I'm Andrew Tsai, Senior Biotech Analyst at Jefferies. Thanks for joining me today, and it's my pleasure to have the Lexicon team with me. To my direct left is Craig Granowitz, CMO, and to his left, Mike Exton, CEO. Welcome, both of you.

Thanks, Andrew.

So help us level set what Lexicon is working on, what you're trying to achieve, and the milestones over the next 18 months could be helpful.

Yeah, great. Thanks, Andrew. and thanks Jeffries for the invite. Look, we've come here really at a very important time for Lexicon's history. You know, over the last couple of years, we've really taken a determined effort to become a focused cardiometabolic company and really put heavy attention into our pipeline and we're here on the precipice today with a number of very significant developments for us. So I'd like to take you through those and we can deep dive into those a little bit more. First and foremost, hypertrophic cardiomyopathy is a topic that has really become a focus of investor and physician attention over the last couple of years and has increased investment and data comes with HCM. We've talked about our Sonata phase three trial that's ongoing and we've always guided everyone that we would be completely enrolled by mid-year. And in fact, we informed study sites that on the 19th of June, so in a couple of weeks, screening will stop. And so really, we are right on track to complete the enrolment by mid-year, which is a very important time for us, as we have this 500-patient Phase III trial in both obstructive and non-obstructive HCM. And that puts us squarely in our commitment to have data in Q1 of next year. So really exciting time for us on that one, Andrew. So with that, we also have guided the sodogliflozin under the brand names in Quista. We will resubmit to the FDA for glycemic control in type 1 diabetes by mid-year, and we're getting well prepared to make that resubmission in our collaboration with the Steno group out of Denmark where that new prospective data is coming from, on which the FDA, over the last couple of years, through our conversations with them, has always requested. And we've been able to really collaborate with the DDLO division of the FDA to determine that that data, in both the exposure and rates of DKA that we would get from that study, would be acceptable to the FDA as part of that submission. And indeed, the good news with that is because it's an open-label study, we get the data in real time, both in exposure and DKA rates, and we can, we've guided publicly that in both of those cases they're well in line with what our expectation is for a successful resubmission. So, as I mentioned, we'll resubmit that soon and we'll likely disclose some more colour on that data that we're seeing and give the street and everyone a bit more visibility into what we're seeing from that particular data set. So that's really exciting for us as well. Thirdly, for pilovapitin in diabetic peripheral neuropathic pain, as we've spoken about before, we had a successful end of Phase 2 meeting and received the minutes earlier this year that have guided us towards being able to commit to the Phase 3 program with no addiction potential, which has been recognised by the FDA. It's very important in neuropathic pain where oral opioids still take up about 20% of the treatment regime, that bringing new non-opioid oral medicines to the market is an important aspect for the FDA, and they've recognised here that pilovapidin has no addiction potential, so it's non-opioid, obviously. So we are currently working with potential partners on, you know, a model that will ensure that that additional investment that doesn't come from our balance sheet right now, we're not using money on our balance sheet for that particular set of studies, will allow us to not only continue the phase three program under a potentially separate vehicle, but But in addition, you know, really have a significant stake in the outcomes post phase three, which is really valued significantly by strategics as we receive feedback along the way. And then finally, really an exciting time for LX9851, for which we sold the license to Nova Nordisk last March. This is a novel target in obesity, the only drug of its kind that is really being developed It looked at a very fast pace by Novo Nordisk. It went into clinical trials earlier this year. We received two $10 million milestone payments from the IND in the fifth patient in the SAD study, and expect a further $10 million milestone payment later this year as it goes into the multiple ascending dose. So, in fact, just give a plug, it actually featured on the page four of their Q1 earnings report earlier this year, which just really shows how enthused Novonautisk is by this particular drug and the mechanism. So, you know, if you sort of fast forward into Q1 of next year, you can paint the picture of Lexicon being a completely transformed company with a readout in HCM with a launch in type 1 diabetes moving into phase 3 for diabetic neuropathy and LX9851 in the hands of Novonautisk moving into phase 2. so really exciting time for the company Andrew great thank you very much and very helpful and so maybe starting with HCM congratulations on completing enrollment very soon so big picture how would you position Soda Gliflozin here relative to CMIs in both obstructive and non-obstructive I

appreciate non-obstructive maybe there's only one CMI potentially in the market soon. So help us frame the positioning.

