Good morning. My name is Luchanda and I will be your conference operator today. At this time, I would like to welcome everyone to the Lexicon Pharmaceuticals’ First Quarter 2014 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn today’s call over to Mr. Chas Schultz. Please go ahead sir.

Good morning, and welcome to the Lexicon Pharmaceuticals first quarter 2014 conference call. I am Chas Schultz and with me today are Dr. Arthur Sands, Lexicon’s President and Chief Executive Officer; Dr. Pablo Lapuerta, Lexicon’s Executive Vice President and Chief Medical Officer; Dr. Brian Zambrowicz, Lexicon’s Executive Vice President and Chief Scientific 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. 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 began, I would like to say that we will be making forward-looking statements including statements related to Lexicon clinical development of LX4211 and telotristat etiprate also referred to as LX1032. These statements may include characterizations of the results of and projected timing of clinical trials of such compounds and the potential therapeutic and commercial potential of such compounds. This call may also contain forward-looking statements relating to Lexicon’s growth and future operating results, discovery and development of products, strategic alliances and intellectual property as well as other matters that are not historical facts or information. Various risks may cause Lexicon’s actual results to differ materially from those expressed or implied in such forward-looking statements, these risk include uncertainties relating to the timing and results of clinical trials and pre-clinical studies of our drug candidates, our dependence upon strategic alliances and ability to enter into additional collaboration and licensing 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, Chas. And I would like to thank everyone for joining us this morning. We had an excellent quarter in progressing our business and I thought what we could do today is focus on just a couple of our key program in later stage development, but first the quarter, the highlight of the quarter was our recent announcement regarding our data and Type 1 diabetes. And so I think we’ll spend most of the time on that. And we will give a brief update, we’ll start with a brief update on telotristat etiprate which is in phase 3 for carcinoid syndrome. The updates for that will begin by Pablo Lapuerta, our Chief Medical Officer and then the update and overview of the type 1 data will be given by Brian Zambrowicz, our Chief Scientific Officer. And given the importance of that data, although we did just release that recently and go over that in the call, we thought it would be good to review that briefly. There are some very interesting data points associated with the results and some complexities surrounding the development of that drug in type 1 diabetes which are going to be great challenges for Lexicon, because it’s an exciting opportunity. So let’s them with Pablo and a brief update on telotristat etiprate. Pablo?

Thank you, Arthur and good morning. Telotristat etiprate is our peripherally acting serotonin synthesis inhibitor, it inhibits tryptophan hydroxylase and therefore reduces the production of serotonin. Telotristat etiprate is absorbed in peripheral circulation crossing the blood brain barrier. Inhibition of serotonin is important because serotonin is a key mediator of gastrointestinal motility, pain and inflammation and is considered the cause of carcinoid syndrome, a debilitating condition from metastatic carcinoid tumors where patients suffer from diarrhea, flushing, pain, disease and pulmonary hypertension. Next slide, we are treating carcinoid syndrome and a pivotal study TELESTAR, a single pivotal study for our program. It’s in Phase 3, randomized minus and placebo controlled. We plan to recruit a minimum of 105 subjects. They will be given double blind treatment for 12 weeks and afterwards, there will be a long term extension that will be open-label. TELESTAR aims to show that TELESTAR telotristat etiprate is effective in reducing the change from baseline in bowel movement frequency over the 12 weeks double blind portion of the study. The study is going well, our efforts have been on recruitment, we've been satisfied that the work has been productive and the TELESTAR study is on track to complete randomization in 2014. I would now like to turn the call over to Brian.

Thanks Pablo. As I mentioned, I'll be reviewing some of the highlights from our most recent clinical trial that led out making us enthusiastic about the opportunity for LX4211 in type 1 diabetes. Of course LX4211 is dual inhibitor of SGLT1 and SGLT2. And what's allowed LX4211 to show differentiation in all the clinical studies we've done to-date is its inhibition of SGLT1. SGLT1 is the major transporter in the gastrointestinal track for uptake of glucose after a meal. And inhibition of SGLT1 results in reduced and postprandial uptake of glucose from the gastrointestinal track and it also triggers the elevated release the beneficial peptide such as GLP-1 and PYY. Next slide? So, we did run type 1 diabetes proof-of-concept study. Of course it's started with open label pioneer portion, which covered three patients, who are on insulin pumps. And we did this because we wanted to really ensure safety as we first moved in the type 1 diabetics with LX4211. And then we moved into an expansion group that consisted of 33 subjects and it could be either on pump or multiple daily injections. We run a study at seven sites in the United States and the dose we used was 400 milligrams given once daily before breakfast. This is a sustained dose that provides the greatest effect over 12 weeks in Type 2 diabetes and we treated for 28 days. If we go to the next slide, I'm not going to cover on the detail of infusion criteria, but the subjects were between 18 and 55 years old with Type 1 diabetes. And I do want to point out that HbA1c value is to have to have robust 7, but below 9. I point that out, because of course we don't have patients with very high hemoglobin A1cs…

