Lexicon Pharmaceuticals, Inc. (LXRX) Q2 2024 Earnings Report, Transcript and Summary

Good day and welcome to Lexicon Pharmaceuticals Second Quarter 2024 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lisa DeFrancesco, Head-Investor Relations and Corporate Strategy. Please go ahead.

Thank you, Betsy. Good afternoon, and welcome to the Lexicon Pharmaceuticals second quarter 2024 financial results conference call. Joining me today are Dr. Mike Exton, Lexicon's new Chief Executive Officer and Director; Jeff Wade, President and Chief Financial Officer; Tom Garner, Senior Vice President and Chief Commercial Officer; Dr. Craig Granowitz, Senior Vice President and Chief Medical Officer; and Dr. Alan Main, Executive Vice President, Innovation and Chemical Sciences. Earlier this afternoon, Lexicon issued a press release announcing financial results for the second quarter of 2024, which is available on our website at www.lexpharma.com and through our SEC filings. A webcast of this call, along with a slide presentation, is also available on our website. During this call, we will review the information provided in the release, provide a corporate update and then use the remainder of our time to answer your questions. Before we begin, let me remind you that we will be making forward-looking statements, relating to the safety, efficacy, clinical development, regulatory status and therapeutic and commercial potential of INPEFA, Zynquista, LX9211, LX9851 and our other drug programs as well as our business generally. These statements may include characterizations and projections relating to our commercial launch of INPEFA in heart failure as well as the clinical development, regulatory status and market opportunity for all of our drug programs. This call may also contain forward-looking statements relating to our growth and future operating results, discovery and development of our drug candidates, strategic alliances and intellectual property as well as other matters that are not historical facts or information. Various risks that may cause our actual results to differ materially from those expressed or implied in such forward-looking statements that we refer you to our most recent annual report on Form 10-K and other SEC filings for detailed information describing such risks. I would now like to turn the call over to Mike Exton.

Thanks Lisa and good day everyone. Thanks for joining us on the call. Before we begin our discussion on Lexicon's results for the second quarter of 2024, let me start by saying that even in my first few weeks here as CEO, I can already see what a tremendous opportunity we have to bring innovative new therapies to patients, transform the treatment landscape of multiple therapeutic areas, and indeed transform Lexicon as a company. Now moving on to our accomplishments for the year, which are indeed incredibly significant. First of all, our INPEFA business continued to grow modestly. We saw progress across all areas of focus in this highly competitive market. Importantly, we also resubmitted our NDA for Zynquista and have received a PDUFA goal date of December 20, 2024, setting us up for a potential commercial launch in this untapped market in early 2025. Furthermore, our Phase 3 study for Sotagliflozin in hypertrophic cardiomyopathy, or HCM, is underway, with sites already open and beginning to enroll patients. In addition, our Phase 2b study for LX9211 in diabetic peripheral neuropathic pain, or DPNP, is on track to meet its timelines and its objectives with top-line data anticipated second quarter of 2025. And finally, our exciting novel drug candidate LX9851, an oral therapy for obesity and weight management, which we believe has the potential to become an innovative next gen treatment in this large market, is progressing into preclinical development. These are all really solid opportunities for Lexicon, not only for next G, but well beyond. So let's take a look at sotagliflozin in particular. We see a significant opportunity for value and growth with this compound across additional indications where sotagliflozin's unique mechanism of action has potential for beneficial effect. Lexicon has taken a purposeful approach in each one of the areas that we're exploring, and as a result, we're now preparing for the next near-term opportunity to commercially launch Zynquista for glycemic control in adults with type 1 diabetes and chronic kidney disease, while working towards a longer term goal of expanding sotagliflozin into HCM. Now, in both of these areas, there are no SGLT therapies indicated, and we believe that the dual inhibition of SGLT1 and 2 offers the unique advantages. These areas of unmet need are also highly concentrated in terms of treatment landscape, and they're very different from the competitive environment we're experiencing in heart failure, which currently is dominated by two larger players within a complex treatment and reimbursement environment. These are really very exciting near and long term opportunities for Lexicon, and as we advance this pipeline of current and potential indications for sotagliflozin, we'll continue to weigh and consider where this unique innovation can have the most impact for patients. Now, as we then go and look holistically at our pipeline, we see similar pipeline in a pill opportunities for our other candidates as well. We have the ability to potentially address unmet medical needs within large markets with development opportunities beyond their initial indications, whether pursued by Lexicon alone or with a strategic partner. And so I'm truly thrilled to have joined Lexicon at this pivotal time when we can focus on unlocking the significant value that these opportunities represent. So with that overview, I'd like to now turn it over to Jeff Wade, President and COO, to discuss in detail the business and financial results. Over to you Jeff.

