SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC. 20549
SCHEDULE
14A
(Rule
14A-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Check the
appropriate box:
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Preliminary Proxy Statement
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x
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Definitive Proxy Statement
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(as
permitted by Rule 14a-6(e)(2))
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Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
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LEXICON
PHARMACEUTICALS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name of
Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment of
Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies: N/A
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(2)
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Aggregate
number of securities to which transaction
applies: N/A
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined): N/A
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(4)
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Proposed
maximum aggregate value of transaction: N/A
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(5)
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Total
fee paid: $0
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| o | Fee paid previously with preliminary materials: N/A |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount
Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.: | |
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Date
Filed
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June 5,
2009
TO OUR
STOCKHOLDERS:
Our board
of directors has called a special meeting of stockholders, as described in the
enclosed notice of special meeting of stockholders and proxy statement. The
special meeting is being called so that our stockholders may consider and act
upon a proposed amendment to our certificate of incorporation to increase the
number of authorized shares of our common stock. The increase is
intended to permit us to satisfy our obligations under our securities purchase
agreement with Invus, L.P. in the event Invus exercises its right to require us
to conduct the full amounts of the rights offerings contemplated by that
agreement, and to provide us greater flexibility in effecting possible future
acquisitions and financings other than the contemplated rights
offerings.
The
special meeting will be held on Wednesday, July 15, 2009 at 1:30 p.m., local
time, at the offices of the company, 8800 Technology Forest Place, The
Woodlands, Texas.
This
proxy statement provides detailed information about the proposed amendment and
the special meeting. We encourage you to read the entire proxy statement
carefully.
Our board of directors has unanimously
approved the amendment to our certificate of incorporation, has determined that
the amendment to our certificate of incorporation is advisable and in the best
interest of our stockholders, and unanimously recommends that you vote
for the amendment
to our certificate of incorporation.
Your vote
is important, regardless of the number of shares you own. Please vote as soon as
possible to make sure that your shares are represented at the special meeting.
To vote your shares, please do so electronically on the Internet, by telephone
or by signing and returning the enclosed proxy card. You also may cast your vote
in person at the special meeting.
| Sincerely, | |
| /s/ Arthur T. Sands | |
| Arthur T. Sands, M.D., Ph.D. | |
| President and Chief Executive Officer |
LEXICON
PHARMACEUTICALS, INC.
8800
Technology Forest Place
The
Woodlands, Texas 77381
(281)
863-3000
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO
BE HELD JULY 15, 2009
TO OUR
STOCKHOLDERS:
A special
meeting of the stockholders of Lexicon Pharmaceuticals, Inc. will be held on
Wednesday, July 15, 2009 at 1:30 p.m., local time, at the offices of the
company, 8800 Technology Forest Place, The Woodlands, Texas, to approve an
amendment to our certificate of incorporation increasing the number of
authorized shares of our common stock from 300,000,000 to
900,000,000.
You are
entitled to vote at the special meeting only if you are the record owner of
shares of our common stock at the close of business on May 21,
2009.
It is
important that your shares be represented at the special meeting whether or not
you plan to attend. Please cast
your vote electronically on the Internet, by telephone or by signing and
returning the enclosed proxy card as promptly as possible. If
you are present at the special meeting, and wish to do so, you may revoke the
proxy and vote in person.
| By order of the board of directors, | |
| /s/ Jeffrey L. Wade | |
| Jeffrey L. Wade | |
| Secretary |
The
Woodlands, Texas
June 5,
2009
LEXICON
PHARMACEUTICALS, INC.
8800
Technology Forest Place
The
Woodlands, Texas 77381
(281)
863-3000
PROXY
STATEMENT
FOR
SPECIAL
MEETING OF STOCKHOLDERS
To
Be Held July 15, 2009
GENERAL
INFORMATION
Purpose
of this Proxy Statement
We have
prepared this proxy statement to solicit proxies on behalf of our board of
directors for use at a special meeting of stockholders called so that our
stockholders may consider and act upon an amendment to our certificate of
incorporation to increase the number of authorized shares of our common stock,
and at any adjournment or postponement of the special meeting.
Notice
of Internet Availability of Proxy Materials
As
permitted by rules adopted by the Securities and Exchange Commission, we are
providing access to our proxy materials over the
Internet. Accordingly, on or about June 5, 2009, we are mailing
to our stockholders a notice containing instructions on how to access our proxy
materials and vote electronically over the Internet. The notice also
provides instructions on how stockholders may request a paper copy of our proxy
materials free of charge. Our proxy materials may be accessed by
stockholders at any time after the date of mailing of the notice.
Time
and Place of the Special Meeting
The
special meeting will be held on Wednesday, July 15, 2009 at 1:30 p.m., local
time, at the offices of the company, 8800 Technology Forest Place, The
Woodlands, Texas.
