In the news release, Lexicon Pharmaceuticals (Nasdaq: LXRX)
Announces Two Agreements, issued yesterday by Lexicon
Pharmaceuticals, Inc. over PR Newswire, we are advised by the
company that the fifth paragraph, first sentence, should read "16.5
million shares" rather than "16.4 million shares" and third and
fourth sentences, should read "34.3 million" rather than "20.4
million" as originally issued inadvertently, corrected release
follows: THE WOODLANDS, Texas, June 17 /PRNewswire-FirstCall/ --
Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) has entered into a
major financing agreement with The Invus Group, LLC ("Invus") to
help fund its strategic goal of transitioning into an integrated
biopharmaceutical company. Under the agreement, Invus will invest
$205M in 2007 with the potential for up to an additional $345M over
the next four years. Simultaneously, Lexicon announced it has
entered into a $60 million product development collaboration with
Symphony Capital Partners, L.P. and its co-investors ("Symphony")
to move its first three drug candidates into advanced clinical
development: -- LX6171 for cognitive disorders -- currently
completing Phase 1b -- LX1031 for irritable bowel syndrome --
currently in Phase 1b, and -- LX1032 for gastrointestinal disorders
-- currently in preclinical development "We have developed a
long-term financial framework upon which we are building an
integrated biopharmaceutical company. With Invus and Symphony,
Lexicon will have substantially greater resources and flexibility
to aid in fulfilling our mission to discover and develop
breakthrough treatments for human disease," said Arthur T. Sands,
M.D., Ph.D., founder, president and chief executive officer of
Lexicon. "We have accomplished groundbreaking target discovery
work, resulting in a portfolio of more than 100 promising new
targets, and have built an exciting pipeline of both antibody and
small molecule drug candidates." "We have chosen to partner with
Lexicon's talented scientists and management team because we
believe that, with our commitment as a long-term shareholder with
significant capital, Lexicon has the potential to become a major
biopharmaceutical company," said Raymond Debbane, founder and
president of The Invus Group, LLC. Summary of the Invus Transaction
Under the agreement, which the Lexicon board of directors has
approved, Invus has received warrants to purchase 16.5 million
shares of Lexicon common stock, for a per share purchase price of
$3.09, the ten-day volume weighted average as of June 14, 2007.
Upon shareholder approval, Invus will purchase, at that price, the
number of shares that remain subject to the warrants, and the
warrants will terminate. Invus also will purchase approximately
34.3 million additional shares of common stock which, when added to
the shares already owned by Invus, will bring Invus' ownership to
40% of the post-transaction outstanding shares of common stock. The
purchase price for these additional 34.3 million shares will be
$4.50, a 46% premium over the Friday, June 15th, 2007 closing price
of $3.08. To assure long-term adequate financing, Invus will have
the right to require the company to initiate up to two rights
offerings, which would provide all shareholders with pro rata
rights to acquire additional common stock in an aggregate amount
not to exceed $345 million. The first rights offerings may be
initiated, subject to certain adjustments, beginning 27 months from
the closing of the initial investment, and the second rights
offering may be initiated beginning 12 months after the initiation
of the first, or 39 months from the closing of the initial
investment if the first rights offering does not take place. The
initial investment and subsequent rights offerings are designed to
achieve up to approximately $550 million in proceeds to Lexicon.
Invus would participate in the rights offering for up to its pro
rata portion of the offering, and would commit to purchase the
entire portion of the offering not subscribed for by other
stockholders. As part of its agreement with Invus, Lexicon will
have the right to issue common stock before the commencement of the
rights offerings at a price above $4.50 per share. Such offerings
will reduce the total amount required to be raised under the rights
offerings. Invus will have the right to participate in future
equity issuances by the company so as to maintain its percentage
ownership of the company. Invus will also agree to customary
standstill restrictions that will not apply to the rights offerings
and will have other exceptions. Invus will have initially three
members on the Lexicon board of directors, which will be expanded
from eight to eleven members. The transaction will be submitted to
Lexicon stockholders for approval at a meeting planned for August
or September. "We are implementing a long-term financial strategy
that will fuel our extensive drug discovery and development
pipeline," said Julia P. Gregory, executive vice president and
chief financial officer. "Taken together, the Invus and Symphony
agreements substantially reduce financing risk and enhance our drug
development expertise, while allowing all shareholders to continue
to participate in Lexicon's growth. This strong financial backing
will complement Lexicon's corporate partnering strategy to
accelerate the development and commercialization of our products."
