Wade Walke – Senior Director, Corporate Communications
Arthur Sands – President and CEO
Philip Brown – SVP, Clinical Development
Brian Zambrowicz – EVP and Chief Scientific Officer
James Tessmer – VP, Finance & Accounting
Stephen Willey – Thomas Weisel
Ted Tenthoff – Piper Jaffray
Lexicon Pharmaceuticals, Inc. (LXRX) Q1 2010 Earnings Call Transcript May 10, 2010 11:00 AM ET
Thank you for holding. Welcome to the Lexicon Pharmaceuticals first quarter 2010 conference call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at Lexicon's request.
At this time, I would like to introduce your host for today's call, Wade Walke, Senior Director of Communications. Please go ahead, Dr. Walke
Good morning and welcome to the Lexicon Pharmaceuticals first quarter 2010 conference call. I am Wade Walke and with me today are Dr. Arthur Sands, Lexicon's President and Chief Executive Officer, Dr. Brian Zambrowicz, Executive Vice President and Chief Scientific Officer; Dr. Philip Brown, Lexicon's Senior Vice President of Clinical Department and Jim Tessmer, Lexicon's Vice President of Finance and Accounting.
We expect that you have seen a copy of our earnings Press Release that was distributed this morning. During this call, we will review the information provided in the release, provide an update on our clinical programs and then use the remainder of our time to answer your questions. Call will begin with Dr. Sands, who will discuss our key accomplishments for the quarter. Dr. Zambrowicz and Dr. Brown will then discuss status of our drug development programs. And Mr. Tessmer will review our financial results for the first quarter and discuss our finance guidance for 2010. We will then open the call to your questions. If you'd like to review the slides for today's call, please access to Lexicon website at www.lexpharma.com. You will see a link for today's webcast.
Before we begin, I would like to state that we will be making forward-looking statements, including statements relating to Lexicon's research and development of LX1031, LX1032, LX2931 and LX4211 and the potential therapeutic and commercial potential of those drug candidates. This call may also contain forward-looking statements relating to Lexicon's future operating results, financing arrangements, cash and investments, discovery and development of products, strategic alliances and intellectual property.
Various risks may cause Lexicon's actually results to differ materially from those expressed or implied in such forward-looking statements, including uncertainties related to the timing and results of clinical trials and preclinical studies of our drug candidates, our dependence upon strategic alliance and ability to enter into additional collaboration and license agreements, the success and productivity of our drug discovery efforts, our ability to obtain patent protection for our discoveries, limitations imposed by patents owned or controlled by third parties and our requirement of substantial funding to conduct our drug discovery and development activities. For a list and description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission.
I will now turn the call over to Dr. Sands.
Thank you, Wade and welcome everyone to this first quarter call. We've had a very active first quarter, several significant events, which we'll take the opportunity to highlight those today.
Before we begin, I'd like to just make a statement about our mission and strategy which of course you are all familiar with the fact Lexicon focuses on novel methods of action. But I think what we're witnessing now is the implementation of this scientific strategy now translating into very important clinical results.
And then I believe as we go forward, a business strategy that is a first in its class, best-in-class strategy with regard to differentiating our products in the clinic and also the market place. Again, all of this ability to differentiate and first-in-class, best-in-class mode is dependent on the fundamental science driving the results that, again, we'll be highlighting again today.
On the next slide, several significant milestones I think were achieved in the first quarter. Most notably on the clinical front, LX4211 for diabetes. The data that we received from this program and have been – have publicized already to a certain extent are very significant and I think noteworthy with regard to their affects in type 2 diabetes. We will have future presentation of this, by the way, coming up in some national meetings, the endocrinology conference, most notably.
And then LX1031 for IBS. Very recently, we had new data disclosed at the Digestive Disease Week convention in New Orleans. And Phil Brown will be highlighting that. Our other programs continue on track. LX1032 for carcinoid syndrome and 2931 for rheumatoid arthritis.
