Lexicon Pharmaceuticals Inc (LXRX) 2018 Q1 法說會逐字稿

Welcome to the Lexicon Pharmaceuticals First Quarter 2018 Financial Results and Business Update Conference Call.

(Operator Instructions) As a reminder, this call is being recorded today, May 3, 2018.

I will now turn the call over to Dr. Kimberly Lee, Head of Investor Relations and Corporate Strategy. Please go ahead.

Thank you. Good morning, and welcome to the Lexicon Pharmaceuticals First Quarter 2018 Financial Results and Business Update Conference Call. Joining me on today's call are Lonnel Coats, Lexicon's President and Chief Executive Officer; Alex Santini, Executive Vice President and Chief Commercial Officer; Dr. Pablo Lapuerta, Executive Vice President and Chief Medical Officer; Dr. Praveen Tyle, Executive Vice President of Research and Development; and Jeff Wade, Executive Vice President of Corporate and Administrative Affairs and Chief Financial Officer. After our formal remarks we will open the call up for Q&A.

Earlier today, Lexicon issued a press release announcing our financial results for the first quarter 2018, 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, will be accessible in the Investor Relations section of our website. During this call, we will review the information provided in the release, provide an update on our clinical programs, 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 and efficacy and the therapeutic and commercial potential of XERMELO, sotagliflozin and our other drug candidates. These statements may include characterizations of the commercial performance of and life cycle management plans for XERMELO, expected timing and outcome of regulatory review of applications for approval of sotagliflozin, results of clinical trials of sotagliflozin and our other drug candidates and the market opportunity for those program. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of other drug candidates, strategic alliances and intellectual property as well as other matters that are not historical facts or information. Various risks may cause Lexicon's actual results to differ materially from those expressed or implied in such forward-looking statement. These risks include uncertainties related to the success of our commercialization efforts and life cycle management plans for XERMELO; the regulatory review of applications for the approval of sotagliflozin; the timing and results of clinical trials and preclinical studies of sotagliflozin and other drug candidates; our dependence upon strategic alliances and other third-party relationships; our ability to obtain patent protection for our discoveries; limitations imposed by patents owned or controlled by third parties; and the requirements of substantial funding to conduct our research, development and commercialization activities. For a list and a description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission.

I would now like to turn the call over to our President and CEO, Lonnel Coats.

Thank you, Kim, and good morning, everyone, and thanks for joining us on the call today. In the first quarter, we achieved several key milestones which position us for significant momentum in the second half of this year. I'll share these developments with you, starting with a summary of recent key events and concluding with a business update. I'll then turn the call over to Pablo and Jeff for updates on XERMELO life cycle management program and financial results, respectively.

I'm very pleased to say that we reached several regulatory milestones in the first quarter that we believe will enable future growth and value creation. In March, in line with our prior guidance, our collaborator Sanofi submitted regulatory filings in the United States and in Europe for sotagliflozin and type 1 diabetes. The European Medicines Agency, or the EMA, validated the market authorization application in March. We anticipate feedback from the FDA regarding acceptance for our filing of our new drug application, or our NDA, approximately 60 days from our filing date. In the meantime, we and Sanofi are working closely with the agencies to make sotagliflozin available as soon as possible to people suffering from type 1 diabetes. As sotagliflozin is a new chemical entity and potentially the first ever oral treatment for type 1 diabetes, we fully anticipate an advisory committee meeting and are diligently preparing for this event.

Moving to XERMELO. We achieved U.S. net XERMELO sales of $5.4 million in the first quarter. I will say we did experience some headwinds as I talked a little bit about this at the end of last year that affected XERMELO net sales, including a continued increase in the number of patients requiring patients' assistance and receiving free drug under our patient assistance program as well as the realignment of our commercial resources, which we believe will improve our effectiveness long term but involve some short-term disruption. As a reminder and as promised, we have unblocked IMS and Symphony Data, but note that there some meaningful inaccuracies as they start reporting, which I believe presumably will be reduced over time. So let me lay out what I believe is important and relevant.

