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Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)

Special Call

June 25, 2012 10:00 a.m. ET

Executives

Wade Walke - Senior Director, Communications and Investor Relations

Arthur Sands - President and Chief Executive Officer

Brian Zambrowicz - Executive Vice President and Chief Scientific Officer

Pablo Lapuerta - Senior Vice President of Clinical Development and Chief Medical Officer

Jeff Wade - Executive Vice President and Chief Financial Officer

Analysts

Cory Kasimov - JPMorgan

Alan Carr - Needham & Company

Liana Moussatos - Wedbush Securities

David Friedman - Morgan Stanley

Kevin Kedra - Gabelli & Company

Nicholas Bishop - Cowen and Company

Operator

Thank you for holding. Welcome to the Lexicon Pharmaceuticals conference call and webcast to discuss LX4211 top-line Phase 2b study results. 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 recorded at Lexicon’s request.

At this time I would like to introduce your host for today's call, Wade Walke, Senior Director of Communications and Investor Relations. Please go ahead, Dr. Walke.

Wade Walke

Good morning, and welcome to the Lexicon Pharmaceuticals conference call and webcast. I am Wade Walke and with me today are Dr. Arthur Sands, Lexicon’s President and Chief Executive Officer; Dr. Brian Zambrowicz, Lexicon’s Executive Vice President and Chief Scientific Officer; Dr. Pablo Lapuerta, Lexicon’s Senior Vice President of Clinical Development and Chief Medical Officer.

We expect that you have seen the copy of our press release that was distributed this morning. During this call we will review the information provided in the release, provide further detail on the top line results from the LX4211 Phase 2b study, then use the remainder of our time to answer your questions. If you would like to view the slides for today's call, please access the Lexicon website at www.lexpharma.com, you will see a link on the home page 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 LX4211 and the potential therapeutic and commercial potential of LX4211. 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 actual 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 alliances and ability to enter into additional collaborations and license agreements, 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 the requirements of substantial funding to conduct our drug discovery and development activities. For a list and a description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission.

I will now turn the call over to Dr. Sands.

Arthur Sands

Thank you, Wade, and I would like to welcome everyone to this call this morning to discuss the much anticipated results for LX4211 from the Phase 2b trial. I would like to say upfront that we are very pleased by the results that we have received recently from this trial. We are excited to discuss them this morning and at the end of the call we can talk about next steps. I would like to emphasize that these are top line results only. We have very recently received them. They have gone through our own internal top line statistical QC procedure, but we are only going to be focused on those results covered in the slide deck that we will be using today.

Before we dive into the results I would like to just say one word -- a couple of words on the context for clinical development strategy here that led to this trial. First of all we believe that diabetes drugs in general will need to demonstrate not only glycemic control and preferably superior glycemic control to other drugs that are available, but also they will have to show that they can provide metabolic benefits to patients on several parameters which we think will ultimately lead to improved -- reduced cardiovascular risk, which has been a big issue in the field.

So our whole clinical development strategy is tuned to seeking those two types of results, glycemic control and metabolic benefits. The other thing I would like to say is that there is a great importance in combination therapy in diabetes treatment and so we have also been very tuned to setting LX4211 in appropriate combinations based on the way drugs are actually prescribed in diabetes today. And that was an important consideration for the design of this trial which is the background of metformin. Of course metformin is an established drug. It’s a drug that is widely prescribed and the largest I think market opportunity is to be second line, coming on top of metformin. And that again is why we designed the trial as we have for this Phase 2b step.

Now we have seen LX4211 in a number of different trial settings and it has demonstrated itself to be, I would say, a very versatile drug and can be combined with other agents. I know that we shared earlier with you our combination trial with our DPP-4 inhibitor initial dosing trial which is also very encouraging. So this agent continues to look, again, I would say very versatile with regard to combinations.

So let's move on to the trial itself and the results. The trial is now obviously complete. We have been focusing on the top line results. We will have Brian present the first part of this presentation touching a bit on the mechanism of action and some of the important glycemic control parameters and some of the things we things we think they are telling us at an early stage about the mechanism. And then we will turn to Pablo to look at some of the other metabolic dimensions of efficacy, as well as very importantly a fairly detailed, I think, disclosure on safety, which we know is of paramount importance as well. And then we will wind up with some conclusions and then Q&A and we can discuss some next steps.

So let's turn it over to Brian.

