Kimberly Lee - IR Lonnel Coats - President and CEO Praveen Tyle - EVP, Research and Development Jeff Wade - EVP and CFO Pablo Lapuerta - CMO

Yigal Nochomovitz - Citigroup Jessica Fye - JPMorgan Chris Shibutani - Cowen Alan Carr - Needham & Company Stephen Willey - Stifel

Welcome to the Lexicon Pharmaceuticals Second Quarter 2018 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a brief question-and-answer session. As a reminder, this call is being recorded today, July 30, 2018. I will now turn the call over to Dr. Kimberly Lee, Head of Investor Relations and Corporate Strategy. Please go ahead.

Thank you. Good morning and welcome to the Lexicon Pharmaceuticals' second quarter 2018 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. Praveen Tyle, Executive Vice President of Research and Development; and Jeff Wade, Executive Vice President of Corporate and Administrative Affairs and Chief Financial Officer. After our formal remarks, we will open the call up for Q&A. Earlier today, Lexicon issued a press release announcing our financial results for the second quarter 2018, which is available on our website at www.lexpharma.com and through our SEC filings. A webcast of this call along with a slide presentation will be accessible in the Investor Relations section of our website. During this call, we will providing information in the release, provide an update on our clinical programs, and then use the remainder of the 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, sotagliflozin and our other drug candidates. These statements may include characterizations of the commercial performance of XERMELO, expected timing and outcome of regulatory review of applications for approval of sotagliflozin, the expecting timing and results of clinical trials of sotagliflozin, XERMELO and our other drug candidates, and the market opportunity for those programs. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of our 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 risks include uncertainties related to the success of our commercialization efforts for XERMELO, the regulatory review of applications for the approval of sotagliflozin, the timing and results of clinical trials and preclinical studies of sotagliflozin, XERMELO and our other drug candidates, our dependence upon strategic alliances and other third-party relationships, 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 research, development and commercialization activities. For a list and a description of the risks and uncertainties that we face, please see the reports that 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. Good morning to everyone and thanks for joining us on the call today. Let me start and say that in the second quarter, we achieved several key milestones which positions us for significant momentum in the second half of this year. I’m very pleased to say these developments, I’ll share these developments with you, starting with a summary of recent key events and concluding with a business update. I’ll then turn the call over to Dr. Praveen Tyle, Head of Research and Development for updates on our sotagliflozin program and then turn it over to Jeff Wade for an update on our financial results. I'm very pleased to say that we reached several regulatory milestones in the second quarter that we believe will enable future growth and value creation and may the FDA accept the Sanofi’s regulatory filing in the US for sotagliflozin in type 1 diabetes. We and Sanofi continue to work closely with the FDA and the European Medicines Agency or better known as EMA to make sotagliflozin available as quickly as possible to people with type 1 diabetes. In June, we had a very strong presence at the American Diabetes Association or ADA where data presented -- we presented further data, increasing our confidence as sotagliflozin SGLT1 mechanism distinguishes the drug’s profile from currently available therapies in type 1 diabetes. Importantly at ADA, a meeting was convened by thought leaders to develop consensus guidelines for the management of diabetic ketoacidosis or DKA risk, when using SGLT inhibitors, a collective effort that should help inform and frame the perspective of physicians and regulators. However, Dr. Tyle will provide more details and color around that a little bit later. Moving to XERMELO, we achieved US XERMELO net sales of $6 million in the second quarter of 2018, up 65% over the prior year quarter and up 11% from the first quarter of 2018. We saw a continued increase in our patient base, but we also saw an increase in the number of patients requiring patient’s assistance and receiving free drug under our patient assistance program. As the remaining accuracies in IMS and Symphony data, I thought I'll take an opportunity to provide you with some relevant details. Total pay prescriptions or TRx for the second quarter of 2018 was 1171, which was an increase quarter-over-quarter. Not reflected in that figure is the number of patients receiving free drug under our patient assistance program, which represents about 24% of XERMELO dispenses, which is up from nearly 17% in the prior quarter. While we did see some lobbying out in the number of patients eligible for the assistance program, this was still higher than we originally projected. On a positive note, that demand along with patient’s assistance grew at about 20% quarter-over-quarter on a unit basis. New patient starts totaled 141. The overall discontinuation rate remains in line with our expectations. We continue to see increased numbers of patient restarts at discontinuation and we anticipate this trend will continue. The compliance rate remains at about 80% and while we are pleased to see good growth and improvements in our overall metrics in the second quarter, we need to make even greater efforts in the second half to bend the curve further to achieve our objectives of doubling XERMELO sales in 2018. Turning to Europe, our collaborator Ipsen continues to obtain reimbursement approvals for XERMELO in Europe. We continue to anticipate that the trajectory of XERMELO launch in Europe will be a gradual one as it may take up to a year and sometimes longer for reimbursement discussions to conclude, depending on the country. Now, I’ll turn the call over to Dr. Tyle who will provide an update on our sotagliflozin program. Dr. Tyle.

