EXHIBIT 99.1
LEXICON GENETICS REPORTS 2005 FOURTH QUARTER
AND FULL YEAR FINANCIAL RESULTS
LEXICON ACHIEVES 23% ANNUAL REVENUE GROWTH
THE WOODLANDS, TEXAS, FEBRUARY 22, 2006 - 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 months and year ended December 31, 2005.
"In 2005, we made significant progress toward our goal of entering clinical
development with our internal programs," said Arthur T. Sands, M.D., Ph.D.,
president and chief executive officer. "We continue to be encouraged by the
results of preclinical safety testing for our lead programs - LG617 for
Alzheimer's and cognitive disorders and LG103 for irritable bowel syndrome."
REVENUES: Lexicon's revenues for the three months ended December 31, 2005
increased 30 percent to $33.9 million from $26.0 million for the corresponding
period in 2004. The increase was primarily attributable to Lexicon's completion
of two performance milestones related to work it is doing in collaboration with
Genentech, Inc. that resulted in payments from Genentech totaling $20 million.
Revenue recognized under Lexicon's alliance with Organon and its award from the
Texas Enterprise Fund also contributed to the increase in revenue. Revenue in
the fourth quarter of 2004 included performance milestone payments from
Genentech and Takeda Pharmaceutical Company Limited. For the year ended December
31, 2005, revenues increased 23 percent to $75.7 million from $61.7 million in
2004.
RESEARCH AND DEVELOPMENT EXPENSES: Research and development expenses for the
three months ended December 31, 2005 increased three percent to $23.9 million
from $23.1 million for the corresponding period in 2004. For the year ended
December 31, 2005, research and development expenses increased three percent to
$93.6 million from $90.6 million in 2004.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for the
three months ended December 31, 2005 were $4.3 million, substantially unchanged
from the corresponding period in 2004. For the year ended December 31, 2005,
general and administrative expenses decreased two percent to $18.2 million from
$18.6 million in 2004.
NET INCOME (LOSS): Net income for the three months ended December 31, 2005 was
$5.9 million, or $0.09 per share, principally as a result of the performance
milestone payments received in the fourth quarter of 2005. This compares
favorably to a net loss of $0.5 million, or $0.01 per share, for the
corresponding period in 2004. The net loss for the year ended December 31, 2005
decreased to $36.3 million, or $0.57 per share, from a net loss of $47.2
million, or $0.74 per share in 2004.
CASH AND INVESTMENTS: As of December 31, 2005, Lexicon had $99.7 million in cash
and investments, including restricted cash and investments, as compared to $90.2
million as of September 30, 2005 and $87.6 million as of December 31, 2004. Cash
and investments at December 31, 2005 reflected the receipt in December 2005 of
an up-front payment, performance milestones and research funding pursuant to
Lexicon's alliance with Genentech.
"Our financial and business development efforts were highly successful in 2005,"
said Julia P. Gregory, Lexicon's executive vice president, corporate development
and chief financial officer. "We continue to create long-term value through our
alliances, with immediate positive impact on our revenues and cash
position. Strategic collaborations and technology contracts and licenses brought
in more than $120 million in cash to Lexicon in 2005, thereby providing a strong
source of funding during the year."
YEAR 2005 HIGHLIGHTS
EXPANSION OF ALLIANCE WITH GENENTECH: In December 2005, Lexicon announced the
expansion of its drug discovery alliance with Genentech to include the advanced
research, development and commercialization of new biologic drugs. Lexicon will
receive a total of $25 million in upfront and milestone payments and research
funding during the three-year advanced research portion of the expanded
alliance. In this period, Lexicon will conduct advanced research on a broad
subset of targets included in Genentech's Secreted Protein Discovery Initiative
(SPDI) program and validated using Lexicon's proprietary gene knockout
technology.
Lexicon may develop and commercialize drugs for up to six of the targets
included in the alliance. Genentech retains an option on the potential
development and commercialization of these drugs under a cost and profit sharing
arrangement, with Lexicon having certain conditional rights to co-promote drugs
on a worldwide basis. Genentech is entitled to receive milestone payments in the
event of regulatory approval and royalties on net sales of products
commercialized by Lexicon outside of a cost and profit sharing arrangement.
Lexicon will receive payments from Genentech upon achievement of milestones
related to the development and regulatory approval of certain drugs resulting
from the alliance that are developed and commercialized by Genentech. Lexicon is
also entitled to receive royalties on net sales of these products, provided they
are not included in a cost and profit sharing arrangement.
COMPLETION OF TWO PERFORMANCE MILESTONES IN GENENTECH COLLABORATION: Lexicon
completed two performance milestones related to work it is doing in
collaboration with Genentech and received corresponding payments totaling $20
million. The first of these milestones related to the completion by Lexicon of
the analysis of the physiological and behavioral functions of the final set of
targets selected from Genentech's SPDI program under the companies' initial
collaboration. The second related to the delivery of data from advanced research
already conducted by Lexicon under the expanded alliance.
