Lexicon Pharmaceuticals Inc (LXRX) 2009 Q3 法說會逐字稿

Thank you for holding. Welcome to the Lexicon Pharmaceuticals third quarter 2009 earnings conference call. At this time all participants are in a listen-only mode. There will be a question and answer session to follow. Please be advised that this call is being taped at Lexicon's request. At this time I would like to introduce your host for today's call, Jason Ray, Manager of Corporate Communications and Investor Relations.

Please go ahead, Mr. Ray.

Good morning. I'd just like to apologize quickly for the extended wait time. We were experiencing some technical difficulties with the call. But I'd like to welcome you to Lexicon Pharmaceutical third quarter 2009 earnings conference call. I'm Jason Ray and with me today are Dr. Arthur Sands, Lexicon's President and Chief Executive Officer, Dr. Brian Zambrowicz, Executive Vice President and Chief Scientific Officer, Dr. Philip Brown, Senior Vice President of Clinical Development and Ajay Bansal, 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 and then use the remainder of our time to answer your questions. The call will begin with Dr. Sands, who will discuss our key accomplishments for the third quarter. Dr. Zambrowicz and Dr. Brown will then discuss the status of our drug development programs and Mr. Bansal will review our financial results for the third quarter and discuss our financial guidance for the remainder of the year. 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 of LX1031, LX1032, LX2931 and LX4211. 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 results of clinical trials and preclinical studies for 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 a 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 Jason and I'd like to thank everyone for participating today. We've had a very busy quarter here in the third quarter and I think much was accomplished. Some of the highlights that we'll discuss today include LX1031, our drug candidate for irritable bowel syndrome having completed the enrollment for the phase IIa trial and that was completed ahead of schedule, significantly ahead of schedule. And we will be discussing the timeline of that but it includes an expectation of our top line data in November, so next month.

The second point during the quarter, it was very exciting to initiate a new phase II trial in rheumatoid arthritis, LX2931, and this was initiated first in the United States. I was happy to be able to participate in the investigator meeting that took place in August. I think there's real enthusiasm for that program and we'll be discussing the progress of that today.

And then third we completed our phase I trial of LX4211 and also initiated the phase IIa trial in patients with type 2 diabetes, so two important initiations in the third quarter.

And then lastly, most recently in October, we completed a public offering of stock, a following offering, which resulted in net proceeds of $55.2 million invested in the Company and that was a very important event, I think a significant step in our financing strategy and it really allowed me to -- and our management team, to branch out and meet with new investors. We have significant new investors involved in that financing as well as very significant current investors that have an ongoing strategy by investing in Lexicon.

But it did allow us to share our mission and strategy more broadly and of course we were very fortunate to find investors who wanted to participate and bringing new mechanisms of action into drug development, which is our mission, as well to take the portfolio approach, which we've taken, to have multiple candidates moving through now clinical development and multiple drug discovery candidates as well.

So we remain on track with our mission and strategies to discover breakthrough treatments of -- for human disease and we now have a broader investment base participating.

The pipeline is proceeding and we now have four drug candidates in phase II clinical trials with the two recent advancements that I mentioned, LX2931 in RA and LX4211 in diabetes, and we'll focus the call on these updates.

But if we look at the upcoming milestones anticipated in the next 12 months, each of these four programs we believe will have important data readouts from these first-in-patient trials, these proof of concept trials. So around the corner is LX1031, again the top line results anticipated in November.

Then we see LX4211, our type 2 diabetes compound, proceeding with results in the first quarter of 2010 and then we turn to LX1032 in carcinoid syndrome. Results anticipated there in mid-2010 and LX2931 on a similar time frame, mid 2010, so a very important 12-month period as we look to readouts from these four drug candidates operating on novel mechanisms in the clinic.

So with that introduction, I'll turn the call over to Dr. Zambrowicz and Dr. Brown and the format we'll use here is a slightly different one from past calls as I'm going to ask Dr. Zambrowicz to give a brief scientific overview of each program and then Dr. Brown will proceed with the clinical development updates.