Thank you, Lonnel. I’m happy to provide updates on our sotagliflozin program, which as a reminder, is the larger ever phase 3 program for an oral anti-diabetic agent in type 1 diabetes. We had an exciting week at the 78th annual American Diabetes Association or ADA conference in Orlando in June. And I'm pleased to share with you new data that was highlighted in an oral presentation and several poster presentations. Notably, we are extremely pleased that diabetes care published the 52-week results of the inTandem 1 and inTandem 2 studies in conjunction with our presentation at ADA. These publications along with the publication of inTandem 3 results in the New England Journal of Medicine late last year highlight the importance and relevance of the investigational drug as a novel anti-diabetic agent and its mechanism of action as a dual SGLT1 and SGLT2 inhibitor. Positive 52 week efficacy and safety data from inTandem 1 and inTandem 2 were presented by Dr. John Buse and Dr. Thomas Danne respecting at ADA. This new data showed that sotagliflozin 200 milligrams and 400 milligrams with maximally tolerated standard of care insulin therapy significantly reduced A1c, total daily insulin dose and weight at 52 weeks when compared to optimized insulin alone. Interestingly, full data from both studies showed that up to 83% of total insulin reduction was attributed to a reduction in bolus insulin at week 52 as seen in the slide. This may reflect SGLT1 inhibition in the GI tract. Our hypothesis has been that SGLT1 inhibition could limit postprandial glucose elevations, making it easier for patients to manage mealtime insulin. In turn, that could make it easier to avoid hypoglycemia. Clinicians were particularly impressed by the finding that sotagliflozin increased the percent of time spent inside the target glucose range of 70 to 180 milligram per deciliter. Despite best efforts to optimize insulin and lower A1c rate, patients still spend only 12 hours per day in glucose target range. That time and range has increased to 15.5 hours per day when patients are on sotagliflozin, which represents almost a 25% increase in time and range. This slide shows that patients treated with 200 milligram and 400 milligram of sotagliflozin significantly increased time and range by 1 hour and 17 minutes and nearly three additional hours respectively and importantly, these dose dependent clinically meaningful improvement occur without an increase in time spent in hypoglycemia. The placebo growth showed no change, despite continued efforts to optimize insulin at 24 weeks. We also analyzed measures of glycemic control in this sub-study which included mean daily glucose, two hour postprandial glucose and the mean amplitude of glycemic excursion, MAGE, which is an important measure of glucose variability. On this slide, you can see that sotagliflozin significantly reduced all these parameters compared to placebo with the greatest reduction appearing with 400 milligram dose. It is worth noting that sotagliflozin 400 milligram provided a nearly 50% additional benefit above what was observed at the 200 milligram dose. And that this degree of postprandial benefit has not been reported with any selective SGLT2 inhibitor. These data reinforce the contribution of SGLT1 inhibition provided by sotagliflozin. The reduction in mean glucose on the left is driven by large reductions in glucose excursion after meal seen in the middle panel. Glucose excursions after a meal are a key source of glucose variability and it is a daily up and down that are so difficult to manage. Smaller glucose excursion mean variabilities decreased as seen in the panel on the right. Since the reduction in mean glucose on the left is matched by the reduction in the glucose variability on the right, the results provide a perspective on how glycemic control could be improved while avoiding hypoglycemia. Insulin alone was unable to achieve this. We have the largest and most comprehensive safety database in type 1 diabetes of any SGLT inhibitor. Irrelevant safety issue for patients and physicians is severe hypoglycemia. As you can see on this slide, there was less severe hypoglycemia in sotagliflozin treated patients than placebo in the 52 week studies inTandem 1 and inTandem 2, while incidences were similar in the shorter duration experience of inTandem 3 studies. On this slide, you have the rate of hypoglycemia with blood glucose less than or equal to 55 milligram per deciliter. There was a significant reduction in these hypoglycemic episodes described in inTandem3 publication. Significant reductions were also seen in inTandem1 and inTandem2 and published in diabetes care in June. Across the board, in every phase 3 study for sotagliflozin, there was approximately a 20% reduction in the rate of hypoglycemic events per patient year. Diabetic ketoacidosis or DKA is a known risk in type 1 diabetes. Turning to this slide in a pooled analysis of inTandem 1 and inTandem 2, 0.2% of patients treated with insulin alone experienced positively adjudicated DKA events at 52 weeks compared with 2.9% of patients treated with sort of close in two hundred milligram and three point eight percent of patients treated with sotagliflozin 200 milligram and 3.8% of patients treated with sotagliflozin 400 milligram and these results were in line with that seen in inTandem 3. These results are consistent with the general experience of other SGLT2 inhibitors in Phase 3 studies of type 1 diabetes. Importantly, like Lonnel mentioned, at ADA, a meeting was conveyed to develop consensus guidelines for the management of DKA risk when using SGLT inhibitor. There was a strong consensus that SGLT inhibitor should be made available to patients with type 1 diabetes with benefits significantly outweighing any risk. Agreed that a small increase in DKA incident could be managed and mitigated with appropriate education and monitoring with growth plans to complete the development of consensus guidelines and present the guidelines at an International Medical Meeting later this year, followed by publication in a peer reviewed journal by year and. In short, the data presented at ADA further increases our confidence at sotagliflozin SGLT1 mechanism, distinguishes the drug’s efficacy and safety profile in type 1 diabetes. The SGLT1 mechanism is characterized by its reduction of postprandial glucose and glycemic variability. This leads to a modest reduction in overall insulin that are more heavily weighted towards meal time insulin rather than insulin. This could help patients avoid hypoglycemia. It appears to limit urinary glucose excretion which may also help limit DKA. Overall, we see a profile of efficacy and safety that supports approval in type 1 diabetes. We're excited about the prospects of sotagliflozin and we and Sanofi continue to work closely with the regulatory agencies to make this therapy available to patients with type 1 diabetes. Now, I would like to turn the call over to Jeff who will provide this quarter’s financial highlights.

