Welcome to Lexicon Pharmaceuticals first quarter 2011 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 recorded at Lexicon's request. At this time I would like to introduce our host for today's call, Wade Walke, Senior Director of Communications and Investor Relations. Please go ahead, Dr. Walke.

Good morning and welcome to Lexicon Pharmaceuticals first quarter 2011 conference call. I am Wade Walke and with me today are Dr. Arthur Sands, Lexicon’s President and Chief Executive Officer; and Jeff Wade, Lexicon’s Executive Vice President and Corporate Development and Chief Financial Officer. 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 this release, discuss the status of our clinical programs and answer and questions you may have. The call will begin with Dr. Sands who will discuss our key accomplishments for the first quarter and review the status of our programs. Mr. Wade will review our financial results for the first quarter and discuss our financial guidance for 2011. We will then open the call to your questions. 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, LX1033, 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 actual results to differ materially from those expressed or implied in such forward-looking statements, including uncertainties relating to the timing and results of clinical trials and preclinical studies of our drug candidates are depended upon strategic alliances 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 the requirements of substantial funding to conduct a 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. We'll now turn the call over to Dr. Sands.

Thank you, Wade, and good morning everyone. This morning we have chosen to not use slides and have webcasts and that's because we're planning on quite a large program at our research and development day next week Thursday May 12th to be held in New York City and that will also be webcast. So I would like to provide my brief update on the status of our programs in the context of the agenda that we will have in next week's meeting as I'll walk through this with you and give you a preview of some of the things we'll be discussing in depths regarding our pipeline. So again, it will be in New York City on May 12th and we will start out with a review of the LX4211 program and type II diabetes. We will be highlighting two aspects of this program. One, the mechanistic studies that we completed in the first quarter and I think it was one of the major accomplishments of the first quarter was a discovery that our compounds stimulates GLP-1 secretion and PYY secretion, two important GI hormones. And so Dr. Brian Zambrowicz will be going through that, those in detail as well as additional preclinical studies that we've conducted here at Lexicon using the knockout mice for both SGLT1 and SGLT2, the dual targets of that compound. Next we'll have our new Chief Medical Officer providing a discussion of the Phase 2B clinical trial design. This is Dr. Pablo Lapuerta who will be discussing the Phase 2B plans and other aspects of the advance development of LX4211. We'll then follow that presentation with a discussion of LX1032 and Carcinoid Syndrome. This will be led by Dr. Lapuerta and he will be providing a clinical trial enrollment update. As mentioned in the press…

Thank you Arthur, I will provide a brief financial update. As indicated in our press release today, we had first quarter revenues of 0.6 million, a decrease of 64% from 1.6 million for the corresponding period in 2010. And the decrease was primarily due to reduced revenues under our alliance with the Taconic Farms. Our research and development expenses for the 2011 first quarter were $23.9 million, an increase of 13% from $21.1 for the corresponding period in 2010. The increase was primarily due to increased external research and development costs, preclinical and clinical research and development cost and increased severance costs resulting from our continued reallocation of resources from earlier staged research towards most advanced drug discovery and development programs. In connection with our acquisition of Symphony Icon we made an initial estimate of the fair value of our liability for the base and contingent payments, changes in that liability based on the development of the programs and the time until the payments are expected to be made are recorded in our consolidated statement of operations. The associated increase in fair value of Symphony Icon purchase liability for $1.1 million for the 2011 first quarter. Our general and administrative expenses for the 2011 first quarter were $4.8 million, a decrease of 14% from $5.5 million for the corresponding period in 2010. The decrease was primarily attributable to decreased legal and patent fees. Our net loss for the 2011 first quarter was $6 million or $0.09 per share, compared to a net loss of $26.1 million or $0.13 per share in the corresponding period in 2010. For the 2011 first quarter, net loss included non-cash stock based compensation expense at $1.5 million compared to $1.3 million in the corresponding period in 2010. Let me now turn to our cash and…

Thank you Jeff and we can now take any questions you may have.

It's actually about 2931 and the dosing. Wondering if you could just discuss some of the preclinical work that helped you settle on the doses that you initially went forward with and then how is that preclinical work helping form why you should be going up on dose and is there a certain new level of dosing that you think will be the right balance of efficacy and safety.

Certainly, so the preclinical data we have been guided by was with respect to the decrease in lymphocyte counts achieved in helping normal volunteers at increasing doses and in healthy normal we saw a fairly precipitous decrease from about 100 milligrams once a day, maximizing at about 150 or even 125 or 130. So it was seemed to be a fairly narrow range in which we saw this robust decrease in total lymphocyte on the order of 30 to 50% decrease and so we extrapolated from there that our reason that that would be the appropriate range because we knew that such a decrease in lymphocyte correlated in preclinical models with the most robust anti-inflammatory effect. So we have that established in preclinical animal models. So as it turns out as we have now have the results from the study in patients, the patients seem to be more resistant to the actions of the drug with respect to their lymphocyte count level, total lymphocyte count and therefore it appears that more drug is required in the setting of pathological inflammation as compared to a normal phyologic state. And so we have, as I indicated in my introductory statement, we have additional data which I won't be highlighting here now that reinforces that view that we are at the early part of the dose response curve. We have identified target doses and a protocol that we think will work (inaudible) this out and again will be going into quite some detail in terms of this in-depth analysis at the R&D day on next Thursday.

And then just one last question. Can you remind us what those limiting toxicity was for this drug in animals?

