Lexicon Pharmaceuticals' Management Presents at 38th Annual dbAccess Health Care Conference (Transcript)

 |  About: Lexicon Pharmaceuticals, Inc. (LXRX)
by: SA Transcripts

Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)

38th Annual dbAccess Health Care Conference Transcript

June 12, 2013 17:40 AM, ET


Arthur Sands - President and Chief Executive Officer


Navdeep Singh - Goldman Sachs

Navdeep Singh - Goldman Sachs

All right. Good afternoon everyone and thank you for attending our Global HealthCare Conference. I am Navdeep Singh, one of the biotech analysts at Goldman Sachs and it's my pleasure to introduce your next presenter, Dr. Arthur Sands, President and CEO of Lexicon Pharmaceuticals. We encourage questions from the audience after Arthur has made his prepared presentation, but before I hand it off to Arthur, I just want to read some disclosures that are required by Goldman Sachs.

So we are required to make some certain disclosures in public appearances about Goldman Sachs in relation to just with companies that we discuss. The disclosure relates to investment banking relationships, compensation received or 1% or more ownership and prepared to review disclosures for any issuer now or at the end of this call if anyone would like me to. However, these disclosures are available in our most recent reports available to you as client on our firm's portals.

In addition, update to those disclosures are available by ticker on the firm's public website at http:\www.gs.com\research\hedge.html. in addition, disclosures are applicable to research with respect to issuers if any mentioned herein are available through your investment representative use of non- Goldman Sachs personnel may not represent the company's views. And with that, I will hand it off to Arthur.

Arthur Sands

Thank you, Navdeep and I would like to also thank the entire Goldman Sachs banking team for inviting us to the conference this year to present. I will be making certain forward-looking statements and I refer you to our filings with the Securities and Exchange Commission regarding the risk factors that affect our business. I would also like to say that as we go through the discussion today, again please ask questions if you would like to along the way. Our -- Brian Zambrowicz, our Chief Scientific Officer is also here and so we can have some question and answer if you would like.

So we are progressing on our mission to discover breakthrough achievements for human disease. These are all genetically targeted therapies that we have validated through our proprietary gene knockout technology, which is a very long large scale program of knocking out 5,000 genes to identify superior targets.

So the company then has progressed now with small molecules addressing those targets and the molecules I’ll be describing today have all been discovered and developed within Lexicon Laboratories and again they are all genetically defined targeted therapies.

So I’ll just walk through the leading edge of our pipeline which are three drugs in development. LX4211 is a very interesting molecule, dual SGLT1 and SGLT2 inhibitors, small molecule that we are developing for both type 1 and type 2 diabetes. I’ll just go quickly over the type 2 diabetes information today and I would like to spend a little bit more time on the newer information we've gained on type I diabetes, which I think is a fairly exciting application for this drug in an area of high unmet medical need.

Then I would like to summarize our progress in Phase 3 for carcinoid syndrome that LX1032 or Telotristat Etiprate. The company's first Phase 3 program in orphan indication for which we've also fast tracked status and then very briefly I’ll give you some of the timing that we expect for LX1033 Phase 2 readout. This is a 360-patient trial in Phase 2, which we expect to have in the third quarter of this year.

So 4211, it is first in class dual inhibitor of SGLT1 and SGLT2. These are two glucose transporters responsible for basically filling your body through glucose and SGLT1 begins that process after ingesting a [needle] if some major transporters of pumps the glucose from your intestinal track into the bud stream and then SGLT2 is there to rescue glucose from blood -- from urine that is filtered as the blood is filtered through the kidney. So glucose flows into the urine and it needs to be rescued back because of course in general we consider glucose to be scarce and we want to conserve it at least through evolution.

Now today glucose and sugar and nutrients in general are in abundance and these two transporters are a viable drug targets to reduce the glucose load in the body. So we developed an inhibitor that can block SGLT1 in the GI tract, which lowers the amount of glucose absorbed or after meals especially postprandial glucose and then also SGLT2 in the kidney, which allows glucose to spill into the urine, so if offloads glucose into the urine.

Now there are humans lacking both these targets and Lexicon has created mice lacking these targets and it's that genetic information that led us to understand that dual inhibition was desirable. The SGLT2 component here pictured in this competitive landscape slide was recognized mainly by pharmaceutical industry through the human genetic components and they tended to stay away from SGLT1 because there was a theoretical concern of gastrointestinal side effects that might occur if your inhibitor is SGLT1.

Now what we saw through our mouse studies was that basically didn't happen, that there was a therapeutic window that could be achieved and a great benefit attributed to SGLT1 inhibition and hence we developed the dual inhibitor and I think that put us out in front of those pack.

