Lexicon Pharmaceuticals, Inc. (LXRX) CEO Lonnel Coats on Q4 2018 Results - Earnings Call Transcript

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About: Lexicon Pharmaceuticals, Inc. (LXRX)
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Earning Call Audio

Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) Q4 2018 Earnings Conference Call March 13, 2019 8:00 AM ET

Company Participants

Kimberly Lee - Head, Investor Relations and Corporate Strategy

Lonnel Coats - President, CEO & Director

Alexander Santini - EVP & Chief Commercial Officer

Pablo Lapuerta - EVP & Chief Medical Officer

Jeffrey Wade - EVP, Corporate & Administrative Affairs and CFO

Praveen Tyle - EVP, Research & Development

Conference Call Participants

Liana Moussatos - Wedbush Securities

Samantha Semenkow - Citigroup

Jessica Fye - JPMorgan Chase & Co.

Alan Carr - Needham & Company

Stephen Willey - Stifel, Nicolaus & Company

Operator

Welcome to the Lexicon Pharmaceuticals Fourth Quarter and Full Year 2018 Financial Results and Business Update Conference Call. [Operator Instructions]. As a reminder, this call is being recorded today, March 13, 2019. I will now turn the call over to Dr. Kimberly Lee, Head of Investor Relations and Corporate Strategy. Please go ahead.

Kimberly Lee

Thanks, Maria. Good morning, and welcome to the Lexicon Pharmaceuticals Fourth Quarter and Full Year 2018 Financial Results and Business Update Conference Call. Joining me on today's call are Lonnel Coats, Lexicon's President and Chief Executive Officer; Alex Santini, Executive Vice President and Chief Commercial Officer; Dr. Pablo Lapuerta, Executive Vice President and Chief Medical Officer; Dr. Praveen Tyle, Executive Vice President of Research and Development; and Jeff Wade, Executive Vice President of Corporate and Administrative Affairs and Chief Financial Officer. After our formal remarks, we will open the call up for Q&A.

Earlier today, Lexicon issued a press release announcing our financial results for the fourth quarter and full year 2018, 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 will be accessible in the Investor Relations section of our website.

During this call, will be review the information provided in the release, provide an update on our clinical programs 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, including statements relating to the safety and efficacy and the therapeutic and commercial potential of XERMELO, sotagliflozin and our other drug candidates. These statements may include characterizations of the commercial performance of XERMELO; the expected timing and outcome of regulatory review of applications for approval of sotagliflozin; the expected timing and results of clinical trials of sotagliflozin, telotristat ethyl and our other drug candidates; and the market opportunity for those programs. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of other drug candidates, strategic alliances and intellectual property as well as other matters that are not historical fact or information. Various risks may cause Lexicon's actual results to differ materially from these expressed or implied in such forward-looking statements. These risks include uncertainties related to the success of our commercialization efforts for XERMELO; the regulatory review of applications for the approval of sotagliflozin; the timing and results of clinical trials and preclinical studies of sotagliflozin, telotristat ethyl and our other drug candidates; our dependence upon strategic alliances and other third-party relationship; our ability to obtain patent protection for our discoveries; limitations imposed by patents owned or controlled by third party; and requirements of substantial funding to conduct our research, development and commercialization activities. For a list and a description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission.

I would now like to turn the call over to our President and CEO, Lonnel Coats.

Lonnel Coats

Thank you, Kim. Good morning, everyone, and thanks for joining us on the call. 2018 was marked by some meaningful milestones for Lexicon. We saw continued growth in XERMELO net sales, made significant progress towards advancing sotagliflozin to market, further developed our pipeline, while effectively managing our resources and spending. I will now elaborate on some of these key achievements. I'll then turn the call over to Alex, Pablo and Jeff for updates on our XERMELO business, pipeline developments and financial results, respectively.

