Lexicon Pharmaceuticals Inc (LXRX) 2018 Q2 法說會逐字稿

Welcome to the Lexicon Pharmaceuticals Second Quarter 2018 Financial Results and Business Update Conference Call. (Operator Instructions) As a reminder, this call is being recorded today, July 30, 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 Second 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. 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 second 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 be providing information in the release, provide an update on our clinical programs and then use the remainder of the 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 XERMELO, the expected timing and outcome of regulatory review of applications for approval of sotagliflozin, the expected timing and results of clinical trials of sotagliflozin, XERMELO and our other drug candidates in the market opportunity for those programs. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of our 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 for XERMELO, the regulatory review of applications for the approval of sotagliflozin; the timing and results of clinical trials and preclinical studies of sotagliflozin, XERMELO and our other drug candidates; our dependence upon strategic alliances and other third-party relationship; our ability to obtain patent protection for our discoveries; limitations imposed by patents owned or controlled by third parties; and the requirements of the substantial funding to conduct our research, development and commercialization activities. For a list and a description of the risks and uncertainty that we face, please see the reports that we filed with the Securities and Exchange Commission.

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

Thank you, Kim. Good morning to everyone, and thanks for joining us on the call today. Let me start, and as I said, in the second quarter, we achieved several key milestones, which positions us for significant momentum in the second half of this year. I'm very pleased to say these developments -- 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 Dr. Praveen Tyle, Head of Research and Development, for updates on our sotagliflozin program, and then turn it over to Jeff Wade for an update on our financial results.

I'm very pleased to say that we reached several regulatory milestones in the second quarter that we believe will enable future growth and value creation. In May, the FDA accept Sanofi's regulatory filing in U.S. for sotagliflozin in type 1 diabetes. We and Sanofi continue to work closely with the FDA and the European Medicines Agency or, better known as EMA, to make sotagliflozin available as quickly as possible to people with type 1 diabetes. In June, we had a very strong presence at the American Diabetes Association, or ADA, where data presented -- we presented further data increasing our confidence as sotagliflozin SGLT1 mechanism distinguishes the drug's profile from currently available therapies in type 1 diabetes. Importantly, at ADA, a meeting was convened by thought leaders to develop consensus guideline for the management of diabetic ketoacidosis, or DKA risk, when using SGLT inhibitors, a collective effort that should help and form -- and frame the perspective of physicians and regulators. However, Dr. Tyle will more details and color around that a little bit later.

Moving to XERMELO. We achieved U.S. XERMELO net sales of $6 million in the second quarter 2018, up 65% over the prior year quarter and up 11% from the first quarter of 2018. We saw a continued increase in our patient base, but we also saw an increase in the number of patients requiring patients assistance and receiving free drug under our patient assistance program.

As there remain inaccuracies of IMS and Symphony data, I thought I'll take an opportunity to provide you with some relevant details. Total paid prescriptions, or TRx, for the second quarter of 2018 was 1,171, which was an increase quarter-over-quarter. Not reflected in that figure is the number of patients receiving free drug under our patient assistance program, which represents about 24% of XERMELO dispenses, which is up from nearly 17% in the prior quarter. While we did see some leveling out in the number of patients eligible for assistance program, this was still higher than we originally predicted. On a positive note, that demand along with patient assistance grew at about 20% quarter-over-quarter on a unit basis. New patient starts, totaled 141. The overall discontinuation rate remains in line with our expectations and continue to see increased numbers of patient restarts at discontinuation, and we anticipate this trend will continue. The compliance rate remains at about 80%, and while we're pleased to see good growth and improvements in our overall metrics in the second quarter, we need to make even greater efforts in the second half to bend the curve further to achieve our objectives of doubling XERMELO sales in 2018.

Turning to Europe, our collaborator, Ipsen, continues to obtain reimbursement approvals for XERMELO in Europe. We continue to anticipate that 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.

Now I'll turn the call over to Dr. Tyle, who will provide an update on our sotagliflozin program. Dr. Tyle?

Thank you, Lonnel. I'm happy to provide updates on our sotagliflozin program, which, as a reminder, is the largest ever Phase III program for an oral antidiabetic agent in type 1 diabetes. We had an exciting week at 78th Annual American Diabetes Association, or ADA conference, in Orlando in June. And I'm pleased to share with you new data that was highlighted in an oral presentation and several poster presentations. Notably, we are extremely pleased that Diabetes Care published the 52-week results of the inTandem1 and inTandem2 study in conjunction with our presentation at ADA. These publications along with the publication of inTandem3 results in the New England Journal of Medicine late last year, highlight the importance and relevance of the investigation drug as a novel antidiabetic agent and its mechanism of action as a dual SGLT1 and SGLT2 inhibitors.

