Lexicon Pharmaceuticals Inc (LXRX) 2012 Q2 法說會逐字稿

Thank you for holding. Welcome to the Lexicon Pharmaceuticals Second Quarter 2012 Conference Call. (Operator Instructions) Please be advised that this call is being recorded at Lexicon's request. At this time, I would like to introduce your host for today's call, Alex Abuin, Vice President-Communications and Alliance Management. Please go ahead, Dr. Abuin.

Good morning, and welcome to the Lexicon Pharmaceuticals Second Quarter 2012 Conference Call. I am Alex Abuin, and with me today are Dr. Arthur Sands, Lexicon's President and Chief Executive Officer; Dr. Brian Zambrowicz, Lexicon's Executive Vice President and Chief Scientific Officer; 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. Zambrowicz, who will provide an update of our clinical programs, and by Mr. Wade, who will review our financial results for the second quarter and discuss our financial guidance. We will then open the call to your questions. If you would like to view the slides for today's call, please access the Lexicon website at www.lexpharma.com. You will see a link on our homepage for today's webcast.

Before we begin, I would like to state that we will be making forward-looking statements, including statements relating to Lexicon's research and development of LX4211, LX1031, LX1033, LX2931, LX7101, telotristat etiprate, also known as LX1032, 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 results of clinical trials and preclinical 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 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, Alex. We proceed to our pipeline slide, the first slide, if you're on the webcast. As you can imagine, most of our efforts at the end of last quarter were focused on the completion of the Phase IIb trial for LX4211 in type 2 diabetes, and the release of the top line results, which we did accomplish in late June. And, as many of you know, we; had a subsequent conference call where we went through the top line results I think in some detail. So, today we will only have a very brief review of those results and a discussion and answer period after this presentation.

Also, we'll discuss briefly telotristat etiprate and its progress in carcinoid syndrome. We spent most of last quarter, I think, involved in the planning of the Phase III program, which has gone well and is on track for commencing in the next quarter.

And then at the end, after Brian discusses 4211 and telotristat, I will come back to discuss briefly the timeline associated with the other programs that you see on the slide, LX1033, LX2931, and LX7101, and the events we expect to see in the next quarter. So, with that brief introduction, I'll turn it over to Brian for a brief review of LX4211.

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

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

This again is a landscape of SGLT inhibitors currently in clinical development. If we focus on the SGLT1 and SGLT2 columns, this indicates whether these agents inhibit SGLT1 and SGLT2. And LX4211 is, again, unique in class and being the only dual inhibitor of SGLT1 and SGLT2 currently in clinical development. Most of the agents are highly selective SGLT2 inhibitors with the exception of the last compound in the table, which is a highly selective SGLT1 inhibitor in that it's just completed Phase I clinical trials. This indicates that SGLT1 alone is an interesting target for type 2 diabetes, and I think the LX4211 data has increased interest in the SGLT1 mechanism of action. We go to the next slide.

We did release the top line data from our Phase IIb study earlier this month. It was a study in patients with type 2 diabetes inadequately controlled on stable dose metformin. It came in with an HbA1c between 7% and 10.5% .

We enrolled 299 patients in five treatment arms. That included 4 doses of LX4211 and placebo, all again on top of stable dose metformin. The doses tested were 75 milligrams given once daily, 200 milligrams once daily, 200 milligrams given twice daily, and 400 milligrams once daily. With a 12-week treatment period and the primary endpoint was a change from baseline in hemoglobin A1c at week 12 with multiple secondary endpoints including the percentage of patients achieving a hemoglobin A1c of less than 7%, fasting plasma glucose and 3-hour glucose tolerance tests, weight, blood pressure, and triglycerides.

On the next slide, just to remind you of the top line data as far as hemoglobin A1c, this shows the effect of LX4211 treatment through the course of the study on hemoglobin A1c. Relative to placebo in green, where we observed a minus 0.09% reduction hemoglobin A1c, we observed in gold at the low dose minus 0.43% reduction; in blue at 200 milligrams once daily, a minus 0.52% reduction; in red of the 200 milligram b.i.d. dosing, a minus 0.79% reduction; and in black at the 400 milligram once daily dose, a minus 0.95% reduction.

