THE WOODLANDS, Texas, March 7 /PRNewswire-FirstCall/ -- Lexicon Genetics Incorporated (Nasdaq: LEXG - news), a drug discovery company that uses gene knockout technology to define the function of genes, today reported financial results for the three-month and full-year periods ended December 31, 2001.
Revenues: Lexicon's revenues for the fourth quarter of 2001 were $10.3 million, an increase of 251 percent as compared to $2.9 million for the corresponding quarter of 2000. For the full year ended December 31, 2001, total revenues increased by 111 percent to $30.6 million, from $14.5 million in 2000. Revenues for the 2001 fourth quarter included:
-- Subscription and license fees of $3.1 million, consisting primarily of
access fees from the Company's LexVision(TM) collaborations with
Bristol-Myers Squibb Company and Incyte Genomics, Inc.;
-- Collaborative research revenues of $3.8 million, consisting primarily
of revenues from Lexicon's therapeutic protein collaboration with
Incyte Genomics, Inc. and revenues from functional genomics
collaborations with pharmaceutical and biotechnology companies; and
-- Revenues of $3.4 million from the sale of chemical compound libraries
by Lexicon Pharmaceuticals to pharmaceutical and biotechnology
companies for non-exclusive use in their internal drug discovery
programs.
Research and Development Expenses: Research and development expenses for the three-month period ended December 31, 2001 increased 101 percent to $17.8 million from $8.9 million for the corresponding quarter of 2000. For the full year ended December 31, 2001, research and development expenses increased 69 percent to $53.4 million from $31.6 million in 2000.
Excluding stock-based compensation, research and development expenses for the three-month period ended December 31, 2001 were $16.4 million, compared to $7.5 million for the corresponding quarter of 2000, and for the full year ended December 31, 2001 were $47.8 million, compared to $20.8 million in 2000.
The increase in research and development expenses in the fourth quarter of 2001 over those in the prior-year quarter primarily reflects increased investments toward the scale-up of the Company's gene knockout and functional analysis programs to determine the function of 5,000 genes over five years for the discovery of new drug targets, as well as the expenses of the Company's new Lexicon Pharmaceuticals division following the Coelacanth merger. Consistent with the Company's focus on these programs, for the full-year 2001, Lexicon's total workforce grew to 484 people, including 384 scientific staff. As of March 1, 2002, our workforce numbered 507 employees.
General and Administrative Expenses: General and administrative expenses for the three-month period ended December 31, 2001 increased 4 percent to $5.1 million from $4.9 million for the corresponding quarter of 2000. For the full year ended December 31, 2001, general and administrative expenses increased 14 percent to $20.9 million from $18.3 million in 2000.
Excluding stock-based compensation, general and administrative expenses for the three-month period ended December 31, 2001 increased to $3.8 million, compared to $3.6 million for the corresponding quarter of 2000, and for the full year ended December 31, 2001 were $15.6 million, compared to $8.3 million in 2000.
Interest and Other Income: Interest and other income decreased 52 percent to $1.6 million in the three-month period ended December 31, 2001 from $3.4 million in the corresponding quarter of 2000 due to lower average cash and investment balances and lower average interest rates. For the full year ended December 31, 2001, interest and other income decreased 11 percent to $8.8 million from $9.9 million in 2000.
Net Loss: Net loss was $11.0 million, or $0.21 per share, in the three- month period ended December 31, 2001, compared to a net loss of $7.5 million, or $0.16 per share, in the corresponding quarter of 2000. For the full year ended December 31, 2001, net loss was $35.2 million, or $0.70 per share, compared to a net loss of $26.1 million, or $0.63 per share, in 2000.
Excluding non-cash stock-based compensation charges, net loss for the three-month period ended December 31, 2001 was $8.3 million, or $0.16 per share, as compared to net loss of $4.9 million, or $0.10 per share, for the corresponding quarter of 2000, and net loss for the full year ended December 31, 2001 was $24.4 million, or $0.49 per share, compared to a pro forma net loss of $5.2 million, or $0.11 per share, in 2000. The pro forma results assume the conversion of the redeemable convertible preferred stock into common stock upon the closing of our initial public offering as if such conversion occurred on the date of the original issuance.
Cash and Investments: As of December 31, 2001, Lexicon had approximately $166.8 million in cash and investments, compared to $176.4 million as of September 30, 2001 and $202.7 million as of December 31, 2000.