Matter
to Be Considered at the Special Meeting
At the
special meeting, our stockholders will be asked to consider and act upon a
proposal to approve an amendment to our certificate of incorporation increasing
the number of authorized shares of our common stock from 300,000,000 to
900,000,000.
Record
Date for Determining Entitlement to Vote
You are
entitled to vote at the special meeting if you were the record owner of shares
of our common stock as of the close of business on May 21, 2009, the record
date for the special meeting established by our board of directors.
How
to Vote Your Shares
You may
vote in person at the special meeting or by proxy. To ensure that
your shares are represented at the special meeting, we recommend you vote by
proxy even if you plan to attend the special meeting in person. Even
if you vote by proxy, if you wish, you can revoke your proxy and vote in person
at the special meeting. If you want to vote at the special meeting
but your shares are held by an intermediary, such as a broker or bank, you will
need to obtain a proxy from such intermediary authorizing you to vote your
shares at the meeting.
You may
receive more than one proxy depending on how you hold your shares. If
you hold your shares through an intermediary, such as a broker or bank, you may
receive materials from them asking you how you want your shares to be voted at
the special meeting.
1
Voting
by Proxy
By Internet or
Telephone. You may vote electronically on the Internet or by
telephone by following the instructions contained on the notice of Internet
availability of our proxy materials. If you hold your shares through
an intermediary, such as a broker or bank, please follow the voting instructions
contained on the voting card used by the intermediary.
By Mail. If you
request a paper copy of our proxy materials, you may vote by mail by completing,
dating and signing the proxy card provided and mailing it in the pre-addressed
envelope enclosed with the paper copy of our proxy materials.
Quorum
We must
have a quorum to conduct any business at the special meeting. This means that at
least a majority of our outstanding shares eligible to vote at the special
meeting must be represented at the special meeting, either in person or by
proxy. Abstentions are counted for purposes of determining whether a
quorum is present.
Outstanding
Shares
On the
record date, we had 137,330,254 shares of our common stock
outstanding. If you were the record owner of shares of our common
stock on the record date, you will be entitled to one vote for each share of
stock that you own on the matter to be voted on at the special
meeting.
Vote
Needed to Approve the Proposal
The
approval of the proposed amendment to our certificate of incorporation will
require the affirmative vote, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock as of the record
date. Any abstention from voting with respect to the proposed
amendment to our certificate of incorporation will have the same effect as a
vote against the proposed amendment.
How
Your Proxy Will Be Voted
Giving us
your proxy means that you are authorizing us to vote your shares at the special
meeting in the manner you direct. You may vote for or against the proposal to
approve the amendment to our certificate of incorporation to increase the number
of authorized shares of our common stock, or abstain from voting on such
proposal.
If you
vote by proxy but do not specify how you want your shares voted, your shares
will be voted in favor of the approval of the proposed amendment to our
certificate of incorporation.
How
to Revoke Your Proxy
You may
revoke your proxy at any time before your shares are voted by providing our
corporate secretary with either a new proxy with a later date or a written
notice of your desire to revoke your proxy at the following
address:
Lexicon
Pharmaceuticals, Inc.
8800
Technology Forest Place
The
Woodlands, Texas 77381
Attention:
Corporate Secretary
You may
also revoke your proxy at any time prior to your shares having been voted by
attending the special meeting in person and notifying the inspector of election
of your desire to revoke your proxy. Your proxy will not
automatically be revoked merely because you attend the special
meeting.
Inspector
of Election
Broadridge
Financial Solutions, Inc. will count votes and provide a representative who will
serve as an inspector of election for the special meeting.
2
List
of Stockholders Entitled to Vote
A list of
our stockholders entitled to vote at the special meeting will be available for
inspection at the special meeting. The stockholder list will also be
available for inspection for ten days prior to the special meeting at our
corporate offices located at 8800 Technology Forest Place, The Woodlands,
Texas. Any inspection of this list at our offices will need to be
conducted during ordinary business hours. If you wish to conduct an
inspection of the stockholder list, we request that you please contact our
corporate secretary before coming to our offices.
Solicitation
of Proxies and Expenses
We are
asking for your proxy on behalf of our board of directors. We will
bear the entire cost of preparing, printing and soliciting
proxies. We will send notices of Internet availability of proxy
materials and, if requested, paper copies of our proxy materials to all of our
stockholders of record as of the record date and to all intermediaries, such as
brokers and banks, that held any of our shares on that date on behalf of
others. These intermediaries will then forward the notices and, if
requested, paper copies of our proxy materials to the beneficial owners of our
shares, and we will reimburse them for their reasonable out-of-pocket expenses
for forwarding such materials.
We have
retained Innisfree M&A Incorporated, a proxy solicitation firm, to assist us
in the solicitation of proxies for the special meeting and our directors,
officers and employees may solicit proxies by mail, in person or by telephone or
other electronic communication. We have agreed to pay Innisfree a fee of
approximately $10,000 and to reimburse its out-of-pocket expenses incurred in
connection with its services. Our directors, officers and employees
will not receive additional compensation for their solicitation efforts, but
they will be reimbursed for any out-of-pocket expenses they incur.
