Lexicon Pharmaceuticals(LXRX) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q2 2020 decreased to $9.2 million from $9.7 million in Q2 2019, primarily due to the absence of bulk tablet sales of XERMELO and a decrease in collaborative revenues, partially offset by an increase in U.S. net product sales [12] - U.S. net sales of XERMELO reached $9 million in Q2 2020, up 21% from the same period in 2019 [9] - Net loss for Q2 2020 was $69.1 million, or $0.65 per share, compared to a net loss of $23 million, or $0.22 per share, in Q2 2019 [13] - Cash and short-term investments at the end of Q2 2020 were approximately $202 million, down from $271.7 million as of December 31, 2019 [13] Business Line Data and Key Metrics Changes - Research and development expenses for Q2 2020 increased to $57.3 million from $12.6 million in Q2 2019, primarily due to increased external clinical development costs related to sotagliflozin [12] - Selling, general and administrative expenses for Q2 2020 were $14.1 million, slightly down from $14.3 million in Q2 2019 [13] Market Data and Key Metrics Changes - The neuropathic pain market reached nearly $6 billion globally last year, with a significant unmet need for effective treatments [16] - Diabetic peripheral neuropathic pain (DPNP) accounts for about 20% of drug sales for neuropathic pain, with an expected annual growth rate of nearly 4% driven by the increase in diabetes prevalence [17] Company Strategy and Development Direction - The company announced an agreement to sell XERMELO and associated assets to TerSera for up to $224 million, allowing a realignment around research and development assets, particularly focusing on the LX9211 program [4][10] - The company aims to build a franchise around LX9211, which targets neuropathic pain, and plans to initiate additional Phase 2 studies in other areas of neuropathic pain [27][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of LX9211, highlighting its unique mechanism of action and the significant unmet need in the neuropathic pain market [16][27] - The company expects to manage its cash effectively to support the Phase 2 development of LX9211 and other R&D projects beyond 2021 [69] Other Important Information - The company is revising its 2020 operating and R&D expense guidance, reducing total operating expenses to a range of $230 million to $250 million [14] - Sanofi committed to pay Lexicon $260 million under a settlement agreement, with the final installment of $26 million due in September [15] Q&A Session Summary Question: Confirmation on term loan repayment related to XERMELO sale - Management confirmed that the repayment of the term loan is intended as part of the transaction to reduce debt, with a modest prepayment penalty expected [32][33] Question: Costs and timelines for LX9211 trials - The first study for LX9211 is expected to cost a little over $10 million, with results anticipated late next year [34][35] Question: Cash inflows and outflows - Management indicated that R&D spending will decrease significantly due to winding down the sotagliflozin program, focusing primarily on LX9211 [42] Question: Status of Type 1 diabetes program - Management confirmed that they are not giving up on the Type 1 diabetes program and plan to reengage with the FDA [43] Question: TerSera transaction and future decisions - All decisions regarding the development of XERMELO will be made by TerSera post-transaction [50][52] Question: LX9211 data expectations - Final results for the Phase 2 DPNP study are expected toward the end of next year, with the study well-powered due to its size [61][62] Question: Treatment landscape for DPNP - Most treatments are focused on moderate to severe patients, with mild cases often going untreated [65]