Well, look, one of, we've talked about in our company, we have what we've coined a lead to succeed strategy, and that is that we want to bring our medicines as either first in class or only in class to particular indications. And, you know, as we mentioned, HCM has really evolved pretty rapidly because there's been attention from a number of companies, both approved agents in obstructive disease and agents that are being investigated and all of these products really target the sarcomere. CMIs and others that are being developed really focus on that interplay between actin and myosin. The difference with soda obviously being a dual SGLT1 and 2 inhibitor is that it's focusing directly on cardiac energetics on the myocardium and we're going to be playing alone in that space which is important not only from a commercial perspective but also from an ability to be used in combination with other therapies as well. From where we see soda potentially being used in obstructive and non-obstructive disease I think the benefit that soda obviously has is it's an oral once a day medicine with a known safety profile And so, so long as the KCCQ benefit is robust, that it makes a natural first-line agent, certainly in non-obstructive disease, where currently there are either no approved treatments and we've obviously seen the outcome of acacia, but in addition, also in obstructive disease to be used in combination or alone with CMI.

Great. And I'd like to add a couple points on that is that we believe that sotaglifosin, only sotaglifosin is a dual inhibitor of SGLT1 and 2, are acting really in three subtype independent ways. The first is we're acting as a cardiorenal agent like an SGLT2 inhibitor, which reduces all of the preload issues and the fluid overload that occurs with all patients with heart failure regardless of the genesis of that heart failure. The second and unique to soda is it's acting primarily on cardiac energetics, unlike the CMIs, and the SGLT2s are not acting on the myocardium the same way because there are no SGLT2 receptors on the myocardium. The third, which again is unique really to soda and soda only, is there is a lot of data supporting the thromboembolic benefits of sodaglifosin and only sodaglifosin because patients that have HCM have very high rates potentially of thromboembolic events between both high rates of AFib and very large left atria. So we believe that the risk profile of this agent, we're acting across three very different areas, and in areas that are separate and distinct from the SGLT2-only inhibitors and from the myosin inhibitors.

I see. So cardiorenal, myocardium, MACE benefits enabled by the SGLT1-2 mechanism, whereas other SGLTs only hit two. SGLT2, correct. And so that explains it, and your confidence. And so are there other, so the question is, what have you shown in other studies, indications, for instance, to prove this?

So again, we have claims and an indicated use for sodoglifosin under the brand name in PEFA for heart failure. Those studies also include reductions in stroke and MI. We show a 30% reduction in stroke NMI and the SGLT2 inhibitors do not show that benefit in their heart failure trials. And there's a significant amount of both secondary analyses of our heart failure program in patients that have left ventricular hypertrophy without hypertension showing a 50% reduction in heart failure events and a 50% reduction in MACE events, as well as a lot of mechanistic data now, both animal, in vitro, and human explant data across all of these range of benefits, including the cardiac energetic effects.

So that's why other SGLTs have not pursued HCM, whereas you can, basically.

Well, I'm not going to say what other companies have chosen to do or not do. I can only focus on what we're doing and why we're confident in our dual mechanism on the benefits.

And so in this phase three trial that reads out in Q1 of 2027, I think it's a 26-week study, over 500 patients. How did you power the study? What is statistically significant?

You want to take that, Greg?

So we powered that based on what the feedback we had from cardiologists and experts in HCM, and that's going to be similar to what the CMIs have powered their trials at around a five-point difference in KCCQ score. And the variance that we're assuming in that is similar to what the CMIs have either powered for or have achieved in their clinical trials.

I see. And so success is driven by the overall population of both obstructive and non-obstructive? That's correct. Okay. And so would you expect any kind of efficacy differential between the two subgroups?

You know, again, based on our mechanism of action, we think it's going to be relatively independent of whether they have obstructive or non-obstructive disease, because obstructive and non-obstructive disease have the same basic underlying physiologic problem. The obstructive group just has an additional anatomical issue of blood outflow, but again, even within the HCM group, there's a continuum of outflow tract obstructions, and there's not a great correlation of symptomatology necessarily in magnitude of the outflow tract obstruction based on gradient.

And the mix of patients, obstructive versus non-obstructive, is it 50-50? Is that how you've tried to stratify? What is the mix going to be?

Yeah, it's not capped. And so, you know, patients get enrolled as they get enrolled, I think. we can expect that there'll be more non-obstructive simply because there is an approved agent at the time of the trial in obstructive disease and so, you know, there's obviously at that time that we conducted enrolment for the majority of it there's a much larger need in non-obstructive disease so we are yet to see what the exact balance is going to be like like we'll see that at the end of enrollment. We will present these baseline demographics as we come to a medical meeting so that people can get an understanding of what that balance looks like.

Good, and so in terms of the regulatory pathway, you have confirmation from the FDA that one phase three is sufficient for both subpopulations or just a label for HCM broadly, and that KCCQ, your primary endpoint, is sufficient to support an approval. You don't mean any co-primary endpoints, to be clear? That's correct. Okay, very good. And so should this be approved, how do we think about price exactly? Because when we're talking Soda Glifosin, MPEFA is technically approved here as the brand. So how do you...