Adjournments
and Postponements
Although
it is not expected, the special meeting may be adjourned or postponed for the
purpose of soliciting additional proxies. Any adjournment or postponement may be
made without notice, other than by announcement made at the special meeting, by
approval of the holders of a majority of the outstanding shares of our common
stock present in person or represented by proxy at the special meeting, whether
or not a quorum exists. Any signed proxies received by us prior to the special
meeting will be voted in favor of an adjournment or postponement in these
circumstances. Any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies will allow those of our stockholders
who have already sent in their proxies to revoke them at any time prior to their
use.
Householding
As
permitted by rules adopted by the Securities and Exchange Commission, we are
delivering a single notice of Internet availability of proxy materials and proxy
statement, as applicable, to any household at which two or more stockholders
reside if we believe the stockholders are members of the same family, unless
otherwise instructed by one or more of the stockholders. We will
promptly deliver separate copies of these documents upon the written or oral
request of any stockholder at a shared address to which a single copy of the
documents were delivered.
If your
household received a single set of any of these documents, but you would prefer
to receive your own copy, or if you share an address with another stockholder
and together both of you would like to receive only a single set of these
documents, please follow these instructions:
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If
your shares are registered in your own name, please contact our transfer
agent, BNY Mellon Shareowner Services, and inform them of your request by
calling them at (800) 635-9270 or writing them at 480 Washington
Boulevard., Jersey City, New Jersey
07310.
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If
an intermediary, such as a broker or bank, holds your shares, please
contact Broadridge and inform them of your request by calling them at
(800) 542-1061 or writing them at Householding Department,
51 Mercedes Way, Edgewood, New York 11717. Be sure to
include your name, the name of your brokerage firm and your account
number.
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3
PROPOSED
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
Increase
in Authorized Shares of our Common Stock
Our board
of directors believes that it is advisable to amend Article IV of our
certificate of incorporation to increase the number of authorized shares of our
common stock from 300,000,000 shares to 900,000,000 shares. As of
May 21, 2009, of the 300,000,000 shares of our common stock authorized by
our certificate of incorporation, 137,330,254 shares were issued and outstanding
and 31,510,782 shares were reserved for issuance under our stock incentive
plans. The remaining 131,158,964 shares that were authorized but
not issued or reserved for issuance as of such date would not be sufficient, at
currently prevailing market prices for our common stock, to permit us to satisfy
our obligations under our securities purchase agreement with Invus, L.P. in the
event Invus were to exercise its right to require us to conduct the full amounts
of the rights offerings contemplated by that agreement, as described
below. After the proposed increase in the number of authorized shares
of our common stock to 900,000,000 shares, 731,158,964 shares of our common
stock would be authorized but not issued or reserved for issuance, which we
believe should be sufficient to permit us both to satisfy such obligations and
to provide us greater flexibility in effecting possible future acquisitions and
financings other than the contemplated rights offerings.
The right
of Invus, at its option, to require us to conduct such rights offerings arises
under a June 2007 securities purchase agreement under which Invus purchased
50,824,986 shares of our common stock for approximately $205.4 million in
August 2007. Our stockholders approved the transactions contemplated
by the securities purchase agreement, including Invus’ August 2007 stock
purchase and the potential issuance of additional shares of common stock in the
rights offerings, at a special meeting held on August 23,
2007. Pursuant to the securities purchase agreement, Invus has the
right to require us to initiate up to two pro rata rights offerings to our
stockholders, which would provide all stockholders with non-transferable rights
to acquire shares of our common stock, in an aggregate amount of up to
$344.5 million, less the proceeds of any “qualified offerings” that we may
complete in the interim involving the sale of our common stock at prices above
$4.50 per share. The price per share of each rights offering would be
designated by Invus in a range between $4.50 and a then-current average market
price of our common stock, and the number of shares to be issued in each rights
offering would be determined by the dollar amount of the rights offering and the
designated price per share. For purposes of illustration, if we were to
conduct both rights offerings for the maximum dollar amounts contemplated by the
securities purchase agreement at an assumed price equal to the $1.39 closing
price per share of our common stock on the Nasdaq Global Market on May 29, 2009,
we would issue a total of 247,841,727 shares in the rights
offerings.