Thank you, Brain. I will provide a brief financial update, as indicated in our press release today we have revenues for the 2014 first quarter $0.3 million which was a decrease of 23% from $0.4 million in the prior year period, the decrease was primarily due to lower revenues from our alliance with Taconic Farms. Our research and development expenses for the 2014 first quarter increased 18% to $24 million from $20.3 million in the prior year period. The increase was primarily attributable to increases in external clinical research and development costs as well as severance costs as a result the restructuring that we announced in January as we focused our resources on late-stage drug development. 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. And changes to that liability based on the development at the programs and the time until the payments are expected to be made are recorded in our consolidated statements of operations. The associated increase in fair value of Symphony Icon purchase liability was $1.1 million in the first quarter and $1.3 million for the prior year period. Our general and administrative expenses for the 2014 first quarter were $5.7 million, an increase of 31% from $4.3 million in the prior year period. The increase was primarily due to severance costs as a result of the restructuring we announced in January. Our net loss for the 2014 first quarter was $30.8 million or $0.06 per share compared to a net loss of $26 million or $0.05 per share in the prior year period. For the 2014 first quarter, our net loss included non-cash stock-based compensation expense of $2.3 million, compared to $2.1 million in the corresponding period in 2013.…

Thank you, Jeff, Brian and Pablo, we can now open the call for questions. So operator?

(Operator Instructions). And your first question comes from the line of Shaunak Deepak with Jefferies.

Hi. Thanks for taking my question. I just wanted to start off, I was curious like if you have any update or feedback on partnership discussions at this stage?

Jeff?

Sure. I’ll be happy to answer that. So, let me [press it] by saying that we’re committed to taking LX4211 forward in Phase 3 development in type 1 diabetes subject to FDA feedback which we expect shortly around the development program and that indication. We’re very enthusiastic about the opportunity for LX4211 and type 1 diabetes. This is an area with the substantial unmet medical needs which we believe LX4211 is well-positioned to address. And it’s also an area in which there have been very little in the way of truly innovative new therapeutic options, at present insulin is the only real therapy. As we’ve communicated, our view has been that we don’t have the practical ability to finance the full scale Phase 3 development program in type 2 diabetes except in the context of the partnership. And we want to have a partner in place before launching a Phase 3 program in that indication. That’s not necessarily the case in type 1 diabetes. And our objective in any partnership that encompasses type 2 diabetes is to enable the achievement of our strategic objectives in type 1 diabetes indication, while also enabling progression with development in type 2 diabetes. So, this is a long way of practicing the answer which is we’re relatively far down the path and partnership discussions but we’re at the stage at this point where we can’t offer much additional comment.

And then just curious in terms of like the timing and any interim FDA feedback on the design for the Phase 3 trial in type 1, just curious if you had any update on that. And also like are you still estimating that cost of that trial would be about $60 million to $100 million?

Pablo, do you want to comment to the extent you can?

Yes, we have an interaction with the FDA scheduled for this quarter. So we are looking forward to that coming up soon. And in terms of the cost of the program, I think it’s a little bit premature to say and so we’ve met with the FDA and we have come to agreement on the complete scope of the program.

Okay. And then just one housekeeping question, I was curious if you looked at like any sort of sub group analysis pertaining to the difference between patients on insulin pumps versus the those taking basal bolus insulin in the type 1 study? And is there are any differences in the outcomes and in [some like] the actual patient disposition there?

I think, it’s a bit of a challenge since there were 16 and 7 patients per arm, right, placebo and LX4211 to begin breaking up that study. But it’s something we will certainly be interested in exploring in Phase 3 when we have larger numbers.

Okay, great. And then just finally, I was curious what we should expect to see at ADA this year and like wouldn’t probably be expecting to see the type 1 data, and then like when we might actually expect to see that? Thanks.

Pablo?

