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Executives

Alex Abuin – Vice President, Alliance Management & Corporate Communications

Arthur T. Sands, M.D., Ph.D. – President and Chief Executive Officer

Pablo Lapuerta, M.D. – Senior Vice President of Clinical Development and Chief Medical Officer

Jake Kushner, M.D. – Section Head, Pediatric Diabetes and Endocrinology, Baylor College of Medicine

Dr. Paul Strumph – University of Pittsburgh Medical Center

Dr. Brian P. Zambrowicz, Ph.D., – Executive Vice President and Chief Scientific Officer

John Northcott – Vice President of Marketing, Commercial Strategy & Operations

Analysts

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Tom O. Seitz – Jefferies LLC

Liana Moussatos – Wedbush Securities, Inc.

Whitney G. Ijem – JPMorgan Securities LLC

Thomas A. Wei – Jefferies LLC

Lexicon Pharmaceuticals, Inc. (LXRX) 2013 Research and Development Day Conference Call December 5, 2013 9:00 AM ET

Alex Abuin

All right. I think we’re ready to start. Good morning, everyone. My name is Alex Abuin, I Head Communications for Lexicon. I would like to thank you for coming out this morning, and I would also like to thank everyone joining through our webcast available at www.lexpharma.com.

Before we get started with today’s presentations, I would like to remind everyone that this presentation contains forward-looking statements, including statements about Lexicon’s plans or the development of its drug candidates and assessment of their therapeutic and commercial potential. The timing of regulatory filings and completion and initiation of ongoing and future clinical trials of Lexicon’s drug candidates and Lexicon’s drug discovery and research programs, growth and future operating results, future capital needs, strategic alliances, intellectual property, as well as other matters that are not historical facts or information. These forward-looking statements are based on management’s current assumptions and expectations and involve risks, uncertainties and other important factors that may cause Lexicon’s actual results to be materially different from any future results expressed or implied by such forward-looking statements.

Information identifying such important factors is contained in our reports filed with the Securities and Exchange Commission. Lexicon undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

Again, thank you very much. And we look forward to sharing our day with you. Arthur?

Arthur T. Sands

Thank you, Alex, and I would like to add my words of welcome to everyone today. We have not had a Research and Development Day with a thorough review and quite sometime, so this will be a very dense agenda, I’ll walk through that with you and introduce it.

It is a product as you all know who have followed Lexicon for sometime. The products will be to discussing, resulted from our discovery engine, which sets the foundation in genetics, and I do believe as we go through the data, you will see the observations from genetics hand carryforward to chemical entities that interact with a targets we’re identifying, I think that’s part of the power of our platform being translated into now what we believe our very differentiated product opportunities.

So we’re in the midst of moving into late-stage development. We have one program already in Phase 3, that’s our carcinoid syndrome program. And I think I’m back as our diabetes program. And that will be – I think a significant amount of the agenda today.

So let me turn to the agenda and walk through how we’ve outlined things and what we will be discussing. We want to start off with diabetes. This will be a very in-depth presentation. We will set the context of the presentation by a very brief review of our results we’ve already disclosed to-date from our Phase 2b trial and Type 2 diabetes, and Pablo Lapuerta will be delivering that. And then we’ll spend quite sometime on the renal impairment data, which is our most recent results from Type 2 population, in a very important proof-of-concept study, in a challenging patient population, and so we will be going through quite a bit of data there.

Then we’re going to shift gears to a new dimension for the drug, which is in Type 1 diabetes. And this being a new area, we’re very happy and pleased to and honor to have an expert in the area of Type 1 diabetes, Jake Kushner joined us, and he will be describing this area of unmet medical need, and I think it’s quite a education excellent, not only help set the stage for reviewing the results we have to-date in Type 1 diabetes from our pioneer study, and we’re beginning an update on the Phase 2a study that is running in Type 1 diabetes. That will be delivered by Paul Strumph, who is our Head of the diabetes program.

We’re very pleased Paul joined us this year. He is – among his and his background is – his experience as Chief Medical Officer at JDRF, and so he extremely well verse in Type 1 diabetes. Then we’ll have a break and then we’ll shift gears to move to our tryptophan hydroxylase inhibitor program and the Phase 3 program with telotristat etiprate and carcinoid syndrome. Paul will be giving an update on the Phase 3 program and progress of the program. And then another new element to our company is our Head of Commercialization and Marketing, John Northcott and he will be presenting the market opportunity in carcinoid syndrome.

As you all know, it’s an orphan indication and it’s a quite bit of study to really understand how the drug will rollout and how physicians we anticipate will be prescribing to Telotristat etiprate to these patients. And John has conducted to external market research groups an initial analysis of this market and will be sharing some of those results with you today. And I think that will be quite interesting, then we will go into our most recent Phase 2 results in IBS-d will LX1033 and then trial in ulcerative colitis and Telotristat etiprate.

And Pablo and Brian will be leading, Brian Zambrowicz will be leading those discussions. We’ll then end with a very exciting new program, a new compound that is in IND-enabling studies that is designed to act locally against SGLT1 in the GI track. And we think that this SGLT1 sort of focused mechanism will be in the emerging new target in diabetes. Obviously LX4211 is a dual inhibitor, we already know a lot about an addition of SGLT1, but I think LX2671 is going to be teaching us even more and will be a differentiated product of the future to keep your eye on.

So Brian will be going through that and then we’ll wind up with good question-and-answer. We can have question-and-answer as we go at each section and I’ll be sure to try to moderate that and keep all of our figures on track that in terms of timing. So with that I think we will dive in to type II diabetes and LX4211 with Pablo Lapuerta. I’m going to go ahead and move down and give everyone a little more room here at the stage and moderate them. Pablo?

Pablo Lapuerta

Thank you, very much. Good morning. It’s a pleasure to be here. You are familiar with our mechanism of action, maybe most familiar with SGLT2 inhibitor, especially with the success of canagliflozin promoting urinary glucose excretion, the differentiating aspect for LX4211, its SGLT1 inhibition in addition to SGLT2. The SGLT1 inhibition reduces the absorption of glucose in the gastrointestinal track, as a secondary consequence, it leads to elevations in GLP-1 and PYY. LX4211 is the first in class dual inhibitor of SGLT1 and SGLT2 if you look at the list of drugs and clinical development. I think one of the main changes that we’ve had over the past year, is that Novartis has announced that it’s entering Phase 2 with a dual SGLT1/2 inhibitor.

For late stage development in commercialization we hope to leverage its unique dual mechanism of action with a robust Phase 3 program and patients with diabetes alone and are in combination, but whatever things we want to emphasize or I think we see great opportunity and I’ll share with you some results today as an opportunity in renal impairments. And also in type I diabetes in contrast to other programs, we started going into research in type I diabetes early because we think it’s a special opportunity, where we can differentiate our compound.

Also we believe that in contrast to other compounds because of the SGLT1 effect, we have a good opportunity to show synergy with DPP-4 inhibitors. LX4211 significantly elevates GLP-1, while DPP-4 inhibitors inhibit its breakdown. And given the magnitude reaching of blood pressure lowering combined with the other beneficial effects on weight and hemoglobin A1c, we do believe that we have a potential to demonstrate a significant cardiovascular benefit with LX4211. This is supported by our Phase 2b results in type II diabetes. It was a study that had about 300 patients placebo and several different doses of LX4211 focusing on hemoglobin A1c, looking at 12 weeks duration of treatment.

These are the results we presented at the American Heart Association last year and it was exciting to see the magnitude of hemoglobin A1c reduction with LX4211 at its top dose 400 milligrams, a 0.95% reduction and not yet reached its plateau contrasts to the effects of placebo only 0.9%. SGLT2 inhibitors that have been developed in Phase 2 at 12 weeks had previously shown a hemoglobin A1c benefit of 0.70 placebo subtracted. With LX4211, we had something that was certainly more than that greater than 0.8.

However, one of the most interesting things about these results is the difference you see between the blue curve, the 200 milligram dose and the black curve the 400 milligram dose. This is a large difference in hemoglobin A1c between 0.52 and 0.95, the reduction and was achieved without any additional urinary glucose excretion. We believe this is the first clinical evidence of meaningful SGLT1 inhibition in patients with diabetics.

Do you see the blue and the black again, the 200 milligram dose and the 400 milligram dose, if you look at them here on the left, we see that urinary glucose excretion plateaued 200. Therefore that additional benefit with a 400 and hemoglobin A1c reduction was not due to urinary glucose excretion. Also if you look at the amount of urinary glucose excretion, this is someone less than that’s been higher doses of canagliflozin. So this also is differentiating.

Beside good reductions in body weight on the order of 2% and good reductions in systolic blood pressure. The systolic blood pressure difference is we’re particularly propound with the good dose response, 6 millimeters is a lot in the population whose baseline systolic blood pressure wasn’t very elevated was in the 120s. We explode this more and recently presented the data out of scientific congress. The blood pressure reductions we’re seeing mostly in the patients with the high baseline systolic blood pressure. These data are relevant from the standpoint of not just efficacy but also safety. Here we have on the left side the 400 milligram group. We have every single patients, the baseline blood pressure thought it against the blood pressure change. What you see is that the higher of the baseline blood pressure the bigger the change.

In terms of safety that we’re assuring because the patients with a baseline systolic blood pressure of around 120 millimeters you see them in this chart they had no blood pressure along. These patients with 130 and 140 millimeters is systolic that were getting blood pressure reductions that were in the order of up to 20 millimeters of Mercury. We look at all patients with systolic baseline blood pressure greater than 130 and their reduction with LX4211 400 milligrams was 14 millimeters compared to placebo 15 milligrams on 400 milligrams and 1 on placebo. And that’s how we got that difference and it was very robust. It is minimal systolic blood pressure change in patients with normal systolic blood pressure and that was very – we assuring a 1 millimeter reduction versus placebo in the baseline systolic blood pressure was normal.

In summary, we saw a significant and robust reductions in hemoglobin A1c and patients with further controlled diabetes. These were achieved with wise urinary glucose excretion that has been observed with selective SGLT2 inhibitors. The body weight changes and the blood pressure changes were notable. The adverse events were generally mild to moderate with an overall incidence of adverse events very similar to placebo.

Now, I’d like to take you to new results and renal impairment. Regarding to the area of renal impairment because we appreciated the high unmet medical need up to 40% of patients was Type 2 diabetes eventually suffering from renal impairment. And this is an area where many medications are contraindicated especially metformin most of the final urea and others.

We thought this was very appealing for LX4211 because this is where the SGLT1 mechanism of action can come into play. The opportunity is to prepare ourselves well for Phase 3 in an area of important unmet medical need to provide a perspective on that clinical meaning of SGLT1 inhibition with LX4211. And above all to differentiate compared to selective SGLT2 inhibitors, the labels are dapagliflozin in Europe and canagliflozin in the U.S., so limited benefit of patients with comprised renal function. More specifically dapagliflozin in Europe is not approved in the setting of moderate renal impairment and that’s the population we’re studying.

Canagliflozin is not approved in the U.S. for the population with modern rental impairment and estimated glomerular filtration rate less than 45. We make sure we had enough of those patients in our study to get a perspective of our potential benefit in that population. So we conducted this study with a primary objective of looking at the effects of LX0211 on post-prandial glucose. We chose post-prandial glucose because that’s a very robust measure. We are looking at serial glucose measurements over a several hours, four hours after a standard yield, but also we felt it was the signature of SGLT1 inhibition. If you are not inhibiting glucose, if you are not absorbing glucose in the gastrointestinal tract, you see that after a meal.

Secondary objectives include safety and tolerability, but we also wanted to look our testing plasma glucose in GLT1. GLT1 being the other signature of SGLT1 inhibition clinically. And we wanted to look at our pharmacokinetic effects which I will share with you, the LX4211 of this population to make sure that we can go forward with the 400 milligram dose. Patients entered the study after a washout phase, they were admitted to clinic and a control setting they have their standard mill administered at baseline and then we allowed them to have a few days as outpatient, but brought them back into clinic and again with a standard meal at seven days, looked at their post-prandial glucose.

We recruited 30 patients with eGFR less than 60 randomized 1:1 LX4211 400 milligrams versus placebo. And we were successful in getting about half the patients with an eGFR less than 45% results for less than 45 and greater than 45. These patients were older than in your typical type 2 study and that’s because renal impairment increases markedly at age. The baseline demographics were well balanced among the treatment groups. One of the most notable things is that the average number of years since a diagnosis of diabetes was 17 years, that’s one of the reasons these patients have renal impairment because of their long-standing type 2 diabetes. 90% of them had hypertension or 90% of them had hyperlipidemia and they were heavily treated and had not achieved glucose control with a variety of other medicines, including insulin which was common.

The safety was good. There were no serious adverse events in this study, no early discontinuations due to an adverse event. The adverse events were well distributed between LX4211 placebo. All adverse events were either mild or moderate. These are the primary results, the glucose after a standard meal and this is the evidence we see a clinical meaning for SGLT1 inhibition.

If you look on the left and you see the glucose after the meal at a day minus 1, which is the green line, it started around 140 and went up all the way up to 240. But seven days later with LX4211, it was starting at a lower baseline, about 124 it was peaking at only 190. The large difference is on the order of 60 milligrams per deciliter at one hour. We go from 170 on the blue line up to 230 on the green line on the left, that’s a 60 milligrams per deciliter difference at one hour.

We calculate the area under the curve as the metric of overall post-prandial glucose reduction and that is the difference between these two curves, and so there is a large contribution at hour one and hour two. Adding this all up together you have contribution of 170 milligram hours per deciliter. So that’s an average of about 45 milligrams per deciliter over the course of these four hours of the study.

Now as I present to you areas under the curve, I’ll present to you two results, one is the total results, which is the 170 that I mentioned, but I also share with you some data that exclude this benefit and in fasting plasma glucose and that’s called an incremental, incremental from the time point of when you first have the new administration. And so that will subtract out this benefit of around 20 milligrams per deciliter of around 4 hours. So we’ll have total and incremental AUCs. As you can see placebo had no change from day minus 1 to day 7.

