Lexicon Pharmaceuticals' CEO Presents At Morgan Stanley Healthcare Conference (Transcript)

Lexicon Pharmaceuticals, Inc. (LXRX)

Morgan Stanley Healthcare Conference Call

September 11, 2012, 08:00 am ET

Executives

Arthur Sands - President & CEO

Brian Zambrowicz - EVP & Chief Scientific Officer

Analysts

David Friedman - Morgan Stanley

Presentation

David Friedman - Morgan Stanley

Okay. Thanks everyone for joining us here today. I am David Friedman one of the biotech analysts. Up here we have the team from Lexicon; on the far side, Brian Zambrowicz, Executive Vice President and Chief Scientific Officer and then on the near side here Arthur Sands, President and CEO.

So thank you very much both of you for coming and we would love this to be as interactive as possible, so everyone please feel free to ask any questions; you can just raise your hand and we’ll get you a microphone.

So thank you all for coming. You guys have a lot going on as usual. So, may be if you want to give a couple of minute overview of the company for those who aren’t familiar and your unique approach to drug development.

Arthur Sands

Yeah, so we have five compounds in drug development, all derived from our genomic platform which I think is unique to Lexicon. That platform we developed and evolved over the last 15 years based on gene knockout technology, so all of the targets were identified starting with the human genome, but then again what’s unique and I think advantageous about our drug discovery system is that we model each of these targets in knockout before we embark on a drug discovery program.

So this is a very large scale genomic effort in the early days. We filtered through about a quarter of all protein encoding genes, the 5,000 genes to identify the novel mechanisms where we could see the most exquisite functions that would read on various categories of human disease. We also have developed then a small molecule platform to develop agents to those novel protein targets.

So our pipeline today is a small molecule pipeline, all new chemical entities discovered and developed at Lexicon with our research team and we're addressing – we’ll get into several therapeutics areas; this fall being the most exciting I think as we enter Phase III in our lead program, that’s my sort of general introduction background.

Brian Zambrowicz

Perfect. We obviously have initiated our first Phase III this quarter in carcinoid syndrome with telotristat etiprate. Then we have -- we're on track for initiating a Phase III in the first half of next year in Type II diabetes and later next year a Phase III in IBS-d.

David Friedman - Morgan Stanley

So maybe if we can start with the diabetes program that’s in the – where we’ve seen some of the newest data as of late, so if you can just talk about briefly the mechanism, the Phase II data and you know how you during the Phase II program have tried to differentiate this drug from other drugs with similar, but not the same mechanism?

Arthur Sands

Well, I'll just lead off to (inaudible) and then turn over most of that answer to Brain, but in terms of timing we just finished our Phase IIb trial. We released those results at the very end of June and in July; excellent results and now we’re in the Phase III planning stages. So Brian you want to address the mechanism?

Brian Zambrowicz

Sure. It’s LX4211; it’s a dual inhibitor of two sodium dependent glucose transporters SGLT1 and SGLT2. And SGLT2 people are pretty familiar with because of compound from BMS, AZ and J&J as well as others, dapagliflozin and canagliflozin. So we also hit SGLT2 but what’s unique is the SGLT1 in addition of our compound, and SGLT1 for those of you who are not familiar as the transporter responsible for the uptick of virtually all the glucose when you have a meal from gastrointestinal track.

And when you inhibit it then it has two effects; one is that it prevents some of the glucose uptake after a meal, so you have less glucose in the blood after a meal and the second thing then is that it allows that glucose to trigger mechanisms of the GI that caused the release of beneficial peptides like GLP-1, so galactose by like effect, but with a small molecule and we have been able to differentiate all on the way with that mechanism, but some of the ways we think we differentiate are first of all just straight up efficacy are placebo subtracted HbA1C effect that thought was 0.86% reduction and the SGLT2 selective compound, multiple have gone through Phase II, I think six now and they have all been right at 0.70 with the best I have seen being 0.71 placebo subtracted.

But in addition to that there is multiple other ways we can differentiate another way of safety; I think we have an opportunity to show a decreased rate of infections, generated urinary infections and it relates mechanistically to the fact that we have still have glucose in the urine, well less glucose in urine is the selective SGLT2 inhibitors.

And then other ways are we believe that we can differentiate in a large way in the renal impaired, that’s about 30% of Type II diabetic and as they loose filtration rate in the kidney, they can no longer benefit from SGLT2 inhibition. However, the SGLT1 mechanism of LX4211 should not be diminished. So we think we can differentiate there in a big way. And the other is with in combination with DPP-4 inhibitors like sitagliptin; we have a very unique synergy, because we trigger the release of GLP-1 from the gastrointestinal tract and the DDP-4 inhibitors prevent its inactivation.

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