No, it's a good question, and obviously we continue to do that work, and you have a situation where mavercampton and africampton are priced at a high specialty tier level and in PEFA at a retail therapy level. And we'll continue to do that work with HCM and there are a number of ways that we will work to differentially price in hypertrophic cardiomyopathy and the proof point really is as we move forward with our Inquista submission, because that's obviously further progressed, where we have a completely novel NDA, NDC, and a brand name and packaging, et cetera, under the brand names Inquista, and our engagement with payers have been for a long time that we can price this at a premium to where we're at within PEFA, completely separate populations, separate need, and that will be the proof point that we will rinse and repeat with HCM, albeit Zinqvista will remain likely still at a sort of a retail-based price because of the prevalence of the population. In HCM it's a different story, so that will be different, but the principles remain the Got it.

Yes.

And so, do you intend to commercialise HCM yourselves, and the same question applies to type 1 diabetes as well yeah great great question so we have prioritized our efforts squarely on HCM I think as a company we see that really is the top of our pyramid the pointy end so to speak of this cardiometabolic strategy for the company because clearly a huge unmet need but also the possibility of commercializing ourselves in fact so we haven't made a determination and we won't make a determination of that yet we need to really look at the data once we have it but we are starting to prepare in fact for that possibility we recently hired a number of MSLs who will start to educate physicians around the benefit of this dual SGLT 1 and 2 inhibition which is really the leading edge of it. We are bringing a couple of commercial people on from an access and marketing perspective. So we're doing the pre-launch preparation so that we can make that determination. So type 1 diabetes is a different situation and, you know, we are engaged in thinking about partnerships here. I think that there's a number of companies that are pretty deep into type 1 diabetes, Unlike in HCM where there's, you know, really a couple of companies in type 1 diabetes, there's device and therapeutics companies that have a lot of expertise. And that may allow us to really focus all of our resources into a potential HCM launch post Q1 27. So more to come on that and, yeah, we'll keep you posted in the not too distant future.

Great. And then shifting then to type 1 diabetes and Quista, long story short, it's encouraging to hear you with the access to the open label data in real time around DKA safety rates. It sounds like it's within the bounds. So what is actually the threshold of an acceptable DKA threshold or exposure, to be clear?

Yeah, so the end of review letter that came out from the FDA, which was made public as part of that divulgence of CRL documents, I think laid it out pretty clearly, and the dialogue we've had with FDA has been consistent with that, is that they wanted to see a rate of diabetic ketoacidosis in a prospective set of patients that was at or below that which was seen in the in tandem program, which was around three and a half cases of diabetic ketoacidosis per 100 patient years so I think you can see based on that relatively low rate that's why we needed a large sample set and a relatively long period of time to get that cumulative exposure to establish a point estimate and confidence interval around what is a reasonably confident rate of DKA in a prospective data set I see and just to give us a sense steno is a 2,000 patients but maybe a proportion of that are sodagliflozin patients so how many patients yeah that's right Andrew so the trial is a treatment algorithm study so it compares an enhanced treatment algorithm in a group of patients that depending upon their baseline characteristics are going to be allocated after optimization of their a1c and their lipids to either sodaglifosin semaglutide or finarenone based on baseline characteristics we believe that that there'll be at least a third of those patients or more that will be on sodaglifosin. So that's 1,000 of the patients. The other 1,000 of the patients is standard of care with optimization of lipids and A1C, and it's a five-year trial looking at rates of MACE. So we actually have two trials that we're supporting looking at MACE outcomes, one in type 1 diabetes that we're using for steno, and another with a company called Cleely. It's an imaging company looking at those, also looking at plaque progression and stroke, which again goes back to the unique attributes of sodaglifosin acting on plaque and stroke and MI. So overall, there'll probably be around 300 to 400 patients on SOTA in the steno trial, and they will be treated ultimately out to as long as five years.

I see. Great. And so sounds like you're on track to submit almost any day now if you're saying mid 2026 and so it's a six-month potential review is your expectation that's correct because it's a resubmission of new clinical data after a CRL okay and then help us frame actually the market opportunity here how many patients per year and I yeah yeah so there's there's a million patients with type 1 diabetes in the US this is we're focusing very much our efforts on the U.S.

Outside the U.S. we've licensed sodagliflozin to Vietras outside of the U.S. and Europe. So they are focused at the moment on heart failure but have the optionality to also launch it in type 1 diabetes. You know, I think the market opportunity is large, both from a patient number, but again, this will be, you have to remember in type 1 diabetes as opposed to type 2 diabetes they only have one thing to treat their hyperglycemia and that's insulin and type 2 of course there are there are many different compounds and so this will be the only product that is being promoted for the control of hyperglycemia in in type 1 diabetes so you know we're doing that forecasting work at the moment but it's a significant opportunity yeah I'll just frame just from a medical standpoint,

only about 20% of patients are at their A1c goal in type 1 diabetes, despite pumps, despite all of the technology, about 20% of patients are at their A1c goal. More importantly, the patient well-being and long-term benefit, though, is probably a concept called time and range, where they're within a certain glucose boundary. The ideal is around 70 to 80% time and range of a day, and the average patient today is no more than about 50 to 60%. So in this regard, Zincuista would be the first and only agent ever indicated beyond insulin for glycemic management in type 1. So we think that is going to be seen very favorably. We know that already from the patient community and the physician community about the desire and want for this drug.