For the postprandial glucose AUC is a 170 or LX4211 is the decline from day minus 1 to day 7, no decline on placebo. The placebo subtracted differences a 170 and the results were highly statistically significant. The incremental subtracting out that benefit in fasting plasma glucose was around 90. This incremental you’ll see is very useful for looking at changes in GLP-1 where there is no fasting change that ends up being a very precise measure.

Here the glucose results and patients with an eGFR greater than 45 mls per minute, so these were the most moderate of the patients in the study and you still see a benefit in them. With the same essentially qualitative difference of reduction in fasting plasma glucose in the lower peak with LX4211 and no real difference in our placebo yes some variability. Now that your sample sizes are a little bit smaller instead of 30 patients now 16 and here the patients with an eGFR less than 45 milliliters per minute.

We have small sample size here only 15 patients, but you still see the difference in reduction in fasting plasma glucose and the reduction in the peak glucose during a meal consistent with results at every single time point in this study and no difference on placebo. Here you also have a little bit of variability placebo patients here actually that a little bit worse at day 7 in that baseline.

Let me share with you some of the numbers in terms of the areas under the curve for these data. With the smaller sample sizes, the reduction in glucose with the LX4211 and the most moderate patients that’s 45 to 59 was no longer significant, but the sub group eGFR less than 45 which is a very important sub group had a very robust production in glucose that held up to statistical testing whether or not it was total or incremental.

To the fasting plasma glucose results, the reduction of 20 milligrams per deciliter is certainly clinically meaningful in canagliflozin in its Phase 3 six month impairment study with hundreds of patients showed an estimated reduction of 13 milligrams per deciliter. So this compares favorably and the results were about 17 and the most moderate patients 27 in patients with the estimated glomerular filtration rate less than 45. We have results for total GLP-1. Total GLP-1 increased consistent with the SGLT1 inhibition provided by LX4211. The results were significant and you could have single time point for day 7 versus day minus 1 was no difference on placebo.

I’ll share with you as well the most moderate group with eGFR greater than 45. We also saw the benefit there with no difference on placebo and in the patients with EFGR less than 45 we also saw the benefit again with no difference on placebo. The statistics and the incremental latency which is more sensitive where this type of measure that has no passing change, we see very low p values 0.005 were all patients for an elevation in total GLP-1 and this holds up in a group of eGFR less than 45 despite the small sample size we had good results with the p value 0.01.

Here is active GLP-1. It’s a sub group of GLP-1 with much smaller numbers. This is a little bit more variable. The proceeding went up to the total GLP-1 was going into the 20s. Here you have results going into a [indiscernible]. Nevertheless the results were better on day 7 for LX4211 at every single time point accessed and there was no difference with placebo. In the population with eGFR 45 the same results came up with no difference on placebo. Good elevations related to the SGLT1 mechanism of action and is resting well with the active GLP-1 elevations and patients with estimated glomerular filtration rate less than 45. The statistics showed significance for active GLP-1 for the overall population and in the incremental latency and also for those with the eGFR less than 45.

Pharmacokinetic data I think in the highlight here is the AUCs here in the last this is a measure of total exposure to study drug, and this is important because we want to be sure that 400 milligrams is a dose that we can take for into Phase 3 that there is no excess accumulation of drug, these results 3,000 and 5,000 for the eGFR greater than 45 and less than 45 show you that there was no dramatic accumulation, and it’s a matter of fact these exposures are similar to what you have with the 800 milligram dose in healthy volunteers, and I’ll show you that. It’s one of the things we wanted to do to complement this study is to do a study where we looked at the pharmacokinetics of our 800 milligram dose and we make sure that it was safe and tolerated.

So I’ll briefly share with you the results of that study, we evaluated 400 and 800 milligrams in healthy subjects, just recently, these are new data. We had good safety and tolerability, with no serious adverse events and we had exposures, if you see that are similar to 800 milligram dose. Here you have a value of 5,000 whereas in renal impairment you have these values around 5,000. So we are in a position to say that we have data in healthy subjects and in renal impairment with similar exposures and we are comfortable moving forward with a 400 milligram dose in deciding of renal impairment.

Perhaps most significant of all from the renal impairment study is the urinary glucose excretion, it’s important to demonstrate that urinary glucose excretion is low. And we have urinary glucose excretions that were 20 grams per day in patients with eGFR less than 45. That’s appropriately low and that’s similar to what’s been shown and studies with selective SGLT2 inhibitors. The difference is that in the studies with selective SGLT2 inhibitors in renal impairment, you do not have the glycemic efficacy even though you had this amount of urinary glucose excretion.

To go into a little bit more specifics about these studies in renal impairment with selective SGLT2 inhibitors, the canagliflozin Phase 3 study involve 270 patients with eGFR between 30 and 50 treated for six months, and the hemoglobin A1c reduction was only 0.3% with 100 milligram dose tripling the dose to 300 milligrams do not provide any benefit.

The fasting plasma glucose reduction actually I said was 13, I think corrected was 12 with the approved dose 100 milligrams and that wasn’t statistically significant in the study. Dapagliflozin also investigated its efficacy in renal impairment and showed no hemoglobin A1c reduction. That was 0.09% with a 5 milligram dose only 0.01% with a 10 milligram dose and that’s where you see fasting plasma glucose reduction that was around 13 milligrams per deciliter that was with a low dose, with a high dose they had no reduction in fasting plasma glucose.

Historically, the data for LX4211 in renal impairments compared very well for these data for selective SGLT2 inhibitors. And they give us optimism about the ability to differentiate in those three. We conclude that LX4211 improved glycemic control in subjects with Type 2 diabetics and renal impairment. The post-prandial glucose reduction was large and was very robust statistically. The benefits were very clear in the population with the lowest eGFR, they held up. The GLP-1 elevations were seen throughout and total inactive, they were a significant as well and they highlight that this was due to SGLT1 inhibition.

Importantly, these benefits were obtained with low urinary glucose excretion supporting that the basic concept of the study and why we entered this area of renal impairment. The top line safety and pharmacokinetic data support us moving forward into Phase 3 in renal impairment with 400 milligram dose and this will be a significant opportunity for differentiation.

Let me highlight just one other element here as we prepare for Phase 3. We have results from our QT Study. We did a thorough QT Study because it’s important to do before going into a program that could involve thousands of patients, and that includes very extensive sampling of the EKG and also pharmacokinetics in relationship to dosing. We studied up to 64 healthy volunteers and they took not just 800 milligrams of LX4211, but even 2000 milligrams. So we wanted to see is there any hint of the signal with really this large multiple of the daily dose. They also took in this crossover design moxifloxacin. Moxifloxacin we know increases the Qt interval, even though it’s an approved drug. And we wanted to make sure that we had a good study that could pick up signals by including moxifloxacin.

We had a successful QT study, the successful QT study means negative. There is no signal of QT elevation with LX4211. What that means more specifically is that we met FDA guidance. The FDA guidance is that you should exclude a QT prolongation signal of 10 milliseconds. Looking at all the values over time if all these assessments, the maximum mean value of the increase in the QTc interval for LX4211 even at the 2000 milligram dose was only 2.7 milliseconds. The 95% is confidence interval, excluded 10 actually it even excluded as small as a 5 millisecond change with LX4211, so this satisfies FDA criteria for a successful QT study.

Moxifloxacin increased the QT intervals substantially, it increased at a – let me just give you a ballpark of around say 6 milliseconds to 9 milliseconds throughout the study depending on the time interval and what we look for with moxifloxacin is a lower confidence interval to make sure that you saw a good QT elevation with moxifloxacin and indeed we do. That’s a quick review and I wanted to seen if there are any questions about our renal impairment data.

Question-and-Answer Session

Unidentified Analyst

We have the microphone, if we could please use those, if you have a question via webcasting. I think there is first question here. If you don’t mind just introducing yourself you can ask the question.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Yes, Stephen Willey from Stifel. Did you follow post-prandial glucose measurements beyond four hours in the renal impairment study and can you provide any kind of color around what that data looks like?

Pablo Lapuerta

Yes, I don’t believe it will be probably beyond four hours. I remember what these patients had to be careful and not have too many blood drops because a lot of these patients are immune.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

You have I think in prior studies looked at post-prandial benefits beyond just…

Pablo Lapuerta

That’s right we’ve looked at them in diabetic subjects with using ones in the morning LX4211, looking at the benefits at the breakfast and lunch and dinner meal and we see impacts on breakfast and lunch and dinner.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

With the perpetual changes in blood pressure that you guys saw dose dependent i.e. did you see a similar level of clustering at the lower 4211 doses?

Pablo Lapuerta

The blood pressure reductions we saw on Phase 2 were significantly dose dependent and that was very nice to see that 400 milligram dose reduced by pressure more than the 200 milligram dose despite the same urinary glucose excretion. So we have that same sense that SGLT1 inhibition, it’s contributed to add hemoglobin A1c reduction. We believe that it may contribute us well to added blood pressure reduction.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Additional questions, I have one there back and he probably went through a lot of data very quickly here.

Unidentified Analyst

Where you able to, I guess anything about contributions of SGLT1 versus SGLT2 in that renal impairment study less than 45 versus over 45 grew.

Pablo Lapuerta

We believe that the benefits we’re seeing, if I can just take you through just I mean the results slide, let’s go to glucose, with [indiscernible] less than 45. We believe this is mostly due to SGLT1 inhibition and the reason we believe that is because the urinary glucose excretion was very low in this group, it was only 20 grams for 24 hours. Then there still will be some SGLT2 benefit, but with canagliflozina and dapagliflozin, in this population it hasn’t translated into hemoglobin A1c reduction.

We believe that hemoglobin A1c reduction we have in this setting should be on the order of 0.5% or more. A way of looking that hemoglobin A1c reduction is a difference in your average glucose of 14, should result in a hemoglobin A1c benefit of 0.5%. Here we have a benefit of a point estimate I think was around 24 for this group.

So we believe this is, we can’t exclude some contribution from SGLT2, but we think historically in this population its small and that’s confirmed drive the low urinary glucose excretion. This is predominantly SGLT1 inhibition and it should be significant enough to have a meaningful hemoglobin A1c decrement.

Alex Abuin

Thank you. That really is the major take home message I think here that we have seen clinical proof-of-concept in this lower than 45 GFR, where the SGLT2 inhibitors have not shown benefit. And further more that as you’ve seen the very robust results, so the logic behind the study of course is that SGLT1 operating in the GI track is not that kind of benefit. It’s not going to be reliant on kidney function. And the severe renal impairment I think that’s what we’re seeing. So its very, very existing we know we’ve done a lot of work to demonstrate mechanistic differentiation of LX4211 but this puts that mechanistic differentiation into a clinical content, so clinical benefit and potentially a very substantial portion of unmet medical need in diabetes.

So this is I think very important study and I think when you combine it with the PK result in the Qt, we’re in excellent shape to engineer a very large Phase 3 program in the setting of renal impairment and include our dose of 400 milligrams and not have to back off that dose in those patients.

So probably we did an excellent job of keeping on track, I had to say there’s a lot of slide quickly and we’re not going to shift gears and move into Type 1 diabetes. There’ll be time for additional questions at the end of all the presentations and we can go back. So I would like to introduce Jake Kushner. Jake if you could join us here at the podium. Jake is the section head of pediatric diabetes and endocrinology at Baylor College of Medicine. He’s McNair Scholar as well in Houston. We’ve had the great privilege of having Jake advise us for a number of years on the evolution of our Type 1 diabetes program, which is probably going backwards always three years of work and planning. To move into this population and I think as we see as Jake will describe this is a very, very challenging population of patients to move into and we’ll be spending I think quite a bit of time thinking about the opportunities for this drug in that population. So Jake?

Jake Kushner

Thanks so much for the opportunity to speak to you today. My goal today is really to try to communicate to you the human impact of type 1 diabetes and how if we could come up with some novel therapeutics how would make a tremendous difference for pretty large population of patients.

Excuse me. So type 1 diabetes in the past was really a very scary thing for pediatricians such as myself. And the typical story is, parents would bring their children to pediatricians such as me and they would describe a child that had been drinking a lot and peeing a lot, but was otherwise healthy and the parent would wonder what’s going on, may be was a urinary tract infection or something else. The pediatrician would check the urine and find glucose in the urine and on that basis would make a diagnosis of type 1 diabetes. And up until 1922, there was really no therapy available for these children. They would prescribe a starvation diet and the vast majority of them would expire within a few years, it was a death sentence, really tragic.

And kids look just like this and they would ultimately waste away. But then along came this guy, is really a hero for many of us in the field Fred Banting. Fred Banting was a world war veteran that’s World War I. And he was a general surgeon and he was struggling in a dead end private practice in London, Ontario. And by the way this history comes from Michael Bliss and he worked on an agent book called The Discovery of Insulin, which I would certainly recommend any of you to read, because it’s a wonderful story.

So Fred Banting is struggling in his practice and he is bored and he reads the literature and he reads this article in this journal called Surgery of Gynecology and Obstetrics retire the articles, the relation of the islets of Langerhans to diabetes with special reference to cases of pancreatitis. He was wondering how we are going to come up with a novel way to treat type 1 diabetes and he goes to sleep. And this is October 31, 1920. And then we wakes up in the middle of the night. And he writes these notes into this little book on his bed stand. And says, diabetes, ligate pancreatic ducts of dog. Keep dogs alive to acini degenerate leaving islets. Try to isolate the internal secretion of these to relieve glycosuria.

And amazingly this turned into a legitimate therapy, he goes to the University of Toronto and he needs best and others and they are able to create a therapy within a [audio dip] few years later, there’s this child who comes for treatment to the University of Toronto, J.L. And two months later this kid is transformed back to a healthy kid, just miraculous, really one of the most wonderful stories in all of biomedical research. And many people had imagined that this would essentially transform and save type 1 diabetics forever. And insulin really did do that to some degree. It dramatically improved the mortality of type 1 diabetics.

In this graph you’re looking at the percentage of surviving patients and in the grey bars are those patients before the discovery of insulin and you can see that 90% would expire within a few years of diagnosis and then afterwards the vast majority would survive of over 90% surviving. That’s really exciting.

But there’s a fundamental question, was insulin cure for type 1 diabetes? And the answer is no. And so patients with type 1 diabetes began to suffer pretty severe complications in the years following the introduction of insulin. And this slide really nicely illustrates that it’s from Elliott Joslin who was a pioneer in the medicine of type 1 diabetes. And but you can see here is the major complications of type 1 diabetes are beginning to emerge in this population. And they are observing calcified arteries that is to say vascular disease and also retinitis proliferans that’s diabetic retinopathy, high blood pressure.