Brian Zambrowicz

Thank you, Arthur. LX4211 is a first in class inhibitor of sodium-dependent glucose transporters 1 and 2. SGLT2, its primary role is for glucose reabsorption in the kidneys and inhibiting the results in glucose release in the urine. SGLT1 is the primary transporter involved in uptake of glucose from your diet. There are humans with mutations in SGLT1, and those humans have what is called glucose, galactose malabsorption. Even small amounts of glucose will trigger diarrhea and other GI side effects. And I mention that because we will be covering the GI safety in some detail later in this presentation. But to date with pharmacology we have seen a very favorable GI safety profile with LX4211.

To remind you, the trial design -- LX4211 we show here in the here in the context of other SGLT2 inhibitors currently in clinical development. I show you this to demonstrate that on the left there are the names of the compounds and then the columns that focus on whether they inhibit SGLT1 or SGLT2. You can see that the majority of the compounds in clinical development are highly selective SGLT2 inhibitors, and we are unique in being a dual inhibitor. I show you this because when we discussed our 12 week data, I will make some comparisons to the some of the agents that have also gone through their Phase 2b studies, 12-week studies.

To remind you, the trial design for this study was in patients with type 2 diabetes on stable dose metformin with a hemoglobin A1c between 7% and 10.5%. There were five treatments arms and a placebo arm, all on top of stable dose metformin. The four doses we tested were 75 mg given once daily. 200 mg given once daily, 200 mg given twice daily, and 400 mg given once daily.

With the 12-week duration of treatment and the primary endpoint was the change from baseline in hemoglobin A1c at week 12, with secondary endpoints including the percentage of patients achieving a hemoglobin A1c of less than 7%, fasting plasma glucose, 3-hour oral glucose tolerance test, weight, blood pressure and triglycerides. Phase 3 planning is currently underway and we have already received some European Union national advice today.

To provide you a little bit of the baseline demographics. There were roughly 60 patients per arm. All arms had 60 except the low dose arm which had 59. The age was pretty well balanced between 55 and 56 years of age on average. I will point out that there were more females than males in all those arms expect for the low dose. This is important, I think that we will later be discussing general or urinary infections. The plasma hemoglobin A1c at baseline was fairly typical for these types of studies and pretty well. And I will point out particularly the 400 mg QD dose and the placebo arm were pretty well balanced as far as hemoglobin A1c at baseline. And finally, if you look at the systolic blood pressure and diastolic blood pressure, these patients had pretty well controlled blood pressure coming in.

Moving along then to the hemoglobin A1c results. Green is placebo and the change from baseline to week 12 was minus 0.09%, which is not statistically significant, this reduction. In gold, you have the 75 mg once a day dose. It showed a 0.43% reduction. All the LX4211 treatment arms showed statistically significant reductions with p values of less than 0.001. Blue is the 200 mg once daily dose. The reduction in hemoglobin A1c was 0.52%, whereas the 200 mg BID, the reduction in hemoglobin A1c was 0.79%. And black is the 400 mg once daily dose, the reduction in hemoglobin A1c of 0.95%.

In this study we observed a very nice dose response. Importantly the 400 mg once a day dose was better than the 200 mg twice daily dose, supporting a once daily dosing for LX4211. I would like to focus particularly on the 400 mg dose. What we observed, baseline placebo subtracted was a 0.86% reduction in hemoglobin A1c. This compares favorably with selective SGLT2 inhibitors that all achieved about 0.7% drop in their 12-week dose ranging studies. Just as example, dapagliflozin in a treatment-naive 12-week study achieved a 0.67% reduction in hemoglobin A1c, and canagliflozin and emplagliflozin, both on top of stable dose metformin achieved 0.7% and 0.71% reductions in hemoglobin A1c respectively.

We move on. And next we are looking at the urinary glucose to creatinine ratio. This looks at the effect of SGLT2 in addition as it relates to urinary glucose excretion. At 75 mg once daily dose, we got 8.2 grams of glucose per gram of creatinine. At 200 mg once daily it elevated to 39.9 grams. At 200 mg twice daily it was 36.6 grams, and at 400 mg once daily it was 37.6 grams. Placebo was 3.4. It appears that we saturated the urinary glucose excretion at 200 mg dosed once daily. This effect on urinary glucose excretion appears to differentiate from selective SGLT2 inhibitors. In their 12-week dose ranging studies, dapagliflozin and canagliflozin elevated this ratio above 60, with dapagliflozin reaching up to 65 and canagliflozin 61.6.

