EXHIBIT 99.1
LEXICON GENETICS REPORTS 2005
SECOND QUARTER FINANCIAL RESULTS
REVENUE GROWTH OF 29% OVER PRIOR YEAR PERIOD EXCEEDS FINANCIAL GUIDANCE
THE WOODLANDS, TEXAS, JULY 28, 2005 - Lexicon Genetics Incorporated (Nasdaq:
LEXG), a biopharmaceutical company focused on discovering and developing
breakthrough treatments for human disease, today reported financial results for
the three and six months ended June 30, 2005.
REVENUES: Lexicon's revenues for the three months ended June 30, 2005 increased
29 percent to $13.9 million from $10.8 million for the corresponding period in
2004. The increase was primarily attributable to collaborative research revenue
recognized under Lexicon's alliances with Organon and Takeda Pharmaceutical
Company Limited, entered in May 2005 and July 2004, respectively, partially
offset by a decline in technology and license fees related to the termination in
2004 of the remaining subscriptions to our LexVision(R) database. For the six
months ended June 30, 2005, revenues increased 23 percent to $27.8 million from
$22.6 million for the corresponding period of 2004.
RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses for the
three months ended June 30, 2005 increased five percent to $23.7 million from
$22.6 million for the corresponding period in 2004. The increase was primarily
the result of increased personnel required to support the expansion and
advancement of Lexicon's drug discovery programs and the cost of external
research associated with preclinical and scale-up activities for Lexicon's lead
drug development programs. It was partially offset by the elimination of
expenses associated with Lexicon's subscription to Incyte Corporation's
LifeSeq(R) Gold database. For the six months ended June 30, 2005, research and
development expenses increased three percent to $46.4 million from $45.0 million
for the corresponding period in 2004.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for the
three months ended June 30, 2005 increased two percent to $4.8 million from $4.6
million for the corresponding period in 2004. For the six months ended June 30,
2005, general and administrative expenses decreased five percent to $9.2 million
from $9.7 million for the corresponding period in 2004.
NET LOSS: Net loss for the three months ended June 30, 2005 decreased to $14.8
million, or $0.23 per share, from a net loss of $16.8 million, or $0.26 per
share, in the corresponding period in 2004. Net loss for the six months ended
June 30, 2005 decreased to $28.1 million, or $0.44 per share, from a net loss of
$32.3 million, or $0.51 per share, in the corresponding period in 2004.
CASH AND INVESTMENTS: As of June 30, 2005, Lexicon had $72.8 million in cash and
investments, including restricted cash and investments, compared to $70.7
million as of March 31, 2005 and $87.6 million as of December 31, 2004.
Restricted cash and investments were $0.4 million on June 30, 2005, March 31,
2005 and December 31, 2004.
SUBSEQUENT EVENT: On July 16, 2005, Lexicon announced it was awarded $35 million
from the Texas Enterprise Fund for the creation of a knockout mouse embryonic
stem cell library containing 350,000 cell lines. Lexicon will create this new
library using its proprietary gene trapping technology for the Texas Institute
for Genomic Medicine, a newly formed non-profit institute whose founding members
are Texas A&M University, the Texas A&M University System Health Science Center
and Lexicon. In addition, Lexicon will equip the Institute with the
bioinformatics software required for the management and analysis of data
relating to the library. The $35 million award will be paid to Lexicon in August
2005.
"Cash received thus far in 2005 related to collaborations and license
agreements, together with our award from the Texas Enterprise Fund, provide us
with approximately $80 million in non-dilutive new funding," said Julia P.
Gregory, executive vice president, corporate development and chief financial
officer of Lexicon. "We continue to demonstrate the value of our genetic systems
and financial flexibility provided by our diverse asset base."
SECOND QUARTER 2005 HIGHLIGHTS
ALLIANCE WITH ORGANON TO DEVELOP BIOTHERAPEUTIC DRUGS: Lexicon and Organon, the
human healthcare business of Akzo Nobel, announced the formation of a
collaboration to jointly discover, develop and commercialize novel
biotherapeutics. The alliance encompasses up to 300 genes encoding secreted
proteins or potential antibody targets that were jointly selected for the
collaboration, including two of Lexicon's existing biotherapeutics discovery
programs. Lexicon will create and analyze mouse knockouts of each of the 300
genes to identify promising human drug targets. Organon and Lexicon will jointly
select targets for further research and development and will share costs and
responsibility for research, preclinical and clinical activities. Organon and
Lexicon will jointly determine the manner in which collaboration products will
be commercialized and will each benefit from collaboration product revenue.
Organon will have principal responsibility for the manufacturing of
biotherapeutic products resulting from the collaboration.
Lexicon received an upfront payment of $22.5 million from Organon in exchange
for access to Lexicon's drug target discovery capabilities and the exclusive
right to co-develop biotherapeutic products that modulate the 300 genes selected
for the collaboration. Organon will also provide research funding totaling up to
$50 million to Lexicon for Organon's 50% share of the collaboration's costs
during the four-year target function discovery portion of the alliance.
ALLIANCE WITH XOMA FOR ANTIBODY DRUG DEVELOPMENT AND COMMERCIALIZATION: Lexicon
established an alliance with XOMA Ltd. to jointly develop and commercialize
antibody drugs for certain targets discovered by Lexicon in its Genome5000(TM)
program. During the three-year initial term of the alliance, Lexicon will select
at least three targets for submission to the collaboration and XOMA will
generate or engineer antibodies that modulate the collaboration's targets using
phage display libraries and its proprietary Human Engineering(TM) technology.
