Lexicon Pharmaceuticals, Inc. 2026 Q2 Earnings Call

Good morning and welcome to our second quarter 2026 earnings call. Joining me today are Dr. Mike Exton, Lexicon's Chief Executive Officer and Director, Dr. Craig Granowitz, Senior Vice President and Chief Medical Officer, and Scott Coiante, Senior Vice President and Chief Financial Officer. This morning, Lexicon issued a press release announcing our financial results for the second quarter of 2026, 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, is also available on our website. During this call, we will review the information provided in our release, provide a corporate update, 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, efficacy, clinical development, regulatory status, and therapeutic and commercial potential of sotagliflozin, pilavapadin, LX9851, and our other drug programs, as well as our business generally. This call may also contain forward-looking statements relating to our growth and future operating results, discovery and development of our drug candidates, strategic alliances and intellectual property, as well as other matters that are not historical facts or information. Various risks may cause our actual results to differ materially from those expressed or implied in such forward-looking statements, and we refer you to the most recent annual report on Form 10-K and other SEC filings for detailed information describing such risks. I would now like to turn the call over to Mike Exton.

Mike? Yeah. Thank you, Lisa.

Good day, everyone. Thanks for joining us. Look, I want to begin by focusing on our most recent and major accomplishment, the completion of enrollment in SONATA-HCM, our phase III study of sotagliflozin in hypertrophic cardiomyopathy or HCM. This study is the largest phase III study to date in both obstructive and non-obstructive HCM. This marks an important milestone for patients living with the symptoms of HCM, as sotagliflozin would be a completely novel and complementary treatment for their disease, as compared to all approved treatments currently available and other agents in development. We're thrilled with the outcome of our enrollment efforts, which resulted in the study being significantly over-enrolled. I couldn't be more pleased with the accomplishment of this critical milestone. We eagerly await the top-line data, which we expect to announce in Q1 of next year.

In addition to the completion of enrollment in SONATA, we've also made other important progress across our portfolio. I'll start by providing an update on ZYNQUISTA, where we're at an important and exciting moment for the program. If you recall, the FDA asked for three things to support a resubmission of our new drug application. A prospective study, adequate patient exposure, and DKA rates below those observed in our previous clinical trials. I'll ask Craig to take over here.

The FDA has previously confirmed that Steno-1, an open-label, investigator-initiated study of sotagliflozin being conducted by the Steno Diabetes Center in Denmark, may serve as that prospective study. Steno-1 is on the verge of achieving the exposure levels previously identified by FDA as necessary to support a resubmission, and the DKA rates observed to date in the study in patients treated with sota are similar to patients on the standard of care in the trial and below those observed in our earlier trials. As a result, we believe that each of the FDA's criteria for resubmission of the NDA will soon be satisfied. We expect that Steno-1 will achieve adequate exposure levels by the end of August and following, we will quickly move to finalize the administrative aspects of patient-level data collection and transfer from Denmark.

We currently anticipate that we will complete a resubmission of our NDA during the fourth quarter of this year. While this is a slight delay from our previous timeline, we could not be more pleased with the data we've received to date. This is a huge step forward for ZYNQUISTA, for Lexicon, and for patients with Type 1 diabetes, who for many years have pleaded for another option besides insulin to manage their blood sugar. Furthermore, in heart failure, our licensee, Viatris, has also continued to submit regulatory applications for sotagliflozin across an increasing number of markets outside the U.S. and Europe. To date, Viatris has obtained regulatory approval in the United Arab Emirates and in Bahrain and has submitted applications for regulatory approval in more than a dozen other countries, including Saudi Arabia, Canada, and Australia.

