Alex Abuin – VP, Communications and Alliance Management Arthur Sands – President and CEO Pablo Lapuerta – SVP, Clinical Development and Chief Medical Officer Brian Zambrowicz – EVP and Chief Scientific Officer Jeffrey Wade – EVP and CFO

Phil Nadeau – Cowen & Company Alan Carr – Needham & Company Thomas Lee – Jefferies David Freeman – Morgan Stanley Kevin Kedra – Gabelli & Company

Thank you for holding. Welcome to the Lexicon Pharmaceuticals’ Second Quarter 2013 Conference Call. At this time, all participants are in 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, Mr. Alex Abuin, Vice President, Communications and Alliance Management. Please go ahead, sir.

Good morning, and welcome to the Lexicon Pharmaceuticals’ second quarter 2013 conference call. I am Alex Abuin, and with me today are Dr. Arthur Sands, Lexicon’s President and Chief Executive Officer; Dr. Pablo Lapuerta, 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. The call will begin with Dr. Sands, followed by Dr. Lapuerta and Zambrowicz, who will provide an update of our clinical programs and by Mr. Wade, who will review our financial results for the second quarter of 2013 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 home page 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 for LX4211, LX1033, LX2761, Telotristat etiprate, also known as LX1032 and other drug candidates and the therapeutic and commercial potential of those drug candidates. 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 pre-clinical studies of our drug candidates, our dependence upon strategic alliances and ability to enter into additional collaboration 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 Dr. Sands.

Thank you, Alex. And welcome, everyone, to today’s call. On slide number two we have the outline of our call today. We’ll begin with an enrollment update which pertains to several of the expected upcoming clinical milestones which are depicted in the graphic included on this slide. Some of the font might be a little bit small so let me walk through at a high level these events in the second half and then Pablo Lapuerta will be going through each of these enrollment updates. But we have a very dense second half expected here. First, we expect to see results from two studies at the end of Q3. These will be the telotristat etiprate in ulcerative colitis which is a proof-of-concept study and also a second proof-of-concept study in renal impairment for 4211 are diabetes drug and development. Then we see next the results from our Phase II trial for LX1033 and irritable bowel syndrome. We expect that to be in the early part of the fourth quarter. And then towards the end of the fourth quarter, we anticipate results from our proof-of-concept study of LX4211 in type 1 diabetes. So again, Pablo will be walking through each of those enrollment updates in greater detail. We will then move into a discussion of some of the highlights from the recent Lexicon presentations at the American Diabetes Association Conference in June. We had three oral presentations there focused on our diabetes program. And two of those were on LX4211 and then the third was on a new clinical candidate LX2761. And we’ll have Brian Zambrowicz walk through the new data from LX2761 our latest clinical candidate. And then Pablo will first be providing highlights on LX4211 presentation. We will then proceed to the financial results and the Q&A session. If we move to the next slide. First, that detailed progress in the second half is all part of our larger progression of the pipeline for these agents which is pictured here. LX4211 as you all know it is our dual inhibitor SGLT1 and SGLT2 which is in development for both type 1 and type 2 diabetes. And then our telotristat etiprate is our tryptophan hydroxylase inhibitor, which is currently in Phase 3 for carcinoid syndrome but also, we’ve embarked on that proof-of-concept trial for ulcerative colitis with telotristat etiprate. And then, LX1033 is our locally acting tryptophan hydroxylase inhibitor, which is in Phase 2 – completing Phase 2 development for irritable bowel syndrome, IBSD. So, with that, we’ll move directly then into the more detailed description of the enrollment update. And I’ll turn it over to Pablo.

