Roanna Ruiz: Got it, thanks.
Operator: Our next question comes from Andrew Tsai from Jefferies. Please go ahead with your question.
Andrew Tsai: Hi, thanks. Congrats, Lonnel, on the retirement. Best wishes to you on everything. It’s been a pleasure. Maybe the first question is about INPEFA. You’ve directionally guided to sales to accelerate in second half 2024. So just how much do you think sales can inflect specifically in Q3 and Q4? Just curious how you would define an acceleration from the current sales trajectory? And then secondly, would you need to rebuild or refocus on payer access again if type 1 diabetes was approved? Or can you leverage the work you’ve done in heart failure and apply it to type 1 diabetes? So I assess the question is just trying to gauge how much sales can accelerate even further immediately if you launched in type 1 diabetes? Thanks.
Lonnel Coats: Andrew, first, let me say, thank you for the well wishes, and I’m looking forward to my retirement, but because of those tough questions. But I think Jeff has an answer to that, so let me turn it to him.
Jeffrey Wade: So I think when you’re looking at our overall coverage, it’s around 40%. But a lot of that is subject to utilization management in terms of step edits, which in this area where the step through drugs, I believe, have been approved for heart failure relatively recently and are still early in the adoption curve, that’s a pretty big obstacle. And when we’re negotiating and working with payers to get on the formularies with contracted coverage, we’re eliminating those step edits. So when you’re kind of looking at our Medicare being single-digits and has a chance to multiply manifold. And very opportunity to very significantly increase the commercial as well when you’re thinking about access without those kind of restrictions, we think that there is an opportunity to really multiply the opportunity for — to multiple manifold, what we’re looking at in terms of the revenues we’re getting from INPEFA.
So that I think is an important element. The second thing is type 1 diabetes, and this is to address your second question. Type 1 diabetes is kind of a different market because unlike in heart failure where we’re competing, in type 1 diabetes, we’re going to be potentially the only game in town. And it’s also an area where payers are really interested. I mean we’re already having discussions. The minute that we announced that we were resubmitting these payer discussions, they’re asking us about type 1 diabetes. We think that we will be able to have more favorable access in type 1 diabetes than we have in heart failure because it’s not a competitive space in terms of — particularly as we think about the rebates required to be able to get access and we’re doing the groundwork now to be prepared for that launch.
So we think that, that is going to be an easier road by a good margin and as it relates to access in type 1 diabetes. So hopefully, that answers your question.
Lonnel Coats: Yes. The only thing I would add is that we will leverage our infrastructure. We’ve built an incredibly talented team of people, both on the access side, the medical side. So that infrastructure will be leveraged to go into T1D. Most important decision we’ve made in the last eight, nine months was to bring on an incredible executive like Tom who knows how to bring all those pieces together well in advance of the launch. So we definitely will be leveraging the infrastructure, along with the other things that Jeff laid out.
Andrew Tsai: Great, okay. Thank you guys.
Lonnel Coats: You bet, Andrew. Thank you.
Operator: And our next question comes from Joseph Stringer from Needham & Company. Please go ahead with your question.
Joseph Stringer: Hi, thanks for taking our questions. You provided some data on the commercial opportunity for Zynquista and T1D. But I suppose, how should we think about your commercial strategy targeting patient subgroups? Or how should we think about the stratification of patients you would target? For example, what patients would you consider early adopters versus potential late adopters to the drug, assuming approval? And is it fair to think about it in terms of, say, CKD stage? Or are there other important factors that we should think about? And then last one is on pricing, assuming approval on T1D, how should we think about pricing strategy? Thank you.
Jeffrey Wade: So I will — I’m going to address the first question is how do we think about this market. So there’s 1.7 million adults who have type 1 diabetes and about 20% to 25% of those have chronic kidney disease. And most people who have type 1 diabetes are at risk for progression of chronic kidney disease. What I would encourage you to think about is this is not about treating chronic kidney disease. This is about providing benefit to patients, people who have type 1 diabetes to manage their blood glucose control who have chronic kidney disease, but that’s one of multiple different things that they’re dealing with. And the benefit in this patient population is greater because there are greater risk of progression of chronic kidney disease.
But the benefits that value — that are valued by the patients are really about improving their A1c, improving time and range, improving — basically reducing their risk for complications across a broad range of areas. So it’s really about providing benefits on glycemic control, addressing the core unmet needs in type 1 diabetes patients in a population that’s a greater risk for progression in chronic kidney disease. So that’s the way I would encourage you to think about it. So one of the advantages in this market is that people with type 1 diabetes are very engaged in their own care. They have to be. They don’t really have a choice. And so that — obviously, people who are more engaged, are probably more likely to be early adopters than people that are less engaged.
But because people with type 1 diabetes, even the people who are less engaged, have to be pretty much engaged in their care and because they want to avoid hypoglycemia, they want to feel better, they want to reduce glucose variability, we think that there’s going to be an opportunity to really have a pretty rapid uptake in this patient population. But the important part really is to frame this is, this is not chronic kidney disease drug. This is a type 1 diabetes drug that is — that would be indicated in the population that has chronic kidney disease. On pricing, we’re still doing pricing work there. We’re going to — we’ll do some refinement of that. But we think mostly that our net pricing is just going to be more favorable. That’s the main thing that we think will be different, but we’re going to do some additional work around how we look at wholesale acquisition cost and also about the level of rebates that would be required.
Does that answer your questions?
Joseph Stringer: Yes, that’s great. Thank you for taking our questions.
Lonnel Coats: Thank you, Joe.
Operator: And ladies and gentlemen, at this time, I’m showing no additional questions. I’ll be turning the floor back over to Jeff Wade for any closing comments.
Jeffrey Wade: Well, thank you, everyone, for joining us on today’s call and really for your continued support of Lexicon. And as we wrap up, I just want to reemphasize how Lexicon really has never been stronger. The company has never been in their position to focus on next steps. We have a strong management and leadership team in place committed to growth and expansion and that includes seamless execution, targeted in smart capital allocation and exploring and leveraging partnerships to add even more value to the Lexicon assets into the company. So we really appreciate you joining us, and thank you for your attention.
Operator: Ladies and gentlemen, with that, we’ll conclude today’s conference call and presentation. We thank you for joining. You may now disconnect your lines.