Thank you, Praveen. This morning, I will discuss key aspects of our second quarter financials. More financial details can be found in our 10-Q, which will be filed shortly. Now, please refer to slide 16 of our presentation. As indicated in our press release today, revenues for the second quarter of 2018 increased 14% to $13.8 million from $12.1 million for the corresponding period in 2017, primarily due to an increase in net product revenues, partially offset by lower revenues recognized from the collaboration and license agreement with Sanofi. Net product revenues for the three months ended June 30, 2018, included $6.0 million from net sales of XERMELO in the US, up 65% from the prior year quarter, and 11% from the first quarter of 2018. Net product revenues for the second quarter of 2018 also included $1.3 million from the sale of both tablets of XERMELO to Ipsen. Cost of sales related to sales of XERMELO for the second quarter of 2018 increased to $0.8 million from $0.5 million for the corresponding period in 2017. Research and development expenses were $26.6 million for the second quarter of 2018 compared to $26.9 million for the corresponding period in 2017. Selling, general and administrative expenses for the second quarter of 2018 decreased to $16.8 million from $18.5 million for the corresponding period in 2017, primarily due to decreased marketing costs. Net loss for the second quarter of 2018 was $34.7 million or $0.33 per share compared to a net loss of $35.1 million or $0.33 per share in the corresponding period in 2017. For the three months ended June 30, 2018 and 2017, net loss included non-cash stock-based compensation expense of $2.9 million and $2.4 million respectively. We ended the quarter with $209.7 million in cash and investments and we foresee that our current cash position together with expected revenues will be sufficient to fund operations through the potential launch of sotagliflozin in type 1 diabetes and to become cash flow positive on the XERMELO brand within next 12 to 24 months. Turning to guidance, doubling XERMELO net sales from last year remains our goal that will require a positive change in the trajectory of our new patient enrollments. We have confidence that the deployment of our salesforce in the second half of the year should result in positive effects. We are otherwise reiterating our financial guidance for 2018. On the R&D front, we have now fulfilled our obligation to Sanofi for our portion of the planned type 2 diabetes development costs, totaling $100 million under the alliance. Looking beyond 2018, with the acceptance of our regulatory filings for sotagliflozin in type 1 diabetes and continued advancement of our sotagliflozin program in type 2 diabetes, we are steps closer to the potential realization of substantial milestone payments under the Sanofi alliance, which include development and regulatory milestone payments of up to $430 million. You can appreciate how achieving these milestones together with potential sotagliflozin royalties and progression to breakeven in profitability of XERMELO will potentially be financially transformative for Lexicon. With that, I will ask the operator to begin our Q&A session.