Starting with XERMELO, we achieved U.S. net sales of $7.3 million in the fourth quarter of 2018 and $25 million for the full year of 2018. We saw a continued growth in our patient and prescriber base in the fourth quarter of 2018, and we expect continued growth in 2019. Our collaborator Ipsen continues to launch XERMELO outside the U.S. with more countries expected to come online this year. Our other project last year was to work with Sanofi to submit the regulatory filings for sotagliflozin in type 1 diabetes in the U.S. and in Europe, which was accomplished. The FDA set a PDUFA date of March 22, 2019, and an advisory committee meeting was held in January 2019, which Pablo will talk more about shortly. In Europe, I'm pleased to announce that sotagliflozin recently received a positive CHMP opinion in type 1 diabetes, which represents a significant step forward for the European type 1 diabetes community.

We look forward to the expected adoption of a CHMP positive opinion by the European Commission and an EU approval in the second quarter. In type 2 diabetes, in 2018, Sanofi continued to enroll patients in 11 Phase III studies to support global regulatory filings, completing enrollment in the nine core studies designed to support an initial approval, and also initiated 2 Phase III studies in China. We continue to believe that sotagliflozin SGLT1 mechanism offers the opportunity for differentiation based, in part, on the ability to benefit type 2 patients who have either Stage 3 or Stage 4 chronic kidney disease and for whom SGLT2 inhibitors provide declining efficacy or are contra-indicated. The first of the Phase III studies is expected to read out in the second quarter this year, with data from the remainder of the core studies expected throughout this year. We are eligible to receive meaningful milestone payments from Sanofi associated with the positive data readouts for certain Phase III studies in type 2 diabetes this year. Sanofi remains on track to submit regulatory filings for type 2 diabetes in the U.S. and in Europe in early 2020.

We continue to make disciplined investments in R&D, including clinical exploring and potential expansion of telotristat ethyl therapeutic utility based on preclinical and other data demonstrating the role of serotonin and tryptophan hydroxylase in biliary tract cancer. We expect initial cohort data from the Phase II biliary tract cancer study in 2020. For LX9211, we continue to make meaningful progress in the clinical development of this novel investigational compound for neuropathic pain.

We anticipate data from our ongoing Phase Ib study in the second half this year, and we are diligently planning for proof-of-concept studies. We have prudently managed our cash and ended 2018 with a strong balance sheet. We're expecting to transition to positive cash flow in our XERMELO carcinoid syndrome diarrhea business over the next 12 months, taking into account expected growth in net sales relative to commercialization and field medical costs for the brand. At the same time, we have wrapped up the major Phase III investments of the past several years and are nearing some substantial potential milestones for sotagliflozin in type 1 diabetes and type 2 diabetes. Overall, we believe we are well capitalized to execute on our business strategy, both with respect to commercialization and continued advancement of our R&D pipeline. 2019 will be an important year for us as we execute on our strategy to position the company for future growth and to build long-term sustainable value for our shareholders. Our priorities remain, growing our XERMELO franchise, establishing our leadership position in type 1 diabetes and advancing our clinical programs.

With that, I'll turn the call over to Alex to discuss our commercial performance. Alex?

Alexander Santini

Thanks, Lonnel. Good morning, everyone. For the full year 2018, we achieved U.S. XERMELO net sales of $25 million, up 66% over the prior year. Total U.S. net sales for XERMELO in the fourth quarter of 2018 were $7.3 million, up 33% over the prior year quarter and 16% from the third quarter of 2018. As Lonnel spoke to earlier, we saw a continued increase in our patient and prescriber base. Total paid subscriptions for the fourth quarter was 1,386, up approximately 13% quarter-over-quarter and 65% compared to the prior year quarter.

There were 144 new paid patient starts in the fourth quarter. The overall discontinuation rate remains in line with our expectations. We continue to see increased number of patient restarts after drug discontinuation, and we anticipate this trend to continue. The compliance rate remains around 80%. We continue to achieve very good access and reimbursement for XERMELO. The payer mix is increasingly weighted toward commercial payers followed by Medicare, which together account for a very high percentage of the business. Medicaid and other government payers, collectively, account for a very small percentage.