Invus may
exercise its right to require us to conduct the first rights offering by giving
us notice within a period of 90 days beginning on November 28, 2009 (which we
refer to as the first rights offering trigger date), although we and Invus may
agree to change the first rights offering trigger date to as early as August 28,
2009 with the approval of the members of our board of directors who are not
affiliated with Invus. Invus may exercise its right to require us to
conduct the second rights offering by giving us notice within a period of 90
days beginning on the date that is 12 months after Invus’ exercise of its right
to require us to conduct the first rights offering or, if Invus does not
exercise its right to require us to conduct the first rights offering, within a
period of 90 days beginning on the first anniversary of the first rights
offering trigger date. The initial investment and subsequent rights
offerings, combined with any qualified offerings, were designed to achieve up to
$550 million in proceeds to us. Invus would participate in each
rights offering for up to its pro rata portion of the offering, and would commit
to purchase the entire portion of the offering not subscribed for by other
stockholders.
In
addition to allowing us to meet our obligations under the securities purchase
agreement in the event Invus were to exercise its right to require us to
conduct the full amounts of the rights offerings contemplated by that agreement,
our board of directors believes that the increase in the number of authorized
shares of our common stock will provide us with greater flexibility in effecting
future acquisitions and financings without the delay and expense associated with
obtaining the approval or consent of our stockholders at the same time the
shares are needed. We expect that our future growth may require the use of our
common stock from time to time either as consideration for acquisitions or as
part of a financing for us either through the use of our common stock or
securities convertible into our common stock. Such shares may be issued in
conjunction with both public offerings and private placements of shares of our
common stock which issuances, depending on the circumstances, may or may not
require future stockholder approval under the rules of The Nasdaq Global Market.
Such shares could also be used for our stock-based compensation plans, subject
to appropriate stockholder approval. Our stockholders other than Invus do not
have any preemptive rights to purchase additional shares of our common stock.
Other than the securities purchase agreement with Invus, we do not have any
current plans, proposals or understandings that would require the use of the
additional authorized shares of our common stock to be issued.
4
The text
of the amendment to increase the number of authorized shares of our common stock
from 300,000,000 shares to 900,000,000 shares can be found in the form of the
third certificate of amendment to our restated certificate of incorporation,
which is attached as Annex A to this proxy statement.
Recommendation
of our Board of Directors
Our
board of directors has unanimously approved the amendment to our certificate of
incorporation to increase the number of authorized shares of our common stock
from 300,000,000 shares to 900,000,000 shares, has determined that this
amendment to our certificate of incorporation is advisable and in the best
interest of our stockholders, and recommends that our stockholders vote for its
approval.
Effects
of the Amendment to our Certificate of Incorporation
Stockholders
should consider the following factors which may affect them, as well as the
other information contained in this proxy statement, in evaluating the proposal
to approve the amendment to our certificate of incorporation to increase
the number of authorized shares of our common stock.
Possible Dilution from Future
Issuance of Additional Shares. Any future issuance of additional
authorized shares of our common stock could dilute future earnings per share,
book value per share and voting power of existing stockholders. Depending upon
the circumstances under which such shares are issued, such issuance may reduce
stockholders equity per share and may reduce the percentage ownership of common
stock of existing stockholders.
Possible Anti-Takeover Effect from
Future Issuances of Additional Shares. Any future issuance of additional
shares also may have an anti-takeover effect by making it more difficult to
engage in a merger, tender offer, proxy contest or assumption of control of a
large voting block of our common stock. Our board of directors could impede a
takeover attempt by issuing additional shares and thereby diluting the voting
power of other outstanding shares and increasing the cost of a
takeover. A future issuance of additional shares of common stock
could render more difficult an attempt to obtain control of us, even if it
appears to be desirable to a majority of stockholders, and it may be more
difficult for our stockholders to obtain an acquisition premium for their shares
or to remove incumbent management. Although the increase in the
number of authorized shares of our common stock may have an anti-takeover
effect, the amendment to our certificate of incorporation has been proposed for
the reasons stated above under the heading “—Increase in Authorized Shares of
our Common Stock,” and our board of directors has no present intention to use
the proposed increase in the authorized shares of common stock as a measure
aimed at discouraging takeover efforts.
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table presents information regarding the beneficial ownership of our
common stock as of May 21, 2009 by:
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each
of the individuals listed in “Executive and Director Compensation —
Summary Compensation Table” in our proxy statement for our 2009 annual
meeting;
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each
of our directors;
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each
person, or group of affiliated persons, who is known by us to own
beneficially five percent or more of our common stock;
and
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all
current directors and executive officers as a
group.
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Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission computing the number of shares beneficially owned by a
person and the percentage ownership of that person. Shares of common
stock under options held by that person that are currently exercisable or
exercisable within 60 days of May 21, 2009 are considered
outstanding. These shares, however, are not considered outstanding
when computing the percentage ownership of each other person.
