Lexicon Pharmaceuticals Provides Clinical Pipeline Update And Reports 2013 Second Quarter Financial Results

THE WOODLANDS, Texas,July 30, 2013/PRNewswire/ --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 endedJune 30, 2013.

"We have continued to advance multiple programs in our clinical pipeline, most notably completing enrollment of Phase 2 studies of telotristat etiprate in ulcerative colitis and LX1033 in diarrhea-predominant irritable bowel syndrome. We look forward to obtaining top-line results from these studies around the end of the third quarter and in the fourth quarter of 2013, respectively," said Dr. Arthur T. Sands, president and chief executive officer of Lexicon.  "In addition, we obtained initial safety data from the pioneer portion of our Phase 2 trial of LX4211 in Type 1 diabetes and subsequently advanced the study into its expansion phase."

• LX4211:  LX4211 is a dual inhibitor of sodium-glucose transporters 1 and 2 (SGLT1 and SGLT2).  SGLT1 is primarily responsible for glucose absorption in the gastrointestinal tract and SGLT2 is responsible for most of the glucose reabsorption performed by the kidney.  At the 73rdScientific Sessions of the American Diabetes Association, Lexicon presented a sub-analysis of blood pressure effects observed in the 12-week dose-ranging Phase 2b study of LX4211 in type 2 diabetes.  Notably, patients with high baseline systolic blood pressure (≥130 mmHg) dosed with LX4211 experienced an average of 14 mmHg reduction in systolic blood pressure when compared to placebo (p=0.002).  In contrast, patients with normal systolic blood pressure at baseline (<130 mmHg) experienced an average of only 1 mmHg reduction (p=0.6).  Lexicon also completed the pioneer portion of a Phase 2 clinical trial of LX4211 in type 1 diabetes, with LX4211 showing a favorable safety profile when given in combination with insulin.  Lexicon has initiated enrollment of patients in the placebo-controlled, expansion portion of the type 1 diabetes trial and is proceeding with preparations for the initiation of Phase 3 clinical trials of LX4211 in type 2 diabetes.

• Telotristat etiprate (LX1032):  Telotristat etiprate is an inhibitor of tryptophan hydroxylase that reduces peripheral serotonin production without affecting brain serotonin levels. Lexicon has completed enrollment of patients in a Phase 2 clinical trial of telotristat etiprate in ulcerative colitis and continues to enroll patients in a pivotal Phase 3 clinical trial of telotristat etiprate in carcinoid syndrome.

• LX1033: LX1033 is an inhibitor of tryptophan hydroxylase that acts locally in the gastrointestinal tract to reduce serotonin production without impacting brain serotonin levels. Lexicon is completing enrollment of patients in a Phase 2 clinical trial of LX1033 in diarrhea-predominant IBS (IBS-d).

• LX2761: At the 73rdScientific Sessions of the American Diabetes Association,Lexiconpresented data on its newest clinical candidate for diabetes.  LX2761 acts locally in the gastrointestinal tract to reduce glucose absorption by inhibiting SGLT1 without any significant inhibition of SGLT2 in the kidney.  LX2761 was shown to improve glycemic control in two mouse models of diabetes, as measured by reductions in hemoglobin A1c and oral glucose tolerance tests.

Revenues:Lexicon's revenues for the three months endedJune 30, 2013were$0.2 million, consistent with the corresponding period in 2012.  For the six months endedJune 30, 2013, revenues increased to$0.6 millionfrom$0.5 millionfor the corresponding period in 2012.

Research and Development Expenses:Research and development expenses for the three months endedJune 30, 2013increased 22 percent to$23.7 millionfrom$19.4 millionfor the corresponding period in 2012.  The increase was primarily attributable to increases in external clinical and preclinical research and development and personnel costs, partially offset by decreases in facility costs.  For the six months endedJune 30, 2013, research and development expenses increased four percent to$44.0 millionfrom$42.4 million for the corresponding period in 2012.

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$0.5 millionand$2.2 million for the three months endedJune 30, 2013and 2012, respectively, and was$1.7 millionand$4.2 millionfor the six months endedJune 30, 2013and 2012, respectively.

General and Administrative Expenses:General and administrative expenses for the three months endedJune 30, 2013increased 12 percent to$4.7 millionfrom$4.2 millionfor the corresponding period in 2012.  The increase was primarily attributable to increases in personnel costs and legal and patent fees.  For the six months endedJune 30, 2013, general and administrative expenses increased three percent to$9.0 millionfrom$8.7 millionfor the corresponding period in 2012.

