Lexicon Pharmaceuticals Q2 2025 Earnings Report

Lexicon Pharmaceuticals EPS Results

• Actual EPS: $0.01
• Consensus EPS: -$0.08
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: N/A

Lexicon Pharmaceuticals Revenue Results

• Actual Revenue: $28.87 million
• Expected Revenue: $4.87 million
• Beat/Miss: Beat by +$24.00 million
• YoY Revenue Growth: N/A

Lexicon Pharmaceuticals Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 8:30AM ET

Lexicon Pharmaceuticals (NASDAQ:LXRX), a biopharmaceutical company, focuses on the discovery, development, and commercialization of pharmaceutical products. Its orally-delivered small molecule drug candidates under development comprise Sotagliflozin that completed Phase III clinical trials for the for the treatment of heart failure and type 1 diabetes; and LX9211, which is in Phase II clinical development for the treatment of neuropathic pain and LX2761, which is in Phase I clinical development for gastrointestinal tract. Lexicon Pharmaceuticals, Inc. has strategic collaboration and license agreements with Bristol-Myers Squibb Company and Genentech, Inc. The company was incorporated in 1995 and is headquartered in The Woodlands, Texas.

Lexicon Pharmaceuticals Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong R&D momentum: Completed secondary analysis of Phase 2b pilavapitant data and convened an advisory board to refine dose selection and support late‐stage development partnerships.
• Positive Sentiment: HCM Phase III progress: SONATA HCM trial now has over 100 sites across 20 countries enrolling obstructive and non‐obstructive patients, making it the only registrational study in this space.
• Positive Sentiment: Financial strength: Q2 revenue rose to $28.9 million driven by $27.5 million from the Novo Nordisk licensing deal, delivering a $3.3 million net income and enabling long‐term debt reduction.
• Positive Sentiment: Cost discipline: Streamlined operations reduced 2025 operating expense guidance by 21–27%, with total OPEX now expected at $105–115 million, supporting capital efficiency.
• Positive Sentiment: Pipeline expansion: IND‐enabling studies for the obesity candidate LX 9851 remain on track for year‐end completion, while partner Novo Nordisk prepares for Phase I development.

Presentation

[Operator]

Welcome to the Lexicon Pharmaceuticals Second Quarter twenty twenty five 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, 08/06/2025. I will now turn the call over to Lisa DiFrancesco, SVP, Investor Relations and Corporate Communications for Lexicon. Please go ahead, Lisa.

[Lisa DeFrancesco, SVP - IR & Corporate Communications at Lexicon Pharmaceuticals]

Thank you, Josh. Good morning, and welcome to our second quarter twenty twenty five conference call. Joining me today are Doctor. Mike Exton, Lexicon's Chief Executive Officer and Director Doctor. Craig Granowitz, Senior Vice President and Chief Medical Officer and Scott Chianti, Senior Vice President and Chief Financial Officer.

[Lisa DeFrancesco, SVP - IR & Corporate Communications at Lexicon Pharmaceuticals]

This morning, Lexicon issued a press release announcing our financial results for the 2025, 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 also available on our website. During this call, we will review the information provided in the press 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 the safety, efficacy, clinical development, regulatory status, and therapeutic and commercial potential of pilavapitan, LX-nine thousand eight hundred fifty one, sotagliflozin, and our other drug programs, as well as our business generally. These statements may also include characterizations and projections relating to the clinical development, regulatory status, and market opportunity for our drug programs and the commercial performance of MPEFA for heart failure.

[Lisa DeFrancesco, SVP - IR & Corporate Communications at Lexicon Pharmaceuticals]

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, and we refer you to our most recent annual report on Form 10 ks and other SEC filings for detailed information describing such risks. I would now like to turn the call over to Mike Eckson. Mike?

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Great. Yes. Thank you, Lisa, good day, everyone. Thanks for joining. We're really excited to give you updates on the quarter and all of the great work going on at Lexicon.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

When we entered 2025, if you recall, we were still in the early days of our strategic pivot to being an R and D focused company. And now in the second half of the year, I can say that this transformation has truly taken shape. We've made great strides against our objectives for the year across the board. We're now in a very strong position to advance our innovative portfolio of potential medicines. And I'm pleased to report that all of our lead R and D programs continue to be on track.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