Positive 52-week efficacy and safety data from inTandem1 and inTandem2 were presented by Dr. John Buse and Dr. Thomas Danne, respectively, at ADA. This new data showed that sotagliflozin 200-milligram and 400-milligram with maximally tolerated standard of care insulin therapy significantly reduced A1c, total daily influence dose and weight at 52 weeks when compared to optimized insulin alone. Interestingly, full data from both studies showed that up to 83% of total insulin reduction was attributed to a reduction in bolus insulin at week 52 as seen in the slide. This may reflect SGLT1 inhibition in the GI tract. Our hypothesis have been that SGLT1 inhibition could limit postprandial glucose elevation making it easier for patients to manage mealtime insulin. In turn, that could make it easier to avoid hypoglycemia. Clinicians were particularly impressed by the finding that sotagliflozin increased the percent of time spent inside the target glucose range of 70- to 180-milligram per deciliter.

Despite best efforts to optimize insulin lower A1c rates, patients still spent only 12 hours per day in glucose target range. That time and ranges increased to 15.5 hours per day when patients are on sotagliflozin, which represents almost a 25% increase in time and range. This slide shows that patients treated with 200-milligram and 400-milligram of sotagliflozin, significantly increased time and range by 1 hour and 17 minutes and nearly 3 additional hours, respectively, and importantly, these dose-dependent clinically meaningful improvements occurred without an increase in time spent in hypoglycemia. The placebo group showed no change despite continued efforts to optimize insulin at 24 weeks.

We also analyzed measures of glycemic control in this sub-study, which included mean daily glucose, 2-hour postprandial glucose and the mean amplitude of glycemic excretion, MAGE, which is an important measure of glucose variability. On this slide, you can see that sotagliflozin significantly reduced all these parameters compared to placebo, with the greatest reduction occurring with the 400-milligram dose. It is worth noting that sotagliflozin 400-milligram provided a nearly 50% additional benefit above what was observed at the 200-milligram dose. And that this degree of postprandial benefit has not been reported with any selective SGLT2 inhibitor. These data reinforce the contribution of SGLT1 inhibitions provided by sotagliflozin. The reduction in mean glucose on the left is prevalent by large reductions in glucose excretion after meals seen in the middle panel. The glucose excretion after a meal are a key source of glucose variability, and it is the daily ups and downs that are so difficult to manage. Smaller glucose excretion mean variabilities decreased as seen in the panel on the right. Since the reduction in mean glucose on the left is matched by the reduction in glucose variability on the right, the results provided perspective on how glycemic control could be improved while avoiding hypoglycemia. Insulin alone was unable to achieve this.

We have the largest and more -- most comprehensive safety database in type 1 diabetes of any SGLT inhibitor. A relevant safety feature for patients and physicians is severe hypoglycemia. As you can see on the slide, there was less severe hypoglycemia in sotagliflozin treated patients than placebo in the 52-week studies inTandem1 and inTandem2, while incidences were similar in the shorter-duration experience of inTandem3 study.

On this slide, you have the rate of hypoglycemia with blood glucose less than or equal to 55 milligram per deciliter. There was a significant reduction in these hypoglycemic episodes described in inTandem3 publication. Significant reductions were also seen in inTandem1 and inTandem2 and published in Diabetes Care in June. Across the board, in every Phase III study for sotagliflozin, there was approximately 20% reduction in the rate of hypoglycemic events per patient year. Diabetic ketoacidosis, or DKA, is a known risk in type 1 diabetes.

Turning to this slide in a pooled analysis of inTandem1 and inTandem2, 0.2% of patients treated with insulin alone experienced positively adjudicated DKA events at 52 weeks compared with 2.9% of patients treated with sotagliflozin 200 milligram and 3.8% of patients treated with sotagliflozin 400 milligram, and these results were in line with that seen in inTandem3. These results are consistent with the general experience of other SGLT2 inhibitors in Phase III studies of type 1 diabetes. Importantly, like Lonnel mentioned, at ADA, a meeting was conveyed to development consensus guidelines for the management of DKA risk when using SGLT inhibitors. There was a strong consensus that SGLT inhibitors should be made available to patients with type 1 diabetes with benefits significantly outgrowing any risk. This group agreed that the small increase in DKA incident could be managed and mitigated with appropriate education and monitoring. The group plans to complete the development of consensus guidelines and present the guidelines at an international medical meeting later this year, followed by publication in a peer-reviewed journal by year-end.

