Good day, everyone. Thank you for joining the 23rd Annual Needham Healthcare Conference. My name is Joey Stringer, and I'm one of the biotech analysts at Needham & Company. It's my pleasure to introduce our next presenting company, Lexicon Pharmaceuticals. Joining us today from Lexicon is CFO Jeff Wade, CMO Craig Granowitz, and Head of IR and Strategy Lisa DeFrancesco. For those of you joining us on the webcast, if you want to ask a question, please do so at any time. You can submit a question using the chat box at the bottom of your screen. So with that, we'll get started. Jeff, Craig, and Lisa, thank you so much for joining us today. Thank you, Joey. Well, we'll start right off with the INPEFA launch in heart failure. You guys launched the drug in June of last year. Can you walk us through your thoughts on the sales ramp so far and how you expect it to play out in 2024? Sure. So, you know, we have had quarter-over-quarter growth since we launched and expect there to be some growth again in the first quarter of this year. But we're really guiding towards an inflection point in the second half of this year. It's really driven by access, and we believe that we're going to be able to achieve some pretty significant improvement in access around the middle of this year and that that will allow us to really start to accelerate and see a bend in the curve on the launch. We're getting good feedback from healthcare providers. We're having good discussions with payers as well. You see the value proposition and the fact that INPEFA is distinguished from some of our competitors and SGLT2 inhibitors with really the number needed to treat a 4 being one of the big drivers. The fact that we have, unlike any of the SGLT2 inhibitors, that we've demonstrated a 30-day reduction in 30-day hospital readmissions is also an important element of that. And the overall profile of the molecule being a dual SGLT1 and SGLT2 inhibitor, I think, has really resonated, and we expect that to continue to translate and as we get better access to really have an opportunity to accelerate growth of INPEFA. You haven't guided yet for INPEFA sales, but is that something that you would look to do in the future? I think that, you know, for the first probably year and a half, probably not. But, you know, after we get a little bit more stable market access, then we'll start thinking about doing that, probably as we get into next year. Yeah. Jeff, can you summarize some of the initial launch metrics outside of sales that give you confidence that, one, the demand is there for the drug and that, two, you can start to gain more and more traction over the next several quarters? Yeah. So we're continuing to see significant claims being driven. And, you know, we're, you know, starting to get better pull-through of those claims, but there's clearly demand. We're also looking at the number of prescribers, and that continues to grow. So we're continuing to see that positive trajectory. We're, you know, also very sensitive to and looking at what the physician feedback has been. And the feedback that we're getting from physicians—we talked to some at ACC this weekend—has been that their experience is really good with INPEFA, that their patients are doing well on it, that they see the value in the data that we have. And really, the main challenge that we have to work through is access, which is something that we're doing right now. We think that the metrics all look favorable, and we just need to clear the decks a little bit more on access. In terms of the access on the access front, can you walk us through what has been the hurdles for INPEFA access? I think previously talked about step edits and things like that. Any color there would be helpful. Yeah. So right now, we have coverage for about 40% of lives. The coverage for commercial lives and Medicare lives is lower than that. So a lot of the coverage that we have is for Medicaid lives, actually. But we're continuing to see that grow over time. But a lot of that coverage is subject to step edits, which requires step-through for either Jardiance or Farxiga, or both. That coverage is what we've gotten without contracting. With contracting and for all of the plans that we've described previously that we've contracted for access, we're contracting for access without any step edits or utilization management other than perhaps a prior authorization to indication. So we are going to be clearing out those obstacles pretty significantly as we get these contracts in place. When we launched the formularies for 2024, it had already been set by the time that we launched middle of last year. So all of what we've gotten so far has been off cycle. This year, now we're on cycle for 2025 plan decisions. Those decisions are being made mostly first half of this year for next year. And the feedback that we've gotten, and this is consistent with past practice, is that if we get an on-formulary for 2025 and we're not already on-formulary, that that'll get pulled forward probably back to the