We've made important progress against each of them in the second quarter, which I'd like to highlight briefly. For filovapentin, we've completed the secondary analysis of our Phase 2b progress results following the announcement of top line data in the first quarter. We're now in the process of analysing the totality of Phase two data, which supports the broad potential for this novel mechanism while reengaging in discussions with potential partners with this additional data in hand. Secondly, LX9851, our first in class candidate for the treatment of obesity, is on track to complete IND enabling studies in 2025. So we look forward to continued collaboration with our licensee, Novo Nordisk.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

For sotagliflozin, we've really hit the accelerator on our Phase III SONARDA study in hypertrophic cardiomyopathy, or HCM, which is the only Phase three HCM programme enrolling currently, evaluating sotater in both obstructive and nonobstructive subtypes of HCM. We've made excellent progress on site initiations globally, and Craig will elaborate on this shortly. Lastly, but importantly, we're also working closely with our licensee, Viatris, on expanding the reach of sotagliflozin in territories outside of The US and EU, and we're making great progress on that front as well. So in summary, the team's hard at work, and it was an incredibly productive quarter for us that I'm very proud of. Now before I turn the call over to Craig to talk in detail about the great progress in the pipeline, I want to take a moment to acknowledge a milestone.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

July marked one year since I joined as CEO of Lexicon, and as I reflect on all the changes that we've seen in that twelve months, I'm truly proud of the dedication and adaptability of this team. We've successfully advanced multiple programs to late stage development and beyond, and we look forward to reporting even more progress to come. And on that note, I'd like Craig to give a more detailed update on our pipeline program. So over to you, Craig.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Thanks, Mike. I'll start by discussing pilavapitan. First quarter, we announced top line results of our Phase 2b progress study of pilavapitan in DPNP. DPNP is a chronic and progressive pain disorder that impacts approximately thirty percent of people with type one diabetes and up to fifty percent of those with type two diabetes. These patients experience burning pain, loss of sensation, and other side effects that can severely impact their quality of life.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Importantly, in both our Phase 2b PROGRESS study and our Phase 2a RILLEEVE study, telavapitan ten milligrams delivered consistent, clinically meaningful reduction in these painful symptoms. Based on these data, we have concluded the ten milligram dosage strength warrants further evaluation and is the appropriate dose to take forward into late stage development. We recently convened a scientific advisory board with expertise across clinical development, regulatory and neuropathic pain to review the full body of evidence for pilovapitan in DPNP. This esteemed group provided encouraging feedback and validated our key findings from the top line data readouts, including the following. First, the advisory board confirmed that pilavapitan demonstrates clinically meaningful efficacy.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Second, they confirmed that ten milligram dose is the appropriate dose for future registrational studies. This gives us clarity on our path forward and validates the dose finding work we've done to date. Third, the board reaffirmed the safety and tolerability profile of the ten milligram supports advancement into late stage development. And finally, they provided validation and valuable input into Phase III study design, including suggestions to potentially lower the placebo response rate, which we believe could reduce potential study variability. The panel support gives us tremendous confidence as we prepare for our next steps and engage with potential partners for pilavapitan.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

It reinforces our belief that we have a potentially transformative therapy for the millions of patients living with this debilitating condition. I also wanted to acknowledge that our analysis of the pilovapitan development program supports its compelling value proposition with a validated mechanism of action of AKA1, compelling clinical profile and broad potential applicability across multiple indications, and demonstrates why we believe pilavapitan represents a true portfolio and appeal opportunity. Overall, beginning with efficacy, pilavapitan has demonstrated consistent and clinically meaningful pain reduction across three separate Phase II trials in neuropathic pain. While our lead indication in DPMP represents a mature clinical development program that is ready for Phase III advancement, several secondary indications, such as spasticity, are also Phase II ready, providing significant pipeline expansion opportunities. In addition, our preclinical work has been extensive.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

We've completed IND enabling studies across multiple neuroscience indications, both central and peripheral, establishing a broad foundation for further clinical development beyond our current focus areas. We've accumulated data from more than 600 patients treated with pilovapitant to date, demonstrating a suitable safety and tolerability profile. This extensive safety database will be valuable as the program moves into late stage development and regulatory discussions. Finally, telavapitan benefits from patent protection extending through 2040 when including an anticipated five year patent term extension. This provides substantial commercial exclusivity to maximize the value of our investment in this area.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Moving on to sotagliflozin and HCM. There are more than a million people with HCM in The United States. Of those, our previous research suggests approximately one third have non obstructive HCM and two thirds have obstructive HCM, in which the thickening of the heart muscle wall blocks or reduces the blood flow to the heart. However, more recent technology, including a more sensitive diagnostic and AI assisted tools, suggest that the incidence of non obstructive HCM could be much higher, potentially fifty percent or greater. This chronic progressive disease that can lead to more serious complications.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Forty three percent of patients with HCM have progressive heart failure and HCM can also lead to atrial fibrillation and stroke. The medical community's understanding of how to diagnose and treat HCM has grown significantly in recent years, as there are a number of innovations in development for HCM, including the approval of cardiac myosin inhibitors for obstructive HCM. However, despite substantial commercial investment and increased awareness of HCM, CMIs have only penetrated approximately one percent of the total HCM market. With this treatment landscape in mind, we believe sotagliflozin offers several unique advantages as a potential therapeutic option for HCM. First, it has a novel MOA as a dual mechanism SGLT1SGLT2 inhibitor and is the only HCM agent under investigation that works both inside and outside the heart.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