Thank you, Mike. I'd like to begin with our INPEFA results. Net sales for the second quarter of 2024 were $1.6 million and $2.7 million for the first half of 2024. We saw improvements in filled TRx and number of new prescribers, a modest expansion in access and greater pull through. This progress is due to the strong efforts of the team assembled by and aligned under Tom Garner since he had joined the company last year. Achieving better market access remains the key to more significant growth for INPEFA in heart failure. Our goal has been and remains to achieve formulary access that is favorable for patients and equitable in light of INPEFA’s value, and we are continuing to have discussions with payers driven by INPEFA’s value and differentiating data. Payer coverage improved slightly in the second quarter to 48%. Although most of this coverage still requires step through of competing therapies, an obstacle that we're focused on eliminating. Some payers have been taking longer to make coverage decisions due to uncertainties associated with the IRA, particularly around the prices to be announced by CMS on September 1 for the first group of products selected for negotiation, a group that includes three major heart failure medications. We expect improvements in coverage as these uncertainties are resolved and as we continue to demonstrate the value of INPEFA for patients, providers and payers. It's important to note that SGLT use remains highly underpenetrated in heart failure, with significant room for growth. Despite strong recommendations within the ACC treatment guidelines and consensus statements for both HFrEF and HFpEF, recommendations that are based in substantial part on INPEFA data, especially as it relates to initiation of therapy after a hospitalization. I'd now like to move to Zynquista, which has the opportunity to be the first ever oral adjunct to insulin therapy indicated to improve glycemic control in adults with Type 1 diabetes. Our approach with Zynquista is part of our overall strategy to expand the use of sotagliflozin beyond the competitive heart failure market into high value opportunities where other SGLT inhibitors are not indicated and in which we believe sotagliflozin’s unique SGLT1 mechanism offers advantages. We've made a lot of progress this past quarter and in the time since. We resubmitted our NDA for Zynquista in June as an adjunct to insulin in adults with Type 1 diabetes and CKD. The FDA notified us in July that they considered our resubmission to be a complete response to their 2019 action letter, and they gave us a PDUFA goal date of December 20, 2024. Based on our recent communications with FDA, it is likely we will have the opportunity for an advisory committee meeting. We look forward to the chance to present and discuss with the committee and key stakeholders, including, importantly, the patient community, the opportunity for Zynquista to address the significant unmet need for adjunctive glycemic control in this population. From our preliminary market research, we expect more than 400,000 adults in the U.S. with Type 1 diabetes and chronic kidney disease could be eligible for treatment. We've seen strong enthusiasm for an improved adjunct to insulin among the concentrated group of endocrinologists who manage treatment decisions in Type 1 diabetes. From our payer research, we expect the market access environment to be considerably more favorable in Type 1 diabetes than in heart failure. Our opportunity to be the first adjunct to insulin therapy in a market in which patients are highly engaged and an indication that is not subject to extensive management are all important factors for achieving favorable and timely market access. We believe that sotagliflozin’s unique dual SGLT1 and SGLT2 mechanism offers advantages in addressing the challenges in people who have Type 1 diabetes and chronic kidney disease. Both are relevant to Type 1 diabetes, but the inhibition of SGLT1, the primary transporter for glucose uptake from the GI tract, offers particular benefits. SGLT1 inhibition slows the uptake of glucose from meals, blunting post-prandial glucose peaks and reducing glycemic variability. And unlike SGLT2 inhibition, the effects of SGLT1 inhibition do not decline with the reduced renal function that characterizes chronic kidney disease. The focus of our NDA resubmission on people with Type 1 diabetes and chronic kidney disease aligns, then both with a population in which a better glycemic control is more important and also with sotagliflozin’s unique mechanism of action. We believe that the greater benefit in this population weighs favorably against the increased risk of diabetic ketoacidosis, or DKA, that has been observed in clinical studies of all SGLT inhibitors, including sotagliflozin in Type 1 diabetes, and that drove the complete response letter that our resubmission addresses. We are pleased to say that we have initiated our pivotal Phase 3 SONATA trial for HCM with the opportunity to transform the standard-of-care in this area of high unmet need. We are leveraging outcomes data from our SCORED Trial in heart failure, KCCQ data from SOLOIST, and other evidence, providing a strong scientific rationale for the potential of sotagliflozin in this indication. This slide shows the design of SONATA HCM, a pivotal, Phase 3, placebo-controlled study with a targeted enrollment of 500 patients with obstructive or non-obstructive HCM. We have sites up and running and have commenced patient recruitment in the study. The primary endpoint of the study is change from baseline in KCCQ score, an endpoint that has been accepted by the FDA as the primary endpoint in this and other label enabling HCM trials and with which we have previously achieved success in our SOLOIST heart failure trial. Importantly, SONATA HCM is studying a broader patient population than that studied in other ongoing trials in HCM, as we are allowing patients to be on cardiac myosin inhibitors as well as allowing the use of beta blockers and calcium channel blockers. We are also enrolling patients with an ejection fraction down to 50%, which is lower than the studies of cardiac myosin inhibitors for which heart failure is a risk. And of course, sotagliflozin is already indicated, as INPEFA to reduce heart failure, which is the major risk for these patients. We have obtained feedback from FDA that success in this single study could support a broad label for sotagliflozin in HCM, once again an indication in an important area of unmet need that would be unique to sotagliflozin among SGLT inhibitors. Current estimates suggest that around 1 million patients in the United States today have HCM. Many are not diagnosed, in part because of the non-specific nature of HCM symptoms, but diagnostic rates have been rising rapidly, a trend which is expected to continue over the next decade with increased focus on the disease. Looking further into our pipeline, we have in LX9211 another opportunity to redefine the standard of care in an important area of need, in this case in neuropathic pain. LX9211 has the potential to be the first new non-opioid treatment for neuropathic pain in over two decades. Our PROGRESS Phase 2b dose optimization study began enrolling towards the end of 2023 and is well on track for top line data in the first half of 2025. It is important to note that this study, like our proof of concept studies is placebo controlled and allows patients to remain on stable dose standard of care therapy, rather than removing all pain medications, consistent with how DPNP drugs are likely to be used in real world practice. We learned a great deal in our Phase 2 RELIEF DPN study, which we are applying to this Phase 2b PROGRESS study with a key hypothesis being that we can improve tolerability by eliminating the 10x first day loading dose in the prior study. At this point, we feel quite confident about where we are in this study and are very much looking forward to the results next year. Approximately 20 million patients in the United States are suffering with some type of neuropathic pain, of which about 5 million have DPNP, with significant growth predicted in the future. We believe LX9211 could offer a real benefit to patients and to the clinical community who are looking for better options to improve outcomes for patients with DPNP. Our newest drug candidate to emerge from our Genome5000 platform is LX9851 in the exciting area of obesity and weight management. We believe that LX9851 has the potential, like our other assets, to be developed in additional indications and to be used as a combination therapy as well. LX9851 is a small molecule inhibitor of the target acyl-CoA synthetase-5 or ACSL5 that we believe could be given orally for chronic weight management with a target product profile that reduces body fat, spares lean body mass and favorably affects overall metabolic profile. In preclinical studies, it has reduced cholesterol and triglycerides, improved insulin sensitivity and demonstrated potential in additional related indications such as metabolic syndrome and MASH. The obesity and weight management space is an area of tremendous interest and we're very excited about the potential for an oral once-daily therapy with these mechanisms that complement and enhance current therapies. We've moved into IND-enabling studies and we are very focused on submitting data to upcoming medical meetings. Now we will review some of the key elements of our second quarter 2024 financial results. You can find more financial details in the press release that we issued earlier today and in our 10-Q that will be filed shortly with the SEC. We ended the quarter with $310 million in cash and investments. As indicated in our press release this afternoon, we had $1.6 million in revenues in the second quarter of 2024, almost all from net sales of INPEFA, and had minimal revenues for the same period in 2023. R&D expenses for the second quarter of 2024 increased to $17.6 million from $14.5 million for the corresponding period in 2023, primarily due to higher external R&D expenses as our development programs progress. SG&A expenses for the second quarter of 2024 increased to $39.2 million from $30 million for the corresponding period in 2023, reflecting the investment in the commercial launch of INPEFA. In total, net loss for the second quarter of 2024 was $53.4 million, or $0.17 per share, as compared to a net loss of $44.9 million, or $0.22 per share, in the corresponding period in 2023. For the second quarters of 2024 and 2023, net loss included noncash stock-based compensation expense of $4.9 million and $3.8 million, respectively. Now I'll turn it back over to Mike for some closing remarks.

