Lexicon hops on public offering train to prepare for next year's potential drug approval
Public offerings and private placements have for years been part of the lexicon for Nasdaq-listed biopharmas, but they’ve become more prominent amid a bear market and a common tactic for drug developers in the hours and days after disclosing positive news.
Lexicon Pharmaceuticals is the latest. A day after saying the FDA had accepted its drug resubmission for heart failure, the Texas biotech eyes $85 million in gross proceeds from a public offering and a private placement, almost split evenly.
Investors wiped out about 21% of the biotech’s shares $LXRX before the opening bell Thursday. The stock climbed about 4% Wednesday after Lexicon said the FDA would review sotagliflozin for heart failure, after multiple denials in type 1 diabetes.
The public offering of 16.8 million shares is at $2.50 apiece, well below the $3.27 closing price Wednesday. The private placement of about 2.57 million shares — to “one or more affiliates” of Lexicon’s largest shareholder, Invus — is also priced at $2.50 a pop.
Lexicon looks to pad its cash reserves to help bankroll pre-commercial activities for sotagliflozin, the company said, as a decision is expected by next May. Proceeds will also fuel a commercial launch, should the FDA approve the drug. Additional financing will be set aside for LX9211 in neuropathic pain. The AAK1 inhibitor passed the primary goal of one of two Phase II studies, Lexicon said last month, with the other trial expected to read out in the third quarter.
In the 319-patient RELIEF-DPN-1 clinical trial, LX9211 achieved the primary endpoint by showing a statistically significant reduction in a score of average daily pain, with the low dose arm showing a reduction of 1.39 points from baseline and the high dose arm exhibiting a 1.27-point reduction. The placebo group showed a 0.72-point reduction.
Lexicon also previously inked a $150 million loan facility with Oxford Finance, which is split into multiple tranches, including a $25 million one triggered by yesterday’s accepted NDA filing.