In short, the data presented at ADA further increases our confidence that sotagliflozin SGLT1 mechanism distinguishes the drug efficacy and safety profile in type 1 diabetes. The SGLT1 mechanism is characterized by its reduction of postprandial glucose and glycemic variability. This leads to a modest reduction in overall insulin that are more heavily weighted towards mealtime insulin rather than basal insulin. This could help patients avoid hypoglycemia. It appears to limit the urinary glucose excretion, which can also help limit DKA.

Overall, we see a profile of efficacy and safety that supports approval in type 1 diabetes. We are excited about the prospects of sotagliflozin, and we and Sanofi continue to work closely with the regulatory agencies to make this therapy available to patients with type 1 diabetes.

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

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

Now please refer to Slide 16 of our presentation. As indicated in our press release today, revenues for the second quarter of 2018 increased 14% to $13.8 million from $12.1 million for the corresponding period in 2017, primarily due to an increase in net product revenues partially offset by lower revenues recognized from the collaboration and license agreement with Sanofi. Net product revenues for the 3 months ended June 30, 2018, included $6.0 million from net sales of XERMELO in the U.S., up 65% from the prior year quarter and 11% from the first quarter of 2018. Net product revenues for the second quarter of 2018 also included $1.3 million in the sale of bulk tablets of XERMELO to Ipsen.

Cost of sales related to sales of XERMELO for the second quarter of 2018 increased to $0.8 million from $0.5 million for the corresponding period in 2017.

Research and development expenses were $26.6 million for the second quarter of 2018 compared to $26.9 million for the corresponding period in 2017. Selling, general and administrative expenses for the second quarter of 2018 decreased to $16.8 million from $18.5 million for the corresponding period in 2017, primarily due to decreased marketing costs.

Net loss for the second quarter of 2018 was $34.7 million or $0.33 per share compared to a net loss of $35.1 million or $0.33 per share in the corresponding period in 2017. For the 3 months ended June 30, 2018 and '17, net loss included noncash stock-based compensation expense of $2.9 million and $2.4 million, respectively.

We ended the quarter with $209.7 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 in the XERMELO brand within the next 12 to 24 months.

Turning to guidance. Doubling XERMELO net sales from last year remains our goal, but we'll require a positive change in the trajectory of our new patient enrollments. We have confidence that the deployment of our sales force in the second half of the year should result in positive effects. We are otherwise reiterating our financial guidance for 2018. On the R&D front, we have now fulfilled our obligation to Sanofi for our portion of the planned type 2 diabetes development cost, totaling $100 million under the alliance.

Looking beyond 2018 with the acceptance of our regulatory filings for sotagliflozin in type 1 diabetes and continued advancement of our sotagliflozin program in type 2 diabetes, we are steps closer to the potential realization of substantial milestone payments under the Sanofi alliance, which included development and regulatory milestone payments of up to $430 million. You can appreciate how achieving these milestones together with potential sotagliflozin royalties and progression to breakeven in profitability of XERMELO will potentially be financially transformative for Lexicon.

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

(Operator Instructions) Your first question comes from the line of Yigal Nochomovitz with Citigroup.

As you think ahead to the potential FDA approval for sotagliflozin, could you just give us a sense as to what you're doing with regard to planning for the AdCom? And specifically, how is that going to work? Is that something that Sanofi will take the lead on as far as representing the drug and the data? Or will that be a team effort in terms of being present and take questions at the AdCom?

Great question, Yigal. This is Lonnel. Yes, it's a joint effort. Sanofi will take the lead and have the lead because as you know, they now own the NDA, but we are the subject matter experts, and they have a lot of expertise to add as well. So it is a remarkable joint effort, that planning has been underway. A lot of work has gone into preparing for. I will stay at this juncture, the agency has not committed -- have not communicated with us that there will be an AdCom, but it is our expectation that there will be one. And when they do -- if they should communicate that to us that there will be one as we believe they will, we'll be adequately prepared to be ready for it. So lot of efforts going into both organizations as we go forward.

