Good morning, everyone, and welcome to our next fireside- chat. My name is Lander, and I'm a Senior Research Associate at H.C. Wainwright. Joining me today are Mike Exton, CEO, and Craig Granowitz, CMO of Lexicon Pharmaceuticals. Thank you both for being here. Thanks so much for the invitation. Of course, yeah. Before we start, from a disclosure standpoint, we currently cover Lexicon with a Buy rating. Mike, you reported first- quarter results last week. For those who may not be familiar with the company, could you please provide an overview of Lexicon? Absolutely Lexicon is a biopharmaceutical company that has a portfolio of preclinical, late- clinical- stage, and commercial assets that are oral medicines, predominantly in the cardiometabolic space— hot areas right now of obesity, hypertrophic cardiomyopathy, diabetes- associated with neuropathic pain. We have had some recent partnerships that have allowed us to continue to develop our medicines and getting them to the patients who desperately need them, and as of the close of March, about $195 million in cash and investment. The company really focused on addressing large unmet medical needs in the cardiometabolic space. Perfect. Thank you for that. Maybe let me start with pilavapadin, the non-opioid AAK1 inhibitor candidate for diabetic peripheral neuropathic pain. Can you please provide some insights about this indication and how it is different from recent approvals in acute pain? I'll lead off and ask Craig to speak more specifically on acute versus neuropathic pain, which are two very different disease states— not only in how they present clinically and their signs and symptoms, but also in the pathophysiology. You're right, there's been a lot of activity, both from recent approvals as well as recent data in acute pain. Yet there remains really very little compelling data in neuropathic pain. We recently concluded the Phase 2b PROGRESS study in diabetic peripheral neuropathic pain, which is important because it's by far the largest market opportunity— about 9 million people in the U.S. are diagnosed with diabetic peripheral neuropathic pain. This disease state has very few suitable treatments, and no new oral medicine has been developed in two decades. Patients typically start with gabapentin, but they quickly cycle through other options, either switching or add-on, due to limited pain relief and poor tolerability of existing medicines. Many patients end up cycling through different medicines and give up on traditional Rx medicines and seek alternative acupuncture and all sorts of non-prescription type medicines. There is a desperate need for new treatments that are non-opioid, there is a big opioid crisis in the U.S. in particular, but worldwide. Indeed, in DPNP, about 20% of the market at the moment are oral opioids. It is really something where both politically and from the patient viewpoint and the physician viewpoint, there is a desperate need for new medicines. Craig, your thoughts around acute versus neuropathic pain? The physiology is distinctly different between acute and chronic pain, and the impact on patient lives is substantially different. A cute pain, most of the time it is some sort of surgical, post-surgical pain, neuromuscular pain, or otherwise. By definition, acute pain resolves within a couple of months. Chronic pain, by definition, again, is a consistent pain state for greater than six months. There you have not only a very different set of underlying disease conditions, but there is also rewiring of the central brain chemistry and circuitry around chronic pain. There is an element of anticipatory pain and really just a way of how it impacts patients' lives overall, which is quite different and distinct from acute pain. Yeah. As you mentioned, in March, you announced top-line results from the Phase 2b PROGRESS clinical trial. Could you guide us through these results and maybe how they could inform the upcoming registrational studies? The Phase 2 program, like most Phase 2 programs, was really designed to definitively determine dose, route, and schedule for your Phase 3 pivotal trials. The PROGRESS trial was first and foremost designed to answer that question with two very important underlying questions that were there. The first is, what was the value of the loading dose? I n the pilot RELIEF study, the day- one loading dose was 10× the maintenance dose. There was also a lot of early dizziness associated with the drug. The question is, could you separate the dizziness with the dose and the PK- related to that? The second is, we had two doses that demonstrated activity, a 10 mg daily dose and a 20 mg daily dose. The two objectives of the PROGRESS study were to determine the impact of the daily loading dose on both efficacy and safety. Can we pick a single dose to go into Phase 3 to have a streamlined Phase 3 registration program? The trial achieved both those objectives. The 