathy and why we believe that this is a great opportunity to improve care for patients who still need better treatment options.

Craig Granowitz: Thank you, Jeff. We shared a lot of detail on our rationale to pursue sotagliflozin in HCM at our recent Investor Day a couple of weeks ago, which is still available for review on our website. So I’ll just briefly summarize here. Our enthusiasm about HCM as an opportunity for sotagliflozin was driven in part by a post-hoc analysis of our SCORED data demonstrated that sotagliflozin reduce the risk of cardiovascular events in patients with left ventricular hypertrophy without hypertension. This cohort shares phenotypic and physiologic traits of patients with HCM and may actually include undiagnosed cases of HCM. This analysis provides insight into the potential efficacy of sotagliflozin in patients with HCM. And there are a lot of other physiology that would support the impact of SGLT1 expression on HCM and why sotagliflozin might work on the myocardium itself to achieve that end.

After reviewing this data and discussing with the FDA, we believe that sotagliflozin has the potential to address key unmet needs with the scientific rationale to support development. The timing of our study could also be beneficial as heavy disease awareness efforts currently underway in the industry through new treatments as new treatments become available could also provide additional benefit. We believe that the rate of diagnosis of HCM will likely outpace the growth of the disease itself. Moving to the study design on Slide 26. Our proposed indication is to improve symptoms and physical limitations, which is what all of the agents that are currently approved are designed to do. All the CMIs and all of the other agents have been designed and approved to improve physical functioning, not improve long-term outcomes.

We have already demonstrated long-term CV outcomes from our vast heart failure clinical dataset. And importantly, we are including both obstructive and non-obstructive HCM patients in the upcoming trial. So we have a single 500-patient study with 200 patients each with obstructive and non-obstructive hypertrophic cardiomyopathy. Our KCCQ primary endpoint has been validated by the FDA as an endpoint for non-obstructive hypertrophic cardiomyopathy in registration trials of other agents. And importantly, a much broader group of patients are eligible to be included in our trial than those of the current CMIs because we’re allowing patients to actually remain on a CMI, to remain on their beta blocker and to be on their CCB, and we will allow an ejection fraction inclusion criteria down to 50%, not to 60% that is in the CMI trials, because the major risk of use of CMIs is that patients may develop heart failure and were actually indicated to reduce the development of heart failure.

Moving to Slide 27. We believe that there are significant stakeholder needs and opportunities in the HCM treatment paradigm for which sotagliflozin can address. For patients, sotagliflozin has the potential for symptom improvement with very limited or no added side effects. It also has the potential to be cost effective without the need for significant patient monitoring. In this case, there would be no significant added burden to HCP offices and payers and all stakeholders could potentially benefit. Because of the way that it will be studied, it would also be available for use across the treatment paradigm of HCM regardless of their current therapy or obstructive or nonobstructive HCM status. Moving now to LX9211. We believe that LX9211 has 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. Lexicon has been granted Fast Track designation by the FDA for the development of LX9211 for DPNP. Diabetic peripheral neuropathic pain is a large and growing market with significant unmet medical need. It is estimated that more than 20 million Americans experienced neuropathic pain and approximately 5 million DPNP patients were identified in the U.S. in 2022. LX9211 has the potential to be a first-to-market novel non-opioid therapy in a multibillion dollar market. Our PROGRESS Phase 2b study has an eight week treatment duration and is enrolling adult patients with a diagnosis of type 1 or type 2 diabetes with moderate to severe diabetic peripheral neuropathic pain.

It is a four-arm placebo-controlled study with approximately 400 patients or 100 per arm. It also allows patients to remain on their underlying DPNP therapy, which reflects a more real world use approach. As we have shared in previous updates, we have advanced LX9211 into late-stage development with a clinical program directed towards DPNP regulatory approval. The PROGRESS study began enrollment in December. It is designed to be a dose optimization study in order to enable a more efficient Phase 3 study execution, increased probability of success as well as de-risk investment, while maintaining overall development program costs and timelines. Enrollment remains on track, and we expect the top line data in Q2 2025. Now moving on to LX9851 for obesity and weight management.