middle of this year. So we're expecting it's that process that we're expecting to give us much improved coverage around the middle of this year. The INPEFA prescription data is tracked in IQVIA. Is this an accurate capture of the written and filled prescriptions? I think the IQVIA data is mostly filled prescriptions, right? There's some data from, like, CDP. Yeah, just to clarify, not written, but filled. Correct. Yeah. Yeah. So we're not blocking IQVIA data. Prescriptions are being filled through normal retail channels. You know, we have no reason to believe that they're not accurate. And it captures those kinds of channels. We also have a specialty pharmacy that is involved in our distribution, particularly as we negotiate through the access hurdles early on in the launch. And the specialty pharmacy aspects of this are not being tracked by IQVIA. So there is incremental demand that's being filled that we are reporting on a quarterly basis that is separate from what's being tracked by IQVIA. You mentioned the specialty channel. I guess maybe a big picture in general, do you anticipate the vast majority of scripts will be captured IQVIA, and maybe that specialty channel will be a relatively small portion going forward, or maybe a little bit of context or color around that? I would say it's a majority that are being filled through the ordinary channels that are being tracked by IQVIA. But over time, that'll probably get to be a bigger, even bigger share. But it's a pretty substantial portion that's being filled through our specialty pharmacy at the beginning and through the early stages of launch. Market sizing and heart failure, what are your latest thoughts? What are the addressable patients for INPEFA? Obviously, there are two competitors on the market, Jardiance and Farxiga. What are your most recent data do you have on the market opportunity for INPEFA? Yeah. So just to start with the broadest demographics, there are about 7 million people who have heart failure in the US That is continuing to grow, and it's expected to be about 8 million or 8.5 million even by the end of this decade. So it's a large and growing market. The SGLT2 inhibitors were adopted into guidelines starting in 2022, and they've been continuing. The guidelines have continued to evolve over time. Guidelines and recommendations from the major medical groups have been evolving over time. It is important to note that INPEFA is actually cited in those guidelines. And one of the reasons that we're cited is because we provide the most significant evidence for initiating this class of therapy in the hospital before discharge. And so that's important that we're part of the guidelines. The uptake has grown a lot since the guidelines were adopted. Before that, it was relatively limited, but it has been growing pretty rapidly, but it's still very early in the adoption curve. So at this point, probably only about 10% of patients who have heart failure are being discharged from the hospital on an SGLT2 inhibitor. And so there's a lot of room to grow. And that is compared with other classes that are foundational to heart failure that have like 90% of patients on heart failure are on beta blockers. About 90% are on an ACE or ARB or ARNI. About 60% are on or a significant percentage are on MRAs, a little bit less in the US than ex-US But these are a lot of room to grow with SGLT2 inhibitors. And so we think there's a very we're early in the adoption curve. This is a good time to be launching the drug. We're distinguished in that we have this data for initiating patients who were hospitalized for heart failure. We have 30-day readmission data, which no one else has. There's about 1 million hospitalizations a little 1.3 million hospitalizations a year. So that's a unique opportunity. That's one of the things that as we right now, almost all of the patients that we have on INPEFA are patients who are prescribed the drug who just have chronic heart failure because it takes time also to get on hospital formularies and discharge protocols, but we're starting to make progress there as well. That's going to be another opportunity that's going to help us shift the growth trajectory of INPEFA. It's a very substantial market opportunity, and we're early in the adoption of SGLT2 inhibitors. [crosstalk] Yeah. I think, Joey, one of the important things that I've seen over the last particular year, so starting with AHA last year. I'm sorry, ACC last year, the American College of Cardiology, then the Heart Failure Society of America, then the American Heart Association meeting in November, and then most recently, just the American College of Cardiology meeting last week, as well as the European meetings. There is a tremendous push towards developing better ways of getting more people on what they call GDMT or guideline-directed medical therapy. There is a tremendous awareness across all of those societies on both sides of the Atlantic. It started with the adoption of the guidelines with these four pillars, as Jeff has