10 mg dose clearly performed superiorly to the 20, and the loading dose was associated with the dizziness and really added nothing to the efficacy over the long term. We believe the study in that regard of what it's designed to do, which is the entryway into a streamlined Phase 3, was very important. We believe the PROGRESS study de-risked the development program. I think to pile onto that, you know, because we have to take the Phase 2 program in its totality now. Importantly, the 10 mg dose across both PROGRESS, because there were two, essentially two 10 mg chronic dosing in PROGRESS and with RELIEF, we've now shown three times that that 10 mg dose will separate from placebo. That is very different to any other program that is looking at neuropathic pain, because when they've used placebo in those trials, in fact, they've shown no separation. When Craig says we think we've got a de-risked dose and asset to move into Phase 3, I think that gives us the confidence that three shots on goal, essentially, that we do have an asset that truly does show meaningful separation from placebo and will continue to show separation in the phase 3 trials, which will be extended to 12 weeks. Excellent. With those data in hand, what are the next regulatory steps and the Phase 3 clinical plans for pilavapadin? The goal now, as many of the listeners might know, is that there were two database closes. The first was the primary endpoint at eight weeks. The second was a four-week blinded runoff period where we're collecting the data right now. We plan on presenting that data at major medical meetings later this year. When we have that data, plus a couple of other smaller studies we're running, is to then have an End- of- Phase 2 meeting with the FDA to finalize our Phase 3 design. Prior to starting the PROGRESS study, we did meet with the FDA. We sort of laid out in broad brushstrokes what a Phase 3 program would be. We've publicly communicated that we're anticipating two parallel Phase 3 trials in a similar patient population. Based on the statistics, which were reaffirmed by the PROGRESS trial, we believe each trials will enroll approximately 600 patients, with a 1:1 randomization between a single dose of pilavapadin (10 mg) and placebo. Just maybe out of curiosity, as a side note, based on your comments during the earnings call, can you talk about pilavapadin's opportunities for additional indications and partnerships potential? One reasons it's important to look for a partner for this particular asset is, like all of our medicines, actually, we consider them a pipeline in a pill because there are multiple potential indications for them. Having a partner gives us potentially two options or two benefits. One, commercially, providing some scale and strength commercially to launch this medicine in the U.S. and ex-U.S. Importantly, really dive deep into the potential indications, not only within neuropathic pain, because we have Phase 2 data as well as a lot of preclinical data on a number of different types of neuropathic pain. It looks to be a pan-neuropathic pain asset, but also spasticity, particularly related to MS and spinal cord injury. There really is a breadth of indications that we can explore with a partner. Those discussions have been very productive and are ongoing as we await the full data set and move towards the Phase 2 meeting. We think while it is important to have a partner in this program, unlike 9851 (the obesity program), where we completely out-licensed it, we granted an exclusive license, we feel that we have capabilities that are important to developing and commercializing this asset. We see a partnership here being quite different, one in which Lexicon continues to have a significant stake in the development and commercialization moving forward. Great. C hanging gears into cardiac indications. Your dual SGLT2/ SGLT1 inhibitor, sotagliflozin, is currently approved in the U.S. for heart failure (b rand name is INPEFA). Can you tell us about sotagliflozin's commercial progress, both in the U.S., and globally? Yeah, great. Commercially, as you know, towards the end of last year, we pivoted to become an R&D-focused company. We have seen great success this last quarter from achieving a number of our objectives in doing that. With doing that, we scaled down the commercial footprint in the U.S. to essentially, you know, not much. What I'm pleased to tell you is actually in Q1, we have been able to maintain our sales that we saw in Q3, Q4. We generated about $1.4 million in INPEFA sales with very little resourcing. I think that really shows that when you do get access and you have prescribers who see the benefit and patients who see the benefit of this medicine, they truly are loyalists. We expect no sales growth in INPEFA this year, but we expect to continue to see sales come out of the U.S. In ex-U.S., as we have mentioned in the earnings call, Biatris