5
Except as
indicated in the footnotes to this table and pursuant to state community
property laws, each stockholder named in the table has sole voting and
investment power for the shares shown as beneficially owned by them. Percentage
of ownership is based on 137,330,254 shares of common stock outstanding on May
21, 2009. Unless otherwise indicated in the footnotes, the address of
each of the individuals named below is: c/o Lexicon Pharmaceuticals, Inc.,
8800 Technology Forest Place, The Woodlands, Texas 77381.
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Beneficial
Ownership
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Number
of Shares Beneficially Owned
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Shares
Issuable Pursuant to Options Exercisable within 60 Days of May 21,
2009
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Percentage
Ownership
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Invus,
L.P., Invus Public Equities, L.P. and related
parties (1)
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55,385,146 |
─
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40.3 | % | ||||||||
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Royce
& Associates, LLC
(2)
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9,205,777 |
─
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6.7 | % | ||||||||
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Arthur
T. Sands, M.D., Ph.D. (3)
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1,663,562 |
1,993,776
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2.6 | % | ||||||||
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Alan
J. Main, Ph.D.
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44,800 |
704,802
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* | |||||||||
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Jeffrey
L. Wade, J.D.
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47,800 |
669,876
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* | |||||||||
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Brian
P. Zambrowicz, Ph.D.
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156,800 |
936,922
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* | |||||||||
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James
F. Tessmer
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25,800 |
103,066
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* | |||||||||
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Julia
P. Gregory (4)
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51,983 |
1,003,994
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* | |||||||||
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Samuel
L. Barker, Ph.D. (5)
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47,000 | 137,333 | * | |||||||||
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Philippe
J. Amouyal
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─
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22,666 | * | |||||||||
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Raymond
Debbane (6)
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55,385,146 | 22,666 | 40.3 | % | ||||||||
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Robert
J. Lefkowitz, M.D.
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─
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89,666 | * | |||||||||
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Alan
S. Nies, M.D.
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5,000 | 80,166 | * | |||||||||
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Frank
P. Palantoni
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─
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59,666 | * | |||||||||
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Christopher
J. Sobecki
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1,000 | 22,666 | * | |||||||||
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Judith
L. Swain, M.D.
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─
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22,166 | * | |||||||||
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Kathleen
M. Wiltsey
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─
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25,666 | * | |||||||||
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All
directors and executive officers as
a group (3)(5)(6)
(16 persons)
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57,414,408 | 5,079,245 | 43.9 | % | ||||||||
*
Represents beneficial ownership of less than 1 percent.
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(1)
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Based upon a Schedule
13D filed with the SEC on June 27, 2007, and amended on August 24 and
August 29, 2007, and certain representations made to us by Invus,
L.P. Reflects the beneficial ownership of (a) 51,494,038 shares
of our common stock by Invus, L.P., Invus Advisors, L.L.C., Ulys, L.L.C.
and Raymond Debbane, each of which may be deemed to have sole voting and
investment power with respect to such shares, and (b) 3,891,108 shares of
our common stock by Invus Public Equities, L.P., Invus Public Equities
Advisors, LLC, Ulys, L.L.C. and Mr. Debbane, each of which may be deemed
to have sole voting and investment power with respect to such
shares. Such shares are subject to certain voting restrictions
pursuant to our stockholders’ agreement with Invus, L.P. described under
the heading “Agreements with Invus.” The address for Invus,
L.P., Invus Advisors, L.L.C., Invus Public Equities, L.P., Invus Public
Equities Advisors, LLC, Ulys, L.L.C. is 750 Lexington Avenue, 30th Floor,
New York, New York 10022. The address for Mr. Debbane is c/o
Ulys, L.L.C., 750 Lexington Avenue, 30th Floor, New York, New York
10022.
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(2)
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Based
upon a Schedule 13G filed with the SEC on January 26, 2009,
reflecting the beneficial ownership of our common stock by Royce &
Associates, LLC. The address for Royce & Associates, LLC is
1414 Avenue of the Americas, New York, New York
10019.
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(3)
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The
number of shares beneficially owned by Dr. Sands includes 60,000 shares
held in the name of minor children and 817,500 shares owned by Sands
Associates LP. The general partners of Sands Associates LP are
ATS Associates, L.L.C., owned by Dr. Sands, and MES Associates, L.L.C.,
owned by Dr. Sands’ wife.
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(4)
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Based
on certain representations made to us by Ms. Gregory. The
number of shares beneficially owned by Ms. Gregory includes 4,847 shares
held in trusts for the benefit of her children, of which she serves as
trustee.
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(5)
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The
number of shares beneficially owned by Dr. Barker includes 35,000 shares
held in grantor retained annuity trusts for the benefit of his children,
of which he serves as trustee.
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(6)
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Based
upon a Schedule 13D filed with the SEC on June 27, 2007, and amended on
August 24 and August 29, 2007, and certain representations made to us by
Mr. Debbane. Mr. Debbane disclaims beneficial ownership of
these shares. The address for Mr. Debbane is c/o Ulys, L.L.C.,
750 Lexington Avenue, 30th Floor, New York, New York
10022.
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6
AGREEMENTS
WITH INVUS
Securities Purchase Agreement.