And I think on the business front, very significant achievement in the first quarter was the accomplishment of financing a stock sale that resulted in a significant increase in our cash position, which now puts us at $278 million in cash as of March 31st. A very strong financial position and foundation upon which to move through our business development initiatives, which are on going and very active.
So, those are just some of the highlights from my perspective on the first quarter. And I think now we will take a look at some of the most recent data presented at DDW and then review the other programs and of course, go through the financial results. Phil?
Great. Thanks very much, Arthur. Well, as Arthur's mentioned, I think reflecting the maturation of our pipeline, we're now getting the opportunity to present our programs on national stage at the major medical meetings and DDW was a great success in that regard. We had both a poster as well as an oral presentation. You can find links to both of those on our website. Today, what I'd like to do is really focus on some of the highlights of recent findings that we did present at DDW on the 1031 program.
Of course, 1031 is our inhibitor of tryptophan hydroxylase. We're now coining the phrase serotonin synthesis inhibitors as a construct around this target, of which we have of course a couple compounds in active development at present.
And again, now moving into some of the more recent findings that we've identified from this study. This slide a little bit busy if you're following on the webcast, but on the top-hand portion this is the primary pre-specified efficacy end point that we disclosed late last year. And it illustrates the improvement in patient's pain and discomfort and the question is asked on a weekly basis. You'll note in the high-dose arm, illustrated in red, that we see a significant improvement observed at the week one time point that is durable over the four week treatment period. And then this happened off set of activity following discontinuation of dosing.
Now the interesting point is illustrated on the bottom portion of the graph. And this is the urinary 5-HIAA data. 5-HIAA is the primary metabolite of serotonin that we've been able to track both preclinically and through early development as our biomarker of pharmacologic activity.
And what we observed in this trial in IBS patients was consistent with our prior observations that we see a dose-dependent reduction in urinary 5-HIAA. And importantly, we see a fairly profound reduction at the high-dose arm, which was as expected with regard to mechanism's action in the compound.
The important observation, of course, was the correlation that was observed between this degree of reduction in 5-HIAA and the degree of improvement observed from the high-dose arm. And that was the tantalizing aspect of this observation, that we then went and in a post-hoc fashion analyzed biomarker responders on the basis of a degree of urinary 5-HIAA reduction.
So because he had failed to see a consistent response in the low-dose arm of the study and you'll note there's only about 12% to 13% reduction in the low-dose randomized subjects, we elected to in a post-hoc fashion evaluate the data on the basis of individuals having a 15% or greater reduction in urinary 5-HIAA. And that's noted on the shaded portion of this graphic.
Going forward and again, looking at our primary pre-specified end point, on this slide we've taken out the low-dose arm in order to clear – for clarification purposes. So you'll see here the full per protocol population at the high-dose arm as well as placebo. And we now bring in the individuals that have been randomized to the high-dose 1031, but we’ve segmented them on the basis of how – of their 5-HIAA biomarker response.
So what you'll note here in blue are individuals, again, that were randomized to high-dose 1031 but achieved a greater than 15% reduction in urinary 5-HIAA. And you'll note of course that we see a most robust response observable by the week one time point. But importantly as you continue out weeks three and four, you see the 73% of individuals achieving this biomarker response are also achieving a good outcome with regard to this particular parameter.
Now, equally interesting are individuals in the gold bar. And these again are individuals randomized to high-dose 1031 who failed to achieve this degree of biomarker response. And interestingly, they also show a significantly reduced effect on this particular parameter. And I think what's particularly interesting is the week four time point where you'll notice a difference in these two subpopulations of individuals of about 60% plus.
And if you look at just the 5-HIAA biomarker responder group versus placebo, that's a 30plus% difference, which is a magnitude of effect which is very profound. It's also important to note that the majority of patients that were participating in this biomarker assessment were the biomarker responder group. So this is not a small fraction of patients that are actually showing this degree of improvement. And I think interestingly, again, we see a very fast offset of activity following discontinuation of drug.