Viatris anticipates regulatory decisions in Australia and Canada and additional regulatory submissions in other markets this year. Turning to LX9851, a first-in-class ACSL5 inhibitor for obesity, a Phase I study is underway and being conducted by our licensee, Novo Nordisk. We have previously received two $10 million milestone payments under our license agreement with Novo and have the potential to receive a third $10 million milestone payment later this year. We are excited to see the continued progress on this promising compound Finally, turning to pilavapadin, our belief in the potential of this agent and its novel AAK1 inhibition mechanism of action only continues to grow. We have exciting work underway exploring its utility in other potentially high-value indications, and we look forward to sharing data from these preclinical studies as early as later this year.

Sorry about that, everyone. Thanks, Craig, for taking that on. Really, I couldn't be more pleased with where we're at, both for HCM and importantly for ZYNQUISTA. This is a really important milestone for us in this program. As many of you know, we've been working with the FDA very constructively and are now on the precipice of having all the requirements needed to move forward with the NDA. With that, I'll ask Craig to continue and give you the pipeline update.

Thank you, Mike, and good morning, everyone. I'll start with sotagliflozin, our novel oral SGLT1 and SGLT2 inhibitor, which is in late-stage development in both HCM and type 1 diabetes. I'd like to begin by discussing the underlying pathology of HCM and why we at Lexicon believe that sotagliflozin is uniquely positioned to address a tremendous unmet need in this space. Hypertrophic cardiomyopathy, or HCM, is a genetic disease characterized by adverse cardiac remodeling associated with myocardial hypertrophy, diastolic dysfunction, and fibrosis. This fundamental biology is present across both non-obstructive and obstructive HCM, which I'll refer to as NHCM and OHCM, independent of underlying anatomy. It is important to note that even in OHCM, symptoms and progression are not explained by left ventricular outflow tract obstruction alone.

It is noteworthy that in OHCM, patients in which the outflow tract obstruction has been eliminated through surgery or other means, patients may still remain symptomatic due to the underlying disease process. Diastolic dysfunction is the underlying disease process observed in both NHCM and OHCM. This dysfunction is characterized by an abnormally thick and stiff left ventricle and impaired diastolic relaxation. These metabolic and anatomical changes negatively impact cardiac function. Both types of HCM are characterized by a thickened left ventricle associated with fibrosis, which results in a less pliable and improperly functioning left ventricle. These changes in cardiac structure and function result in the physical manifestations of shortness of breath and exercise intolerance that often impact patient quality of life. Sota's unique dual SGLT1 and SGLT2 inhibition directly addresses the underlying diastolic dysfunction that characterizes HCM.

By improving how the heart uses energy and other mechanisms, we believe that Sota has the potential to demonstrate similar benefits in both NHCM and OHCM. SGLT1 is expressed by cardiac myocytes, and the level of expression is increased in cardiac diseases such as HCM and other cardiomyopathies. As a reminder, SGLT2 is not routinely expressed in the myocardium. By inhibiting SGLT1, Sota improves cardiac cell function in the heart through mechanisms such as enhanced calcium flux, improved energy utilization, reduced inflammatory and fibrosis markers, and reduced epicardial fat. In addition to the cardiac benefits of SGLT1 inhibition, SGLT2 inhibition also has a positive effect on the cardiorenal dysfunction that is a hallmark of all patients with heart failure. As a result, Sota is the only agent that works both inside and outside the heart to reduce the symptoms of HCM.

As Mike highlighted earlier, we are excited to have completed enrollment in the SONATA-HCM trial, which is evaluating the effects on symptoms, function, and other patient-reported outcomes, as well as safety in patients with symptomatic HCM. We are pleased that the trial was significantly over-enrolled and as such, should positively impact the overall study powering. The study included a substantial majority of patients with NHCM, providing a robust opportunity to evaluate Sota in a patient group for whom effective treatment options remain limited, as well as a meaningful cohort of patients with OHCM. As a reminder, the primary efficacy endpoint is improvement in symptoms as measured by the change from baseline to week 26 in the Kansas City Cardiomyopathy Questionnaire Clinical Summary Score, or KCCQ-CSS for the overall patient population.