So, Brian?

Thank you Arthur. I'm on the slide entitled "LX1031 - A New Drug Candidate for Irritable Bowel Syndrome. LX1031 is an inhibitor of tryptophan hydroxylase, the rate limiting enzyme in serotonin syntheses. Most of the body's serotonin is produced by enterochromaffin cells that are dispersed along the lumen of the GI tract or EC cells, as you can see in the diagram to the right.

One of the unique attributes of the LX1031 compound is it was designed to be locally acting in the GI tract where it can hit the EC cells and inhibit serotonin syntheses without giving systemic exposure.

This was important we thought to maximize the safety of the compound in this indication, and that safety has been supported by both our preclinical and clinical data to date.

The function of serotonin in the GI tract is both to increase the motility as well as to signal feelings of GI discomfort to the brain. And so by decreasing serotonin one would expect to both decrease motility as well decrease feelings of GI discomfort.

On the next slide, there is growing evidence that abnormal serotonin signaling may play a role in irritable bowel syndrome. This graph was taken from a paper by (inaudible) and in this study what they did was they measured serotonin levels in the blood on the Y axis after a meal and they did this study in IBS-D patients in the exposed circles, in healthy normals in the open triangles and in IBS-D patients in the closed squares.

And what you see is after a meal the IBS-D or diarrhea predominant IBS patients have elevated levels of serotonin relative to healthy normals while IBS-C or constipation predominant IBS patients have lower levels than the healthy normals. This suggests abnormal signaling but it also suggests that bringing these IBS-D patients, their serotonin levels back into the normal range could benefit them.

On the next slide there's also genetic data that supports this concept that abnormal serotonin signaling may play a role in IBS. In this study they looked at polymorphisms in the serotonin 5-HT3e receptor and they found that there was a polymorphism in this receptor, the gene from this receptor that was associated with IBS-C in females.

It turns out that this polymorphism is thought to upregulate the expression of this receptor for serotonin enterocytes that line the GI tract and one could imagine that this would make them hypersensitive to serotonin signaling.

The biogenetic evidence on the next slide is the association between polymorphisms in the serotonin transporter and IBS-D. And what they found in this study was that polymorphisms that resulted in decreased expression of the transporter were associated with IBS-D and the decreased expression would cause enhanced or upregulated serotonin signaling in the GI tract, again together between the biomarker data and the genetic data suggesting this upregulation of serotonin signaling in IBS-C patients.

With that I'll turn it over to Dr. Phil Brown.

Great, thanks very much Brian. Well clearly IBS represents a very common disorder, some estimates suggest that up to 20% of the US population is affected or experience the symptoms consistent with IBS.

As Brian just described, LX1031 really represents a novel approach to influencing a number of the symptoms that these patients experience and it's a first in class compound and we believe that by reducing serotonin, we have the opportunity to influence motility and/or the subjective aspects of the disorder, all of these being very important in the symptom complex that these patients experience.

IBS really represents an unmet medical need. There are two emerging therapies that are gaining some evidence of utility in both the diarrhea and/or the constipative predominant forms of IBS, Rifaximin and Linaclotide. Interestingly, these are completely different mechanisms of action from 1031 but they also act locally, which underscores I think the necessary safety profile that's required to develop drugs in this area and so again, the development goal around 1031 has been to focus on this localized activity of reducing serotonin.

If we move to the next slide, the phase II study, which Arthur just mentioned, completed enrollment ahead of schedule, focused on patients with non-constipating forms of IBS, so it'd be either diarrhea predominant or a mixed form of IBS. We randomized 150 patients in a one to one to one fashion to placebo, exploring two dose levels of LX1031, 250 mg or 1000 mg given four times daily.

And we -- over a 28 day treatment period, and we're following a number of the symptoms associated with IBS to determine how the drug may be affecting these parameters.

If we move to the next slide, the overall outline of the analysis, which we're currently involved with, obviously the primary objective is to confirm the safety and tolerability profile of the compound that's been observed to date. So it's going to be a very important facet for the compound in IBS.

