BioPharma Credit and BioPharma Credit Investments IV, a private fund that also invests in life sciences debt, have said they will lend up to $200 million to a Nasdaq-listed biopharma company Lexicon Pharmaceuticals.
Lexicon markets XERMELO, the first and only orally administered therapy for the treatment of carcinoid syndrome diarrhoea in combination with somatostatin analog (SSA) therapy in adults inadequately controlled by SSA therapy.
The first $150 million is available immediately and an additional tranche of $50 million is available for draw by March 2019 at Lexicon’s option if net XERMELO sales are greater than $25 million in the preceding quarter.
Lexicon has licensed XERMELO to Ipsen Pharma SA for commercialisation in territories outside of the United States and Japan. Lexicon is also developing sotagliflozin for the treatment of type 1 and type 2 diabetes in partnership with Sanofi. BioPharma said on Tuesday that Lexicon intends to use the money of the financing to support the commercial efforts of XERMELO, advance sotagliflozin, as well as to execute on the clinical development of other earlier stage product candidates.
“This non-dilutive financing, along with the current cash on hand, will allow us to finalize the sotagliflozin type 1 diabetes applications, comply with our financial commitments to our collaborator, Sanofi, on the type 2 diabetes program and fund our commercial costs while the XERMELO launch ramps up,” said Jeffrey L. Wade, J.D., executive vice president, corporate and administrative affairs and chief financial officer. “As a result, we believe that this financing offers Lexicon the necessary runway for the company to achieve positive cash flow based on the progress of our late-stage assets, while enabling continued advancement of clinical development programs for earlier-stage product candidates.”
Martin Friedman, Managing Member of Pharmakon Advisors, said: “We are impressed with the Lexicon team and the commercial opportunities for XERMELO and are thrilled to support Lexicon in its ramp up of this product that fills a well-defined unmet patient need.”
Pedro Gonzalez de Cosio, CEO of Pharmakon Advisors LP, said this was the company’s second major investment since its IPO and to partner with Lexicon in this transaction. ”Following the announcement of our investment with Tesaro last month, this provides another opportunity for BioPharma Credit to grow and deploy its cash reserves in loans that we believe will deliver real shareholder value and make a positive difference for patients,” Pharmakon’s CEO has said.