This enables treated patients to potentially achieve symptom reduction while simultaneously targeting other outcomes such as heart failure and major adverse cardiovascular events where sotagliflozin has demonstrated benefits. Second, as more data is generated, it is becoming increasingly clear that sotagliflozin is uniquely myocardially targeted. From a practical standpoint, the once daily oral dosing profile facilitates broad clinical adoption, convenience and compliance. Importantly, this comes without the burden of a risk evaluation and mitigation strategies or REMS requirements that can complicate treatment. It is worth noting that sotagliflozin is already approved for heart failure.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

To date, we've observed no increased risk of atrial fibrillation, which is a critical consideration in this patient population. Looking forward, we're pursuing a broad proposed indication that encompasses both non obstructive and obstructive HCM phenotypes. This positions sotagliflozin for potentially either use as monotherapy or in combination with other agents, providing clinicians with valuable flexibility in treatment planning. We have amassed a wealth of data from studies confirming SOTA's mechanism of action in HCM and related conditions summarized here. Specifically, the animal models studied demonstrate sotagliflozin improves cardiac function and reduces wall thickness, left ventricular mass in fibrosis, and cardiac inflammation, while the ex vivo models demonstrated the direct effects of sotagliflozin on the myocardium by reducing both stroke work and increasing metabolites associated with improved cardiac energetics.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Collectively, these studies provide evidence that SOTA has the unique ability to work across multiple markers of the disease. Now I want to spend some time talking through the current ongoing clinical program beginning with our own Phase III Sonata HCM study of sotagliflozin in HCM. Sonata HCM is a large global registration trial with a KCCQ primary endpoint designed to support a regulatory filing and broad label in HCM. SONATA HCM is the only ongoing registrational trial currently evaluating a treatment in both obstructive and non obstructive HCM. We have recently surpassed 100 sites initiated in 20 countries, including The US, Europe, Israel and Latin America and we're well positioned to meet our goal of 130 sites actively enrolling patients by the end of the 2025.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

There are two important investigator initiated studies underway that are designed to evaluate cardiac function of sotagliflozin in HCM. The first is SOTA Picardia being conducted by Doctor. Juan Badaman and colleagues at the Mount Sinai School of Medicine in New York City. This study is designed to investigate the cardiorenal mechanistic benefits of sotagliflozin in eighty eight nondiabetic patients with HFpEF, which as you recall is a subset of HCM. It is a six month study comparing sotagliflozin four hundred mg in placebo on the following endpoints: change in left ventricular mass, functional performance, and quality of life measurements.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

This study was completed in July 2025 and the investigators are currently evaluating the data. The second study I wanted to highlight is SOTA Cross, a twelve week crossover study funded by the NIH and being conducted by Doctor. Charlene Day at the Penn School of Medicine comparing sotagliflozin and placebo on exercise capacity, physical activity and symptoms, and diastolic function in patients with symptomatic non obstructive HCM. We already have shown that SODA strongly improves diastole in F PEP, SODA Cross will aim to specifically ascribe such functional benefits in non HCM as well. Together with SODA with Sonata HCM, this study could potentially be a major therapeutic advance for a large subset of patients who have limited treatment options.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Last but not least, we remain on track to complete the IND enabling studies this year for LX-nine thousand eight hundred fifty one, our first in class ACSL5 inhibitor for the treatment of obesity and related metabolic disorders. LX-nine thousand eight fifty one's oral administration, preclinical findings to date, and possibility for both monotherapy and combination applications provides a compelling profile and the potential to occupy a unique space in the treatment landscape. And we look forward to working with our partner Novo Nordisk to maximize the potential of this innovative investigational medicine. With that, Scott Chiante, our CFO, will now provide a report of our financial results for the second quarter.