Outside the U.S., Ipsen continues to obtain approvals for XERMELO in other territories. In 2018, XERMELO received national reimbursement approval in Scotland, Denmark, Sweden, Greece, Luxembourg, Northern Ireland, Wales, Germany, Belgium and the Netherlands. We expect other European countries and pricing approvals to come online throughout this year, but continue to anticipate that the trajectory of the XERMELO launch in Europe will be a gradual one. In 2019, we expect total U.S. XERMELO net sales to grow in the range of 20% or greater year-over-year. We will continue to activate a broader prescriber base. Our experienced team continues to work to ensure that patients with carcinoid syndrome diarrhea have the opportunity to benefit from XERMELO. There remains significant opportunity to increase demand.

I will now the call over to Pablo, who will provide a pipeline update.

Pablo Lapuerta

Thanks, Alex. Let's start with our most advanced program, sotagliflozin in type 1 diabetes. I'm pleased to announce that on February 28, the EMA Committee for Medicinal Products for Human Use adopted a positive opinion recommending regulatory approval of sotagliflozin for use as an adjunct to insulin therapy to improve glycemic control. It is for adults with type 1 diabetes and a body mass index of at least 27 who have failed to achieve adequate glycemic control despite optimal insulin therapy. We are very pleased with this result. This positive opinion is a testament to our and Sanofi's dedication to this community. We look forward to the adoption of this CHMP positive opinion by the European Commission and the EU approval next quarter.

In the U.S., we and Sanofi met with the FDA advisory committee on January 17 to discuss the new drug application or NDA for sotagliflozin in type 1 diabetes. The committee voted 8 to 8 on the question of whether the overall benefits outweigh the risks and support approval of sotagliflozin as an adjunct to insulin to improve glycemic control in adults with type 1 diabetes. We at Sanofi are working closely with the FDA, as they complete their review of the NDA. We will not provide more detail on this matter given the stage of the regulatory process. We continue to expect a regulatory decision in the U.S. by March 22.

In type 2 diabetes, Sanofi is running a robust Phase III clinical development program centered on the opportunity for differentiation in patients with renal impairment. Diabetic patients with moderate to severe chronic kidney disease remain a significant [indiscernible] that comprises between 16% and 20% of the type 2 population. Since the declining renal function is a hallmark of type 2 diabetes, demonstrating benefits in this patient population could make sotagliflozin an attractive option for all type 2 diabetes patients. Evidence continues to build that SGLT2 inhibitors are becoming treatment of choice for patients with type 2 diabetes based on benefits on A1c, weight loss and blood pressure as well as improvements in cardiovascular outcomes and renal protection.

We are seeing organizations, such as the American Diabetes Association, the European Association for the Study of Diabetes and the American College of Cardiology, supporting the use of SGLT2 inhibitors in patients with type 2 diabetes. We look forward to initial data readouts from our core Phase III studies for sotagliflozin this year, starting in the second quarter. We anticipate that Sanofi will submit regulatory filings for type 2 diabetes in the U.S. and in Europe in early 2020. We look forward to potentially adding a second marketed drug to our portfolio.

In addition to sotagliflozin, we continue to explore telotristat ethyl's therapeutic utility outside of carcinoid syndrome diarrhea. We're excited to advance the drug into clinical development in biliary tract cancer. In this quarter, we have initiated a Phase II study of telotristat ethyl and gemcitabine plus cisplatin in treatment naïve patients with cholangiocarcinoma. Last, but not least, we are very excited about our LX9211 program in neuropathic pain. Recent Phase Ia data were consistent with the drug's preclinical profile and showed a favorable pharmacokinetic profile that supports once-daily dosing. We look forward to advancing LX9211 into proof-of-concept studies in neuropathic pain indications following completion of our ongoing Phase Ib study in healthy volunteers. We are committed to discovering, developing and commercializing therapies with the greatest value proposition for patients. We have made good progress, and we look forward to updating you in the future. Now I'd like to turn the call over to Jeff, who will provide financial highlights.