Summary of the Symphony Transaction Under the terms of the $60
million Symphony transaction, $45 million has been provided to
Symphony Icon, Inc., a newly-created company that was established
to accelerate development of Lexicon's first three product
candidates and hold the license to the intellectual property of
LX6171, LX1031 and LX1032. An additional $15 million of equity
capital was provided directly to Lexicon for general corporate
purposes. Through a purchase option, Lexicon retains the exclusive
right, but not the obligation, to acquire 100% of the equity of
Symphony Icon at exercise prices that range from $72 million in the
second year up to $90 million in the fourth year of the
collaborative development period. The option exercise may be paid
in cash or a combination of cash and Lexicon common stock at
Lexicon's sole discretion. If Lexicon chooses not to exercise the
purchase option, Symphony Icon will retain the rights to the three
programs. In exchange for the purchase option and $60 million of
funding, Lexicon issued approximately 7.7 million shares of Lexicon
common stock to Symphony Icon's investors at a purchase price of
$3.14, the ten-day closing price average as of June 12, 2007. The
collaboration is intended to last up to four years. "Our
collaboration with Symphony provides capital as well as additional
drug development expertise to further the clinical development of
LX1031, LX1032 and LX6171," said Arthur T. Sands, M.D., Ph.D.,
Lexicon's founder, president and chief executive officer. "The
structure of the collaboration also provides Lexicon with the
unique opportunity to develop these lead product candidates rapidly
while we retain exclusive rights. Simultaneously, we expand our
early-stage pipeline of drug candidates in the Lexicon 10TO10
Program to achieve 10 drug candidates in clinical development
through 2010. Our agreement with Symphony affords Lexicon the
flexibility to partner with pharmaceutical companies at a more
advanced stage of development." In accordance with Financial
Accounting Standards Board Interpretation No. 46 regarding variable
interest entities, Lexicon will consolidate the results of
operations of Symphony Icon into its financial statements beginning
with the filing of its second quarter 2007 financial statements.
Symphony Icon will be governed by a board of directors comprised of
Arthur T. Sands, M.D., Ph.D., Lexicon's founder, president and
chief executive officer; two representatives of Symphony Capital,
Mark Kessel and Jeffrey S. Edelman; and two independent Board
members, Steven H. Ferris, Ph.D., executive director of the NYU
Silberstein Aging and Dementia Research Center, and Douglas A.
Drossman, M.D., professor of medicine and psychiatry, UNC School of
Medicine, Division of Gastroenterology & Hepatology and
Co-Director of the UNC Center for Functional GI & Motility
Disorders. Symphony Icon has retained RRD International, LLC, a
regulatory and clinical development advisory group, to serve as
Symphony Icon's management team. Lexicon will continue to lead the
development of LX1031, LX1032 and LX6171. Advisors Morgan Stanley
& Co. Incorporated and Vinson & Elkins LLP represent
Lexicon in the Invus transaction. Cahill Gorgon & Reindel LLP
advised Lexicon's board of directors. Simpson Thacher &
Bartlett LLP represents Invus in the Invus transaction. Paul,
Weiss, Rifkind, Wharton & Garrison LLP represents Symphony in
the Symphony Icon transaction. Conference Call Tomorrow, Monday,
June 18th Lexicon management will hold a conference call tomorrow
to discuss the Invus investment and the Symphony Icon collaboration
at 8:30 a.m. Eastern Time. The dial-in number for the conference
call is 800-289-0485 (within the United States) or 913-981-5518
(international). The passcode for all callers is 4692046. Investors
can access http://www.lexpharma.com/ to listen to a live webcast of
the call. About Lexicon Lexicon is a biopharmaceutical company
focused on the discovery and development of breakthrough treatments
for human disease. Lexicon currently has clinical programs underway
for such areas of major unmet medical need as irritable bowel
syndrome and cognitive disorders. The company has used its
proprietary gene knockout technology to discover more than 100
promising drug targets and create an extensive pipeline of clinical
and preclinical programs in the therapeutic areas of diabetes and
obesity, cardiovascular disease, psychiatric and neurological
disorders, cancer, immune system disorders and ophthalmic disease.
To advance the development and commercialization of its programs,
Lexicon is working both independently and through collaborators
including Bristol-Myers Squibb Company, Genentech, Inc., N.V.