talked about, with the beta blockers, the RAAS inhibitors, the mineralocorticoids, and the SGLT2s. It's elevated the SGLT2s as the go-to class for all patients with heart failure to be on as foundational. There's a lot of research ongoing. There's a lot of use, actually, and interest in artificial intelligence and some of these other newer technologies and real-world evidence and going through electronic medical records. So the heartening thing is that there is a tremendous recognition within the field, and it's also linking into disparities in access to care as well, particularly in the United States, the underrepresentation of women, those of lower socioeconomic status, those that are disproportionate share groups. So there's a lot of real interest and activity that's not coming just from the industry, but it's coming from the field itself that they need to do better. No, that makes sense. I guess last one on heart failure, any updates on the ex-US partnership talks for INPEFA? We are continuing to have dialogue around ex-US arrangements in selected markets. It's likely to be something that would encompass both heart failure and additional indications that we are now pursuing, which I know that you want to talk about as well. Yeah, that's great. Kind of leads into the other programs you have ongoing. T1D, quite an interesting story. You guys have stuck with it. You recently announced that you're resubmitting the SNDA for T1D. Can you summarize what has changed, both from FDA and from your perspective, since the original CRL back in 2018? Yeah. And maybe a little bit of background. So we conducted with sotagliflozin the largest-ever phase III program for an oral adjunctive insulin therapy ever done. It was about 3,000 patients in total. And we hit all of our endpoints. So A1c, we showed benefits in time and range. We showed actually better weight management for these patients. The patients in our studies had the lower rates of hypoglycemia and severe hypoglycemia than did the placebo patient studies. But there was an increase in diabetic ketoacidosis, which is something diabetic ketoacidosis is a risk that is inherent in having type 1 diabetes. And it really is tied into not having enough insulin. So we had this incremental risk that we believe that can be managed. And actually, there are protocols to manage that risk that have been developed. But FDA was concerned about that risk, and they gave us a complete response letter. And the feedback to us in the complete response letter was either we need to identify a patient population as a greater benefit within the studied patient population, or we needed to demonstrate that we could reduce the risk of diabetic ketoacidosis. The challenge with the latter is that the rate was very low. So in our studies, the rate was actually below the rate that is normally experienced out in the real world. It was just extremely low on placebo also. So since then, we have developed a lot of data with sotagliflozin, and there's been developments outside of us too. So with sotagliflozin, we demonstrated benefits on cardiovascular outcomes in the SCORED study and in the SOLOIST study. So we saw improvements in cardiovascular death and heart failure. We've seen benefits on myocardial infarction and stroke, some of which we published just this past weekend at ACC, some of the stroke data. We've shown a reduction of the progression of chronic kidney disease in terms of that progression in type 2 diabetes patients, but in a way that the progression of chronic kidney disease and the cardiovascular outcomes, the means by which those happen in type 1 diabetes patients are very similar in type 2 diabetes as well. So we have a lot more data than we had about sotagliflozin than we had when we got the CRL in 1999. I mean, sorry, 2019. So the other thing that's changed is that there's more data following type 1 diabetes patients, particularly as it relates to chronic kidney disease progression. There's some data that were published, actually just published beginning of this year, showing that better glycemic control leads to better outcomes on chronic kidney disease progression, and worse glycemic control leads to worse outcomes. And so this is another element of benefit that wasn't recognized. The data weren't there really at the time that we were going through the FDA approval process. So this is something that weighs on the benefit side of benefit risk. So after we got the approval in heart failure, we had appealed the CRL. We're going through the appeals process. After we got the approval in heart failure, we went back to the FDA and asked if we said that we had an idea about how we might be able to address one of the questions that they had or one of the avenues that they had in the CRL, which is a patient group that had greater benefit. They asked us, "So what is it you have in mind? And show us the data." We did that. They said, "This is something that's worth discussing." We've had a couple of interactions with them since then, a couple of