Thus their hemoglobin A1c effect appears to be occurring with less urinary glucose excretion then has observed with SGLT2 selective inhibitors. I want to get back to this saturation of urinary glucose excretion effect of the 200 mg BID dose. This suggests that further pushing dose to above 200 mg once daily, gives no further urinary glucose elevation and no further SGLT2 effect. And if we go back one slide and look at the hbA1c, it’s fairly clear that 200 mg once daily produces a reduction from baseline hbA1c of 0.52%, while the 400 mg once daily dose is giving a 0.95% reduction in hemoglobin A1c. This additional hbA1c benefit is happening in the absence of any increase in urinary glucose excretion suggesting this additional effect is through SGLT1. Again, supporting the importance of the dual mechanism of action.

Finally, I am going to be covering body weight. It will in kilograms and it’s the change from baseline at week 12. The 75 mg once daily dose produced a kilogram drop in body weight at week 12. The 200 mg once daily dose produced a 2.7 kilogram reduction, the 400 mg once daily dose produced a 1.9 kilogram reduction, and the 200 mg twice daily dose produced a 2.5 kilogram in body weight. With placebo recuing body weight by 0.4 kilograms. So at the three highest doses, the placebo subtracted weight change was 2.3, 1.5 and 2.0 kilograms. Again, this compares very favorably with the 2.1 kilograms of weight loss that was observed for canagliflozin in its 12-week dose ranging stud. And the cana effect on weight reported in that study was the best weight loss that has been observed for a selective SGLT2 inhibitor.

I will now turn the call over to Pablo Lapuerta to complete this top line data review.

Pablo Lapuerta

Thank you, Brian. On slide nine we have the results for LX4211 in terms of blood pressure reduction. LX4211 provided significant reductions in systolic blood pressure with a good dose response. 75 mg was similar to placebo, but 200 mg showed a significant reduction. 200 mg BID an even greater reduction, and the maximum, the 400 mg once daily, the maximum was a 6 millimeter reduction in systolic blood pressure with less than half of a millimeter reduction on placebo. And previously Brian had shared with you the patient demographics. This was in a population that was fairly well controlled. So these are good systolic blood pressure reductions on the order of magnitude of what one might achieve with an effective diuretic or a low salt diet.

On slide ten, we have the reductions in diastolic blood pressure which also reached statistical significance. These reductions in diastolic blood pressure were a bit smaller. They were on the order of 2 to 2.5 millimeters of mercury. And that also is consistent with what one might expect with a diuretic or a low salt diet.

Most importantly, these blood pressure reductions were achieved without any signal of hypertension, orthostatic hypertension, dizziness, or any adverse events. LX4211 exhibited a very favorable safety profile which is described on slide 11. The overall proportion of subjects with an adverse event was 66.7% on placebo. In each of the LX4211 treatment arms, the overall proportion of subjects with an adverse event was the same as placebo or lower. It was 66.7% on 75 mg, only 60% on 200 mg and 57.6% on 400 mg, 61.7% on 200 mg BID.

Adverse events were generally mild to moderate with very few discontinuations. Only four people discontinued due to adverse events, and these discontinuations were distributed evenly among the treatment groups. There were very few serious adverse events. There were only four, and none of them were related to study drug. These serious adverse events are described below for more detail. And importantly we worked with an independent adjudication committee to review our data for major cardiovascular adverse events, including cardiovascular death, myocardial infarction and stroke. And there was, indeed, one adjudicated myocardial in fraction. It occurred on placebo.

The results and safety and tolerability extended into the gastrointestinal safety profile. On slide 12, the overall incidence of gastrointestinal adverse events was similar among the LX4211 treatment groups and placebo. There was a lot of interest in the possibility of diarrhea and yet the incidence of diarrhea was generally similar, LX4211 and placebo. Our most effective dose is the 400 mg and so looking specifically at that dose there were five cases of diarrhea on 400 mg and four on placebo.

We did have a trend for less constipation on LX4211 then placebo. Only one case on 400 mg but four cases on placebo. What perhaps is most informative in conducting the study is that there seems to be an association with nausea, and that maybe consistent with LX4211’s known ability to elevate GLP-1. So the incidence of nausea was 10% on 400 mg but 5% on placebo. Now most of the nausea was mild and none of the cases of nausea led to any discontinuation. Most importantly when reviewing nausea the question is, is it severe enough to lead to MSS. There was one case of MSS on 400 mg but three cases of MSS on placebo.