We’ve heard about this already, proteinuria, so patients who are beginning to suffer severe life threatening complications on insulin therapy. And this was really pretty disappointing to many people in the field. You’ll notice it’s happening only within a few decades after the onset of therapy. So it was in some ways really kind of confusing because some patients suffered complications and other patients didn’t. And there was a very intense debate in the filed about why these complications were occurring. Some said I was generic, I have – I’m a physician and I have one patient who does well and one patient who doesn’t do well, but they have seemingly the same environment and others, said no maybe it has something to do with the way these patients are being treated. And this debate raged on for years and years.

And finally, people began to wonder what are we going do about it? Here you can see the mortality of these patients. It’s really quite scary. So this is a study from the Allegheny cohort. And you can see on the vertical access survival it goes up to 100% and you can see that the patients are dropping off significantly within just a few decades. So by 30 years after duration of diabetes, about a quarter had expired. So really very scary. By the way there are very significant racial disparities in these cohorts. And so African Americans were doing much poorer than Caucasians and this is being observed again and again. And it probably has something to do with so-so economic status, but there may be other complicating factors, as well.

So we know that patients, some patients are really at very great risk for complications. And again those who don’t want to expire don’t just magically drop that on the ground, they suffer major complications and they tend to spend their lives in hospital. And so their essentially chronically ill and they use a lot of medical resources. So I think of the present era in type 1 diabetes is to find by this question, would improve glycemic control reduce the rate of complications in type 1 diabetes. And there is this amazing trial called the Diabetes Control and Complication Trial and this is carried up at A.N.H. and many of you probably know this trial, but it asked a seemingly simple question in a very elegant way. So what they did was they treated 1,000 patients without a very aggressive therapy, or the standard of the day. And here you can see the results. Those who are treated with a conventional therapy, they had hemoglobin A1c’s that were around 9.3. And within the first few years of the study had begun to develop serious complications of diabetes.

So this is early signs of diabetic retinopathy. And you can see that 50% or more show early signs of diabetic retinopathy. But in this aggressive that they call the intensive arm, the incidence of diabetic retinopathy was reduced by about two thirds. So this is amazing, and it says that what we do clinically can transform the outcomes of patients. And it says that probably every little bit counts. And in a way the DCCT redefined our field from going from saying well, you know, some people get complications and some people don’t, to saying that aggressive reduction in ambient blood glucose probably could – would make people live much longer healthier lives, and it essentially transformed our field. So now what we do is we think about kids and we’re trying to get their blood sugars as low as possible in a safe manner.

Another interesting part of this study is that the effects are not just short-term. So this cohort has been followed for many years since then and they called this the EDIC study, which is the follow-up. The patients were only randomized for eight years, but they’ve been followed for many years since then and you can see the effects here in this graph on the right for cardiovascular outcomes. So the difference of blood sugar is only for those eight years and yet there is a profound difference in major cardiovascular outcome.

Here in this graph what I’m showing is the cumulative incidence of any predefined cardiovascular outcome, and you can see that the conventional treatment arm on the top, which is the grey bar, has a much higher incidence of cardiovascular complications than the intensive treatment. So this had led to this concept of metabolic memory and a notion that every little bit counts in order to save human health in type 1 diabetes.

So at this point, the numbers are approximately 1.5 million people in United States with type 1 diabetes and they’re kids just like this, and it’s the most common life threatening, chronic illness of childhood in developed countries. It’s a big deal. So of all the things that exist in a children’s hospital, cancer and all sorts of other crazy things that could happen to kids, type 1 diabetes is the most common life threatening chronic illness of childhood, and they don’t outgrow it, they don’t get cured when they’re 18, they live with it and so as a result, we see quite a few adults who have type 1 diabetes. It’s growing in prevalence, it’s doubled since 1960, all ethnic groups and injected insulin is the only significant therapy. The word available, but that’s not technically correct, there is a drug called Amylin or pramlintide, which was – which has been marketed by Amylin, which has really failed to achieve any significant presence in the field because of concern about hypoglycemia, so very difficult to patients to use.

And again, we’ve talked about the risk of life threatening complications. So the reality is this is really quite complicated, these are parents, these are grandparents, these are children, these are people throughout all walks of life, they are not people who had some sort of lifestyle problem and got diabetes and their lives are utterly dependent upon injected insulin. And by the way if they inject too much insulin, they can go low and they can have very serious complications, unconsciousness or even seizure and we’ll talk more about this, and we’ve been awaiting for definitive therapies for a long time.

As it turns out, even though we know that better control leads to improved outcomes, it turns out that most people don’t have good control with type 1 diabetes, it’s difficult. If you give too much insulin, your blood sugar goes low. If you give too little insulin, your blood sugar is high, it’s very burdensome. They say that you can beat type 1 diabetes by readily learning to manage it, but the problem is you have to wake up the next morning and beat it again, and beat it again and beat it again.

And I have many close friends with type 1 diabetes and they check their blood sugar four to twelve times a day or they wear these devices that read the blood sugar constantly and it’s like one more thing to manage, it’s the equivalent to having an iPhone and checking your e-mail all the time, but you are checking your blood sugar, you are thinking, okay, if I give too much, my blood sugar is going to go low. So as a result, the success of people in United States with type 1 diabetes is not so great and the hemoglobin A1c is – this around the world, every survey appears to show that people who are getting Alcs around 8.5 or 9 is adults, and we know that that’s no where near good enough to reduce the rates of complications to an acceptable level.

So there has been a lot of talk about hypoglycemia and this is an ad from the [indiscernible] and it just illustrates the dangers of hypoglycemia and they report that a significant number of patients with type 1 diabetes can ultimately be at risk for fatal hyperglycemic events, and certainly in the data from the Type 1 Diabetes Exchange, so this is the Helmsley Charitable Trust and this is a registry of type 1 diabetes patients and what you look – what this slide shows is the three month frequency of severe hypoglycemia occurring to age and what you see is a large percentage of patients with type 1 diabetes are having a severe event every three months of around 10%, 12%. That’s a big deal. That’s either a seizure or loss of consciousness, when you could be driving a car or you could be at sleep, it’s pretty scary.

So we need something better than what we have. Our tools are really primitive and I’m here basically to beg to you guys to look to this market, to think about ways that we could ultimately affect some major change for this population. Well, obviously, there’s been a lot of talk about technology and there are advanced technologies and they can help and so this is an illustration of that, it’s an insulin pump and you can, instead of injecting insulin, you can have it infused in a pump, but it’s not a smart pump, it’s a dump pump, it only does what you tell it to. It’s like a wind-up toy, you send it and it goes. So it doesn’t know what your blood sugar is and it can’t make decisions for you. The way I think of it is, it gives you the opportunity to mess with you diabetes that much more intensely.

There are also glucose centers and these are blood glucose centers, but they are [indiscernible] glucose centers. One company Dexcom has one, but there are several others around the world and essentially this is something that’s implantable device and it will use glucose oxidase to read glucose and it will give you a read out and it will give you an alarm, if you’re going low, an alarm if you’re going high, it’s a very intense way to manage diabetes and it requires a really judicious aggressive perspective, because we have to think about it all the time. The uptake of these devices in our population has been relatively poor just because its – requires such an intense disease management philosophy, but they are very exciting devices and the people who use them in the right way appear to have a huge benefit.

Well, there has been talk about immunomodulatory therapies for type 1 diabetes and this slide shows an illustration of what are the studies that’s been done. This is with Rituximab and it was – this study was carried out by a large consortium including [indiscernible] and NAH and others as the type 1 trial in that group, the late Mark Pescovitz was the first author and so they used for Rituximab and they were able to modulate B cell function that’s not beta cell, but B cells, those cells that produce antibodies and Rituximab is effective and can modulate B cell function in patients with nuance of type 1 diabetes, but the trial essentially failed in its primary outcome measure, which was to improve hemoglobin A1c and which you see is that it doesn’t have a durable effect to preserve hemoglobin A1c.

And by many other measures, you see that you can sort of in a short-term stunt the immune system and you can slowdown the destruction of the pancreatic beta cells. I haven’t really talked about the pathogenesis of type 1 diabetes, but it’s an autoimmune disease and it’s just to the destruction of the beta cells. So if you shutdown the immune system to some degree, you can preserve the beta cells for a short period of time, but it’s not durable. And this trial is representative of many others that have been carried out and they’ve essentially always had the same result. They appear to fail to preserve beta cell function in a durable way. Maybe it will get better, maybe as we have more – we leverage more and more pressure on the immune system, we might be able to make a difference, but I think it’s also possible that we are then raising the stakes for a life threatening competitions with immunomodulatory.

Well, there has been a talk about islet transplant and there was early talk and lot of excitement shown that you could use a good corticoid-free regimen and you could achieve insulin independence and that’s true. And you can see in the graph on the left, people can become insulin independent with islet transplant. But the same patients eventually go back on insulin and basically with the graphs. And so at this point to get some little bit comments on independent, you have to have two graphs that is a whole persons pancreas into one person and then you have to have another persons pancreas in the one person in order the achieve insulin independence and that eventually those graphs appear to all.

So this also requires immunomodulatory therapies and we’ve never considered administering these two kits given that we have such an effective therapy in insulin at least to keep them at status as well. So beta cell therapeutics has been – there has been a lot of interest and hope in this and I’m a basic scientist and I study the pancreatic beta cells. This is a picture from a 9-year-old who was not diabetic and you can see what the islets look like in normal conditions and after type 1 diabetes, they islets are far smaller and as part of your beta cells and there is a lot of us who are trying to re-grow beta cells. Half of my life is spent doing this and overarching hypothesis is that unraveling the mysteries of beta cell. Lifecycle could lead to normal therapies that would generate beta cell function in diabetes patients.

But I got to be honest with you. Major questions remain unresolved which represent huge barriers towards the development of beta cell replacement therapies. Questions like where do adult beta cells come from? We don’t know this. I published papers on this, other people published papers on this, we go to conferences and there is intense debate. So this is not resolved. Is beta cell generation capacity preserves throughout life. There is also intense debate about this. And the big one of course, the luming question is, are there undiscovered druggable targets which could preserve or expand endogenous beta cell. We’d have to have a target that it’s safe and focused on the beta cell nowhere else. You wouldn’t want your toe nails to grow in addition of beta cells right. You have to have a very safe and directed therapy.

A whole another question which you would also have to answer is this one, how is beta cell autoimmunity initiated and maintained because if even if lab such as mine were able to grow beta cells. We still have to worry about the immune cells that are destroying the beta cells and if we came up with the beta cell growth therapy, we just be adding fuel to the fire for patients for type 1 diabetes. And then of course, this question could therapies be developed to safely inducing the intellectual tolerance to beta cells for type 1 diabetes patients. So really in order to treat type I diabetes with – and so we generated beta cells function you have to both find a way to expand the beta cells and to safely modulate the autoimmune response and we are just not there yet, I think it’s a long way so.

But I’m going to spend at least half of my career working on this and I think it’s you know the hope that, a few decades from now will make some real progress. Well, so this question again we spent a lot of time on in and I’m amazed that, where do adult beta cells come from? But we don’t even know that basic question. So I don’t see how we are going to come up with directed therapies yet. There has been a lot of talk about adjuvant therapies to reduce glucose flux in type I diabetes and that’s part of the reason why I’m here today. There is a paper that was published in the European journal endocrinology and this is a pretty interesting paper. And it basically – it’s an open label study and it has some problems. Really it’s not well controlled. If I’m going to take you through this panel in the paper.

What they are looking at is blood glucose in the vertical axis and the horizontal axis is basically 24 hours. And what you see is the range of blood glucose is in patients before they initiated the therapy, and the therapy is liraglutide, it’s GLP-1. And so you can see right away that they are able to modestly reduce the flux of blood glucose with liraglutide. So I’m going to just look back and forth and so that’s exciting and again I think it illustrates that there is potentially some opportunity to improve the glycemic control in patients like this. This is an injectable therapy of course. Its FDA approved not for this indication, but I think that there is a lot of excitement in the field and everybody hopes that there will be novel therapies that would make the difference for these patients.

Again, it’s a lot of patients. Its 1.5 million, it’s not like hypertension, it’s a smaller market, but these folks are really quite desperate for an advance in therapy and if we could find someway that could really push the bar forward, it would just make an enormous difference in your lives. And I think that’s all I have. Thanks so much for your attention.

Unidentified Analyst

Jake, thank you. We have time for questions. I think he was very thorough, I’m impressive. I have to say it’s an eye opener. Thank you. And so moving forward into what we hope will be a potential new therapy for type I diabetes. We are going to be discussing the early stages of this trial, and I like to introduce Dr. Paul Strumph, who is leading our program and our effort in diabetes, now Paul take us through your presentation. Thank you.

Dr. Paul Strumph

Thank you, the first on slide is actually is going to be presented by Dr. Brian Zambrowicz.

Brian P. Zambrowicz

We could drop in one preclinical pharmacology slide and we think it shows the potential of the SGLT1 and 2-inhibition for type 1 diabetes. Was the study done in mice? Well identified through breathing is spontaneously getting a type 1 diabetes through autoimmune attack of their beta cells and they get diabetes by about 10 weeks of age. So for this study we left in mice age and we identified whey they became diabetic by looking at their glycosuria. And then in the graph on the left, we’re looking at blood glucose on Y axis over the number of study days. And what we’ve done here is we have about 10 animals per group and in – it’s hard for me to read from here, but in the green what we have is those are mice that are given a therapeutic dose of insulin, its point two units.

And in blue, those are animals that are given a sub-therapeutic dose of insulin, its 0.05 units. And you can see that they are faring much more correlated as far as their blood glucose levels. But then what we’ve done is on top of that sub-therapeutic dose of insulin, we’ve provided LX4211 dose to once a day at either 2 mgs per kg and triple or 30 mgs per kg in rep. And what you can see is that in spite of large reduction in insulin, they’re able to have pretty well controlled blood glucose levels. In fact by the end of the study both the lower and the higher dose of LX4211 are achieving about the same Glycemic Control as that therapeutic dose of insulin.