have submitted their dossier to the UAE and to Saudi Arabia, with Canada and other countries to follow. As we go through the regulatory approvals worldwide, we will start to see sales, meaningful sales, come out of these countries. We have a pretty significant both milestone and royalty agreement with Biatris for that. You know, in the U.S., our aim is to keep INPEFA in the market, continue to drive differentiation, as you've seen with the recent MACE publication in The Lancet, to show that this SGLT1/SGLT2 dual inhibition truly makes a meaningful difference and continue to build that evidence as we look towards the HCM data at the end of 2026, finishing the study at the end of 2026 with data coming in early 2027. Okay. As you said, now you're looking to expand growth opportunities for sotagliflozin. My question: why hypertrophic cardiomyopathy? What's the rationale behind evaluating sotagliflozin in both forms of the disease, obstructive and non-obstructive HCM? The underlying pathophysiology of the disease is similar, whether it's obstructive or non-obstructive. There are really two components to what defines HCM physiologically. The first is that there's an overdynamic myocardium that uses too much energy. The second is that you have insufficient relaxation during diastole, which leads to pressure overload, both of which ultimately lead to a thickened scarred heart that can't pump blood effectively. What you see with HCM, even in obstructive HCM, when you do a reduction surgery, a significant percentage of those patients do go on to develop heart failure. It is not just that there's the outflow tract obstruction as the physiology. It is the outcome of the physiology, but not the underlying physiology. In that regard, we believe that sotagliflozin, with its dual mechanism of action, and there are SGLT1 receptors directly on the myocardium, provides something that is different from the CMIs, something that's different from beta blockers, calcium channel blockers, but also something that is differentiated compared to SGLT2 inhibitors. So now sotagliflozin is getting ready for late-stage clinical development in HCM in the Sonata HCM clinical trial. C an you tell us about the current status and overall design of the trial. The trial design is broad and pragmatic, including both obstructive and non-obstructive. Again, this study before we started it, we gained alignment with the FDA on the design and the endpoints and what would be adequate for approval. As a reminder, this is an approved drug that reduces the risk of heart failure. The others are drugs that are associated with an increased risk of heart failure as a class. We believe that that is a very appealing perspective to provide to cardiologists. Also, we have a long-established safety record, both in terms of a large clinical trial program(12,000 patients), as well as post-marketing experience (3,000 patients) in the post-marketing experience with a class of medications that cardiologists are familiar with. The trial includes, as I said, both obstructive and non-obstructive. We're allowing the use of underlying medications, including CMI, and the major entry criteria is symptomatic HCM, whether obstructive or non-obstructive, defined by a minimum KCCQ score. The primary endpoint of the trial is change in KCCQ score. We've grounded that expected difference based on, again, our extensive HFpEF program, because again, HCM really is essentially HFpEF. We feel quite confident that based on that experience and the other clinical data we have, that we're going to have a drug that has a high probability of achieving its endpoint. Commercial perspective as we look in HCM, because there's been a lot of data in Q1, quite revealing, I think, in HCM and the various mechanisms that are being studied. It's always been my position and our position that CMIs are going to be somewhat restricted in their availability commercially because of the complexity of the REMS. We've seen that with BMS. We've now seen that with afacamtan and the need to go back to the FDA with the REMS, because those protocols are pretty laborious, both from an echo frequency, from the need to screen for DDIs each time you give the medicine. What that does is it limits the prescriber base to those academic centers that really can manage the complexity of just the logistics. It's very complex to start and maintain these drugs. You see that borne out in the fact that there's about a million HCM patients in the U.S. and currently treated with CMIs is about 10,000, so less than 1% or 1% or thereabouts. The other factor that you need to consider with the CMIs is that they do potentially contribute to heart failure. Now there's also an AFib signal. Here you have a drug, an SGLT1 and 2 dual inhibitor that has potential not only in obstructive HCM, but we have good reason to believe that it's going to be effective in non-obstructive HCM because it