Most recently progress was made by J&J here with canagliflozin. They recently got FDA approval and that's the first SGLT2 selective compound approved in the United States. BMS/AZ hope to be the second. They are approved in Europe already and then BI and Lilly has also filed their NDA for an SGLT2 selective compound. So it does look like this will be the next major class of oral antidiabetic agents.

Also recently Pfizer and Merck announced an alliance to move Pfizer’s SGLT2 selective compound forward largely in combination studies with and in combination products with Januvia and then also interestingly Novartis has entered a new compound into Phase 2, which is a dual inhibitor compound that we know quite a bit about now and we think it's interesting that this dual inhibition concept is being recognized more broadly perhaps.

So our strategy is with the dual inhibitor that we have, our strategy allows us to address broad populations of type 2 diabetes and we are doing so in our outlined Phase 3 program and as well in combination with many other agents. These are very versatile drugs, but specifically to our compound and a point of differentiation is the renal impaired population where our compound we believe will work well because we don’t rely just on the kidney but we also use the GI tract mechanism and then type 1 diabetes.

Again no compound yet has been approved for type 1 diabetes and no small molecule compound. So we are going to be illustrating some of these as we go forward with our results here. I’ll be talking very briefly about the background results in type 2 diabetes first and then I’ll go to type 1. This was our 2b study, which is a dose ranging study from 75 milligrams to 400 milligrams once a day with LX4211 over 12 weeks and 300 patients with type 2 diabetes. We released this data about nine months ago. So I’ll go very quickly through this, but we saw a very nice dose response curve in reduction of haemoglobin A1C in blood reaching a 0.95% reduction in haemoglobin A1C.

For some reference perspective, the SGLT2 selective compounds all report about 0.7% reduction of haemoglobin A1C after 12 weeks of therapy. So we think we compared just upfront very favourably in type 2 diabetics, these are type 2 diabetics on Metformin who failing their current therapy.

This is looking at glucose that's excreted into the urine and the point I want to make here is that from our 200 milligram dose in blue to black, there are 400 milligram dose that appears to be no different and the amount of glucose our drug puts into the urine, which means that we've maximized our SGLT2 kidney specific effect by definition, but what's interesting is if you reconsider this blue line here in HbA1c and look how different it is to the black line, how much improved the HbA1c is.

We attribute this therefore to the SGLT1 effect because we know we are not getting any additional SGLT2 effect through the kidney effect here and glucose and yet we are getting almost a half a point increase in haemoglobin A1C or additional reduction I should say.

So the dual mechanism portrays I think a favorable picture here and also I should point out this is substantially less glucose in the urine than the SGLT2 specific compounds report and why is that important? Well, the more glucose you need to put into the urine, the higher the rate of general urinary tract infections and that's what the data appear to support so far if you look at all the studies today and so theoretically and we hope to prove this on Phase 3, we should have a lower rate of that type of side effect, the GU infection rate and so far that's what we've actually seen in our trial.

There is weight loss. This is in kilograms. There is a characteristic of the SGLT2 class as well, a very desirable attribute here and lower blood pressure. This is a systolic blood pressure about a 6 millimetre drop overall. We know in hypertensive patients and what we are discussing this at the upcoming ADA meeting that we have our greatest effect in hypertension than this is all the population within hypertension, we get up to about 14 millimetre drop, whereas in normal intensive about a 1 millimetre drop. So that's very good from a surgeon perspective and it also bodes well for cardiovascular safety which is of high importance now, of course in diabetes.

So I think I have hit on some of the high points, highlights of the Phase 2B study. I would like to move forward quickly into type 1 diabetes. So why LX4211 in type 1 diabetes? Well, first of all most type 1 diabetics are poorly controlled. It's just from a haemoglobin A1C standpoint and part of that has to do with an ever present fear of hypoglycaemia from two stringent of control with insulin alone.

And then so what we think we can do is reduce insulin use potentially substantial reduction through our unique insulin independent mechanism of the GI in the kidney action is LX4211. This should prevent weight gain caused by insulin use, so insulin promotes weight gain itself and then also we could promote weight loss through our own independent mechanisms here.

I think there is also a potential for beta cell protection and so we've desired to embark on this study. Of 30 patients, 33 patients actually with type 1 diabetes and this is the first example of administering this drug with insulin. So we have to be very cautious of course. We went with a pioneer design in the trial that is three patients only dosed first and open label and then filling an impatient period and then if that goes well and safety being the main goal here with these three patients, the lease in for 28 days outpatient where they can carry on their lives is normal, but they are talking LX4211 with insulin and so I will show you our first experience with these three patients.

With this proceeding favourably, these three patients we then roll into the placebo controlled phase of the study with much greater confidence about safety. So just to give you the results upfront and both point formats and then we will look at some graph. We are very pleased with the safety so far. There were no series of adverse events and no discontinuations.