Total pay prescriptions, or TRx, for the first quarter of 2018 over 1,082 TRxes, which was relatively flat quarter over quarter from the fourth quarter. Now what's important here is that -- what's not reflected in that figure is the number of patients receiving free drug under our patient assistance program, which has continued to increase and by March represented about 20% of XERMELO dispenses. That was much higher than expected. We anticipate this to increase some more, but then I believe it will level off in the second quarter. Almost all of these patients have Medicare coverage but fall below certain income thresholds that make them eligible for free drug under our patient assistance program if they cannot otherwise cover their copay. In years past, many of these patients might have received third-party financial assistance, but the availability of that assistance has been substantially reduced or eliminated, a trend that we don't expect to be reversed any time soon.

The good news, even though we are providing free drug, this represents demand and this demand continues to grow relative to new patients, we believe the growth of patients eligible for patient assistance will start to level out, however. In addition, we believe the realignment of our field-based activities should have a positive impact on our business starting in the second half of this year as more nurse educators come onboard and engage patients and nurses and in doing so help better -- physicians better understand XERMELO so improve -- we can see improvement in compliance and persistence.

Now we also saw about a 5% increase in quarter-over-quarter of new patient starts which total 161. In addition, we are seeing an improvement in the discontinuation rate. We're now seeing a monthly discontinuation rate of about 10% during the first 3 months of therapy, improving significantly to about 4% over the longer term of treatment. Overall, I think an important note now that we have been in the market for more than a year, we're seeing about half of all patients remaining on therapy after a year of treatment, representing a stable base of long-term patients. We are always striving to improve upon these rates. And as we compare ourselves to other analogs in the industry, we believe we're comparing very favorably but there is still very much more room to improve. Since last November, we're also seeing an increased number of patient restarts after drug discontinuation and we anticipate this trend to continue. As for compliance, for patients who stay on XERMELO, we're seeing excellent compliance of around 80%.

Our commercial operation continues to serve more patients with carcinoid syndrome diarrhea, and we believe that the substantial majority of patients with carcinoid syndrome diarrhea have yet to initiate treatment. While we expect continued near-term growth in patient assistance, we also expect growth later this year in paid prescriptions as we continue to actively bridge the gap between how well oncologists believe patients' symptoms are being controlled and how well patients feel their symptoms are being controlled. There was a disruptive influence in the first quarter, but we believe implementation of the field force changes should deliver noticeable results on growth in the second half of the year. Importantly, we reiterate our expectation is that total U.S. XERMELO net sales this year will at least double from 2017.

Now let me turn to Europe. Our collaborator Ipsen continue to market XERMELO in the U.K., Germany and Austria. While still early in the European launch, we anticipate the trajectory of XERMELO launch in Europe will be a gradual one as it may take up to a year and sometimes longer for reimbursement discussions to conclude depending on the country. We expect other European countries and pricing approvals to come online throughout 2018. We expect the XERMELO growth to strengthen over time, but it will require diligent efforts as we continue to challenge and change longstanding practices and habits in treating carcinoid syndrome as we build a case for XERMELO's benefit for carcinoid syndrome patients.

Shortly, Dr. Lapuerta will reiterate the work we’re doing in expanding XERMELO's label in neuroendocrine tumors, or NETs, and biliary tract cancers, or BTC, as shared in detail at our R&D day on April 10. We believe the scientific evidence suggests that XERMELO could have benefit on disease progression and may slow tumor growth as noted on Slide 5. Should we be successful in expanding XERMELO's label, the addressable market opportunity will greatly expand.

By 2025, we believe there could be an addressable market of approximately 20,000 patients with progressing midgut NETs, with some overlap into the carcinoid syndrome diarrhea market of about 18,000 patients. Now we also believe that biliary tract cancers represent an additional upside potential of approximately 10,000 addressable patients. Lastly, this ongoing work should also bolster our current efforts in making a case for XERMELO in the current treatment paradigm for patients with carcinoid syndrome diarrhea.