We did not identify a dose limiting toxicity per se in animals. This is well tolerated drug. We’ve gone up to a 1,000 milligrams per kilogram in our three months monkey toxicology study which is a very large dose and there the toxicity that was identified was really pharmacology which was a type of small lymphoid organ, a small (inaudible) particularly shrunken which you would actually fit with the method of action. So the drug was very well tolerated in animals through a safety profile and we believe we have plenty of room to dose up as required in humans.

And we have a question from the line of Steven Willy.

Just a couple on carcinoid, with respect to the phase II data we're going to see in the patients that have been enrolled, how much variability do you expect to see in baseline serotonin between patients and should we expect to see a dose response curve based on that baseline variability and then if there is anything anecdotal that you can tell us from the open label trial that's ongoing in Europe, that would be helpful as well.

Yes thank you Steven, thanks for mentioning that. I forgot to mention we are anticipating sharing some information from the open-label trial in Europe at next week's meeting which will address part of your question, your next question which was, what is the effect on base line serotonin and the heterogeneity of the disease based. So I do believe that (inaudible) the tumor burden varies significantly between patients and the type genotype of the carcinoid tumors does vary even though they all have the commonality of a histologic diagnosis of carcinoid tumor and carcinoid syndrome. There are differences in the actual type of tumor and the amount of secreted by these neuroendocrine tumors and that's well known, we knew that going into the study. So we've seen heterogeneity like that and I believe that the data will be studied according to those tumors that, number one, in fact are high producers of serotonin which is the classic medical definition of carcinoid syndrome, the tumor is producing large amount of serotonin as well as other active (inaudible). And then number two, we'll look at other patients and see if they have a different level of serotonin that may not fit that classical definition. Now, of course we're blinded the US study, the European study as open-label on going and I think it will be somewhat informative. We're hoping to be able to do basically present some case studies, case reports from the European trial and that's what we're working on this week as we prepare. So I do think that it will be an informative study. Both of these studies will be very informative and so far as helping us plan the phase III design based on the biomarker data and the symptomatic relief data that we hope to have.

And if I remember correctly the European trial has both two-tiered refractory and naïve patients as well?

It allows for both, that's correct, however I believe they've all been two-tied refractory and under the sort of the regime, the protocols we have established, we found that we have really been very sufficient with advance disease and these tend to be on a number of medications and I think we have all our two-tiered refractory patients with incumbent dosing of our two-tiered.

And then just lastly I know you're going to cover a lot of this next week but, with respect to some of the enrollment challenges you've seen thus far in carcinoid, this changed at all I guess how you plan on developing this link going forward and are you more incentivized to try to push the FDA to get this directly to a page type kind of knowing that a phase II step now is probably going to prolong the process a bit significantly?

Yes, our current plan is to move forward to a Phase III program in discussion with the FDA because any one of these trials takes as we have seen a long time and rather than wait with patience in another Phase II trial, if the result support we've been inclined to go into the Phase III program straight away and I also think that we'll learn a lot from these current trials as to how to engineer the trial to enroll more rapidly, place withdraw in a treatment paradigm that if it be used perhaps earlier and number of things that I think will aid the next trial. So, we're eager to get through this step and move onto the next step.

And we have a question from the line of Linda Monsanto [ph].

Thank you. Can you give us the status of the LX4211 metformin study?

Yes, so we have completed the dosing in the drug, drug interaction study, which is the study I think you're referring to. It’s a Phase I study done in healthy normal volunteers simply to establish the two drugs don't interact with respect to the pharmacokinetics. So we do not have the results yet from that study. We'll be showing those results at the meeting coming up next week but we don't anticipate there being any drug interaction there. Hasn’t been any evidence for that today.

And we have a question from the line of Phil Nadeau.

Just first on the upcoming medical meetings. Do you have any data presentations you expect to that 88 or (inaudible)?

Yes actually, we have a poster that we're presenting at 88 that's going to be featured as part of the ablator and we also have a clinical trial, the progress poster that we'll be presenting at (inaudible). So the 88 I think is focusing on mechanistic aspects of fortune 11 action.

And then second on 4211 and maybe I'm jumping the gun here, guessing this is something that you're going to cover next week but could you give us a little bit more details on the design of the Phase IIB. For example, do you still expect them to maybe include as a comparator?

So, yes, I can give you a little bit but we're not expecting to include genovia [ph] comparator arm at this stage of development but we are going on top of metformin and of course we'll have a placebo controlled arm where the patients are receiving metformin, so that becomes we take as metformin's comparator if you will. But again, we'll have the advantage next week of having doctor to report to there to discuss all the thinking behind this and why the sequencing events make sense in terms of when you actually do another comparator study.

And we have a question from the line of Cory Kasimov [ph].

Hi it's actually (inaudible) in for Cory today. Many of my questions around 4211 have actually been answered already. So I guess just around the carcinoid data from the US trial, is it possible at all to be more specific around the exact timing of when you would like to expect that data?

Well we have to identify the last patient dosing day and then we'll more you know more explicitly. But I can tell you that it would either be the very end of this quarter or early July. So we don't anticipate it to be far off the end of this quarter with regard to having the data sent. So I am giving you a window of a few weeks I guess.

And there are no more questions at this time.

All right, appreciate everyone participating and hope to see a good number of your at our research day when we will go in to quite some detail on I think we'll be covering seven or eight drug programs. So a lot to cover then. Again, thanks for your participation. Good bye.

And that concludes today's conference. Paul, you may now disconnect.