And you can see also at the end of the study, we looked at the change in hemoglobin A1c and relative to the sub-therapeutic dose of insulin and blue in that – in that table on the right, you can see that both the intensive insulin therapy with 0.2 units in red is clearly a significantly reducing A1c, but also both the low and high dose of LX4211 are good in the same thing. Importantly on the bottom, if you look in this blood glucose graph on ten of the days during the study, we took blood glucose rates. And there were ten – nine or ten animals in each group, which means that over the course of the study we got between 90 and 100 blood glucose rates.

And that’s what show on the bottom is the frequency of hypoglycemia. And what we did – what we saw as identified as reads below 70 mgs per deciliter or below 15 mgs per deciliter. And what you can see is the only hypoglycemia that was seen was intensive insulin therapy where 13 out of a 100 reads were below 70 and five out of the 100 reads were below 50. We did have one below 70 read with 30 mgs per kg of LX4211, but in general we’re seeing this good glycemia control very similar to intensive insulin therapy by reducing insulin adding on LX4211 and it’s with less of a probability of hypoglycemia.

Unidentified Company Representative

Thank you. So this is the potential promise of this drug and that’s why we’re so excited about exploring it in Type 1 diabetes. What I want – Brian, of course, is a Chief Scientific Officer and as a clinician, I try to translate this into what it means for people and it’s great that Jake talked about the DCCT. No one wants the high blood sugar here whether you are mouse or men. And the DCCT says to lower complications, you need a blood sugar here. And I think of the red line is current insulin therapy, you can get your – your glucose down, you can get your A1c down but the price of that A1c down is low blood sugar whether its 13 or five episodes, you have low blood sugar.

And what we would like to do [Audio Dip] what we can translate the LX4211 seen in the mouse experiment to humans where you could be within the target range, but with a very low rate hypoglycemia. And one of the things I wanted to bring up about Dr. Kushner’s talk was that the great slide he showed where he basically demonstrated the people before insulin died from Type 1 diabetes. So the Type 1 diabetes to paraphrase and that yesterday was used to be a life sentence that used to be a death sentence for people.

The invention of insulin meant it wasn’t a death sentence, but now it’s a life sentence in prison without parole. And there is a high unmet need for therapies that will improve the outcome. So what – how – what do I mean by a life sentence that without parole well for some very observant people you will notice that was the last one at the table and the first one to leave. I didn’t catch the people were walking over to the table, I have Type 1 diabetes, I’m in cohort number 1, so half of the people that were diagnosed when I was in 1966 are dead.

But I came up to the table here without my usual life insurance policy and realized that around the time in my talk that it is true that current insulin therapy causes hypoglycemia. And so by missing a cell acute to come to the table when everyone else is at the table, I set myself up for potential failure and that’s why I had to leave the table early to try to robustly consume some glucose, so I can give the rest of my talk. So people with Type 1 diabetes test for normal on the street all the time, but insulin is not here and it’s a high unmet need and that’s why I am so excited to be here at this company at this time.

I’d like to now switch gears and build on what Jake talked about with respect to mechanisms of action. This is a great slide. I’m going to ask you to think of it as a target and then I’m going to ask you to think of it as a clock. These are pipeline products for Type 1 diabetes. There’re 28 products shown in this target. The blue ring is what is in Phase 2, the white is what is in Phase 3 and essentially a pre-registration is the blue center part of the target. What I’d like you to trust me about is the color coding here.

The open white circles are oral therapies. Of that 28 therapies that you see on this slide 6 are oral therapies, of the 6 oral therapies on the slide, I’m sorry, yes I believe its 6, of the 6 oral therapies on the slide 3 are 4 are SGLT inhibitors. Of the 4 SGLT inhibitors, only one is the dual SGLT2, SGLT1 inhibitor and the information that has been shared with you about the pre-clinical data and some of the clinical early clinical data, I’m going to share with you I believe we’ll demonstrate why we’re excited about the dual inhibition of SGL2 and SGLT2 inhibitors in Type 1 diabetes.

I again think Jake for summarizing current therapy. I’m not going to go over what he said. I do want to stress the natural history of Type 1 diabetes and also I do want to mention that I really appreciate the slide of the young girl with Type 1 diabetes and that’s what really pulls the heartstrings. But we do believe that over 50% of people with Type 1 diabetes are over the age of 18 to 20. And this is a wonderful if you will of pathophysiologic curve of beta cell mass and beta cell destruction is where everything begins, but actually it begins before then when you can chose your parents, it’s a certain genetic predisposition. And many of the therapies that were on the previous slide are targeting beta cell instruction and many others are targeting glucose intolerance.

And then as you go to the slide, what you see is if you actually look at it as a clock from 12 o’clock to about 5 o’clock, you’ve got the insulins, and from 12 to 3 o’clock are the basal insulins, these are the bolus insulins, there’s a lot of activity on the quick active mealtime insulin, and on the pathophysiological scale, I should a beta-cell mass, there are immunomodulators here, which are targeting, if you will, pre-diabetes or very early diabetes in itself, but if you modulate the autoimmune destruction of the beta cells, you can preserve mass. These agents could have utility, but as much more limited after the onset of type 1 diabetes, and then I did mention cell therapies, that’s a little sliver between about 8 o’clock and 9 o’clock and then we have the SGLT2 inhibitors or SGLT inhibitors between about 9 o’clock and 10 o’clock, and then you have various therapies here, some aimed at antibodies.

And so we actually have the therapies on the previous slide not here, but this makes type 1 diabetes look like such a small thing. Actually this was written by people who are interested in this side of the equation, but actually type 1 diabetes starts here and extends all the way here for we hope 50 to 75 years, until you live as long an healthier life as you can, and right now is only the insulins really they’re targeting this. And so there’s a huge unmet need for an agent that could target this part of the pathophysiological, but also because of the insulin independent mechanism of action potentially target this part, and we’re very interested in the dual SGLT2/SGLT1 inhibitor for this pre-diabetes.

I am not going to read this slide. I am going to point out that I agree with everything that was said about hypoglycemia, I believe that insulin is a life saving drug, but a dangerous drug, because of its narrow therapeutic index. And I also believe that as Americans and people around the world are getting heavier, as diets change, people with type 1 diabetes are no different, and that a drug that actually allowed weight loss or decreased weight gain in people with type 1 diabetes would be very much a drug that would meet an unmet need in this population. And I believe that mice and men something here and that the promise of this SGLT1 component of the mechanism of action would be wonderful with respect to hypoglycemia and we’ll go over this in a little bit more detail.

And we also are – these were touched on earlier either in the pre-clinical discussions or Pablo’s discussion, but the target product profile of this drug supports these kind of results, which we aim to design and execute studies that will actually provide clinically meaningful data. So let’s go to the proof of concept study. This is a currently ongoing study. I’m going to be sharing with you results of the first three patients. The first three patients were unblinded. They were treated open-label, because the purpose of this study was to see what the safe dose and correct dose of insulin was to bring forward to a double-blind portion of the study.

We learnt from history or we try to and if you look at the SYMLIN development program, probably the reason that they are not very popular and that there are a black boxes associated, some times has to do with the fact that there is hypoglycemia in early development or late development, and so we decided to take a few from what our colleagues at BMS did was dapagliflozin and first figure out the safe date of insulin to move forward when you added this drug. And so that’s the first three patients.

And then the secondary objectives are looking at the insulin dose and parameters of glycemic control.

The study designed is summarized here. The inclusion criteria are pretty generic for Type 1 diabetes studies, the age is typical 18 to 55, the fasting glucose less than 270 is typical, BMI less than 32 is typical, you will eventually studies more obese people, but you don’t want the background noise of adverse events if they have to cloud your assessment of the drugs’ properties and the A1c range is very typical for this, as is the fasting C-peptide are cut off which is a way of demonstrating that yes, indeed you have Type 1 diabetics and they are not type cause a Type 2 diabetics.

This is a 29 day study of treatment and the screening period was a period where they qualified for the studies, the laboratories being drawn at the outpatient baseline period to the very end of the study, end of treatment, a continuous glucose monitor was placed, and continuous glucose monitor was changed throughout the study according to manufacturer’s instructions and we have continuous glucose monitoring readings on all these patients for all the days of treatment of the study.

So what you have is a before treatment period where they were free range Type 1 diabetics, then they came in for a, we call a sequestration, but it’s really a wonderful overnight stay in the hospital where they had a mixed meal tolerance test performed on two days, the first day was the mixed meal tolerance test under usual dose of insulin at breakfast. The second day, we would tell their breakfast insulin. They still got their basal insulin, they were all insulin pumps, but we did not allow them to get a bolus dose of insulin that you would typically take with the meal. And then they were discharged and they were free range Type 1 diabetics in the outpatient period and then the pioneer group the first three patients they were all treated with LX4211.

We are currently in the double-blind portion of the study, where there half the patients are on LX4211, half were on placebo in a blinded fashion. At the end of the study the same thing was done, they were brought back into the hospital and the mixed meal tolerance was performed, and then they were follow-up laboratories at the end of study.

I want to share with you three case histories and I’ll go through this rather quickly because time is of the essence here. The first of the 31 year old white female, she was on a 0.6 units per kilo on an insulin pump. This is a typical dose of insulin, her BMI is 25, A1c was 7.1%. The goal is usually less than 7 or less than 6.5, but many endocrinologists will be happy if all their patients had an A1c of 7%, and she did have a Type 1 diabetes with a low C-peptide, but the glucose at the time was low.

So we actually mean that she is a true Type 1 diabetic. I want to share with you the way we collected the data on insulin dosing. The baseline period outpatient is shown here on the bottom left. The Y-axis is a number of units used at this meal and this is the day of the study. So the started on day minus seven went all the way out to day 37, and you can see that she had variable doses of insulin at breakfast as is typical for Type 1 diabetes because people take the amount of insulin that corresponds the carbohydrates they are eating, unless you eat the exact same meal every day and have the exact same blood sugar before the meal your insulin dose will vary day to day. She started LX4211 and was on a aggressive insulin algorithm, which allowed up and down titration of insulin, but we didn’t want the people to become hypoglycemic.

So we actually tried to minimize the insulin as much as safely possible. You can see though that she went from an average that was somewhere north of two units a day to between one half and one unit of insulin at breakfast with very little variability and then once LX4211 was stopped, the insulin needs went back up, you see the same pattern at lunch and you see the same pattern at supper.

The summary of the data is shown here. I just want to orient you, this column here is the outpatient period before treatment. This is the outpatient period on treatment, it was a longer period of time with 23 days. This was essentially a four day period. And then we look at the delta in this column and then the percent change. So percent change is probably the easiest way to look at these data, but blood sugar did go up by 20%.

The algorithm was designed to minimize hypoglycemia on this drug. So this was not a study to see if, with a primary endpoint of how much will lower your blood sugar, the primary endpoint is how much can be safely lower insulin before we – in order to define the safe dose to move forward in the next phase of the study. Look at though that here co-efficient of variation in blood sugars went down by 5% and this is profound, her breakfast bolus went down by 83%, lunch bolus 72%, dinner bolus down by 60%, her daily bolus during the day went down by about 60% and her basil rate went down also.

Basil is what you typically associate with SGLT2 inhibitors and I’ll show you data later, but the basil rate did go down in this 2 inhibitor, but what you see is that the bolus went down much more than that. This is the mix meal tolerant test before she got her first dose of LX4211, this is actually CGM values these are not the serum glucose. Breakfast is shown here, lunch is shown here, dinner is shown here. On the left hand panel, she got insulin at each meal, the units of insulin are shown under the arrows, three units at breakfast, two at lunch, 3.75 at supper. This is the first day of treatment on the right hand panel. At breakfast, I told you study design was, give her no insulin. Look what happened to her blood sugar after breakfast, it went up by about 20 points.

Look at the left hand panel, look what happened to her blood sugar after breakfast when she received insulin, it went up by over 100 points. And so this is as you would expect if the drug will work in patients as it does in mice, this is what you would expect that it would be limited to our glucose excretion after the meal because of the SGLT1 inhibition which is different than others who have seen for SGLT2 inhibition.

Another way of looking at the data is to look at the continuous glucose monitoring during the outpatient baseline and the period on drug. And so what we do is we divide the glucoses into three ranges 70 to 180, less than 70 in red or greater than 180 in orange. You can see that the time in green went down a little bit, but was pretty similar during both periods. The time that she was low 8.7% of the time less than 70 went from 8.7% to 1% and the time that she was high did go from 24% to 35%, probably consistent with the algorithm which tried to minimize the amount of insulin people were on.

The second case study is patient three, the second patient 002 was a screen failure again a female on about 0.6 units per kilo of insulin and essentially an unremarkable history except for some mild neuropathy. I’m not going to go through every panel, but I do want to show you that the theme is repeated here before treatment in the baseline period at breakfast, lunch and supper, higher insulin doses that are more variable, then LX4211 is started and you can see essentially flat line of insulin at a meal during treatment and then LX4211 will stop and slightly different than the first patient, her insulin needs did not immediately increase. If you look at this patient’s descriptive statistics, you can again see the percent change in blood sugar was about 20%, only 23 points.

You can see that the coefficient of variation went down by nearly 15% and her boluses at breakfast, lunch, supper were all above 50% in the amount that they declined and again the daily basal insulin went down about 20%. This is what you would expect with an SGLT2 inhibitor. We demonstrate that, but these meal time decreases in bowels are, we believe, unique to SGLT1 inhibition. If you look at her summary data, it’s very impressive what happens to hypoglycemia. 22% of her values in the baseline period were in the low range, less than 70 – 10% well on therapy. Her A1c, it was only a 30-day study, but her A1c actually declined from 8.8 at baseline to 6.9 at the end of study. Again it was only a 30-day study and A1c usually is not interpretable. It’s less than a three-month study.

The last patient, I want you to really realize that we were the most concerned about this patient, not a good patient you want in a study, but we took all commerce of net inclusion, exclusion criteria and I’ll tell you up front he did the best. 36-year old African-American on 100 units of insulin a day on 0.9 units per kilo with a BMI of 32.2. So what I’m telling you is he is obese, he is insulin-resistant because he is on 0.9 units per kilo and you are going to say well, is he a type 1 diabetic and I’ll answer formidably, yes because his glucose was 172 at the same time his C-peptide was undetectable. So he is following the American diet. He admitted to eating candy bars, drinking coco cola and he was obese, but he had type 1 diabetes.