I will turn the call now over to Dr. Lapuerta, who will discuss our planned life cycle management activities for XERMELO to demonstrate the broader potential benefits beyond carcinoid syndrome diarrhea in other oncology indications. Dr. Lapuerta?

Thanks, Lonnel. Turning to Slide 7. This is an important opportunity to explore XERMELO's potential outside of carcinoid syndrome diarrhea. XERMELO addresses the cause of carcinoid syndrome diarrhea, which is overproduction of serotonin, but there is good scientific rationale that XERMELO may slow the growth of the tumor and improve overall patient health and survival. Octreotide and lanreotide have shown benefits in tumor control and these benefits may relate to their effects on serotonin. Scientific evidence also suggests that inhibition of serotonin production via tryptophan hydroxylase 1 could inhibit proliferation of cancer cells in patients with cholangiocarcinoma. Serotonin is also linked to fibrosis. We have the opportunity with XERMELO to explore more fully the impact of serotonin on tumor growth and fibrosis.

On Slide 8, we have the rationale recently presented by Dr. Renuka Iyer of the Roswell Park Cancer Institute at our Research and Development Day. If you weren't able to attend, you can find the slide presentation in the Investor Relations section of our website. Dr. Iyer presented this slide that shows some of the potential for XERMELO to benefit the neuroendocrine tumor population beyond carcinoid syndrome diarrhea. In the left-hand panel, there are data showing that production of serotonin by neuroendocrine tumors significantly decreased survival. This can be seen in the blue survival curve for patients with elevated 5-HIAA, a metabolite of serotonin. The middle panel shows the extent to which XERMELO reduced 5-HIAA levels in our pivotal study, TELESTAR. And the right-hand panel shows how patients treated with everolimus had worsening survival if their tumors produced elevated amounts of 5-HIAA. In her presentation Dr. Iyer commented on favorable data we have recently published on weight gain with XERMELO in the TELESTAR study. She asked whether it reflected stable disease. TELESTAR and our companion study TELECAST did not include formal assessments of disease progression, but overall survival with XERMELO was 93% at 1 year and 88% at 2 years. If XERMELO were to stabilize disease for some patients with neuroendocrine tumors or cholangiocarcinoma then this would represent a very important benefit.

On Slide 9, Dr. Renuka Iyer also presented the rationale for the potential of XERMELO to benefit patients with cholangiocarcinoma, here described as BTC, or biliary tract cancers. Expression of serotonin and the associated enzyme tryptophan hydroxylase are increased in patients with biliary tract cancers. Here we see a figure showing reduced rates of tumor growth when animals who have biliary tract cancer xenographs are treated with tryptophan hydroxylase inhibition. We also see photographs showing a smaller tumor for the rodents who received a TPH inhibitor and a larger tumor in the absence of treatment. There are also photos showing that biliary tract cancers and neuroendocrine tumors have similar histological features. The 2 opportunities are related.

On the next slide, by running a study in neuroendocrine tumors, we intend to provide supportive evidence for the expansion of XERMELO's label as an antiproliferative agent. We are designing a single-arm open label efficacy study to examine XERMELO in combination with everolimus. It will have a primary endpoint of median progression-free survival, PFS. We plan to initiate the study in the second half of this year and generate enough evidence to obtain agreement from the FDA on a registrational pathway. Of note, this will be the first time that we are initiating clinical development of XERMELO in combination with everolimus, so we want to see open label data before considering placebo-controlled studies.

We are also excited to initiate a single-arm open label safety and efficacy study of XERMELO in biliary tract cancers in combination with standard first-line chemotherapy, which is gemcitabine plus cisplatin, also in the second half of this year. The primary endpoint will be median progression-free survival. We believe the addition of XERMELO may maintain benefit, improve quality of life of these patients in a setting where survival is generally less than 1 year with gemcitabine and cisplatin. Here XERMELO may help patients with biliary tract cancers tolerate their chemotherapy and maintain their body weight. As in the neuroendocrine tumor study supportive evidence in biliary tract cancer is intended to identify a registrational pathway for label expansion.

Now I'd like to turn the call over to Jeff, who will provide this quarter's financial highlights.

