Welcome to the Lexicon Pharmaceuticals' First Quarter 2012 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 your host for today’s call, Wade Walke, Senior Director of Communications and Investor Relations. Please go ahead, Dr. Walke. Wade Walke – Senior Director, Communications and Investor Relations: Good morning and welcome to the Lexicon Pharmaceuticals' first quarter 2012 conference call. 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; .and Jeff Wade, Lexicon’s Executive Vice President of 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 the release, provide an update on our clinical programs, and then use the remainder of our time to answer your questions. The call will begin with Dr. Sands who will give an update on the status of our programs; Dr. Lapuerta will then provide additional information on our lead clinical programs; and Mr. Wade will review our financial results for the first quarter of 2012 and discuss our financial guidance for 2012. We will then open the call to 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 homepage for today’s webcast. Before we begin, I would like to state that we will be making forward-looking statements, including…

(Operator Instructions) Your first question comes from the line of Cory Kasimov from JPMorgan. Karen Jay – JPMorgan: Hi, this is actually Karen Jay for Cory Kasimov. Thanks for taking our questions. I just have a few. The first is we like to hear your thoughts on the recent HMB decision for DAPA and what do you think is driving the different views from the FDA and any potentially read through for 4211?

Pablo, you recently returned from Europe, would you like to take that question?

Absolutely, we see it as very positive news. We see it as very positive then the sense that the (indiscernible) that half of those will be approved in Europe and that people will be more comfortable with SGLT2 inhibition and the benefits that provides and that will pave the way for another drug like LX4211. In terms of why it was approved in Europe and not yet in the US? I think some of that may have to do with the concept as to whether you can study safety post-marketing or you need additional pre-marketing studies to study safety? And what we thought was that Bristol-Myers Squibb has announced that they are going to look at safety in the launch cardiovascular outcome study. And I think that’s a good path for us. Karen Jay – JPMorgan: And do those differing decision in US when you influence it all or help with partnership negotiations if at all?

I think it does help just because it does sort of clear up some of the questions. In some ways it’s validation that the drug should be approved in Europe and I get to this confidence that we should be able to do that and we think eventually you don't get approved to the United States as well. So, it looks to be more of the delay than a – than a instrumental borrower. Karen Jay – JPMorgan: Okay. And just one another question on the 4211 data coming in the year in addition to the efficacy endpoints you mentioned in your prepared comments, well we have any insight into dynamics of the hormone levels (indiscernible)?

Brian, do you have any answer?

Those are not endpoints that we are tracking in this study, we have done multiple additional studies now in both patients with type 2 diabetes and healthy subjects, while we have confirmed and built upon the SGLT1 mechanism of action in greater detail will be publishing those as papers and scientific journals. The focus of this study is to see how the dual inhibition can potentially differentiate and enhance the benefits over what has been observed with SGLT2 selective compounds. Though the key is looking at the HbA1c glycemic control in the metabolic and cardiovascular benefits and how dual inhibition could further enhance those? Karen Jay – JPMorgan: Okay thank you.

Thank you.

Your next question comes from the line of Phil Nadeau from Cowen and Company. Phil Nadeau – Cowen and Company: Good morning. Thanks for taking my questions. First one on telotristat, could you update us on your picking strategically there are you still looking for partner or you are committed taking that forward?

Our plan is, as I think we have talked about previously, we are planning on taking that forward on our own. We had been talking to people about potential for partnerships ex-U.S. that our base line plan is to take that forward on our own, that continues to be our objective. Phil Nadeau – Cowen and Company: Okay. And eventually in the Phase 2 meeting with the FDA, I think in the past, you said that in the Phase 2 meeting with EMEA would follow after, have you – have that meeting it or is that over-the-counter?

Pablo?

The meeting is on the calendar for the end of June. Phil Nadeau – Cowen and Company: Okay. And then on LX4211 in your milestone slide, there is a note that, that's going to move into Phase 3 contingent out of results from the relevant studies. Could you give us maybe a little bit more of an idea of kind of what the hurdle was to moving that into Phase 3? What you need to see in the ongoing Phase 2 as well as the renal or type 1 study to move that forward versus (when we trip) of the program?

That’s a big question. Pablo, would you like to try to answer that first?