Thank you, Arthur. Let me go to slide five. We completed enrollments recently in three important studies. The first that I’ll be reviewing with you is the 30-patient study of LX4211 in patients with type 2 diabetes and renal impairment. The next one that’s completed enrollment is our 60-patient Phase 2 study of telotristat etiprate in ulcerative colitis. And this week, we’re completing enrollment in a 360-patient Phase 2 study of LX1033 in irritable bowel syndrome that’s diarrhea-predominant, IBSD. Our enrollment is advancing well and our other studies, and they include our pivotal Phase 3 study of telotristat etiprate in carcinoid syndrome, and our placebo-controlled portion of the LX4211 study in type 1 diabetes. On slide six, I have some background on our ongoing renal impairment study. We entered this area, because our renal impairment is so common in patients with type 2 diabetes and many current medications are contraindicated for patients with renal impairment, while SGLT2 selective inhibitors have promise because of their exclusive renal mechanism of action. They have some limitations in this space whereas LX4211 has a dual SGLT1, SGLT2.inhibitor may offer more robust efficacy. At our last earnings call, I had described how we had increased the sample size of our renal impairment study from 20 to 30 patients in order to provide more robust data. That was a good opportunity and we’ve been able to fulfill that and we’ve today completed our enrollments on all 30 patients with type 2 diabetes and moderate to severe renal impairment. These patients are being treated with LX4211 400 mg once a daily versus placebo and we will be focusing most on postprandial glucose as evidence of clinically meaningful SGLT1 inhibition and the study we’ll also be looking at the pharmacokinetic of LX4211 in this population. We are on track to have topline results around the end of the third quarter of this year. On slide seven, I have some background on telotristat etiprate, telotristat etiprate works by inhibiting the tryptophan hydroxylase enzyme, in doing so it’s a serotonin synthesis inhibitor absorbing into the peripheral circulation by not crossing the blood-brain barrier, inhibiting serotonin is important in controlling the symptoms of carcinoid syndrome, including diarrhea and flushing. We have Fast Track and Orphan Drug status from the FDA and Orphan Drug designation from the EMEA for the treatment of carcinoid tumors and yet we’ve also evaluated an opportunity in ulcerative colitis. On slide eight, we’ve completed randomization in this study. The proof-of-concept study called a PARSEC to assess the relationship between serotonin and efficacy and the treatment of ulcerative colitis. We completed randomization with 59 patients that had mild-to-moderate ulcerative colitis, some of the last few patients are still being treated with either placebo or 500 milligrams once daily or 500 milligrams three times daily of telotristat etiprate. These are all patients who required mesalmin and continuing to mesalmin throughout the study. The efficacy measures include bowel movement frequency; will be emphasizing as well endoscopy in addition to bowel movement frequency, mill score is an integrated assessment of endoscopy and clinical response and faecal calprotectin will be another biomarker for the study. The top line results are on track to come in around the end of the third quarter of 2013. Slide nine, I have some background on LX1033. It’s a locally acting serotonin synthesis inhibitor while telotristat etiprate peripherally acting and enters the blood stream. LX1033 is locally-acting in the GI tract with minimal absorption. It’s been granted fast track status by the FDA for the treatment of irritable bowel syndrome that is diarrhea-predominant and we’re completing enrollment this week for the Phase 2 trial. Our Phase 2 is diagramed on slide 10. We’re nearing completion this week. We expect to randomize our last patient. We will have approximately 360 patients with irritable bowel that’s diarrhea-predominant and our primary endpoint will be change in stool consistency. However, in preparation for a Phase III, an important secondary measure will be abdominal pain, we’ll be looking at other patient reported outcomes as well and we made this a large study of 360 patients because we want to be able to address the potential role of biomarker in this opportunity. They include plasma 5 HIAA and genotype and patient reported outcomes in our Phase III clinical program. We are on target to have topline results in the fourth quarter and this will be with patients randomized either placebo or three different doses of LX1033. On Slide 11, I have some background on a high point diabetes proof of concept study, which is progressing nicely. This study in Type 1 diabetes was meant to establish the safety of LX4211 and to show proof of concept data. We began with an open label pioneer group, our first three patients, we treated with LX4211 in an open label fashion in order to get a per perspective on the exact insulin reduction that we needed to apply in order to manage a placebo-controlled expansion cohort. We’ve now entered the expansion cohort that will randomize up to 30 subjects with Type 1 diabetes to 400 milligrams of LX4211 or placebo for 28 days of treatment. From our open label experience, we feel comfortable with the safety and the dose selection and the overall strategy for treating Type 1 diabetes patients while safely reducing insulin in them. Our primary efficacy endpoint for this randomized phase will be the impact of LX4211 on bolus insulin. That’s our experience from the open label experience is that we are having an impact on bolus insulin. Secondary objectives will include basal and total insulin use which were reduced as well in our pioneer cohort. And we will be looking at other parameters of glycemic control, pharmacodynamics like here in glucose excretion and pharmacokinetic parameters in type one diabetes patients. The enrollment under placebo controlled expansion study has been initiated and we are on track right now for a topline results around the end of this year. With that, I’d like to review some of the highlights from our American Diabetes Association presentations. And one of them had to do with the reductions of blood pressure that we’ve seen in Phase 2 with LX4211 and type two diabetes. On slide 13, we did an extensive analysis of the blood pressure results of our Phase 2 study with LX4211. The reason we did that is because mechanistically we had a good rationale for expecting blood pressure reduction. It comes not just from inhibiting SGLT2 in the kidney, it also comes from SGLT1 in the gastrointestinal tract. SGLT1 and SGLT2 are both involved in sodium metabolism. SGLT1 in the gastrointestinal tract with sodium absorption, SGLT2 in the kidney is urinary sodium excretion, by affecting both LX4211 may reduce blood pressure. But also there is an indirect potential effect here through GLP-1. LX4211 when inhibits SGLT-1 in the GI tract leads to release of GLP-1 and GLP-1 administration has been shown to reduce blood pressure, potentially by elevating atrial natriuretic peptide. And this analysis we had data on 299 hypertensive and normotensive patients with type 2 diabetes in Phase II. The study did not impose a minimum or maximum blood pressure here and there were no restrictions on the prescribing or adjustment of anti-hypertensive medications. Anticipating blood pressure reduction we prespecified that we would analyze blood pressure change in sub-groups with blood pressure elevations at baseline or normal blood pressure at baseline and systolic and diastolic blood pressure. On slide 14, we have the patient demographics. And it’s important to note that in systolic blood pressure we had values in the 120s for a millimeters of mercury, which is slight above normal for. For diastolic blood pressure, we had blood pressures which were essentially at the mean at normal. They’re 80 millimeters of mercury. So we had more of an opportunity for systolic blood pressure lowering in the study which is common in the treatment of hypertension in type 2 diabetes. On slide 15, LX4211, blood pressure reductions are shown for systolic blood pressure and there was a very nice dose dependent result with the greatest reduction coming from the highest dose 400 milligrams of LX4211. Slide 16 shows the placebo effect on systolic blood pressure with the scatter plot. This scatter plot has all 59 or 60 patients that were in the placebo group and the X axis has the baseline systolic blood pressure. So these values are scattered around a mean of slightly over a 120 as I showed in the demographic slide. The Y axis is a change in systolic blood pressure and placebo doesn’t lower blood pressure and so on the Y axis about half of the values are above and half below the line of zero both systolic blood pressure changed. Placebo had no effect and you can see that abd there’s round scatter around the baseline of systolic blood pressure 127 and the change of zero. However on slide 17 LX4211 at its highest dose had a very nice systolic blood pressure reduction. Here we have all 59 patients on LX4211 milligrams with their baseline and change in systolic blood pressure matched. And what you see is a very large systolic blood pressure change in patients with the high systolic blood pressure. You see a tighter relationship than LX4211 than in placebo. The results get progressively better at the baseline systolic blood pressure progressively increases. In the pre-specified analysis of patients with the systolic blood pressure of at least 130 millimeters of mercury at baseline, we saw a large 14 millimeter blood pressure reduction placebo subtracted that was highly significant with LX4211. What’s also important about the slide is the upper left of the slide we have the patients with low baseline systolic blood pressures. They had essentially no reduction in blood pressure and this speaks importantly to the safely of LX4211 in individuals who are normotensive. We saw minimal systolic blood pressure change in patients with normal baseline blood pressure only a 1 millimeter reduction versus placebo that was not statistically significant when the baseline systolic blood pressure is below 130 millimeter symmetry. On slide 18 we have the diastolic blood pressure values for all 59 patients. 400 milligrams once daily of LX4211 and we see the same type of trend. And our distribution that’s centered on the line with progressively greater diastolic blood pressure reductions the higher the diastolic blood pressure. However, here the specified sub-group analysis did not the reach the statistical significance because there are not many patients you can see here with diastolic blood pressure at or above 90. So there is a 3 millimeter reduction versus placebo in patients with the diastolic blood pressure greater than 80. But importantly for the purposes of safety there was a zero millimeter reduction versus placebo when the baseline diastolic blood pressure was less than 80. What we concluded from these blood pressure analysis was that we had dose dependence, reductions in systolic blood pressure it was interesting to see that LX4211, 400 milligrams reduced systolic blood pressure more than intermediate doses despite having similar urinary glucose excretions. Seeing a greater blood pressure efficacy with the (inaudible) glucose excretion makes us postulate that the blood pressure effect could relate partly to gastrointestinal SGLT1 inhibition. That could be from reducing sodium absorption in the gastro intestinal track or as I mentioned an interactive symptom GLT1 mediated through Atrial Natriuretic Peptide. It is very, very assuring from a safety standpoint to see a minimal to no blood pressure impact on normal attentive patients. We believe that this cardiovascular profile of LX4211 is encouraging and we will pursue it further in Phase 3 clinical developments. We’ve seen effects today that are as good as those seen with those of approved antihypertensive agents. We were encouraged by the magnitude of systolic blood pressure reduction in this study. I will now turn the call over to Brian.

