Good morning, ladies and gentlemen and thank you for holding. Welcome to the Lexicon Pharmaceuticals Second Quarter 2009 Earnings 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, Jason Ray, Manager of Corporate Communications and Investor Relations. Please go ahead, Mr. Ray.

Good morning and welcome to the Lexicon Pharmaceuticals second quarter 2009 earnings conference call. I'm Jason Ray, and with me today are Dr. Arthur Sands, Lexicon's President and Chief Executive Officer; Dr. Philip Brown, Senior Vice President of Clinical Development; and Jim Tessmer, 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 and then use the remainder of our time to answer your questions. The call will begin with Dr. Sands, who will discuss our key accomplishments for the second quarter. Dr. Brown will then discuss the status of our drug development programs and Mr. Tessmer will review our financial results for the second quarter and discuss our financial guidance for 2009. We will then open the call to your questions. If you would like to view the slides for today's call, please access 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 LX1031, LX1032, LX2931, LX4211 and LX7101. 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, 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 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.

Thank you, Jason and welcome everyone this morning to our call. I'd like to start out with just a word of reiterating that Lexicon is doing well on its mission on implementing a strategy to develop a whole portfolio of novel drug candidates and these of course are candidates that we've discovered through our novel technology, gene knockout technology. I think it's important to acknowledge that upfront again, especially given some of the recent news in biotechnology where we've seen several of our peer companies do announce quite encouraging clinical results based on drugs with novel mechanisms and I think it's in that light of course we would like to see our own pipeline advancing. We'll focus – I'll hit some highlights here before we get started on slide number 4, for the second quarter. We had a very active second quarter in progressing our clinical pipeline and so, I think most of the news is centered on that. Most notably, we have advanced LX1032, our small molecule compound for carcinoid syndrome in the Phase II, having initiated the Phase II clinical trial. And very importantly, we recently gained Orphan designation for that drug in Europe and Dr. Brown will be explaining some of the attributes of that designation. LX1031 for irritable bowel syndrome, is on track, continues to be on track to complete the Phase II clinical trial by year-end. We are encouraged by the enrollment status there. And then the third point, we are actively preparing to initiate a Phase II trial for LX2931 in patients with rheumatoid arthritis. And so, as you can imagine, this is quite a bit of work on the part of our clinical team to move these two programs forward into Phase II over the last quarter. We have also completed dosing of…

Great. Thanks very much, Arthur. Well, as Arthur just outlined, we are continuing to make very good progress against the development pipeline. And I'll like to start today with LX1032. This is our oral inhibitor of tryptophan hydroxylase that reduces serotonin production. It's positioned for use in carcinoid syndrome and by background – by way of background, to remind you, carcinoid syndrome is a situation which results from metastasis of serotonin secreting tumors that results in high levels of serotonin and causes severe diarrhea, abdominal cramping, as well as a variety of other symptoms in these patients. It's a very exciting compound because it's been specifically designed to gain high levels of systemic exposure without causing the blood brain barrier. So we believe that we can reduce serotonin being produced by these tumors without impacting brain serotonin level and thereby influence in a positive fashion the symptoms that these patients experience. As Arthur mentioned, we were pleased to have the opportunity to present our Phase I data at the recent Digestive Disease Weekly meeting and an oral presentation. And we've initiated the Phase II study in the U.S. at three centers and continuing to evaluate additional centers to get up to our targeted number of five centers in the U.S. By way of study design, the double-blind, placebo-controlled randomized study in patients with symptomatic carcinoid syndrome who are refractory to the current standard of care, which is octreotide. Octreotide is an injectable somatostatin analog. We believe that an oral agent in the setting offers significant advantages to these patients who no longer receive benefit from that therapy in terms of symptom management. The study design is a serial-dose escalation, which will then be followed by a cohort expansion once the optimal dose is identified. So it will be a 28-day…