Yes, thanks, Jeff. Look, in summary, the next 18 months for Lexicon includes several important planned catalysts. First of all, we've got the potential to launch ZYNQUISTA in the early part of next year, which for us is an exclusive opportunity and importantly, a much needed additional treatment option for the Type 1 diabetes community. Secondly, we've initiated our SONATA Phase 3 study of sotagliflozin in HCM, and that presents a new and promising area of focus. Thirdly, our PROGRESS Phase 2b study of LX9211 in DPNP is on track with top line data in Q2 of next year. And then finally, we've commenced IND-enabling studies of LX9851 in the rapidly evolving area of obesity and weight management, where current treatments are primed for next-gen and combination therapies. So each of these opportunities have a lot in common. They're all in large markets. There's significant areas of unmet need where there's white space with the true need for new innovative therapies. And within each of these areas, we have the potential to be the first or only truly exclusive in our approach, unlike what we're experiencing in heart failure currently. And each of these opportunities is supported by thoughtful clinical development that is informed by discussions with the FDA and designed to incorporate real world elements of how the drug would actually be used in the market. So as we enter the back half of the year, we’re currently evaluating our strategy and our resourcing in order to ensure that we are optimized for success across these programs. We believe that we’ll have the opportunity over the next 18 months to significantly improve treatment paradigms, transform Lexicon as a company, and create significant value for all of our stakeholders, most importantly including the patients that we serve. So with that, like to turn it back to the operator to open up the Q&A.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Yasmeen Rahimi with Piper Sandler. Please go ahead.