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

Thank you, Craig, and good morning, everyone. For the 2025, we reported $28,900,000 in revenue compared to $1,600,000 for the 2024. Q2 twenty twenty five revenue consisted primarily of $27,500,000 of licensing revenue recognized from the Novo Nordisk agreement. As a reminder, we received the upfront payment of $45,000,000 from Novo in April, which was initially recorded as deferred revenue and is being recognized as revenue throughout the remainder of 2025 as the IND enabling work is completed. Total revenues for the quarter also include net product revenue of 1,300,000.0 from sales of Mpefa.

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

Research and development expenses for the 2025 decreased to $15,700,000 from $17,600,000 in 2Q twenty twenty four, primarily reflecting lower external research expense on our PROGRESS clinical trial study, partially offset by increased investment in our SONOTA Phase III clinical study in HCM. Selling, general and administrative expenses for the 2025 decreased to $9,400,000 compared to $39,200,000 in 2024. The decrease reflects lower costs as a result of our strategic repositioning announced in late twenty twenty four and the significantly reduced marketing efforts in 2025 for MPEFA. Net income for the 2025 was 3,300,000.0 or $01 per share as compared to a net loss of $53,400,000 or $0.17 per share in the corresponding period in 2024. The net income for the quarter was primarily a result of the revenue recognized from the Novo Nordisk licensing agreement in Q2.

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

We expect to recognize the remaining $17,500,000 of licensing revenue from the Novo agreement in the second half of this year as the IND enabling work is completed. We ended the second quarter with $168,000,000 in cash, short term investments and restricted cash as compared to $238,000,000 as of 12/31/2024. In summarizing our financials, I would like to note a few highlights from the quarter. We've used the $45,000,000 upfront payment received from the Novo licensing agreement to strengthen our balance sheet by reducing our long term debt, a portion of our long term debt. On the expense side, we've made significant progress reducing our costs and streamlining our operations.

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

Quarter over quarter operating expenses decreased by $31,900,000 primarily due to the strategic repositioning as an R and D focused company announced late in 2024. Reviewing our full year 2025 guidance, we're lowering our operating expense projections for the year. Total operating expenses are now expected to be in the range of $105,000,000 to 115,000,000 from $135,000,000 to $145,000,000 previously announced. R and D expenses are now projected to be in the range of $70,000,000 to 75,000,000 down from a range of 100,000,000 to $105,000,000 primarily as a result of the transfer of cost to Novo under our licensing agreement with them. SG and A expenses remain between 35,000,000 and $40,000,000 Our R and D expense assumptions do not include costs associated with Phase III pivotal studies of pilobapentin as our goal will be to take this asset forward with a development partner.

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

Overall, we are in a strong position with the resources we need to advance our ongoing clinical programs, while maintaining a disciplined approach to capital allocation and a focus on creating value for our shareholders. Now I'll turn the call back to Mike for closing remarks.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Yes. Thanks, Scott and Craig. Now,

[Operator]

Please stand by. Your conference will resume momentarily. Please stand by. Your conference will resume momentarily. Please stand by. Your conference will resume momentarily. Please stand by.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Well, apologies for that brief interruption, Rod, when I'm getting to the punchline here. But look, let me go back and say that we've got lots of exciting updates in the 2025. And clearly, as we've outlined, partnering is an essential part of how we plan to advance all of our assets. And on this slide, it really highlights the partnership strategy and action. Firstly, Viatris is making great progress and has recently received its first approval of sotagliflozin in The United Arab Emirates, which was a really short turnaround time and has also filed for regulatory approval in Saudi Arabia and is expecting to file for regulatory approval in Canada, Australia and New Zealand, Mexico and a number of Southeast Asian countries before the end of this year.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

We aim to maximise the potential of LX9851 with our licensee, Novo Nordisk, a global expert in obesity and related conditions, and partnership discussions are ongoing for pilovapitan where we hope to collaborate with a high quality partner to unlock the pipeline and appeal potential of this asset globally and across multiple indications. This flexible partnership strategy is intended to allow us to follow the science broadly, but really remain focused internally on our core cardiometabolic expertise. And so as you can see on this slide, we're exceptionally well positioned with a number of pipeline opportunities. From our late stage assets to our newest opportunities, and whether organically or with a partner, we expect these programs to continue to add value and bring new innovation to patients over the longer term. Now, as we look further into 2025, we're excited about where Lexicon stands at this moment.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Starting with pilovapitan, we're expecting full progress data to be presented in Q3. Also planning our end of Phase II meeting with timing to be dependent on our partnership discussions. Our preclinical work to broaden the value of this asset into additional indications continues. And additionally, a broad partnership with filovapatin would allow us to become therapeutically focused on our core cardiometabolic programs and expertise. For SOTA in HCM, our Sonata study is making excellent progress.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Sites in The U. S, EU, Israel and LATAM are currently enrolling, and we expect all Phase III sites to be running by Q3. We also expect results from certain investigator initiated studies of SOTA as early as Q4 of this year, which could provide valuable additional insights to the body of data on this therapeutic candidate. For IMpepa, Viatris is continuing to handle regulatory submissions and approvals outside The U. S.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

