Lexicon achieves two milestones, $20 million in payments from Genentech collaboration

By E. Janene Geiss

Philadelphia, Dec. 20 - Lexicon Genetics Inc. announced Tuesday the completion of two performance milestones and $20 million in payments related to work it is doing in collaboration with Genentech, Inc.

Lexicon said it received the first of these payments in connection with its achievement of the fourth and final performance milestone in its initial collaboration with Genentech, according to a company news release.

This milestone relates to the completion by Lexicon of the analysis of the physiological and behavioral functions of the final set of targets selected from Genentech's Secreted Protein Discovery Initiative (SPDI) program.

Lexicon received the second payment under the extension and expansion of the Genentech alliance announced in December 2005.

This milestone payment is related to the delivery of data from advanced research already conducted by Lexicon to further elucidate the functions of certain potential therapeutic proteins and antibody targets identified in the companies' initial collaboration.

Lexicon said it will conduct additional advanced research over the next three years and will receive research funding from Genentech for that purpose.

Under the expanded alliance, Genentech has granted Lexicon the exclusive right to develop and commercialize drugs modulating up to six of the targets included in the alliance, officials said.

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, officials said.

In addition to upfront and performance milestone payments and research funding, Lexicon said it 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 said it is entitled to receive royalties on net sales of these products, provided they are not included in a cost and profit-sharing arrangement.

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, officials said.

"In our expanded alliance, Lexicon will be performing advanced research to validate a broad subset of targets included in the SPDI program," Arthur T. Sands, president and chief executive officer of Lexicon, said in the release.

Lexicon Genetics is a Woodlands, Texas, biopharmaceutical company focused on the discovery and development of breakthrough treatments for human disease.

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