``Lexicon's performance in the year 2001 reflected a number of significant achievements that demonstrate our consistent growth as a leader in drug discovery,'' said Arthur T. Sands, M.D., Ph.D., President and Chief Executive Officer of Lexicon. ``We completed our merger with Coelacanth Corporation and used Coelacanth's extremely strong medicinal chemistry skill set as the basis for our Lexicon Pharmaceuticals division; we announced our advancement of in vivo-validated drug targets from our cardiology, neurology and immunology programs into therapeutic discovery programs and are continuing the rollout of additional targets from our drug discovery pipeline; we signed a major therapeutic protein alliance with Incyte Genomics, Inc.; and we reached favorable settlement of our patent infringement litigation against Deltagen over our gene knockout technologies. These outstanding achievements, coupled with our extremely strong revenue and cash position and the operational start- up of our Genome Pharmaceutical Center, demonstrate our success at creating a highly competitive platform for drug discovery.''
Year 2001 Highlights:
Formation of Lexicon Pharmaceuticals: Lexicon announced in June and subsequently closed in July its merger with Coelacanth Corporation of Princeton, New Jersey. Coelacanth's medicinal chemistry expertise has provided the basis for a new division called Lexicon Pharmaceuticals, where Lexicon's chemists are creating optimized compounds against Lexicon's in vivo- validated drug targets in order to identify lead drug candidates.
Discovery of gene targets for potential treatment of heart disease, inflammation and depression: Lexicon announced the discovery of four new in vivo-validated drug targets in 2001 and early 2002. LG314 is a new target for the development of potential treatments for heart disease, obesity and related diseases, such as diabetes. LG293 is a new target that could be used for the development of therapeutics to block inflammation and potentially prevent organ transplant rejection. LG527 is a new target for the development of potential treatments for depression. LG914 is a new target for the development of potential treatments for atherosclerosis. All four targets were uncovered through the Company's industrialized gene knockout program in which mice lacking specific genes are associated with desirable medical profiles. Lexicon advanced a total of eight in vivo-validated drug targets into therapeutic discovery programs in 2001, a pace that we expect to accelerate in 2002.
Therapeutic protein alliance with Incyte Genomics: Lexicon and Incyte Genomics, Inc. established a drug discovery alliance to develop a pipeline of therapeutic protein products for development and commercialization by the two companies. A committee of senior scientists from each company will jointly select up to 250 secreted proteins for which Incyte may have composition of matter patents or patent applications, and Lexicon will apply a broad range of proprietary technologies, including its patented gene trapping and gene targeting technologies, to discover the in vivo function of the selected proteins and their utility as potential therapeutic proteins. Lexicon and Incyte will pool the resulting discoveries and related patent rights, and will alternate selections of in vivo-validated therapeutic proteins from the program for development and commercialization.
Launch of Genome5000 Project: Lexicon announced a major scale-up of its gene knockout and in vivo functional analysis programs to determine the function of 5,000 genes over five years for the discovery of new disease targets. The company is focusing its large-scale gene function discovery process on those proteins encoded by pharmaceutically valuable gene families. These include genes that encode medically important proteins such as G-protein coupled (GPCRs) and other receptors, kinases, ion channels, key enzymes and secreted proteins. Lexicon believes its large-scale gene knockout program will make it the first to discover the medical applications of the largest number of new pharmaceutical targets for drug discovery.
New LexVision and functional genomics collaborations: Lexicon entered into a LexVision collaboration with Incyte, and functional genomics collaborations with Abgenix and Immunex Corporation.
Settlement of patent infringement litigation against Deltagen: Lexicon and Deltagen, Inc. reached a settlement of Lexicon's patent infringement litigation against Deltagen. Under the terms of the settlement, Deltagen obtained a commercial license under the patents covering Lexicon's gene targeting technologies, Lexicon obtained access to Deltagen's DeltaBase(TM) database of mammalian genes and their in vivo functions, and all of the claims and counterclaims in the litigation were dismissed with prejudice. Lexicon's subscription to DeltaBase includes non-exclusive, perpetual licenses to the 250 drug targets represented in DeltaBase at the time of the settlement and the 1,000 additional drug targets that are to be added to DeltaBase over the subsequent four years. Lexicon will have the opportunity to receive payments for Deltagen's fee-for-service generation of knockout mice, and Deltagen will have the opportunity to receive milestone and royalty payments for potential therapeutic and diagnostic products developed from drug targets in DeltaBase. Neither party will pay subscription or license fees.
