Lexicon Pharmaceuticals Inc (LXRX) 2013 Q4 法說會逐字稿

Good morning. My name is Stephanie, and I will be your conference operator today. At this time I would like to welcome everyone to the Lexicon Pharmaceuticals earnings conference call.

(Operator Instructions)

I would now like to turn the conference over to Chas Schultz. Please go ahead, sir.

Good morning, and welcome to the Lexicon Pharmaceuticals' fourth quarter and year-end 2013 conference call. I am Chas Schultz, and with me today are Dr. Arthur Sands, Lexicon's President and Chief Executive Officer; Dr. Pablo Lapuerta, Lexicon's Executive Vice President and Chief Medical Officer; Dr. Brian Zambrowicz, Lexicon's Executive Vice President and Chief Scientific Officer; and Jeff Wade, Lexicon's Executive Vice President of Corporate Development and Chief Financial Officer.

We expect that you have seen a copy of our earnings press release that was distributive this morning. During this call, we will review the information provided in the release, provide an update on our clinical programs, and then use the remainder of our time to answer your questions.

The call will begin with Dr. Sands, followed by Dr. Lapuerta, who will provide an update of our clinical programs, and by Jeff Wade, who will review our financial results for the fourth quarter and full-year 2013 and discuss our financial guidance. We will then open the call to your questions.

If you would like to view the slides for today's, call please access the lexicon website at www.lexpharma.com. You will see a link on the home page for today's webcast.

Before we begin, I would like to state that we will be making forward-looking statements, including statements relating to Lexicon's clinical development of LX 4211, telotristat etiprate, also referred to as LX1032, and LX1033, including characterizations of the results of and projected timing of clinical trials of such compounds and the potential therapeutic and commercial potential of such compounds. This call may also contain forward-looking statements relating to Lexicon's growth and future operating results, discovery and development of projects, 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, including uncertainties related to the timing and results of clinical trials and free clinical studies of our drug candidates, our dependence upon strategic alliances and ability to enter into additional collaboration and licensing agreements, the success and productivity of our drug discovery efforts, our ability to obtain patent protection from our discoveries, limitations imposed by patents owned or controlled by third parties, and the requirements of substantial funding to conduct our drug discovery and development activities.

For a list and description of the risks and uncertainties that we face, please see the reports we have filed with the Securities and Exchange Commission. I will now turn the call over to Dr. Sands.

Thank you, Chas, and I'd like to welcome everyone to the call. Will spend today, this morning, briefly reviewing our two lead programs, LX4211 for diabetes and then telotristat etiprate for Carcinoid Syndrome, giving an update on their clinical progress.

Looking at the first slide, as a reminder LX4211 is a unique-in-class first-in-class dual inhibitor of SGLT1 and SGLT2, and as we'll discuss, because of this unique mechanism of action, we have spent considerable time elucidating the clinical impact of this and preparing this compound for phase 3 in type 2 diabetes, and I think we are now at that stage of being phase 3-ready in type 2 diabetes.

In addition the dual mechanism has opened the door for type 1 diabetes, and we are eagerly awaiting the results of that proof-of-concept study, which we now believe will be early April to have those results in. So on the next slide, the landscape for these SGLT2, SGLT compounds, more broadly speaking is pictured here. As you can see, and as we know, most of the companies have focused on SGLT2 highly-selective compounds, and our advantage and clinical differentiation derives from being a dual-inhibitor of both SGLT1 and SGLT2.

As we will describe, the phase 3-ready status of LX4211 makes it a very attractive asset at this stage. On the next slide, the strategy going forward is to take full advantage of our dual mechanism of action and make sure that it leads to clinical differentiation, opens up certain medical marketplaces for us that other compounds have not, where other compounds have not been successful.

Specifically, not only of course the broad type 2 indication in combination with many potential agents, but specifically those diabetes patients that suffer from renal impairment, and we've been very encouraged by our findings in this category of patients, which is a significant patient population. Up to 30% to 40% of patients with diabetes are in this category of renal impairment. And the SGLT1 method of action gives us an unique advantage there in addition to our SGLT2 mechanism.