Thank you, Pablo. Another important oral presentation we had at this year’s ADA was our first public description of LX2761. Our new diabetes compound currently undergoing R&D enabling studies with an IND expected near mid-year of next year. LX2761 was designed to be locally acting to have low systemic exposure thereby reducing or eliminating, or eliminating urine glucose excretion. So the compound was designed largely to stay in the gastrointestinal track working inhibit SGLT1. Since SGLT1 is the primary transporter involved in glucose uptake for meals inhibiting SGLT1 should have a strong effect on postprandial glucose excursions in the blood reducing them. And as we described in the past inhibiting SGLT1 also stimulates the release of SGLT1 from the gastrointestinal tract. So we are eager to test this compound in patients with diabetes. We believe that there could be real advantages in certain populations of diabetics including subjects who are at increased risk of infections. Patients with renal impairment who can’t benefit from very much from SGLT2 inhibition and we believe the compound will have a unique synergy with DPP-4 inhibitors in type 2 diabetes and perhaps in type 1 diabetes as well. On slide 22 as part of the design I mentioned that we were seeking to minimize systemic exposure and in this graph what we’re looking at is the blood levels of LX2761 on the Y axis and this is a large scale. On the X axis is the time after giving the compound orally to mice and what you can see relative to 10 milligrams, up to 10 milligram per kilogram dose of LX4211 in blue is red and red 10 milligrams per kilogram of 2761 is very low systemic exposure even pushing the doses to 30 milligrams per kilogram has very little exposure systemically. Importantly, both 10 and 30 mgs per kilograms I’ll show you are well below the doses required to improve glycemic control in well above, well above the doses required to get glycemic control in diabetes models. On the next slide, importantly, we wanted to reduce the systemic exposure of LX2761 to reduce the urinary glucose excretion and this slide shows that data what we’re looking at here is urinary glucose excretion on day one and two of dosing with either LX4211 and blue 1.5 milligrams per kilogram vehicle in green or LX2761 at 1.5 milligrams per kilogram in red. As expected LX4211 produces the large increase in urinary glucose excretion on both day one and day two after dosing whereas very similar to vehicle in green you can see that LX2761 in red is lying right on top of it and really not elevating urinary glucose excretion at all. On the next slide we then did some studies again in mice where we dosed over five days once a day with LX2761 at 1.5 milligrams per kilogram and we were looking for the effects of this agent and inhibition SGLT1 on the gastrointestinal track that we’ve described you in the past one new inhibitor SGLT1 you deliver glucose to the distal small intestine colon and this is sensed and triggers the release of GLP-1 from the gastrointestinal track. So on day five of dosing we gave a meal challenge containing glucose and what we did is we measured glucose in the cecum the beginning of the large intestine. You can see it’s elevated with 2761 treatment and as expected on the right as well, we see an elevation of GLP-1 release from the gastrointestinal track. On the next slide we’ve looked at the synergy of LX2761 with a DPP-4 inhibitor in this case (inaudible) and the concept as we described in the past is since inhibition of SGLT1 results in the release of increased amounts of GLP-1 from a gastrointestinal track and DPP-4 inhibitors prevent its inactivation. We expect and have seen in fact in human clinical trials that there is a synergistic elevation of active Glip 1 with 4211 and DPP-4 inhibitors. Here you can see that we’ve given either vehicle in green, LX2761 alone in blue, and I’ll point out this is a tenfold lower dose even than what we just showed you in the previous slide this is 0.15 mgs per kig. Sitagliptin alone in purple at 30 mgs per kig or the combination in red of LX2761 at 0.15 migs per kig and sitagliptin at 30 migs per kig. What you can see is a pretty profound synergy in the elevation of active Glip 1 levels with the combination of 2761 for sitagliptin. We think this is going to be a very important combination. Again as I said it’s not only type 2 diabetes but potentially in type 1 diabetes as well. On the next slide we did further studies in mice to examine the sustained inhibition of SGLT1 in the gastrointestinal track. Not only is it important to be potent at SGLT1 but to really have a good duration of action to be able to benefit from SGLT1 inhibition you have to be able to sustain that inhibition over the course of the biding and through all meals of the day. So on this study we dosed for five days once a day with LX2761 at various doses of placebo in green. And after dosing at 5 PM on day five the last dose, we waited 15 hours before we gave an oral glucose challenge and looked for sustained inhibition and sustained effects of that SGLT1 inhibition. And what we can see on the bottom left graph is looking at the glucose excursions in the blood with an oral glucose challenge 15 hours again after the last dose of 2761. And there is a very nice dose response which you can also see when you showed as area under the curve in the graph on the right. You can see that even extremely low doses 0.009 migs per kg of LX2761 are showing improvements and .015 migs per kig is already showing statistically significant improvements in that you can see for glucose excursions. So we are pleased to see that we were getting sustained inhibition of SGLT1. On the next slide we moved into some models of diabetes. This first one is a genetic model of type 2 diabetes its KKAy mice. And we treated the mice once a day with LX2761 in red or placebo over the course of 30 days. And then we both looked at the hemoglobin A1c as well as giving an oral glucose challenge and looking at that area under the curve for the blood glucose excursions after that oral glucose challenge. What we saw was a significant reduction in hemoglobin A1c levels in this diabetic model in the bottom left graph with 2761 relative to placebo. And on the bottom right also as expected a very nice improvements statistically significant reduction in the AUC for glucose excursions after the oral glucose challenge with 2761 relative to placebo. On the next slide we went into a second mouse model of diabetes. This one is more of a type 1 diabetes model. It’s created with a chemical STZ. This chemical destroys the pancreatic beta cells and that’s why it mimics more of type 1 diabetes model. And in this study again we dosed once a day with 2761 add a couple of doses for placebo which is in green in the graph. On day 20 of dosing we did an oral glucose challenge and on day 30 we measured the hemoglobin A1c. And what you can see is we saw significant improvements in the blood glucose excursions after the oral glucose challenge for both the doses of LX2761 on the bottom left and on the bottom right. A significant improvement in hemoglobin A1c at the high dose here relative to placebo. To summarize on the next slide, oral dosing of LX2761 or a small molecules gene our key the inhibitor designed to be retained in the intestine and the local reacting resulted in very low systemic exposure and little if any urinary glucose excursion. It did delay in intestinal glucose excursions, absorption thereby decreasing blood glucose excursions after meal challenges or oral glucose challenges and increased the release of intestinal GLP-1. It showed nice synergy with the DPP-4 inhibitor and elevating active GLIP 1 levels. It showed sustained inhibition of SGLT1 in the gastrointestinal track. As I showed you we could still see the exhibition SGLT1 15 hours after a dose of LX2761. And did improved glycemic control in both type 2 and type 1 model of diabetes. With that I’ll turn it over to Jeff Wade.