Beginning on Slide 34, we recently revealed an exciting pipeline opportunity, a novel oral development candidate for chronic weight management, which we are calling LX9851. With this ACSL5 inhibitor, we see the potential to address the significant opportunities beyond weight loss with GLP1 receptor agonist, in oral agent, reduction in body fat that spares lean muscle mass and improve metabolic profile and benefits beyond weight loss, including potential in additional related indications such metabolic syndrome and MASH. Our work here begins with an assessment of the compelling phenotype. We observed in knocking out the ACSL5 gene in mice representing what we might expect from a drug inhibiting the protein target encoded by that gene. The observed phenotype suggested that an ACSL5 inhibitor had the potential to counter all aspects of metabolic syndrome to reduce obesity, improve glucose tolerance and reduce cholesterol and triglycerides among other metabolic benefits.

In particular, as seen in Slide 36, in our large-scale assessment of nearly 5,000 different genes, we saw a much lower cholesterol and triglyceride and low and moderately lower body fat with no effect on lean body mass on a standard diet. And in Slide 37, evaluating the effects of high fat diet revealed another important characteristic of the target, substantially lower body fat, 25% less with no difference in lean muscle mass. We have broadly reproduced these weight loss and metabolic effects with small molecule inhibitors of ACSL5, and our drug discovery efforts have now yielded a development candidate called LX9851. As we think about the opportunities for chronic weight management, the data from one of our more recent studies helped demonstrate that opportunity with LX9851 producing weight loss on its own, but importantly also being additive to the weight loss seen with GLP1 receptor agonist semaglutide with a combination of LX9851 and semaglutide having a greater reduction in body fat overall than either agent on its own.

And in Slide 39, as we consider the opportunities specifically for weight management after initial weight loss with a GLP1 receptor agonist, you can see when we stopped treatment with semaglutide after day 14, we saw a return to baseline weight similar to what has been seen in humans after discontinuation of GLP1 receptor agonist treatment. However, when we added 9851 after initial weight loss with semaglutide, we saw a preservation of weight loss. In summary, we have identified a promising new development candidate for chronic weight management, addressing a novel target that is entering IND-enabling studies that address many of the most important opportunities beyond initial weight loss with the GLP1 receptor agonist in oral agent that reduces body fat and spares lean muscle mass that leads to an improved metabolic profile and has benefits beyond weight loss and potential in additional related indications like metabolic syndrome and MASH.

We presented these results at our Investor Day two weeks ago with significant additional details, and we have already received a considerable amount of interest in the target and compound from potential partners. I’d now like to turn the call over to Jeff to take us through the financial results for the third quarter of 2024.

Jeffrey Wade: Thank you, Craig. I will review some of the key elements of our first quarter 2024 financial results. You can find more financial details in the press release that we issued earlier today in our 10-Q that’s filed with the SEC. We ended the quarter with $355.6 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 INPEFA, to prepare for and potentially launch Zynquista in type 1 diabetes and to make planned investments in research and clinical development, including our Phase 3 study of sotagliflozin in HCM and our Phase 2b study of LX9211 in diabetic peripheral neuropathic pain. We anticipate that our existing cash and investments, together with expected product revenues, will provide us with sufficient resources to manage our operations into 2026.

And potentially significantly longer, if we achieve the partnerships, that may be optimal for certain programs, for example, enabling the Phase 3 global development of LX9211 across multiple types of neuropathic pain. As indicated in our press release, we had $1.1 million in revenues in the first quarter of 2024, almost all from net sales of INPEFA and had minimal revenues in the same period of 2023. Research and development expenses for the first quarter of 2024 increased to $14.4 million from $12 million for the corresponding period in 2023, primarily due to higher external R&D expenses. Selling, general and administrative expenses for the first quarter of 2024 increased to $32.1 million from $19.1 million for the corresponding period in 2023, reflecting our investment in the commercial launch of INPEFA, including higher salaries and benefits associated with the addition of the INPEFA sales force and other increased primarily commercial head count as well as increased travel and marketing costs.