There were two hypoglycaemic events during the baseline period before treatment. So this is interesting and it was only three cumulative weeks of observation. Now during treatment, there was only one hypoglycaemic event and that's over 12 cumulative weeks of observation. So very low numbers, but this is very important when you are embarking on a new really a test of a new drug and such a somewhat fragile patient population.

We did see apparently clinically relevant decreases in insulin. I’ll show you some of those while maintaining our improving glycaemia control we believe we've seen that in the first three patients. That wording is important, because that's the FDA current guidance. You have to maintain or improve glycaemia control in type 1 diabetics while improving the insulin regime, that's the goal and so keep in mind maintaining or improving that's what we saw with these patients. I won't show you the glycaemia control data, but I will focus instead on some of the insulin data from these three patients.

And we will do it in a case study format. I am just going to show you the one patient and then a summary cable for the total three patients because of time, but this is very active a 31-year old female. She exercises 30 to 45 minutes a day and has very active lifestyle, very well controlled in general type 1 diabetic, very cognisant of her treatment and we will take a look at her breakfast insulin use, her lunch insulin use and then her dinner. So each of these patients takes an injection before breakfast, lunch and dinner as per normal routine and then also has a basal level of insulin use. I am not going to go too much into the quantification, but I think you can start to see the picture of what we are seeing from treatment.

So on this graph we are looking at the entire study period along the X-axis are days of treatment from day minus seven, this is a baseline area where there is no treatment just recording their baseline habits of injection, their routine injection, here on the Y-axis are units of insulin that she would normally take -- that she took before breakfast. You can see the start of LX4211 here at day one. Day one to three are inpatient and then there are outpatient during days three to 27 and I think it's then right at day 29, this is where we stop 4211 during another inpatient phase and we have to restore insulin -- proper insulin use.

So that's I think a fairly interesting format there and it's one that's repeated here at lunch, this is the lunch insulin dosing, so here is baseline, here is on treatment and then off treatment, same patient and then here is this patient dinner insulin dosing. So these are some we believe substantial reductions in insulin dose and if you look at the numbers for this one patient then, this is the breakfast, both lunch and dinner and then this column is the percent decrease from the baseline outpatient. So baseline outpatient to treatment outpatient regime and those numbers I think speak for themselves.

This is an interesting way to look at this patient’s experience on day one of dosing of LX4211. So let me orient you. This is a continuous glucose monitor tracing of blood glucose in blue and so a normal person's blood glucose should be 80 to 120. If you go below 70, that can be hypoglycaemia, above 200 is generally considered not good hyperglycaemia.

So here is before we give 4211, this patient comes in, is in the clinic and breakfast, lunch and dinner and you can see after reaching me, there is a bump in glucose up to about 250 is the mgs per litre here. Now this is day one of dosing and dosing is at 8 AM, right before breakfast and we withheld lowest insulin, so no insulin given to this patient at this point in time – time point here and you can see these peaks are post trying to glucose really don’t get above 200 until dinner.

This patient took again no insulin or breakfast, took 90% decrease of insulin at lunch and about a 90% decrease of insulin at dinner here and now this is bolus insulin. Their basic insulin is still running and to reduce that by about 10% starting here in the early morning. So we think that's an interesting profile. It was one repeated for patient two and somewhat different for patient three, but these are all three patients and we are looking at the bolus insulin used in bar graph form.

In green is the third patient who had less of a decrease in blue is the second patient similar I would say a decrease overall to the first patient that I showed you all the graphs for who is in red here, but clearly the trends I think are obvious and the safety far has been excellent. So that's what has allowed us to take this next step to go into the placebo controlled phase of the study. 145 patients on LX4211, 15 patients on placebo blinded and we are going to monitor all the parameters that I showed you.

So this is I think an exciting first step, but we hope to have results of this placebo controlled study and that's really the only study that could give us a proper interpretation. So we are not -- we are not overly quantifying what we've seen in the first three patients. We want to be cognisant that the placebo controlled portion is really the critical portion of the result.

We are also in the midst of a renal impairment study. This is a proof of concept study and including severe renal impaired as well as modern, over seven days up to 30 patients and this would enable us to do a proper Phase 3 study in renal impairment. This is important because the SGLT2 selective compounds have not gained -- not been well in renal impairment and that's because of course you rely wholly on functioning kidney. So we should have a unique event.

This is about 30% to 40% of the diabetic population. So that was on diabetes and shifting gears here to give you a quick update and overview of Telotristat either played carcinoid syndrome. This is obviously a very different type of indication about 20,000 patients globally. You know diabetes is estimated to be you know 300 million, but an orphan indication with high unmet medical need we have fast tracks status and orphan status with the FDA.