[Operator Instructions] Your first question comes from the line of Yigal Nochomovitz with Citigroup.

As you think ahead through the potential FDA approval for sotagliflozin, could you just give us a sense as to what you're doing with regard to planning for the adcom [ph] and specifically how is that going to work? Is that something that Sanofi will take the lead on as far as representing the drug and the data or will that be a team effort in terms of being present and take questions at the adcom?

Great questions, Yigal. This is Lonnel. Yeah. It’s a joint effort. Sanofi will take the lead or have the lead, because as you know, they now own the NDA. But we are the subject matter experts and they have a lot of expertise of that as well. So it is a remarkable joint effort. That planning has been underway. A lot of work has gone into preparing forward. I will say at this juncture, the agency has not committed -- have not communicated with us that there will be an adcom, but it is our expectation that there will be one. And when they do commit, if they should communicate that to us that there will be one, as we believe they will, we will be adequately prepared to be ready for it. So a lot of efforts going into by both organizations as we go forward.

And Jeff, you mentioned on the 430 at milestones, how much of that could realistically be realized in the next 12 months from Sanofi?

Well, in the next 12 months, we're really looking at the approval and commercial launch for sotagliflozin in type 1 diabetes, but in 2019, a number of these type 2 diabetes trials read out and there are a number of milestones that are associated with the outcomes of type 2 diabetes trials. So there are a number that are coming sort of in that sort of 2019 to 2020 timeframe. In total, there are about $330 million of milestones that are associated with type 1 and type 2 diabetes approvals and outcomes of studies and then there's a balance of 100 million that's related to outcome studies that would come after the initial approval in type 2 diabetes or anticipated to come after the initial approval in type 2 diabetes.

And where do you guys need to be to -- on revenues to breakeven on XERMELO, how close are you right now.

Well, we still have some work to go, but we're making steady progress and we expect within the next year or two to be able to get breakeven on XERMELO.

And then just one question on 2761, so that’s a pure SGLT1, is that a more potent blocker of SGLT1 than sota?

Great question, Yigal. Trying to develop an SGLT1 by itself has its own levels of challenge. I’ll let Dr. Tyle speak to that.

