On August 4, 2016 Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), reported financial results for the second quarter ended June 30, 2016 and provided an overview of key milestones for the company’s lead drug candidates (Filing, Q2, Lexicon Pharmaceuticals, 2016, AUG 4, 2016, View Source [SID:1234514319]).

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"We enter the second half of the year with significant momentum, with both telotristat etiprate and sotagliflozin," said Lexicon President and Chief Executive Officer, Lonnel Coats. "We are looking forward to our upcoming PDUFA date of November 30 for telotristat etiprate, as well as top-line data from two pivotal Phase 3 clinical trials and two Phase 2 clinical trials for sotagliflozin in type 1 diabetes by the end of the year."

Pipeline Progress

Telotristat etiprate is the first investigational drug in clinical studies to target tryptophan hydroxylase (TPH), the rate-limiting enzyme involved in serotonin production. Excess production of serotonin within metastatic neuroendocrine tumor cells can lead to carcinoid syndrome, a condition characterized by serious consequences including frequent and debilitating diarrhea, facial flushing, abdominal pain, and heart valve damage.

On May 30, 2016, Lexicon announced that the U.S. Food and Drug Administration had granted a Priority Review of the NDA filing for telotristat etiprate and set a Prescription Drug User Fee Act ("PDUFA") target action date of November 30, 2016. In addition, the European Medicines Agency recently accepted a marketing authorization application filed for telotristat etiprate by Ipsen. Lexicon previously entered into a collaboration with Ipsen to commercialize telotristat etiprate in Europe and other countries outside the U.S. and Japan.

Sotagliflozin, which is being developed as a potential treatment for type 1 and type 2 diabetes, is a dual inhibitor of sodium-glucose transporters 1 and 2 (SGLT1 and SGLT2), each of which modulates glucose levels, and is the first investigational medicine to target both of these two proteins.

Lexicon is conducting three Phase 3 clinical trials of sotagliflozin in patients with type 1 diabetes, two of which have completed enrollment and are expected to provide top-line results in the second half of 2016. Lexicon expects that Phase 3 development of sotagliflozin in patients with type 2 diabetes will be initiated by Sanofi by the end of 2016. Lexicon previously entered into a collaboration with Sanofi in which Lexicon is responsible for clinical development activities relating to type 1 diabetes and Sanofi is responsible for clinical development activities relating to type 2 diabetes.

Financial Highlights

Revenues: Lexicon’s revenues for the three months ended June 30, 2016 increased to $20.1 million from $0.4 million for the corresponding period in 2015, primarily due to revenues recognized from the collaboration and license agreement with Sanofi. For the six months ended June 30, 2016, revenues increased to $32.6 million from $2.2 million for the corresponding period in 2015.

Research and Development Expenses: Research and development expenses for the three months ended June 30, 2016 increased 132 percent to $48.2 million from $20.8 million for the corresponding period in 2015, primarily due to increases in external clinical and nonclinical research and development costs. For the six months ended June 30, 2016, research and development expenses increased 105 percent to $85.2 million from $41.6 million for the corresponding period in 2015.

Change in Fair Value of Symphony Icon Purchase Liability: In connection with the acquisition of Symphony Icon, Lexicon made an initial estimate of the fair value of the liability for the associated base and contingent payments. Changes in this liability, based on the development of the programs and the time until such payments are expected to be made, are recorded in Lexicon’s consolidated statements of operations. The change in fair value of the Symphony Icon purchase liability was $0.5 million and ($12,000) for the three months ended June 30, 2016 and 2015, respectively, and was $1.4 million and $1.7 million for the six months ended June 30, 2016 and 2015, respectively.

General and Administrative Expenses: General and administrative expenses for the three months ended June 30, 2016 increased 33 percent to $8.4 million from $6.3 million for the corresponding period in 2015, primarily due to increased costs in preparation for commercialization of telotristat etiprate. For the six months ended June 30, 2016, general and administrative expenses increased 40 percent to $16.8 million from $12.0 million for the corresponding period in 2015.

Consolidated Net Loss: Net loss for the three months ended June 30, 2016 was $38.1 million, or $0.37 per share, compared to a net loss of $28.1 million, or $0.27 per share, in the corresponding period in 2015. Net loss for the six months ended June 30, 2016 was $73.0 million, or $0.70 per share, compared to a net loss of $56.2 million, or $0.54 per share, in the corresponding period in 2015. For the three and six months ended June 30, 2016, net loss included non-cash, stock-based compensation expense of $2.0 million and $3.8 million, respectively. For the three and six months ended June 30, 2015, net loss included non-cash, stock-based compensation expense of $1.8 million and $3.7 million, respectively.

Cash and Investments: As of June 30, 2016, Lexicon had $429.4 million in cash and investments, as compared to $477.1 million as of March 31, 2016 and $521.4 million as of December 31, 2015.