Jeffrey Wade

Thank you, Pablo. This morning, I will discuss key aspects of our fourth quarter and full year 2018 financials. And we'll introduce our financial guidance for 2019. More financial details can be found in our 10-K, which will be filed shortly. Now please refer to Slide 13 of our presentation. As indicated in our press release today, fourth quarter 2018 revenues totaled $17.1 million, down from $34 million for the prior year period, primarily due to lower revenues recognized under collaboration and license agreements. Full year 2018 revenues decreased to $63.2 million from $91.7 million, primarily due to timing of revenues recognized from clinical-trial activities under our alliance with Sanofi and reduced milestone payments from Ipsen, Partially offset by an increase in net product revenue. Net product revenues for full year 2018 included $25 million from net sales of XERMELO in the U.S. and $1.6 million from the sale of bulk tablets to Ipsen.

Cost of sales related to sales of XERMELO was $0.6 million and $0.5 million, respectively, for the fourth quarter of 2018 and 2017. Full year 2018 and 2017 cost of sales was $2.5 million and $1.9 million, respectively. Research and development expenses for the fourth quarter of 2018 decreased to $12.3 million from $46.3 million for the corresponding period in 2017, primarily due to decreases in our external clinical development costs related to sotagliflozin. Full year 2018 R&D expenses decreased to $100.2 million from $152.2 million, primarily due to lower external clinical development costs related to sotagliflozin and professional and consulting fees. During the financial close for fiscal year 2018, we determined that we had overaccrued $19 million of clinical development costs related to sotagliflozin in our R&D expenses over the last several years. The 2017 R&D expenses set forth in today's press release have been restated to reflect these adjustments.

Selling, general and administrative expenses for the fourth quarter of 2018 were $16.6 million compared to $16.1 million for the same in 2017. Full year 2018 SG&A expenses decreased to $63.8 million from $66.1 million, primarily due to lower salaries and benefits and decreased marketing costs. During 2017, Lexicon recognized an $8.7 million income tax benefit when the intangible assets relating to XERMELO were reclassified from indefinite-lived to finite-lived assets. The income tax benefit was remeasured to $12.7 million for full year 2017. During 2018, there was no income tax benefit.

Net loss for the fourth quarter of 2018 was $16.8 million or $0.16 per share compared to a net loss of $26.6 million or $0.25 per share in the corresponding prior year period. For the fourth quarter of 2018, net loss included noncash stock-based compensation expense of $2.8 million. For the fourth quarter of 2017, net loss included noncash stock-based compensation expense of $2.3 million.

Net loss for the full year 2018 was $120.5 million or $1.14 per share compared to a net loss of $123 million or $1.17 per share in 2017. For the full year 2018, net loss included noncash stock-based compensation expense of $11.7 million. For the full year 2017, net loss included noncash stock-based compensation expense of $9.5 million.

We ended 2018 with $160.1 million in cash and investments as compared to $310.8 million as of December 31, 2017. We foresee that our current cash position, together with expected revenues, will be sufficient to transition to positive cash flow on our XERMELO carcinoid syndrome diarrhea business within the next 12 months based on expected growth in net sales relative to commercialization and field medical costs for the brand. At the same time, we have wrapped up the major Phase III investments over the past several years and are nearing some potential - substantial potential milestones for sotagliflozin in type 1 diabetes and type 2 diabetes. Overall, we believe that we are well funded to operate our business, including our obligations associated with potential launch of sotagliflozin in type 1 diabetes, while continuing to invest in our early-stage pipeline and life-cycle management R&D for telotristat ethyl.