Thank you, Pablo. This morning, I will discuss key aspects of our first quarter financials. More financial details can be found in our 10Q, which will be filed shortly.

Now please refer to Slide 12 of our presentation. As indicated in our press release today, revenues for the first quarter of 2018 increased 38% to $25.2 million from $18.3 million for the corresponding period in 2017, primarily due to an increase in net product revenues recognized from the sale of XERMELO in the U.S. to $5.4 million from $0.7 million and the increased revenue from collaborative agreements. Cost of sales related to sales of XERMELO for the first quarter of 2018 was $0.5 million, up from $0.2 million for the corresponding period in 2017.

Research and development expenses increased 10% to $47.8 million for the first quarter of 2018 from $43.6 million for the corresponding period in 2017, primarily due to higher external clinical development expenses relating, in substantial part, to development of sotagliflozin in type 2 diabetes and professional and consulting fees related to sotagliflozin NDA preparation. Selling, general and administrative expenses for the first quarter of 2018 were flat year-over-year at $14.9 million. Net loss for the first quarter of 2018 was $42.1 million or $0.40 per share compared to a net loss of $34.9 million or $0.33 per share in the corresponding period in 2017. When comparing the prior year period, recall that in the first quarter of 2017 there was an $8.7 million income tax benefit due to Lexicon's valuation allowance for its deferred tax assets as a result of the reclassification of intangible assets relating to XERMELO from indefinite-lived to finite-lived assets.

For the first quarter of 2018 and 2017, net loss included noncash stock-based compensation expense of $3.1 million and $2.2 million, respectively. We ended the quarter with $262.3 million in cash and investments. And we foresee that our current cash position, together with expected revenues, will be sufficient to fund operations through the potential launch of sotagliflozin in type 1 diabetes and to become cash flow positive on the XERMELO brand in the next 12 to 24 months. Overall, our financial performance positions us for important future milestones and value generation and advancement of our earlier stage product pipeline, while at the same time effectively managing our resources and spending.

Now let's turn to our financial guidance for 2018. We continue to expect collaboration revenue to be in the range of $30 million to $40 million and U.S. XERMELO net sales to at least double in 2018 from the $15.1 million we recorded in 2017. As we continue efforts to be prudent in our use of resources, we are reducing our guidance for operating expenses and net cash used in operations. We now expect our operating expenses for 2018 to be in the range of $190 million to $210 million, down from $205 million to $225 million. We now expect R&D expenses in the range of $115 million to $125 million, down from $125 million to $135 million. We anticipate SG&A expenses in the range of $75 million to $85 million, down from $80 million to $90 million. We expect our net cash used in operations to be in the range of $185 million to $200 million, down from $190 million to $205 million.

As I noted in our year-end conference call, 2018 represents a significant financial inflection point for Lexicon. The final costs of a completed type 1 diabetes registrational program will be recorded in 2018 as will the full satisfaction of our cost sharing obligations with respect to the type 2 diabetes program. As a result, even with meaningful R&D investments in XERMELO and our earlier stage pipeline assets such as LX2761 and LX9211, we expect that our R&D expenses will moderate substantially in 2019. At the same time, we believe our investments in 2018 will position us to achieve very substantial milestone payments under the Sanofi alliance in 2019 and again in 2020.

As a reminder, we are entitled to receive development and regulatory milestone payments of up to $430 million from Sanofi under the sotagliflozin alliance. Of that total, as we have publicly disclosed, up to an aggregate of $110 million is payable upon the achievement of 4 development milestones relating to the results of certain Phase III clinical trials of sotagliflozin in type 2 diabetes patients and up to an aggregate of $220 million is payable upon the achievement of 4 regulatory milestones relating to the first commercial sale following regulatory approval of sotagliflozin for type 1 and type 2 diabetes, respectively, in each of the United States and Europe. The $100 million balance relates to the achievement of milestone based on result of either of 2 outcome studies in type 2 diabetes patients, the completion of which would likely occur after initial regulatory approval of sotagliflozin in type 2 diabetes.