Now the other pre-specified end point that we saw an effect in was the Bristol stool scale. This is a parameter that has also been utilized in the assessment of drugs for marketing purposes. And so it is a very important end point in the setting of IBS.
And again, on this slide, we've taken up the low-dose arm, so what you see is the per protocol population, both for the high-dose randomized subjects and the placebo. And we had seen a significant improvement in individuals randomized high-dose compound.
Now bringing in this analysis on the basis of biomarker response, we again note in the blue bar individuals that are the 5-HIAA biomarker responders having a much more profound improvement in this parameter. Again, durable over the four week treatment period and this compelling offset of activity following discontinuation of dosing that really illustrates the pharmacologic activity of 1031.
So on the basis of these observations, we then evaluated these individuals across every end point that we studied in the study. And you'll note on this slide, this very compelling trend existent in virtually every parameter.
And if you then focus on the adequate relief scales, the second histogram there, the adequate relief is the primary pre-specified end point that I've been sharing line graphs with you. You'll notice this highly statistical difference in these two populations and this parameter.
The global improvement scale, the first histogram on this graphic was a different question called the IBS-GAI scale, which was a seven-point scale evaluating improvement symptoms at any given time point versus baseline. And you again see this very robust improvement in individuals who had a biomarker response.
Importantly, we also see these improvements in both pain scales and consistency. The consistency parameter I have already shared with you in some detail. But we had failed to see a response in the per protocol population on pain.
Now when we look at the data based on individuals having this 5-HIAA biomarker response, we see a very consistent trend emerge when pain is analyzed both through a visual analog scale as well through a four-point Likert evaluation. This is extremely important because the FDA has recently issued draft guidance in the setting of IBS and they focused on consistency and pain as end points for consideration in trials going forward.
So we believe that these are very compelling findings that position the program well for future development. I think it's also nice to see this consistent trend of improvement on all the other parameters noted on this slide for individuals who achieve this biomarker response.
So in summary, LX1031 was safe and well tolerated study Obviously, this has been an important consideration for us with the compound since day one, but particularly moving it into the setting of IBS, this will be an important facet of any compound being considered in this indication. We did in the pre-specified per protocol analysis see this rapid and durable improvement in both global assessment and stool consistency.
But I think the most important observation that we're now gleaning from this data set is this very strong correlation of biomarker reduction and symptom improvement. We see this correlation in both a global assessment, but as we now analyze the data on the basis of this biomarker response, we see this enhanced effect across virtually every end point we assessed.
This lends itself to great opportunity as we envision bringing the program into its next stage of development because it potentially offers an opportunity for us to prospectively identify patients we can enroll in studies and thereby reduce some of the variability that has been an inherent risk factor in the setting of IBS.
And then even looking forward beyond that, you might envision an opportunity by which you could identify individual patients that could respond to compound and it could be used as a biomarker of clinical response in a commercial setting. So, we think this is a very interesting observation from this data set that yields great opportunity going forward.
We're obviously involved at present in improving the formulation of the compound. I think we've spoken to that in the past. That's an on going effort. Believe there's great opportunity to further optimize on this and reduce either the amount of drug or frequency with which we're delivering the drug.
We then would intend to do a PK bridging study in humans to confirm the preclinical observations of the new formulation. And then we'll be conducting longer stage tox studies that will enable us to go out longer in the clinic. And we're at present actively designing our 2B study to progress the compound.
So with that, I'll hand it over to Brian, who will recover the remaining programs.
Thanks, Phil. I'll begin with LX4211 and SGLT2/SGLT1 dual inhibitor for diabetes. In our Phase 2a clinical trial, we dosed once a day orally with LX4211 and we observed a very favorable safety profile. In addition, we saw large and rapid improvements in glycemic control that resulted in a remarkable reduction in hemoglobin A1c in on four weeks of dosing.