We were very pleased by this robust hemoglobin A1c effect. We saw very nice filter spots in this study. In addition, it as clear that the 400 milligram once daily dose in black appears superior to splitting that dose into 200 milligram b.i.d. in red, confirming that 4211 is a once-daily drug.

We did see a very strong effect, as I mentioned, on hemoglobin A1c that compares very favorably with any agent that has gone through the 12-week Phase IIb study. And in particular it compares favorably with selective SGLT2 inhibitors, which in the 12-week dose-ranging studies has exhibited pretty much the same with each other, a 0.7% placebo subtracted reduction. So, that's what we know can be achieved with SGLT2 and this dual inhibitor, LX4211 is achieving better than that.

In addition to the effect we saw, the nice glycemic control, we also saw significant reductions in body weight and improvements in systolic and diastolic blood pressure. And all this was achieved with a very favorable safety profile with a high dose of LX4211 looking very similar to placebo.

On the next slide we have a couple other ongoing or about to be initiated studies with LX4211. The first is an ongoing renal impairment study. The rationale for this study is that up to 40% of patients with type 2 diabetes will eventually suffer from kidney failure. In addition, many current medications are contraindicated in this population, including metformin and all but one of the sulfonylureas.

The SGLT2 selective inhibitors to date have demonstrated limited benefit in patients with compromised renal function, and that is because as you lose renal function, you lose the ability of SGLT2 inhibition to benefit. Unlike SGLT2, however, these patients should benefit from the SGLT1 mechanism of action, and they should not lose that benefit as they lose renal function, because the SGLT1 benefit is happening through inhibition in the gastrointestinal tract.

The current study is 20 patients with type 2 diabetes and moderate to severe renal impairment. They have a glomerular filtration rate of less than 16 milliliters per minute per meter squared. The treatment is with 400 milligrams of LX4211 versus placebo for 7 days, and we expect the results in the first half of 2012.

In addition, we are about to initiate trial in type 1 diabetes. The rational for that trial is that the majority of type 1 diabetics remain above their HbA1c goals, and LX4211, we believe, in combination with insulin, could enhance their glycemic control and, in addition, reduce insulin needs. And the reason for that is because of LX4211's dual mechanism of action it lowers blood glucose levels and the insulin requirements by reducing glucose absorption from the gastrointestinal tract, by enhancing glucose excretion by the kidney, and by elevating the release of beneficial GI peptides, such as GLP-1 and PYY.

All three of these effects are effects that benefit in the absence of insulin. So, we believe that LX4211 could allow patients with type 1 diabetes to reach their HbA1c targets with less hypoglycemia and to reduce the long-term consequences of hyperglycemia.

Just to remind you, in none of our studies, including our Phase IIb study, have we seen any hypoglycemia with LX4211. We also believe that we can reduce the insulin doses required, particularly the postprandial, or the mealtime doses of insulin and avoid weight gain.

The current study will be 30 patients with type 1 diabetes. The treatment period with LX4211 will be for 28 days. The primary endpoint will be reduction in total insulin usage and the secondary endpoints will include improved glycemic control.

And on the next slide we're moving to telotristat etiprate, or LX1032. The Phase III planning is continuing. We have had our end of Phase II meeting with FDA, and the current Phase III plan is a single pivotal study of approximately 100 patients with a 12-week treatment period. And we know from discussions with the FDA that the efficacy endpoint will be 12 weeks. It will consist of three arms, two doses of telotristat etiprate, 250 milligrams given 3 times daily, or 500 milligrams 3 times daily, and placebo. And the primary endpoint will be the reduction in number of bowel movements. We are proceeding with our protocol assistance from the European agencies and we're on track to initiate this study in the second half of this year.