So that is part of our core strategy in phase 3 is to emphasize that differentiation. And in addition, pending the results in our current type 1 study, that is also part of our core strategy of clinical differentiation for this compound, to ultimately seek a potential approval in type 1 diabetes, which would be a real first.

There are other mechanistic synergies that we plan to continue to explore, including combination therapy with DPP-4 inhibitors where we think there is unique synergy with our dual mechanism, great potential for that. And then, and very importantly, the potential for cardiovascular benefit, which derives, we think, from several mechanisms working, perhaps one of the most impressive of which is the favorable blood pressure affects that we've been seeing with LX4211 and diabetes in a variety of settings, and blood pressure being one of the most telling risk factors for cardiovascular risk. So that will certainly be a centerpiece of a phase 3 plan.

So with that introduction, we'll turn it over to Pablo to give us the update on the clinical programs. Pablo?

Thank you, Arthur. I'd like to talk a little bit about our work in the renal impairment with LX4211.

Renal impairment in type 2 diabetes is an area of high, unmet needs for two reasons. One is that it's very common, but another is that so many medications in this area are contraindicated for one safety issue or another. And yet, this is an area where LX4211 has potential.

The SGLT1 inhibition that it offers in the gastrointestinal tract could provide benefit whereas other drugs have failed in this area. We see this is a good opportunity for LX4211, positioning it in an area of unmet medical need. Differentiating against relatively selective SGLT2 inhibitors, and giving us a perspective on how important clinically that SGLT1 effect of LX4211 may be.

On slide 6, we've recently concluded our study of LX4211 in patients with renal impairment. The study was successful, it met it's primary endpoints, LX4211 significantly improved glycemic control in subjects with type 2 diabetes and renal impairment. The post-prandial glucose reductions were robust, and the benefits were clear in those with the most-advanced renal impairment with no evidence of any kind of waning of effect. We also saw a GLP-1 elevations, and this is part of the signature of SGLT1 inhibition in the gastrointestinal tract, we see a strong post-prandial glucose reduction and significant elevations in GLP-1, which we believe are beneficial.

And as we see in the final data, we confirm that these benefits were obtained with low urinary glucose excretion highlighting that this is a good study of clinically-relevant SGLT1 effects. We've also received the safety and pharmacokinetic data, they support our selection of LX4211 400 milligrams as a dose of study in phase 3. So we believe we will have a significant opportunity there. And a renal impairment study, that will be an important part of our program.

On slide 7, I have updates on two other recently completed clinical trials. One is a definitive QT study. This is a study that's required by the FDA, and for them, it forms part of the cardiovascular safety profile of any new medical entity. We conducted a study with 64 healthy volunteers that were randomized to single doses of LX4211 at either 400 milligrams, or 2,000 milligrams, or a placebo.

We included this high 2,000 milligrams dose of LX4211 because we wanted a proper safety margin. And we also included as a positive-control moxifloxacin, which does elevate the QT interval and can let us know that we're getting quality precise measurements in this study.

These study results have come in and are final, and they met FDA guidance for supporting cardiovascular safety. The results were well within the guidance.

We also conducted an additional multiple ascending dose study. There had been one conducted in phase 1 before proceeding to phase 2; however, the highest dose in that early experiences was only 400 milligrams. Being prepared to give the 400 milligrams dose to a large population in phase 3, we wanted additional data on 800 milligrams. This is also about supporting a safety margin.

So we randomized 25 subjects to 10 days of treatment with LX4211 400 milligrams, 800 milligrams or placebo, and the study results showed us adequate safety and pharmacokinetic data that supports the use of LX4211 400 milligrams and our phase 3 program. In other words, if there's a question that exposure is variable, and giving the 400 milligrams dose in some outliers may give them relatively high exposures, we do have now more evidence that a higher dose can be -- and higher exposure can be tolerated with LX421.