In addition, we received favorable trends and multiple cardiovascular and metabolic parameters, including a decrease in blood pressure, triglycerides and body weight.
Our next step for the 4211 program, we've completed the 13 week toxicology studies recently and we expect the reports from those studies in this quarter. We've all established a prototype tablet formation and we'll be running at a bioequivalent study in the third quarter to compare it with our previous liquid formulation.
Finally, we're in the process of designing our Phase 2b study, which we anticipate will begin in the first quarter of 2011.
Moving on to LX1032 program, this is our peripherally acting serotonin synthesis inhibitor for the carcinoid syndrome. This program has fast track status in the United States and orphan status in the EU. And we think it has significant market opportunity for treating the GI symptoms of carcinoid syndrome. In addition, we think there also may be potential for this compound as far as anti-tumor effects. And there may be applications in other neu-antigen-derived tumors.
Phase 2a study is ongoing in the U.S. We're running a placebo controlled study. And enrollment is progressing well. In addition, we've initiated a study in Eastern Europe – in the EU that's open label. It's an inter-patient dose escalation. Based on the results from both of these studies, there's a potential for extension and expansion of the studies and we are on track to get the results from either one or both of these studies in the second half of 2010.
Finally LX2931, our S1P lyase inhibitor for rheumatoid arthritis. Obviously, rheumatoid arthritis is a large and significant progressive disorder. There's a clear need for safe and effective oral therapies and if we observe a signal in our rheumatoid arthritis trial, it will be very likely that there will be utility for this compound in other autoimmune indications.
Our Phase 2a study is on going. It's once daily oral dosing. And we are on – we're hitting the lyase, S1P lyase, which is a novel target on an established pathway.
The U.S. and Eastern European enrollment is on track for results by around year end.
With that, I'll turn it over to Jim Tessmer, who will cover the financial results
Thank you, Brian. Let me provide you with a brief financial update. Lexicon's revenues for the three months ended March 31, 2010, were $1.6 million, a decrease of 61% from $4.2 million for the corresponding period in 2009. The decrease is primarily due to reduced revenues under alliances with N.V. Organon and Bristol-Myers Squibb.
Research and development expenses for the 2010 first quarter for $21.1 million, a decrease of 8% from $22.9 million for the corresponding period in 2009. The decrease is primarily due to lower salary and benefit costs, partially offset by higher external clinical research and development costs.
General and administrative expenses for the 2010 first quarter were $5.5 million, an increase of 13% from $4.9 million for the corresponding period in 2009. The increase was primarily due to higher patent-related legal costs.
Lexicon's net loss for the three months ended March 31, 2010, was $26.1 million, or $0.13 per share, compared to a net loss of $21.6 million, or $0.16 per share, in the corresponding period in 2009. For the three months ended March 31, 2010, net loss included non-cash stock-based compensation expense of $1.3 million, compared to $1.4 million in the corresponding period in 2009.
Let me now turn to our cash and investments. As of March 31, 2010, Lexicon had $278.7million in cash and investments, net of its obligations under the credit line secured by its auction rate securities, as compared to $125.1 million as of December 31, 2009. During the first quarter, we completed a public offering and concurrent private placement and sale of 161.8 million shares of our common stock, resulting in net proceeds of $181.5 million. We believe that the working capital available to Lexicon, without taking into account funds held in our auction rate securities, will be sufficient to meet our cash requirements for at least the next 12 months.
Now let's turn to our forward-looking financial guidance for 2010. We are on track to achieve our year-end guidance. Our contractual revenues from existing agreements for 2010 should be in the range of $4 million to $5 million. As we've previously made you aware, while we are in conversations with pharmaceutical companies to enter into potential alliances or collaborations, we have not included forecasted revenues from such potential arrangements in our guidance. We believe our pipeline will provide Lexicon with attractive opportunities for future alliances.