And EU. They've been really a fantastic partner, fully engaged and motivated. And we expect that these approvals will build significantly on the stabilised sales of INPEPA in The U. S, where my team is achieved by a strong mix of focused execution and innovation. For Zynquista, the end of review evaluation process is underway.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

As you've no doubt seen, there's been an outpouring of patient support advocating for the approval of Zynquista in type one diabetes, and we're committed to pursuing all potential avenues for this program. And last but not least, LX9851, our IND enabling studies for obesity are progressing really, really well with a target completion by the end of the year. So if you look across this pipeline, any of these programs has the potential to transform patient lives and create significant value for Lexicon. But we believe that the simultaneous advancement of all five programs makes our position very compelling as we move through 2025 where we have a significant amount of opportunities for success. And with that, we conclude our introductory remarks and turn it to you, operator, for some Q and A.

[Operator]

Thank you.

[Operator]

Our first question comes from Yasmeen Rahimi with Piper Sandler. You may proceed.

[Liam Hiester, Biotech Equity Research Associate at Piper Sandler Companies]

Hi, this is Liam on for Yasmeen Rahimi. Great presentation this morning. We just we're really impressed by the SOTA CROSS trial that's upcoming with potential data mid to late twenty twenty six. So we're just wondering maybe if you can kind of walk us through, given the small sample size of the study, what are the doses being assessed And how much the inclusion exclusion criteria resembles Zonata? And kind of like in that vein, whether you expect to see like a stat six separation on the efficacy endpoint?

[Liam Hiester, Biotech Equity Research Associate at Piper Sandler Companies]

And also why NHCM was selected rather than an OHCM patient population?

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Yeah, thank you, Liam, for the question. We're really excited about working with Doctor. Day on this NIH supported mechanistic trial. And I think the idea behind the NIH's interest in this was to continue to look at therapeutic options outside the CMIs that would be much more widely applicable and more readily implementable across The United States for this large unmet medical need. Non obstructive HCM, I think was also the target for the NIH grant because there are options available for obstructive.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

There are surgical options and now medical options, but there are no treatment options that have been approved for non obstructive. Relative small size of the study belies its significant power to accomplish its goals. By having a crossover design, you use the patient as their own control in the study. And the study has a number of important both imaging and physiologic outcomes. The inclusion criteria is very similar to that in the SONOTA HCM trial, which is a very broad cross section of patients without diabetes who have a non obstructive HCM.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

The only difference is that in SOTA Cross, there's not an allowance patients on a CMI, but in Sonata HCM there actually is. So Sonata HCM is even more broadly applicable. We believe that if you look at all of the data together in its totality, and what we try to do really as we think about lifecycle management strategically, is to look at the totality of the benefit of sotagliflozin both mechanistically, imaging and clinically across a range of heart failure, MACE and HCM using different trials to look at different aspects. One of the reasons we presented all three of Sonata HCM, SOTA Cross and the SOTA Picardia study is that they are looking at different aspects of the physiology and clinical findings of patients with HFpEF and HCM.

[Liam Hiester, Biotech Equity Research Associate at Piper Sandler Companies]

Thanks so much.

[Operator]

Thank you. Our Our next question comes from Andrew Tsai with Jefferies. You may proceed.

[Andrew Tsai, SVP at Jefferies]

Hi, good morning. Thanks for the updates and thank you for taking my questions. A couple of questions on pain. Recently, RFK Jr. Mentioned how he wanted to promote the development of non opioid pain drugs like Vertex's Jornavax.