Great. Thank you so much, team, for all the updates. A few questions on ZYNQUISTA, did you mention, I think it sounded like in the prepared remarks that you guys were preparing for an outcome? I guess, you could maybe talk about whether an outcome is expected, when it could occur, what could be possible topics? That’s sort of like big bucket one. And then bucket two is, if you could talk about commercially how you’re thinking about sort of, do you need to add more sales people? Is there any – as you will be focused on patients that are of under the care of endocrinologists, what would the launch trajectory look like in a more endocrinology focused setting versus a cardiovascular focus? Would appreciate any color around that as well and I’ll jump back into the queue for any other questions.

Thanks a lot, Yasmeen. I heard two big buckets, not sure if you had a third, but let me pass the first one to Craig for the AdCom and what we’re thinking of timing and expectations, et cetera.

Yes. Thank you for the question, Yas. And at this point, we expect that we will get an AdCom from the FDA and it really would focus on the risk benefit of treatment. As I think we’ve shared at prior calls and at other meetings and communications that we’ve really worked hard to find a population where the risk benefit is more favorable. We currently are committed, and the FDA has been committed to our target action date of December 20 of this year. I think I’ll just take a moment on the risk benefit in that we believe that this group of patients with chronic kidney disease are at much higher rate of disease progression to end stage disease across a range of underlying diseases, such as end stage kidney disease, heart failure, stroke, myocardial infarction, severe retinopathy and other diseases. So glycemia is actually a marker for that. And the indication we’re seeking, as a reminder is a glycemic control indication with that group of patients with underlying chronic kidney disease. So we’re not seeking an indication right now for preventing necessarily progression of the chronic kidney disease, but that is a marker of patients that are going to have much more rapidly progressive disease across a range of complications of type 1 diabetes. So I think in that regard, we’ve gotten great feedback from the patient and physician community and on the need for this therapy, I think in prior communications from FDA, some which publicly that they acknowledge that insulin alone is not enough in type 1 diabetes patients, they’ve acknowledged that those that don’t have tight glycemic control are at risk of progression of more rapidly progressive disease. So we look forward to the opportunity, if there is an AdCom, that we’ll be able to share all of this with both the FDA and the medical community.