Yigal, Praveen here. Yes. It is much, much potent SGLT1 inhibitor. And as you probably know that we are in the late stage phase 1b study as we speak.

So, we'll have some of the same -- more about that Yigal in the second half. The work that we're doing on 2761, that Dr. Tyle and his team is leading.

Your next question is from the line of Jessica Fye with JPMorgan.

I was curious on your interpretation of the Lilly [indiscernible] type 1 top line release and in particular the language around the elevated rate of DKA on the higher two doses and the comment that they’re discussing next steps and exploring options, curious how you interpreted that top line release.

Thank you, Jessica for the question. We would interpret as top line release. There was no real data. So there's no way to respond to a lack of data. It would tell me that sort of those challenges in two of their higher doses and they added a third lower dose, which with one trial, which as you know, in the two trials with any dose and they also need 52 weeks of data on any dose to be able to file. So all I know is, at this point, they're presented a top line without a top line, meaning, we don’t know trends or statistics or any of that. So we have no way of really responding to it. So we’ll have to wait and see what Lilly has to say going forward. It's always my view that we should watch both AZ as well as Lilly very closely and we'll see how much progress they make relative to progress that we've already made. What I'm very confident about is that, at this stage, all of our data is in, all of it, all this in front of the reviewers and we're pretty confident where we are today and others right now, I'm not sure exactly what they're expressing.

And maybe just sticking with kind of the competitive positioning, you kind of highlighted some of the CGM and time and range data. What do you think is the most differentiating aspect of the sotagliflozin, either efficacy or safety profile relative to dapa, based on the data that we’ve seen so far?

I'll give you two points of view and I’d turn it over to Dr. Lapuerta for his thoughts. One is, I think, as we continue to make the strong case, the hypoglycemia data is unparalleled. And we chose to speak about it here today, we spoke about it at ADA and I don't think anyone else can show the data that we have shown so far across our entire program to show that sotagliflozin has the ability to reduce hypoglycemia. We have to make the argument certainly in front of the regulators and we certainly intend to do that. The second one on the efficacy side, the postprandial glucose, when you look at that data, it is amazing. When you put it up against, certainly, it’s not head-to-head, but the data that’s been presented thus far by others, it's nowhere close when we look at the mill time reduction and the excursion. So I think those two pieces are really the two strong pieces that we've always argued is directly, we believe, has a direct correlation to the SGLT1 component. And so, that is starting to emerge very clearly as others start to bring their data forward and we all have the ability to look at our data. So that will be my point of view. Dr. Lapuerta, you have anything you want to add?

Yes. And in terms of the PPG reductions, we think they mean a lot of patients because we've had a lot of positive feedback from the sites that patients really value their improvements in glycemic control and so that's something that you see -- that's something they see day-to-day and I think it underscores the uniqueness of our patient reported outcome data [indiscernible] patient reported outcome data in these other trials and that we’ve shown significant improvements in satisfaction and significant reductions in diabetes distress with sotagliflozin compared to placebo. And then I think beyond that, beyond the satisfaction of controlling the diabetes better, it's the hypoglycemia, I think that is a big barrier to achieving glycemic control and we’re very pleased that we have pretty robust data on hypoglycemic events less than 55. The program has almost, I’ll give you a ballpark, 1 million estimates of blood glucose from glucometers that were uploaded into the Internet from patients participating in our clinical program. And that's why, in each of the Phase 3 studies, we were able to show evidence that sotagliflozin reduced the incidence of hypoglycemic events on self-monitoring of blood glucose.

Jessica, if I can add only one other thing that Dr. Tyle pointed out to me, one of the things that was pointed out, what they believe that helps the Lilly folks did in terms of the data presented, the 2.5 milligram dose that we’ve shown that they were touting, it really came down to how much urinary glucose excretion that was occurring, which we found to be remarkable in what they showed. And I believe, we believed that was the sweet spot. A few correlate, how much urinary glucose is excreted by their 2.5 milligram dose relative to our 400 milligram dose, then I would say sotagliflozin is already in the sweet spot on both doses. So it's not just the dose, it’s what does the dose correlate to urinary glucose excretion. And so therefore, we found it very, very exciting to hear that he agrees with us. From my point of view, if he’s talking about UGE, not just dose. Dr. Tyle, do you have anything you want to add to that?