In June 2007, we entered into a securities purchase agreement with Invus,
L.P., pursuant to which Invus purchased 50,824,986 shares of our common stock
for approximately $205.4 million in August 2007. This purchase
resulted in Invus’ ownership of 40% of the post-transaction outstanding shares
of our common stock. Pursuant to the securities purchase agreement,
Invus also has the right to require us to initiate up to two pro rata rights
offerings to our stockholders, which would provide all stockholders with
non-transferable rights to acquire shares of our common stock, in an aggregate
amount of up to $344.5 million, less the proceeds of any “qualified
offerings” that we may complete in the interim involving the sale of our common
stock at prices above $4.50 per share.
Invus may
exercise its right to require us to conduct the first rights offering by giving
us notice within a period of 90 days beginning on November 28, 2009 (which we
refer to as the first rights offering trigger date), although we and Invus may
agree to change the first rights offering trigger date to as early as August 28,
2009 with the approval of the members of our board of directors who are not
affiliated with Invus. If Invus exercises its right to require us to
initiate such first rights offering, it will have the right to designate the
amount of such first rights offering up to $172.3 million, less the
proceeds of any “qualified offerings” that we may complete in the interim
involving the sale of our common stock at prices above $4.50 per share. Invus
may exercise its right to require us to conduct the second rights offering by
giving us notice within a period of 90 days beginning on the date that is 12
months after Invus’ exercise of its right to require us to conduct the first
rights offering or, if Invus does not exercise its right to require us to
conduct the first rights offering, within a period of 90 days beginning on the
first anniversary of the first rights offering trigger date. If Invus
exercises its right to require us to initiate such second rights offering, it
will have the right to designate the amount of such second rights offering up to
$344.5 million, less the proceeds of the first rights offering, if any, and
less the proceeds of any “qualified offerings” that we may complete in the
interim involving the sale of our common stock at prices above $4.50 per share.
Invus would participate in each rights offering for up to its pro rata portion
of the offering, and would commit to purchase the entire portion of the offering
not subscribed for by other stockholders.
Board of
Directors. Concurrently with the execution of the securities
purchase agreement, we entered into a stockholders’ agreement with Invus under
which Invus has the right to designate the greater of three members or 30% (or
the percentage of all the outstanding shares of our common stock owned by Invus
and its affiliates, if less than 30%) of all members of our board of directors,
rounded up to the nearest whole number of directors, and pursuant to which Invus
has designated Philippe J. Amouyal, Raymond Debbane and Christopher J.
Sobecki. Mr. Debbane is president and chief executive officer of The
Invus Group, LLC, an affiliate of Invus, and Mr. Amouyal and Mr. Sobecki are
each managing directors of The Invus Group, LLC.
In the
event that the number of shares of our common stock owned by Invus and its
affiliates ever exceeds 50% of the total number of shares of our common stock
then outstanding (not counting for such purpose any shares acquired by Invus
from third parties in excess of 40% (or, if higher, its then pro rata amount) of
the total number of outstanding shares of common stock, as permitted by the
standstill provisions of the stockholders’ agreement), from and after that time,
Invus will have the right to designate a number of directors equal to the
percentage of all the outstanding shares of our common stock owned by Invus and
its affiliates (not counting for such purpose any shares acquired by Invus from
third parties in excess of 40% (or, if higher, its then pro rata amount) of the
total number of outstanding shares of common stock, as permitted by the
standstill provisions of the stockholders’ agreement), rounded up to the nearest
whole number of directors. The directors appointed by Invus have
proportionate representation on the compensation committee and corporate
governance committee of our board of directors.
Invus’
rights with respect to the designation of members of our board of directors and
its compensation and corporate governance committees will terminate if the
percentage of all the outstanding shares of our common stock owned by Invus and
its affiliates falls below 10%. Invus will also have the right to
terminate these provisions at any time following the date on which the
percentage of all the outstanding shares of our common stock owned by Invus and
its affiliates exceeds 50% (not counting for such purpose any shares acquired by
Invus and its affiliates from third parties in excess of 40% (or, if higher, its
then pro rata amount) of the total number of outstanding shares of our common
stock, as permitted by the standstill provisions of the stockholders’
agreement).
Preemptive
Rights. Invus has preemptive rights under the stockholders’
agreement to participate in future equity issuances by us (including any
qualified offering), subject to certain exceptions, so as to maintain its
then-current percentage ownership of our capital stock. Subject to
certain limitations, Invus will be required to exercise its preemptive rights in
advance with respect to certain marketed offerings, in which case it will be
obligated to buy its pro rata share of the number of shares being offered in
such marketed offering, including any overallotment (or such lesser amount
specified in its exercise of such rights), so long as the sale
of the shares were priced within a range within 10% above or below the market
price on the date we notified Invus of the offering and we met certain other
conditions.