Now let's turn to our financial guidance for 2019. As Alex indicated, we anticipate U.S. XERMELO net sales to grow in the range of 20% or greater year-over-year. We expect collaboration revenues to be driven almost entirely by milestone payments under our alliances with Sanofi and Ipsen. In the latter regard, milestone payments from Ipsen may reach the mid-single-digit million range in 2019. As to the former, 2019 marks the beginning of a period of slightly more than 2 years in which we are eligible to receive up to $330 million in development and regulatory milestones, up to $220 million in regulatory milestone payments related to the first commercial sale following regulatory approval of sotagliflozin in type 1 diabetes and type 2 diabetes in the U.S. and in Europe and up to $110 million in development milestone payments relating to the results of Phase III clinical trials of sotagliflozin in type 2 diabetes.

We will also be entitled to receive an additional $100 million in development milestones upon a successful result from 1 of 2 outcome studies, which is not expected for a few years yet. Finally, our 2019 revenues will include royalties, for which we are not providing specific guidance, encompassing royalties on Ipsen sales of XERMELO outside of the U.S. and subject to approval on Sanofi's sales of sotagliflozin, both within and outside of the U.S. Now let's turn to expected expenses. We anticipate operating expenses, inclusive of the U.S. sotagliflozin launch to be in the range of $150 million to $170 million, including R&D expenses in the range of $65 million to $75 million and SG&A expenses in the range of $85 million to $95 million.

Noncash expenses are expected to be approximately $19 million of this total, including $14 million in stock-based compensation and $5 million in depreciation and amortization. Exclusive of the U.S. sotagliflozin launch, we would expect our operating expenses to be in the range of $120 million to $140 million, including R&D expenses in the range of $60 million to $70 million and SG&A expenses to be in the range of $60 million to $70 million. Noncash expenses are expected to be approximately $17 million of this total, including $12 million in stock-based compensation and $5 million in depreciation and amortization.

We will provide updates to our financial guidance in subsequent calls based on resulting regulatory interactions.

I will now turn the call back to Lonnel.

Lonnel Coats

Thank you, Jeff. We entered 2019 with a well-defined strategy to position the company for future growth and to build long-term sustainable value for shareholders. Our main priorities remain centered around driving long-term value through continued execution on the XERMELO commercialization and making sotagliflozin available as quickly as possible to patients with type 1 diabetes. XERMELO remains a significant franchise for us, and we're extremely excited to clinically explore the use of telotristat ethyl in an additional therapeutic indication where the role of serotonin inhibition has shown preclinical promise.

In parallel, we and Sanofi continue to work with the FDA as it completes its review of the NDA filing. In Europe, we look forward to the European Commission's regulatory decision for sotagliflozin in type 1 diabetes next quarter. In type 2 diabetes, we anticipate completion of the core Phase III studies for sotagliflozin this year followed by regulatory filings in Europe and in the U.S. in early 2020.

Lastly, we continue to advance our early-stage pipeline product candidates in areas we believe will create long-term value for the company. Underlining each of our development programs is a clear mission to create novel, life-changing therapies fueled by innovative science, talent and our core expertise so that we can make meaningful difference in patients' lives.

With that, I will now ask the operator to begin our Q&A session. Please note, that we will not have any further comment on type 1 diabetes regulatory matters, but we'll be happy to address other questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from the line of Liana Moussatos of Wedbush.

Liana Moussatos

You've mentioned milestones from type 2 diabetes, Phase III trial data. Does the first Phase III data in Q2 trigger milestone? Or do we have to wait for subsequent trials to read out? And can you talk about cash runway? And for sotagliflozin, when does the composition of matter IP expire?

Lonnel Coats

Of course, great questions, Liana. Jeff, I'll turn this over to you.