On slide 8, I'll review the type 1 diabetes for us. We see this as an area of high, unmet medical need. The incidence rate is increasing annually. It's a disease that is diagnosed at a young age and has a different mechanism, but it's an area where LX4211 may offer benefit with an insulin-independent mechanism. Essentially, the only treatment for type 1 diabetes is insulin, and that leads to many issues.

On slide 9, a little bit more of the rationale for LX4211 in this area. Insulin will be the mainstay of the treating of the type 1 diabetes, but the majority of patients, even with advanced insulin therapy, are remaining above that hemoglobin A1c goals with type 1 diabetes. Part of that is they fear hypoglycemia, which is such an issue with insulin, whose therapeutic index is narrow and post-prandial glucose elevations are too high in the patient population. We see an opportunity for LX4211 as an add-on therapy to patients -- to insulin for patients with type 1 diabetes, an opportunity to prevent weight gain, to enhance weight loss, reduce hypoglycemia and improve the time spent in the [new] glycemic range.

For the patients, there are additional benefits. Lowering the mealtime insulin dose, reducing the variability in blood glucose, simplifying the insulin regimen, and other potential benefits.

To this end, we've conducted a type 1 diabetes proof of concept study on slide 10. We want to establish the safety and mechanism of action of LX4211 in this setting.

We have previously shared the results of an open-label pioneer group, where subjects had initial experience with LX4211 reducing their insulin doses and with good glycemic control. What we've done more recently is we've completed enrollment in the double-blind expansion group. That consisted of about 30 subjects, treated for 28 days, randomized to LX4211 or placebo.

Our primary endpoint relates to the total mealtime bolus insulin, which we will believe will be reduced by the use of LX4211. Secondary objectives address other glycemic parameters and other aspects of insulin use. We are now in position to produce top-line results early in the second quarter of 2014, early in April.

On slide 11, overall the LX4211 program is supporting a differentiated profile of [potent] sustained SGLT1 inhibition, characterized by post-prandial glucose reductions, GLP-1 and PYY elevations, giving us strong hemoglobin A1c reductions and an opportunity to differentiate against other agents with less urinary glucose excretion for LX4211. We are seeing progress, and our understanding of the opportunity of LX4211 and populations with high unmet need, including type 1 diabetes and diabetes with renal impairment.

On slide 12, I have a summary of a telotristat etiprate and its mechanism of action. Telotristat etiprate is a peripherally-acting serotonin synthesis inhibitor. It is absorbed into the peripheral circulation but does not cross the blood brain barrier. This is important because of serotonin is a key mediator of gastrointestinal motility and pain, and serotonin, above all, is implicated in Carcinoid heart disease and cardiac valve damage, and in symptomatic diarrhea, flushing, and abdominal pain in patients with Carcinoid Syndrome.

On slide 13, we have done some market research to further evaluate and understand our market opportunity for telotristat etiprate in the United States, and we believe that approximately 6,000 patients in the United States have Carcinoid Syndrome and are receiving octreotide for it but are not adequately controlled and need additional therapy.

We believe this is the destiny of most patients with Carcinoid Syndrome when they initiate octreotide. Octreotide is very effective, but over the course of three years, our market research indicates that physicians believe approximately 80% of patients will not be controlled on octreotide and will need additional therapy. There are no other therapeutic options for patients that are not adequately controlled, and we believe this is an important opportunity for telotristat etiprates.

To achieve approval of telotristat etiprates, we are conducting the TELESTAR study on slide 15. This is a phase 3 randomized placebo-controlled double-blind study. We will have at least 105 subjects treated for 12 weeks on treatment versus placebo and then 36 weeks in open label follow-up.

The primary objective will be to evaluate telotristat etiprate and its ability to reduce the frequency of bowel movements in patients who are inadequately controlled on somatostatin analog therapy. Other objectives include an examination of 5-HIAA reductions. That's our biomarketer of serotonin synthesis to reduce flushing episodes and to reduce abdominal pain.

The study of progress is well underway. We are randomizing patient's effectively and believe that we can complete randomization in 2014.