[Andrew Tsai, SVP at Jefferies]

And so is there something you guys can do to take advantage of this new development? And could it, for instance, make sense to apply to the Commissioner's National Priority Voucher Program? Thanks.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Yes. Thanks, Andrew. In fact, my team has been very actively engaged from a legislative perspective, particularly with the Alternatives to Pain Act, which is the act that's supporting the use of non opioid medications in chronic pain. And we've been really supporting the utility and the passing of that particular act. And we're seeing bipartisan support for this very important facet of the management of pain.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

In addition to that, like we have done with type one diabetes, it's also a patient advocacy groups that very compelled to get new treatments. And really, all of those things are just a factor for I think what is really a zeitgeist in the realisation that particularly for chronic pain actually, even though there are new alternatives for acute pain, the real issue for non opioid alternatives lies within the realm of chronic use over many years where the addictive potential is clearly much more significant. And so we're very encouraged by the bipartisan enthusiasm in this area, and we think that as we progress filovapitan into Phase III and then beyond, that this not only gives great support for continuing to develop pilobapitan, but importantly, once it achieves commercial reality, clearly it provides a pathway for great access and ease of patients getting onto this non opioid medication.

[Andrew Tsai, SVP at Jefferies]

Right. Thank you. And it sounds like you will have the FDA meeting by year end now. And so in theory, in that meeting to you guys, what would be the realistic quote unquote worst case scenario that can arise from that meeting?

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Yeah, thank you Andrew. It's Craig. I can answer your question. I mean, it actually is validating hearing other companies talk about what their pain program phase three approaches in DPNP are. And as you recall, we have already met with the FDA on this program.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

And I think their feedback is going to be very similar to what we've already heard from them. And I think what other companies have also acknowledged is that you're going to need two parallel studies in the lead indication for neuropathic pain. And it is highly unlikely that with a single indication or a single study in two indications that you could get a broad neuropathic pain indication. That was always our expectation. That was affirmed by the FDA.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

That was affirmed in our ad board. And I think it's been affirmed by other companies that are out there. So when you think about the timing of our program and the magnitude of our program, I think it remains pretty much unchanged to what it was. It would be two parallel trials in DPNP, potentially with different geographies or slightly different designs, but primarily the same primary endpoint of a pain score at week twelve. And I think based on all the data we've seen across the totality of our program, we think that the size of those studies to appropriately power them is very similar to what we've already been communicating to you of two two arm studies of roughly 600 patients each with a single active arm and a placebo control arm.

[Andrew Tsai, SVP at Jefferies]

Thank you.

[Operator]

Thank you. Our next question comes from Caroline DePaul with Citi. You may proceed.

[Caroline DePaul, AVP & Biotech Equity Research at Lexicon Pharmaceuticals]

Hi. This is Caroline on for Yigal Nochomovitz. So we'd like to know what is Novo's plan for the Phase I in obesity? Are there plans to combine with GLP-one?

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Yeah, I think in our discussions with Novo, and I really wanted to thank our entire team for really having a great collaboration with Novo, I think as you've heard in the marketplace, and I think you've seen from both Lilly and Novo and other companies that the market is going to be moving towards oral options and combination options. And I think the data that we've already demonstrated and have presented on the use of nine thousand eight fifty one as an oral once daily agent or the expectation of that, both with semaglutide and other agents that are being studied in development for weight loss and the potential for triple combinations. And I think you've seen other companies talking about moving both to oral and triple combinations. I think nine thousand eight fifty one is really rightly positioned to be a part of that set of development programs.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

If I could just provide one comment over the top of that. We've been really blessed with both of our partners, with our licensees, with Viatris and Novo Nordisk. The enthusiasm and capabilities that they bring to bear for both of these assets are really stellar. And although obviously Novo is undergoing some changes at the moment, our engagement and interaction and their enthusiasm and drive for this asset is unbridled, so to speak. It's really incredible to see the team in action and we expect that Novo will attack the Phase I program with vigor shortly after the IND.

[Operator]

Thank you. Our next question comes from Joe Pantginis with H. C. Wainwright. You may proceed.

[Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.]

Hey, everybody. Good morning. Thanks for taking the questions. A couple, if you don't mind. First is a housekeeping question.

[Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.]

With regard to the OpEx guidance, does this include or not include stock based compensation?

[Scott Coiante, SVP & CFO at Lexicon Pharmaceuticals]

It does include stock based compensation.

[Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.]

Great, thank you. And then a couple of comments here that have been coming up about the end of phase two meeting for pilobabadin. Just curious how you feel, you know, that that's still on track, but more specifically, do you feel this is the ultimate rate limiting step for your partnering plans?