Consolidated Net Loss:Net loss for the three months endedJune 30, 2013was$29.1 million, or$0.06per share, compared to a net loss of$25.9 million, or$0.05per share, in the corresponding period in 2012.  Net loss for the six months endedJune 30, 2013was$55.1 million, or$0.11per share, compared to a net loss of$55.8 million, or$0.12per share, for the corresponding period in 2012.  For the three and six months endedJune 30, 2013, net loss included non-cash, stock-based compensation expense of$1.9 million and$4.0 million, respectively. For the three and six months endedJune 30, 2012, net loss included non-cash, stock-based compensation expense of$1.6 millionand$3.3 million, respectively.

Cash and Investments:As ofJune 30, 2013, Lexicon had$175.4 millionin cash and investments, as compared to$197.2 millionas ofMarch 31, 2013and$223.2 millionas ofDecember 31, 2012.

Lexicon management will hold a conference call to discuss its clinical development progress and financial results for the second quarter of 2013 at11:00 a.m. Eastern TimeonJuly 30, 2013. The dial-in number for the conference call is 888-645-5785 (within the US/Canada) or 970-300-1531 (international). The conference ID for all callers is 22881223. Investors can access a live webcast of the call atwww.lexpharma.com. An archived version of the webcast will be available on the website throughAugust 30, 2013.

Lexicon is a biopharmaceutical company focused on discovering breakthrough treatments for human disease.  Lexicon currently has multiple drug programs in clinical development for diabetes, irritable bowel syndrome, carcinoid syndrome and other indications, all of which were discovered by Lexicon's research team.  Lexicon has used its proprietary gene knockout technology to identify more than 100 promising drug targets.  Lexicon has focused drug discovery efforts on these biologically-validated targets to create its extensive pipeline of clinical and preclinical programs.  For additional information about Lexicon and its programs, please visitwww.lexpharma.com.

This press release contains "forward-looking statements",includingstatements relating to Lexicon's clinical development of LX4211, telotristat etiprate (LX1032), LX1033 and LX2761, including characterizations of the results of and projected timing of clinical trials of such compounds, and the potential therapeutic and commercial potential of LX4211, telotristat etiprate (LX1032), LX1033 and LX2761.  In addition, this press release also contains forward-looking statements relating to 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.  All 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 clinical development of LX4211, telotristat etiprate (LX1032), LX1033 and LX2761 and preclinical and clinical development of its other potential drug candidates, advance additional candidates into preclinical and clinical development, obtain necessary regulatory approvals, achieve its operational objectives, obtain patent protection for its discoveries and establish strategic alliances, as well as additional factors relating to manufacturing, 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 "Risk Factors" in Lexicon's annual report on Form 10-K for the year endedDecember 31, 2012, 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.

(In thousands, except per share data)

Revenues:

Collaborative research

$     211

$        199

$     495

$     351

Subscription and license fees

3

-

79

148

Total revenues

214

199

574

499

Operating expenses:

Research and development, including stock-based compensationof $1,022, $915, $2,352 and $1,952, respectively

23,692

19,355

44,019

42,392

Increase in fair value of Symphony Icon, Inc. purchase liability

477

2,162

1,741

4,243

General and administrative, including stock-based compensationof $847, $680, $1,626 and $1,361, respectively

4,669

4,162

8,993

8,727

Total operating expenses

28,838

25,679

54,753

55,362

Loss from operations

(28,624)

(25,480)

(54,179)

(54,863)

Interest income

44

58

97

114

Interest expense

(496)

(530)

(1,002)

(1,067)

Other income (expense), net

(4)

21

30

17

Consolidated net loss

$    (29,080)

$  (25,931)

$    (55,054)

$    (55,799)

Consolidated net loss per common share, basic and diluted

$  (0.06)

$  (0.05)

$  (0.11)

$  (0.12)

Shares used in computing net loss attributable to Lexicon Pharmaceuticals, Inc.  per common share, basic and diluted

513,083

480,634

512,757

480,479

(In thousands)

Cash and investments

$        175,378

$     223,208

Property and equipment, net

42,152

42,634

Goodwill

44,543

44,543

Other intangible assets

53,557

53,557

Total assets

323,393

371,778

Deferred revenue

14,028

14,038

Current and long-term debt

22,678

23,451

Other long-term liabilities

35,256

32,283

Accumulated deficit

(954,886)

(899,832)

Total stockholders' equity

215,084

266,678