We examined gastrointestinal adverse events more thoroughly for other terms for adverse events, including abdominal pain, abdominal distension, flatulence, abdominal discomfort, and other potential signs. And there was simply no signal for any concern for LX4211 versus placebo. This was an overall favorable gastrointestinal safety profile with a patient safety experience that is now 20-fold greater than what we achieved in our phase 1 studies.

On slide 13, genitourinary safety was also satisfactory. We reviewed the safety database for dozens of preferred terms that could suggest some sort of reporting of vaginal yeast infections and looking through these dozens of terms we found five of them, that may be associated with vaginal yeast infection. And these covered three patients on 200 mg, three patients on 400 mg, two patients on 200 mg BID and no patients on 75 mg or placebo. So this is an overall low incidence of vaginal yeast infections.

There were no yeast infections in men. Urinary tract infections is also another area that received a lot of attention with SGLT2 inhibition and glucose in the urine, but there was no signal for urinary tract infections either with this preferred term or any other safety term. There were four urinary tract infections and no more than one in any treatment group and there was one on placebo.

So in summary, Brian has described to you the efficacy, it was significant, it was robust in reduction hemoglobin A1c in all treatment groups with p values than 0.001 for change from baseline in every single treatment group tested. And clearly controlled type 2 patients on a background of metformin therapy. These hemoglobin A1c reductions were achieved with less urinary glucose excretion than has been historically observed with selective SGLT inhibitors. And it seems to be that there is a dose response pattern that describes to us the SGLT1 effect as an effect that is clinically meaningful and provides us additional efficacy for the 400 mg dose without anymore urinary glucose excretion than the 200 mg dose.

There were also significant reductions in body weight, systolic and diastolic blood pressure. And we were especially pleased with the adverse event profile with no more adverse events on LX4211 than placebo overall, and good tolerability in terms of gastrointestinal adverse events, vaginal yeast infections and urinary tract infections. We believe that these results from this profile support us moving forward into an ambitious stage three program and that we are in target to initiate phase 3 program in the first half of 2013.

I will now turn the call over to Arthur.

Arthur Sands

Thank you, Pablo and Brian. And we can now take questions as we compile our roster.

Question-and-Answer Session

Operator

Your first question comes from Cory Kasimov with JPMorgan.

Cory Kasimov - JPMorgan

Thanks for taking the questions and congratulations on the positive data. Few questions for you. First of all, the A1c slope at three months is still heading down, so I am wondering if you have historical data on when these patients would typically plateau? And maybe based on your modeling, if you would hazard to guess kind of what degree of blood sugar reduction you might see here. And then I have a couple of follow-ups.

Arthur Sands

Brian, would you like to handle it. I did also notice that slope which was encouraging. Can you comment, Brian?

Brian Zambrowicz

Sure. We were really encouraged by that slope and there is every reason to believe that we should get a greater hbA1c effect over time. And that’s supported, I think, by the latest Phase 3 data for canagliflozin where as they went up to 24 weeks, they got further improvements over what they saw at week 12. But for the first time we are adding in this SGLT1 effect and it will be interesting to see as well, what additional benefit that can give us.

Cory Kasimov - JPMorgan

Okay. And then you seem to have a dose response everywhere except for weight loss and diastolic blood pressure. I guess safety as well, but any idea why you don’t see the same dose response there as you do with the blood sugar in particular with A1c.

Arthur Sands

Pablo, would you like to take the blood pressure question then we will come back to body weight for Brian. Go ahead, Pablo?

Pablo Lapuerta

Yeah, we saw a good dose response for systolic blood pressure. We didn’t see as much of a dose response for diastolic blood pressure. We expected that systolic blood pressure reductions would be greater than diastolic blood pressure. And part of that is because of the baseline blood pressures in this population, the baseline diastolic blood pressure is well controlled in this population. The systolic blood pressure is more frequently uncontrolled in a population like this. And we will have more data on how the systolic blood pressure looks and diastolic blood pressure in the hypertensive individuals. Those who did not have blood pressure control in baseline, later on in July and August, and so we will be able to provide more data when we have the final tables, listings and figures to look at that.

Cory Kasimov - JPMorgan

Okay.

Arthur Sands

I would just follow-up with that and say that may very well be because there is more variation then body weight and blood pressure measures then what you see with hbA1c where that tightness of the data is indicated by the very low p-values.