We're also obviously tracking a number of both subjective and objective symptoms associated with the disorder.

And we have the opportunity here to continue following the biomarkers of serotonin and its metabolite urinary 5-HIAA, which has been very helpful in our normal healthy studies to date, in our phase I studies, but as Brian just alluded to, we -- the evolving literature suggesting the genetic basis for classifying these patients, we have samples, pharmacogenomic samples that we believe will help identify patients that may be most likely to benefit from this type of approach.

The real purpose of this study of course is to identify the symptoms that may be influenced by 1031 and the size of that affect, so that we can better define and plan for future studies.

We are currently in the process of finalizing the data set and we hope to have results from this towards the end of November. The final study report, which will involve a very comprehensive analysis that will include both the biomarkers, the pharmacogenomic assessments as well as the various symptoms will be available in the first quarter of 2010.

Brian I'll hand it back to you for 1032.

Thank you. I'm on this slide entitled "LX1032 - A New Drug Candidate for Carcinoid Syndrome." A little bit on carcinoid syndrome, it's a result of neuroendocrine tumors. These tumors typically start in the GI tract therefore they contain these enterochromaffin cells which are making large amounts of serotonin.

And once they metastasize to the liver, the serotonin they dump is able to reach the GI tract where it causes very severe GI symptoms as you might imagine like diarrhea and cramping and discomfort.

Now, LX1032 is an inhibitor of tryptophan hydroxylase however, it's a unique chemical entity from LX1031 and it's also unique from 1031 in that it does give systemic exposure, which is critical in order to reach the tumors that are in -- typically in the liver.

And so this is an interesting program in that serotonin is clearly the driver of the symptoms in carcinoid syndrome and it's a unique opportunity to hit its synthesis in the periphery without getting in the brain.

We do have fast track status from the FDA and Orphan designation from the EMEA.

On the next slide, this is a unique case where there is actually proof of concept for this target and this mechanism of action for carcinoid syndrome. This is a New England Journal of Medicine article from 1967 and in this study and other studies by these authors they tested a compound called pCPA, para-chlorophenylalanine, which is an inhibitor of tryptophan hydroxylase in 16 patients with carcinoid syndrome, and it was effective in 13 of the 16 patients in both decreasing abdominal cramps and pain as well as decreasing bowel movements. So it was -- had good to excellent response.

Now the problem with this compound was that it caused depletion of brain serotonin because it crossed the blood-brain barrier and so it wasn't progressed.

If you look at the left on the graph I think one of the interesting things is the biomarker that they're tracking here, a biomarker we've already discussed, 5-HIAA, which is a breakdown product of serotonin. This is in normal carcinoid patients that gave a response and you can see that it's decreased following treatment by about 50%, which is very similar to what we've seen with our inhibitor in clinical studies.

Moving to the next slide, I think this is further support again for this mechanism as far as especially related to discomfort and nausea. pCPA was also tested in humans undergoing chemotherapy and it prevented chemotherapy induced nausea and vomiting. In fact, authors described it as being as good as, if not better than Zofran in controlling those symptoms.

And on the next slide, more recently it suggests that there may be an actual antitumor benefit for these carcinoid syndrome patients by treating with a tryptophan hydroxylase inhibitor. (Inaudible) on this study where they took knockout mice for the target tryptophan hydroxylase and they put colon cancer tumor cell lines in those animals.

Those tumors grew very slowly in the knockout animal, however if you rescued the animals by allowing them to produce serotonin, those tumors started to grow again.

Phil.

Thanks Brian. So 1032 really represents a unique opportunity in the setting of carcinoid. As Brian just described, serotonin's a primary mediator of the symptom complex that is experienced in carcinoid syndrome and we -- this novel approach will allow reduction of serotonin in the periphery which is completely different from current standard of care.

The current standard of care are the Somatostatin analogs which are injectable proteins that also influence symptoms but they -- patients develop a -- they become refractory to this therapy over time so their symptoms begin to recur despite this therapy.