Jeffrey Wade

Okay. So we haven't specified which studies the milestones are tied to, but we are looking forward to data that's coming in the relatively tight time frame, starting in second quarter going through the third and fourth quarter. And we believe our cash runway is - actually, we believe - maybe I should approach this indifferently. We believe that we're quite well capitalized for the business that's ahead of us, both in terms of what we have cash on hand in terms of the fact that our R&D spend is - will be declining quite significantly in next year and also because of the fact that we have a number milestones tied together. So we feel like we are well capitalized for the business that's ahead of us in pretty much in any scenario and that, that allows us to continue to execute against our strategy, both in terms of the potential launch of sotagliflozin in type 1 diabetes, in terms of continued execution on XERMELO and in terms of continued investment in our early-stage pipeline.

Lonnel Coats

The patent?

Jeffrey Wade

Oh, the patent, sorry. Patent term [indiscernible] late 2020s before patent term extension. We do expect to have patent term extension that will take it out beyond that into the 2030s.

Operator

Our next question comes from the line of Yigal Nochomovitz of Citi.

Samantha Semenkow

This is Samantha on for Yigal. So one of the discussions that came out of the outcome meeting was the potential need for a DKA monitoring study either [indiscernible] approval or potentially post-marketing. I'm curious have you any thoughts to that and what the trial would look like in just broadly or even in terms of enrollment requirements, endpoint, duration. Any details you could provide there for your thoughts would be great.

Lonnel Coats

That's a great question. No, we can't provide any detail as we already stated we're actively engaged in the discussions with the regulatory agency. So we're going to abstain from answering any questions around that.

Samantha Semenkow

Understandable. Thought I'd ask, all the same. So since the CHMP issued a positive opinion, is your impression that after speaking with some European physicians that they are less concerned about the DKA risk than some other U.S. colleagues?

Lonnel Coats

Well, I'll give Dr. Lapuerta an opportunity to answer that question.

Pablo Lapuerta

DKA is the same condition in the U.S. and Europe and is viewed the same way.

Samantha Semenkow

Okay. And then can you maybe just give a little bit more detail about what the cadence of the data releases we should expect for the T2D trials. Is Sanofi going to give these by press release? Or are they going to be released in - together, multiple trials at the same time? Or is the first time I'm going to see this data potentially at a medical meeting?

Lonnel Coats

I'll turn it over to Jeff.

Jeffrey Wade

We expect to announce the level of results that will be required for us to announce from a materiality point of view, but we do expect and we are intending to try to preserve the ability to publish at medical meetings, and so a lot of the details will probably be published at medical meetings. But we will be able to see as we get through the clinical trials have we succeeded on those clinical trials as we go along.

Operator

Our next question comes from the line of Jessica Fye of JPMorgan.

Jessica Fye

I was hoping we could talk a little bit about the commercial preparations you've got underway in anticipation of the launch of sotagliflozin in the U.S. How much of this is going to be triggered by an eventual approval versus stuff you're getting underway now? And I was also just hoping you could help me understand the co-promote a little bit better. Like does the $25 million delta in your SG&A guidance, with and without sotagliflozin launching, reflect 40% of the commercialization cost for type 1? Because the filings talk about having a significant role, but $25 million doesn't seem like all that much in the scheme of big pharma launches. So any kind of help you could or color you could provide there would be great.

Lonnel Coats

It's a great question, Jessica. I'll turn it over to Jeff.

Jeffrey Wade

So I guess, what I would say, Jess, is we have been making investments in preparation for commercialization. There will obviously be more expenses associated with the launch, but we have been - over the course of 2018 and the first quarter 2019, we've been making investments to be prepared. So I will - I'm somewhat limited in what I can say in terms of the details of the co-promotion arrangement. I would say that the focus of our co-promotion arrangement is on specialists in type 1 diabetes. And so it is somewhat circumscribed as to what we are participating in, but we have continued to make investments. And the delta that you see there is what the incremental investment would be - that we would expect over the course of this year associated with the launch. That's our financial obligation associated with that.