I think, there was a comment which was basically made at the meeting which is that perhaps the UGE is directly linked to DKA rate and that's why they're seeing that sweet spot. So, our UGE number for 400 milligram is very similar to 2.5 milligram.

So, Jessica, even when they presented their data, we were left even more confident.

Your next question is from Chris Shibutani with Cowen.

If I can just review what the relative timelines are for regulatory process for sota in the US and in Europe. Can you just remind us how we think events might play out and particularly in terms of events that we could get some tangible update. I believe, the US filings put a PDUFA of March 22, some of that constant logic in the first quarter. Could you juxtapose that against what kind of potential correspondence and the typical [indiscernible] whatnot over in Europe, so that we can get some understanding of when you can get tangible feedback from the US and Europe regulatory processes, which are occurring in parallel?

Yeah. Chris, great question. As you know that as I stated earlier, Sanofi is running the regulatory process. So I'll give you what you can look forward to generally speaking. I think as we get into, for the end of the year, we'll have a better sense of two things. One is, will there be an adcom, that's the first thing. And two, we'll have a better sense of when there will be an advisory committee. So those are two things we'll probably learn in the third and fourth quarters hopefully. And then, we'll talk – we’ll be able to talk some more about that when we know that. For EMEA, those conversations are of active and have been ongoing and I would say that we're on pretty solid timeline with the regulators and are engaged with them, as we speak certainly to answer the questions that they’ve put in front of us as you can count forward, you can figure that we’re in that period now where we're answering lots of questions about the EMEA. And so, I would say, our teams are working on that and we’ll probably have more to say again as we get into, later into the third quarter, early fourth quarter about that correspondence. So that's a timeline I would share with you. Our best guess, if there is an advisory committee, at the earliest, it'll be at the end of the year, at the latest, it will be some time January, first quarter timeframe. Still with a commitment, with a PDUFA date in the US of March 22. We're still on that trajectory and feel pretty good about it.

And then switching over to your comment about the consensus guidelines document for the management of DKA, could you just remind us – do you expect that this is a document that will include describing patients who may or may not be appropriate for certain therapeutics that may be associated with DKA. It seems as if, I'm not sure whether it's just once the patient has, what the consensus for clinical management once the event or complication has occurred or do you expect this document to also encompass a little bit more in terms of perhaps somewhat paradigms or use of certain agents?

Chris, great question. We're not in control of that process. We were observers that we thought was a great idea. I think it’s a fantastic idea. The fact that they came together, no, it's really they believe that these compounds need to be at market, they are being used and there needs to be clarity put to them. So I thought that was a fantastic advancement. I think three things that should come from this. I hope one is to your point, patients or certain type of patients should be on these drugs, which is very, very true. You're on a low carbohydrate diet, is probably not the best in your type 1 patient, these drugs are probably not the best for those patients to use, because you get the same kind of effect that you can get it as much faster if you're on a low carbohydrate diet. And so things like that, I think, they are looking at to say, these are precipitating factors of getting DKA and then you don't want to accelerate that by being on the compounds as well. So I think you’ll have that level of discussion and I think that may be called out. I think the second important point will be called out are, what are the intervention points when you see patient who may be going into ketosis, what you need to do and what rules need to apply when that happens. And then thirdly, I think they’re going to look at what type of keytone monitoring, should it be BHP meters or should it be the year end monitoring with the state. I think those are the three places they will play and we think those are all three, the right places for them to give some guidance overall to the marketplace. So, we look forward to that guidance coming out sometime this year and then certainly followed by publication. So, it is open to everybody to view.

