Good evening. My name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to the Lexicon Pharmaceuticals First Quarter 2017 Financial Results 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 the call over to our host Ms. Kim Lee, Executive Director, Investment Relations and Strategy. Ma’am, you may begin your conference.

Thank you, operator, and good morning, and welcome to the Lexicon Pharmaceuticals first quarter 2017 financial results and business update conference call. Joining me on today’s call are Lonnel Coats, Lexicon’s President and Chief Executive Officer; Alex Santini, Executive Vice President and Chief Commercial Officer; Dr. Pablo Lapuerta, Executive Vice President and Chief Medical Officer; Dr. Praveen Tyle, Executive Vice President of Research and Development; and Jeff Wade, Executive Vice President of Corporate and Administrative Affairs and Chief Financial Officer. Earlier today Lexicon issued a press release announcing our financial results for the first quarter 2017, which is available on our website at www.lexpharma.com and through our SEC filings. A webcast of the call along with a slide presentation will be accessible in the Investor Relations section of our website. During the 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. Before we begin, let me remind you that we will be making forward-looking statements, including statements relating to the safety and efficacy and the therapeutic and commercial potential of XERMELO. These statements may include characterizations of the results of clinical trials of XERMELO and the market opportunities for XERMELO. This call may also contain forward-looking statements relating to Lexicon’s growth and future operating results, discovery and development of other drug candidates, 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 related to the success of our commercialization efforts for XERMELO, the timing and results of clinical trials and preclinical studies of our other drug candidates, our dependence upon strategic alliances and other third-party relationships, our ability to obtain patent protections for our discoveries, limitations imposed by patents owned or controlled by third parties, and the requirements of substantial funding to conduct our drug development and commercialization activities. For a list and a description of the risk and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission. I will now like to turn the call over to our President and CEO, Lonnel Coats.

Thank you, Kim, and let me also take the opportunity and welcome Kim to Lexicon. She's a wonderful addition to our team. This is a very exciting time for those who have worked so hard and so long in the areas of discovery and development seeing the Lexicon now has its first approved commercial product in XERMELO. The first and only oral treatment approved for carcinoid syndrome diarrhea in conjunction with somatostatin analog or SSA therapy in adults inadequately controlled by SSA therapy alone. I've been very pleased with the progress of the launch and we’ll go so far SSA that it is indeed one of the best launches I've had the opportunity to be part of thus far. Just to give you some metrics. XERMELO was approved on February 28th in all XERMELO related websites launch within 30 minutes of the approval. The drug was available the same day it was approved. In fact we received our first prescription within 24 hours of approval. The sales force was deployed, trained on the label and certified in the market and deployed within 72 hours and the drug was commercially available in especially pharmacies within 72 hours. So this is truly a best-in-class readiness for market. We are one of the only companies that has put product in the channel in only a few hours and filled scripts in such a short amount of time. Alex Santini, our Chief Commercial Officer, will provide you with some telling launch metrics shortly, but what I would say is the uptake and demand for XERMELO has exceeded our expectations. We continue to receive early positive feedback from patients and physicians and are saying early adopters at leading institutions at even low decile physicians are ordering XERMELO at a pretty good clip. We believe these…

Thanks, Lonnel, and good evening everyone. I'm very excited to provide you with an update on the XERMELO launch. As Lonnel just mentioned, we achieved net XERMELO sales of $700,000 in the first quarter of launch, which really consisted of 21 selling days given the timing of the launch. I am thrilled with the commercial team's efforts that have supported the increased education and awareness of carcinoid syndrome with patients, their caregivers, physicians and payers. Now our strategic imperatives for XERMELO include continuing to drive awareness of the disease and its burden impact driving rapid adoption, amplifying the patient voice and ensuring that patients and healthcare providers can gain access through XERMELO. Our team has built a solid plan towards our key customers and has executed extremely well against this objectives. As seen on Slide 6, our field force has reached more than 3,000 health care providers and of those providers nearly 270 are top-tier prescribers of which 90% have been detailed. What's impressive is that approximately one third of all enrollments are being generated by the top prescribers. In addition, 19 of the top 20 high volume centers that prescribe SSA therapy have written in XERMELO scripts. Lastly, we are effectively activating physicians and nurses in the lower deciles and they are also prescribing XERMELO at a high rate. We are capturing scripts from a multitude of institutions around the country. On the reimbursement side, we have a very positive formulary position. Thirteen major payers have already been reimbursing for XERMELO even though a decision may not have been rendered yet. That being said, I am excited to announce that our first national formulary decision has been made by Express Scripts. We now also have coverage from CVS, Caremark, OptumRx, Humana, Aetna and UnitedHealthcare where patient claims are being…