New technology license agreements: Lexicon granted non-exclusive, internal research-use sublicenses under its gene targeting patents to Immunex, GlaxoSmithKline plc, Merck & Co., Inc. and Pfizer Inc.
Expansion of OmniBank library of gene knockout clones: Lexicon substantially expanded the size of its OmniBank library of more than 200,000 knockout mouse ES cell clones, which the Company estimates now contains gene knockout clones for more than half of all genes in the mammalian genome, each identified and catalogued in a database by DNA sequence from the trapped gene.
Operational start-up of Genome Pharmaceutical Center: Lexicon initiated operational start-up of its Genome Pharmaceutical Center in The Woodlands, Texas, tripling the size of its physical plant to approximately 300,000 square feet. The company believes this facility will provide it with significant competitive advantages in speed and scale for its program to determine the function of 5,000 genes over five years for the discovery of new disease targets.
Continued record of substantial revenue growth: Lexicon achieved more than $30 million in annual revenues in 2001, marking the Company's sixth consecutive year of greater than 100% year-over-year revenue growth.
Lexicon Genetics Incorporated is a drug discovery company of the post- genome era, using gene knockout technology to define the functions of genes for the discovery of pharmaceutical products. Lexicon is using this technology to fuel drug discovery programs in cancer, cardiovascular disease, immune disorders, neurological disease, diabetes and obesity. Lexicon has established drug discovery alliances and functional genomics collaborations with leading pharmaceutical and biotechnology companies, research institutes and academic institutions throughout the world to commercialize its technology and further develop its discoveries. Additional information about the Company is available through Lexicon's corporate website, www.lexicon-genetics.com .
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 develop drug candidates from its discoveries, achieve its operational objectives, obtain patent protection for its discoveries and establish strategic alliances, 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, 2000, 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.
Lexicon Genetics Incorporated
Selected Financial Data
Consolidated Statements of Operations Data
Three Months Ended Year Ended
December 31, December 31,
(In thousands, except
per share data) 2001 2000 2001 2000
(unaudited) (unaudited)
Revenues:
Subscription and
license fees $3,076 $2,085 $14,744 $4,579
Collaborative research 3,812 753 11,220 9,505
Compound libraries 3,383 --- 4,549 ---
Other revenue --- 85 64 375
Total revenues 10,271 2,923 30,577 14,459
Operating expenses:
Research and
development,
including
stock-based
compensation of
$1,391, $1,327,
$5,539 and $10,883,
respectively 17,790 8,872 53,355 31,647
General and
administrative,
including
stock-based
compensation of
$1,271, $1,322,
$5,231 and $9,958,
respectively 5,106 4,891 20,861 18,289
Total operating
expenses 22,896 13,763 74,216 49,936
Loss from operations (12,625) (10,840) (43,639) (35,477)
Interest and other
income 1,637 3,404 8,781 9,905
Interest expense 18 83 314 422
Net loss $(11,006) $(7,519) $(35,172) $(25,994)
Accretion on redeemable
convertible preferred
stock --- --- --- (134)
Net loss attributable
to common
stockholders $(11,006) $(7,519) $(35,172) $(26,128)
Net loss per common
share $(0.21) $(0.16) $(0.70) $(0.63)
Pro forma net loss
per common share* $(0.21) $(0.16) $(0.70) $(0.58)
Pro forma net loss
per common share,
excluding stock-based
compensation* $(0.16) $(0.10) $(0.49) $(0.11)
Shares used in
computing net loss
per common share 51,955 48,123 50,213 41,618
Shares used in
computing pro forma
net loss and pro
forma net loss,
excluding stock-based
compensation, per
common share* 51,955 48,123 50,213 45,028
Balance Sheet Data As of December 31, As of December 31,
(In thousands) 2001 2000
(unaudited)
Cash and investments $166,840 $202,680
Property and equipment, net 26,707 14,477
Goodwill 25,798 ---
Intangible assets other than
goodwill, net 5,440 ---
Total assets 239,990 220,693
Deferred revenue 13,095 4,672
Deferred stock compensation (22,260) (33,637)
Accumulated deficit (90,075) (54,903)
Total stockholders' equity 218,372 207,628
* Pro forma net loss per common share excludes the effect of accretion on
redeemable convertible preferred stock. Pro forma net loss per common
share data is computed using the weighted average number of common
shares outstanding during the period, including pro forma effects of
the conversion of outstanding redeemable convertible preferred stock
into common stock upon the closing of the initial public offering as if
such conversion occurred on the date of original issuance.
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