Yes. Great. Thanks, Craig. We feel very confident going into that AdCom and look forward to presenting all of our and independent data at that time. So I’ll throw at the second question, the second big bucket to Tom, the Chief Commercial Officer, which really focusing on the commercial footprint for ZYNQUISTA and particularly around field force. Tom, if you could take that question.

Absolutely, yes. Thanks, Mike, and thanks for the question, Yas. So I think, as you’re well aware, we’ve spent significant amounts of time and effort really building a highly capable commercial infrastructure, and that crosses field sales, access, and going as deep as kind of patient support programs as well. I’ve taken some time since I joined the company as well, just to make sure that we’re focusing all of our efforts in the right place with high zone [ph] INPEFA but kind of with knowing that ZYNQUISTA is probably going to be coming down the truck at some point in the future as well. I think as you’re very well aware, and Jeff mentioned this, this is going to be a somewhat more concentrated marketplace than what we see for heart failure. So we estimate that there’s going to be between 3,000 to 4,000 endocrinologists who treat the lion’s share of these patients. So given that existing infrastructure that we have in terms of commercial, and as you know, we have around 150 representatives for INPEFA at the moment, our plan is that we’re going to try and leverages that team as far as possible to make sure that we can kind of really deliver on the value that we know we can unlock with ZYNQUISTA very quickly. Just given the unmet needs that I think are very clear here, while at the same time making sure that for INPEFA as well, we continue to support where needed as well.

Thanks, Tom.

Thank you so much.

Thanks.

The next question comes from Andrew Tsai with Jefferies. Please go ahead.

Hey, thanks. Appreciate you’re taking my questions. Maybe just on the AdCom actually, going back to the AdCom, would it be safe to presume that you’re preparing for hypothetical voting decisions or questions around the risk benefit and as well as a risk mitigation strategy of ZYNQUISTA, or is there anything else you’re specifically preparing for? And then secondly, do you think then based on the comments so far today that ZYNQUISTA’s launch could be stronger than what you’re seeing with INPEFA right now? Thanks.

Great. Same order, I’ll throw to you first with Craig, then Tom.

Thank you, Andrew. Again, we really feel strongly that based on all of the discussions that we've had with the FDA over this past number of months that they really are going to focus on the risk benefit. I think what we've talked about is that – in this subgroup, which has much higher risk of progression to the complications of diabetes, that tight glycemic control was even more important. And the data is shown convincingly, both overall in the entire inTandem program, nearly 3,000 patients, but also in that renal subgroup that you have similar and highly significant control of glycemia, whether on baseline insulin or optimized insulin therapy, and that tight glycemic control will be associated with less progressive disease. And we've also shown and published that the risk of diabetic ketoacidosis seems to be similar in that subgroup of patients with underlying CKD than in the overall population. So we feel quite strongly that the primary questions that FDA will ask is about overall risk benefit.

Great. Thanks, Craig. Tom, to you.

Absolutely. Thanks for the question, Andrew. So as we think about ZYNQUISTA for T1D versus INPEFA for heart failure, I mean, the first thing I would say is that this is going to be a very, very different space to what we encountered with heart failure. As Mike mentioned during his remarks, this is going to be a space that's basically untapped. We know there is some small amount of off-label usage of SGLTs at the moment, but largely speaking, this is not a market that has really been brought to the fore. So we believe that given the unmet need, given the fact that we know we have a group of endocrinologists who have been kind of at the starting line of being wanting to be able to use these products for quite some time, there is clearly untapped potential there that we think we're going to be able to capture very quickly. The other thing that I would point out to you that is going to be markedly different from heart failure is just repair dynamics. The challenge that we faced with INPEFA is the fact that heart failure is a tightly managed category and we are upper against some very big competitors who have some very significant rebate dollars that they're paying. We're continuing to push very hard, but as we've started the same dialogue with those payers as it relates to ZYNQUISTA, I can tell you that the feedback they're already getting on the profile on the potential utilization management and how they view just the general management of this category in particular for T1D patients, is going to look and feel very, very different to what we face with heart failure. So I think yes is the answer to your question. We do see that this will potentially be a space where we can make a very meaningful impact pretty quickly, just given the concentrated market that we're going into.

Makes sense. Thank you.