Yeah, if you don't mind me piling on to that as well there, Andrew, because if you remember at the ADCOM that we had towards the end of 24, there was an open public forum, as there is in all ADCOMs, and there were over 140 submissions from the community, and they were unanimously supportive of Sotloplozin and Quista being approved in type 1 diabetes. I've been in this game a long time. I haven't seen and I've had many ad comms as many submissions or the uniformity of response. And really that's been the case from the community, which is unsurprising, again, given the sort of relatively poor options that folks with T1D have for glycemic control. And so, you know, really with that in mind, we are very much focused on bringing this to market. And one of the benefits that Zinqvista has upon launch is, in fact, the unaided branded awareness. If you're a commercial person, you always want, what's the unaided branded awareness when I launch? It's very high. Why is that? Because we've been talking about it now for a while. and so you know we would expect that once we do get the approval in fact the the launch uptake is very promising okay yeah in terms of the IP because this applies to both HCM I think and type 1 diabetes yeah what's the current IP and should you be approved is there a way a way to actually to extend the IP on an Yeah, so the composition of matter is 2033 for the molecule. There's a number of different options specific to HCM. The first being, you know, there's, of course, if we explore this, there's the opportunity for orphan designation, which brings some regulatory coverage. But importantly, we have built and continue to build a suite of IP, particularly around left ventricular hypertrophy and HCM, as more and more data and the richness of this differentiation of SGLT1 comes to bear. And so, you know, we will continue to support that with further IP that has the potential to extend beyond 2040.

Okay. And so then, so two, actually three late-stage programs, there's pain too. And so non-dilutive capital, in the meantime, you're getting some from the Novo partnership for your obesity asset. Any colour, how much milestones actually you could be receiving in the next, you know, 2026, 2027 timeframe?

Yeah, so as you know, and we mentioned up front, we've had two tranches of $10 million from Novo because of the submission of the IND and the commencement of the single ascending We expect another $10 million from the commencement of the multiple ascending dose later this Novo has indicated that they'll move directly into phase two when satisfaction from both of those studies, and that would mean another $60 million in the first part of 2027. We need to keep in mind, additionally, that Vietris is selling sodicoflozin in the UAE and expects a number of further approvals this year, and while not necessarily of the magnitude of $60 million from NOVO, that will also contribute to revenue over the course of 26 and increasingly so in 27 and beyond, so non-dilutive capital continues to flow into the company.

And then lastly, on the pain program, you're phase three ready. Sounds like you're exploring or entertaining some ways to fund this program.

So, you know, I think what we have learned over the time and what we've been able to do has helped us form our sort of perspective on how to take this forward. I think the first thing, we were very much focused on partnering this with a strategic early on because at that stage we were thinking we would use that non-dilutive capital, an upfront payment from a partnership, to fund HCM and well beyond the data from HCM. So that was very much our focus. Now we had the opportunity and were somewhat opportunistic like that to raise close to $100 million earlier this year. That was fantastic, obviously, for the balance sheet, but also allowed us to reformulate our debt provisions and in fact switch from switch lenders which afforded us a lot more flexibility and afforded us the potential for additional debt if we so so desire and in addition to that delayed our principal payment by a good 12 months out until November of 2027 and potentially even beyond that so that gives us a lot more flexibility from a cash runway and so that negated the if if you like, somewhat urgency to partner it. And at the same time, we learned that strategics in the pain space are willing to pay a significant increase, if you like, a significant premium on a phase three data set, at least to have phase three data. I think it's an area where not many strategics have a lot of clinical expertise, and so, So, you know, they're willing to really up the ante in what that deal could look like. And that means that we would be doing both Lexicon and our shareholders a disservice in, if you like, going for second best. And so we have the opportunity, we think, you know, maybe a special purpose vehicle or other types of programs to get capital that's not on our balance sheet right now. I want to make sure everyone's clear on that. We're not using any of our current capital to fund this program, but to do the phase three program, which is about $200 million, a little over, and if we deliver significant phase three data, you can imagine on a drug that has a minimum of $4 or $5 billion peak sales potential, that the return on invested capital here is very significant. And so I think from those perspectives, it really behoves us to be very thoughtful and take that forward in a way that best creates value for the company.

Makes a lot of sense. Well, I think that's all the time we have. So I appreciate you sharing all the updates, and then best of luck on your milestones coming up. Thanks so much, Andrew. Thank you, everyone.