Lonnel Coats

And just we've been making - to Jeff's point, we made quite a bit of an investment this - in 2018. We've built quite a good infrastructure for ourselves to have the capability to launch into the type 1 community with specialists. We certainly have no intent from a Lexicon point of view to go beyond specialists. And then the second thing I would say is our collaborator Sanofi has been well positioned on how it is ready to launch the compound upon approval. So we are pretty much in a position of readiness, and what you see in the expenses is to just point - is to incremental cost to launch into market at the point of approval.

Jessica Fye

Okay. So have you been making key hires, like MSLs and, at least, sales reps in the kind of numbers that you would need to target specialists ahead of time?

Lonnel Coats

Yes, so we have the core - at Lexicon, for our side, we already have the core. We have the management leadership locked and ready, and it's all a matter of timing now to bring in the next layer to support that core. On the Sanofi side, I think it's more of an allocation. They're already in diabetes. And so it's a matter of tweaking how they're going to allocate their sales force upon approval. So we can be efficiently and quickly deployed into market upon approval.

Jessica Fye

Okay. Got it. And then, actually, just on that point, how quickly following an approval do you think this product could be in a pharmacy as kind of ready to go?

Lonnel Coats

That's a great question. And it's something we've been working with Sanofi on. All that's going to depend on label and what may come out of the discussions with the agency will determine how quickly we'll be able to get into market. But our intent always is to get in as quickly as possible. Lexicon has its standards, and Sanofi its standards, but I think, ultimately, both of our objectives is to get in as quickly as possible. So I can't give you a time line because our partners have not expressed that publicly, but the objective is to get in as soon as possible.

Jessica Fye

Okay. Great. And then just one on type 2. I think in prepared remarks, you gave a range for the proportion of type 2 diabetics that have CKD in the, I think, it was like mid- to high teens, up to 20%. What proportion of type 2 patients have Stage 3 or Stage 4 CKD?

Lonnel Coats

Jeff, I think we've disclosed that before.

Jeffrey Wade

Yes, it's basically 1% to 2%, in the Stage 4 and the balance of that is stage 4 chronic kidney disease.

Lonnel Coats

Yes.

Operator

[Operator Instructions]. Our next question comes from the line of Alan Carr of Needham.

Alan Carr

Well, can you comment a bit on your thoughts on the CHMP decision in the BMI of 27?

Lonnel Coats

Thanks, Alan. I'll turn that question over to Dr. Lapuerta.

Pablo Lapuerta

Well, the patients with a BMI greater than 27, they have a greater cardiovascular risk. They tend to be on higher insulin doses. They tend to a little bit older. And the benefit risk profile is considered generally a bit more favorable in this population because the weight loss is more important to them since they're already overweight. And to just push insulin doses even more in this population would only exacerbate the weight gain, which is a cardiovascular risk factor in this population. So that's the - that's really the kind of the clinical appreciation for the BMI greater than or equal to 27 being a consideration in the CHMP opinion.

Operator

Our next question comes from the line of Stephen Willey of Stifel.

Stephen Willey

Maybe just a follow-up on that question. I know - I think it was inTandem2 that median BMI in the patient population was, I believe, about 28, but just curious as to kind of what proportion of the type 1 population in Europe you believe this BMI greater than 27 captures.

Pablo Lapuerta

We don't have exact numbers, and it's difficult to get exact numbers because most of the epidemiology studies really report BMI greater than 30 and not BMI greater than 27. There are a few that are reporting BMI greater than 25, but if you look at how weight is changing over time, you look at trends in Europe, perhaps some of the best data are really from inTandem2. InTandem2 is such a broad - with such a broad collection of sites and countries that its demographics really reflect well what's happening with type 1 diabetes in Europe. And in inTandem2, they would be somewhere around 40% or so of the population.