7
The
provisions of the stockholders’ agreement relating to preemptive rights will
terminate on the earlier to occur of August 28, 2017 and the date on which the
percentage of all the outstanding shares of our common stock owned by Invus and
its affiliates falls below 10%.
Standstill
Provisions. Invus is subject to standstill provisions
restricting its ability to purchase or otherwise acquire additional shares of
common stock from third parties to an amount that would result in its ownership
of our common stock not exceeding 49% of the total number of shares
outstanding. These standstill provisions will not apply to the
acquisitions of securities by way of stock splits, stock dividends,
reclassifications, recapitalizations, or other distributions by us, acquisitions
contemplated by the securities purchase agreement and the stockholders’
agreement, including in the rights offerings and upon Invus’ exercise of
preemptive rights under the stockholders’ agreement.
Except
for acquisitions pursuant to the provisions described above, and subject to
certain exceptions, Invus has agreed that it will not, and will cause its
affiliates not to, without the approval of our unaffiliated board, directly or
indirectly:
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solicit
proxies to vote any of our voting securities or any voting securities of
our subsidiaries;
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submit
to our board of directors a written proposal for any merger,
recapitalization, reorganization, business combination or other
extraordinary transaction involving an acquisition of us or any of our
subsidiaries or any of our or our subsidiaries’ securities or assets by
Invus and its affiliates;
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enter
into discussions, negotiations, arrangements or understandings with any
third party with respect to any of the foregoing;
or
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request
us or any of our representatives, directly or indirectly, to amend or
waive any of these standstill
provisions.
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The
standstill provisions of the stockholders’ agreement will terminate on the
earliest to occur of (a) August 28, 2017, (b) the date on which the percentage
of all the outstanding shares of our common stock owned by Invus and its
affiliates falls below 10%, (c) the date on which the percentage of all of the
outstanding shares of our common stock owned by Invus and its affiliates exceeds
50% (not counting for such purpose any shares acquired by Invus from third
parties in excess of 40% (or, if higher, its then pro rata amount) of the total
number of outstanding shares of common stock, as permitted by the standstill
provisions of the stockholders’ agreement), (d) the date on which any third
party makes a public proposal to acquire (by purchase, exchange, merger or
otherwise) assets or business constituting 50% or more of our revenues, net
income or assets or 50% of any class of our equity securities or our board of
directors recommends or approves, or proposes to recommend or approve, any such
transaction or (e) the date on which any third party acquires beneficial
ownership (by purchase, exchange, merger or otherwise) of assets or business
constituting 20% or more of our revenues, net income or assets or 20% of any
class of our equity securities or our board of directors recommends or approves,
or proposes to recommend or approve, any such transaction.
Sales to Third
Parties. Subject to certain exceptions, Invus has agreed that
neither it nor its affiliates will sell any shares of common stock to third
parties that are not affiliated with Invus if, to Invus’ knowledge, such
transfer would result in any such third party (or any person or group
including such third party) owning more than 14.9% of the total number of
outstanding shares of our common stock.
The
provisions of the stockholders’ agreement relating to sales to third parties
will terminate on the earliest to occur of (a) August 28, 2017,
(b) the date on which the percentage of all the outstanding shares of our
common stock owned by Invus and its affiliates falls below 10%, and (c) the
date on which the percentage of all the outstanding shares of our common stock
owned by Invus and its affiliates exceeds 50% (not counting for such purpose any
shares acquired by Invus and its affiliates from third parties in excess of 40%
(or, if higher, its then pro rata amount) of the total number of outstanding
shares of our common stock, as permitted by the standstill provisions of the
stockholders’ agreement).
8
Voting of
Shares. In any election of persons to serve on our board of
directors, Invus will be obligated to vote all of the shares of common stock
held by it and its affiliates in favor of the directors nominated by our board
of directors, as long as we have complied with our obligation with respect to
the designation of members of our board of directors described above and the
individuals designated by Invus for election to our board of directors have been
nominated, and, if applicable, are serving on our board of
directors. With respect to all other matters submitted to a vote of
the holders of our common stock, Invus will be obligated to vote any shares that
it acquired from third parties in excess of 40% (or, if higher, its then pro
rata amount) of the total number of outstanding shares of common stock, as
permitted by the standstill provisions of the stockholders’ agreement, in the
same proportion as all the votes cast by other holders of our common stock,
unless Invus and we (acting with the approval of the unaffiliated board) agree
otherwise. Invus may vote all other shares of our common stock held
by it in its sole discretion.
The
provisions of the stockholders’ agreement relating to voting will terminate on
the earliest to occur of (a) August 28, 2017, (b) the date on which
the percentage of all the outstanding shares of our common stock held by Invus
and its affiliates falls below 10%, (c) the date on which the percentage of
all outstanding shares of our common stock owned by Invus and its affiliates
exceeds 50% (not counting for such purpose any shares acquired by Invus from
third parties in excess of 40% (or, if higher, its then pro rata amount) of the
total number of outstanding shares of our common stock, as permitted by the
provisions of the stockholders’ agreement), and (d) the termination of the
standstill provisions in accordance with the stockholders’
agreement.