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

I don't think it's a rate limiting step, Joe. I think what has been our approach here is have the initial round of discussions with partners with the top line, helping them understand. And now two important things have happened. We have, A, completed the secondary analyses from progress or three important things, I would say completed the secondary analysis. We're bringing the totality of the Phase two program data to bear so that we understand the totality of evidence.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

And most importantly, perhaps most importantly, we've convened the scientific advisory board. You know, we won't sort of go into who the people were, the members of that advisory board, but I can assure you these are the top, top people that have been involved in this space from a regulatory development and mechanistic perspective for some time. And having their endorsement of, as we theorized all along, from the top line of ten milligrams being the appropriate dose to move forward into Phase III really gives us confidence not only internally but to reengage in those discussions and start to progress the discussions to a more concrete basis over the coming months. I think how we approach the end of Phase II meeting will be sort of dependent on now the engagement from partners around whether they want to be a part of that, whether they want to sort of see the outcome and move forward. But we're progressing that at speed.

[Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.]

Totally fair, thanks. And then just quickly on HCM, I don't know if Craig would want to give any color on this. I think it's been a pretty impressive ramp on the number of sites that you have. So just curious as you're looking to really ramp up enrollment as well, are there any comments from the field with regard to views towards CMI or CMI competition for patients or what have you? Even though you have a different profile of where SOTA might fit.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Yeah, great question, Joe. I'll answer that sort of in two very different ways. The first is that we have this open window of enrollment. There are no active ongoing registrational trials now in HCM. And the fact that OHDSI ended in a sense without a long term extension, there's a fair runoff period in that trial from what we understand, but those patients are also available with no treatment options.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

So, we really have a nice golden opportunity here from an enrollment standpoint as you have a lot of sites with available patients that are symptomatic, both obstructive and non obstructive, whether they're on a CMI or not, that can be included in the trial. So in that regard, I think that's been a real upside. The interesting aspect actually when you think about enrollment, and I think this is what you're seeing already with some of the companies that are marketing products in obstructive HCM is there seems to be a speed limit in the capacity of the field to start new patients on CMIs because of the echos. And while we do not require multiple echos during treatment, unlike the CMI studies or CMIs themselves, we do require a baseline echo. So, scheduling echos is an issue for enrollment, at least in The US.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

So, it is interesting to see that flow through from the commercial market. In The US, I would say the very early enrollment and again, we're just looking at blinded data, but we know whether patients are obstructive or non obstructive. There are more non obstructive patients being enrolled currently in The US than obstructive, which is to be expected because one of the CMIs is already approved on the market in The US. So there are no options available at all for the non obstructive. So in The US, we're seeing more non obstructive than obstructives but we think that's gonna rapidly shift ex US because the CMIs are largely not available outside The US.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

And Joe, what I hear over the last sort of three to six months speaking with KOLs is a couple of things. One, they're becoming more and more aware of SODA in HCM. I think that's twofold. One, we're progressing Sonata and enrolment is going nicely. And two, there's obviously been noise in the marketplace particularly around non obstructive and conjecture around will abacamten be successful?

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

But they see because of some of the other evidence that we have with Sonata that this could be a real option for non obstructive. So they're enthused about the possibility of that. And then more broadly, sort of having worked in this space with Entresto and understanding that general cardiology practices across the country have HCM patients, have HFpEF patients, and the potential to have one medicine that can potentially treat both very significantly without sort of fear nor favor and is really compelling beyond the academic sites into the general cardiology practices where, as you know, actually the vast majority of HCM patients are being treated.

[Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.]

Appreciate it. Thanks a lot.

[Operator]

Thank you. Our next question comes from Madhir Ali Mohamed with Leerink Partners. You may proceed.

[Mazahir Alimohamed, Biotech Equity Research at Leerink Partners]

Yes. Hi, everyone. This is Mazi on for Roana. Just two from us, but I guess the first one is given Vertex's recent announcement about their VX993 and its inability to meet its primary endpoint in the Phase II, how does that, I guess, impact your confidence in the overall pain market and the ability to conduct a careful phase three trial? And then I guess the second one, Craig, just to follow-up to what you just said.

[Mazahir Alimohamed, Biotech Equity Research at Leerink Partners]

So I noticed that you mentioned that there's gonna be an echo for every patient when they start the trial. Is that something that you would expect if approved as well? And to the market, would it be something that you would expect commercially that they would have an echo before being started on drug?