Thank you, Alex. Today, I'm going to focus on our sotagliflozin program, which Lonnel mentioned is being studied in the largest and most comprehensive Phase III program ever for an oral agent in type 1 diabetes to fully understand why we believe sotagliflozin could be a best-in-class therapy for type 1 and type 2 diabetes. It's important to understand unmet need. On Slide 10 you can see that about 75% of patients living with type 1 diabetes in the U.S. are not achieving the ADA target for A1C of 7%. Now half of them have A1C over 8%. These statistics reveal the challenges in managing glucose levels with insulin alone. Patients make tradeoffs between effectively managing their blood glucose while trying to avoid complications like severe hypoglycemia, diabetic ketoacidosis, or DKA, and weight gain. We believe that sotagliflozin’s effect could be far reaching by controlling blood glucose without these complications, but the proof will be in the putting and we expect to get those answers from our Phase III studies inTandem1, 2 and 3 relatively soon. Moving to Slide 11. We are running two pivotal trials in inTandem1 and inTandem2, which are identical studies in terms of the primary endpoint looking at changing A1C on a background of optimized insulin. Most studies have already achieved their primary endpoint. Demonstrating the drop in A1C was statistically significant for both 200 milligrams and 400 milligrams at 24 weeks. Sotagliflozin treated patients continued to show reductions in A1C and those reductions came on top of optimized insulin, which is a very important distinction. On Slide 12, the 0.35% and 0.41% placebo subtracted improvement in A1C is an effect that cannot be obtained by insulin alone. That's a very high bar to overcome. But we are expecting later this month from inTandem1, these additional…

Thank you, Pablo. I'm pleased to provide you with a brief financial update, more financial details can be found in our 10-Q, which will be filed in a few days. Now please refer to you Slide 17 in our presentation. As indicated in our press release today, first quarter of 2017 revenues totaled $18.3 million, which represented a 46% increase from $12.5 million in the prior year period. This increase was primarily due to recognition of revenues received under our collaboration and license agreement with Sanofi, which reflects revenues associated with the performance of our obligations related to type 1 diabetes development activities and in 2017 shared funding of type 2 diabetes development. Revenue for the three months ended March 31, 2017 included approximately $700,000 of net revenues recognized from XERMELO sales in March. As Lonnel and Alex mentioned, we filled the first XERMELO script on March 3rd, so we experienced 21 selling days. As we started recognizing revenues from XERMELO, we had cost of sales of $0.2 million for the first quarter of 2017, which included finite-lived intangible asset amortization. We began capitalizing inventory during the first quarter as we expected to recover related costs through the commercialization of the product. The pre-commercialization inventory of XERMELO is expected to be sold over approximately the next two years. As a result, cost of sales of XERMELO for the next few years will reflect the lower average per unit cost of materials than would otherwise be expected. During the three months ended March 31, 2017, intangible assets relating to XERMELO of $24.7 million were reclassified from indefinite-lived to finite-lived assets following FDA approval and we started to amortizing this asset using the straight line method over its estimated useful life. So in addition to the cost of materials, cost of sales…

Thank you, Jeff. 2017 has the potential to be a game changer and changing the year for Lexicon with several defining moments. We will continue to execute on our launch plan for XERMELO driving uptake momentum, optimizing and maximizing field activities, increasing awareness of the disease and the drugs differentiated profile and continuing the strong relationships we have with all of our stakeholders, patients, physicians, key advocacy groups and payers. Another key priority that we believe will drive our long-term value is advancement of our pipeline. As you can see on Slide 18, we have multiple near-term clinical readouts for sotagliflozin starting from May through third quarter of this year along with advancement of our earlier stage drug candidates later this year and as always, we will keep you apprised on the progress throughout the year. At this time, I will stop here and ask the operator to begin the Q&A session.

[Operator Instructions] And your first question comes from Yigal Nochomovitz from Citigroup.

And your next question comes from Alan Carr from Needham.

Your next question comes from Chris Shibutani from Cowen.

Thank you. Your next question comes from Liana Moussatos if Wedbush Securities.

[Operator Instructions] And your next question comes from Jessica Fye of JP Morgan.

[Operator Instructions] And your next question comes from Stephen Willey of Stifel.

Well with that I’ll just close it up by saying that I’m very proud of our team, pleased with our readiness and execution. Just totally excited to provide a much needed new first-in-line, first class, I should say first class therapy for carcinoid syndrome diarrhea patients. We look forward to keeping you informed as we have make progress and have new developments. In the mean time we will be participating in the Bank of America Merrill Lynch Health Care Conference in Las Vegas, May 18. Hope to see many of you there. And we’ll engage more at that time. With that I’ll say thank you and have a good evening.

Ladies and gentlemen this does conclude today’s conference call. You may now disconnect.