Thank you, Phil. We issued a press release this morning detailing our second quarter 2009 financial results, which you may find on our website if you have not already reviewed it. Lexicon's revenues for the three months ended June 30th, 2009 were $3 million, a decrease of 69% from $9.6 million for the corresponding period in 2008. The decrease was primarily attributable to reduced revenues under alliances with Bristol-Myers Squibb and N.V. Organon due to our progressing completing the target discovery portion of the alliances and the completion in 2008 of the target discovery portion of our alliance with Genentech, Inc. For the six months ended June 30th, 2009, revenues decreased 61% to $7.2 million from $18.5 million for the corresponding period in 2008. Research and development expenses for the 2009 second quarter were $20.2 million, a decrease of 33% from $30.1 million for the corresponding period in 2008. The decrease was primarily attributable to lower salary and benefit costs due to reductions in personnel, as well as lower external preclinical research and development expenses. For the six months ended June 30th, 2009, research and development expenses decreased 25% to $43.1 million from $57.5 million for the corresponding period in 2008. General and administrative expenses for the 2009 second quarter were $5.6 million, a decrease of 6% from $5.9 million for the corresponding period in 2008. The decrease was primarily attributable to lower salary and benefit costs due to reductions in personnel. For the six months ended June 30th, 2009, general and administrative expenses decreased 11% to $10.4 million from $11.8 million for the corresponding period in 2008. Lexicon's net loss for the three months ended June 30th, 2009 was $20.1 million or $0.15 per share compared to a net loss of $20 million or $0.15 per share in the…

Well, thank you, Jim. Just like to say clearly, we have realized significant savings by implementing strict cost controls and of course, the associate [ph] necessary workforce reductions over the last 18 months, and of course this reflects the changes in our business, emphasis from genetics into drug discovery and development, as well as adapting to a rather difficult economic environment. Well, thank you very much. We'll now open the call to questions and answers.

Certainly, sir. (Operator instructions). We'll pause for just a moment to compile the Q&A roster. Our first question is from Chad Mather [ph].

Hi guys, good morning. I was wondering on the partnering front if there was any color you can give us. You've got four programs in the clinic. Where are you seeing the most interest?

Yes. So the most interest is on the most advanced programs. Our business model is to focus on those programs that will gain pivotal concept through the Phase IIa portion of their development. And I think now that we have these programs that are on deck, that's where we are seeing this interest and we are focused in our whole model there. Now, having said that, we do continue to have significant interest as well on the early-stage pipeline and the potential for forming new drug discovery alliances based on our novel target discovery and then – which is of course, Lexicon's historical strength. So we do entertain those conversations, but I do think most of the interest is forwarding the pipeline and significantly around the new tryptophan hydroxylase inhibitors. Those two programs with that novel mechanism I think are gaining high interest. And then, LX2931 with regard to a new small molecule in RA as well. I think that our business model also envisions partnering those indications where large pharma partnerships could aid the company strategically. And so, the larger indications such as type 2 diabetes with LX4211 and RA and IBS I think would be the primary areas that we would be interested in partnership.

Thanks.

(Operator instructions). We’ll pause once more to compile the Q&A roster. (Operator instructions). There are no further questions from the phone lines at this time.

Great. Well, then we will wrap up. On slide 21, just another reflection on the pipeline. To the question that I did have, I should also mention LX7101 as an area of high interest in glaucoma, as well as our ophthalmology research pipeline. There is relatively little research going on, innovative research and new mechanisms in ophthalmology, for us another area of significant interest. And then on the next slide, this is the earlier-stage pipeline to which I referred and there we have several antibodies programs and bio-therapeutics programs where we are also active on the partnership front. So that is I think the new frontier for Lexicon to move into a new dimension and new partnerships, focused on our drug candidates and that's where we are spending a significant amount of management time. With that, I'd like to thank everyone for participating today and we look forward to giving you future updates. Bye-bye.

Ladies and gentlemen, thank you for your participation in today's Lexicon Pharmaceuticals second quarter 2009 earnings call. This concludes today's call. You may now disconnect.