Except for the outcome studies, all of these milestone payments relate to events potentially achievable in the reasonably near term, given the filings for U.S. and EU approval in type 1 diabetes in March, expected readouts of the core Phase III studies for type 2 diabetes in 2019 and potential filings for U.S. and EU approval for type 2 diabetes in early 2020 and the second half of 2019, respectively. You can appreciate how achieving these milestones, together with progression to breakeven in profitability of XERMELO, will be potentially financially transformative for Lexicon as we look past 2018, and that's without accounting for potential sotagliflozin royalties. So as I mentioned, 2018 truly represents a significant financial inflection point for the company with our investments in sotagliflozin Phase III development winding down this year and beginning to yield returns in 2019 and beyond.

With that, I will ask the operator to begin our Q&A session.

(Operator Instructions) And your first question is from the line of Yigal Nochomovitz.

Lonnel, could you just help us understand a little bit better on the comment around the free drug? I think you said about 20% of XERMELO dispensing was free drug this quarter, and then you mentioned that it was going to level out. Do you mean that it's going to level out at 20% on a go-forward basis, or is that a leveling out just on an absolute volume basis for this quarter?

Great question, Yigal. No, we actually expect for it to grow a little bit more, to be frank with you. I would probably say if I had to give you an indication I would say that looking at our Medicare book of business, because that's where most of these patients come from, and when we do our projections based on what we're now seeing, this will level out in the mid-20% range. So I expect that leveling out to take place in the second quarter, and then from there I think that's the number that we'll probably use going forward.

Okay, got it. And then with regards to the reiterated guidance of doubling the 2017 revenues, just a quick calculation suggests you need about 20% quarter-on-quarter growth from the $5.4 million this quarter to get there. So if you could just help us understand a little bit more, with a little bit more granularity what the ingredients are to support that 20% month-on-month growth, I mean, quarter-on-quarter growth.

Yes, great question. Two things. One of the things we shared with you is that we're very pleased that the discontinuation rate that we had talked about before, that is leveling off, and we think that means we'll be able to retain more of our patients than we have historically. The second piece is the efforts we're now making with the nurse educators. We've also seen the abandonment rates decline, as well. So that should allow more flow-through of our prescriptions. And then, thirdly, the realignment of our field force on the account-based selling that we're approaching should drive greater enrollment. Those 3 things will be critical to that growth, along with the opportunity for -- in all candidates, along with the opportunity for price appreciation.

Okay. And with respect to the comment on I think you said half are on therapy after 1 year, was that your expectation sort of going in with the profile of this product, or is that something you're also trying to change?

Yes, we would love to improve that. It was somewhat of our expectation because that's what we saw in the clinical trial. Actually it's very rare to see that, that the drug is behaving very much like what we saw in the clinical trials in terms of our 1-year data. That's about the same percent. And what's even nicer is that when you get beyond this 3 months when patients stay on the drug you see the compliance rate is really wonderful and the -- you don't see discontinuation. So once we get past getting people started and understanding how to use the drug, all the metrics thereafter are pretty darn good.

All right. Got it. And then switching over to type 1 diabetes, you mentioned you're doing a lot of prep work with respect to the adcom panel. I assume you don't have a date yet, because it hasn't -- the filing hasn't been accepted. But just if you could just tell us when you expect their adcom and then, more importantly, with regard to the issues that are likely to come up there, obviously one, which I think you've outlined in the past, is the question of the dose, 200 versus 400, which I understand may be a review issue. What are the other key review issues or themes that you're making sure to address or have very good answers to in respect to the preparation for that now?

Yes, thanks, Yigal. Great question. I think you know that one is that we certainly have to make the case for our dose. I think we're in a very good position to make that case. The second one is to make sure that we're in a great position to be able to show how we managed the DKA risk in our clinical program. And that management can translate into the community once the drug is approved. I think those are the 2 most important things that we will be preparing for. And I think the third piece, and I'll let Dr. Lapuerta speak to that, is we saw some really wonderful data around our hypoglycemia data that we think we want to work very hard to make sure that becomes part of our package. Do you want to speak to that, Dr. Lapuerta?