This is the person who has an aA1c at 7. 8 with very variable blood glucoses I would imagine at home and takes thus a fixed amount of insulin in each meal because he doesn’t calculate what he is taking and that’s essentially what he told the investigator and look at his insulin decline. Not as impressive as the others, but it did go down between baseline and treatment for breakfast, lunch and supper, but you are going to say that’s not true and I have to say I have to agree with you.

Supper actually went up a little bit with insulin and so this is something to keep in mind. And now the most interesting thing is the person who we would expect will do the worst in a study actually did the best. Remember the algorithm was designed to minimize insulin, not to improve control. His control got better. His blood sugar went down by CGM. His 24-hour blood glucose average went down by 21 points, was almost 50%. His co-efficient of variation in blood sugar, the variability of blood sugar went down by almost 15%. His boluses went down by 30% at breakfast, 36% at lunch, actually went up by 10% at supper and his daily basil went down by 20%. But overall, this is the kind of – these are very good results. You couldn’t dream about results like this.

Now let’s look at the pie charts. On an algorithm that was supposed to minimize insulin his green got bigger. So it went from 63% of values in the green zone to 86% and look at this, 28.6% values greater than 180 before treatment, now down to 10.5. So what I’ve told you is essentially the inner range blood sugar went up. The high blood sugar went down. So you know that low blood sugar also had to go down. But what is impressive here is that blood glucose control improved. Insulin requirements went down and hypoglycemia went down. So this is the analyzing bit of information that maybe [indiscernible] and that’s what we really like to see during the double-blind extension study.

This is a summary of the decline in insulin at breakfast, lunch, dinner. Here is the last patient that went up and the total daily bolus, the daily basel, remember I indicated this is likely an SGLT2 property and that’s what we believe. We believe this is what we’re seeing with SGLT1 and I keep repeating that and I will show you two slides at the end, some data regarding that. You’ve already seen this. The time in the low range went down in the treatment period, the outpatient treatment versus the outpatient baseline period. What you haven’t seen is the A1cs, they’re not really helpful in the thee-day study, but they are unchanged in the first patient. They went down in the second patient. The third patient, the laboratory would not run them because he had either a sickle cell or fetal hemoglobin and so they couldn’t run them, put a protocol but a point-of-care device gave a value that was the same.

If you look at weight, this is very consistent with what Pablo shared with you earlier in type 2 diabetes, about a 3% weight loss – 2% to 3% weight loss, but it’s only a 3=-day period. We’d love to see what happens at 12 weeks and 26 weeks and one year. These are the data I want to share with you. This is empagliflozin. This is poster presented to ADA and then oral presentation at EASD. This an eight week study. I’m going to shot, unblind it and I’m going to show you week four because ours was a high 28 days of therapy. If you look at the amount of insulin, the total daily insulin did go down, but if you look at how it went down you see here that the majority, 30% was basel insulin and a little over 10% was bolus insulin. This is an SGLT2 inhibitor. You would not expect the bolus insulin to go down very much and it did not.

If you look at dapagliflozin, again a study in type 1 diabetics. The very bottom shows you that the mean change from baseline and insulin ranged from essentially 10% to 20%. This is a 16% decline and that’s a 19.3% decline there. And then that’s the total change and then a small amount of that was obviously basel versus bolus. And so we believe that the initial data does support the target product profile, which I’ve summarized on the slide here.

We believe the most important aspects are there is a clinical meaningful reduction insulin that we need to prove, but we believe this is support of evidence that you could have improved glycemic control and that you most wonderfully could have less hypoglycemia. And as Pablo mentioned, with the urinary glucose excretion in type 2 diabetics, if you can get equivalent glycemic control, superior reduction in hypoglycemia with less urinary glucose, you would expect then this efficacy profile to have less of a safety risk from vulvitis and vaginitis.

This is the summary. I’m not going to read the slide. Just going to say that it is still early days and these are forward-looking statements and we look forward to the type 1 study finishing and being reported out, but if our initial results are shown to return data this could be as transformative as we believe. And just to let you know, the expansion group enrollment is completed and we expect top line results in the first quarter of 2014 and I do apologize for running over.

Unidentified Analyst

Have a few questions, and I’m going to take a brief break and I’ll shorten my break a little bit. We have a question here.

Tom O. Seitz – Jefferies LLC

Thanks. Tom Seitz from Jefferies. I guess I’m curious Dr. Tessmer. What do you think the three patients worth of data and maybe I’ll wait for [indiscernible] follow-up question.

Unidentified Company Representative

I have many close friends with type 1 diabetes and they look at traces like that and they – and tears [indiscernible] and they think, wow, if I could only do that on a daily basis and what I see is really variability and it seems like the diabetes is easier for these folks to manage and that’s really exciting because the burden of therapy that daily they put in therapy in really profound. And we’re all basically sitting at the edge of our seats waiting for this time, [indiscernible].

Tom O. Seitz – Jefferies LLC

I think that’s what – Pablo, wouldn’t you want them to show, obviously, the ideal is to show an improvement in glucose control with less hyperglycemia, but given the trial design is that realistic or are we looking at one or the other here?

Unidentified Company Representative

So I will just jump in on that and maybe Pablo you can explain how and as we move to the expansion group, we were able to back off on the target for insulin dosing, as we felt we have a safe approach here, so we’re able to give them user instructions on insulin dose. So we anticipate they’ll probably be taking more insulin in this expansion phase. You want to comment further on that?

Pablo Lapuerta

Yeah, so we anticipate they will be taking more insulin than the greatly reduced insulin they were previously, but still less than baseline. The other thing to be aware of you probably already know is that the FDA actually will approve an agent for type 1 diabetes that does not necessarily lower A1c or glucose, but has a clinically meaningful reduction in insulin and is associated with such things as it has simpler insulin regimen or lot less hypoglycemia. We believe that we have demonstrated in type 2 diabetics that this agent does lower A1c and it is now hard to balance a study design that will allow glucose lowering, but also an understanding of how much insulin requirements will go down.

Another way of thinking about the design of the study is this is the only opportunity Lexicon will have as a company to explore the boundaries of what is the safe or appropriate insulin reduction for this drug. We’ll have all of Phase 3 to design treat to target protocols that will demonstrate an A1c reduction, and so the purpose of this was twofold. It was to establish that the drug could be safely used without causing hyperglycemia, because we knew we had to reduce insulin, but when we started the trial we didn’t really know how much insulin to reduce in the double blinded portion of the study. So it’s a trial that’s serving many masters, but we believe it is serving the masters of safe insulin dose and potential for insulin glucose reduction very well.

As Arthur mentioned, the algorithm for adjustment of insulin was liberalized during the expansion phase, during the pioneer phase, insulin supplementation was only if glucose was above 250, now insulin supplementation is if glucose is above 200 typically in practice insulin supplementation instructions are blood sugar is above 150. So we still have that 50 million per deciliter safety zone in this early study, but in Phase 3, we will be leaving at treat to target and the investigator in the study has those recommendations about supplementing insulin, but is free to do what they want. So it is not a protocol deviation or violation if they supplement with insulin with the glucose below 200.

Unidentified Company Representative

Thanks a lot and it was very important for us to take a very judicious approach here the first trial where we combine our drug with insulin and I think hopefully we are turning that, but will see when we get the blended results. There was another question over here.

Tom O. Seitz – Jefferies LLC

Placebo.

Unidentified Company Representative

Okay. Any other questions on the type 1 section so, we are little bit running over in time, we reduce our break may be to five minutes or so and then we will move into the next section. Thank you.

Unidentified Company Representative

Okay, let’s go ahead and reconvene and we’ll move into our update on the Phase 3 program for carcinoid syndrome with Pablo Lapuerta, will be our Chief Medical Officer will be presenting this. So I would say get started here, I believe we are in the right slide. Pablo?

Pablo Lapuerta

All right, well thank you for your patience and we are pleased to provide an update on telotristat etiprate for carcinoid syndrome. I’ll just a little bit of background for those of you who aren’t so familiar with telotristat etiprate. It’s a peripherally-acting serotonin synthesis inhibitor. It’s absorbent to the – peripherally-acting I mean it’s absorbent to the peripheral circulation that does not cross the blood-brain barrier and that was an important part of its development and its advancement in the clinical trials and as a serotonin synthesis inhibitor, its important because carcinoid syndrome is caused by an access of serotonin and that’s leading to diarrhea, flushing abdominal pain in cardiac valve disease.

We conducted a placebo-controlled study with telotristat etiprate in Phase 2 patients with carcinoid syndrome. They were having at least four bowel movements a day. They were continuing the standard of care which was somatostatin analogs and they had LX – telotristat etiprate or placebo added onto that and they showed good reductions in bowel movement frequency.

This chart shows all the patients that had baseline and follow up data bowel movement frequency and it shows the percent reduction and it ranks in from the best and the left to the worst on the row and the telotristat etiprate patients were largely towards the left of placebo patients largely to the right, that was a very nice separation for us to see between telotristat etiprate and placebo.

We also did an open label study to complement this placebo controlled experience. And in Phase 2 we saw a very nice reduction in bowel movement frequency in the open label study. The experience for the first four weeks matched beautifully the placebo-controlled experience.

We treated patients in the longer here for 12 weeks and we saw continued reductions in bowel movement frequency as the drug was even longer. 40% overall here is the same type of waterfall plot, here you don’t have a placebo group. This is an open label study but you have every single patient, and you see that the vast majority had greater than a 30% reduction in bowel movement frequency.

In this open label study they were also significant improvements and still consistency also there were improvements in abdominal pain and in nausea and this is associated with a strong reduction in the corporate here which is a serotonin in a biomarker or serotonin in urinary 5-HIAA serotonin metabolite. That came down by over a 70% with therapy with telotristat etiprate, continuing to improve has the drug was given over time.

And that’s what led us into Phase 3. For Phase 3 we have one pivotal study and we have agreement with regulatory authorities that this will be submissioned for approval and its TELESTAR, it’s a randomized placebo-controlled and double-blind. We will have at least 105 subjects. We see at least 105, we want to have 105 subjects on octreotide. We will accept subjects from abroad who are being treated with another somatostatin analog lanreotide. So it – so the study ends when have 105 subjects with octreotide in terms of the randomization. If we have 15 or 20 on lanreotide, that would mean that our total population maybe 125 or so.

The patients will be treated for 12 weeks with a double-blind therapy and afterwards they will have an extension therapy for nine months. Our primary end-point will be a reduction in bowel movement frequency and secondary endpoints will look at our marker of serotonin synthesis urinary 5-HIAA, flushing episodes in abdominal pain.

The TELESTAR study design is shown here. There is a running period, that’s related to your use of somatostatin analog doses where we go to a good proper baseline for its subject in 12 weeks of treatment, and then the open label extension. That somatostatin analog treatment continues throughout the entire study. In terms of other anti-tumor therapies like radiation or surgery, they are allowed once you have completed the double line portion and you are in open label extension.

These are clinical trial progresses. We currently have more than 50 sites active in North America, Europe and Australia and we have randomized 30 patients. Randomization started around May and it’s progressed well. Now, we are on a course, where in the last two months, we’ve randomized at a rate of eight patients per month. We hope that if we continue this, we could complete randomization in 2014.

In terms of continuing our progress, we are prepared to open more sites. We’ve identified additional sites that may take us to over 80 sites, and that’s something that we believe consisting randomization. One of the risks is that may be some of the sites that have contributed early on exhaust their patient pools and that’s why we’re trying to mitigate that by still bringing or more sites.

Let me also introduce to you an important part of our strategy, we have a second study and this is called Telecast. It’s a companion study. The rationales of product safety and efficacy promote enrolment and increase patient exposure. We’ve heard about this when designing TELESTAR. With TELESTAR, you have to have over 4,000 units today. What about the patient who is coming in with significant diarrhea and flushing and may be other symptoms and comes in through the screening process providing a whole month of data and only has a 3.9 bowel movements per day, would it be important to still treat that patient, perhaps not in our pivotal study, but to get good safety data and supplementary efficacy data for a patient like that. And we organized this companion study to accept those patients who don’t qualify for TELESTAR.

Telecast, we designed to have the same treatment groups, duration of placebo-controlled therapy, extension and the assessments as TELESTAR, but we have the different inclusion criteria. We accept people who screen fail TELESTAR due to a lower bowel movement frequency, about 3.8, 3.9. Also we realized in some patients may not be on a background of somatostatin analog for a variety of reasons, and we can take patients with somatostatin analog into Telecast and learn more about safety and efficacy in that population with telotristat etiprate.

So to be more specific with Telecast population, its patients would do not qualify for TELESTAR, but are still seeking treatment and still have unmet need. With [indiscernible] acting somatostatin analog, well, one of the reasons that you would have that is for stool consistency, even if you don’t have exactly four bowel movements per day. Another reason would be flushing episodes, abdominal pain, nausea or a high level of 5HIA, that markers they are attending is when it’s elevated is associated with cardiac valve destruction. If you are not underlying acting as to say, well then the same requirements will apply, stool consistency, flushing, abdominal pain, but here just simply having more than four bowel movements a day would be sufficient.

So telotristat etiprate and in summary, the Phase 3 program is moving forward well. Pivotal study telotristat is our basis for evaluating efficacy and safety in carcinoid syndrome and enrolment is making progress, and we’re pleased that it’s on track for 2014. For the companion study, Telecast, we think that will be a very nice supplement in terms of safety and efficacy data. We think it will motivate sites to recruit into TELESTAR. We can be confident that if they have a patient who needs treatment, that patient can have treatment available in Telecast if they don’t qualify. So their efforts of data collection and working with patients will be rewarded. And with Telecast, we’ve done all our preparations, we’re just at the point, where we’re just starting to randomize patients. We would expect that first patient to come in January.

All right are there any questions?

Liana Moussatos – Wedbush Securities, Inc.

Liana Moussatos from Wedbush. The data from the TELESTAR trial maybe mid-2015?