Thank you, Brian. I will provide a brief financial update. As indicated in our press release today we had revenues for the 2013 second quarter of $0.2 million consistent with the prior year period. For the first half of 2013 our revenues increased to $0.6 million from $0.5 million in the prior year period. Our research and development expenses for the 2013 second quarter increased 22% to $23.7 million from $19.4 million in the prior year period. That increase was primarily attributable to increases in external clinical and preclinical research and development and personnel costs. Partially offset by decreases in facility costs. Our R&D expenses of $44 million for the first half of 2013 reflected a 4% increase from $42.4 million in the prior year period. In connection with the acquisition of Symphony Icon we made an initial estimate of the fair value of our liability for the base and contingent payments and changes in that liability is based on the development of the programs and the time until the payments were expected to be made are recorded in our consolidated statements of operations. The associated increase in fair value of Symphony Icon purchase liability was $0.5 million in second quarter and $1.7 million for the six months ended June 30, 2013. Our general and administrative expenses for the 2013 second quarter were $4.7 million, an increase of 12% from $4.2 million in the prior year period. The increase was primarily attributable to increases in personnel costs and legal and patent fees. Our G&A expenses of $9 million for the first half of 2013 reflected a 3% increase from $8.7 million in the prior year period. Our net loss for the 2013 second quarter was $29.1 million or $0.06 per share compared to a net loss of $25.9 million or $0.05 per share in the prior year period. Our net loss for the first half of the 2013 was $55.1 million or $0.11 per share compared to a net loss of $55.8 million or $0.12 per share for the corresponding period in 2012. For the three and six months ended June 30, 2013 our net loss included non-cash stock-based compensation expense of $1.9 million and $4 million respectively. For the three he and six months ended June 30, 2012, net loss included non-cash stock-based compensation expense of $1.6 million and $3.3 million respectively. Finally, as of June 30, 2013 we had $175.4 million in cash and investments as compared to $197.2 million as of March 31, 2013 and $223.2 million as of December 31, 2012. Now, let’s turn to our forward-looking financial guidance for 2013. We continue to expect contractual revenues from existing agreements in 2013 of around $1 million. We are engaged in partnership discussions for LX4211 as you know and also in conversations about other potential collaborations and alliances. Consistent with our past practice, however, we are not including forecasted revenue from potential new collaborations and alliances in our guidance. We continue to expect that our operating expenses in 2013 will be in the range of $110 million to $120 million. Non-cash expenses are expected to be approximately $15 million of that total including $7 million in stock based compensation, $5 million in increase in fair value of Symphony Icon purchase liability and $3 million in depreciation and amortization. Taking into account cash received under existing contractual relationships only, we continue to expect that our 2013 net cash used in operation will be in the range of $92 million to $97 million consistent with the previous guidance. I should note that these operating expense and net cash use expectations reflect costs of preparations that we are making for Phase 3 development of LX4211 as well as certain supportive non-clinical and clinical activities but they do not reflect the cost of full scale Phase 3 clinical trials for that program given our expectation of a partnership around those activities. I will now turn the call back to Arthur.