Yeah, I think that Phase 2 study is going to help us most with dose selection for Phase 3. So, we are studying four different doses in Phase 2 and we want to select one of them to move forward. And so we are looking for hemoglobin A1c lowering and we are looking for a support of the profile that we have seen today with LX4211, where we are seeing some data on blood pressure reduction and weight reduction and triglyceride reduction. So, we'd like to see that profile come together at a dose that we can take forward into Phase 3. And in terms of safety, we want to see a safety profile that’s consistent with what we've seen before and that’s a safety profile we don’t have serious adverse events related to study drug and well we have overall good tolerability with patients staying on therapy. So, that’s what we are looking for. And we think the Phase 2b study will be sufficient to provide that information to make that choice. And so that Phase 3 can start in 2013 somewhere between the first and second quarter.

And Brian, would you like to add anything to that answer?

Sure. We've really been doing our homework as far as building a story of differentiation for LX4211, particularly with respect to the selective SGLT2 inhibitors such as (indiscernible). We think we have an opportunity to show enhancements and benefit, that would come out of our Phase 2b studies, but I would just remind you that we have additional data that we have already obtained or is it coming to further that differentiation story and that includes the sitagliptin in DPP-4 inhibitor combination with LX4211, where clearly the ability to cause an enhanced release of these beneficial GI peptides after a meal in combination with DPP-4 inhibitor that prevents the breakdown of GLP-1, that’s an enhanced benefit we demonstrated improving or further elevating active GLP-1 levels and improving glycemic control with less insulin required. That’s not an affect of evaluating active GLP-1that you could anticipate with the selective SGLT2 compound. We discussed today, the renal impairment study, that’s a very important study we believe that the SGLT1 mechanism of action will benefit those patients and that’s a population that doesn’t – can achieve much benefit with selective SGLT2 inhibitions. And finally I think we are continuing to build the differentiation story, because of the type 1 studies that we'll be initiating, where the 2 is non-insulin dependent mechanisms of action of LX4211 both increasing urinary glucose excretion and reducing intestinal glucose absorption we believe can benefit those patients. So, again, multiple opportunities for differentiation. Phil Nadeau – Cowen and Company: Great, that’s very helpful. Thanks for taking my questions.

Thank you.

Your next question comes from the line of Alan Carr from Needham & Company. Alan Carr – Needham & Company: Hi. Thanks for taking my questions. Why don't you get tell us more about who is the non-profit behind this type 1 diabetes trial and as well as the cost and timelines around it in terms results and that sort of thing?

So, as we indicated in the press release the funding is coming from a independent non-profit organization. Its founder has an established interest in funding that these another medical research. They are going to be funding the cost of the proof-of-concept trial that we talked about earlier in the call. There is also a framework in place that allows or simply want to request funding for a Phase 2b trial, although hat additional funding is not committed. The funding that we are receiving should gave it across to the trials, however. The arrangement is just for a little bit of detail on this, it's not unlike other pending arrangements by disease that is non-profit to net, if we achieve success measured in this case by filing an NDA and getting approval in the type 1 diabetes indication. We will return capital to the non-profit in form of that kept payments for them to redeploy in other research in the field. So, that’s a little bit of information about growth in the – and nature of that structure. Alan Carr – Needham & Company: And timelines for starting into results.

I think the start it's in – I'll let Pablo answer that question.

Well, I think we'll start this quarter and well, I have to gauge enrollment, but I would anticipate being done by the end of the year. Alan Carr – Needham & Company: Thanks. And then any updated thoughts on the SGLT1 and SGLT2 landscape there, obviously talked a bit earlier about the positive opinion from CHMP, but broader sense other compounds that we should be looking out for datacenter around those compounds that we should be looking for in the next few months?

Brian, would you like to comment on that?