Okay. And Jeff, you mentioned on the $438 million in milestones, how much of that could realistically be realized in the next 12 months from Sanofi?

Well, in the next 12 months, we're really looking at the approval and commercial launch for sotagliflozin in type 1 diabetes. But in 2019, the number of the type 2 diabetes trials read out, and there are a number of milestones that are associated with the outcomes of type 2 diabetes trials. So there are a number that are coming sort of in that sort of 2019 to 2020 time frame. In total, there are about $330 million in milestones that are associated with type 1 and type 2 diabetes approvals and outcomes of studies. And then there is a balance of $100 million that's related to outcome studies that would come after the initial approval in type 2 diabetes or anticipated to come after the initial approval in type 2 diabetes.

Okay. And what you need -- what you guys need to be to -- on revenues to breakeven on XERMELO? How close are you right now?

Well, we still have some work to go, but we're making steady progress, and we expect within the next year or 2 to be able to get the breakeven on XERMELO.

Okay. And then just one question on 2761, so that's a pure SGLT1? Is that a more prudent blocker of SGLT1 than sota?

Great question, Yigal. Trying to develop an SGLT1 by itself has its own levels of challenge. But I'll let Dr. Tyle speak about that.

Yigal, Praveen here. Yes, it is much, much potent SGLT1 inhibitor. And as you probably know that we are in the late-stage Phase Ib study, as we speak.

So we'll have some to say more about that, Yigal, in the second half. The work we're doing on 2761 that Dr. Tyle's team is leading.

Your next question is from the line of Jessica Fye with JPMorgan.

I was curious on your interpretation of the Lily empagliflozin type 1 top line release, and in particular, the language around the elevated rate of DKA on the higher 2 doses and the comment that they're discussing next steps and exploring options. Curious how you interpreted that top line release?

Thank you, Jessica, for the question. We would interpret as top line release. There was no real data, so there is no way to respond to lack of data. It would tell me that certainly there was challenges in 2 other higher doses, and they added a third lower dose, which -- with one trial, which as you know, they need 2 trials with any dose. And they also need 52 weeks of data on any dose to be able to file. So all I know is at this point, they presented a top line without a top line, meaning, we don't know trends or statistics or any of that. So we have no way of really responding to it. So we'll have to wait and see what Lily has to say going forward. As always, it's my view that we should watch both AZ as well as Lily very closely, and we'll see how much progress they make relative to progress that we've already made. What I'm very confident about is that at this stage, all of our data is in, all of it. All this is front of the reviewers, and that we're pretty confident where we are to date and others right now, I'm not sure exactly what they're expressing.

Okay. And maybe just sticking with kind of the competitive positioning. You kind of highlighted some of the CGM and timing range data. What do you think is the most differentiating aspect of the sotagliflozin either efficacy or safety profile relative to dapa based on the data that we've seen so far?

I'll give you 2 points to view, and I'd turn it over to Dr. Lapuerta for his thoughts. One is, I think, as we continue to make the strong case, the hypoglycemia data is unparalleled, and we chose to speak about it here today. We spoke about it at ADA, and I don't think anyone else can show the data that we have shown so far across our entire program to show that sotagliflozin has the ability to reduce hypoglycemia. We have to make the argument certainly in front of the regulators, and we certainly intend to do that. The second one on the efficacy side, the postprandial glucose, we look at that data, it is amazing. When you put it up against -- it certainly is not head-to-head, but the data that's been presented thus far by others, it's nowhere close when we look at the mealtime reduction and excretion. So I think those 2 pieces are really the 2 strong pieces, and we've always argued is directly -- we believe, has a direct correlation to the SGLT1 component. And so that is starting to emerge very clearly as others start to bring their data forward, and we all have the ability to then look at our data. So that would be my point of view. Dr. Lapuerta, do you have anything you want to add?