In total, net loss for the first quarter of 2024 was $48.4 million or $0.20 per share as compared to a net loss of $31.9 million or $0.17 per share in the corresponding period of 2023. For the first quarters of 2024 and 2023, net loss included noncash, stock-based compensation expense of $4.3 million and $3.4 million, respectively. As we typically do with our first quarter earnings, we are introducing our current view of our 2024 full-year expense guidance. This includes expected R&D expenses of between $70 million and $80 million, SG&A expenses of between $140 million and $155 million and total operating expenses of between $210 million to $235 million. These figures include noncash expenses of $18 million to $20 million for stock-based compensation, depreciation and amortization.

As we near the end of our prepared remarks, I think it’s worth highlighting the extent of our accomplishments to date and what remarkable opportunities we have ahead. We have an improved and marketed product in INPEFA that originated from our own discovery engine in a large and fast growing market. In addition, we have a strong and deep pipeline encompassing label expansion and life cycle management opportunities for sotagliflozin along with promising drug candidates addressing novel targets in large markets with high unmet needs like LX9211 for neuropathic pain and LX9851 for obesity and weight management. Together, these assets offer remarkable opportunities, both for growth and for value-generating partnerships. As we wrap up on Slide 45, you can see the significant number of potential catalysts that you’ll be able to track and use to measure our progress over the next 18 to 24 months and expect an inflection in the INPEFA launch in the second half of this year, our NDA resubmission in type 1 diabetes and initiation of enrollment in our study in HCM, both in the middle of this year, expected completion of enrollment this year for LX9211 in diabetic peripheral neuropathic pain with top line data in the second quarter of 2025 and progress on our new development candidate, for obesity and weight management.

We are looking forward to a productive remainder of the year and to sharing our progress and achievements with our stakeholders. I would like to now open up the call to take your questions.

Operator: Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions]. Our first question today comes from Yigal Nochomovitz from Citigroup. Please go ahead with your question.

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Q&A Session

Unidentified Analyst: Hi team, this is Amin [ph] on for Yigal. Thank you for taking our questions. We have two here. So for the first one for INPEFA, can you talk about the — a bit more about the granularity and the main factors that will lead into the inflection in the second half? And second question is on hypertrophic cardiomyopathy. Can you talk about what — mechanistically do you expect any differences in clinical outcomes between the obstructive and nonobstructive types of HCM?

Lonnel Coats: Thank you, Amin. Let me take the first question and turn it over to Tom. I believe it’s — what do we believe in terms of inflection and what’s leading us to believe the inflection happen in the second half? Let me start off the first part. I’ve said this consistently that we were — we launched in the summer and we launched off cycle. So it’s going to take time for us to build access and coverage. And we’re now at that point where we’re starting to get that access and coming up very shortly, we feel very confident we’re going to gain even greater access. And to the point that Tom made earlier, we’re seeing good growth in the absence of the kind of access is going to need to accelerate. But once we get it, then that should be the few that accelerates. But Tom, I would turn it over to you to have more — to give more specificity and then Craig, if you can answer the question around HCM. Tom?

Tom Garner: Thanks, Lonnel. So I think you kind of summarized it well. Further comments I shared earlier on. So if we look at how we’re kind of doing in terms of driving demand, we are encouraged by some of the leading indicators that we see around just the customer perspective on INPEFA as a whole. Clearly, when our reps get in front of our customers, they are converting them into trialists. And I think as we continue to broaden the adoption for the product with the numbers now increasing all the time, 2,000 writers, we’re actually pleased with that kind of continued uptake. And we see on an ongoing basis, accelerating claims, but also, we’re seeing now accelerating quarter in terms of TRx volume as well. And per Lonnel’s comments, the team are now very actively engaged with all of the payers given where we are with the 2025 bid cycle.

So I think you put all of those factors together and just given what we’re hearing from payers in particular regarding the value proposition and the fact that they do seem to be quite willing and open to be considering adding INPEFA to their formularies with utilization management taken off the table, I think if we can do that, coupled with all of the efforts that we have in this growing prescriber base that we feel good about where we’ll be in the second half of the year. So it’s that combination of demand and access. And as you’re probably well aware, those two things are always linked in a launch window, access big as demand, demand big as access. We’re making sure that we’re working very hard on both fronts to achieve that. So Craig, maybe I’ll hand over to you about HCM.