We have also initiated TELECAST companion study to TELESTAR. TELECAST is for patients with Carcinoid Syndrome who do not qualify for the TELESTAR study.

Conducting a companion study like this can support the safety of telotristat etiprate, can provide additional efficacy information, increasing overall patient exposure and promoting enrollment. Promoting enrollment because when physicians screen patients for TELESTAR, they know that if they do not qualify, they will still have a clinical trial option which will be TELECAST.

TELECAST will focus on the reduction of 5-HIAA as its primary efficacy measure, and the inclusion criteria will be slightly different accepting patients who screen TELESTAR because they don't exactly four bowel movements a day or more, and accepting patients who are not on background somatostatin analog therapy.

On slide 17, I'd like to summarize our program. We are advancing Lexicon's late-stage pipeline, elotristat etiprate for Carcinoid Syndrome, has the TELESTAR program enrolling well, the companion study TELECAST has been initiated, and our commercial preparations are underway, LX4211 for diabetes. We are now phase 3 ready. All studies that were required before phase 3 are completed, and we continue to anticipate progression into phase 3 with the corporate partner.

Our phase 2 study in diabetes has completed enrollment and treatment of all patients, and we are expecting data early in April of 2014. In that context, we're already anticipating potential regulatory interactions with the FDA and European Medicines Agency, and we are planning ongoing development in type 1 diabetes including the phase 3 program.

I will now turn the call over to Jeff Wade.

Thank you, Pablo. I will provide a brief financial update.

As indicated in our press release today, we had revenues for the 2013 fourth quarter of $1.4 million dollars, an increase of 547% from the $0.2 million in the prior-year period. The increase was primarily due to revenues recognized from a collaboration with a nonprofit institute supporting the phase 2 development of LX4211 and type 2 -- the type 1 diabetes. For the year, revenues increased 104% to $2.2 million from $1.1 million in 2012.

Our research and development expenses for the 2013 fourth quarter decreased to 3% to $20.3 million from $21 million in the prior-year period. For the year, our R&D expenses increased 9% to $89.7 million from $82.6 million in 2012.

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 such payments are expected to be made are recorded in our consolidated statements of operations.

The associated decrease in fair value of Symphony Icon purchase liability was $5.3 million in the fourth quarter and $2.2 million for the year. The decrease was primarily attributable to a reduction in the liability associated with Lexicon's LX1033 development program and diarrhea-predominant irritable bowels syndrome.

Our general and administrative expenses for the 2013 fourth quarter were $3.4 million, a decrease of 13% from $3.9 million in the prior-year period. For the year, our G&A expenses increased slightly to $17.1 million from $17 million in 2012.

Our net loss for the 2013 fourth quarter was $17.4 million, or $0.03 per share, compared to a net loss of $24.9 million or $0.05 per share in the prior-year period. Our net loss for the year was $104.1 million, or $0.20 per share, compared to a net loss of $110.2 million, or $0.23 per share, in 2012.

For the three months and year ended December 31, 2013, our net loss included non-cash stock-based compensation expense of $1.7 million and $7.4 million, respectively. For the three months and year ended December 31, 2012, our net loss included non-cash stock-based compensation expense of $1.6 million dollars and $6.5 million, respectively. Finally as of December 31, 2013, we had $129.1 million in cash and investments, as compared to $151.2 million as of September 30, 2013 and compared to $223.2 million as of December 31, 2012.

Now lets turn to our forward-looking financial guidance for 2014. We expect contractual revenues from existing agreement in 2014 of around $0.5 million. We are engaged in partnership discussions for LX4211 as you know and are also in conversations about other potential collaborations and alliances. Consistent with our past practice, however, we are not including forecasted revenue from potential new collaborations and alliances in our guidance.

We expect operating expenses in 2014 to be in the range of $105 million to $110 million. Non-cash expenses are expected to be approximately $13 million of this total, including $6 million of stock-based compensation, $4 million, an increase in fair value of Symphony Icon purchase liability, and $3 million in depreciation and amortization. Taking into account cash received under existing contractual relationships only, we expect our 2014 net cash used in operations to be in the range of $87 million to $92 million.