Operating expenses for 2010 should continue to be in the range of $100 million to $110 million. Non-cash expenses will be approximately $10 million of this total, including $5 million in stock-based compensation and $5 million in depreciation and amortization. Taking into account cash received under existing contractual relationships only, we expect our 2010 net cash use and operations to be in the range of $90 million to $95 million.
I will now turn the call back to Arthur.
Thank you, Jim and we can now go forward and take your questions.
(Operator Instructions) Your first question comes from the line of Stephen Willey with Thomas Weisel.
Stephen Willey – Thomas Weisel
Good morning. Thanks for taking my question. Just a quick question on the IBS data that we saw. Can you just maybe talk little bit about your selection of the 15% cutoff value? Maybe talk about some of the sensitivity around that, maybe what the error bars look like, if that's kind of moved plus or minus 5%. And I guess in thinking about maybe a larger trial, maybe a pivotal trial, would you even consider using a four-week running period as kind of a way to get responses and then use that as an exclusion criteria?
Great. Thanks, Steven. So we selected the 15% cut point on the basis of the biomarker response. So as indicated, if you take a look at the slide where we had shown the 5-HIAA reduction, the 250 milligram dose group peaked out at about 13%. So we selected 15% because we had seen the response on the high-dose on the pre-specified parameters and we had failed to see that effect in the low dose.
So that was the rational construct around that cut point. It was of course a post-hoc analysis. It was an exploratory trial, so we – this is appropriate at this stage of development. But you do have to obviously give a certain caveats to that.
The error bars themselves, there is some variability in the biomarker response. But as you can see by the magnitude of effects, those error bars are not overlapping. And we believe that there's very good a robust data around those various data points under this analysis.
We haven't actually tried to take a look across all the different iterations of that if you're suggesting a 5% or 10% difference versus 15%. So we believe this is a rational evaluation at this point. We're obviously ongoing to continue to look at the data in an on going fashion
With respect to your question as far as for our pivotal trial, whether we consider a four week run-in to look for biomarker responders. It's been a while, but if you remember our Phase 1b data with the LX1031 compound at the high dose, we observed a maximal effect on the day five dosing, which was the earliest day that we had tested for the biomarker. So it may be a five day run-in or less to get a readout on the biomarker responders.
And so I think – the other thing is we have indicated in the past is that even baseline 5-HIAA, high levels were correlated with clinical response as far as that adequate relief of IBS pain and discomfort. That didn't reach significance statistically in that study. It was P equals 0.057, but a clear correlation which may be able to build upon in our Phase 2b as we look at more patients.
Stephen Willey – Thomas Weisel
Okay. So you see the response, I guess, the reduction in 5-HIAA peaking out around week four, but you are able to kind of discern that difference by day five?
Yes. Day five in healthy normals, we already the peak or maximum effect at the high dose. So we – remember in our Phase 2a, we were only measuring the 5-HIAA at baseline at week four and after – and two weeks later. So we didn't take intermediary points, but we think it is likely again at day five in the high dose we would have gotten a maximal effect as well.
If I could add, I think you probably sense our excitement around this. The reason for that is, if you even go back and look at the draft guidance from FDA, there is an acknowledgement that there has been a lack of a biomarker in this setting. And that has been a problem for the disorder.
This is the first evidence that we have this very nice tool pharmacologically to assess our compound, but the potential to integrate it into showing a subset of patients that are responding, meaning a disease marker. So that is obviously very exciting I think for medicine, as well as presents a great opportunity for us going forward. So we're still dissecting the data and look forward to discussions with the FDA about how to integrate it most effectively.
Stephen Willey – Thomas Weisel
And then I know, again, it's a small end, but is there any observation as to I guess why at week four you have non-responders so meaningfully below the placebo arm, relative I guess to where the responders are?
Yes. I think at this point it – we'd be speculating, but having talked to experts, there is suggestion of multiple potential reasons. It could be that if we just push the dose in those non-responders, they would then become biomarker responders. Other possibilities are perhaps they have increased GI motility, so the drug is not seeing enterochromaffin cells for as long.