And, finally, with telotristat etiprate, we do have an ongoing proof-of-concept study in ulcerative colitis. This study is in 60 patients with mild to moderate ulcerative colitis. There are three treatment arms. There are 10 patients on placebo, and then 25 patients each on the two doses of telotristat etiprate, either 500 milligrams given once daily or 500 milligrams given 3 times daily. It's an 8-week treatment period on top of mesalamine, and the efficacy measures are the Mayo score, colonoscopy, histology and faecal calprotectin, and enrollment is progressing. With that, I'll turn it back over to Arthur.

Thank you, Brian. Before we turn to the financials, we'll take a quick look at some of the upcoming clinical milestones that we expect over the next 12 months. Looking at, as we embarked here on Q3, we have three data events that are likely to be overlapping in the third quarter. The LX2931 dose-escalation results in RA. That event should be in mid-third quarter, as well as LX7101 in glaucoma. And then we have -- we expect the results from our open label study of telotristat etiprate in carcinoid syndrome as well in this quarter. That is a 12-week trial. I think that will give us some important indicators with respect to our Phase III trial, which, as Brian summarized for you, will also be 12-week endpoints. So, I think the time frame there will be important. So, those events, again, we think will occur in mid-Q3. They are likely to be somewhat overlapping and we'll keep you posted as we announce those results.

We expect the fourth quarter at the end of the year to be largely occupied with our ongoing efforts to plan and indicate the Phase III program in LX4211, and also the Phase III program for telotristat etiprate. There is quite a bit of work involved in both of those programs.

With regard to early next year, we expect to have results from LX1033 in IBS in Q1. That is a trial of 360 patients in IBS-D, and that, of course, will be an important event for us and will inform us as to the future Phase III potential for that compound.

And then in the first half, a little bit harder to target, we will look for the results of the ulcerative colitis trial. That trial Brian summarized for you is enrolling well. It tends to be a little bit slower type of indication to enroll, but it is going well, taking place in both the United States and Eastern Europe, and we look forward to those results.

As indicated along the bottom of the timeline, our anticipated launch of telotristat etiprate in carcinoid syndrome will be towards the end of Q3, and we are actively engaged in identifying sites and contracting the sites currently, and that program is on track.

And then you can see farther out, in 2013 in the first half, our targeted launch for the Phase III program in diabetes with LX4211. Also, I should mention not on this timeline, it would be in the first half of 2013, results from our type 1 diabetes trial with LX4211, and also we would anticipate our proof-of-concept study in renal impairment to be in that first half of 2013. So, we'll probably be adding that to future renditions of that slide. With that, I'll turn it over to Jeff Wade to discuss the financial results.

Thank you, Arthur. I will provide a brief financial update. As indicated in our press release today, we had revenues for the three months ended June 30, 2012 of $0.2 million, which is a decrease of 64% from $0.6 million in the prior year period. The decrease was primarily attributable to reduced revenue from a government contract and from functional genomics contracts. Our revenues of $0.5 million for the first half of 2012 reflected a 57% decrease from $1.2 million in the prior year period.

Research and development expenses for the 2012 second quarter decreased 4% to $19.4 million from $20.1 million in the prior year period. The decrease was primarily attributable to decreases in personnel, lab supply and facility cost, partially offset by an increase in external clinical research and development costs. Our R&D expenses of $42.4 million for the first half of 2012 reflected a 4% decrease, from $44.1 million for the prior year period.

In connection with our acquisition of Symphony Icon, we made an initial estimate of the fair value of our liability for the base and contingent payments. Changes in this liability, based on the development of the programs and the time until the payments are expected to be made, are recorded in our consolidated statements of operations. The associated increase in fair value of Symphony Icon purchase liability was $2.2 million in the second quarter and $4.2 million in for the six months ended June 30, 2012.

Our general and administrative expenses for the 2012 second quarter were $4.2 million, a decrease of 8%, from $4.5 million in the prior year period. The decrease was primarily attributable to decreases in personnel and patent-related costs. Our G&A expenses of $8.7 million for the first half of 2012, reflected the 6% decrease from $9.3 million for the prior year period.