Craig Granowitz: Thank you, Tom. So I’ll just make — restate the question that it was about, are there mechanistic differences that we believe are in place between obstructive and nonobstructive hypertrophic cardiomyopathy? Great question. And as a reminder, HCM is largely due to a number of gene defects, but most of them relate to actin and myosin and the interaction of actin and myosin. And that results in what is considered diastolic dysfunction. So largely, it is an issue of relaxation of the myocardium and limiting the ability of the myocardium to fill adequately in diastole. What is interesting is that a lot of the benefits that are seen mechanistically with sotagliflozin are acting directly on the myocardium, which we believe will actually improve that basic underlying defect.

It’s also important to note that in many patients with obstructive HCM that undergo septal reduction therapy, they often progress and continue to symptomatically progress. And so again, we believe that there are more similarities in the underlying mechanism for which sotagliflozin might be uniquely beneficial than our differences between what is obstructive and nonobstructive hypertrophic cardiomyopathy.

Unidentified Analyst: Okay, great. Thank you. Thank you for answering the questions and congratulations on the retirement, Lonnel.

Lonnel Coats: Thanks, Amin. Appreciate it.

Operator: Our next question comes from Yasmeen Rahimi from Piper Sandler. Please go ahead with your question.

John Geelan: This is John Geelan for Yas. Just first wanted to thank Lonnel on behalf of the Piper team for your contribution. We have two questions. The first one is in regards to your 9851, what types of IND studies still need to be completed? And what duration tox package are you aim to have before entering the clinic? And for the second question, considering there’s actually a lot of off-label use for SGLT2s in nonobstructive patients, is there a biological basis why sotagliflozin’s differentiated mechanism of action could actually possibly work better for these patients?

Lonnel Coats: Great two questions. Craig, why don’t you start with the first one, HCM? And then we have our Head of Innovation available today to talk about 9851 to answer your first question. So Craig, why don’t we start with you?

Craig Granowitz: Yes, thank you. If you could just — it’s got just a bit garbled at the end, so I didn’t catch the whole question. Could you just restate the last part of that on the differences? I just missed the first part of it.

John Geelan: Yes. Is there a biological basis why sotagliflozin’s differentiated mechanism of action could actually work possibly better in these nonobstructive HCM patients?

Craig Granowitz: Yes, it’s great question. As we said in part to the last question, the fact that there are SGLT1 receptors on the myocardium itself both at baseline but are also induced during stress conditions, both experimentally and in patients as well as Mendelian genetic studies that show that patients that have knockdown mutations in SGLT1 actually have less heart failure. We believe that the benefits that you’ll see with sotagliflozin will be even better than those that you might see with an SGLT2 inhibitor. So the combination of both SGLT1, which is acting directly on the myocardium and on the endothelium and in the GI tract as well as on the kidney, plus the more systemic effect that you see with SGLT2 inhibitors in lowering fluid volume, increasing hemoglobin and some other factors that you can get potentially two bangs for your buck with sotagliflozin, both of which would be beneficial in patients with HCM.

Lonnel Coats: Alan, do you want to take the second question related to 9851 and IND work?

Alan Main: Sure, absolutely. So we’re just beginning the IND-enabling work. The first part of that is manufacturing the enough GMP material to do the toxicology studies and safety studies, and we’re planning to do a one-month tox study in two species. So that will allow us to treat the first patient for up to one month. This is, I think, the 10th IND that we’ve done at Lexicon. So we have a pretty well-oiled machine to do the IND-enabling studies.

Lonnel Coats: Thank you, Alan.

Operator: Our next question comes from Roanna Ruiz from Leerink Partners. Please go ahead with your questions.

Roanna Ruiz: Great. Good afternoon everyone. For INPEFA, I was curious what feedback are you getting from physicians and reps in the field on INPEFA’s clinical profile and differentiating features? And particularly, what’s attracting more prescribers to INPEFA?