And then additional, there has been more polymorphisms identified in genes involved in serotonin signaling being associated with IBS. And in particular some of those are involved in the enzymes involved in synthesis, which of course our target is. So I think we'll have to be following that data carefully as we go forward. It may be that perhaps they have polymorphisms in tryptophan hydroxylase that make them difficult to inhibit with our LX1031.
Stephen Willey – Thomas Weisel
And maybe just quickly switching over to the diabetes program. We have seen kind of the companies, I guess, that are developing some more selective SGLT2s. Kind of reiterate maybe some of their concerns around the GI tox and hitting SGLT1. So I guess from a timing perspective, is there any kind of benchmark we can use to maybe think about where we might see some that GI tox pop up, if indeed there is any at all?
Well, personally, I would have believed we would have seen that already in our Phase 2a study, especially given the fact that we were giving the patients boluses of glucose during the oral glucose tolerance test. These are 75 gram boluses of glucose and they were not triggering GI effects, which you might anticipate if you were truly seeing glucose-galactose malabsorption like genotype. I'd say it's also of interest that are other companies that are progressing highly selective SGLT1 inhibitors and these – the GI side effects don't appear to be deterring them from moving those compounds forward.
Stephen Willey – Thomas Weisel
Helpful. Thank you. And then just a quick financial question. We saw a little bit of a sequential spike in the G&A number. You mentioned it was due to patent litigation. Is that really something we should think about as a one-time charge to Q1? Or is that something that's going to be recurring over the course of the year?
It was really patent related legal cost, not litigation. This is just filing and executing our patents as really more of a timing thing as we have a lot more international patents that we're having to file in all the different countries. So it's really more of a timing thing, but it is actually because of we are success in the programs and we want to make sure we've got our patent protection.
Stephen Willey – Thomas Weisel
Perfect. Thanks a lot and congrats on the progress.
Your next question comes from the line of Ted Tenthoff with Piper Jaffray.
Ted Tenthoff – Piper Jaffray
Great. Thank you very much. As a long-term observer, it's very nice to see the progress that you guys are making. I know it's been years of hard work. So congratulations on that, sincerely.
Ted Tenthoff – Piper Jaffray
Looking from the 30,000 foot view, you guys and shareholders have been funding these developments and discoveries for a long time now. How does establishing proof of concept here energize and/or prioritize potential partnering discussions and obviously with recently refilling the tank it doesn't seem like you're in any particular rush to partner assets. But obviously as we go into larger share, your R&D expense is going to increase. So how do you balance this portfolio now and entertain potential partnering opportunities?
Well, our business model evolves towards achieving proof of concept as a partnership inflexion point are a real target for commencing sincere discussions, because of course, that's when the value in the program can really be recognized as seen in patients for the first time. So this has been an important several months for the company in terms of our business product and our business front as well.
So we are engaged in discussion with potential partners on all the programs. They're at different stages of, I'd say, maturity and seriousness based on how we prioritize our ability to prosecute them all and how we see the programs.
So we prioritize the programs that are in large primary care indications very highly for partnership because of – among the reasons you cited already, Ted, was the high potential cost for example of future diabetes trials in Phase 3. And other associated costs, too, with regard to commercialization. So that's a very high priority for us. And we have a significant amount of partnership interest in the program.
Of course all of this interest is driven by results. The results that we highlighted today are remarkable in both diabetes and IBS and but in diabetes in particular, that reduction in hemoglobin A1c over four weeks has been I'd say head-turning for potential partners. So that's a very high priority for us.
And we do have, I think, a real sense of urgency with regard to timing even though we do – we are in a strong financial position. These programs need move forward aggressively, given the opportunity. So we're very intent on progressing our discussions with partners, although we do not forecast – we've been studious not to forecast timing with regard to when any of the discussions might come through fruition because that’s very hard to predict, as you know.