Our net loss for the 2012 second quarter was $25.9 million, or $0.05 per share, compared to a net loss of $26.6 million, or $0.08 per share in the prior year period. Our net loss for the first half of 2012 was $55.8 million, or $0.12 per share, compared to a net loss of $56.3 million, or $0.17 per share for the corresponding period in 2011. For the three and six months ended June 30, 2012, our net loss included noncash stock-based compensation expense of $1.6 million and $3.3 million, respectively.

For the three and six months ended June 30, 2011, that loss included noncash stock-based compensation expense of $1.5 million and $2.9 million, respectively. Let me now turn to our cash and investments.

As of June 30, 2012 ,we had $231.5 million in cash and investments compared to $253.7 million as of March 31, 2012, and $281.7 million as of December 31, 2011. Now let's turn to our forward-looking guidance for 2012. We continue to expect contractual revenues from existing agreements in 2012 of around $1 million.

Consistent with our past practice, while we are in conversations with pharmaceutical companies without potential collaborations and alliances, we are not including forecasted revenue from those potential arrangements in our guidance. That said, we believe our productive pipeline provides Lexicon with attractive opportunities for future alliances.

We continue to expect operating expenses in 2012 to be in the range of $110 million to $120 million. Noncash expenses are expected to be approximately $20 million of this total including $11 million in increase in fair value of Symphony Icon purchase liability, $6 million in stock-based compensation, and $4 million in depreciation and amortization.

Taking into account cash received under existing contractual relationships only, we expect our 2012 net cash used in operations to be in the range of $93 million to $98 million, consistent with our previous guidance.

Finally, I wanted to bring to your attention that after the end of the quarter we exercised our option to pay the full $35 million balance of the Symphony Icon base payment in shares of Lexicon stock. As you may recall, we had the obligation to pay this amount on or before July 30, 2013, and we had the rights to make the payment 100% in stock through July 30, 2012. After that time we would have been obligated to make at least half of the payment in cash. The stock price used to calculate the number of shares to be issued, [$2.64] with the average of the closing prices of our stock over the 20 trading day period ending immediately preceding the second trading day before the July 30 payment date.

Based on that stock price, we issued 13.2 million shares of stock in satisfaction of the $35 million balance of the Symphony Icon base payment. The only remaining payment obligations we have under the Symphony Icon arrangement are contingent on the achievement of success-based milestones. Either receipt of partnership proceeds, in which they are eligible to receive a share, or on our receipt of US regulatory approval for products that were funded by the Symphony Icon partnership. I will now turn the call back to Arthur.

Thank you, Jeff. And as you are formulating your questions, I'd just like to also mention that since our data release of LX4211, we have been very busy on the partnership front, engaged with a number of parties on the initial review of the top line data. And our timing for that includes receiving the complete data within the next few weeks, which is a very essential event for the partnership process and progressing in our discussions with other parties. So, now we will open it up to questions.

(Operator Instructions) Your first question comes from the line of Cory Kasimov, JPMorgan.

Hi. It's actually Matt Lowe in for Cory today. Just a couple of quick questions on 4211, first one being if you could just maybe outline the general response to the Phase IIb data from big pharma companies that have seen it so far and physicians. And then, secondly, if you have any idea when that data might be presented? Thanks.

Sure. Thank you, Matt. So, the response has generally been very positive. As Brian indicated, the hemoglobin A1c effects look to be basically superior at this stage of development, at any rate, to the competing compounds. Now, that remains, then, to be described further in Phase III, but it's generally been viewed as a very positive result, very robust effect on hemoglobin A1c. And also combined with the reductions in blood pressure and body weight, providing a very compelling, I'd say, metabolic picture.