I should note that these operating expenses and net-cash use expectations reflect costs of preparations we are making for phase 3 development of LX4211 as well as certain supportive non-clinical and clinical activities, but they do not reflect the full cost of full-scale phase 3 clinical trials for that program, given our expectation of a partnership around those activities. These expectations for 2014 also reflect the impact of our recently announced focusing of financial resources on our late-stage development programs, particularly LX4211 for diabetes until and telotristat etiprate for Carcinoid Syndrome and on preparations for commercialization.

I will now turn the call back to Arthur.

Thank you, Jeff. We can open the call for questions.

Is the operator on the line? We can open the call for questions.

(Operator Instructions)

Your first question comes from Cory Kasimov with JPMorgan.

Hi there. It's actually Matt Lowe in for Cory today. Just to start with, I just want to confirm the QT study and the multiple ascending dose study up to 800 milligrams.

Are they new studies that you just completed or just done, and how do they feed into the partnership discussions? And just to end, what gives you confidence that the deal is in the works, obviously it's been around 18 months now I think since the phase 2 data came out. Just wondering if there's anything you can tell us as to why you remain confident that a deal can still happen? Thank you.

Okay. So Matt first off, those are new studies. They're very recently completed studies. They are, of course, part of the required package, if you will, to proceed in the phase 3. So I do think that in some ways, those studies have been gating for progression of the program. So we're very pleased with the results. With respect to the second part of your question, perhaps I could turn it over to Jeff Wade who is directly handling these discussions.

Sure. So we've been making good progress. Obviously, taking risk out of the program is hopeful in progressing those discussions. And having completed these studies with favorable results helps us check off the box for a couple of additional things that needed to be done before we went into phase 3. We're still engaged in active discussions, and those discussions are going well. And we feel confident that they are progressing towards a conclusion.

And then I think the only thing I'd add to that is that being the first to move a new method action forward into a potentially very major phase 3 program is a high bar, and it has required significant amount of data to demonstrate not only the unique dual mechanism is operating as we predicted, but also to forecast the medical markets that that could open up. And so, that's been part of the whole process. And again, it is a high bar to be the first mover with the dual mechanism. Thank you.

Okay. Thank you.

Your next question comes from Colin Bristow with Bank of America.

Hi, this is Colin with Bank of America. Thanks for taking the questions.

On 4211, in-line with the QT study and the fact that this is a novel mechanism, as we think about the later stages of the regulatory process, can you talk about any additional scrutiny you see 4211 facing, and given the fact that SGLT1 is expressed in other tissues, such as the heart, and what steps you have or will need to take to address this additional scrutiny?

Also on Novartis LIK066, can you comment on how you see this compound stacking up versus 4211 and any early indications of differentiate between the two? Thanks a lot.

Okay, so there's two parts of that. I think the first part on the regulatory aspects of this and dual mechanism, Pablo, would you care to comment on that first, and I think the second part, we'll turn to Brian for the comments regarding the Novartis compound. Pablo?

Yes, with the dual mechanism of action, we do not anticipate any additional safety hurdles or any unique safety hurdles. And the reason is because the systemic absorption of LX4211 is not sufficient for meaningful SGLT1 inhibition in the heart or other tissues. LX4211 still has relative selectivity for SGLT2 over SGLT1, and so it has systemic exposure that's sufficient for renal SGLT2 inhibition but not renal SGLT1 inhibition or inhibition of SGLT1 and other tissues.

And our discussions with regulatory agencies have progressed well. We will have a program that's large like other type 2 programs. It will have a cardiovascular outcome study like other type 2 programs, and we have a systematic adjudication of events. And in our discussions with regulatory authorities, the key attention has really been to the types of events that have been seen in [canigal] flows and [into ethical flows] and programs.

Okay. And, the second part of your question was regarding Novartis. Brian, do you want to talk about that?