Ted Tenthoff – Piper Jaffray
And we have seen some nice early stage diabetes deals, too so.
I think if you've got the results, it's possible. But it is a big – it's a big investment for potential partners, so there's a lot to consider. And we've taken the tactic of look, let's go forward and plan a Phase 2b trial as if we're going on our own, because there are things that have to happen along the way and we don't want to lose time when we see this opportunity.
Ted Tenthoff – Piper Jaffray
Okay. Thank you.
Thank you, Ted.
You do have a follow-up question from the line of Steven Willey with Thomas Weisel.
Stephen Willey – Thomas Weisel
Yeah. Thanks for taking the follow-up. Maybe just following up on Ted's question, how do you think about the balance of weighting a partner when you're out kind of surveying the landscape looking to who is going to gain control of these assets of yours, hopefully? And how much weight is actually placed on the economics of the deal versus, maybe how you fit into a collaborators pipeline. And maybe how you would be competing with other products in the pipeline?
Can you maybe just explain maybe kind of where your thoughts are there? I think we've seen a couple companies get dinged in the marketplace a little bit. Because they maybe didn't take as much up front, but they kind of felt like they got a better partner in return?
Well, I think clearly the long-term consideration of where our product would fit in the pipeline of a potential partner and how it would commercialize are – I think are of paramount importance for really maximizing the value. Ultimately the sales of the drugs, how it's positioned is really the most critical factor when you're talking about something that could have such a medical impact, for example, with LX4211 or LX1031. So I think that's first on our mind.
The next consideration is governance considerations, because I think they end up affecting that long-term outcome. How are the programs managed? What role was Lexicon continue to play with the partner? Are there indications where Lexicon could play a dominant role, particular indications or particular market segments of physicians where we could co-promote, where we think we could make a real contribution and maximize the value of the drug, so that I think is a very important next consideration.
And then I think on the last point, the economics certainly that's sort of the high optical impact, when deals with signed. But I think you really have to analyze those closely to see what value is really transmitted by those economics to the partner. Clearly, we're going to want to maximize the economic value overall and balance upfront payments, milestone payments and royalties and other sorts of structures that might involve cost profit share.
So that ends up being a fairly complex analysis that has to take place to really value the deal and other – people can value those in different ways. But we'll obviously model these financially with a very sophisticated modeling that we're going to be applying to analyze each of these economic parameters. And that's very important because that of course is how you quantify the return on investment for our all that has been invested in the program. So bit of a perhaps long winded answer, but those are the three steps, I think we take to evaluate these and how we prioritize it, Stephen.
Stephen Willey – Thomas Weisel
At this time, there are no further questions.
All right. Well thank you all for participating. Again, it's been a very active quarter for us. I think it's – if you're watching the slides, we already discussed some of the comments on partnering strategy thanks to the last couple of questions. But I would like to look at the timeline slide going forward, because I think this will be important for everyone to appreciate the important milestones we see going forward here.
So we're – as we move into through 2010, the next major results that we see on our radar screen are the LX1032 results coming in the second half, which is pictured here on the left portion of this timeline slide and then 2931 around year end. In a similar time zone, the LX4211 clinical trials will lift off for the Phase 2b study. So that would be the company's first Phase 2b initiation and that's a significant milestone.
Then in 2011, you see our initiation of LX1031, the Phase 2b study for IBS. And both of those, I'd say the gating factors there are trial design and formulation and bringing forward the materials required to launch those trials. And then farther off in the future, you see we anticipate results from LX4211 towards the end of 2011 and then farther off, LX1031.
Now, not on this timeline, there are numerous this events which we will be updating you as we proceed with new programs, new INDs that will be filed. And of course, we'll be updating you as to any significant corporate partnerships that will occur. So with that, I'd like to again thank you all for participating in the first quarter conference call. Bye-bye.
This concludes today's conference call. You may now disconnect.
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