Entry into a Material Definitive Agreement

On December 29, 2023, Lexicon Pharmaceuticals, Inc., a Delaware corporation (the "Company") reported to have entered into an Open Market Sale AgreementSM (the "Agreement") with Jefferies LLC, as sales agent ("Jefferies"), pursuant to which the Company may offer and sell, from time to time, through Jefferies (the "public offerings"), shares of its common stock, par value $0.001, having an aggregate sales price of up to $75,000,000 (the "Shares") (Filing, 8-K, Lexicon Pharmaceuticals, DEC 29, 2023, View Source [SID1234638836]).

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The Company is not obligated to sell any Shares under the Agreement. Subject to the terms and conditions of the Agreement, Jefferies will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable laws and regulations to sell Shares from time to time based upon the Company’s instructions, including any price, time or size limits specified by the Company, subject to certain limitations. Under the Agreement, Jefferies may sell the Shares by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the "Securities Act"), including block transactions, sales made directly on the Nasdaq Global Select Market or sales made into any other existing trading market of the Company’s common stock.

The Shares will be issued pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-258564), filed August 6, 2021 and effective as of September 14, 2021. The Company filed a prospectus supplement with the U.S. Securities and Exchange Commission on December 29, 2023 in connection with the offer and sale of the Shares pursuant to the Agreement.

The Company will pay Jefferies a commission equal to 3.0% of the gross proceeds from each sale of Shares, reimburse legal fees and disbursements and provide Jefferies with customary indemnification and contribution rights. The Agreement will terminate as set forth in the Agreement.

An affiliate (the "Covered Stockholder") of Invus, L.P., the Company’s largest stockholder, has the right, pursuant to the Company’s Fifth Amended and Restated Certificate of Incorporation, in connection with any sales made pursuant to the Agreement to concurrently purchase a number of shares of the Company’s common stock sufficient to maintain its proportionate ownership interest in the Company after giving effect to such sales; provided, however, that in any given year, the Covered Stockholder may not exercise such right unless and until the Company has otherwise issued, in the aggregate, common stock pursuant to sales under the Agreement in an amount greater than two percent of the Company’s issued and outstanding common stock measured as of December 31 of the preceding year. Should the Covered Stockholder choose to exercise such right, the Company expects that any shares sold to the Covered Stockholder pursuant thereto would occur in a concurrent private placement exempt from the registration requirements of the Securities Act, at the same price as the price to the public for the corresponding sales made under the Agreement (a "concurrent private placement" and, together with the public offerings, an "offering").

The Company intends to use the net proceeds from any offerings, if any, (i) to fund the commercial launch of INPEFA (sotagliflozin), (ii) to fund the continued research and development of its drug candidates and (iii) for working capital and other general corporate purposes.

The foregoing description of the Agreement in this Current Report on Form 8-K does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 1.1 hereto and is incorporated herein by reference.

Vinson & Elkins L.L.P., counsel to the Company, has issued a legal opinion relating to the validity of the Shares being offered pursuant to the Agreement. A copy of such legal opinion, including the consent included therein, is filed as Exhibit 5.1 to this Current Report on Form 8-K and is incorporated herein by reference.

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy any Shares under the Agreement nor shall there be any sale of such Shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.