Cory Kasimov - JPMorgan

Okay. And then last question is whether or not you can give us any insight into the percent of patients reaching goal of target or if we have to wait for a formal presentation of that, maybe where that formal presentation might take place.

Arthur Sands

Yeah, I think we are going to have to wait for that, Cory, and we will have to see what the fall looks like in terms of more formal setting for us to present. We will let you know.

Operator

Your next question is from Alan Carr with Needham & Company.

Alan Carr - Needham & Company

A quick one on the weight. I missed it. Could you remind me what the baseline weight was for these patients and also -- I believe you are also tracking triglycerides. Do you have any information for us about that?

Brian Zambrowicz

Sure, I can cover that. The baseline weights range from 90 to 96 kilograms. And we will have to wait to see further triglyceride data.

Alan Carr - Needham & Company

Okay. So that’s something that you will hold till, like a scientific presentation?

Brian Zambrowicz

Probably, yes.

Alan Carr - Needham & Company

Okay. And then what's the latest in terms of seeking a partner and how to handle Phase 3 if you don’t have a partner by first half ’13?

Jeff Wade

Hi, Alan, this is Jeff Wade. We have been having some partnership discussions ongoing before we got the data. We expect to continue those and our expectation is still to have a partnership in place before we actually launch Phase 3.

Operator

Your next question is from Liana Moussatos of Wedbush Securities.

Liana Moussatos - Wedbush Securities

So any plans for a six-month trial besides the Phase 3?

Arthur Sands

That’s a good question. I think as we look at the data now, we will have to consider whether there are potentially additional trials we want to do to tee up the Phase 3 program. Pablo, would you like to comment on that? We have outlined the program. We see what we call, I guess, a cluster of trials that are Phase 3a trials that we know would get going right away. But then there is another set that could come afterwards based on some of the nuances of the drug we would like to demonstrate clinically. Pablo, would you like to comment on this?

Pablo Lapuerta

Yeah, we have a Phase 3 plan that we have already discussed with some regulatory authorities and it has all these six months studies that we had planned. And we can initiate that in the first part of 2013. Prior to the initiation of Phase 3, we don’t believe that we require any more efficacy or safety data. This profile I think is satisfactory to move forward and we have a good enough database here to support dose selection. And we will be emphasizing the 400 mg once daily dose.

In terms of other studies though, we have discussed previously that we are interested in their study in renal impairment. We have already initiated that. And that’s a small study. It’s not six months duration. But we think that a small study in renal impairment can help us conduct better and be better prepared and execute more effectively. A large Phase 3 study in renal impairment because we think that’s an important opportunity for differentiation of LX4211 from selective SGLT2 inhibitors.

Liana Moussatos - Wedbush Securities

And can you remind me how long the type 1 diabetes trial is, the treatment time?

Arthur Sands

It’s a 28-day treatment period, yeah. And we are going forward with that as well. And I know that Brian would like to comment on some of the potentially very interesting mechanistic studies we see that we could do along the way there as we proceed to Phase 3. Brian?

Brian Zambrowicz

I think we have a big interest in looking at beta cell function with LX4211 treatment. We know that SGLT2 selective inhibitors seem to improve beta cell function but we believe through the SGLT1 mechanism and release of GLP-1, that we could anticipate a further beta cell benefit which would be very very important for type-2 diabetic.

Operator

Your next question is from David Friedman with Morgan Stanley.

David Friedman - Morgan Stanley

Just one in regards to the dose. Have you guys considered trying a higher dose than 400 and if not, why not? And if so, do you think it would be included in one of the future Phase 2s?

Arthur Sands

Pablo, would you like to comment on that?

Pablo Lapuerta

Well, we think we have good support for going forward with an emphasis really on one dose in Phase 3 and that’s the 400 mg once a daily. Since it’s well tolerated, there is always a question of whether now we could go even higher, because I think we are seeing incremental SGLT1 effects of 400 milligrams. And it’s a reasonable question to ask whether if 400 milligrams in the morning and 200 milligrams in the evening could give you even more of an SGLT1 effect and still look good in tolerability. So we will have to consider whether at some point in the development program we explore a higher dose. But we feel that this has a differentiated profile. We have gone through a good dose ranging study, and that 400 milligrams is a good choice to emphasize for our Phase 3 program.