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Yeah, great couple of questions. And please pass on our best regards to Ron. I hope it's all going well with the above. Let me take a first go with the pain question and Vertex, and obviously, we followed their earnings yesterday. I think in fact that gives us even greater confidence in our own programme.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Why is that? We've now shown three times across Phase two programs in neuropathic pain that we can separate from placebo with a ten milligram dose. We, I think, have always been a little bit skeptical of Nav1.8, particularly neuropathic pain. I think the evidence in acute pain despite nine ninety three's results yesterday in post bunionectomy not reading out positively. So it allows us confidence in our programme and having a novel mechanism of action compared to the number of companies that are now pursuing NAVs, which, you know, really the evidence is mixed, one would have to say, apart from acute, but certainly in neuropathic pain, the evidence is mixed at best and actually it's probably pretty much not great, so to speak.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

And it's one of those instances where being on a novel MOA with proven efficacy really we think is something that we appreciate and gives us confidence moving forward. And importantly, partners will appreciate as we sort of go back and have this next round of discussion. So Craig, any other thoughts on that?

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

Yeah, Mike, I think that was well said. I think just scientifically there are a couple of important points. And again, I don't want to draw undue attention to another company's communications. But they did demonstrate or they communicated that with nine ninety three, they did get more exposure with more dose and they had no additional efficacy. So I think that the question is there is certainly a ceiling on the effect of Nav one point seven to mitigate pain.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

I think that's also reflective of the fact that they're looking at developing combinations of NAV one point seven and one point eight which presupposes that they're looking for more efficacy. So I think that's an important point. As Mike said, in neuropathic pain, the NAVs have not demonstrated separation from placebo. They've demonstrated similar drops in pain score compared to pregabalin. But as we know, pregabalin doesn't always separate from placebo in the pregabalin registration trials.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

And that's the whole issue around placebo effect. So I think those are just a couple additional comments. And I think it also reaffirms from a regulatory standpoint that you're going to need to do two separate trials in a pain indication to seek approval. And so again, I think those were some important findings that we had from what we heard the other day. Switching gears on the echo, I don't think that's gonna be a major impediment.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

All these patients are gonna be getting an echo regardless. I think a lot of the issues in HCM frankly are related to the echos because of the fact that CMIs reduce ejection fraction. So I think we don't have that issue, right? We're a drug that treats heart failure whether you have low ejection fraction heart failure or normal ejection fraction heart failure. I think part of what's going on in the HCM field has been modified by the level of the agents and the fact that the current agents that have either been approved or under study actually have a negative ionotropic effect on the heart by their very design.

[Craig Granowitz, SVP & Chief Medical Officer at Lexicon Pharmaceuticals]

And because of that, getting an echo and following ejection fraction closely is a very important safety signal which is the basis of the REMS that exist. So I think FDA will probably label our drug the way that we studied it, that there'll be an echo. But I think that the requirement or the necessity of the echo from a patient suitability standpoint might be less with SODA even though following the echo and following ejection fraction in patients with symptomatic heart failure is sort of standard of care today anyways, at least in The United States.

[Mazahir Alimohamed, Biotech Equity Research at Leerink Partners]

Great. Thank you, guys.

[Operator]

Thank you. I would now like to turn the call back over to Mike Exton for any closing remarks.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

Yes. Well, very much for joining, everyone, and thanks for the questions, folks. I really appreciate those. So I've done a number of these quarterly earnings calls since I've been here. And the last couple, we've had some major announcements with data readouts, with refocus on strategy, and all of those have been very important announcements.

[Mike Exton, CEO & Director at Lexicon Pharmaceuticals]

But I think so far in my short tenure here, this is probably the quarter that I'm most proud of, mostly because of two things: one, that the team has really driven all programmes in parallel to the point of their next stage of catalyst, to their next sort of inflection point, to their next natural development. And importantly, we've done so in a way where we've really focused our resources and are allocating capital in a way that's really focused on adding value for us and all stakeholders. So both of those things have resulted in a quarter where the pipeline has advanced dramatically and we've done so revising the outlook for expenses for the year, mostly because of 09/1951, but some of it due just to looking at all of our expenses and making sure we're spending wisely. So I couldn't be prouder of the team. Looking forward to Q3 as we go through a number of important developments over the next three months and updating you all then. So thanks very much.

[Operator]

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Lisa DeFrancesco, SVP - IR & Corporate Communications
• Mike Exton, CEO & Director
• Craig Granowitz, SVP & Chief Medical Officer
• Scott Coiante, SVP & CFO
• Caroline DePaul, AVP & Biotech Equity Research

Analysts

• Liam Hiester, Biotech Equity Research Associate at Piper Sandler Companies
• Andrew Tsai, SVP at Jefferies
• Joseph Pantginis, MD & Senior Healthcare Analyst at H.C. Wainwright & Co.
• Mazahir Alimohamed, Biotech Equity Research at Leerink Partners