meetings with them since then. Ultimately, it's really to align around and define what would be the patient population for which we could resubmit. So we are going to be resubmitting for a patient population type 1 diabetes and chronic kidney disease. Chronic kidney disease is a challenge for people with type 1 diabetes. Most people who have type 1 diabetes are going to get chronic kidney disease at some point. There's a pretty substantial proportion of people who have type 1 diabetes who already have chronic kidney disease. And so it's a challenge and a problem. And it's really that this is a patient population that benefits more. Better glycemic control matters more in this patient population than the overall patient population because of their progression towards chronic kidney disease. So that's the approach that we've taken. We have a couple of advantages in the data that we have. So because we had the largest program, we had a lot of patients who had type 1 diabetes and chronic kidney disease. The SGLT1 mechanism is not dependent on kidney function, and so it continues to show glycemic control benefits even as kidney function declines. That probably helps us as well. That gives us the ability to demonstrate in this population that we're also having good glycemic control, which is an important part of the resubmission because that's what we're applying for to improve glycemic control as an adjunct to insulin in patients who have type 1 diabetes and chronic kidney disease. We're happy to be able to resubmit and hopeful that we can bring this forward to patients. There are a lot of benefits that sotagliflozin brings to that patient population. We've been committed to it, and we've found an avenue to be able to pull that forward. What are the timelines for resubmission here, Jeff, and maybe walk us through the timing of the subsequent regulatory events? Yeah. So we are preparing to resubmit around the middle of this year. We believe that given the nature of this and it's a live NDA, that it would be a six-month review cycle. So it's a relatively near-term opportunity for us, commercial opportunity for us, if we can get that through to approval. Yeah. Is that six months from submission because it's an sNDA or from acceptance? It's a resubmission as opposed to an sNDA. Resubmission. It's a resubmission of an existing NDA, and that's where the six months come from. It's from resubmission. From resubmission. Okay. Makes sense. And you walk through essentially the type of label you'd be seeking, T1D and CKD patients. So can you talk about that market opportunity and some of your underlying assumptions around that? Yeah. So there are about 1.7 million adults who have type 1 diabetes. As I mentioned, most people who have type 1 diabetes will eventually get chronic kidney disease. That's part of the progression of type 1 diabetes. But at any given time, maybe a quarter of patients have, maybe even 30% of patients have chronic kidney disease. And so that's really the market opportunity that we are going to be looking at. It's treating that patient population to improve their glycemic control. What's the plan for the potential commercial rollout in this, assuming approval? Where do you stand there? We have commercial infrastructure. We already have a full commercial infrastructure and the ability to commercialize that we built for the heart failure launch. The call point for type 1 diabetes will be different. Really, the incremental part of this will be to have people that are calling on endocrinologists. Right now, we have a cardiovascular specialty field force, and we will have a group calling on endocrinologists for type 1 diabetes. Okay. Great. Moving on to one of your other programs, kind of a lifecycle management again for sotagliflozin, hypertrophic cardiomyopathy, HCM. You've provided some great updates recently, green light from FDA on a single pivotal phase III trial, which you've guided to start in the middle of this year. Can you just walk us through why HCM as an indication? So I'll start, and then I'm going to turn it over to Craig. So in everything that we're doing in terms of lifecycle management, we are looking for things where it can be unique to among SGLT inhibitors and where there's an advantage of having the SGLT1 mechanism. And this is one of those things. And I'll turn it over to Craig to talk about why we're pursuing it and why we think we'll be successful. Yeah. Thanks, Jeff. So, Joey, great question. And as Jeff mentioned, all those indications you just went through, type 1 diabetes, the data on the magnitude and the speed of response in heart failure, the reduction in stroke and MI, and hypertrophic cardiomyopathy are all related to expression of SGLT1. And by downregulating SGLT1 expression, you get clinical benefits. And the HCM data really came out of the observation we made that the data you have with sotagliflozin in HFpEF is truly outstanding. Most drugs that are on the market for heart failure really do not work as well in HFpEF. And the