Thank you, Jeff. Well, I think we’ve made significant progress on completing enrollment for several key studies as we advance our pipeline into Phase 3. Telotristat etiprate continues to progress in carcinoid syndrome and our pivotal study. We are enrolling actively in that study. We talked about 4211 for type 2 diabetes with respect to renal impairment as a key, I would say pillar of our future Phase 3 program focusing on that population where we think again we’ll have unique advantages given our dual methods of action. We made progress on our type 1 diabetes trial as well and we continue to progress the overall Phase 3 preparations for the type 2 program which we continue to anticipate moving into Phase 3 with a corporate partner. With respect to LX1033 this has been a very large Phase 2 effort it’s exciting to see enrollment completing this week. We have designed this Phase 2 program to allow us to progress directly into Phase 3 and early next year pending results from the study. And I think it was nice to hear that not only and while most attention is focused on the three advanced programs but Lexicon continues to progress new compounds into development. I think a very exciting presentation on LX2761 and demonstrating that we see SGLT1 as an emerging target for diabetes and hopefully Lexicon will continue to be a leader lead in progressing that compound as well on that mechanism that particular mechanism. So with that we can now progress into our Q&A session.

(Operator Instructions). Your first question have Cory Kasimov from JPMorgan.

Hi. This is Whitney on for Cory. One question or two questions I guess. First can you guys talk about if you’re still confident in doing a 4211 deal before the end of the year? And kind of getting that Phase 3 trial off the ground in second half? And then secondly, in the IBS-d trial can you talk a little bit about the rationale of choosing stool consistency as the endpoint instead of sort of the standard pain and frequency endpoints and also what scale are you using for stool consistency?

Okay so if you want to start with 4211, Jeff?