Therefore LX1032 we believe would meet an nice need that's currently unmet for these patients in helping to moderate their symptoms that recur after they've developed resistance to the Somatostatin analogs.

As Brian mentioned, we have recently gained Orphan designation by the EMEA and that has opened Europe as an opportunity for us to take advantage of, so we're currently evaluating opportunities within Europe in determining if and how we might be able to further continue the development of 1032 in that setting.

And as Brian also mentioned, there's an evolving literature base suggesting that serotonin plays a significant role in a variety of settings, disease settings, which we believe may represent opportunities for 1032 as we gain additional information about its utility in the clinical setting.

If we go to the next slide, these are data from our normal healthy volunteer studies utilizing the biomarker of urinary 5-HIAA, the primary metabolite of serotonin. And what we noticed in that study was at the mid-dose level of 500 mg given once daily up to the maximum dose we explored, 500 mg three times daily, we saw a very similar reduction of urinary 5-HIAA over the 14-day treatment period.

So this is a nice suggestion of what the potential of the drug does in terms of its pharmacodynamic activity and importantly the mid-dose level and above all achieve the same degree of reduction, about a 50% to 60% decline of serotonin production relative to what is observed in placebo randomized subjects.

So that's been the basis for which we've identified the dosing going forward into our carcinoid proof of concept study. This is a double blind, randomized, placebo controlled study in patients with symptomatic carcinoid syndrome who have become refractory to the standard of care, octreotide.

This is a study designed as a serial dose escalation in which we'll assess for both safety/tolerability as well as effectiveness of the compound on a variety of the symptoms these patients experience. And once that optimal or maximum dose is identified then we'll expand the cohort and each of these dose levels is being explored over a 28-day treatment period.

We're currently enrolling patients and the study's progressing at present.

Brian, back to you for 2931.

All right, I'm on the slide entitled, "LX2931 - A New Drug Candidate for Autoimmune Disorders." Our LX2931 is an inhibitor of an enzyme called sphingosine-1-phosphate lyase and to give you a feel for the pathway, I'll refer to the cartoon on the right.

This is a cell and this pathway, S1P pathway has become I think a pathway of very high interest of late, especially due to the progress of FTY720 or fingolimod in multiple sclerosis. FTY720 is an S1P receptor agonist.

Now we hit a different point in the pathway. The lyase was already mentioned and the lyase is a function, usually it's a breakdown in the endogenous second messenger, sphingosine-1-phosphate, so by blocking the lyase function, one would increase the naturally occurring second messenger.

By hitting this point in the pathway we think we can acquire our unique specificity of action relative to receptor agonists and we believe that can -- may translate into an improved safety profile.

There's clearly an affect of modulating the lyase and lymphocyte trafficking but there's growing data that suggests that increased intracellular S1P levels have an effect on inflammation that goes beyond the tract in effect.

If we go to the next slide, this is an animal model of autoimmune disease, the collagen induced arthritis in mice and what you're going to see on the left is we're measuring the response in this model by the swelling of the ankle or the change in the ankle thickness.

And in green are the vehicle treated animals, in gold are the animals treated with LX2931. You can see our compound is able to block inflammatory response in this model.

What's very important, if you look on the right, that's the lymphocyte count in the animals in this study. And what's I think very important to note is that in spite of a very modest reduction in circulating peripheral of those lymphocytes, we have a very profound effect on the inflammatory response and we believe that LX2931 has the opportunity to benefit patients with arthritis without causing severe immunosuppression.

On the next slide, this is a similar arthritis model but this is now in the lab. It's a rat adjuvant induced arthritis model and in this study we did the treatment starting after the disease had reached about 50% maximal inflammatory response so it's in a treatment mode clearly.

And what we did is three separate treatments. We -- on the left, we treated with methotrexate alone, which is of course is (inaudible) and it is effective. We had LX2931 alone in gold in the middle and then we used a combination of methotrexate plus LX2931 on the far right.