David Friedman - Morgan Stanley

And then just in terms of the differentiation, the A1c reductions were a tick above the cana, the weight loss was similar and the blood pressure declines were roughly similar. So where do you think -- I mean on what axis do you believe it’s the most differentiated and how can you emphasize that going into Phase 3?

Arthur Sands

Okay. Brian, let's break that up a little bit? We want to talk about the differential first on the hbA1c at 12-weeks again, because I think you stated that well.

Brian Zambrowicz

Well, I think that differential between -- obviously we are at 0.86 here, they were at 0.7. I would emphasize that in the study we are on top of stable dose metformin. I think that if anything we may be underestimating the effect of 4211 alone in that setting. And certainly I think we have every reason to believe we would see greater effects in combination with the BPT-4 inhibitor. So I think glycemic control is going to be one of the primary differentiators. But then also the fact that this is being achieved with less glucose in the urine, and what that may entail as far as potential for seeing better infection, general urinary safety in larger studies, that could be very important as well.

And again, I think there is opportunity to get additional beta cell benefits with GLP-1 release as well as beneficial GI peptides.

David Friedman - Morgan Stanley

Got it. Okay. Thanks.

Pablo Lapuerta

We also feel that benefits in renal impairment will be differentiating here since we are seeing that a lot of the hemoglobin A1c reduction is independent of glucose excretion by the kidney. And so we believe we have a good opportunity in patients with mild to moderate renal impairment.

Brian Zambrowicz

Yeah, just, again when we looked at that 200 versus 400 milligrams once daily, that jump in A1c with no increase in urinary glucose excretion was 0.43, I believe. And that appears to be SGLT1 and that shouldn’t be affected in a renally impaired subject. And certainly the SGLT2 inhibitors have been more in the range of 0.3 for hbA1c in renally impaired. So it’s very encouraging for that population.

Operator

Your next question is from Kevin Kedra with Gabelli.

Kevin Kedra - Gabelli & Company

I know you guys showed the comparison between your compound and canagliflozin, but we have heard comments coming out, J&J saying that they believe that they hit SGLT1 as well. So I was wondering if you could just sort of comment in light of their comments, how you think that they match out with our compound?

Pablo Lapuerta

Sure. I can speak to that. So first of all, we are about 13-fold more potent at SGLT1 than canagliflozin. And secondly, we did see their two presentations at the ADA where they discussed potential for SGLT1 inhibition. They did one study in healthy subjects and one study in type 2 diabetics. In healthy subjects they had inhibition of SGLT1 for two hours and then lost it. So only at breakfast, no inhibition at lunch or dinner. And in fact at two hours when they lost their effect they had compensatory urinary glucose uptake, so the change in AUC only at breakfast was a 6% reduction. So they had very modest and transient effects on SGLT1 and the moderator in fact questioned whether that could be clinically meaningful.

They saw a similar, extremely modest and transient effect in type 2 diabetics and they were faced with the same question that whether that was clinically meaningful. And then they were further asked if they measured GLP-1 which we know is associated with real SGLT1 inhibition, and they said yes, they measured it and they had no effect. So I think while they made some claims, I don’t think the data supports that they are true and potent inhibitor of SGLT1.

Arthur Sands

We were encouraged however that they do like the new mechanism, apparently.

Operator

Your next question is from Nicholas Bishop with Cowen and Company.

Nicholas Bishop - Cowen and Company

Just had a couple of questions about Phase 3 design. How was your thinking about Phase 3 design involved in light of this data, if at all? What are the key endpoints you think you will be looking at and will GLP-1 dynamics be included in the trial?

Arthur Sands

Okay. The overall design, Pablo, would you like to discuss that? And then we will talk about GLP-1 and DPP-4 combinations.

Pablo Lapuerta

Yeah. So this supports our design. We had a considered five diabetes studies and one cardiovascular outcome study for Phase 3 and a total sample size, of Phase 3 of about 9000 patients. The five diabetes studies we were thinking of were, two in the sitting of monotherapy, to on top of metformin, and this important study that we think can be very differentiating in patients with renal impairment. The results we have today, I think they suggest that we can focus more on the 400 milligram dose. We had considered designs previously where we were actually having a significant number of patients on lower doses. And since there is no real safety advantage of lower doses, we think we have good justification to really emphasize one daily dose for LX4211.

And then seeing the blood pressure reductions and the weight reductions and the robustness hemoglobin A1c reduction, we do feel that LX4211 is fulfilling this profile of being a cardiovascular drug. So that really supports this plan of starting a cardiovascular outcome study early in Phase 3. And having it powered not just for safety data, but also for efficacy and cardiovascular risk reduction.