Sure. So we are continuing to make progress on the partnership discussions and our objective remains to move into Phase 3 with a partner this year for LX4211. So that’s something that continues to go well.

And then Pablo, would you like to comment on the question regarding LX1033 and the endpoints in our study.

Yeah, the question was why we selected a stool consistency as opposed to other endpoints like pain and the reason is that in our experience with LX1031 a first generation symptom in synthesis inhibiter that we evaluated in IBS-d. We found that stool consistency was the most sensitive indicator of the mechanism of action and that the activity of the drug. So for Phase 2 with LX1033 the next generation compound we discussed this with the FDA and what we proposed is that to know that the mechanism of action is having an impact on patients. We felt that stool consistency would be the best primary endpoint. But that we made the study large enough with 360 patients to show that we would have adequate data on abdominal pain and other patient reported outcome measures to define effectively our strategies for Phase 3. So it’s really the difference between establishing the mechanism of action and optimizing the Phase 3 patient reported outcome strategy.

Do you want to comment on our scale for stool consistency?

Yeah sure that was the another part of the question which scale and it’s the distal stool scale.

Great. Thanks. And then one quick follow-up. On what would you have to see there to be statistically significant?

On the Bristol stool scale actually I don’t have an effect size that has a minimum because this is not powered on a mean, it is powered on a ranking. Ensure the distribution I think what we will see is we will see a greater proportion of patients with the reduction of an improvement in stool consistency of at least one on the Bristol stool scale. But the analysis we look at the overall distribution not just the proportion of with one score or another.

Great. Thanks for taking the questions.

Thank you.

Your next question is from Phil Nadeau from Cowen & Company. Phil Nadeau – Cowen & Company: Good morning. Thanks for taking my questions. First one on telotristat in carcinoid. Could you give us a bit more update detail about the enrollment there, how is it going with opening the sites and approximately more proportion of patients have already been recruited.

Pablo dorks you want to comment on that?

Yes, yes. I don’t want to give a specific numbers on randomization but I can say that where we are and we’re still initiating some sites. But the vast majority have come onboard and that’s really what we’ve accomplished in the past quarter. We had a wave of sites come up. In Europe it takes a little bit longer than in the US and we are very satisfied with the European participation that’s come onboard in the past quarter. And so we are consistent right now in randomization with our projections to be able to complete randomization in 2014. Phil Nadeau – Cowen & Company: Great. Thanks it was very helpful. And then second on LX4211 Phase 3, there [is language] in the press release that says you’re proceeding with plenty of the Phase 3s today. Curious how far can you go in the planning of process before you have the partnership signed and it does seems like partners will want some input in the Phase 2 program and the design of the studies. So how far can you go or how much further can you go without signing a partner before you kind of hit that wall?

Phil its Arthur here. So we’ve, in the our partnership discussions, we’ve been thoughtful in incorporating a lot of feedback into the Phase 3 plan so the answer is quite far and that these Phase 3 programs in diabetes are actually a good portion of them are fairly I would say well defined and there is general agreement on what they need to be especially the key he studies. And so we’re, we positioned ourselves to be able to go quite far in the preparations. We’ve actually invested quite a bit in the preparation process. There’s been a large number of studies and smaller studies also ongoing that will allow us to stay on our timeline while at the same time progressing partial discussions with multiple parties. Phil Nadeau – Cowen & Company: Okay, great. That’s very helpful thanks. And then one last question on LX1033 and IBS, Just unclear, I understand stool consistency is the endpoint of the Phase 2 but you suggested in some of your comments that abdominal pain is more likely to be the endpoint in Phase 3. Am I right in taking that interpretation or is there some chance that you move forward with the stool consistency endpoint in Phase III as well?

Pablo do you want to comment on that again?

Yeah the most likely endpoints were Phase 3 will depend on the results because the FDA offered several options. So what is intrigued us the most is the integration of abdominal pain and stool consistency into one endpoint. And what the FDA suggested is that for evidence of efficacy they would like to see a patient having a reduction in abdominal pain. That would be about a 30% reduction from baseline. But have it on the same day that the patient does not report poor stool consistency. And therefore you would characterize for each station a number of good days and bad days and that a patient with at least 50% of good days during the trial would be a responder. That’s how we plan to integrate abdominal pain into stool consistency. There are couple of different ways to do that if you integrate it on a weekly basis or daily basis and those are some of the analysis we will be doing. We think it’s most likely going to be this integration of abdominal pain and stool consistency. Now we’ll have a separate analysis plan to meet European regulatory requirements. And for European regulatory requirements it seems that we’ll most likely end up with co-primary endpoints and the co-primary endpoints could be something like a global response and reduction and an abdominal pain. Phil Nadeau – Cowen & Company: Great. That’s very helpful. Thanks for taking my questions.

Thank you.

Your next question is from Alan Carr – Needham & Company. Alan Carr – Needham & Company: Hi. Thanks for taking my questions. One of you could comment a bit on the endpoints for the 1032 ulcerative colitis trial provide us I guess some context there for when the results are announced and also how does the design of that trial with its endpoints compared to what would be needed for Phase 3? Thanks.