targets the underlying cause of the disease, not the hemodynamic obstruction that we see with obstructive HCM. Okay. And this is a global phase 3 trial, right? Yes. R unning in 20 countries, posted on CLINICALT rials.gov. and all the countries are listed. We now have regulatory approvals in all the countries. We've enrolled significant numbers of patients in the U.S. and are now actively enrolling patients outside the U. S. Okay. And the plan would be to file a supplemental NDA for HCM for sotagliflozin? Absolutely. With both obstructive and non-obstructive with a baseline EF down to 50 on top of, or in as monotherapy or on top of existing therapy, including CMIs. Perfect. I also want to touch a little bit on your obesity asset, 9851, and the recently announced deal with Novo Nordisk. Congratulations, by the way. Can you tell us about the terms of the deal and the importance of it, considering that 9851 is a preclinical stage asset? Right. No, look, we're delighted with doing that deal with a world leader in obesity and related disorders. And just to answer quickly, the first question around the financial terms, we received $75 million in upfront and near-term milestones. $45 million of that was the upfront, which we actually used to downpay some of our debt, which is good for the balance sheet, and up to $1 billion in regulatory and developmental milestones, plus sales royalties. So really, if you look at that market, the long-term potential of that particular asset, and as we've said all along, you see it now more and more with both deals that are being done as well as scientific data that's coming out in this class or in this market, that it really will turn to oral and combination therapies. I think that's classic. What happens in pretty much all of cardiovascular disease is you end up with oral combination therapies that are designed to suit that patient. I think that's where 9851 will fit in Novo's portfolio really well. The reason why we ended up and we had a number of folks interested in this particular asset and this particular mechanism is Novo, we believe, really understands the science and the breadth of the potential of this asset, not only in obesity, but in a number of other related disorders. They're committed to developing the breadth of that asset. For the long term, although we're now finishing the preclinical IND enabling studies, Novo will be responsible for submitting the IND. This has been already a very fruitful and collaborative partnership. To the extent that you can share, how close is Novo involved in the IND enabling studies? What's the anticipated timeline for Novo for the clinical progress of the asset? The IND enabling studies are pretty straightforward. We're responsible for completing those. We're in touch with them, but they do not really have any involvement in running them. That was how the deal was structured. We expect to complete that this year. Submission of the IND is then fully at Novo's discretion. What I can say is their enthusiasm continues to be very, very strong. I would not expect that there would be much, or there would be a haste to get the IND submitted. Maybe just for the sake of time, would you like to summarize the upcoming catalysts for the programs or clarify anything that investors should be aware of? Thanks for the discussion, first of all, and thanks for the invitation. We've got a number of exciting catalysts coming up ahead of us. We continue to close out and finish the rest of the secondary data for pilavapadin, working towards disclosing the full dataset at an upcoming medical meeting this year and then coordinating with the FDA for an end of phase two meeting. We continue to get sites up and running now across both U.S., EU, and Latin America for Sonata HCM. We expect all those sites up and running by Q3. We have a sort of a clear runway to really push the enrollment of the Sonata HCM trial very strongly. We're continuing to look towards engaging with the FDA on some of our sotagliflozin data, particularly around MACE, where we see another potential indication and another differentiation versus other SGLT2 inhibitors. We are completing the IND enabling studies for 9851. We'll conclude that this year. Finally, something that we don't talk about much, but we're wrapping up the process for the end of review meeting for Zynquista in type 1 diabetes. As you know, the patient advocacy and demand for new treatments, particularly with sotagliflozin, Zynquista is still incredibly high. We're committed to seeing through that process throughout this year and bring that to its natural conclusion. A lot going on for us and a lot of positives as we continue to drive value for the development pipeline. Great. Thanks again, Mike and Craig. This was very informative. Thanks so much. We look forward to upcoming company updates. Thanks so much. Thank you. Thank you. Appreciate it. Thank you. Appreciate it.