What you can see is that neither methotrexate alone or LX2931 alone was able to block this further inflammatory response but on the right, in red, you can see that together they were very effective in blocking the further inflammatory response once treatment began.

The reason we really like this model is because we think it mimics what we're trying to do in our phase IIa study where we're moving into patients that are failing on methotrexate and their arthritis symptoms are breaking through and we'll be treating on top of methotrexate with LX2931.

Phil.

All right, so clearly our rheumatoid arthritis represents a very large market opportunity and we believe that 2931 is uniquely positioned as an oral agent not only for RA but for a number of autoimmune or inflammatory conditions due to its novel immunomodulatory types of effects.

Being an oral we believe that it has the opportunity to be utilized prior to moving into the more aggressive biologic therapies that currently represent the standard of care.

So we recently presented data at the American College of Rheumatology meeting relative to our drug-drug interaction study of 2931 with methotrexate. These data were presented in a poster by Dr. Roy Fleischmann who's been our primary investigator in this study and this was a very important study for us in that it allows -- it has allowed us to move into the phase IIa study.

The findings of this is that there were no clinically significant changes in the pharmacokinetics of either methotrexate or 2931. And this underscores the lack of a drug-drug interaction which is -- was anticipated based on our preclinical studies. In this study 2931 was given over a 14-day treatment period to patients with stable rheumatoid arthritis who were on concomitant methotrexate.

It was well tolerated. There were very mild events reported including abdominal pain, nausea and headache, but there were really no clinically significant trends observed with regard to AE profile, laboratory assessments, vital signs or electrocardiograms, so this was a very important next step for us to position the compound to go into the proof of concept study.

And it was a very exciting opportunity for us at this meeting and I think based on the traffic we received at the poster, and I think that reflects the novel approach to modulating the inflammatory process in this setting and really the lack of emerging therapies in this area. Our phase IIa study is designed as a double blind, randomized, placebo controlled study that's looking at 2931 in combination with methotrexate. We're anticipating enrolling up to 120 patients. As Arthur mentioned in his introduction, this is being conducted in both the US as well as Eastern Europe.

We're exploring three dose levels of LX2931 - 70 mg, 110 mg and 150 mg, all are given as once daily over a 12-week treatment period. And this is a very standard study designed at this stage of development with a primary efficacy endpoint being the ACR20 at week 12.

We're evaluating a number of secondary endpoints that include all the ACR assessments, ACR20, 50 and 70 as well as the DAS28 scoring at weeks 4, 8 and 12.

We're anticipating this study being completed in mid-2010. As Arthur indicated, we've had a good initiation of this program and we're -- we believe that it should be able to achieve that sort of timing goal.

And now to LX4211.

All right. Thanks Phil. I'm on slide entitled, "LX4211 - A New Drug Candidate for Diabetes." I will point out that this is the only program that we're working on where we're not first in class either in the clinic or in our pipeline. And I'll try to explain why that is.

We believe this is an extremely compelling mechanism for treating type 2 diabetes. If you refer to the picture on the right, it describes SGLT2's function. So the glomeruli in the kidney normally filters the blood and removes impurities which are then excreted in the urine.

Typically glucose passes right through the glomeruli and it's SGLT2's job as a glucose transporter to reuptake that glucose so it's not lost in the urine. So by blocking its function, you can excrete excess blood glucose in the urine. Now I think one of the things that's very unique about this target is its function is very specific. Its job is really only to reuptake that glucose from the blood and so it if you have a compound that's quite specific, you imagine a very -- I think it would have a clean mechanism that's working on and it's (inaudible).

And that's supported by the knockout data in mice that we've seen as well as by human mutants who are completely lacking this target. Both mice and humans completely lacking the targets are quite healthy, never show hypoglycemia.

And then it happens to be one of the strongest antidiabetic effects we've ever seen, having looked at almost a quarter of all protein (inaudible) genes to date.

