Lexicon Pharmaceutical's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Lexicon Pharmaceuticals, Inc. (LXRX)

Q2 2012 Earnings Call

July 31, 2012, 11:00 a.m. ET

Executives

Alex Abuin – VP Communications and Alliance Management

Dr. Arthur Sands – President and CEO

Brian Zambrowicz, EVP, Chief Scientific Officer

Jeff Wade – EVP, Corporate Development and Chief Financial Officer

Analysts

Matt Lowe – JPMorgan

Liana Moussatos – Wedbush Securities

Alan Carr – Needham & Company

David Friedman – Morgan Stanley

Nicholas Bishop – Cowen and Company

Stephen Willey – Stifel Nicolaus

Presentation

Operator

Thank you for holding. Welcome to the Lexicon Pharmaceuticals' Second 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, Alex Abuin, Vice President Communications and Alliance Management. Please go ahead Doctor Abuin.

Alex Abuin

Good morning and welcome to the Lexicon Pharmaceuticals' second quarter 2012 conference call. I am Alex Abuin, 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. Jeff Wade, Lexicon’s Senior Vice President of Clinical Development and Chief Medical 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, followed by Dr. Lapuerta who will give an update of our clinical programs; and Mr. Wade will review our financial results for the second quarter and discuss our financial guidance. 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 statements relating to Lexicon’s research and development of LX4211, LX1033, LX1033, LX2931, LX7101, and Telotristat etiprate, also known as LX1032, and the therapeutic and commercial potential of those [inaudible]. 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 result 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 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 Doctor Sands.

Arthur Sands

Thank you, Alex. We proceed to our pipeline slide, the first slide that’s here on the left half. As you can imagine, most of efforts at the end of last quarter were focused on the completion of the Phase 2b trial for LX4211 and type 2 diabetes, and the release of the top-line results, which we did accomplish in late June. And then many of you know we had a subsequent conference call where we went through the top-line results, I think in some detail.

So today, we will only have a very brief review of those results and a discussion, and after questions period after this presentation.

Also, we’ll discuss briefly with telotristat etiprate and its progress in carnitine syndrome. We spent most of last quarter, I think involved in the planning of the Phase 3 program, which has gone well and is on track for commencing in the next quarter. And then at the end, after Brian discusses LX4211 and telotristat, I will come back to discuss briefly the timeline associated with the other programs that you see on the slide, LX1033, LX2931, LX7101 and the events we expect to see in the next quarter.

So with that brief introduction I’ll turn it over to Brian for a brief review of LX4211.

Brian Zambrowicz

Thank you, Arthur. LX4211 is our first-in-class dual inhibitor of two sodium dependent glucose transporters, SGLT1 and SGLT2. The normal function of SGLT2 is to prevent glucose loss in the urine. And by inhibiting SGLT2 in the kidney, you elevate urinary glucose excretion.

The role of SGLT1 is it’s the key glucose transporter in the gastrointestinal tract, and when you have a meal, it’s the transporter responsible for taking up glucose. When you inhibit SGLT1, you inhibit the uptake of glucose from the gastrointestinal tract, and that ultimately also then triggers the release of beneficial gastrointestinal peptides, such as GLP-1 and PYY.

We go to our next slide. This again is the landscape of SGLT inhibitors currently in clinical development. If we focus on the SGLT1 and SGLT2 column, this indicates whether these agents inhibit SGLT1 and SGLT2. And LX4211 is again, unique in class in being the only dual inhibitor of SGLT1 and SGLT2, currently in clinical development.

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