Just, if you allow me, Andrew, to just add to that, is that in fact that's how we see the rest of the pipeline. I think as we go through the strategic review, I think we see that each of our assets offers this opportunity for a pipeline in a pill, which is multiple indications. And those indications are in spaces where, like for ZYNQUISTA will be the first and only player either as an adjunct or standalone therapy. And as you're aware, that provides, as Tom explained, very different payer dynamics, very different dynamics at the provider interaction. And so we feel very, very confident that ZYNQUISTA has the opportunity to be a very significant medicine for Lexicon. Thank you.

Right. Congratulations on executing on that front as well as everything else.

Thanks so much.

[Operator Instructions] The next question comes from Joe Pantginis with H.C. Wainwright. Please go ahead.

Everybody, good afternoon. Thanks for taking the question. First, I wanted to focus on the HCM program. It's good. The program's up and running. And I wanted to sort of talk about your views about the evolution of the space. So when you recently had your R&D Day, you positioned sotagliflozin sort of in between the beta blockers, et cetera, on the front end and the CMIs on the back end. And your current study you're going to be also including for the CMIs. But I guess, how do you envision sotagliflozin fitting in as of this point, since you can also include the CMI population?

Yes, great question. Over to you again, Craig.

Yes. So, again, I think they have different mechanisms of action that are complementary. And since we are enrolling patients that are symptomatic, they're symptomatic regardless of their underlying therapy. So whether they're on nothing or a beta blocker, calcium channel blocker, or a CMI, or all combinations thereof, the inclusion criteria is those with a KCCQ score of less than 80. So we think that it provides the maximum flexibility to providers to manage the symptomatic relief in these patients, which is the key reason why patients with HCM present in general, and why they require treatment and the goal of treatment. And as a reminder, the other agents that are in development right now, particularly in non-obstructive disease, FDA has also allowed KCCQ as the primary endpoint, just like the endpoint, primary endpoint of the SONATA HCM trial.

That's very helpful. Thank you. And then – sorry. And then, just curious about the potential timelines. I don't know if you're ready to think about that now, since it's just started, and disclosure. And the second question, maybe for Mike, you mentioned in the prepared comments and in the press release, and in one of your answers, talking about strategy and resources and strategic review, obviously, you're not prepared now to show your hand, but wanted to sort of get a sense of what potential outcomes or goals are you looking for as part of that?

Yes. Fantastic, Craig, firstly, for the timeline of HCM.

Yes, I think we've shared in general some of the timelines previously. And again, as a reminder, we got this study up and running extraordinarily quickly, and we're really looking at having a final data towards the end of 2026, early 2027. So, I think that's the timeline that we're looking at. As a reminder, and as Jeff Wade showed in his slides, we really have a treatment duration that's quite a bit shorter because the drug has already been proven in a number of heart failure related indications. So we're looking at a 26-week treatment duration, not a 52-week treatment duration, which will accelerate timelines quite a bit.

And maybe, Joe, if you allow me just to pile on a little on to the first question, because, yes, while we foresee sotagliflozin potentially being an adjunct to all indicated therapies for HCM, clearly there's a huge timeline gap between initiation of basal therapies, CCB's or for beta blockers through to CMIs. Just because of the complexity and the logistics that the centers face in initiating those later therapies, and where we have a demonstrated safety profile, an easy oral therapy, we see that it can be form a place within that position in the treatment paradigm, as the team has explained previously, but not exclusively so. And I think that gives us a unique position actually across the HCM. Now, I appreciate the question on the strategic review. We're well into it. I've started that with my team pretty much immediately when I started, and we're getting great insights as a part of that. What are we looking to achieve? It's overall a very simple equation. And that is we have a lot of opportunities, actually more than what a company outsize probably deserves or has and yet we need to be very thoughtful at how we deploy our resources across those opportunities to maximize them all because they're all fantastic medicines in unique indications. And so that's really the answer that we're searching for is across the sort of current therapies, across our pipeline therapies, where do we place our resources and effort to maximize the return for the organization. And that's where we're at. And you're right, I'm not going to steal my hand quite yet.

Absolutely. Thank you very much for all the details.

I appreciate it. Thanks.

The next question comes from Roanna Ruiz with Leerink Partners. Please go ahead.

Great afternoon, everyone. So maybe continuing with questions about the Phase 3 SONATA trial in HCM, I was curious, what has the feedback been from trial sites and investigators so far? As you're kicking it off and could you remind us about what standards you plan to use to ensure tight execution of that trial as well?