Just one more thing, maybe, on the first part is that I think it's very important, as Pablo mentioned, that we don't achieve systemic levels of 4211 to inhibit SGLT1, but it's important to note that many targets of drugs are express broadly.

That doesn't mean that those sites of expression are meaningful. We'll just further affirm patients with complete loss of function of SGLT1 are reported to have no cardiovascular issues, and in long-term talks using tremendous multiples of exposure of 4211, relative to what we are achieving in the clinic, we see no cardiovascular effects. And most importantly and most recently in our third QT study, we saw no effects of LX4211 on the heart.

With that, you brought up the dual inhibitor LIK066 from Novartis. We know that it's completed phase 1, and although they've registered for phase 2 with clinicaltrials.gov quite some time ago, I think it's notable that they have not initiated that study yet.

I think the big challenge with any dual inhibitor -- there's two huge challenges. One is that it's very difficult with two targets to hit the right point in dose response curve with an agent for both targets, not hitting one or the other too hard or too little.

I think we have been very fortunate in hitting those points in the dose response curve very effectively with 4211. Particularly challenging, we can tell you based on our experience and our studies with multiple agents, is being able to sustain the inhibition of SGLT1 in the gastrointestinal tract over time and throughout the day, which we've clearly demonstrated. That will be a huge challenge with other agents. We feel very confident that we will remain first in best-in-class as a dual inhibitor of SGLT1 and 2.

Great. Thank you.

Your next question comes from the line of Thomas Wei with Jefferies.

Thanks. Just in terms of the partnership and contingency plans, if you don't line up a partnership, how are you thinking about that scenario? Would you just do type 1 on your own? Would you run some critical type 2 studies in a type 1 program in parallel? I would love to get a sense of that.

And then also, just in the preparation work here, when exactly would you be ready to actually start enrolling phase 3 trials in type 2, and then the same question in type 1, partnership notwithstanding?

Jeff, would you like to lead off on that?

Sure. So I think there are different possibilities here that we could consider pursuing. Again, we expect that we should be able to do a partnership, and so that's where our baseline expectation -- clearly, there are options in type 1 development that might be positive, that might be more doable from a cost perspective than a full-scale type 2 diabetes program. And so we do have things that we've thought about in terms of different approaches we could take, but again, our expectation is a partnership is the likeliest and most probable way forward.

In terms of timing, we've basically done the work to be ready to launch very quickly. Now, there is a gap between the time that you pull the trigger for full-scale activities and the time that you enroll the first patient, but we've minimized that gap as much as we could and would still be able to start in the second half of this year with enrollment based on what we've done so far.

For both type 1 and type 2, it's conceivable to start in the second half.

And just a question on the type 1 data in April. A reminder of what you want to see out of that on a primary endpoint to consider that a good outcome, and I have heard on a little bit here how aggressively those patients in that trial are being treated with their basal-bolus regimen, and how aggressive of a treat-to-target regimen are they on?

Okay. So it's a 28-day study. So in that time period, the most sensitive, I think, important indicator is the use of insulin, and that is the primary endpoint. And the most proximal piece of insulin dosing -- most proximal to our mechanism is the bolus insulin dosing. That's the mealtime insulin dosing.

So that's going to be the focal point and is the primary endpoint of the study. And then looking at the other aspects of insulin use, which include the basal insulin use and total insulin use.

So the second part of your question, the patients are basically instructed to treat-to-target as you would expect in a study of this kind with attention to safety that is not to over-treat themselves, so as to avoid hypoglycemia, because we do know that this agent, when administered with insulin, will lead to a, we think, significant reduction in the need for insulin.

So with certain safety advisory sort of topics that we've given the patients, it is basically treat-to-target. That would be their standard approach before the treatment period started. So there's a baseline period and then we go into the treatment period. And the patients and the physicians have to make adjustment calls about the insulin dosage estimates based on their blood sugar readings.