The other things I think that have stood out for pharma are the fact that we're getting this, what looks like superior glycemic control and it's happening with apparently less glucose excretion in the urine. As you can remember -- I didn't cover it today, but we maximized our glucose-to-creatinine ratio at the 200 milligram dose. And as we push the dose we got no further elevation in that ratio, and in spite of that we got a big bump in hemoglobin A1c effect, really speaking to the importance of SGLT1 mechanism of action. So, that stood out for everyone.

And then the other thing that has really stood out is that we're adding the SGLT1 benefit without any apparent difference in AE profile. So, we're getting a strong SGLT1 effect, but no safety signal in the gastrointestinal tract, which had been a concern. So, we're adding this benefit without really changing the AE profile. In fact, our AE profile, if anything, suggests that it could be better than what's been observed for SGLT2 selected compounds. So, it's been very well received.

Yes, and the second part of your question, Matt, was with respect to when will we be able to present this in a peer reviewed sort of setting. I would expect that would likely be the next ADA meeting. There are a number of events between now and then where we'll probably be reviewing the top line dataset, but in terms of a detailed publication, that's really the next major opportunity. There is, as you know, quite a long lead time with regard to submitting to these conferences, and we have -- for the European we missed that date for submission, so we'll just be reviewing data we have to date up until the next ADA meeting.

Okay, that's great. Thank you.

Your next question comes from the line of Liana Moussatos, Wedbush Securities.

Thank you for taking my questions. You had mentioned partnership negotiation status for LX4211. What about 1032?

So, 1032, we're -- again, I think we've indicated previously, we're planning to progress that ourselves into Phase III, and at present we are proceeding with that plan. And I would -- I think that we'll not likely be doing anything further on the partnership front pending getting that launched and probably seeing the ulcerative colitis data.

Okay. And what's the status of LX2311 in autoimmune?

Well, 2311 is an up and coming program. I think you're also referring perhaps to 2931. 2931, we'll be having the results from our dose escalation trial in Q3, but we do have another program, 2311, which is a novel kinase that we discovered through our gene knockout program, and that is a very active program in our medicinal chemistry group. Our goal being to identify clinical candidates to that program as well, and has a very interesting anti-inflammatory autoimmune phenotype.

So, that one is not going to enter the clinic this year or next year?

Our goal would be to have 2311 selected as a clinical candidate next year. So, that timing would then require IND-enabling studies, so it's hard to forecast whether or not we'd start clinical trials next year. It depends on the timing of identifying a clinical candidate and getting the IND-enabling studies underway.

Okay. And my final question is, can you remind us the difference between the European and the US data for 1032?

Sure. The US data was double-blind, placebo-controlled study, and the efficacy endpoint was four weeks, whereas, for the European study was open label. Every patient was dose-escalated all the way up to the highest dose, and it was 12 weeks of dosing. So, I think it's important, as Arthur mentioned, because the 12-week endpoint in that European study will be very similar to the 12-week endpoint that will happen in Phase III.

Thank you very much.

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

Hi. Thanks for taking my questions. Regarding the Phase III telotristat trial, is that -- are you expecting that to be 18- to 24-month time frame from beginning to end?

Yes. That's our goal. Enrollment goal of 18 months.

Okay. And then you have data coming from a couple of programs coming up third quarter -- 7101 and 2931. I wondered if you could tell us a bit about what we should be -- trial design of 2931 in particular, and what we should be looking for there?

Right. So, 2931 is a dose-escalation trial. It's 10 patients over 12 weeks. It is with intrapatient dose escalation stepping up over the 12-week period, from 150 milligrams to 500 milligrams total daily dose. So, it's a proof-of-concept trial, I'd say within a very small, obviously, patient group.

The 7101, the glaucoma trial, is also proof-of-concept. It's a slightly larger patient group, actually quite a bit larger, with 60 patients overall. It is placebo controlled and double-blinded. It is in glaucoma patients, and so will serve as, I think, a very important initial proof-of-concept. It's our first in patient trial. It's actually our first in human trial as well. Brian, do you want to comment on that?