Nicholas Bishop - Cowen and Company

Okay, great. And then in order to begin Phase 3, you discussed this a little bit earlier I guess, but are there any events, any gating events apart from kind of establishing partnership and getting regulatory sign-off here or those the major things.

Arthur Sands

There really are no other gating events. I mean we have been preparing already for Phase 3 with respect to production material and the planning and the early interaction with regulatory authority. We will be targeting our end of Phase 2 meeting hopefully in September with the FDA. And so that obviously is a gating event as you would expect. But we really have, I think, intentionally built a runway to Phase 3 that’s fairly straight forward. The partnership discussions I think are basically going to accelerate at this point with these data. This has been a gating event today. And now I think we are through that gate.

Nicholas Bishop - Cowen and Company

Okay. And then just lastly on the structure of the partnership. I wonder if you have any guidance for us on how you would prefer to structure that. Would it be an ex-U.S. rights, co-promote in U.S., or what you are thinking there?

Arthur Sands

Jeff, do you want to address that?

Jeff Wade

Well, I don’t have a whole lot to comment there, other than we think this is an important drug and we are interested in establishing a real partnership around this opportunity and think that we can add to that partnership. So that’s something that we will be looking for and in terms of structure we will have discussions with a variety of partners about that.

Operator

(Operator Instructions) Your next question is from Stephen Willey of Stifel Nicolaus.

Unidentified Analyst

Hi, this is actually [Amol Powar] in for Steve. I just want to add my congratulations as well. Can I have a couple of quick questions. So did you record any data about the urinary urgency and frequency in these patients and then the other diuretic properties seen?

Arthur Sands

Pablo?

Pablo Lapuerta

I am sorry, could you repeat the question?

Unidentified Analyst

Sure. So any information on the urgency or frequency in urination in these patients and any other diuretic properties seen while on study drug?

Pablo Lapuerta

Yes, we viewed that and there was no issue with increased frequency of urination or increased volume. And so we have looked at these terms and I believe that there was only one term for a polyuria and perhaps only one case for urinary frequency. I think there was a case of nocturia on placebo. I don’t have the exact numbers, I can tell you that these were kind of isolated cases, there is no pattern of an issue here with problems with urinary frequency.

Unidentified Analyst

Okay. And then...

Pablo Lapuerta

And certainly given the lower urinary glucose release compared to SGLT2 selective inhibitor, it will be very interesting to look at that data in more detail.

Unidentified Analyst

Okay. And just if you can remind us of what the follow-up plan is for patients that have finished with the Phase 2b trial?

Arthur Sands

Pablo, the follow-up times is two weeks, isn’t it?

Pablo Lapuerta

(inaudible) is about two weeks.

Unidentified Analyst

All right. But if they are going to be enrolled in a potential extension study to gather more long-term safety data?

Pablo Lapuerta

We don’t have an extension for the Phase 2 population. We are planning extensions in Phase 3 and we are planning those length of extensions in mind with safety requirements and the importance of collecting long-term cardiovascular outcome data.

Operator

You have a follow-up from the line of Liana Moussatos with Wedbush Securities.

Liana Moussatos - Wedbush Securities

Going back to the previous question on partnerships, do you have any plans on building your own sales force, even for specialists in the U.S.?

Arthur Sands

Jeff?

Jeff Wade

I think at this point we don’t really have any comment to add. We would be interested in participating at some level or at least having an option to participate in the commercialization of the product. But I don’t think we have any ambitions to build a primary care sales force.

Operator

And there are no further questions, I would like to turn the call back over.

Arthur Sands

Yeah, I would like to thank everyone for participating this morning. It certainly has been a very exciting weekend for us as we have processed this top line data. Based on the questions obviously there is a lot more data that we are going to be evaluating and we hope to be sharing with you in the future. We are very encouraged and we think that LX4211 was like a very versatile drug, it seems to have really an excellent safety profile from this study so far. And I think it has the potential even to prove itself eventually to be a superior drug in diabetes. So we are very encouraged and again we thank you for your participation. Good bye.

Operator

Thank you. This does conclude today's conference call, you may now disconnect your lines.

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Source: Lexicon Pharmaceuticals' CEO Discusses LX4211 Top-line Data from Phase 2b Trial (Transcript)
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