Lexicon's second quarter revenues decrease 55% to $0.6 million

Lexicon Pharmaceuticals, Inc.Aug 9 2011

Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), a biopharmaceutical company focused on discovering and developing breakthrough treatments for human disease, today updated its drug development progress and reported financial results for the three and six months ended June 30, 2011.  

Progress in Clinical Pipeline

• Lexicon commenced a Phase 2b clinical trial for LX4211, a dual inhibitor of sodium-glucose cotransporters 1 and 2.  The company also presented data at the 71st Scientific Sessions of the American Diabetes Association from a mechanistic study designed to investigate the effect of LX4211 on peptide hormones in the intestinal tract in patients with type 2 diabetes.  The data from the study demonstrated that a single dose of LX4211 significantly increased GLP-1 (total and active) and PYY, important mediators of glycemic and appetite control.  
• Lexicon successfully completed a Phase 1 study of LX1033, a serotonin synthesis inhibitor being developed as a potential treatment for irritable bowel syndrome (IBS).  Results from the study demonstrated that LX1033 was well tolerated at all doses and produced a statistically significant reduction in serotonin synthesis compared to placebo, as measured by both plasma (p<0.001) and urinary (p<0.01) 5-hydroxyindoleacetic acid (5-HIAA), a biomarker for serotonin synthesis.  Importantly, a greater reduction in serotonin synthesis was achieved with lower and less frequent dosing than was observed with Lexicon's first generation serotonin synthesis inhibitor, LX1031, which had previously demonstrated improvements in global assessment of adequate relief and stool consistency in a Phase 2a clinical trial of IBS patients.  Like LX1031, LX1033 acts locally in the gastrointestinal tract to reduce serotonin production by inhibiting tryptophan hydroxylase, a key enzyme in the biosynthesis of serotonin.  
• Lexicon is planning to initiate a dose-ranging study in the third quarter of this year to explore higher doses of LX2931 in rheumatoid arthritis patients.  Previously reported Phase 2a results of LX2931, an inhibitor of sphingosine-1-phosphate lyase, demonstrated a favorable safety profile at all doses tested and suggested that rheumatoid arthritis patients treated with 150 mg of LX2931 once daily showed improvement in the primary efficacy endpoint of the study, the percentage of patients achieving an American College of Rheumatology 20 (ACR20) response at week 12.
• Lexicon completed a U.S.-based Phase 2 clinical trial of LX1032 in carcinoid syndrome patients.  LX1032 is an inhibitor of tryptophan hydroxylase that reduces peripheral serotonin production without affecting brain serotonin levels.  Lexicon continues to enroll carcinoid syndrome patients in a second E.U.-based open-label clinical trial of LX1032.

Financial Results

Revenues:  Lexicon's revenues for the three months ended June 30, 2011 decreased 55 percent to $0.6 million from $1.2 million for the corresponding period in 2010.  The decrease for the three months ended June 30, 2011 was primarily attributable to reduced revenues under Lexicon's alliance with Taconic Farms.  For the six months ended June 30, 2011, revenues decreased 60 percent to $1.2 million from $2.9 million for the corresponding period in 2010.

Research and Development Expenses:  Research and development expenses for the three months ended June 30, 2011 decreased slightly to $20.1 million from $20.2 million for the corresponding period in 2010.  For the six months ended June 30, 2011, research and development expenses increased seven percent to $44.1 million from $41.3 million for the corresponding period in 2010.

Increase in Fair Value of Symphony Icon Purchase Liability:  In connection with the acquisition of Symphony Icon, Lexicon made an initial estimate of the fair value of the liability for the associated 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 Lexicon's consolidated statements of operations.  The increase in fair value of the Symphony Icon purchase liability was $1.8 million and $2.9 million for the three months and six months ended June 30, 2011, respectively.

General and Administrative Expenses:  General and administrative expenses for the three months ended June 30, 2011 decreased 11 percent to $4.5 million from $5.1 million for the corresponding period in 2010.  The decrease was primarily attributable to decreased salaries and benefits expense and consulting fees.  For the six months ended June 30, 2011, general and administrative expenses decreased 12 percent to $9.3 million from $10.6 million for the corresponding period in 2010.    

Consolidated Net Loss:  Net loss for the three months ended June 30, 2011 was $26.6 million, or $0.08 per share, compared to a net loss of $25.2 million, or $0.07 per share, in the corresponding period in 2010.  Net loss for the six months ended June 30, 2011 was $56.3 million, or $0.17 per share, compared to a net loss of $51.3 million, or $0.19 per share, for the corresponding period in 2010.  For the three and six months ended June 30, 2011, net loss included non-cash, stock-based compensation expense of $1.5 million and $2.9 million, respectively.  For the three and six months ended June 30, 2010, net loss included non-cash, stock-based compensation expense of $1.3 million and $2.6 million, respectively.    

Cash and Investments:  As of June 30, 2011, Lexicon had $164.8 million in cash and investments, as compared to $188.9 million as of March 31, 2011 and $211.1 million as of December 31, 2010.