Lexicon Genetics Inc. is adding $40 million to its coffers through the sale of 11 million shares priced at $3.78 apiece to support its ongoing research and development efforts.

The Woodlands, Texas-based firm, which expects net proceeds of the oversubscribed offering to total about $37.5 million, also plans to use funds for preclinical and clinical development of its lead programs, capital expenditures and for working capital purposes. New York-based Banc of America Securities LLC acted as lead placement agent, and Lazard Capital Markets LLC, also of New York, served as co-placement agent.

"We're most excited about moving into the clinic" with the lead candidates, said Arthur Sands, president and CEO of Lexicon.

Last month, the company initiated plans for a Phase I trial of LX6171, an oral small molecule in development for cognitive disorders, such as Alzheimer's disease, schizophrenia, vascular dementia and Fragile X syndrome. That study is expected to evaluate the product's safety in 40 healthy subjects.

Lexicon anticipates filing an investigational new drug application for a second candidate, LX1031, before the end of the year in irritable bowel syndrome, and expects to file INDs on hematologic compounds sometime next year, Sands said.

The company has started IND-enabling studies for the first of those, LX293, an oral, small-molecule modulator of leukocyte trafficking that might have potential against autoimmune diseases, such as multiple sclerosis and rheumatoid arthritis. A second program, LG267, which is designed to "affect lymphocyte apoptosis," is expected to be developed against lymphoma, Sands said.

Lexicon's internal pipeline emerged from its gene knockout technology, which works by determining the functions of genes and then identifying drug targets against those genes. That technology also has led to a number of collaborations over the years.

In June, Lexicon extended its 2003 neuroscience alliance with New York-based Bristol-Myers Squibb Co. for an additional two years and an additional $20 million in research funding. And last year, Lexicon expanded its deal with South San Francisco-based Genentech Inc. for $25 million. (See BioWorld Today, Dec. 2, 2005.)

The company also is working with NV Organon, of Oss, the Netherlands, to discover, develop and commercialize therapeutics based on certain proteins and antibodies targeting inflammatory disease. In that deal, Lexicon could receive up to $73 million.

The recent financing, "combined with our current and anticipated new collaborations," Sands told BioWorld Today, "puts us in a very strong position."

In addition, the company also signed an equity financing facility in June with Azimuth Opportunity Ltd. to access, at its discretion, up to $75 million over an 18-month period through the sale of stock.

Lexicon reported a net loss of $16.9 million, or 26 cents per share, for the second quarter. As of June 30, it had cash and investments totaling $65.3 million.

Its stock (NASDAQ:LEXG) closed at $3.85 Monday, down 21 cents.

In other financings news:

• Acadia Pharmaceuticals Inc., of San Diego, is providing initial seed funding to establish Abbey Pharmaceuticals, a firm focused on developing medications for substance abuse. Acadia also agreed to invest up to $1 million upon Abbey's completion of an external equity financing. Following that financing, Abbey intends to collaborate with Acadia to gain access to selected drug discovery assets. The new firm will be led by Mark Brann, who has resigned from his position at Acadia to serve as Abbey's CEO.

• Amorcyte Inc., of Hackensack, N.J., said it secured additional funding to complete the first Phase I trial of its cell therapy product in cardiovascular disease, as well as to pursue additional cell therapy opportunities. Amorcyte expects to finish accruing 40 patients for the study in December. The amount of the financing was undisclosed. It was placed by PA Early Stage Partners and adds to the $4.2 million round announced by the company in June.

• Iomai Corp., of Gaithersburg, Md., is bringing in $10 million through a private placement of shares to Essex Woodlands Health Ventures and New Enterprise Associates. That funding is expected to support ongoing clinical programs of its patch-based vaccines and immunostimulants in development against influenza, pandemic flu and travelers' diarrhea. Shares of Iomai (NASDAQ:IOMI) closed at $5.18 Monday, down 27 cents.

• Lev Pharmaceuticals Inc., of New York, said it raised $21 million through the private placement of 32 million shares of its stock and almost 10 million warrants, priced at 65 cents per share. Net proceeds totaled about $19.6 million, which will be used to complete the Phase III trial of its lead compound, C1-INH in hereditary angioedema, and to advance other development programs for C1-INH. Lev's investors included Southpoint Capital Advisors LP, Hound Partners LP, Emigrant Capital Corp., Alexandra Global Master Fund Ltd. and Rosaline Capital Partners LP. Rodman & Renshaw LLC acted as the placement agent.

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