Right. Another one for you, Craig.

Yes, Roanna, it's a great question. And the feedback I have to say, has been really positive. We've identified all of the sites that we need for the trial in a number of countries around the world. I think you've seen or can see on clintrials.gov that the trial activated around the end of June, and that we're operating in a large number of countries, but the single largest contributor of sites will be the United States. And we really have a top notch group of HCM centers around the country that are participating. And I think the things I really like about the trial are many of the topics that Jeff already covered, is that it's a therapy that has very little friction to get patients on, can be used either alone or on top of existing therapies. It's oral once-daily, has an ejection fraction down to 50%. You don't require all the echoes. It has a pragmatic and straightforward and relatively easy to administer endpoint of a KCCQ. You don't have all the CPAD [ph] and all the other things. The feedback on trial execution from a study site standpoint has been very positive because it's a whole lot easier to include patients on. I think there's also a general expectation that there's this sort of understanding that, yes, I think this drug is going to work. I mean, the most common thing I hear from investigators is, yes, it makes sense it's going to work. And especially because many of them in obstructive disease, where they said, well, gee [ph] if you remove the obstruction, does that solve the problem? But when they think about it, many of those patients in a few years are back with symptomatic disease again. And that’s why we included both obstructive and non-obstructive is the underlying genetic default in pathophysiology between the two is far more similar than dissimilar. So that’s really where including both obstructive and non-obstructive on top of or instead of other therapies with an EF down to 50 KCCQ score as the primary endpoint, a relatively shorter duration of therapy with an agent and class that they’re familiar, I think, really all stack up in a very favorable way.

Roanna, you talked about what controls or mechanisms do we have to see that it gets executed appropriately? I think, in fact, Craig and his team has shown their execution excellence in clinical trials with LX9211 and have really been able to demonstrate in a study that obviously was coming from another study that had some issues. But we’re on track with recruitment, and that’s powering along and the timeline that Craig and his team met to get SONATA up and running was incredibly tight. And so the ability to recruit the number of sites that they have ever since the protocol was finalized is pretty amazing. So we are running with this very, very fast and look forward to updating on progress in the near future.

Got it. And a quick follow-up for me. I wanted to ask about the obesity program as well. Could you just elaborate a bit more? What excites you about LX9851 and how this product profile could layer into the treatment paradigm in the future, assuming that there could be more products approved by them and more combo regimens?

Yes, absolutely. So I’ll turn it over to Alan in the first instance to give a little bit of background on his baby. I mean, LX9851. And so, Alan, why don’t you take us through and then a couple of others may, may lay some other opinions on top.

Yes, absolutely, absolutely. Obviously, the weight management field is incredibly exciting. Treatment is evolving. But despite the success of the GLP‐1 agonists, I think there’s still some important questions, cost and ease of use, reduction of lean body mass and tolerability. And with LX9851, we think we’re addressing all of those issues. It’s a small molecule, relatively easy to manufacture. It’s oral product. In our preclinical studies, in our knockout studies, we’ve seen a very nice reduction in fat only with no change in lean body mass and tolerability. In our preclinical studies so far, we’ve never seen any evidence of diarrhea, and that includes our knockout mice. And if you think about it, the enzyme is inhibited 100% for their entire lives. And we haven’t seen any diarrhea or anything like that in mice or any of the other preclinical species we’ve looked at. So we’re very excited about this agent. It’s a totally new mechanism that was discovered by our gene knockout work. Through our knowledge, nobody else is working on this. And we think it really addresses a lot of the current issues in terms of treatment of weight management.

Maybe I’ll ask Craig to just throw some comments from a clinical perspective, what he views with [indiscernible].

I think the other important point, and Alan touched on it. But just to put a finer point on it. This enzyme is expressed really in only two tissues. It’s in the apical part of the GI tract, particularly the ileum, and in the liver. And I think all the effects that we’re seeing is really related to the weight management and this ileal break concept, which is really driven by the gut. And then also some of the data that Alan has previously shared, looking at favorable effects on lipid profile and progression of plaque in the coronary arteries of susceptible animals, and also in liver fat overall, I think, are indicative and reflective of the narrow distribution of the expression of this enzyme. So we’re excited that it is a unique mechanism, but also one that’s really tailored in the tissues where a lot of these disease processes are taking place.