At ADA we plan to present an abstract on our renal impairment data. We made an announcement that we have positive results for LX4211 in type 2 diabetes patients with the renal impairment. That’s an important opportunity for us and we feel that it effectively differentiates us from selective SGLT2 inhibitors. And we will be proving a lot of detail there at the American Diabetes Association. As far as the Type 1 data, the Type 1 data came in after the deadlines for -- submissions to ADA 2014. And so it will likely be presented at a major meeting in 2015.

Thank you.

Your next question comes from the line of Cory Kasimov with Morgan Stanley.

Hi there, it’s actually Matt Lowe in for Cory. Just wondering a bit more on the partnership talks, I guess could you share with us what are being some of the major areas of debate throughout the partnership discussions given that talks have been going on for over a year now? And just wondering if you’ve seen any change in how potential partners are looking at the diabetes space over that course of time? Thank you.

Thanks Matt. Jeff, do you want to handle this question?

Sure. I think one of the key areas has been differentiation in establishing that and we have done a fair amount of work during the course of these discussions to establish that. And one of the key elements of that, which Pablo was referring to that we are going to present at ADA is the data in (inaudible). So we’ve done a lot of additional work in the Type 2 diabetes space. And that’s been important because differentiation in Type 2 diabetes is key to this product having the opportunity to be successful. And we believe that we have well established that at this point. We’re also very excited about the Type 1 diabetes data because that’s something where we view as being demonstrated at the particular value of the mechanism of this compound, but it’s also something where we have very significant opportunity, something that matches up very well with the unmet medical needs in the Type 1 diabetes space. So that’s an exciting commercial opportunity and this certainly has implications for our partnership discussions as well.

Thank you.

Okay. Thank you.

Your next question comes from the line of Colin Bristow with Bank of America Merrill Lynch.

Thanks for taking the questions and congrats on the progress. On potential competition to 4211, (inaudible) you reported Phase 2 data for SGLT2 inhibitor and I saw no increase in (inaudible) placebo. I was just wondering can you offer any commentary on that would be appreciated, especially given they’re announcing to be a similar stages of development as you guys? Number two in the SGLT2 market, we have decent amount of data now on the genitourinary data, I was wondering if you could comment on how the market is growing relative to your own expectations? Thanks.

Okay. The first one of that Brian, do you want to address and the second part will be to Jeff.

Yes. To be clear, the compound is again a selective SGLT2 inhibitor. We now have tremendous amounts of data on SGLT2 in addition. Yes, they’ve run some small studies, but we have data from very large Phase 3 studies of multiple selective SGLT2 inhibitors. I think we know pretty much from a safety standpoint and from a genitourinary infection standpoint, what to anticipate there. And I think another selective SGLT2 inhibitor will have a very difficult time differentiating in any way. Again we are unique in being do inhibitor if the SGLT1 inhibition that allows us to differentiate in multiple ways, whether that’s in renal impairment in the general two population with the potential for both efficacy and safety benefits because of that dual inhibition and in combination with DPP-4 inhibitors, the synergy due to our GLP-1 effect. And finally and most recently as we showed today the very unique effect we have relative to what’s been observed with selective SGLT2 inhibitors in Type 1 diabetes. So I don't think they have anything in our compound that would make us believe they could differentiate in any way.

Jeff; on the business front, for the launches.

Sure. I think that one of the questions about the SGLT2 mechanism was how big of an obstacle the urogenital infections might be. And I think they kind of launch -- helps answer that question that there is definitely a place for compounds that in the SGLT2 class. And one of the key elements that we see with our compound is that we're achieving results with (inaudible) glucose excretion and so we expect to have a differentiated safety profile with very positive efficacy in this patient population and that's an opportunity that we see with our compound. So we're very encouraged by what the market opportunity is for LX4211.

And then just finally, is that, are you guys able to provide any further timelines around which we should expect a partnership update or you've been switched tact and explore other options for the pricing opportunity? Thanks.

Jeff?

Well, I’m not really prepared to provide the timeline that where we are working towards progressing in Type 1 diabetes which is something we can do on our own and we are continuing with the partnership discussions that would enable us to progress in Type 2 diabetes as well.

Great, thanks a lot.

Thanks.

Your next question comes from the line of Alan Carr with Needham & Company. Mr. Carr, your line is open. Alan Carr - Needham & Company: Hello.

Yes Alan. Alan Carr - Needham & Company: Can you hear me?

Yes, we can hear you. Alan Carr - Needham & Company: A couple of things; one of them, Jeff can you clarify whether or not your guidance for 2014 includes the spent done Phase 3 trials for Type 1 diabetes? And then also are there any updates, sorry I missed the beginning of call, but are there any update on your discussions with KROs around 1033 or any plans for your SGLT1 inhibitor or with 2931? Thanks.

