Symphony Icon was set up in 2007 to accelerate development of these products.
Lexicon Pharmaceuticals has exercised a restructured purchase option under its drug development financing collaboration with Symphony Icon Holdings. For $10 million at closing and additional fees to come, the firm has acquired all the equity of Symphony, thereby regaining full rights to LX1031, LX1032, LX1033, and the other drug programs subject to the original collaboration between the firms.
The total of the up-front, deferred, and contingent payments will not exceed the $90 million exercise price applicable under the terms of the original purchase option. In 2007, Lexicon entered into a product-development collaboration with Symphony Capital Partners to create Symphony Icon. The firm was seeded with $45 million and licenses for Lexicon’s first three products, which included LX1031 and LX1033. Under the agreement with Symphony Capital, an additional $15 million of equity capital was provided directly to Lexicon for general corporate purposes.
“The encouraging results we have obtained with our portfolio of serotonin synthesis inhibitors—LX1031 for irritable bowel syndrome, LX1032 for carcinoid syndrome, and LX1033 for other gastrointestinal disorders—informed our decision to reacquire all development and commercialization rights to these promising drug candidates,” says Arthur T. Sands, M.D., Ph.D., Lexicon’s president and CEO.
LX1031 is an orally delivered compound that acts locally in the gastrointestinal tract targeting tryptophan hydroxylase (TPH), an enzyme necessary for the production of serotonin. It has demonstrated positive results in a Phase II trial in patients with diarrhea-predominant and mixed forms of irritable bowel syndrome.
LX1032 is also an orally delivered drug candidate that acts peripherally to inhibit TPH without affecting brain serotonin levels. It is currently in a Phase II study in patients with carcinoid syndrome. LX1033 is a locally acting serotonin synthesis inhibitor. It is in IND-enabling studies.
“We have restructured our agreement with Symphony in a manner that enables us to both defer a sizable portion of the purchase option exercise price as well as make a significant portion contingent on the success of the drug candidates, allowing us to make payments as we receive licensing proceeds to fund them,” Dr. Sands adds.
Deferred payments of $50 million less 50% of the expenses Lexicon incurs for the future development of LX1031, LX1032, LX1033, and related drug candidates, are subject to certain exceptions and up to an aggregate reduction of $15 million. Lexicon may make the deferred payments in whole or in part at any time that it chooses on or before July 30, 2013.
The contingent payments will consist of a 50% share of any consideration Lexicon receives from licensing any of the drug candidates, up to a maximum of $30 million plus the amount of any reduction in the deferred payment amount. If any of the products receives FDA approval prior to Lexicon entering into a licensing transaction in the U.S., the firm will make an alternative contingent payment in lieu of the licensing consideration share.
Deferred and contingent fees are payable at Lexicon’s option in cash, common stock, or a combination of both, provided that at least 50% of any payment made on or prior to July 30, 2012 will be paid in common stock and no more than 50% of any payment made after this date will be paid in common stock.