Okay. Pablo?

Yes, the endpoints I will be having in the ulcerative colitis. The most important clinical management would be the Mayo score which integrates patients symptoms, physician observation and colonoscopy results. Now the mean Mayo score that we’ll have is around eight in the study and we would expect an effective treatment to reduce the Mayo score maybe around a couple of points. But this is a pilot study and we’re not looking for a statistical difference in either means or proportions. What we are looking for is an overall relationship as we look cross the study and across the dose groups for reducing 5HIA is associated with greater clinical improvement with the Mayo score. We will be describing that relationship with scatter plot like you’ve seen today for blood pressure on LX421 and with histograms. Other endpoints that would be important will be bowel movement frequency and endoscopy scores separately. The reason bowel movement frequency is going to be very helpful for us to look at the mechanism of action of telotristat etiprate and ulcerative colitis is that because it is because the study lasts 56 days. And we’ll have 56 recordings on bowel movement frequency for every day for every patient. And with that number of recordings we believe bowel movement frequency could be actually our most sensitive endpoints for our topline results with telotristat etiprate and ulcerative colitis. And we’ve spoken to some consultant who advised us as well that endoscopy scores may actually be more sensitive than the Mayo score overall and a little more precise. And we’re following their advice and looking at the distribution. Not necessarily one cutoff score treatment versus placebo but the overall distribution between two treatments and placebo. So basically the most important clinical variable is Mayo score, but we think that some of the most sensitive variables for the study is established mechanism of action will be bowel movement frequency and endoscopy scores. And we want to look at them not simply in terms of treatment groups our placebo group is very small. We want to look at them in the context of the overall relationship between 5HIA reduction and improvement. Alan Carr – Needham & Company: And then what are your expectations for the endpoints in a Phase 3? How much guidance do you have is from the FDA on that? Would it be similar to...

We haven’t had a meeting with the FDA on ulcerative colitis. However, we’ve been looking at competitor labels and competitor labels are describing clinical response with the Mayo score and clinical response is defined by a reduction in the Mayo score of around three points. Or 30% actually I should say three points and at least 30% because your score can be as high as 11 or 12, right. And that the rectal bleeding score has to be either zero, one or has to be improved by at least one on the rectal bleeding component of the Mayo score. So that’s a type of description that we’re seeing clinical response in the labels of approved drugs and that we think would be the focus of ours for Phase 3. We will looking at clinical response and we’ll be looking to for ways of clinical response and maybe broadly between say 30% and 50% of patients responding on an effective therapy. But that’s not what we’re looking for a T value of statistical significance. OR just be kind of a benchmark for the type of results that we think effective therapies provide. Alan Carr – Needham & Company: Okay. Thanks very much.

Thank you.

Your next question is from Thomas Lee of Jefferies. Thomas Lee – Jefferies: Thanks. Just a follow-up on the IBF answers that you’ve given. I’m a little bit confused on what exactly we’re going to see in this press release on the analysis of stool consistency if you’re not reporting the mean data and you are not the reporting a responder analysis, what exactly like how will that language read and how should we judge whether the difference there is clinically meaningful?

Pablo, do you want to respond?

Yes. The statistical test we’d be using would be I believe a rank test. And the reason you don’t use means with stool consistency is because it’s not a type of thing that you can average easily, right. A six on the Bristol stool scale a day with the score of a six and another day with a score as a four is not necessarily the same as two days of five even though they may have the same meaning. And that’s why stool consistency is typically analyzed in terms of distribution with of scores with ranked tests. So we will be looking at bucks of scores. Now in terms of clinical meaningful change we will have these analyses that we’ve described in terms of the integrated endpoints that we may see with integrating abdominal pain and stool consistency. And we’ve done that with LX1031 in irritable bowel syndrome and responders according to that type of definition may be on in a ballpark range of, let’s say, 25% to 50% on an effective therapy and something on the order of 10% to 25% on placebo. So I think we’ll have these proportions of responders that will give you a guidance to clinically meaningful change but the most the sensitive test would be about distributions and ranking of scores and that will be a P value on a ranked test which is common for this type of patient reported outcome. Thomas Lee – Jefferies: That’s helpful and those percentages that you just threw out there, that was for an integrated, that integrated analysis that we were talking about that includes the both stool consistency and abdominal pain?

Yes, we’ve been looking at that variable. I think it’s one of our best guidance and we’ve looked at it carefully with the LX1031 data and those are the proportions that we may expect from this study or an effective therapy. Thomas Lee – Jefferies: And then just a question on 4211, I guess I’m curious why would you model the A1c reduction to be like in moderate to severe renal impairment patients? What should our expectations there be?