Now we have a real nice biomarker in the clinic which is blood glucose, but two of the most appealing aspects of this mechanism are one, that unlike all other mechanisms for treating type 2 diabetes, glucose is being lowered in the blood through a non insulin dependent mechanism and what that means then is that you're sparing the pancreatic beta cells.

Ultimately the pancreas wears out in type 2 diabetes and they require insulin therapy. And this, one could imagine, may allow them to function longer without requiring insulin.

And the second thing that's very appealing is that all the other mechanisms for controlling blood glucose in type 2 diabetes resulted in storage of the glucose in fat and other tissues, whereas this dumps it, in fact dumps very large amounts of glucose and provides the opportunity for weight loss. And that could have potential benefits both cardiovascular and metabolic benefits.

Philip?

Clearly, type 2 diabetes represents a very large market with plenty of space we believe for multiple agents that are going to be required to ultimately manage the symptoms that these patients experience and the outcomes that they experience as a result of their diabetes.

If we move to the next slide, we have, as Arthur mentioned, completed our phase I study. What we observed in this utilizing our -- the biomarker of urinary glucose was a dose-dependent increase in urinary glucose excretion up to a 300 mg dose level.

Importantly, we -- all the dose levels that we explored in normal healthy volunteers were extremely well tolerated. We had no serious adverse events and there was no evidence of a dose limiting toxicity that emerged within this study.

The pharmacokinetic and pharmacodynamic data both support a once-daily dosing regimen, which I'll share with you on the next slide, and we believe that this represents a very favorable safety profile and efficacy profile as we contain to produce the compound.

If we move to the next slide, these are our urinary biomarker data. And if you'll bear with me as I walk you through it, you'll note that on the far left of the slide there's the placebo -- individuals randomized to placebo and of course there's no glucose within the urine of a normal healthy volunteer who has normal blood glucose. So there's obviously no urinary glucose detected in those individuals.

And you'll note that as we increase doses from 25 mg up to the top dose of 500 mg, we see a dose dependent increase in the glycosuria or the urinary glucose that's excreted. And what I'd also like to note is that these are cumulative data over 72 hours.

So following a single dose of LX4211 we achieve a fairly robust glycosuric response that occurs over a 3-day time period and this really underscores the once-daily dosing regimen that we believe is going to be required to be an attractive agent in the setting of diabetes and was a development goal for us prior to moving it into its proof of concept study.

I think it's also important to note again that these are normal healthy volunteers who have completely normal blood sugars and were achieving this fairy robust response in glycosuria.

So we've just recently moved this compound into a proof of concept study in patients with type 2 diabetes. We're exploring two dose levels with 4211, 150 mg once daily or 300 mg once daily versus placebo over a 4-week treatment period.

We're obviously evaluating a number of the biomarkers that are associated with diabetes including fasting blood glucose, oral glucose tolerance tests, but based on this very nice biomarker that exists for the target, we're continuing to follow urinary glucose secretion to begin to correlate its effects on pharmacodynamically with the laboratory parameters.

Obviously safety and tolerability remain paramount and that's an ongoing confirmation of those observations in the study as well.

This study is ongoing at present. We have initiated it and we hope to have it completed in the not too distant future with results available in the first quarter of next year.

So with that, I'll hand it over to Ajay Bansal.

Thanks Phil. Let me just take a brief moment to provide you some financial updates. Lexicon's revenues for three months ended September 30, 2009 were $2.1 million, a decrease of 72% from $7.5 million for the corresponding period in 2008. The decrease was primarily due to reduced revenues under our alliances at Bristol-Myers Squibb, Organon and Genentech, partially offset by increases in revenue under our collaboration with Taconic Farms.

For the nine months ended September 30, 2009 the revenues decreased 64% to $9.3 million from $26 million for the corresponding period in 2008. Overall this decrease in revenue reflects the shift in our business model from drug discovery collaborations to developing our drug candidates through clinical proof of concept before performing new collaborations.

Now a brief look at our expenses. R&D expenses for the 2009 third quarter were $19.3 million, a decrease of 29% from $27.3 million for the corresponding period in 2008. The decrease was primarily due to lower external preclinical research and development expenses as well as lower salary and benefit costs.