And then lastly on XERMELO, the patient just needs -- program constraints have been a factor, kind of a headwind to the XERMELO launch. Can you comment, now that we’re sitting here just past the midpoint of the year about what you expect the outlook for patients of these program to be beyond 2018? Is there anything there that gives you an indication that things could improve or allow me to the same or potentially get worse, but any color there would be helpful?

Chris, great point. It has become a headwind. It was not one that we predicted or could have predicted. I think it’s just the macro environment that we're in and there's a lot of efforts that I know is being placed on trying to change some of the rules around Medicare patients and how you can help Medicare patients very similar to the way companies have been able to help commercial paying patients, but I think that’s far out. And so I do not see this alleviating any time this year and it could certainly become an issue in 2019 as well before we see any real effort that will shift this headwind. It's not something that I think that we're dealing with by ourselves, but I think it's more of an industry issue right now and how this came about. But, what we hope Chris is as we get some selling out of the patients who are eligible and going into the patient assistance program, physicians are getting more utility out of XERMELO and they're learning more about XERMELO that ultimately should help our paying business. Right now, it became a headwind because the numbers are fairly large that we would have otherwise projected to have been paid patients are now getting free drug. So no guidance for this year and I don't see any alleviation from it going into ’19.

Your next question comes from the line of Alan Carr with Needham & Company.

Can you talk a bit more about the salesforce in the commercial infrastructure on XERMELO? I remember you made some changes, I think, it was earlier this year, if you can characterize them a bit and whether or not any of these changes have helped. And then also looking into the pipeline, can you talk a bit about your plans for oncology and then also a bit about design of 2761 phase 1b, what can we learn from that or what will we learn from that? Thanks.

So let me start off, Alan, with the sales force. Yeah. We're very pleased with the actions that we took. As you all know that we saw growth was fairly flat quarter-over-quarter last quarter and you see pretty good growth coming into this quarter. All that is a reflection of two things. One is that we made see some shifts in the portion of patients, portion of field personnel that will be clinical nurse educators who can do more and certainly work with patients on staying on drug as necessary and/or ensuring that they receive drug as intended by physicians. Also, we've been able to increase the level of experience that we have onto our field force that has now settled out and therefore we believe we’ll carry the full effect of that selling out into the second half. So, it did yield us better growth than what we had seen in the previous quarter, so we're very pleased with the changes that have been made. Relative to further development in oncology, we're still working with many KOLs. What we're very excited about Alan since, we certainly have talked about going in to the space, we have received a lot of requests that have come inbound relative to studying XERMELO, particularly in that and so what we're evaluating is what's the best way to develop evidence with this compound in the net community, should we go forward with a company sponsored trial or should we begin to work with these different centers who've asked for support. So that’s under active review. The biliary tract cancer work that we're trying to accelerate because we think it can make a -- there's a strong preclinical basis to do this work and that’s where I think you'll see more acceleration from us on a company sponsored basis. And then I think your last question is around 2761 and I'll turn it over to Dr. Tyle.

Alan, we're doing a traditional phase 1b study in type 2 patients. So what we're doing is we're using -- ascending those as a function of time, so we are basically giving the same patient multiple doses. So it's a traditional multiple ascending dose protocol, but it is limited by the duration. And what we are basically checking is what is the maximum tolerated dose in that population. So this population is going to be type 2 population and we are going to basically find out what is the maximum tolerated dose in the population. So this will provide evidence for us that what dose should we take forward in phase 2a trials where we do proof of concept work. So it is more or less a safety -- traditional safety study with multiple doses, but with limited duration, okay, because we’re dosing these patients as you might have seen on clinicaltrials.gov for eight days per cohort.

2761 is an important compound and it gives us great optionality. So finding the dose that gives us that optionality in terms of, do we want to do something in combination with other things, that becomes the tricky part and I’m sure Dr. Tyle and the team will figure that out.

[Operator Instructions] Your next question comes from the line of Stephen Willey with Stifel.

