Lexicon updates drug development progress, reports 2014 financial results

Mar 4 2015

Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX), a biopharmaceutical company focused on developing breakthrough treatments for human disease, today updated its drug development progress and reported financial results for the three months and year ended December 31, 2014.

"We enter 2015 in a strong financial position to develop our two lead drug candidates, telotristat etiprate and sotagliflozin," said Lonnel Coats, Lexicon's president and chief executive officer. "This year will be key for Lexicon as we complete a pivotal Phase 3 trial of telotristat etiprate in patients with carcinoid syndrome and initiate Phase 3 trials for sotagliflozin in patients with type 1 diabetes."

In October 2014, Lexicon completed a collaboration agreement with Ipsen Pharma SAS for the commercialization of telotristat etiprate, with a focus on carcinoid syndrome, in markets outside the United States, Canada and Japan. Under the agreement, Lexicon is eligible to receive up to approximately $145 million in aggregate upfront and milestone payments, including an upfront payment of $23 million. In addition, Lexicon is entitled to receive royalties on net sales of telotristat etiprate by Ipsen.

Also in the fourth quarter of 2014, Lexicon completed concurrent debt and equity financings that resulted in gross proceeds of $293.4 million. After fees and offering expenses, the financings resulted in net proceeds of $286.0 million and are reflected in the company's financial results as of December 31, 2014. In the aggregate, the financings consisted of the issuance of approximately 204.9 million shares of common stock, with gross proceeds of $205.9 million, and $87.5 million in aggregate principal amount of 5.25% convertible senior notes due 2021.

Progress in Clinical Pipeline

• Telotristat etiprate (LX1032): Lexicon is nearing completion of enrollment in TELESTAR, its pivotal Phase 3 clinical trial of telotristat etiprate in carcinoid syndrome, with the last patient expected to be randomized in March 2015. Telotristat etiprate is an inhibitor of tryptophan hydroxylase (TPH) that reduces peripheral serotonin production without affecting brain serotonin levels.
• Sotagliflozin (LX4211): Lexicon continues to progress with the initiation of Phase 3 clinical trials of sotagliflozin in type 1 diabetes, with the anticipation that enrollment will commence in the first half of 2015. Sotagliflozin is a dual inhibitor of sodium-glucose transporters 1 and 2 (SGLT1 and SGLT2). In parallel with Phase 3, Lexicon is also progressing with a Phase 2 clinical trial of sotagliflozin in collaboration with JDRF, focused in individuals with type 1 diabetes younger than age 30 with high A1C, representative of a population of particularly high unmet need.

Financial Results

Revenues: Lexicon's revenues for the three months ended December 31, 2014 increased to $21.5 million from $1.4 million for the corresponding period in 2013, primarily due to revenues recognized from the license and collaboration agreement with Ipsen Pharma SAS. For the year ended December 31, 2014, revenues increased to $22.9 million from $2.2 million for the corresponding period in 2013.

Research and Development Expenses: Research and development expenses for the three months ended December 31, 2014 decreased one percent to $20.0 million from $20.3 million for the corresponding period in 2013. For the year ended December 31, 2014, research and development expenses decreased to $89.3 million from $89.7 million for the corresponding period in 2013.

Change 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. For the three months ended December 31, 2014, the fair value of the Symphony Icon purchase liability increased by $0.9 million as compared to a decrease of $5.3 million in the corresponding period in 2013. For the year ended December 31, 2014, the fair value of the Symphony Icon purchase liability increased by $1.4 million as compared to a decrease of $2.2 million in the corresponding period in 2013.

General and Administrative Expenses: General and administrative expenses for the three months ended December 31, 2014 increased 17 percent to $4.0 million from $3.4 million for the corresponding period in 2013. For the year ended December 31, 2014, general and administrative expenses increased 13 percent to $19.4 million from $17.1 million for the corresponding period in 2013.

Impairment Loss on Buildings: In September 2014, Lexicon determined its buildings and land should be classified as assets held for sale. Lexicon recognized a non-cash impairment loss on its buildings of $13.1 million for the year ended December 31, 2014, as a result of writing down the buildings to the estimated net selling price.

Consolidated Net Loss: Net loss for the three months ended December 31, 2014 was $2.9 million, or $0.00 per share, compared to a net loss of $17.4 million, or $0.03 per share, in the corresponding period in 2013. Net loss for the year ended December 31, 2014 was $100.3 million, or $0.19 per share, compared to a net loss of $104.1 million, or $0.20 per share, for the corresponding period in 2013. For the three months and year ended December 31, 2014, net loss included non-cash, stock-based compensation expense of $1.5 million and $7.1 million, respectively. For the three months and year ended December 31, 2013, net loss included non-cash, stock-based compensation expense of $1.7 million and $7.4 million, respectively.

Cash and Investments: As of December 31, 2014, Lexicon had $339.3 million in cash and investments, as compared to $57.9 million as of September 30, 2014 and $129.1 million as of December 31, 2013.

SOURCE Lexicon Pharmaceuticals, Inc.