Jeff?

So we are, we’ve included cost preparations for Phase 3 activities in our financial projections, we haven't included the cost of actually conducting the trials as of yet, that's something that we'll look at, mostly have a little bit more regulatory clarity and at this what that program looks like. There would be some incremental spend associated with that program in Phase 3.

And then on the 1032 on close that other KO Pablo do you want to comment on recent not really recent meeting that we've had that conference in Europe?

Yes, telotristat etiprate, we had a good presentation at the European Neuroendocrine Tumor Society Meeting, a large audience of several 100 physicians they saw our long-term experience in a case series of patients who had Carcinoid heart disease and we’re impressed with the degree of reductions in serotonin synthesis that we’re able to achieve long-term. The meeting went very well and sticking to physicians in general about the program those who are participating in our Phase 3 trial are very excited and they’re motivated and once they recruit two or three patients they want to recruit more so that’s been a very good experience with telotristat etiprate.

Thanks Pablo. And then the last part of the question of earlier stage of pipeline, Brian you want to comment on those three compounds.

Sure. You asked about SGLT and? Alan Carr - Needham & Company: Do you have the number for SGLT1 inhibitor and then also I think you’ve been looking at other indications for 2931 just wondering the changes there?

Sure. All right, so I just want to emphasize again as we said earlier in the year we are focusing our resources on telotristat etiprate and LX4211. So we aren’t currently planning any other clinical studies right now for LX2931 or LX1033. We remain interested in the compound. We’re exploring other potential indications particularly for 2931, but again we’re focusing our resources telotristat and LX4211 currently. We are progressing LX2761 are I think SGLT1 inhibitor that acts and stays in the GI and produces very little systemic exposure for urine glucose excretion, we will finish our IND enabling studies this year. Alan Carr - Needham & Company: Okay, thanks very much.

Thank you Alan.

Your next question comes from the line of Steven Willey from Stifel.

Yes, hi. Good morning, guys. So first I guess maybe just to clarify, is your proceeds of Phase 3 type 1 and partnering type 2 kind of on two parallel tracks at this point and what’s the probability that those two paths merge at some point? And then secondly with respect to your pursuit of type 1, obviously that’s probably not an indication that would require any kind CD outcome study, but maybe just kind of any inclination you might have about FDA concerns regarding off label use in type 2 that might influence either labeling or a regulatory process. know it’s something that we’ve kind of seen before in the respiratory space with respect to the long acting beta agonists and either COPD or in asthma. Thanks.

Jeff, part of that question on the partnership track.

Sure. So I am not going to offer handicap on that. But I would say, we are still in discussions with partnership that would allow us pursue both type 2 diabetes and type 1 diabetes. We don’t feel that that kind of partnership would be necessary in type 1 diabetes. At this point, I wouldn’t characterize them as separate tracks. We are looking at the different options here in progressing what we have the ability to progress under our control.

But being pursuit in parallel. And then Pablo, maybe just in a general sense, you could address Steve’s question about the off label use, other indications et cetera in a general sense.

Yes. It’s an interesting example that is the long acting data agonist and -- COPD. What I would say is we need to clarify the situation with the FDA so we are looking forward to our meeting coming up soon. And we feel that Type 1 diabetes is an area of such high unmet need that we really believe in the profile of LX4211 and the value of developing it in Type 1 diabetes.

Thank you.

Your next question comes from the line of David Friedman with Morgan Stanley.

Hi, thanks for taking the question. I wanted to just see if you could comment on whether you think you will need a cardiovascular outcome study or not given the potential of the drug to theoretically be used in Type 2 and Type 1 patients? And what you would expect the cost of an outcome study like that to be? Thanks.

Similar question as last one, Pablo do you want to answer that again?

Yes, I can’t go into specifics before an FDA meeting. I would say that’s one of the reasons that we are having our interaction and we’d look forward to it. And I could say that if you look at the guidance, the emphasis on cardiovascular outcomes data is really out Type 2 diabetes and in Type 1 we see a large unmet need and we see a special opportunity to get the first full potentially approval for that indication.

Thank you.

(Operator Instructions). There are no questions at this time.

Excellent. Well, I would like to thank everyone for participating this morning. And we look forward to keeping you posted on our progress. Bye, bye.

This concludes today’s conference call. You may now disconnect.