sotagliflozin data is equally robust across the entire range of left ventricular ejection fraction. And if you think about it, HCM is a subset of HFpEF. HFpEF is a diastolic failure of the heart. It is a thickened, stiffened heart that doesn't fill properly, leading to elevated pressure and left-sided heart failure. That is really very different than HFrEF, which in general is an issue of loss of contractility of the heart due to repeated damage of the heart and dropout of myocardial cells. But if you look at our HFpEF data, it's truly outstanding. And when you take that group of HFpEF patients that have left ventricular hypertrophy without hypertension because that is about 70% to 75% of patients that develop LVH are due to hypertension, but that group has a higher risk out of our heart failure studies, a higher risk of disease progression to heart failure, stroke, and MI, and a larger benefit with sotagliflozin compared to the overall group. You're looking at a 50% to 60% reduction in the rate of progression to either heart failure, stroke, or MI. You also have similar improvements in KCCQ and patient well-being. So taking all of that and understanding the SGLT1 expression, understanding some of the preclinical data that shows significant systemic effects on the heart with SGLT2 and myocardial benefits with SGLT1, we went to the FDA after talking to a number of advisors with a single pivotal registration trial, including obstructive and non-obstructive patients with symptomatic HCM with a baseline KCCQ score of 80 or less and stratified by obstructive and non-obstructive disease on top of existing therapies, either beta-blockers, calcium channel blockers, and even CMIs. And that's the trial we have approval with the FDA to go and do. And we have had tremendous interest from the medical community. We've almost identified all of the sites we need already to complete the trial. We're looking to randomize the first patient by the end of the second quarter. In just looking at the competitive landscape in HCM, there's an approved drug, Camzyos, and another in phase III. And they're also generic off-label options. So a two-part question here. Can you walk us through what the unmet need is in HCM given the availability of options? And then second, how would you envision positioning sotagliflozin in HCM given the available treatment options? Sure. So most patients with HCM are initially treated on a beta-blocker, which is generic, and/or a calcium channel blocker. And then there's a big gap between that initial therapy and the cardiac myosin inhibitors, which are drugs that are effective for obstructive HCM and are under investigation for non-obstructive but are very expensive and challenging to use. So we think that this is going to be a really good opportunity for INPEFA between those two and overlapping on either end that could be used in combination with any of those. And that's the way the study is designed. Obviously, INPEFA is a lot less expensive than the $100,000-a-year cardiac myosin inhibitor. And we're going to have developed in the specific HCM patient population, we'll have developed data that show a benefit of symptom control and the ability to address functional limitations. But we also have then an adjacent space data that is a tremendous amount of safety data showing a very well-tolerated drug and showing benefits across a wide range of patients, cardiovascular benefits on heart failure and myocardial infarction and stroke. So that is likely to be relevant to people's decision-making in terms of prescribing. So we think it's really going to be something that fits in that very large gap in between the generic first-line therapies and cardiac myosin inhibitors and that would overlap with either end of them. What's the bar for success in the phase III? Is it fair to look at, say, Camzyos or Aficamten, that data, as kind of the measuring stick, or what are your thoughts on that? Craig, do you want to answer that? Yeah. I mean, I think what I hear, Joey, is that what most people are looking for is symptomatic relief. And I think the FDA has moved now to KCCQ as a more relevant primary endpoint. And that's really how the ACACIA trial is being done because I don't think there is any real clinically meaningful benefit of an increase in peak VO2. It doesn't seem to correlate to physical functioning, nor in six-minute walk test. And talking to many KOLs, it's almost impossible to convert that into telling a patient why they should go on this treatment and get all of this monitoring and all these other things associated with what the CMIs require patients with a REMS to be on. It's very hard to explain to a patient, "Gee, there's a statistically significant increase of 15 meters in your six-minute walk test," and the patient's sort of looking at you saying, "So what? How is that going to help me live better?" And I think we feel very confident that sotagliflozin in all of our heart failure trials have a significant benefit on physical well-being and improvement in