Sure. We of course have been continuing to pursue from a medicinal chemistry standpoint, the SGLT1 mechanism of action focusing on discovering locally acting compounds, let's say in the gastrointestinal tract producing very, very low systematic exposure and virtually no urinary glucose excretion. We believe that these could be particularly appealing agents by reducing glucose absorption by the small intestine and enhancing the GI response after meals of the beneficial peptides, including GLP-1 and PYY. While maximizing safety, there is no need to get on border to systemic exposure is the (indiscernible) facility don't have that GLP-1 and we are getting very closed to putting a compound in a formal preclinical development. We are very excited. We think this would be an interesting class of agents and if you consider particularly the renal impaired, if they can benefit from SGLT2 inhibition, this could be an attractive type of agent. I would also say that there was a recent publication just came out at the end of the last month describing an SGLT1 highly selective compound from (indiscernible) Pharmaceuticals, they are partnered with GSK on the SGLT1 selective compound which has gotten through Phase 1 and again that data as well as data that GSK has publicly shown really support everything we’ve been describing for SGLT1 in addition with our 4211. Alan Carr – Needham & Company: Okay, great. Thanks and then the last one I wanted to ask about was the 1032 Phase 3 trial it sounds like there is a fair number of similarities of which you are guiding for previously may be on the lower end in terms of the size of the trial. What are your thoughts on when granted, you don't know enrollment rates in that sort of thing, but your best guess in terms of when that trial might be able to ramp-up.

Well, I'd say that product a little early to make that forecast Alan, so, I think we probably differ on that once we get this thing up and running. I think we have been anticipating with an outlining 18 months to 24 months of the trial. I think of that – I think that’s realistic, but enrollment could make a big difference. And I think importantly there will be going to the trial now armed with positive results from the Phase 2 program that can be very encouraging for patients and propositions to participate. So, that may make a substantial difference in enrollment rate. So, we have to really see how it goes within the firs t six months of the trial I think before we can make an accurate forecast. Alan Carr – Needham & Company: That’s helpful. Thanks very much.

Thanks.

Your next question comes from the line of Liana Moussatos from Wedbush Securities. Liana Moussatos – Wedbush Securities: Hi, I just have a mechanistic question kind of following up on what you’re talking about was still. Can you talk about how inhabiting SGLT1 could lead to decrease excretion of glucose, and how that could decrease – potentially decreased the potential for skin infections?

Yes, Brian, you want to address that on the urinary tract?

Sure, I’ll give that a shot. One of the things we observed in Phase 2 with LX4211 was a decrease – a nice linear decrease in urinary glucose excretion between day one of dosing and the 28 of dosing. For instance in the high dose form, 300 mg given daily of LX4211, we had roughly 80 grams of glucose in the earn over of the first 24 hours after the first dose. However, by the 28, that have dropped to 65 grams and so we believe that was a result of the enhanced glycemic control with the patients were coming under and that – if that trend continues and there were no signs that it was dropping off. There could be a continued decreased in urinary glucose excretion overtime, which we think would – could correlate with a decrease in risk of general and urinary tract infection. And I think that does stand in contrast to some of the published data for SGLT2 selective compound, some of which have shown the same amount of urinary glucose excretion two years in the dosing as – on day one of dosing. So, that could provide another potential area of differentiation with SGLT2 selective inhibitors. We really we’ll have to demonstrate that in a clinical studies.

Right. And I think the only thing I'd add Liana is that in this current 12-week study, we do have a sub-study of moving participants who are going to be giving us the required the 24-hour urine collection over this 12 weeks. So, we should have built – test our hypothesis with regard to the amount of glucose and the urine over time, but as Brian indicated ultimately it's the adverse event rate that will target – will be most important to the patient. Liana Moussatos – Wedbush Securities: Thank you. And can you talk about how you can maintain control blood glucose if there is a decrease in glucose excreted.

Yeah, I think the best really that SGLT1 component of the mechanism and that's where that added the practice, we think it's probably what is leading not only to the decreased urinary glucose excretion, but you can recall from our Phase 2a data that did not alter the fact that both fasting plasma glucose as well as postprandial glucose was dramatically affected even 28 days in the study insight of the fact that you’re losing urinary glucose excretion. So, that fasting plasma glucose at day 28 was continuing to improve over day 1 and day 13 likewise postprandial and that’s speaks about SGLT1 mechanism of action and we now over the SGLT1 mechanism is particularly profound and its effects on postprandial glucose. And that all read out of course into the pretty robust HbA1c drop that we absorbed in that study. Liana Moussatos – Wedbush Securities: Thank you very much.

Thank you.

