Development-stage Lexicon Pharmaceuticals (NASDAQ:LXRX) served up a dish of dilution to its shareholders today, issuing 13.2MM shares of common stock to “designees of Symphony Icon Holdings LLC” in order to pay down $35MM in debt owed. Lexicon may still be required to pay $45MM (cash or stock) in contingent payments to Symphony Holdings if certain licensing transactions and regulatory approvals are met in their LG103 development program. Lexicon’s lead candidate, LX4211, is a Phase II diabetes SGLT1 and SGLT2 inhibitor, the first dual inhibitor of its kind in clinical trials.
Lexicon has a strong $282MM cash position and little debt, however the company burned through an average of $94MM yearly for the last five years. LXRX reported $2M in revenue for 2010 and 2011 each and will inevitably need to acquire more financing before it can create significant, sustained income through commercialization of its pipeline products. With LX4211 still in Phase II trials, it may be years before production; Lexicon may have to return to a public stock offering and further dilution. Shares closed down 9% Monday, and the company will provide a second quarter earnings report during a conference call Tuesday.