Yes. In terms of the PPG reductions, we think they mean a lot to patients because we've had a lot of positive feedback from the Science that patients really value their improvements in glycemic control. And so that's something they see day-to-day, and I think, it underscores the uniqueness of our patient-reported outcome data. We're not aware of patient-reported outcome data in these other trials, and yet we've shown significant improvements and satisfaction and significant reductions in diabetes distress with sotagliflozin compared to placebo. And then I think beyond that, beyond the satisfaction of controlling diabetes better, it's the hypoglycemia, I think that is a big barrier to achieving glycemic control, and we're very pleased that we have free robust data on hypoglycemic events less than 55. The program has almost -- I'll give you a ballpark, 1 million estimates of blood glucose from glucometers that were updated into -- to the Internet from patients participating in our clinical program. And that's why in each of the Phase III study, we were able to show evidence that sotagliflozin reduced the incidence of hypoglycemic events on self-monitoring of blood glucose. Thank you.

You bet. Jessica, if I can add only one other thing that Dr. Tyle pointed out to me. One of the things was pointed out, what they believe that helps the Lily folks that in terms of the data presented, the 2.5 milligrams dose that was shown that they were touting, it really came down to how much urinary glucose excretion that was occurring, which we found to be remarkable in what they showed. And I believe, you believe that was the sweet spot. If you correlate to how much urinary glucose is excreted by the 2.5 milligram dose relative to our 400 milligram dose, then I would say, sotagliflozin is already in the sweet spot on both doses. So it's not just the dose, it's what does the dose correlate to, to the urinary glucose excretion. And so therefore, we found it very, very exciting to hear that he agrees with us, and from my point of view, if he's talking about UGE, not just dose. Dr. Tyle, you have anything you want to add to that?

I think, there was a comment which was basically made at meeting, which said that perhaps this UGE is directly linked to DKA rate, and that's why they are seeing that sweet spot. So our UGE number for 400 milligram is very similar to 2.5 milligram ramp up.

So Jessica, we like -- even when they presented their data, we left even more confident.

Your next question is from Chris Shibutani with Cowen.

If I can just review what the relative time lines are for the regulatory process for sota in the U.S. and in Europe? Can you just remind us how we think events might play out and, particularly in terms of events that we could get some tangible update? I think the U.S. filing put a PDUFA of March 22, so when AdCom seems logical in the first quarter. Could you juxtapose that against what kind of potential correspondence and the typical schema of 100 (inaudible) questions, whatnot over in Europe, so that we can get some understanding of when can you get tangible feedback from the U.S. and Europe in regulatory process which are occurring in parallel?

Yes, Chris, great question. As you know that -- as I stated earlier, Sanofi is running the regulatory process. So I'll give you what you can look forward to, generally speaking. I think as we get into towards the end of the year, we'll have a better sense of 2 things. One is, will there be an Adcom? That's the first thing. And two, we'll have a better sense of when there'll be an advisory committee. So those are the 2 things we'll probably learn in the third and fourth quarters hopefully, and then we'll talk -- we'll be able to talk some more about that when we know that. For EMEA, those conversations are active and ongoing. And I would say that we're on a pretty solid time line with the regulators and are engaged with them, as we speak, certainly to answer the questions that they have put in front of us. As you can account forward, you can figure that we're in that period -- now where we're answering lots of questions for the EMEA. And so I would say, our teams are working on that, and we'll probably have more to say, again, as we get into later on to the third quarter early fourth quarter about that correspondence. So that's a time line I would share with you. Our best guess if there is an advisory committee at the earliest, it'll be at the end of the year. At the latest, it'll be some time January first quarter -- that time frame. Still with a commitment with the PDUFA date in the U.S. of March 22, we're still on that trajectory and feel pretty good about it.

Okay. Then switching over to your comment about the consensus guidelines document for the management of DKA, could you just remind us -- do you expect that this is a document that will include describing patients who may not be appropriate for certain therapeutics that may be associated with DKA? It seems it -- I'm not sure, whether it's just once the patient has what the consensus for clinical management once the event has or complication has occurred? Or do you expect this document to also encompass a little bit more in terms of perhaps somewhat paradigms or the use of certain agents?

Chris, great question. We're not in control of that process. We are observers. We thought it was a great idea. I think it's a fantastic idea. The fact that they came together knows really they believe that these components need to be a market. They are being used and there needs to be clarity put to them. So I thought that was a fantastic advancement. I think 3 things that should come from this, I hope, one is to your point, patient -- a certain type of patient should be on these drugs, which is very, very true with you. If you've a -- you're on a low carbohydrate diet is probably not the best in your type 1 patient. These drugs probably not the best for those patients to use because you get the same kind of effect and you can get ketosis much faster if you're on a lower carbohydrate diet. And so things like that I think they are looking at to say, these are precipitating factors of getting DKA period, and then you don't want to accelerate that by being on the compounds as well. So I think you'll have that level of discussion, and I think that may be called out. I think the second important point would be called out are, what are the intervention points when you see patients who may be going into ketosis, what do you need to do, and what rules need to apply when that happens. And then thirdly, I think they're going to look at what type of ketone monitoring. Should it be BHB meters or should it be the urine monitoring of the -- with this [type]. I think those are the 3 places they apply, and we think those are all 3 the right places for them to give some guidance overall to the marketplace. So we look forward to that guidance coming out some time of this year, and then certainly followed by publication, so it's open to everybody to view.