Sure. For 7101 in glaucoma, there are two things to be watching for. Number one, what is the efficacy benefit? In other words, what's the effect on intraocular pressure? And, two ,what is the safety profile? How well is it tolerated as a topical agent on the eye? I mean, those are very telling for any glaucoma agent and indicates its potential benefit going forward.

Now, if that is successful, how far forward do you think you would bring that in-house?

Well, we've been very pleasantly surprised with how executable these trials are in glaucoma. They're very straightforward. This trial enrolled ahead of schedule and it's actually fairly low cost, so we've learned quite a bit about this indication and it's a fairly attractive indication. So, I think obviously we're going to evaluate the results and determine then if we have a competitive profile. If we do, I think that we'll be revisiting our pipeline priorities and thinking about what kind of resources we can direct to it in-house.

Now, we do have partners also interested in the results, so that will be an option as well. So, I can't say at this point, although I can tell you that it's very feasible from a logistical standpoint to bring this type of indication forward on our own. It is very feasible. But I think when we get the results from these three studies this quarter -- as you can imagine, it's quite a bit of data. And I think it's going to trigger for us, really, a pipeline review and prioritization sort of exercise so we could determine, then, where we want to distribute our internal resources and which programs we'd want to partner.

Okay. Thanks very much.

Your next question comes from the line of David Friedman, Morgan Stanley.

Hi. Thanks for taking the question. It's just regarding the IBS program and I just wanted to see if you could talk about what are the timing -- I'm sorry if you mentioned it -- for the Phase II data? And then what are plans for next steps with that program? Is that something that you think has to be partnered, or is that something you would consider doing yourself?

So, the timing is as was indicated on the timeline side for the first quarter of 2013. Our goal is to complete enrollment this year. It is a large study. It's in over 50 centers. It's all in the United States, and it's gone well in terms of enrollment to date. The readout from that, I think, will give us some answers as to whether or not, number one, it's a competitive profile for Phase III.

And, number two, whether or not at that stage we want to start to discuss the program and the data with partners. So, our current plan would be to discuss it with partners. We've had already partnership feedback on the mechanism and the fact that a four-week trial on this indication should be indicative of the likelihood of success for Phase III, which is, I think, critical for even the highest value partnership.

So, I think in this indication it would be very beneficial to obtain a partner. Obviously, certain companies have done very well in the IBS-C space, such as Ironwood with international and a US partnership strategy. Anyone to add anything?

In the meantime, we have taken the required steps so that we'll be ready for Phase III initiation if the data is good for the second half of next year.

Anything more on the partnership front, Jeff?

I think at some point we're likely to want to have a partner on this, because it's going to be a relatively broad commercialization effort. But when that happens I think it will depend upon the data and what we look at in terms of our overall pipeline at that point.

Thank you.

Your next question comes from the line of Nicholas Bishop, Cowen and Company.

Hi. Good morning. Thanks for taking the question. I have a question on LX1032 Phase III design. I wonder if you could give us a little more detail on what discussions with the EMA have been so far and kind of what's left to get through there on the protocol assistance discussions, and whether you think the Phase III will satisfy potential European regulatory requirements as designed?

Yes, we have gotten some feedback from the EMA to date and we think, again, as with the FDA, that the single Phase III study will be sufficient to get us to a filing with telotristat etiprate.

Okay. And can you remind us how many sites you are expecting to have active in that trial and what the geographies are?

Clearly above 50 and it will be worldwide, with many sites in Europe and the US.

Greater than 50 sites for approximately 100 patients, do I have that right?

That's correct.

Yeah, okay.

I think we're targeting 50 sites, so it may go over that slightly.

Okay, and then just one last one on 4211. Can you tell us what data you are still waiting for to show to potential partners? Is this just a quality control of existing data or is there new efficacy or safety information still to come?

Sure. I think the key elements were present in the top line data. There are some additional elements that I think will be of high interest. One would be the 24-hour urinary glucose excretion, so the data we reported to date has been the spot check glucose-to-creatinine ratio that was done on all study participants. But we did have a substudy which included 24-hour urine collection for the 24-hour UGE measures.