Yes. In The New England Journal of Medicine article for inTandem3 we published the statistical significance of the reduction in hypoglycemic episodes, less than 55 mg per dL. And the decrease with sotagliflozin compared to placebo was highly statistically significant, with a P value less than 0.001. And I think that's unusual, especially when you're improving A1c at the same time, to actually reduce severe hypoglycemia. I'm sorry, that was overall hypoglycemia less than 55. So I think the FDA may have some questions about that finding, looking at inTandem1 and inTandem2, as well, and then the most important manifestation, severe hypoglycemia. We presented those data in our press releases and at 52 weeks they're very favorable for sotagliflozin 400 mg. And so that is a fair area for discussion.

Yes, I agree. And the reason it's a fair area for discussion is because the way we designed our studies we did not exclude people who would traditionally have risks for severe hypo. They were in the trial. And therefore we have the opportunity to express both the efficacy that could be expected as well as how they turn out relative to the safety data. So this is going to be a critical point and an important point that we need to make a very strong argument for during the review period.

Your next question is from the line of Jessica Fye.

This is Yuko on for Jessica. You talked about an ambitious peak sales for XERMELO, including the line extension possibilities in the past. Could you provide an update on what you think peak U.S. sales could be in the current indication?

Yes, we haven't -- what our guidance has been is around peak sales for XERMELO in terms of its current indication and in the area of NETs. And so the way we get there is both its current indication and the work that we're doing now for neuroendocrine tumors. We remain very confident we can get to the peak sales. Where the real upside opportunity for us beyond NETs, including carcinoid syndrome diarrhea, is really going to be in how well we're able to conduct our program for biliary tract cancers, because that is new. And if we're able to be successful there, then I think we have some upside to what our peak guidance has been.

Your next question is from the line of Chris Shibutani.

Thank you for additional granularity on the XERMELO launch. You talked about patient restarts. Can you tell us what is driving the restarts? Is it the clinician/nurse sales folks who are helping patients reset expectations? Is it restarts based upon some sort of financial support background? What are the dynamics there?

Chris, great question. I mean, this was, to be frank with you, this is the most exciting piece of data we started capturing. Something I said, I don't know, maybe 3 quarters ago, we believe that possibly some of the discontinuation we saw they will come back because there are very few alternatives for these patients, and we're now starting to see that. I mean, you're a year out and these patients are now starting to come back. And so I think that's exciting news for us. I think the dynamics is happening because the way we are now deploying the resources both with the clinical nurse educators as well as some of the medical work that we're doing around medical affairs and the publications, physicians are getting more comfortable with the position we're taking, and the advocacy work that we certainly do patients are starting to understand more about what's the best expectation and the right expectation for this drug. And as a result, we are definitely seeing a very good trend in the area of patients coming back to XERMELO.

Over in Europe we're familiar with how reimbursement is a lengthy process, and in particular there are often cost -- health economics, risk/benefit-type organizations in Germany, IQWiG, for instance. Is there any insight into those types of processes and timelines for when we might learn what's going on over there? I realize you're not driving it, but just trying to understand how that progress is occurring.

Yes, I'll just say this, because we certainly leave that up to Ipsen to talk about Europe with specificity, but I'm very proud of Ipsen. They've done a remarkable job in Germany, particularly in Germany, and they're doing a very nice job of making a case by in Europe in a lot of these agencies you can do subset analysis. Here in the U.S. with the FDA that's not allowed. But you can run a lot of subset analyses that allow us to make the case for XERMELO particularly in unique patient populations, and I think that Ipsen is doing a very good job of doing that with some of your health technology assessment groups. So we have a very high expectation that they're going to do well in Germany, U.K., as I think the only market that they're working hard on to make inroads is in France, but everybody works hard to make inroads in France. But nonetheless, I think they're doing a pretty good job.

Then quickly on sota, just to make sure, additional data that we have not seen perhaps yet in the type 1 setting? Is there anything between now and, say, the adcom that we should be aware of that may be disclosed, whether it be at the ADA in June or in other formats?