Organon and Takeda Pharmaceutical Company Limited. For additional
information about Lexicon and its programs, please visit
http://www.lexpharma.com/. About Invus Group Invus is a New
York-based investment firm with additional offices in London and
Paris. Invus invests in a variety of equity transactions, including
buyouts, longer term public equity investments, venture capital,
and expansion financings. Invus manages in excess of $4 billion of
capital. Invus has achieved both cash on cash multiples and annual
internal rates of return over 22 years that are at the very top of
the private equity industry. Invus manages interests in a broad
range of industries, including consumer goods, consumer services,
education, software, biotechnology and medical devices. The Invus
principals draw on their broad experience in partnering with
management teams and boards to help formulate and execute
strategies that maximize long-term value. About Symphony Capital
Partners, L.P. Symphony Capital is a New York-based private equity
firm that invests in development stage biopharmaceutical programs.
Symphony has the most experienced team in R&D project-specific
financings and invests exclusively in the type of collaboration
undertaken with Lexicon. Symphony Capital Partners, L.P. is the
lead investor in Symphony Icon. Additional information about
Symphony is available at http://www.symphonycapital.com/. About RRD
International, LLC RRD International, LLC (RRD) is an innovative
product development company dedicated to supporting the global
regulatory, preclinical and clinical needs of biotechnology,
pharmaceutical and medical device companies. RRD provides
comprehensive strategic planning and operational support from
program inception to product approval including the design,
management and execution of clinical trials. RRD's team of highly
experienced drug and device developers has a substantial record of
favorable FDA interactions and outcomes. Through its customized and
flexible business approach, RRD offers a unique risk-sharing model,
enabling its goals and interests to be aligned with a partner
company's success. Additional information about RRD is available at
http://www.rrdintl.com/. Lexicon Safe Harbor Statement This press
release contains "forward-looking statements," including statements
relating to, without limitation, all statements regarding the
agreement with Invus to invest in Lexicon and the agreement with
Symphony Capital to provide capital to advance Lexicon's
development of LX1031, LX1032 and LX6171, Lexicon's growth and
future operating results, discovery and development of products,
strategic alliances and intellectual property, as well as other
matters that are not historical facts or information. All
forward-looking statements are based on management's current
assumptions and expectations and involve risks, uncertainties and
other important factors, specifically including those relating to
Lexicon's ability to successfully conduct preclinical and clinical
development of its potential drug candidates, advance additional
candidates into preclinical and clinical development, obtain
necessary regulatory approvals, achieve its operational objectives,
obtain patent protection for its discoveries and establish
strategic alliances, as well as additional factors relating to
manufacturing, intellectual property rights, and the therapeutic or
commercial value of its drug candidates, that may cause Lexicon's
actual results to be materially different from any future results
expressed or implied by such forward-looking statements.
Information identifying such important factors is contained under
"Factors Affecting Forward-Looking Statements" and "Risk Factors"
in Lexicon's annual report on Form 10-K for the year ended December
31, 2006, as filed with the Securities and Exchange Commission.
Lexicon undertakes no obligation to update or revise any such
forward-looking statements, whether as a result of new information,
future events or otherwise. Lexicon will file a proxy statement and
other documents with the Securities and Exchange Commission
relating to the approval of the Invus transactions. Stockholders
are urged to carefully read the proxy statement when it becomes
available, because it will contain important information regarding
Lexicon and the Invus transactions. A definitive proxy statement
will be sent to stockholders seeking their approval of the Invus
transactions. Stockholders may obtain a free copy of the proxy
statement (when it is available) and other documents containing
information about Lexicon, without charge, at the SEC's web site at
http://www.sec.gov/. Copies of the definitive proxy statement and
the SEC filings that will be incorporated by reference in the proxy
statement may also be obtained for free by directing a request to
Lexicon Pharmaceuticals, Inc. 8800 Technology Forest Place, The
Woodlands, Texas 77381, Attention: Corporate Communications.
Lexicon and its officers and directors may be deemed to be
participants in the solicitation of proxies from the stockholders.
Information about these persons can be found in Lexicon's Annual
Report on Form 10-K filed with the SEC, and additional information
about such persons may be obtained from the proxy statement when it
becomes available. DATASOURCE: Lexicon Pharmaceuticals, Inc.
CONTACT: investor relations, Bobbie Faulkner of Lexicon
Pharmaceuticals, Inc., +1-281-863-3503, or media, Steve Milunovich
or Melissa Daly, +1-212-333-3810, both of Brunswick Group, for
Lexicon Pharmaceuticals, Inc.; or Jeffrey S. Edelman,
+1-212-632-5404, for Symphony Capital LLC Web site:
http://www.lexpharma.com/ http://www.symphonycapital.com/
http://www.rrdintl.com/
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