Stephen Willey

Okay. Just going back to the cadence of type 2 data disclosures. I know - I think it was mentioned and I know it's in clinical trials and a number of these studies are going to complete during the first half of this year. I guess, you talked about, perhaps, Sanofi's preference for disclosure at a medical meeting. I believe in their most recent earnings presentation, they were referencing a 4Q '19 type 2 data disclosure, which I guess is kind of past the European diabetes meeting, which is in late September. So just kind of wondering if you can kind of help us triangulate what Sanofi might be guiding to here just with respect to data disclosure.

Jeffrey Wade

I can't really comment on what they - happened to their data disclosure. [Indiscernible] the EASD is like right at the cusp of the end of the third quarter and beginning of fourth quarter. I do expect that some of the data, the medical meetings will probably be - some of them will probably end up being next year in terms of the details. The expectation from our perspective - and I would say that for the most part that the clinical trials will be in the second half of the year rather than in the second quarter, just in terms of timing. But for the most part, we're going to - we'll be able to provide some color as to whether we have achieved the endpoint and - but not a heaped amount of detail in terms of the results unless it's something that's - that we need to disclose from materiality perspective.

Stephen Willey

Understood. Can you maybe just provide a little bit of color around what this Phase Ib trial for 9211 will look like, just in terms of patient size, duration of treatment, et cetera?

Lonnel Coats

Sure, I'll turn that over to Dr. Tyle.

Praveen Tyle

Steve, Praveen here. Steve, Phase 1b trial is going to be multiple ascending dose, and it will basically have several dose cohorts in parallel to what we did in Phase Ia with single ascending dose. We will monitor these patients over a period of 4 to 6 weeks, and we will basically study a significant amount of PK and report by the end of this year the results.

Stephen Willey

Got it. Just curious, I guess, in the list of milestones for '19, there was no mention of the selective SGLT1, 2761. Is there any update to provide there with respect to the state of that compound?

Lonnel Coats

Yes, Steve, as we - I think we stated on one of the other calls that one of the things we are looking to get results on is one of the trials where there is sotagliflozin on DPP-4 with a background of metformin versus Jardiance on the background of a DPP-4. And depending on what that outcome looks like, it gives us greater information as to how, perhaps, we want to advance 2761 into the clinic based on that data. So once we have that, then we'll make more critical datas on how we're going to advance 2761 because we see it more as an opportunity for - to be in line extension or life-cycle management opportunity for the franchise.

Stephen Willey

Got it. And then just one last quick question, sorry. If - can you just remind us if any of the outstanding debt, either the term loan or the convertible, have any kind of covenants with respect to minimal cash requirements?

Jeffrey Wade

There are no covenants with respect to cash requirements.

Operator

At this time, there appears to be no further questions. I will now turn the call back over to Mr. Coats for his closing remarks.

Lonnel Coats

Well, thank you. One of the things that I generally want to say, based on the questions that are asked, I think Sanofi has done a - from my perspective, they have done a fantastic job at developing sotagliflozin, thus far, for type 2 diabetes. I think the speed by which they have operated to enroll patients and start moving these trials to completion has been quite remarkable. So to Jeff's point, our confidence about how things are going to call out this year is high because of how well they have executed. So that's just a general comment I wanted to make.

Overall, I would say we entered into 2019 with a well-defined strategy to position the company for future growth and to build long-term sustainable value for our shareholders. And as I said before, our priorities remain centered around driving long-term value through continued execution of the XERMELO commercialization and making sotagliflozin available as quickly as possible for patients with type 1 diabetes. Those things are at the core of what we will continue to do in 2019.

It's also important to say that we're very proud that we may have the potential to have a second compound in the market, which really is a testament to the ability of this company to discover and to develop innovative therapies that allow us to build on the opportunity to grow our company and to provide substantial long-term value for our shareholders.

I want to thank our employees for doing such an incredible job of putting us in this position, and look forward to future communications with all of you. Thank you.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect, and have a wonderful day.