Your next question comes from the line of Stephen Willey from Stifel Nicolaus. Stephen Willey – Stifel Nicolaus: Yeah, hi, good morning, thanks for taking the questions. Just going back I guess to your second half guidance for the initiation of the Phase 3, I think we all pretty much know that pharma BD tends to now move very quickly. So, can you may be just give us a little bit of characterization with respect to kind of where those discussions are at this point in any color I guess on a number of parties that you are kind of holding hands with going into this 2b data we have.

Okay. So, that you’re talking about the diabetes program? Stephen Willey – Stifel Nicolaus: Yeah.

Yeah. And so, we’re talking to – so we’re talking to that we’re very active on the partnership front. And there is a lot of interesting thing the 2b data and we’re obviously doing a lot of ground work in preparation for that and we’re – we have a relatively broad in that in terms of groups that we’re talking to. We’re doing the work to try to be prepared to go into Phase 3. So, we are doing a lot of the planning. We’re doing with the studies that are required to be able to do that. We – obviously there is going to be sometime to do – to go through partnership discussions. But we are doing everything we can to be in a position to make that transition into Phase 3 as quickly as we can and without a delay and if part of the dialog that we've had with potential partners who is informed our Phase 3 planning too. So, it is something that we are taking into account. Stephen Willey – Stifel Nicolaus: Thanks, that's helpful. And then just on the Phase 3 carcinoid program, the primary endpoint right now, which you indicated would likely be reduction in above move into frequency. Will that be a responder analysis and I guess if it's not what kind of level of statistical power, are you comfortable with given that's are going to have about 100 patients and kind of one to one to one randomized across couple of doses.

Pablo, would you like to address that?

Yes, so, we are looking at the primary endpoint as a reduction involvement in the frequency rather than a responder analysis. As a continuous measure, the total number of bowel movements that you have projected over a 12-week period. We believe there is a more sensitive measure and looking at the proportion, we just achieve the certain threshold or necessary in threshold. So, we think that we will have more robust data with continuous measure at the primary endpoint and looking at the data, we have from our two Phase 2 studies. We believe that a sample side of approximately 100 patients who leave us with well over 90% power and the tolerability and the ability to show robust results. Stephen Willey – Stifel Nicolaus: And then will you have some of kind of running phase, I guess what you try to determined the baseline for all three codes prior to…

We'll have a running where we measured bowel movement frequency everyday and so that will led to the power because we will be able to have individual data on changing bowel movement frequency. Stephen Willey – Stifel Nicolaus: Okay, thank you very much.

(Operator Instructions) Your next question comes from the David Freedman from Morgan Stanley. David Freedman – Morgan Stanley: Hi, thanks for taking the question. Just around some of the Phase 3 planning you are doing. Do you guys have a sense as to the cost of the Phase 3 program for 4211 and is that something that in the absence of a partner you would be able to take on.

Pablo, do you want to address that as the two-part question, may be you could talk – first speak to the scale of the program and then we'll talk, let's just comment on the partnering aspect.

Yeah, we believe that Phase 3 programs in diabetes is actually large in order to achieve the cardiovascular safety information that the FDA requires and so the program that we put together for LX4211 involves 9,000 patients that similar to what other companies have been doing in diabetes and one of the big drivers is a 6,000 patient cardiovascular outcome study that's part of the Phase 3 program. So, it is a big program. We think it's in the right direction and that's why we are proactive about getting regulatory input and as to the specific cost, I think Jeff Wade can answer that.

Yeah, I'm not sure. I want to layout this specific cost. So, it's a multi $100 million development plan for Phase 3 and diabetes and I think our plan and our expectation is that we would do that with the partner and so, that’s our – that's all of our planning is based on the expectation that we will do that, which is not similar from a lot of the big pharma companies who were also partnered on this kind of programs. David Freedman – Morgan Stanley: Thank you.

Thank you.

Thank you. (Operator Instructions) At this time, there are no further questions. I will now turn it back over to Dr. Arthur Sands for closing remarks. Arthur Sands – President and Chief Executive Officer: Yes, well, I’d like to thank everyone for their questions and participation today. I think next time we meet in this format, there will be a lot less speculation about results and that's what we are talking about results for the 2b trial, so that should be an exciting next meeting? Thank you all.

Thank you. That concludes today's conference call. You may now disconnect.