Roanna, you can tell that we’re excited by this asset because we all want to have a say, including myself, just commercially, of course we don’t know where the obesity weight management space will be in the years to come. However, I think it’s reasonably easy to predict that there’ll be combination therapies beyond the incretins. And as you know, a lot of the new medicines that are being developed are incretin based different formulations, et cetera. And other somewhat similar metabolic conditions have shown us that new mechanisms of action are always appreciated as combination therapies, diabetes being an obvious choice here. So we’re pretty excited by it, and we’re going to learn a lot more about the clinical development, a lot more about the biology over the coming years, and yes, look forward to continuing to update you all.

Yes, sounds good. Looking forward to more updates. Thanks.

Thanks.

The next question comes from Yigal Nochomovitz with Citi. Please go ahead.

Hi, guys, this is Hosni Mubarak [ph] on for Yigal. Thanks for taking my questions. I just wanted to ask a follow up on the last questions related to the obesity program. It sounds like on the safety front, you believe that this program might be differentiated on diarrhea. But I'm curious if you have any sense of what maybe the nausea profile might look like to the similar question on safety. I think one of the things we're wondering about is that these obesity drugs seem to be, it may be necessary to dose very chronically for long periods of time. So I'm curious how long, in terms of duration of therapy you explored in these sort of preclinical models, especially on the safety side? Thanks.

Great. Yes, thanks very much. So, Alan, over to you for the question on nausea and then duration of therapy, particularly from a safety perspective.

Sure. Thank you. So, nausea, as you probably know, that's rather difficult to look at in preclinical studies. But what I would say is it's important to note that the inhibition of this enzyme doesn't completely reduce the absorption of free fatty acids. What it does is it delays absorption so that it can go further down, the fatty acids can go further down in the GI and then trigger what Craig mentioned, the Ileal Brake Mechanism. So obviously, to really look at nausea, you would have to do we have to look to the studies in Phase 1. So far, I think most of our studies have been only about one month duration, and we'll be doing the IND-enabling tox studies, which will also be a one month duration in two species. But we do have plans on the preclinical side, exactly as I suggested, to do studies of much longer duration for three and six months.

Got it. Thank you.

No, if you allow us also, you go to elaborate a little bit more, there is also some evidence beyond our group that might suggest that nausea is not an issue. Craig, maybe you want to talk a little bit about that.

Yes, hi it's a great question. And the beautiful thing is, we have the knockout mouse models and the tolerability and safety of those over the life of both the mice. But also, there is more recently, some limited human genetics data of knockdown and knockout variants of ACSL5. And those individuals seem to live a full and normal life without any issues. The only issues you see is very early in life, there is a modification of diet that is needed for the first couple weeks, but after that, these children seem to grow on and develop normally into normal adults. So I think we feel that both from the knockout side with the animals and some of the human genetics that have been identified, that we have something that is probably going to be able to be dosed for very, very long periods of time, comfortably. And again, as Alan said, we need to do all the long term tox in the animals, and then the actual human clinical program with this particular inhibitor will need to be done. But I think we have high degree of confidence, based on what we know, that they can be dosed safely for long periods of time.

Got it. That's super helpful. If I could ask one more quick one on the same topic. I'm just really thinking about how this mechanism, if this mechanism has applicability in areas outside of diabetes, but maybe in related areas. We know the GLP1s are in diabetes as well. But and I think more recently, some of the larger players have even talked about heart failure. I'm just wondering if this mechanism has any relevance there as well, for maybe obvious reasons. Thanks.

Yes. The answer is yes. And I could turn to Alan, where we've actually shown data in a number of metabolic conditions, as you would assume from reducing body weight and obesity. Some of it is incredibly exciting, and we're looking to present that data at medical conferences in the near future. So the short answer is yes. There's opportunity within lipidology, opportunity within other metabolic conditions as well. So, looking very, very interesting mechanism here.

Got it. Thank you very much.

Thanks a lot.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

I'd just like to thank you all for attending today's Q2 earnings call. We're incredibly pleased with the progress that has been made today. We've got a busy back half of the year and into 2025, but that provides us many, many opportunities that we're really looking forward to. So look forward to continued dialogue, and we'll speak to you all soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.