Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lexicon Pharmaceuticals Inc (NASDAQ:LXRX) completed the resubmission of their NDA for inep for glycemic control in people with type one diabetes and chronic kidney disease.
• The company has two major assets undergoing late-stage clinical development, with significant progress in both a phase three study for Solosin in hypertrophic cardiomyopathy and a phase two B study for LX 9,211 in diabetic peripheral neuropathic pain.
• Lexicon Pharmaceuticals Inc (NASDAQ:LXRX) has entered into an exclusive licensing agreement with Beatrice for Sogo Flozin outside of the US and Europe, providing a $25 million upfront payment and potential milestone payments.
• The company has a strong cash position with $258.4 million in cash and investments, not including the recent $25 million from the Beatrice deal.
• Lexicon Pharmaceuticals Inc (NASDAQ:LXRX) is actively preparing for an IND filing for their novel drug candidate LX 9,851, targeting obesity and associated cardiometabolic disorders, by mid-2025.

Negative Points

• The advisory committee voted 11 to 3 that the benefits of Zinque do not outweigh the risks in adults with type one diabetes and chronic kidney disease.
• Net sales for the third quarter of 2024 were only $1.7 million, representing modest growth and highlighting challenges in commercial performance.
• R&D expenses increased significantly to $25.8 million from $17.6 million in the corresponding period of 2023, primarily due to investments in late-stage development programs.
• Selling, general, and administrative expenses rose to $39.6 million from $32.2 million, reflecting higher marketing costs and severance costs from strategic repositioning.
• Lexicon Pharmaceuticals Inc (NASDAQ:LXRX) faces challenges in gaining FDA approval for their products, with ongoing discussions and uncertainty around potential outcomes.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with LXRX.

Q: After the advisory committee meeting, what is your confidence level in obtaining a label for the 60 to 90 CKD subgroup, and can you do anything to influence the FDA's decision? A: We remain engaged with the FDA and are committed to the target date of December 20th. Both Lexicon and the FDA highlighted the 60 to 90 group as potentially having an improved benefit-risk profile. We continue to work with the FDA on potential scenarios. Dr. Craig Randwick, Chief Medical Officer

Q: Regarding the pain program, are you expecting a larger placebo-adjusted efficacy separation than in the prior phase 2A? A: If the data holds up and the percentage of patients completing the trial is higher than the dropout rates seen previously, we might expect greater response rates. The dizziness signal seen before was related to the initial loading dose, and the current study shows a different tolerability profile. Dr. Craig Randwick, Chief Medical Officer

Q: Are you aligned with the FDA on the KCCQ primary endpoint for the phase 3 HCM trial, and what would be considered a successful change? A: We are confident in the endpoint, having discussed it with the FDA. We have not disclosed the expected KCCQ delta but are confident based on prior experience and FDA approvals of similar studies. Dr. Craig Randwick, Chief Medical Officer

Q: If the FDA suggests another study for the defined population after a CRL, are you prepared to conduct it? A: It would be difficult to continue with more studies given the evidence already presented. We believe we have demonstrated efficacy and safety, and further investment would be challenging without confidence in sufficiency. Dr. Mike Eckton, CEO

Q: Can you elaborate on the recent Viatris agreement for Soglozin and your outlook on future partnerships? A: The agreement with Viatris allows us to expand Soglozin's reach outside the US and EU. We are focusing on partnering opportunities for LX 9,211 and LX 9,851, which have significant potential in their respective fields. Dr. Mike Eckton, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.