Unidentified Company Representative

Yes, I think that’s a good approximation, anticipating completion of randomization in – near the end of 2014 and then the follow-up time needed to follow up patients through the 12 weeks, so sometime in 2015, yes.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Yes, Stephen Willey from Stifel. Can you maybe just characterize the rate of screen failures you’re seeing thus far in TELESTAR and maybe just some color around which one of those inclusion by the – which one of those inclusion metrics is driving the majority of those…

Unidentified Company Representative

The screen failure rate has not been high, it’s been less than 20% and it’s been around that the main reason for screen failing has been because of not having for evolvement of today. But I think the reason it hasn’t been higher is because there has been an active process of pre-selection and there has been a lot of interaction of with patients before hand about that [indiscernible] with us. So I think we’re having larger pool of patients coming in now that we have Telecaster available to complement TELESTAR. And I think that would be nice. There may be some patients who are in discussions with the physicians only have 3 to 3.5 involvements today they come in, they provide a month of data and they actually qualified for TELESTAR because they come in after just or before.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

And then just be approximate incremental cost of or telecast, if there is any?

Unidentified Company Representative

Yes, the - well in terms of the assessments are similar and since the follow-up is similar, the costs are similar to telecast or TELESTAR. There are some savings though because since they’ve been conducted at the exact same sights. There is a reduction in monitoring visits. So it will be in a similar ballpark but with some savings because of that synergy having been conducted at the same sights.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Okay, thank you. We’re going to move on now and to look at the commercial assessment of carcinoid syndrome with John Northcott. John?

John Northcott

Great, good morning. I’m John Northcott, I’m the Vice President of Marketing, Commercial Strategy and Operations here at Lexicon. It’s a really a pleasure to be a part of this mornings agenda. I’m going to give you initial assessment of what we believe is commercial opportunity for telotristat etiprate in the carcinoid syndrome marketplace. Given them recent – relatively new to the organization, I thought I just give you a brief update of my background. I joined the company six months ago from at Genentech Roche where I’ve worked for the past six years on Avastin leaving commercialization efforts first in the U.S. for the past few years working in Basel, Switzerland as the International Business Leader and Global Commercialization for Avastin and previous to that a number of years at big pharma with pharmacy and worked with Pfizer leading a number of commercialization products.

Let’s first start off by kind of introducing a little bit about the thoughts that sort of carcinoid syndrome marketplace, its part of the larger market of neuroendocrine tumors, there were about 13,000 plus patients with carcinoid syndrome. The standard of care in this marketplace is octreotide or brand name somatostatin by Novartis essentially all patients get this as their current standard of care. But the reality is many of these patients become not adequately controlled over time and this is why we have the trials enrolling with telotristat etiprate to really address this unmet medical need.

As Pablo mentioned, serotonin is a key driver of carcinoid syndrome as serotonin is over produced follows on the consequences of carcinoid syndrome and also as Pablo mentioned what’s known about telotristat etiprate as the blocks to production of serotonin. And we hope to prove via our Phase 3 programs that this needs the clinical benefit for patients with carcinoid syndrome. Kind of the three things I wanted to kind of highlight on this slide is that one describes the previous slide is there is a number of patients currently on octreotide of 13,000 plus patients already on octreotide. And we believe that over time these patients will become not adequately controlled based on the data I was showing you on the bowel slide. This is a great opportunity for us to add telotristat etiprate to really help these patients with this unmet medical need.

The second point is that these lines here represent the new patients that will be coming into this marketplace year-over-year. So you can see that it continues to be a growing market and the third point is that these patients with carcinoid syndrome live a relatively long life for having cancer, and so as a chronic therapy of telotristat etiprate these patients will be on therapy for a number of years. I mentioned previously that patients on octreotide, the current standard of care become not adequately controlled via market research project that we conducted with IMS interviewing 45 medical colleges in the United States. We learned that about 80% of patients on the current standard of octreotide become not adequately controlled and they largely become not adequately controlled within the first three years. So there is really a great opportunity for telostristat etiprate in this marketplace.

What the current stand of care for these patients would become not adequately controlled octreotide is more octreotide. Octreotide is given as a once monthly injection as a standard of care. And so essentially physicians are in a force to kind of ramp up the dose of that once monthly injection beyond the label dose and/or give kind of ongoing kind of injections to patients to kind of manage the symptomatic outbreaks of the patients’ carcinoid syndrome. So we believe there is a really high unmet medical need and we initiate these trials, but we’re speaking to the physicians at our market research project with IMS, they certainly echo the feeling that there is a high unmet medical need here. The scale will be kind of no need to extremely needed on these attributes, if it’s extremely needed for new drugs, reduce the [indiscernible] bowel movements, improve stool consistency, improve quality of life, old therapies and reducing serotonin, all the things that we’re looking to address in our Phase 3 program.

On the topic of serotonin, we know there has been well study the role of serotonin in carcinoid syndrome. It’s a common topic in PubMed in or member of the Congress is where the pharm leaders who take care of patients, neuroendocrine tumors represent this information. But we want to understand how well is it understood most of the medical oncologists to take care of these patients on a day-today basis and see those numbers at the top. Medical oncologists take care of these patients are really familiar with how the role of serotonin plays in driving carcinoid syndrome and are equally aware how important it is to inhibit serotonin.

As you know, its quite common as you are preparing for a launch as you are trying to kind of assess what is your commercial potential that your product profile testing to kind of gauge the level of adoption that your product is likely to have upon kind of approval in launch. We share with physicians, 45 physicians in the United States. We have worked the re-commission with IMS and we ask physicians based on our product profile that we put in front of them, which are largely derived from the Phase 2 results that Pablo presented earlier with respect to reducing bowel movements, improving stool consistency and looking at episodes of daily flushing.

When we showed physicians this profile and asked them what’s your likely projected adoption of this product. We indicated that either its having patients likely to receive [indiscernible]. It really speaks to, I think IMA medical need that we stressed before were these patients are under journey with carcinoid syndrome, that become not adequately controlled on octreotide, really have no other options. But they are also really impressed with the clinical data that we had in our Phase 2 program, the mechanism of action by blocking serotonin, it was really a mechanism and also the oral administration trying to minimize the need for additional injections.

Kind of making a brief transition from kind of product to promotion, we believe that the carcinoid syndrome market really allows us to have a very targeted focused efficient commercialization model. We believe we can easily target the physicians that are really driving the opportunity within the carcinoid syndrome market by leveraging the data that exists from data sources like IMS to purchase which physicians are prescribing octreotide, who are seeing kind of the [indiscernible] patients, so we can scale our sales force aligned to the number of physicians we need to call upon, then we’ll supplement that effort via non-personal promotion or e-marketing.

So just to kind of recap what we discussed, just over 13,000 patients with carcinoid syndrome in the United States, very much all treated by octreotide as a standard of care, but this drug does not adequately control patients within a three year window. So there is a great need for something new. Physicians really largely understand the role of serotonin into the fact that in addition of the serotonin is really important patient benefits instead of assumption. Given the unmet medical need physicians are really encouraged by telotristat etiprate profile and again we believe we are going to be over half or really targeted and efficient commercialization model being able to leverage octreotide prescribing information.

So kind of in conclusion as we look at this marketplace where we believe are kind of the critical factors for successful launch broken out in three buckets, foundational, strategic and operational. From a foundational perspective, it’s solidifying our commercial understanding of the carcinoid syndrome marketplace to have the stakeholders that we are going to be engaging with the patients, physicians and payers. Strategically, its about establishing beliefs and advocacy around a differentiated positioning across the segments that we’ll target as well as ensuring that payers understand our value proportion as an old agent in an orphan indication that has little options for patients and that physicians have reimbursement confidence that when they prescribe a product that they are going to get reimbursed and/or the patients will be reimbursed.

And then lastly operationally [indiscernible] factor of targeting, again we think we are going to be able to really scale organization to the need by able to leverage the octreotide data as an analog. And then lastly, its our first commercial launch opportunity for Lexicon either mapping out all the key activities that need to take place in order to pull through a critical success factors and we are going to be hiring the capabilities in a timely fashion to meet the opportunity.

So with that said, the company has presented a number of things today and over the years about our discovery and our development progress and last to say the new aspect of our organization, another evolution of commercialization in launch [indiscernible] planning has begun. With that I’ll conclude. Questions?

Unidentified Analyst

[indiscernible]. How big is the modest sales force numbers?

John Northcott

Yes a kind of broad range estimate at this point is probably 25 to 50. We will totally analyze that over time.

Whitney G. Ijem – JPMorgan Securities LLC

Hi Whitney here, on for Cory Kasimov for JPMorgan. I’m just wondering, I guess in terms of the patients that become not well controlled would a drug holiday kind of benefit that or you can kind of get an on/off kind regimen between the two drug?

John Northcott

I think that’s probably best, Pablo can you address that question.

Pablo Lapuerta

I think the most common reaction to that would be to continue those drugs. I think we’ve had some patients treated with telotristat etiprate up to three years now and we haven’t seen any evidence of a wining effect. And when we discontinued patients, we haven’t seen any evidence of just kind of a rebound beyond where they were at baseline. So we don’t see kind of a rationale for interim therapy to somehow keep patients with better long term control.

In terms of octreotide and speaking to physicians, these patients have lost control with octreotide. They are continuing to drag and the reason they continue to drag is because the physicians believe that it’s slowing down tumor growth in the long run even though that they are having diarrhea with the therapy. So they’re unwilling to stop the octreotide, I think that our evidence so far would be that the use of telotristate etiprate would be long-term.

John Northcott

I think just one thing I would add to that is that there might be some evidence and we are going to be monitoring the Phase 3 for production and use of short acting octreiotide which is a daily injection that would have to be tough to administer. I think that could be a good indicator of benefit in terms of those that are with the long acting which continue the circling.

Thomas A. Wei – Jefferies LLC

Thomas Wei from Jefferies. Just a question on the enrollment rate relative to the size of the population I guess I would have thought maybe it would be an easier or faster trials to enroll if there are not any patients you are not adequately controlled on octeriotide and then also just wanted to confirm when you look at 6,000 patients, basically does that entire population that within the parameters of the label that you are likely to get based on TELESTAR?

John Northcott

Pablo, you want to talk about enrollment?

Pablo Lapuerta

So the first part of the question is you think that enrollment would be a little bit faster because of the unmet need?

Thomas A. Wei – Jefferies LLC

[Question Inaudible]

Pablo Lapuerta

We feel that we are encouraged by patients that we think that’s actually very good enrollment and the main barrier to enrollment, I think for us is the competition of better clinical trials within our several clinical trials through this space. Some of them are in that two directed therapies. And so we are encouraged by age given the number of sites and the experience that we have so far. We’ve looked at kind of historically how does this compare to other anti-tumor therapies and they actually compares fairly well.

Thomas A. Wei – Jefferies LLC

I would say that enrollment, what’s better than some historical studies that have been done with metastatic analogs in similar patients?

Pablo Lapuerta

And I think – so first to some extend the question is why is enrollment going well and the feedback we have is that physicians like the protocol and they like that for the patient there is only 12 weeks on placebo. So I think that’s working well, that’s attractive for patients and patients know that once they complete the study that they were going to long-term extension. So no matter what they’re guaranteed to have access to new therapy and I think there is a lot of excitement of this thing really the first new mechanism of action in many years.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Stephen Willey from Stifel. Maybe just confirm that there is harmony between FDA and INA requirements for approval based on study and then with respect to the utilization of SSAs in Europe is a much different relative to U.S. do you see physicians still wanting to mean on the analog to maybe see some kind of progression benefiting I guess as reimbursement in Europe plus the loss of control still reimbursable, yes.

Unidentified Analyst

We got some questions and then start with the harmonization on the end point.

Unidentified Company Representative

Yes, we have spoken to both the FDA and EMA about our pivotal study and the feedback we’ve had has been very similar and I think two pieces of the feedback that has been more important to our program is that they both accepted a 12 week duration of placebo control therapy and that they both accepted that one single pivotal study would be sufficient for registration and they both granted orphan drug approval. So we’ve seen a lot of similarities and we’ve been comfortable with our regulatory interactions.

Unidentified Company Representative

Yeah, so second part of your question is SSA therapy is here as well in Europe, both our tier type and also addition [Indiscernible] is also approved there but also the process of kicking of a European assessment to better understand the European market, like we have done here in the U.S. marketplace.

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Okay, thank you, we’ll move on to our next section. And reviewing some trial results, we’re actually starting with, yes you’re next after Pablo. And this is some of our recent Phase 2 results. Pablo, I’d like to take this.

Pablo Lapuerta

Yes let me review just first some of the challenges of working with this phase so far little more bouncing on that stand very predominant. There is a modest efficacy of approved drugs, the most notable drug being – and by modest efficacy depending on your measure of benefit you may have say 50% of patients benefiting on alosetron and 40% on placebo. One of the reasons that maybe the case is it’s difficult to ensuring accurate diagnosis of IBSD.

Symptoms are subjected and it’s a diagnosis of exclusion. Also the regulatory environment is challenging in the sense that there is an extent of our RMS program for alosetron, that risk of evaluation and mitigation strategy and the new guidelines are then issued by the FDA suggesting that patients with milder symptoms be excluded from clinical trials. That’s something that we’ve done with LX1033. We have previously developed LX1031 and we have evolved some drugs with a moderate population.

Now our recent results with LX1033 are in more moderate population of IBS. So we’re gaining experience here and there is a substantial unmet need and opportunity for new therapies. Why have we moved forward with serotonin synthesis inhibition in IBSD is because serotonin plays an important role in the gastrointestinal function including bowel motility, nausea and vomiting and abdominal pain.

And we could encourage to see several examples of drugs targeting the serotonin pathway showing clinical utility that includes alosetron to gastron.

Now one of the advantages with our strategy versus alosetron is that LX1033 is a result of our Genome5000 program and that means that we had mice lacking tryptophan hydroxylase lacking their enzyme and unable to produce serotonin in the GI tract, and those mice were healthy and they give us the insights how we could avoid some of the promises of severe constipation that alosetron has had.

So LX1033 was designed to inhibit serotonin production simply locally in the GI tract and it has shown promise in reducing serotonin Phase I and we took it forward into Phase II with the study design.

