Lexicon Pharmaceuticals signs up to $150 million term loans via Oxford

By Wendy Van Sickle

Columbus, Ohio, March 17 – Lexicon Pharmaceuticals Inc. and one of its subsidiaries entered into a loan and security agreement on Thursday with Oxford Finance LLC that provides up to $150 million of borrowing capacity available in four tranches, each maturing in March 2027, according to an 8-K filing with the Securities and Exchange Commission.

Monthly interest-only payments are due during an initial 36-month period, which may be extended at Lexicon’s option to 48 months if Lexicon maintains compliance with a financial covenant relating to net sales of sotagliflozin following regulatory approval. The interest-only period will be followed by an amortization period extending through the maturity date.

The first $25 million tranche was funded at closing. The second $25 million tranche is available for draw at Lexicon’s option prior to Aug. 31, but within 30 days of acceptance of filing by the U.S. Food and Drug Administration of Lexicon’s resubmission of its application for regulatory approval of sotagliflozin for heart failure. The third $50 million tranche is available for draw at Lexicon’s option prior to June 30, 2023, but within 60 days of U.S. regulatory approval of sotagliflozin for heart failure. The fourth $50 million tranche is available for draw at Lexicon’s option, subject to Oxford’s consent, at any time prior to the expiration of the interest-only payment period.

Borrowings bear interest at 30-day U.S. dollar Libor plus 790 basis points with an interest floor of 8.01%.

Any prepayment of the term loans is subject to prepayment fees for up to three years after the funding of each tranche of the loans. A final payment of 6% of the amount funded under the term loans is due upon prepayment or maturity.

The loan and security agreement provides that, upon funding of the first three tranches, Lexicon will grant Oxford a warrant to purchase shares of its common stock having a value equal to 3.5%, 1.75% and 0.875%, respectively, of each such tranche, as determined by reference to a 10-day average closing price of the shares.

The Woodlands, Texas-based Lexicon is a biopharmaceutical company with clinical-stage programs for drugs to treat diseases, including diabetes.

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