For the nine months ended September 30, 2009, R&D expenses decreased 26% to $62.4 million from $84.9 million for the corresponding period in 2008.

G&A expenses for the 2009 third quarter were $4.6 million, a decrease of 8% from $5 million for the corresponding period in 2008. The decrease was due primarily to lower consulting expenses.

For the nine months ended September 30, 2009 G&A expenses decreased 10% to $15 million from $16.7 million for the corresponding period in 2008.

Lexicon's net loss for the three months ended September 30, 2009 was $19.1 million or $0.14 per share, compared to a net loss of $23.5 million or $0.17 per share in the corresponding period in 2008.

Net loss for the nine months ended September 30, 2009 was $60.8 million or $0.44 per share compared to a net loss of $61.4 million or $0.45 per share for the corresponding period 2008.

For the three months ended September 30, 2009 net loss included non-cash stock-based compensation expense of $1.3 million compared to $1.4 million in the corresponding period in 2008.

For the nine months ended September 30, 2009, net loss included non-cash stock-based compensation expense of $4.1 million compared to $4.8 million in the corresponding period in 2008.

Let me now turn to our cash and investments. As of September 30, 2009 Lexicon had $87.3 million in cash and investments. Net of this obligation are the credit line secured by the auction rate securities and including $5.7 million in cash and investments held by Symphony Icon.

This compares to $106.9 million as of June 30, 2009 and $158.8 million as of December 31, 2008.

Taking into account the recent financing which resulted in net proceeds of $55.2 million, Lexicon's pro forma cash and investments net of the credit line would be $142.5 million.

We believe that the working capital available to Lexicon without taking into account funds held in the auction rate securities will be sufficient to meet our cash requirements for at least the next 12 months.

I will now like to turn to our forward-looking guidance for the full year 2009. Revenues are projected to be in the range of $10 million to $11 million, up slightly from our previous guidance of $9 million to $11 million.

Operating expenses are now projected to be in the range of $102 million to $105 million, down from our previous guidance of $105 million to $110 million.

Non-cash expenses are expected to be approximately $11 million of this total including $5 million in stock-based compensation and $6 million in depreciation amortization.

We expect our 2009 net cash used in operations to be in the range of $92 million to $95 million, down from our previous guidance of $93 million to $98 million. This will result in an estimated year-end cash and investment balance, again net of our credit line, of approximately $120 million.

Let me now turn the call back to Arthur.

Thank you Ajay. We can now take any questions you may have.

(OPERATOR INSTRUCTIONS) We'll pause for just a moment to compile the Q&A roster. (OPERATOR INSTRUCTIONS)

And there are no questions from the -- you have your first question from the line of [Alan Korn].

On your diabetic drug --

Well at any rate, I didn't hear -- something about drug but we are --

The diabetic drugs.

On the diabetic drug?

Yes.

Okay, go ahead.

How soon do you think it will be available for use where you have a large trial?

Well, the -- one step at a time, let's put it that way. I think that what we're willing to forecast at this point is that we'll get results from our first in-patient trial the first quarter which is a big step forward for a new entity and then we'll make the judgment call based on the data. So that's about all we can say at this time.

To put it in context though, that's fairly rapid for the phase IIa program because we did compress it by doing a trial, a 4-week trial in patients, these are patients that are sequestered in units. We're monitoring everything and so I think in a very reasonable time frame we'll get those results.

Thank you.

Thank you.

(OPERATOR INSTRUCTIONS) And there are no further questions. I would now like to turn the call over to Dr. Sands.

Well thank you. I anticipate over the next 12 months that we'll have a lot of questions and I think that's true because that's of course the time frame in which we'll have these results.

We're on stage now to evaluate those and I am referring to the slide that has the time line over the next 12 months of these four trials which we spent a fair amount of time now reviewing.

So we look forward to keeping you updated as the results flow in and thank you for your participation.

Bye-bye.