Approximately 360 patients with three different doses at LX1033 that from Phase I we thought it would provide proper serotonin synthesis inhibition and placebo, 28 days of therapy with the two week follow up period.

The effective was to look at the effects of LX1033 on sole consistency. The reason we chose this as an endpoint is because we had prior clinical trial experience with LX1031 that was in the same class, but was less than required higher doses and in the experience which was published, we showed good reduction in consistency versus placebo.

The secondary objectives included safety and tolerability and then plasma 5 HIAA are biomarker of serotonin synthesis. And to look at relationships between these biomarkers and not just 5 HIAA, but also generic polymorphisms and clinical outcomes, abdominal pain, other symptoms and additional measures of patients reported outcomes. Base line demographics, the characteristics were evenly distributed among treatment groups but I feel perhaps what is most notable is that these patients had experienced on average around 11, 12 or 13 years of symptoms of IBS and had been diagnosed for an average of about four years. And so these are patients who really had gone through several therapeutic options and many diagnostic test – that speaks to the high unmet need.

Top-line results showed that we did reduced plasma 5 HIAA effectively, we did inhibit serotonin synthesis and we did this in dose related manner. LX1033 500 milligram just twice a day do not have a statistical difference versus placebo, but the 500 milligrams TID had a strong statistical difference versus placebo and so did the 1000 milligrams BID. And in terms of the main change from base line, from a base line of almost 10, that 25% reduction with LX1033 500 milligram TID was the best reduction. We feel here that the three times daily dose is the best for inhibiting serotonin synthesis inhibition. And as you’ll see it prove to be the best for symptoms as well.

Stool consistency however was fairly similar between placebo and the LX1033 treatment groups. Here there was much reduction in stool consistency that was statistically significant in terms of the change from base line for patients. I think one reason that placebo patients had such a drop in stool consistency for us such an improvement is because we were requiring patients according to FDA criteria that have very poor stool consistency to get into the trial. And so this is a condition that lacks us, so we are catching patients at a time where they have poor stool consistency and therefore many of them were actually improving over the 28 days.

If you look at the point estimates here, this 0.50 reduction was placebo the best LX1033 group was 0.55 it was that three times a day dose. It was just a barely better, if you look at the difference in terms of standard error, standard error was 0.07, so a little bit less than standard error which is really not a large difference compared to placebo.

But one of the things we would like to add was to see whether stool consistency responses were sustained for the entire trial duration. One of the things that we’ve discussed with regulatory authorities is they want to see that in terms of responder, responder has good results for at least majority of days during the trial and you’re looking at the two thirds cut off that means in 28 days you have to have at least 19 good days of stool consistency data. The best performing group was the LX1033 500 milligrams three times daily group.

And that’s a result that was statistically significant, if you look at the placebo patients, even though placebo patients had some important to actually have improvement for 19 good days during that 28 days study was only 5% and yet it was 16% with LX1033 at the 500 milligrams three times daily group. The abdominal pain results were a bit more positive. There was a decrease on placebo as well, and in terms of change from baseline placebo patient showed a significant improvement and minimum requirement of the nominal pain results are one of the entry criteria for this study. So placebo patients improved by a little bit less than 1 point, that’s a 0.97.

However, the patients on 500 milligrams CID improved by about 0.27 more points and actually considering that the standard error was 0.14, that’s a more than a standard error. And so that’s something that’s worth exploring that we’d looked at in a couple of other analysis. One of the analyses was looking at weekly responders. With that regard to stool consistency, we just looked at patients who had at least a 30% reduction in abdominal pain or at least two of their four weeks in the study, well I should say 50% of the weeks in material response was determinant. And looking at that the response rate was 36% on placebo, about 50% in abdominal pain at the 500 milligrams three times daily dose. And that result had a fee value that was almost normally significant at 0.056.

Now one thing to note here is that abdominal pain response is currently regardless of stool consistency results. We wanted to have several looks at abdominal pain and stool consistency. One other things the FDA has recommended is that abdominal pain responder be a patient with stable or improvement stool consistency with their review of the data. That you should have at least no worse things in stool consistency if you are reporting an improvement in abdominal pain. So we looked at that with a weekly responder definition here and we saw that 33% of patients on placebo improved according those criteria, but 47% of patients on 500 milligrams three times daily improved [indiscernible] was almost 2 and the P value was 0.03.

So the abdominal pain responses were a bit more robust and consistent and encouraging in the study. Our summary of the top line data is that LX1033 it was safe and well tolerated. I haven’t presented the detailed summary slides, but there were no serious adverse events attributed to study. And adverse events were evenly distributed among treatment groups. The stool consistency results were similar among all treatment groups. The best responses for reducing 5HIA for improving stool consistency and abdominal pain with that 500 milligrams three times daily groups.

So one of the learning’s is perhaps that we need to keep LX1033 three times daily or even consider four times daily as we had done in our clinical trial before with LX1031 that we mainly have more treatment test administration. But in order to put the picture together, we want to do some more data analysis to fully explore the relationship between biomarkers and clinical outcomes. I hold an Advisory Board Meeting in the first quarter with some experts to review these data and see what they think of the abdominal pain responses and consider as a results and other opportunities for earlier phase clinical developments perhaps achievement of longer duration 12 weeks especially given the stool consistency improvements we saw in placebo or four times daily dosing and considering maybe how our biomarker strategy using generic testing or 5HIA reduction could help us. Now make sure that we are treating the proper patients with the right dose and treating them effectively.

Any questions about the LX1033 results?

Unidentified Analyst

So if you are going to do more early clinical development probably won’t go into Phase 3 until maybe 2015?

Pablo Lapuerta

Yes, I think that’s fair to say. I think these results aren’t robust enough for us to consider a transition into the Phase 3 before 2015. They are worth exploring with the abdominal pain responses that we’ve seen, discussing with experts, considering some additional study provided with the early phase clinical development.

Unidentified Analyst

What are your thoughts on the twice a day versus three times a day is more important than doses?

Pablo Lapuerta

Well, I think it was an important learning for us, it’s something we wanted to explore. And I think it tells us that just looking at 5HIA overall is probably not sufficient in terms of learning about what is happening to the patient in terms of excretion of mucous into the sole and singling abdominal pain responses. So I think it was an important learning for us and this could guide us for the future.

Unidentified Analyst

Inconsistent or consistent with the some of the preclinical data or maybe contemporary one?

Pablo Lapuerta

Brian, do you have…

Brian P. Zambrowicz

I think it’s – the data is consistent and Phase 1 in healthy subjects and all of the doses we tested are 1033 maximize the biomarker reductions. So certainly, we are seeing the level of biomarker reduction we anticipated in this study. I think what’s clear though is that even know it was a higher dose, the BID 1000 faired more clearly than the TID 500, which suggests that the biomarker does not tell you everything and its not telling you about the potential dynamics of serotonin production and it’s effects over the course of the day. And certainly it speaks to the strong possibility that frequent dosing is required for this mechanism to have its full effect.

Unidentified Company Representative

Okay. Next topic moving into another Phase 2 study in IVD. I’m going to briefly show the pre-clinical rational for our interest in running the also the quietest study that he can describe it. Our interest was far based on people that came out from an economic lab from economic lab at University and there is both generics and pharmacology to suggest that inhibition TPH1 the target of Telotristat etiprate could potentially provide a benefit in IVD. So what they did in this study is there is a mice and they looked there is a chemical DSS which causes tissue damage, promotes inflammation and creates an IVD like disease state in animals. And on the left hand graph they did that in animals that were either well type for TPH1 hour target in open circles or the closed circles are the TPH1 knockouts.

And that’s really looking at disease severity over time and you can see that in the knockout animals for our target, the target of Telotristat that was reduced disease severity. They further went out and did a pharmacology experiment, did an wild type animals, where they induced their colitis, but – next slide – that’s in the right hand graph and then they treated these with the vehicle in open circles or with pCPA an inhibitor of tryptophan hydroxylase in closed circles and just like the genetic model the pharmacology of TPH inhibition resulted in decreased disease severity.

Next slide, since that time, we – as I said got interested in and became involved with both the lab and further progressing this concept as well as the lab at Columbia University and we have worked with them using Telotristat in these same models of IBD. So here in this same DSS model this is results from the lab where they treated with Telotristat LX1606.

In the graph on the left that’s looking at amount of serotonin in the colon and in the genome and relative to animals that are treated with DSS and getting the vehicle in blue, in gold you can see that treatment with Telotristat dramatically reduces the amount of serotonin in the gastrointestinal track. And on the right just like the genetic and pharmacology model I showed you on the previous page when you treated with Telotristat and in the upper left that’s still a consistency, on the upper right that’s still blood and on the lower left that’s the total disease severity score and you can see that treatment with Telotristat reduced the severity of all these parameters.

Next slide, in addition they did histopathology as well as looking at a number of markers of inflammation, so on the left hand in those graphs what they’re looking at is the histopathological scores both macroscopic and microscopic and what’s clear is that there was – there was is that there was less lesion in the tissue. When in this DSS model you treated with Telotristat. And importantly, we looked at the potential of anti-inflammatory component of this effect in the bottom graphs where we’re looking at three biomarkers of inflammation, myeloperoxidase which is a biomarker of neutrophils as well as IL-1 Beta and IL-62 pro-inflammatory cytokines.

And by these three biomarkers of inflammation in the blue given vehicle versus the gold on the bottom left hand graphs all three biomarkers of inflammation where reduced and finally they ran another model which was on the right, on the right hand graphs which was an infectious IBD model and they saw similar improvements in that model when they treated with Telotristat.

Next slide, likewise in parallel we are running additional studies IBD models in mouse with the lab at Columbia University and they’re also expert side in the serotonin area and GI. And in this case, we used the different chemical agent to produce the IBD model TNBS. And we saw a very similar effect to our studies that were done in the CON lab. So when we looked at the actually get a little closer on the upper left hand graph that’s the body weight and it’s the most objective measure of disease severity because as you with more severe disease, there is much more dramatic weight loss that treatment with Telotristat reduced that weight loss.

We also saw that the stool blood in the middle top graph as well as stool consistency was improving the treatment upon treatment with Telotristat and the total disease for on the bottom left. And we additionally saw that we had significant reductions in both IL-6 and IL-1 data. Again, these biomarkers have information where it is. And finally, we did the histopathology work up and whether it was the total histopaths were that inflammation score, ulceration in the bottom left hand graph or could damage. There was clearly less histopathological damage lesser ulceration in these models when treating with telotristat and that really spurred us to want to run our ulcerative colitis study.

So that led us to a Phase 2 study. Telotristat etiprate and ulcerative colitis we call that PARSEC Phase 2 assessment of the relationship between serotonin and efficacy and ulcerative colitis. It’s a small study with 59 patients randomized to placebo and two different doses of telotristat etiprate. Patients were treated for 8 weeks. They’re all taking mesalamine as a standard of care and they continue that standard of care throughout the treatment period. We look at bowel movement frequency, endoscopy mayoscores which incorporate several of these measures colonoscopy and fecal occult protective.

The plasma 5-HIAA results to interested effort reduced plasma 5-HIAA greater than placebo. The results were in line with what we anticipated. We worked with 500 milligrams CID and carcinoid syndrome. Here we had and we’ve seen reductions of over 50%. Here we had a reduction from almost 9 to 4, so over 50% reduction in plasma 5-HIAA. We examine the relationship between 5-HIAA change and clinical improvements and we did this year with the mayo score. And what you see is like the – a pointer [inaudible] okay all right. Here the diamonds are 500 milligram TID and they had a good reduction in plasma 5-HIAA by 4 nanograms per litter or more. Here are the patients with a lower dose 500 milligram once a day and they didn’t get quite as much 5-HIAA lowering and then you had the patients on placebo. We’ve had no 5-HIAA lowering at all.

Now what you see is that if you look at just the triangles, you see relationship. The lower the 5-HIAA, the better the reduction in this mayo score. A reduction in mayo score of say two points is common and this is taking into reductions of more than say 4, 5, if you had good reduction in 5-HIAA on the triangles. However the results were not robust in the sense that there is something, there were the four patients here with a great reduction and improvements in mayo score and no 5-HIAA reductions really. This was – this T2 means the lower third of 5-HIAA reductions observed for the study. So we saw relationship within these triangles for this high dose, but not at all for the low dose or for placebo.

Unidentified Company Representative

That’s reflected in these correlations co-efficient. A modest correlation would give you a correlation coefficient of around 0.2 or 0.3 actually with a 500TID group, the correlation of the mill score is very high 0.67 and that was highly significant. But if you look at all the data overall, the correlation co-efficient was low 0.05 with the p value of 0.76. So that’s what we mean when we say we saw these relationships really within the 500 milligram TID group in terms of the raw value change from baseline and percent change for baseline, high correlation co-efficients here and then none here.

The mill scores for bowel movement frequency actually were encouraging, these values are in a 2 point scale. And so zero will be normal bowel moving frequency, 1 is 1.2 bowel movements per day more than normal, a 2 is 3 to 4 bowel movements more than normal per day and then a 3 is more than 4 bowel movements per day and more than normal. So patients here with a mean of 1 on placebo were coming in around 1 to 2 or actually I guess around 2 somewhere between 1 to 2 and 3 to 4 bowel movements per day. They had some improvement on placebo overtime and they had more improvement with, well actually this is similar improvement with 500 milligrams QD, but more with the TID, so instead of 0.6, where you have to change about 1.

So that’s a change of about 2 bowel movements a day, but we have to recognize that placebo had some improvement, so maybe overall reduction about 1 bowel movement per day. The change from baseline was highly significant. The change for placebo in terms of a dose response here was getting close to significance, but not quite significant. Now these are just looking at our weekly data. We did have bowel movement frequency data according to this four for every single day during the study and integrating those data, results are actually stronger. And seeing that there was an impact of the high dose 500 milligrams TID in reducing bowel movement frequency and doing so something on the order say 1 to 1.5 bowel movements per day compared to placebo.

However, one other things that I’ve discussed before at earnings calls is external benchmarks and expectations for success. We looked at a clinical response definition and we had said that we would expect somewhere between say 25% and 50% response on effective therapy. We’ve also looked at clinical remission definitions that are consistent certainly apply to literature [indiscernible] modifying drugs, endoscopic responses and endoscopic remissions.