ALLIANCE WITH ORGANON TO DEVELOP BIOTHERAPEUTIC DRUGS: In May 2005, 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. Organon and Lexicon will share costs and responsibility for research,
preclinical and clinical activities and will equally benefit from collaboration
product revenue. 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: In June
2005, Lexicon established an alliance with XOMA Ltd. to jointly develop and
commercialize antibody drugs for certain targets discovered by Lexicon. 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.
AWARD FROM TEXAS ENTERPRISE FUND: In July 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 is creating
this new library using its proprietary gene trapping technology for the Texas
Institute for Genomic Medicine, a newly formed non-profit institute. In
addition, Lexicon will equip the institute with the bioinformatics software
required for the management and analysis of data relating to the library.
CONTRACT WITH NATIONAL INSTITUTES OF HEALTH: In September 2005, Lexicon entered
into a three-year contract to provide selected knockout mouse lines and related
phenotypic data to the United States National Institutes of Health (NIH). These
materials are related to genes that have already been knocked out and analyzed
by Lexicon. Lexicon will receive payment from NIH of approximately $4.9 million
for NIH's initial order of knockout mouse lines. Lexicon retains the sole right
to provide these materials to commercial entities.
HARVESTED NOVEL DISCOVERIES FROM GENOME5000(TM) PROGRAM: Lexicon's Genome5000
program continued to yield new biologically-validated targets for drug
discovery. In this program, Lexicon is analyzing 5,000 genes using its
proprietary gene knockout technologies and its extensive physiological and
behavioral analyses to discover new drug targets from the human genome. To date,
Lexicon has completed the analysis of more than sixty percent of these genes and
has harvested more than 90 promising targets related to major medical needs.
LEXICON CONFERENCE CALL:
Dr. Arthur T. Sands and Julia P. Gregory will host a conference call at 11:00
a.m. Eastern Time on Wednesday, February 22, 2006 to review Lexicon's operating
highlights and its financial results for the year ended December 31, 2005 and to
discuss the company's guidance for 2006.
The dial-in number for the conference call is 800-946-0741 (within the United
States) or 719-457-2649 (international). The pass code for all callers is
7195604. 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 February 27, 2006.
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.
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
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
CONSOLIDATED STATEMENTS OF OPERATIONS DATA ------------------------ --------------------------
(In thousands, except per share data) 2005 2004 2005 2004
--------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
Revenues:
Collaborative research..................................... $ 33,393 $ 21,739 $ 69,567 $ 49,736
Subscription and license fees.............................. 501 4,272 6,113 12,004
--------- ----------- ----------- -----------
Total revenues............................................ 33,894 26,011 75,680 61,740
Operating expenses:
Research and development.................................... 23,854 23,120 93,625 90,586
General and administrative.................................. 4,318 4,349 18,174 18,608
--------- ----------- ----------- -----------
Total operating expenses.................................. 28,172 27,469 111,799 109,194
--------- ----------- ----------- -----------
Income (loss) from operations.................................. 5,722 (1,458) (36,119) (47,454)
Interest income................................................ 881 440 2,645 1,638
Interest expense............................................... (815) (831) (3,280) (2,660)
Other income, net.............................................. 245 1,308 558 1,304
--------- ----------- ----------- -----------
Income (loss) before taxes..................................... 6,033 (541) 36,196 47,172
Income tax provision........................................... 119 -- 119 --
--------- ----------- ----------- -----------
Net income (loss).............................................. $ 5,914 $ (541) $ (36,315) $ (47,172)
========= =========== =========== ===========
Net income (loss) per common share, basic and diluted.......... $ 0.09 $ (0.01) $ (0.57) $ (0.74)
========= =========== =========== ===========
Shares used in computing net income (loss) per common share,
basic......................................................... 64,539 63,449 63,962 63,327
Shares used in computing net income (loss) per common share,
diluted....................................................... 67,317 63,449 63,962 63,327
CONSOLIDATED BALANCE SHEET DATA AS OF DECEMBER 31, AS OF DECEMBER 31,
(In thousands) 2005 2004
------------------ ------------------
(UNAUDITED)
Cash and investments, including restricted cash and investments of $430....... $ 99,695 $ 87,558
Property and equipment, net................................................... 85,265 84,573
Goodwill...................................................................... 25,798 25,798
Intangible assets other than goodwill, net.................................... 640 1,840
Total assets.................................................................. 218,714 211,980
Deferred revenue.............................................................. 81,582 37,592
Current and long-term debt.................................................... 36,940 37,631
Accumulated deficit........................................................... (297,430) (261,115)
Total stockholders' equity ................................................... 85,802 121,594