This is a tumor syndrome that's driven by a neuroendocrine tumor that is metastatic in the liver of patients and those neuroendocrine tumors do what neuroendocrine cells do, which is crank out lots of neuropeptides including neurotransmitters, serotonin being the major one here and serotonin is well known transmitter when over produced by these tumours causes significant diarrhea and heart valve damage in the long run as well as pulmonary hypertension. So serotonin is a toxic molecule at high levels over time and so our drug, Telotristat inhibits the production of serotonin. It's targeted to that.

What else is out there? Well, not much. It's really only the somatostatin analogues which have been around for 30 years. They are injectable agents. They cause a general sort of suppression on neuroendocrine access and we are here with an oral agent. We are going into patients that are failing on these octreotide or some analogues or some metastatic analogues, but they maintain their therapy anyway.

So we are going on top. We are going into treatment failures that are maintaining their therapy for potential additional benefits. This is the design and the study. I will just show you our Phase 2 study from Europe. Open label in over 12 weeks and we are just dose escalating here to 500 milligrams TID and we will take a look at the results.

Over the 12-week period, you can see on the X-axis, on the Y-axis, is the number of daily bowel movements and we get through a 43% reduction in bowel movement. So we believe this is clinically significant. This is what the somatostatin analogues were approved for. That's what their label reads. These are the only kinds of endpoints you can get to in real estate timeframe with carcinoid syndrome patients and so we are very encouraged by this reduction and again remember there are an ongoing therapy that is failing.

This is looking at each patient in the study. You can see, they all benefitted. They all show some decrease in bowel movement control. In fact most of them are 30% or more. There is only two that were less than 30% decrease or more. And then reduction in abdominal pain and discomfort and this one very important, a reduction in 5-HIAA, which is a direct breakdown product of serotonin. So it's a 71% reduction in 5-HIAA.

This tells us that we are definitely hitting our target and we are relieving the serotonin load that is so damaging to these patients. Lifestyles are live and their tissues. So it was well tolerated. They are all dose levels and that allowed us to move in the Phase 3. I will show you the design. This is ongoing, this was 105 patients that we discussed this with the FDA and EMA. 12-week endpoint, same endpoint timeframe that we had in Phase 2 and the primary endpoints are also the same that is a reduction in bowel movements.

We are also looking at 5-HIAA. So our goal is to complete this study by the middle of next year and have data by the end of next year. This mechanism is also being tested in ulcerative colitis biopsy. We have a 60-patient trial ongoing. We should have results next quarter. I won't go into the pre-clinical data supporting it, but it was quite intriguing and we believe this would open up another avenue for major indications to this drug if positive.

So again we will anticipate those results here earlier in September and then lastly, just couple of slides and then we can take some questions, looking at LX1033, this is a locally-acting serotonin synthesis inhibitor. It blocks the enzyme TPH where it resides in normal anatomy, which is in the GI tract where 95% of your serotonin is made. We dialled that down and we can provide relief to this chronic diarrheal syndrome [IVFD].

We have fast-tracked status from the FDA. LX1033 is very potent locally acting inhibitor. We like the locally acting nature of it, unlike Telotristat Etiprate, that's absorbed in the blood stream to go hit the tumor. This one stays in the GI tract and we think this opens up even a broader safety window for us to have a locally acting compound, but we are able to track its efficacy by a chemical again with this very important and convenient biomarker 5-HIAA. So we know we are dosing appropriately to dial that down and we published on this mechanism in gastroenterology with an earlier proof of concept study.

The current study that Phase 2 has three dose levels, 500 BID, 500 TID, 100 milligrams, 1,000 milligrams BID, placebo controlled over four weeks, 360 patients and it's got all the biomarkers built into it and we expect the results in Q3. So just to summarize then, we have three drugs that are now in late phases of development. One is Phase 3 and carcinoid syndrome, LX4211 in diabetes, both type 1 and type 2 and then LX1033 in IBS-d.

I mentioned all these studies in my talk here today. This is a timeline picture of the sequence we expect results in the second half from each of these. They all appear to be on track. So it's going to be a very busy second half in terms of results from ulcerative colitis and then renal impairment, a proof of concept study. The big study, the Phase 2 in IBS and then this I think very exciting Placebo controlled study in type 1 diabetes.

We finished the year -- I mean we finished the first quarter with $197 million in cash and we are in a strong financial position. Our business model is to pursue partnerships, which we are doing primarily in primary care indications reserving specialty indications for Lexicon and so that would include carcinoid syndrome certainly and then potentially other indications such as type 1 diabetes I think as well.

So that is our business model and I think with that if there are any questions, we can take some questions. Thank you, very much. All right, with that then, if you have questions I can be reached at the back of the room thanks.

Question-and-Answer Session

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