Just two for me. So one just with respect to the recent CREDENCE data that we just saw from J&J, just kind of curious as to your thoughts there and whether or not you think that data may impact patient enrolment in the scored OUTCOMES trial that Sanofi is running and I guess any impact that you see or don't see on the longer term competitive positioning in renally type 2 patients? And then just on XERMELO, a lots being discussed about the patient assistance headwinds, just kind of curious, what has to happen operationally outside of the patient assistance program to get volume growth kind of moving again?

Yeah. Steve, let me start with your first question first with XERMELO. I think we're doing that now. I think that's why you saw a return to growth. It's really about execution and getting into the proper centers and being able to drive the proper centers, make sure we cut off the leaking buckets that we have before which I think we've done a fantastic job of doing now. Now, it’s about just accelerating the growth, we have the talent in place to do that. I think we have the structure right fortunately to our medical affairs organization, the clinical nurse educators and then our field force. So I think, this is all going to be about grunting it out and executing very well from this point forward. As we talk about the CREDENCE program, I’d just say, how cool is it. These compounds, these SGLT compounds are remarkable and I think it's just another study in this class of compounds that argues greatly, why they should be frontline use in the type 2 setting. That's my view and I thought the data was quite remarkable, but it also gives credibility to what we have said always was sotagliflozin and our ability to have impact with renally impaired patient when you add in the SGLT1 component. So we're very encouraged by the data, but it should give great encouragement also to the work that we're doing for the renal population as well. In terms of what impact it’s going to have on enrolment, I'll turn it over to Dr. Lapuerta for any commentary he may have there.

Yeah. I think in the long run, all the value around the SGLT2 inhibitors could potentially impact enrolment in late stage OUTCOMES trials, but I'm very pleased that it has great momentum behind it. I don't think I should give exact numbers of sites or exact numbers of patients, but it has a good momentum that's progressing well and therefore we don't think that in the near term, we’re going to see an impact of CREDENCE on enrolment in our cardiovascular OUTCOMES trials.

Yeah. And Steve, this is one of the things that we're very excited about because we think that SGLT2 inhibitors and sotagliflozin, there's data building about the benefit and chronic -- in patients with chronic kidney disease in terms of preservation of the kidney function and with that, we think there's the opportunity for the class to grow significantly as it becomes more apparent that this is an important class, but within that same patient population, one of the challenges for the selective SGLT2 inhibitors is not providing them with glycemic control and that's where we think the SGLT1 component of sotagliflozin will allow us to provide better glycemic control, but also to be able to participate in this -- in the market that for SGLT inhibitors, which should grow because of the broad benefits that we're seeing across glycemic controlled cardiovascular benefit and now chronic kidney disease.

I think to Jeff’s point, I’ll hold on to my own view for this, what I don't like is the class seems to have slowed when this class should be growing relative to other classes. And I think as these data continue to come forward from this class of compounds, this is the classic compound that should be having the most remarkable growth in the type 2 setting versus any other class at this point. And I think as this evidence gets built, it’s really setting sotagliflozin up for a very good position when we come to market because I think these guys are going to do a pretty good job of making a case while these class of compounds should have been moved up, which increases the opportunity for the SGLT marketplace and certainly increases the opportunity relative to how we are developing the drug.

At this time, there are no additional audio questions. I would like to turn it back over to Mr. Coats for closing remarks.

Well, thank you. I’ll close by saying our main priorities remain unchanged and include driving -- which includes driving long-term value through continued execution on the XERMELO launch, advancing the clinical development of XERMELO in the area of oncology, obtaining regulatory approval for sotagliflozin in type 1 diabetes and developing a supportive evidence that would difference sotagliflozin in type 2 diabetes, while advancing our pipeline. I look forward to updating you on future calls, relative to the progress we make on these priorities. With that, I'll say thank you and really appreciate you joining us.

Thank you. This concludes today’s conference. You may now disconnect. Speakers, hold the line.