Great question. We will have a presence at ADA, so I'll let Dr. Lapuerta speak to that.

I think one of the main things at ADA is it's an opportunity for us to discuss 52-week data in more depth in inTandem1 and inTandem2. And with that you'll see an opportunity for us to go into a lot of the more specifics on DKA, which is limited, and we're pleased with that, and on severe hypoglycemia data, which has been encouraging.

So this is more incremental information that has not previously been presented.

Yes.

Yes, Chris, a lot of the 52-week data we're going to -- ADA is the opportunity for us to be more specific around that 52-week data, which I think is going to be very nice to do at ADA.

Your next question is from the line of Stephen Willey.

I guess just a couple on XERMELO and then maybe one for Jeff. You took a price hike I think January 31. Just wondering what contribution of that occurred within 1Q specifically and should we expect any additional pull-through perhaps into 2Q.

Yes, we did take it in January, as you said, and it is a contributing factor. I can't say too much more beyond that, but I will say that we keep a very close eye on how the market sets, and then we reset based on how the market sets. And I think as others in the market take actions we'll watch that very carefully and closely and make what decisions we have to make in terms of the relative value of XERMELO and follow suit thereafter.

Got it. And then kind of just in the context of patients, I guess, who are inadequate responders or perhaps aren't achieving the desired level of symptomatic control after initiating therapy, are you seeing many patients being dose escalated to the higher dose that was evaluated in the Phase III trial?

You mean up to the 500 mg dose?

Correct.

Yes, I'll speak to it anecdotally and then turn it over to Dr. Lapuerta. Anecdotally there are some cases of that, yes. But I don't believe it's of any substantial nature at this point. But what I will note is as we started developing our clinical programs for biliary tract cancer as well as for NETs, then the dose that more than likely we will pursue will be the 500 mg dose. We know that dose is a very important and highly efficacious dose, but for the cancer tumor setting it may be the most appropriate way to approach it. So the 500 mg dose will get a lot more attention going forward.

Got it. And then, and maybe just for Jeff with respect to the revised OpEx guidance, does this reflect just a greater emphasis on peripheral cost reductions or are there certain activities and efforts which are either being rationalized or pushed into 2019?

It's mostly related to efforts that we've made to prioritize what we spend our money on and to be sure that we're being efficient with the use of funding. So it reflects attention on good use of our resources, but it doesn't really affect any of the things that we've been talking about in terms of our plans for our program. So it reflects continued investment in 2761, 9211, XERMELO life cycle management. It doesn't affect any of those priorities.

Steve, I think one of the things that I'm very cautious about is we have so much good science inside this company we just have to be very strongly focused on what we advance and when we advance it. And so to Jeff's point, we're trying to keep our eyes on the near-term things that we've laid out. But I tell you, it's a challenge, because there is a lot of other things we would like to do, but at this moment it's really about focus, and the more we focus, then the efficiencies that Jeff just laid out allow us to make sure that we're using our resources on the near-term priorities.

(Operator Instructions) And there are no further questions. I will now turn the call over to Mr. Coats for closing remarks.

Well, thank you, everyone. I appreciate you joining us this morning. I'll just close by saying I believe we have a very well-defined strategy to position the company for future growth and to be a long-term sustainable value for shareholders. Our main priorities remain centered around driving long-term value through continued execution on the XERMELO launch, advancing the clinical development of XERMELO, as we're now really excited about the additional indications we can get in oncology for this compound, and obtaining regulatory approval for sotagliflozin in type 1 diabetes as well as working with our collaborator Sanofi and ensuring we have the supportive evidence that truly differentiates sotagliflozin in type 2 diabetes. We're also doing a lot of work to advance our early-stage pipeline with LX9211 and LX2761, which we think are very, very important programs. With that being said, we will always be very precise in how we manage our resources to achieve value, and that is our assurance as we go forward quarter to quarter.

With that, I'll stop there and thank everybody again for attending this session.

Thank you for your participation. This concludes today's conference call. You may now disconnect.