But just back on that earlier question, I understand the mealtime insulin measurement as the primary endpoint, but there was a whole range of different outcomes looking at insulin use from the early pioneer cohort. What you think across this number of patients -- what should we be looking for in terms of an actual numerical reduction in insulin use? What would you consider a success?

Well in terms of bolus insulin use, I think based on what we've seen in the pioneer group, anywhere from 30% to 60% reduction for these individuals. That may mean out at around 30% or 25% reduction. That would be a meaningful reduction, clinically, we believe in bolus insulin use.

The basal, we think, if there is 10% or 15%, that may be something to look for. But those are just approximations at this point. So it is a proven concept study, Thomas, and it will tell us what those reductions are.

Great. Thanks. That's very helpful.

Thank you.

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

Thank you for taking my questions. Is LX2761 still active in development, and could Jeff repeat the Q4 stock-based compensation expense in the 2014 guidance?

Sure. LX2761 continues to progress in its IND-enabling studies with an opportunity for initiating clinical studies following in the second half of this year some time.

And then Jeff?

The stock-based compensation in Q4 and for the full year for 2013 was $1.7 million dollars in the fourth quarter and $7.4 million for the year. I think that was what you had asked about.

And then on the financial guidance expectations, we are expecting contractual revenues of about $0.5 million in 2014, operating expenses in the range of $105 million to $110 million, of which non-cash would be about $13 million of the total, $6 million of which would be stock-based comp, $4 million Symphony Icon purchase liability increase, and $3 million in depreciation and amortization. And cash use and operations in the range of $87 million to $92 million.

So hopefully I captured what you were asking in your question.

Thank you very much.

Thank you.

Your next question comes from the line of Phil Nadeau with Cowan and Company.

Good morning. Thanks for taking my question. First, one question on the dose trial. Can you give us some more information about what you found at the 800-milligram dose. Was there any increase in side effects at that dose? Any non-linear pharmacokinetics and/or -- it was only a 10-day study, so I'm not sure what efficacy measures you took, but any signs of additional efficacy?

Pablo would you like to address the 800-milligrams dose, the safety of that?

Yes. The pharmacokinetics were linear so that the overall exposure to the patients at the 800-milligram dose was approximately double that of the 400-milligram dose.

The 800-milligram dose was well-tolerated in the sense that there were no discontinuation due to adverse events and no serious adverse events. There seemed to be a slight increase in the gastrointestinal adverse events, but it would slide in with the small sample size. That's not conclusive.

Okay, and did you have any -- again, over 10 days I'm not sure what you can measure, but did you have any efficacy measures in the trial?

No, this was in healthy volunteers and we do not do detailed assessments of glucose profiles.

Okay, great. My second question is on the TELECAST study. Can you remind us how that fits into your regulatory plan for telotristat?

Pablo?

Yes, the main way that it helps us is in providing additional safety data. Even though this is an orphan drug, and we don't need to have the safety database of drugs for other areas, that it is helpful to us, we believe, to have more exposures to telotristat etiprate, and the TELECAST trial is one way of achieving that.

It was not requested by regulatory authorities. It was our belief that this was a way to help patients who were interested in receiving the drug, and for us to learn more about its safety and support of an approval package.

Okay. Will that be completed at the time of the filing?

No. We will have safety data that will contribute to the filing, but there may still be patients who are ongoing in this study.

Okay. And then last question is just on long-term expenses. As you've disclosed, Lexicon's gone through a bit of a transition this year. How should we think about modeling expenses after 2014? Do you anticipate a further decline in expenses, or will there be a re-growth following this retrenching?

I think you will see a shift in the way that our -- the mix of our expenses. So in 2014, we're right in the heart of the telotristat etiprate phase 3 development program. That will start to wind down in 2015.

So that will also end up having some additional expenses relating to launch preparations assuming that the phase 3 data warrant a NDA filing as we are hoping will be the case. And then the other element involved in this is the diabetes program. And again, we are not modeling expenses associated with that because of the expectation that that will be within a partnership. But if there were expenses associated with that, it could vary from the outline that we presented here.