I can, I’ll take a shot at that. So what we know from the Phase 2B study was when we went from 200 to 400 milligrams once a day 4211 dose the A1c jumped an additional 0.43 or reduced an additional 0.43%. That was in the absence of any further SGLT2 effect. And so we expect that SGLT1 alone can do a little over 0.4. And in addition, we should have some effect from SGLT2. So we maybe in 0.5%, 0.6% reduction range which is well better than any selective SGLT2 inhibitors as shown in that patient population. Thomas Lee – Jefferies: That’s very helpful. Lastly is any of the stuff that’s still ongoing right now for 4211 like the renal impairment study or type 1 diabetes expansion cohort rate limiting at all for partnership discussions? Are these pieces of date that that they want to see before they make a decision?

I would say that that he can augment the process but they are not rate limiting. And so we are, it’s all part of our general Phase 3 preparation plan but it’s not rate limiting. Thomas Lee – Jefferies: Thanks. That’s the’ very helpful.

Thank you.

Your next question interest David Freeman of Morgan Stanley. David Freeman – Morgan Stanley: Just in terms of LX4211 given that your initial Phase 2 B data was a year ago, and you had couple competitors continue move ahead including most recently Merck and Pfizer planning to go into Phase 3. So is there a time where you move into Phase 3 on your own or drop the program all together? Or is this just something that will only move forward with a partner?

Jeff, do you want to take that to start with?

I don’t, I think we expect to be able to move forward with a partner in this program. And I think the other element of this is that we do think that this is in a fundamentally different class because of the fact that we have the SGLT1 effect and that will be distinguishing, particularly distinguishing in certain areas in type 2 diabetes but broadly but also in certain area and then in type one diabetes it’s a unique we think it is a unique opportunity for us. David Freeman – Morgan Stanley: Okay. So essentially just sort of an open-ended process?

Well I think we know what the conclusion is going be which is we intend to get a partner for the program focused on type 2 diabetes and as we stated before we would like to play a much greater role in type 1 diabetes, Lexicon itself… I think we know the conclusion is not an open, I wouldn’t characterize it as an open-ended process.

Other questions?

Our next question is from Stephen Willey of (inaudible).

Yeah hi guys. Just a quick question on the renal impairment study. I guess I understand that this a study that’s kind of targeted towards differentiating 4211 versus the other SGLT2s and I think its seven day study whereby you’re looking at postprandial glucose and also (inaudible) I think it’s kind of pretty well understood that SGLT2s don’t provide much postprandial benefit and take a… so I guess I’m just trying to figure out what your kind of internal goal posts are around each of these endpoints and kind of what you’re hoping to see out of this study. Thanks.

Pablo, would you like to address that?

Yeah, we hope to see a significant reduction in postprandial glucose. Even though this is a small study we believe we will work hard to show that reductions. And postprandial glucose the way we measure it is we give the subjects a meal and it’s a consistent meal in clinics with the defined caloric content and we follow the glucose over the next four hours and so that gives you a curve and the area under the curve is our measure of postprandial glucose. And we believe that we can show reduction. I’ve had several questions today about clinically meaningful change. We believe that reductions in postprandial glucose over four hours on the ballpark of 100 milligram per deciliter hours so that’s almost an average of 25 an hour for four hours. We believe that’s clinically meaningful and that’s an internal benchmark that we are looking at. The other thing that we have is an interesting measure is fasting plasma glucose. We may not see much fasting plasma glucose change because of the small sample size and the population having renal impairment. However, we would say that any fasting plasma glucose could change that statistically significant. Would really be differentiating because we’ve seen that clinical flows and then in Phase 3 studies did not show significant reduction of fasting plasma glucose. The point estimate was around 10 milligrams or 12 milligrams per deciliter reduction. So anything above that and anything statistically significant I think would be provided a good basis for a broad historical comparison.

Thank you.

Your next question from Kevin Kedra of Gabelli & Company. Kevin Kedra – Gabelli & Company: Hi, guys. I was wondering I don’t know if I missed it but did you guys give a timeline for 2761 sort of what we can see there as far as that moving into the clinic? And then on the partnership discussions for 4211 how important is it to have a partner who is somebody who is already established in the diabetes space as opposed to say maybe someone who is a newcomer looking to inner that space?

For LX2761 is currently in IND enabling studies and we anticipate filing an IND near mid-year of next year.

And then with regard to 4211, I think it is important to have someone with experience in the diabetes space and that’s really been our focus and our discussions.

(Operator Instructions). The next question from John Rogers, private investor.

Hi. I have a quick question about LX4211. In the FDA’s review of flows and mechanical flows and they set bone accretion as an issue with the drug or I guess you could call it bone cancer and I just wanted to know if potential partners were concerned with that in 4211? Thanks.

Pablo, would you like to answer.

Yeah the discussion of potential bone changes really hasn’t been prominent in our partnership discussions. Our Phase 2 data on bone biomarkers were reassuring and our animal data I think are reassuring as well.

Okay. Thanks.

And with the FDA what was observed with other agents was an increase in bone mineral density with selective SGLT2 inhibitors and no signal for bone cancer.

Thank you.

There are no further questions.

All right. Excellent. Well, I would like to thank everyone for participating. I think judging from the volume of the questions on this call you can imagine as we go through the various data events in the fall we’ll have quite a about the new map and dedicate a little more time to covering the results and we look forward to reporting those to you as we go. Thanks again. Bye, bye.

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