And then lastly on XERMELO, the patient assistance program constraints have been a factor kind of a headwind to the XERMELO launch. Can you comment now that we're sitting here just past the midpoint of the year about what you expect the outlook for patients with these programs to be beyond 2018? Is there anything there that gives you an indication that things could improve? Or will that still be the same or potentially get worse? But any color there would be helpful.

Yes, Chris, great point. It has become a headwind, was not one that we predicted or could have predicted. I think it's just the macro environment that we're in, and there is a lot of efforts that I know has been placed on trying to change some of the rules around Medicare patients and how you could help Medicare patients. There is some to the way companies have been able to help our commercial paying patients, but I think that's far out. And so I do not see this alleviating anytime this year, and it could certainly become an issue in 2019 as well before we see any real effort that will shift this headwind. It's not something I think that we're dealing with by ourselves, but I think it's more of an industry issue right now, and how this came about. But what we hope, Chris, is as we get some selling out of the patients who are eligible and going into the patient assistance program, physicians are getting more utility out of XERMELO and they're learning more about XERMELO that ultimately should help our paying business. But right now, it's become a -- became a headwind because the numbers are fairly large that we would have otherwise projected to have been paid patients are now getting free drug. So no guidance for this year, and I don't see any alleviation from it going into '19.

Your next question comes from the line of Alan Carr with Needham & Company.

Why don't -- can you talk a bit more about the sales force in the commercial infrastructure around XERMELO? I remember, you made some changes, I think, it was earlier this year. Maybe if you can characterize that a bit? And whether or not any of these changes have helped? Then also looking into the pipeline, can you talk a bit about your plans for telotristat in oncology and then also a bit about the design of the 2761 Phase Ib, what can we learn from that? And what will we learn from that?

So let me start off, Alan, with the sales force. Yes, we're very pleased with the actions that we took. As you all know that we saw our growth was fairly flat quarter-over-quarter last quarter, and you see pretty good growth coming into this quarter. All that is a reflection of 2 things. One is that we made some shifts in the proportion of patient -- a proportion of field personnel that would be clinical nurse educators, who can do more and certainly, work with patients on staying on drug as necessary and/or ensuring that they receive drug as intended by physicians. Also, we've been able to increase the level of experience that we have on to our field force, that has now settled out. And therefore, we believe we'll carry the full effect of that selling out into the second half. So it did yield us better growth than what we had seen in the previous quarter, so we're pleased with the changes that have been made. Relative to further development in oncology, we're still working with many KOLs. What we're very excited about, Alan, since we certainly have talked about going into the space, we have received a lot of request that have come inbound relative to studying XERMELO, particularly in NETs. And so what we're evaluating is what's the best way to develop evidence with this compound in the NET community. Should we go forward with a company-sponsored trial? Or should we began to work with these different centers who have asked for support? So that's under active review. The biliary tract cancer work that we're trying to accelerate because we think it can make -- there is a strong preclinical basis to do this work, and that's what we -- I think you'll see more acceleration from us as -- on a company-sponsored basis. And then I think, your last question is around 2761, and I'll turn it over to Dr. Tyle.

Well, Alan, we are doing a traditional Phase Ib study in type 2 patients. So what we are doing is we are using ascending dose as the function of time, so we are basically giving the same patient multiple doses. So it's a traditional multiple ascending dose protocol, but it is limited by the duration. And what we are basically checking is what is the maximum tolerated dose in that population. So this population is going to be type 2 population, and we are going to basically find out what is the maximum tolerated dose in this population. So this will provide evidence for us that what dose should we take forward in Phase IIa trial, where we do proof-of-concept work. So it is more or less a safety -- traditional safety study with multiple doses, but with limited duration, okay, because we are dosing these patients, as you might have seen on ClinicalTrial.gov, for 8 days per cohort.