In addition, we will be getting the data for the all glucose challenge, and since that's a primary effective SGLT1 inhibition, is the postprandial effect due to the inhibition of glucose uptake from the GI, that will be important. There is not really a lot other things. There will be some other interesting things. We have some additional blood measures, including things like C-peptide for beta cell ability to produce insulin and measures like adiponectin, CRP. That will be of interest, but, again, I think a lion's share of the data was in the top line data we've revealed to date.

Great. Thanks very much.

(Operator Instructions) Your next question comes from the line of Stephen Willey, Stifel Nicolaus.

Yes, hi. Just a quick question on the glaucoma program first. Can you maybe just give us some kind of indication as to what the kinetics of intraocular pressure reduction look like, I guess in currently available drugs? I know this is going to be a 14-day trial and I'm just wondering if this is going to be long enough in order to see any kind of meaningful reduction there?

Sure. All the agents that are currently on the market have a very rapid onset of action, and one of the reasons that we went with -- obviously, we're taking extensive measures at baseline. The first day of dosing, day 7 and day 14, and one of the reasons for that is that one of the intriguing things about LX7101 is that baseline appears to move down for intraocular pressure as you dose longer. And so you have greater effects as you dose longer. And that's a bit unusual and very, I think, it's one of the positive things about LX7101. But we think that the 7- and 14-day time points will allow us to see those elevated effects with increased dosings.

And was there a cutoff criteria that you used in terms of gaining patients for selection, in terms of having a baseline?

Yes. They had to be at 22 millimeters of mercury or above.

Okay. And then quickly on the IBS program, can you maybe just remind us where you are with respect to the companion diagnostic, whether or not you think you can have that Phase III ready by the time, I guess 1033 is presumably ready to maybe go into a Phase III? And then with respect to the parting discussions around the four-week data in IBS, is that enough, I guess, just given the fact that there tends to be a fairly high placebo response in the setting that doesn't really kind of segregate itself out until sometimes eight weeks, if that's enough to potentially get a partner across the finish line? Thanks.

So, first the companion diagnostics for the IBS compound LX1033, yes, we've been progressing with two companion diagnostics. One is a lab test, which is an LC/MS-based test that we've used to date. But getting that up and running, and that will, we believe, be ready for the Phase III study. And the other test is a blood test, which is going to be a test that can be run on pretty much any instrumentation that is out there for blood tests. That one will be an antibody-based test, and that test, although we don't believe it would be ready for the initiation of Phase III, we do think it would be ready to validate and be ready during Phase III, and be ready for filing with the drug. The second part?

Second part, Jeff, do you want to address the four-week endpoint and the partnership?

Yes. Well, I think part of this is also relevant to what using the new FDA guidance and the way to analyze the data. I think it limits the placebo effect considerably. We have reanalyzed our 1031 data using those measures and it continues to show significant benefit on the compound, but it reduces substantially the placebo effect. And so if we use -- if we put that guidance on a go-forward basis, I think that we'll see even larger separation than we had seen previously. So, I think that's one part that's relevant to answer that question.

The other is that we do expect that even without that, the feedback that we've gotten is that we expect that four-week endpoint to show, based on the results we've seen with an earlier compound, to show results that would be adequate in terms of assessing that difference between drug and placebo and potentially have an ample opportunity to have a partnership.

And I believe the current guidance is for an eight-week endpoint. It's not so different from a four-week endpoint we're seeing here, so I don't think that that will be that big of a difference.

Okay. We're also powering the study very well. It is a 360-patient trial, so we should have a fair -- we should have pretty strong data by then. Other questions?

(Operator Instructions) And there are no further questions at this time.

All right. Well, I'd like to thank everyone for joining us and we look forward to updating you probably along the way in the third quarter with respect to our several data events that we anticipate. Thank you and goodbye.

This concludes today's conference call. You may now disconnect.