And only look at the rates we absorbed with telotristat 500 milligrams 3 times daily and even though they’re within the range, they tend to be on the low end of the range. So 30% clinical response, yes it’s within the range but it’s not very high. A clinical remission is not very high endoscopic response actually was a little bit lower than what we expected baseline review of literature and the same thing with endoscopic remission. So we believe that there is some evidence of clinical response with reductions in bowel movement frequency. But without these stronger endoscopic response or endoscopic emissions that there was not robust evidence of the strong impact on disease modification.

The safety will look very good with telotristat etiprate and they were no serious adverse events related to study drug. I have a couple of slides here one on the gastrointestinal safety and one on the neurological conditions because this is very relevant to telotristat etiprate overall and it’s relevant to carcinoid syndrome as well to make sure that we had adequate safety.

And we are pleased with the results in terms of safety with gastrointestinal disorders, this is a number of events (is a number of patients) and in the percentage of a number of patients of the total population.

So we had numerically a little bit higher rates in placebo, here is 20% versus 10%, but if you look at the type of events, these are minor issues in terms of differences between treatment of placebo, a little bit of nausea and vomiting, right, but this is really just one patient gradual insulin patients, grew at one patient and nausea in one patient. So we had some minor differences. Overall, the safety profile in terms of gastrointestinal tolerability even in patients going through an ulcerative colitis was acceptable.

And in nervous system disorders, here we had really no difference between placebo or treatment either and so one patient on placebo and zero patients on 500 million CID in case of dizziness, in case of manual impairments, zero to 500 milligrams CID. This is important to us not just because it’s still out [indiscernible] using carcinoid syndrome, but actually this is a larger placebo controlled experience than we had with our orphan drug. With our orphan drug, our orphan indication of carcinoid syndrome, the Phase 2 experience was I think 18 patients treated with Telotristat etiprate and here we have 48. Our patients were treated longer and been treated here for eight weeks. So that is contributing to the safety database and will be part of our filing.

The primary objective of demonstrating safety and tolerability in the study was achieved. We did see dose dependence, statistically significant reductions in 5-HIAA. There was a relationship between the biomarker 5-HIAA and certain measures of clinical benefit namely bowel movement frequency, but we just didn’t see a compelling enough evidence of an effect on the underlying pathogenesis of ulcerative colitis to aggressively move forward with the next study.

We have focused our resources on their growing Phase 3 program in carcinoid syndrome, where the investment for us is to go into the Telecast study that I mentioned to come and study to TELESTAR that will give us more safety data in patients with carcinoid syndrome and some supportive efficacy data as well.

Unidentified Company Representative

There are no questions for the section. We’ll move – one of the computer log 2 and zero of the last session where we are going to return now to our diabetes program with an exciting new drug candidate and Brian Zambrowicz.

Brian P. Zambrowicz

All right. I will be describing data around LX2761, our next generation diabetes compound that locally acting SGLT1 inhibitor, but action to GI and currently an IND-enabling studies. So we saw the opportunity here is an opportunity to inhibit SGLT1 in the G1, blood glucose absorption, trigger elevations of beneficial peptides like that GLT1 and [indiscernible] elevate the release from the GI after meals. And of course, by having low systemic exposure and local side of action, the real opportunity in the diabetes space will have potentially a very safe compound.

It’s a very potent inhibitor of SGLT1 as I will show you some of the doses that are using the pharmacology experiments are exceedingly low. And we think that although this compound would have general utility and type 2 diabetes, there are some populations where it maybe particularly intriguing. We know that patients who all have a previous history of GU infections are at elevated risks of those infections when they are on the SGLT2 inhibitors and dumping glucose in the urine, and with this agent, we would not be dumping glucose in the urine. Patients with severe renal impairment, if you can’t benefit from SGLT2 inhibition, there really isn’t a point of having SGLT inhibitor on board so to speak and clearly this compound, I think, one of its best uses will be in combination with DPP-4 inhibitors, because of the synergy in GLP-1 elevation.

A little bit on the knockout animals for SGLT1 that speaks the mechanism of action that we’ve talked a little about and what excited us about this mechanism of action. So this relates to knockout animals for SGLT1 in red, the wild type animals in green and what we’ve done is we have given them a meal challenge containing glucose and our hypothesis was that if you get from a meal challenge containing glucose, you would delay glucose absorption, the glucose would get future down in the GI than it usually does to the distill small intestinal colon.

The L cells there would sense that elevated glucose or it’s a breakdown product, serotonin, fatty acids and respond by releasing elevated levels of GLP-1 and PYY. That’s what we saw. In the bottom left, we saw elevation of cecum glucose. There was a decrease in pH in the knockout animals on the bottom right, that’s because that glucose is being fermented in the short-chain fatty acids, butyric acid, propionic acid, acetic acid and that’s dropping the pH, and that’s resulting in the elevations of GLP-1 and PYY you see at the top – in the top two graphs.

This was clearly an SGLT1 mechanism of action, when we did similar studies here in the SGLT2 knockout animals in red relative to wild type animals in green. We saw no elevation of glucose in the cecum, no drop in cecum pH and no elevations of GLP-1 and PYY. So we – then our strategy was to develop this local reacting compound, have very low systemic exposure, so what we’ve done here is this is a log graph, you can see on the Y-axis, we’re looking at PK of LX4211 in blue at 10 milligrams per kilograms versus LX2761 and red at 10 milligrams per kilogram, an equivalent dose or a higher dose 30 migs per kig in green, and obviously on a log scale, there’s dramatically less systemic exposure.

But probably the best way of looking at the systemic levels of the compound and really what we are trying to achieve is look at the urine glucose excretion. Our strategy was we wanted to able to hit SGLT1 locally and avoid any urine glucose excretion, and here the Y-axis is the milligrams per day of urinary glucose excretion on days zero, one and two of dosing, blue is LX4211 at 1.5 migs per kig, as expected, we get a lot of urine glucose excretion, but you can see that vehicle in LX2761 in red are lying on top of each other with virtually no urinary glucose excretion at this 1.5 mig per kig per dose.

So we had achieved what we had wanted to and then we wanted to see if at these doses were, we were clearly not creating any urinary glucose excretion, we were getting our SGLT1 affects that we anticipated and of course I’ve already mentioned that that’s related to inhibiting glucose absorption in the GI, allowing the glucose to the get to the cecum and triggering – colon and triggering GLP-1 release and in this study, we dosed once a day for five days. On the fifth day, we gave a meal challenge containing glucose. We were able to observe now in treated animals in red relative – treated with LX2761 in red relative to vehicle or placebo in green we saw elevation of cecum glucose, an elevation of total with one level.

I spoke a bit about the synergy. We think this is really one of the exciting components of this compound. We know that inhibiting SGLT1 results in the elevated release of GLP-1 after meals and we know that DPP-4 inhibitors, their mechanism of action is to block the inactivation of that Glip 1 that’s being released. So together, there should be a synergistic elevation of active Glip 1 and we measured that in a study where we gave either vehicle in green, LX2761 alone in blue, sitagliptin alone in purple or the combination of sitagliptin and LX2761 in red. And although 2761 and sitagliptin, as we know, significantly elevate active Glip 1 levels relative to placebo, you can see the tremendous synergy and very high elevation. This gets us excited and thinking about the potential this kind of combination could be as efficacious as a Glip 1 analog for the treatment of type 1 diabetes and type 2 diabetes.

We also are very interested in duration of action. Since we’re inhibiting the target in [indiscernible], it’s not just a simple PK – systemic PK/PD relationship, we’re looking at SGLT1 inhibition, you need to be able to inhibit target and maintain that inhibition over time if you’re going to affect postprandial Glip 1 and glucose levels throughout the day. So in this study, we again, we dose for six days, but on the sixth day, we did an oral glucose challenge on the bottom left in that graph and we gave them this oral glucose challenge with different doses of LX2761.

The oral glucose challenge was 15 hours after the last dose, really focusing on how long could we maintain that inhibition after a dose, and what you can see is the extremely low doses being used here, green is the first vehicle and we have 0.009, 0.015 and 0.15 migs per kig of LX2761. Very effectively, almost flat lining at 0.15 mig per kig, the glucose excursions after that glucose challenge. And on the right, it’s just showing the AUC for those curves where you can see the strong reduction in AUC, especially as you get to 0.15 migs per kig.

Finally, we tested LX2761 in a couple of diabetes models. This is the KKAy model. It’s a model that was developed just through breeding and identified as type 2 diabetes model and in this study we did 30 days of once a day dosing and at the end of the study, we did both an oral glucose challenge and measured hemoglobin A1c. In the bottom left, we saw significant reductions in hemoglobin A1c with LX2761 treatment in red relative to vehicle in green. And when we gave an oral glucose challenge now on the bottom right, that’s just looking at the area under the curve of the glucose excursions after that challenge there was a significant reduction in the ADC. And finally, we did another model, which is more like a Type 1 model of diabetes, because we’re using STZ, a chemical that destroys pancreatic beta cells. We did a similar 30 days of dosing.

In this study on day 20, we did an oral glucose challenge, which is shown on the bottom left and at the end of this study, on day 30, we did a measurement of hemoglobin A1c. You can see that here relative to the vehicle in green, there is market reductions in the glucose excursions after a meal with both 1.5 in blue and [indiscernible] LX2761 in red and significant reduction in A1c at on the right with 3 mig per dose.

So to summarize the oral dosing of LX2761, this molecule that was designed to be retained in test and then inhibit SGLT1 locally resulted in very low systemic exposure and little any urine glucose excretion. It delayed intestinal glucose absorption and increased the release of GLT1. There was clear synergy in elevation of active Glip 1 in combination with the DPP-4 inhibitor. There was sustained inhibition, 15 hours after a final dose is still strong reduction in glucose excursions and oral glucose challenges and improved glycemic control in diabetes model and I think that’s it.

This is currently in IND enabling studies, potential start of clinical trials to be around mid year of next year.

Unidentified Company Representative

And with that, I think we can open up to any questions for any of the presenters. Any topics of interest. Stephen?

Stephen D. Willey – Stifel, Nicolaus & Co., Inc.

Yes, Stephen Willey from Stifel. Could you may be just provide a little bit of color around if from a regulatory perspective you think a drug like this locally acting SGLT1, which does not have any systemic exposure with the subject, the same kind of CV requirements that are now kind of dictating the development of Type 2 drugs?

Unidentified Company Representative

Pablo, you want to lead of from there?

Pablo Lapuerta

It’s hard to say right now, but I think that’s a potential opportunity to explore with regulatory agencies. I think there has been this change in the environment in the sense that all these concerns that have been precipitated by – are now decided and it could be that with a drug like this that we really show very little systemic absorption and we could be on a good, I believe, scientific foundation for that type of regulatory discussion, we just have to see.

Brian P. Zambrowicz

I think another area of application where there could be a good strategy in clinical development is Type 1 diabetes with – as well and that’s something we’ll be exploring as well we progress with Type 1 program whether it is specifically what if any need is there for cardiovascular outcome study in Type 1 diabetes.

Pablo Lapuerta

And one of the exciting things that we’ve shown, I believe we saw on the diabetes type 1 presentation that – analogs here is so they can benefit Type 1 for this concept of DPP-4 plus 2761 in Type 1 could be pretty intriguing.

Thomas A. Wei – Jefferies LLC

I’m Thomas Lee from Jefferies. I wanted to ask a little about carcinoid and telotristat trial, what has – what is the ultimate timing of getting data and getting back onto the label, it should be considered back to be a label enabling trial and allow you to target the entirety of the market?

Unidentified Company Representative

The Telecast study, the timing of it should pair well with TELESTAR. In terms of sample slides, we’ve estimated around 60 patients for Telecast because we think that’s about how many patients we would recruit by the time that TELESTAR completes, and we think that would provide us meaningful data on 5-HIAA reduction in this population. So we think that would be a sufficient information. So to your question about timeline, we think you can follow a similar timeline. There is some uncertainty there, I think we actually might be surprised by good enrolment in Telecast because I think it would appeal really to a lot of patients with carcinoid syndrome.

The other part of your question was about the regulatory views. I think it will be relevant to regulatory authorities because it’s providing them safety data, all right. And I think the efficacy data will be relevant as well now – will the efficacy data get into the label. I think there is a good probability that 5-HIAA reduction since it’s really so closely linked to the mechanism of action, would got into the label for this population. But I haven’t discussed that with the FDA or EMA yet.

There is another question about – say other parts of evidence of their benefit will they get into the label. I think one of the things we have to consider for Telecast is in order to treat a lot of patients, we’ve made the entry criteria [indiscernible] and so some people would be coming because of flushing and some people will be coming in because of diarrhea or with poor stool consistency. Some patients will be coming in because of elevated 5-HIAA.

So I think that means that benefits an individual endpoint beyond 5-HIAA reduction may not be as robust as in TELESTAR, in particular with what seems to be a small sample size that would be able to recruit. So I think the regulatory role here would be number one safety data, and I think in terms of efficacy 5-HIAA data, I think will be relevant to regulatory authorities and that’s something that we are interested in discussing with them.

Alex Abuin

Thank you. If there are no other questions I think today, probably I appreciate the amount of science that goes into underpin all these programs in the clinical development and translating that science all the way in demand and into late-stage clinical development, is certainly a challenge, but it’s one that we are meeting and it’s a very exciting time for the company to be seeing some of these late-stage results moving forward in Phase 3.

I think among everything we’ve learned over the past year, the diabetes program overall, continued to just produce the most robust results and even show that’s potential to expand into some very high areas of unmet medical need. And I think is personally one of the most, impressive, and I think moving opportunities that I’ve seen anywhere in the past year has been in type 1 diabetes. And we hope that that will prove out in this current proof-of-concept study and we really hope it will translate into a Phase 3 program that can make a potentially very major difference for these patients. It’s really something to be quite dedicated to.

In that regard, I’d like to thank again Dr. Jake Kushner for his insights and presentations, presentation on type 1 diabetes and we really applaud your efforts to make these patients well, I’d like to give you the small gift and thank you once again.

So that concludes our formal program. We have lunch program and we can stay continue at this open discussion. Thank you.

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Source: Lexicon Pharmaceuticals' CEO Hosts 2013 Research and Development Day Conference (Transcript)
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