Lexicon Pharmaceuticals, The Woodlands, Texas 2015 Annual Meeting of the American Society for Bone and Mineral Research http://www.asbmr.org/ItineraryBuilder/PresentationDetail.aspx?pid=8064e838-b1aa-4e0d-bc80-761bce3db186&ptag=WebItinerarySearch Neutralizing Antibody and Orally Active Small Molecule Inhibitors of the Secreted WNT Inactivating Lipase NOTUM Stimulate Cortical Bone Formation in Ovariectomized Rodents Robert Brommage, Andrea Y. Thompson, Melanie K. Shadoan, Jeff Liu, Sabrina Jeter-Jones, Jie Cui, David G. Potter, Dawn Bright, Faika Mseeh, Jennifer P. Bardenhagan, Gwenn M. Hansen, Peter Vogel, James E. Tarver, Victoria K. Lombardo, David R. Powell, Qingyun Liu and Brian Zambrowicz Lexicon Pharmaceuticals, The Woodlands, Texas

High-Throughput Screening of Mouse Gene Knockouts Identifies Established and Novel Skeletal Phenotypes Brommage et al., Bone Research 2:14034; 2014 Elevated femoral cortical bone thickness, averaging 21%, was observed in 12 separate cohorts of male and female Notum KO mice, with a total of 242 WT and 220 KO mice examined from 2004 through 2011 No trabecular bone phenotypes KOs show 32% reduction in viability and 26% of survivors have a single kidney

Midshaft Femur Cortical Thickness and Strength Intermediate phenotypes in heterozygous mice suggest pharmaceutical inhibition need not be 100% for efficacy

NOTUM – Secreted Enzyme That Inactivates WNTs by Removing Essential Palmitoleate WNT Binding to Frizzled WNT lipase activity of NOTUM identified by Lexicon during 2006 Independent confirmation of this mechanism of action by two groups published during early 2015 Kakugawa et al., Nature 519:187-192; 2015 Zhang et al., Dev Cell 32: 719-730; 2015 Robotic enzymatic screening and cell-based WNT signaling assays established These assays were employed to identify inhibitors of NOTUM activity Orally active small molecules Neutralizing antibodies Brown = WNT Ligand Green = Frizzled Receptor Red = Essential Palmitoleate Janda et al., Science 337:59-64; 2012

Mineralization Studies in MC3T3 Cells Mineralization inhibited by NOTUM conditioned medium This inhibition is overcome by addition of NOTUM small molecule inhibitor LP-922056

Femur Cortical Thickness NOTUM Antibody Treatment Increases Bone Mass in Both Intact and OVX Mice Mice treated once weekly for 4 weeks starting 4 weeks after OVX at 16 weeks of age Dose = 10 mg/kg; Enzyme IC50 = 37 nM; Cell-based EC50 = 4 nM Treatment increased midshaft femur cortical thickness, cortical (but not trabecular) bone mass in LV5 vertebral body, and total BV/TV in femoral neck (Scanco μCT40) Two-Factor ANOVA Femur Cortical Thickness LV5 Cortical Bone BV/TV Femoral Neck BV/TV Effect of OVX P < 0.001 P = 0.002 Effect of NOTUM Ab Interaction P = 0.37 P = 0.32 P = 0.29

Transient Stimulation of Midshaft Femur Endocortical Bone Formation Modeling-dependent bone formation OVX Control OVX Treated OVX Treated

Treatment with Orally-Active Small Molecule NOTUM Inhibitor Increases Bone Mass in OVX Rats OVX Fischer 344 rats treated daily by oral gavage for 12 weeks starting at 80 weeks of age OVX at 17 weeks of age LP-935001 examined at doses of 1 and 5 mg/kg Plus untreated OVX and Sham-surgery groups Enzyme IC50 = 0.4 nM; Cell-based EC50 = 21 nM Two courses of double fluorochrome labeling Alizarin at 1 and 3 weeks Calcein at 9 and 11 weeks Multiple bones examined by standard DEXA, microCT and breaking strength analyses

LP-935001 Treatment Has Beneficial Cortical Bone Actions at Multiple Skeletal Sites Parameter Treatment Effect (5 mg/kg) Statistics Midshaft Tibia Cortical Thickness 6% P = 0.02 Midshaft Tibia Strength 7% Spine LV5 Cortical BV/TV P = 0.002 Femoral Neck BV/TV P < 0.001 Femoral Neck Strength 15% P < 0.02 Midshaft Femur Cortical Thickness Midshaft Femur Strength 13% Pelvis Shaft Cortical Thickness 12% Distal Tibia Cortical Thickness 9% Distal Tibia BFR (Weeks 1 to 3) 3-fold Distal Tibia BFR (Weeks 9 to 11) Treatment effects are compared to OVX control values. Ns = 13 to 17 Statistical evaluation involved ANOVA followed by Dunnett’s test for multiple comparisons to the OVX control group

Additional Studies (Data Not Shown) Teriparatide treatment for 7 days stimulated Notum expression in femur shaft 10-fold Notum KO mice responded normally to teriparatide treatment but LP-922056 treatment was ineffective LP-922056 was effective when dosed twice per week LP-922056 treatment increased serum total alkaline phosphatase and PINP levels within 4 days Bone gained during LP-922056 treatment was lost after treatment stopped, but this gain was maintained with subsequent zoledronate treatment Notum KO mice have defective dentin mineralization but enamel and all soft tissues show normal histology

Summary NOTUM is a secreted enzyme that inactivates WNTs by cleaving a palmitoleate group essential for binding to Frizzled receptors Inhibiting NOTUM by gene KO, neutralizing antibodies or orally-active small molecules stimulates modeling-dependent endocortical bone formation, resulting in greater bone strength Trabecular bone is unaffected NOTUM is a novel osteoporosis anabolic drug target Genes that differentially affect cortical and trabecular bone include leptin, Klotho, Src, Wnt16, Sfrp4, ENU 14104 mutation Lrp5 A214V and G171V activating mutations have site-specific actions WNT signaling in bone involves both canonical and non-canonical pathways Prx1 affects the appendicular but not the axial skeleton Different activities of visceral, marrow and subcutaneous fat