Lexicon and XOMA will jointly develop and commercialize novel antibodies
directed at these targets and will share the responsibility and costs for
research, preclinical, clinical and commercialization activities. Costs and
profits will be allocated 65% to Lexicon and 35% to XOMA. XOMA will have
principal responsibility for manufacturing antibodies for use in clinical trials
and commercial sales.
"Our new collaborations with Organon and XOMA reflect the significant value of
our developing biotherapeutics portfolio," said Arthur T. Sands, M.D., Ph.D.,
president and chief executive officer. "We expect each of these alliances to
provide access to antibody technologies, process development and biologics
manufacturing capabilities which can accelerate the development of Lexicon's
biotherapeutics programs."
LEXICON CONFERENCE CALL:
Dr. Arthur T. Sands, president and chief executive officer, Julia P. Gregory,
executive vice president of corporate development and chief financial officer,
and Dr. Brian P. Zambrowicz, executive vice president of research, will host a
conference call at 11:00 a.m. Eastern Time on Thursday, July 28, 2005. They will
review Lexicon's recent operating highlights, the status of its drug discovery
programs and its financial results for the six months ended June 30, 2005 and
will discuss the company's third quarter financial guidance.
The dial-in number for the conference call is 800-930-1344 (within the United
States) or 312-461-0644 (international). The pass code for all callers is
2937184. Investors can access www.lexicon-genetics.com to listen to a live
webcast of the call. The webcast will be archived and available for review
through August 2, 2005.
ABOUT LEXICON GENETICS
Lexicon Genetics is a biopharmaceutical company focused on the discovery and
development of breakthrough treatments for human disease. Lexicon is
systematically discovering the physiological and behavioral functions of genes
to identify potential points of therapeutic intervention, or drug targets.
Lexicon makes these discoveries using its proprietary gene knockout technology
to model the physiological effects that could be expected from prospective drugs
directed against novel targets. The Company has advanced knockout-validated
targets into drug discovery programs in six therapeutic areas: diabetes and
obesity, cardiovascular disease, psychiatric and neurological disorders, cancer,
immune system disorders and ophthalmic disease. Lexicon is working both
independently and through strategic collaborations and alliances to accelerate
the development and commercialization of its discoveries. Additional information
about Lexicon is available through its corporate website,
www.lexicon-genetics.com.
LEXICON GENETICS SAFE HARBOR STATEMENT
This press release contains "forward-looking statements," including statements
about 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. These 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
development of its drug candidates and advance such candidates into clinical
development, achieve its operational objectives, obtain patent protection for
its discoveries and establish strategic alliances, as well as those relating to
manufacturing, the regulatory process, 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 "Business - Risk Factors" in Lexicon's annual report on Form
10-K for the year ended December 31, 2004, 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.
# # #
CONTACT FOR LEXICON GENETICS:
Bobbie Faulkner
Manager, Investor Relations
281/863-3503
bfaulkner@lexgen.com
LEXICON GENETICS INCORPORATED
SELECTED FINANCIAL DATA
<Table>
<Caption>
-------------------------- -------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
CONSOLIDATED STATEMENTS OF OPERATIONS DATA JUNE 30, JUNE 30,
-------------------------- -------------------------
(In thousands, except per share data) 2005 2004 2005 2004
----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
Revenues:
Collaborative research.................................................. $ 13,771 $ 8,211 $22,654 $16,505
Subscription and license fees........................................... 127 2,567 5,169 6,115
----------- ----------- ---------- -----------
Total revenues........................................................ 13,898 10,778 27,823 22,620
Operating expenses:
Research and development................................................ 23,667 22,580 46,427 44,981
General and administrative.............................................. 4,750 4,642 9,182 9,686
----------- ----------- ---------- -----------
Total operating expenses.............................................. 28,417 27,222 55,609 54,667
----------- ----------- ---------- -----------
Loss from operations....................................................... (14,519) (16,444) (27,786) (32,047)
Interest income............................................................ 506 361 997 793
Interest expense........................................................... (827) (705) (1,632) (996)
Other income, net.......................................................... (2) - 313 (4)
----------- ----------- ---------- -----------
Net loss................................................................... $(14,842) $(16,788) $(28,108) $(32,254)
=========== =========== ========== ===========
Net loss per common share, basic and diluted............................... $ (0.23) $ (0.26) $ (0.44) $ (0.51)
=========== =========== ========== ===========
Shares used in computing net loss per common share......................... 63,636 63,369 63,581 63,217
</Table>
<Table>
<Caption>
---------------------- ----------------------
CONSOLIDATED BALANCE SHEET DATA AS OF JUNE 30, AS OF DECEMBER 31,
(In thousands) 2005 2004
---------------------- ----------------------
(UNAUDITED)
Cash and investments, including restricted cash and investments of $430......... $ 72,792 $ 87,558
Property and equipment, net..................................................... 86,051 84,573
Goodwill........................................................................ 25,798 25,798
Intangible assets other than goodwill, net...................................... 1,240 1,840
Total assets.................................................................... 192,149 211,980
Deferred revenue................................................................ 50,162 37,592
Current and long-term debt...................................................... 37,289 37,631
Accumulated deficit............................................................. (289,223) (261,115)
Total stockholders' equity ..................................................... 93,902 121,594
</Table>