Lonnel Coats: Great question. Tom, do you want to take that?

Tom Garner: Sure. I think I’ve mentioned some of the data earlier on. I mean if you take the two main studies that we have, which is SOLOIST and SCORED, obviously, SOLOIST was somewhat unique in that it was the only study of an SGLT in patients who have been hospitalized or recently hospitalized. And I think when customers see that data, in particular, the NNT of 4 and as I mentioned, the fact that we reduced hospital admissions both at days 30 and at 90 by over 50%, I think that scene is very compelling when those two data points are taken together. I think when they then look — when customers then see the SCORED data on top, which is obviously more of the kind of patients who would be wanting to prevent coming into the hospital, they can clearly see that INPEFA has a profile that actually fits across the entire range of heart failure patients, whether they’d be early heart failure patients where you may be looking to prevent them entering the hospital or they’ve actually had an episode of hospitalization and they recently left or about to leave, you may want to prescribe the drug then or if they’ve been recently discharged, you ensure that they go on to the best possible treatment.

So I think those profile — those kind of key data that’s taken together are seen as compelling. The mode of action I think is also seen as compelling for those people who appreciate the data that we have. And obviously, the evidence that we are continuing to generate around the products, specifically around areas like 3-point MACE and stroke, which we have data coming out of ACC is also seen as very differentiating versus the other SGLT treatment. So I think that, that’s the high level story. On top of that, those messages are also resonating with payers, especially payers that are dealing with both the pharmacy and the medical benefit because, obviously, reducing and stopping these patients having to come back into the hospital after a period of hospitalization is something that is a priority across the board.

So we’re pleased with the general reaction to the profile on this on the whole. And as I mentioned earlier on, we are making significant efforts to really bolster our commercialization efforts, both in terms of in-person selling but also thinking about third-party and omnichannel approaches as well.

Roanna Ruiz: Interesting. Thanks. And one more for me. Given your upcoming Phase 3 in HCM, could you just help frame why KCCQ is an important measure across both obstructive and nonobstructive HCM patients, particularly in the context of the fact that a lot of us are focused on like other things like peak VO2 with some of the CMI trials and things like that?

Lonnel Coats: Great question. Craig?

Craig Granowitz: Yes. Thank you, Lonnel. And again, I think Roanna, it’s a great segue from ending the last question is that physicians who have already started using INPEFA in the clinic have had really good results that the patients are satisfied with the therapy. And as Tom mentioned in our prepared remarks, something on the order of over 90% of patients are satisfied, health care providers are satisfied with the therapy and I think that is really another foundational support for why we’re so excited about what we’re doing with HCM. And as a reminder, what you hear from clinicians and experts is that all of these agents are approved for symptomatic relief. The CMIs are not approved for long-term clinical benefit. And increasingly, what you’re seeing from providers and from the FDA is that some of these other physiologic markers, six-minute walk or peak VO2, it’s very hard to communicate that to patients and that being a meaningful benefit.

But when you ask them, “Is your life better? Can you walk another flight of stairs? Do you not get winded? Do you not have a lot of the symptomatic problems that the devil, the daily lives of patient,” that’s what’s most meaningful and I think that’s why the FDA has evolved in their own thinking and in the more recent trials with these agents that they have allowed KCCQ as the primary end point. And as a reminder, the inclusion criteria for our study is all symptomatic patients with KCCQ below 85. And so again, it’s not a matter of saying, “Are we looking for another 10 meters walking in a six-minute walk test?” I mean we’re really focusing on the activities of daily living. And I’ve got to give the FDA a lot of credit that they’ve evolved in their thinking about what is most important to patients.

And importantly, we have the key secondary endpoint, the New York Heart Association, which is the counterpoint, so New York Heart is the health care provider assessment of patient functionality, KCCQ is the patient self-assessment of functionality. And I think having it in that order with the patient reported outcome is the primary and the health care provider assessment as the key secondary is a good way to go and there’s a lot of excitement in the field to participate in this trial.