Okay. Great. Thanks for taking the questions.

Thank you.

Your next question comes from the line of Kevin Kedra with Gabelli.

(inaudible) plans and additionally --

Kevin, we missed the first part of that. Could you start repeating the question?

Sorry, sure. Just wondering if you could update us on the admin succession plan search for a new CEO, and then secondly, will those plans have any impact on the timing of finding a partner for LX4211?

Yes, the succession plan and search is ongoing, and so that's really all we can comment on there. And then the second part, it really should have no impact on the timing with regard to partnership. So that is a process that's, of course, been underway for quite some time. So, thank you.

Your next question comes from the line of Stephen Willey with Stifel.

Hi. Thank you. Just with respect to the upcoming type 1 data announcement, could you maybe just better define what's going to be communicated from a data perspective? Presumably, we get the reductions in bolus and basal and total insulin utilization, but will you also be providing information, just with respect to time in hypoglycemic ranges, and any other secondary endpoint data that you'll be sharing with us? And then also, if you think this data will be eligible for ADA in June?

Right. Thanks for your question, Steve. You bring up some good points. So, yes, in addition to the insulin readout, they really will only have real meaning in the context of glycemic control information.

And so in that short-term study, it will be through our continuous glucose-monitoring data, the CGM data, which the patients are all on. And that will give us a picture as to their glycemic control over this -- very granular picture over this time period, including time in hypoglycemia ranges, which is blood sugar is below 70 by the CGM measures, and then also time in hyperglycemic ranges.

So we hope to see improvement in some of those parameters, although with the small [ends] and the short time period, it is hard to predict, and that's why they're secondary endpoints. But we should have the CGM data along with the insulin data in the top-line data set.

And then with respect to ADA, it looks like we're just a little late on timing, even for our late-breaking abstract, so it's not like we will present anything at ADA from a type 1 study, but we will shoot for presenting the information as soon thereafter at a conference as we are able.

And then to maybe just to follow-up on a prior question. I know the prior pioneer cohort was fairly heterogeneous. I understand there was a small end, but it was fairly heterogeneous just with respect to time from diagnosis and HbA1c and baseline insulin, and I'm just wondering if you could maybe characterize what, if anything, you know about the type 1 population of the study you're running now with respect to what that heterogeneity may look like relative to what we saw in the pioneer cohort?

Well, we don't have that information yet in detail, but just as a reminder, we were enrolling patients whose hemoglobin A1c was between 7 and 9, so these are relatively well controlled, and we wanted to have, for this first study, patients that we could rely on in terms of compliance.

So these are relatively well-controlled patients for type 1 diabetes, and basically they have to have had the disease at least a year. And so other than that, really, we don't have the demographics yet on the cohort.

Okay. And then I know that there was a mention of potentially being able to explore some other collaborative opportunities that were non-4211 related and just wondering if you could maybe provide a little bit of color around how you're thinking about those opportunities? Thanks. And what those opportunities might be?

Yes, so right now we are assessing how -- we're planning on commercializing telotristat etiprate in the US, so that's the strategy that we're following and we're making those preparations. But we're still assessing how exactly we want to commercialize telotristat etiprate in markets outside of the US, and so that's something that we're exploring, whether that's something that we can do on our own in certain markets or whether there are partnership alternatives that might be more favorable. Principally, that's the other area that we're exploring at the moment.

I know you guys have frequently talked about how you have a lot of other additional programs that have been seemingly shelved over the years due to bandwidth and resource issues. Are those now in the context of a restructuring, hoping to monetization at all?

Well there are definitely other programs that we are considering, both the partnership and what next steps might be. So with respect to the earlier stage programs, those are still things that we're evaluating. We think that some of those programs have significant opportunities, and we are thinking about partnership and about other possible next steps that we might be able to pursue with those programs.

Okay, thanks.

Thank you.

(Operator Instructions)

At this time, there are no additional questions in queue.

All right. Well, I'd like to thank everyone for participating this morning. Bye-bye.

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