New York Heart Association score, which is the patient view of I'm sorry, it is the provider view of patient functionality and KCCQ, which is the patient self-assessment. So the primary endpoint on which our study is powered is KCCQ, and the key secondary is New York Heart. And again, we are grounding this based on what we already know out of our own 10,000-patient heart failure chronic study. We feel quite confident in the baseline KCCQ that we picked and in that group of patients that if the drug works as we think it will, we should achieve the target that was set with the FDA and I think most providers see as clinically beneficial. Last one on HCM, commercial opportunity. I think if you look at Camzyos launch, it's pretty impressive so far, $350 million annualized run rate based on last quarter sales. But I guess, what does this say about the market opportunity for sotagliflozin in HCM? Well, we think it's a pretty robust opportunity. I mean, there's about 1 million patients who have HCM. Traditionally, that diagnosis rate has been relatively lower, but it has been growing extremely rapidly with both new technologies to identify patients, but also because there's awareness being driven in part by Camzyos and others that there's a treatment option available. So that diagnosed patient population is growing very rapidly. So we think it is a quite attractive market opportunity. And I think the other positive is that it'll have a halo for what we're doing in heart failure generally because it pulls out some of the distinguishing characteristics of the drug. And it's something that has the benefit in that patient population itself, but also more broadly within heart failure. Yeah. Joey, I want to just stress the point that Jeff just made because, again, at the last couple of medical meetings after we announced going forward with the trial, particularly at ACC, there's a lot of interest. I think between that and our stroke and MI data that we presented and the fact that there was just a meta-analysis published in the major cardiology literature that shows there's no benefit in a meta-analysis of all SGLT2 drugs, not including sotagliflozin, on stroke and MI. We have both a mechanistic and clinical benefit on stroke. We're doing the HCM trial. We're going forward with T1D, again, based on blocking the SGLT1 expression in the gut and in the kidney, that you're now creating a reason to believe this drug is not just the fifth SGLT2 or the sixth SGLT2 inhibitor. It is a unique drug with a really important differentiated profile in undertreated diseases. Got it. Very helpful overview and discussion on HCM. I do want to ask a question about pain, LX9211. You have the phase IIB trial up and running. Any comments on how enrollment is progressing and how do the timelines look for that one? Well, we're on target at this point. We think we'll finish enrollment this year, and we'll have data first half of next year, in the second quarter. We're feeling very confident about how things are going so far. Great. I also want to ask a question on your preclinical program. Obesity certainly is a hot area nowadays. You have an oral agent in preclinical development. What can you tell us about this asset in terms of what's the target, development plan, timelines to data, etc.? So we are saving that for 22 April, where we're having an investor day, and invite you to tune in then. So we'll be talking about it. Fair enough. We'll be looking forward to that, and I know a lot of investors will. Last two questions from us. Can you remind us what the IP is on sotagliflozin and patent life runway? I'm just going to speak to the composition of matter patent because we also have other patents, obviously. The composition of matter patent with patent term extension will run to 2033. Got it. Last question, current cash position and expected cash runway for Lexicon? So we had $170 million in cash at the end of last year. With the recent financing, we had the net proceeds of that financing was $242 million. So we're pro forma, very well-funded. And we expect that to allow us to execute all of these different elements of our plan and to take us at least into 2026, but maybe a lot longer than that because we do believe that ultimately, the best way to develop LX9211 would be in a partnership because we're prosecuting diabetic peripheral neuropathic pain, which is an important area. But the data suggests that this would have a benefit across all types of neuropathic pain. And that's something that with a partner, we would be able to pursue those in parallel, which wouldn't be something realistic for us to do. I think that that would change that from being a cash-out-the-door program to one that actually bringing in cash. Great. Well, we're out of time for this session. Thank you so much, Jeff, Craig, and Lisa for participating. It was a very useful discussion. Thank you very much. Thanks, Joey. Appreciate it. Thanks, everyone, for joining us on the webcast. Have a good day and a good rest of your conference.