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Lexicon s Q2 Revenues Rise 35 Percent on Increased Licensing Fees

NEW YORK, Aug. 7 – Lexicon Genetics of The Woodlands, Texas, said Tuesday its second quarter revenues rose to $3.5 million, compared with $2.6 million in the year ago period, as the company posted higher fees from collaborations with pharmaceutical and biotech companies and increased licensing fees for its gene targeting technology.

During the second quarter, research and development expenses nearly doubled to $10.7 million, from $5.6 million in the year ago period, reflecting the company’s efforts to further develop its gene knockout and functional analysis programs. The company aims to determine the function of 5,000 genes over five years.

Lexicon with 371 employees, including 279 scientific staff, also posted an increase in second quarter general and administrative expenses, which rose to $5 million from $3.3 million in the year ago period.

Approximately $1.2 million of G&A expenditures stems from the patent infringement litigation against Deltagen.

Second-quarter highlights include the acquisition of Coelacanth, a Princeton, NJ-based developer of proprietary chemistry technologies and a therapeutic protein alliance with Incyte Genomic.

"We expect that our merger with Coelacanth Corporation, with drug-like chemical libraries and an industrialized medicinal chemistry approach to drug discovery, will allow us to rapidly implement an integrated gene-to-lead drug discovery platform," Arthur Sands, CEO of Lexicon, said in a statement.

"Likewise, the combination of our leading capabilities for defining in vivo gene function with Incyte's large number of potential therapeutic proteins gives us the opportunity to become an industry leader in the discovery and development of therapeutic protein products," he said.

During the quarter, Lexicon also delivered the third installment of gene function information for new protein targets to Bristol-Myers Squibb, triggering a payment under the related LexVision collaboration agreement. The five-year agreement with the pharmaceutical company could generate up to $25 million in cash payments to Lexicon.

Lexicon’s second quarter losses widened to $9.9 million, or 20 cents a share, compared with $3.5 million, or eight cents a share, in the comparable quarter a year ago.

As of the end of the second quarter, Lexicon had about $184 million in cash, cash equivalents, and marketable securities, down from $203 million at the end of 2000.

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