Yes, 276 -- go ahead. Alan, I'm sorry.

No, that was it.

Okay. Yes, 2761 is an important component, and it gives us great optionality. So finding the dose that gives us that optimality in terms of do we want to do something in combination with other things, that becomes a tricky part. And I'm sure. Dr. Tyle and team will figure that out.

(Operator Instructions) Your next question comes from the line of Stephen Willey with Stifel.

Just 2 from me. So one just with respect to the recent CREDENCE data we just saw from J&J, just kind of curious as to your thoughts there, whether or not you think that data may impact patient enrollment in this core outcomes trial, that Sanofi is running? And I guess, any impact that you see or don't see on the longer-term competitive positioning in renally impaired type 2 patients? And then just on XERMELO, lots being discussed about the patient assistance headwinds. Just kind of curious what has to happen operationally outside of the patient assistance program to get the volume growth kind of moving again?

Yes, Steve, let me start with your first question, first with XERMELO. I think we're doing that right now, and I think that's way you saw a return of growth is really about execution and getting into the proper centers and being able to drive the proper centers, make sure we cut off the leaky buckets that we have before, which I think we've done a fantastic job of doing now. Now it's about just accelerating the growth. We have the talent in place to do that. I think we have the structure right, proportionally to our medical affairs organization, our clinical nurse educators and then our field force. So I think, we -- this is all going to be about grunting it out and executing very well from this point forward. As we talk about the CREDENCE program, I'll just say, how cool is it? These compounds -- these SGLT compounds are remarkable. And I think it's just another study in this class of compounds that argues greatly why they should be frontline use in the type 2 setting, that's my view. And I thought the data was quite remarkable, but it also gives credibility to what we have said always with sotagliflozin and our ability to have impacts with renally impaired patient when you add in the SGLT1 component. So we're very encouraged by the data, but it should give great encouragement also to the work that we're doing for the renal population as well. In terms of what impact is going to have on enrollment, I'll turn it over to Dr. Lapuerta for any commentary he may have there.

Yes. I think in the long run, the -- all the value around the SGLT2 inhibitors could potentially impact enrollment in late-stage outcomes trials. But I'm very pleased that this cohort has great momentum behind it. I don't think I should give exact numbers of size or exact numbers of patients, but it has a good momentum that's progressing well, and therefore, we don't think that in the near-term, we're going to see an impact of CREDENCE on enrollment in our cardiovascular outcomes trials.

Yes, and Steve, this is one of the things that we're very excited about because we think that SGLT2 inhibitors in sotagliflozin, there is data building about the benefit in chronic -- in patients with chronic kidney disease in terms of preservation of the kidney function. And with that, we think there is an opportunity for the class to grow significantly as it becomes more apparent that this is an important class. But within that same patient population, one of the challenges for the selected SGLT2 inhibitors is not providing them with glycemic control. And that's where think the SGLT1 component of sotagliflozin will allow us to provide the better glycemic control, but also to be able to participate in this market for SGLT2 inhibitors should grow because of the broad benefits that we're seeing across glycemic control, cardiovascular benefit and now chronic kidney disease.

Yes, I think to Jeff's point, I'll hold onto my own view. What I don't like is the class seems to have slowed when this class should be growing relative to other classes. And I think as these data continue to come forward from this class of compounds, this is the class of compound that should be having most remarkable growth in the type 2 setting versus any other class at this point. And I think as this evidence gets built, it's really setting sotagliflozin up for a very good position when we come to market because I think these guys are going to do a pretty good job of making the case why these class of compounds should be moved up, which increases the opportunity for the SGLT marketplace and certainly, increases the opportunity relative to how we're developing the drug.

At this time, there are no additional audio questions. I would like to turn it back over to Mr. Coats for closing remarks.

Well, thank you. I'll close by saying our main priorities remain unchanged and include driving -- which includes driving the long-term value through continued execution on the XERMELO launch, advancing the clinical development of XERMELO in the area of oncology, obtain a regulatory approval for sotagliflozin in type 1 diabetes and developing a supportive evidence that would differentiate sotagliflozin in type 2 diabetes, while advancing our pipeline. I look forward to updating you on future calls relative to the progress we make on these priorities. With that, I'll say thank you and really appreciate you joining us.

Thank you. This concludes today's conference. You may now disconnect. Speakers hold the line.