Minority
Protections. Invus is entitled to certain minority
protections, including consent rights over (a) the creation or issuance of any
new class or series of shares of our capital stock (or securities convertible
into or exercisable for shares of our capital stock) having rights, preferences
or privileges senior to or on parity with our common stock, (b) any amendment to
our certificate of incorporation or bylaws, or amendment to the certificate of
incorporation or bylaws of any of our subsidiaries, in a manner adversely
affecting Invus’ rights under the securities purchase agreement and the related
agreements, (c) the repurchase, retirement, redemption or other acquisition of
our or our subsidiaries’ capital stock (or securities convertible into or
exercisable for shares of our or our subsidiaries’ capital stock), (d) any
increase in the size of our board of directors to more than 12 members and (e)
the adoption or proposed adoption of any stockholders’ rights plan, “poison
pill” or other similar plan or agreement, unless Invus is exempt from the
provisions of such plan or agreement.
The
provisions of the stockholders’ agreement relating to minority protections will
terminate on the earlier to occur of August 28, 2017 and the date on which Invus
and its affiliates hold less than 15% of the total number of outstanding shares
of our common stock.
Registration
Rights. Concurrently with the execution of the securities
purchase agreement, we entered into a registration rights agreement with Invus,
pursuant to which Invus has certain demand and piggyback registration rights
with respect to shares of our common stock acquired by Invus under the
securities purchase agreement.
STOCKHOLDER
PROPOSALS FOR THE 2010 ANNUAL MEETING OF STOCKHOLDERS
In order
for a stockholder proposal to be considered for inclusion in our proxy statement
for next year’s annual meeting, we must receive the written proposal at our
principal executive offices no later than November 13, 2009. Any such
proposal must also comply with Securities and Exchange Commission regulations
regarding the inclusion of stockholder proposals in company-sponsored proxy
materials. Similarly, in order for any stockholder proposal to be
otherwise raised during next year’s annual meeting, we must receive written
notice of the proposal, containing the information required by our bylaws, at
our principal executive offices no later than November 13, 2009. You
may contact the corporate secretary at our principal executive offices for a
copy of the relevant bylaw provisions for making stockholder
proposals.
WHERE
YOU CAN FIND MORE INFORMATION
You may
obtain, without charge, a copy of our annual report on Form 10-K, including the
financial statements and exhibits thereto, by written request to Corporate
Communications, Lexicon Pharmaceuticals, Inc., 8800 Technology Forest Place, The
Woodlands, Texas 77381.
9
We file
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy any reports,
statements or other information we file at the SEC’s public reference room at
100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and the web site maintained by the SEC at www.sec.gov.
FORWARD-LOOKING
STATEMENTS
This
proxy statement contains statements that do not directly or exclusively relate
to historical facts. Such statements are “forward-looking statements.” You can
typically identify forward-looking statements by the use of forward-looking
words, such as “may,” “will,” “could,” “project,”
“believe,” “anticipate,” “expect,” “estimate,”
“potential,” “plan,” “forecast,” and other similar words.
Forward-looking statements in this proxy statement include statements regarding
the amendment to our certificate of incorporation and our expectations and plans
with respect to the additional authorized shares of our common
stock.
The
forward-looking statements in this proxy statement reflect our intentions,
plans, expectations, assumptions and beliefs about future events and are subject
to risks, uncertainties and other factors, many of which are outside our
control. Important factors could cause actual results to differ materially from
the expectations expressed or implied in the forward-looking statements
contained herein. Except as required by law, we undertake no obligation to
update or revise our forward-looking statements, whether as a result of new
information, future events or otherwise.
| By order of the board of directors, | |
| /s/ Jeffrey L. Wade | |
| Jeffrey L. Wade | |
| Secretary |
June 5,
2009
The
Woodlands, Texas
10
ANNEX
A
FORM
OF
THIRD
CERTIFICATE OF AMENDMENT
TO
RESTATED
CERTIFICATE OF INCORPORATION
OF
LEXICON
PHARMACEUTICALS, INC.
LEXICON
PHARMACEUTICALS, INC. (the “Corporation”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(“DGCL”), hereby certifies as follows pursuant to Section 242 of the
DGCL:
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FIRST:
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That
at a meeting of the Board of Directors of the Corporation, resolutions
were duly adopted setting forth a proposed amendment of the Corporation’s
Restated Certificate of Incorporation, as amended, declaring such
amendment to be advisable and calling a meeting of the Corporation’s
stockholders for consideration thereof. The resolution setting
forth the proposed amendment is as
follows:
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RESOLVED
that, subject to the approval of the stockholders of the Corporation, the
Corporation’s restated certificate of incorporation, as amended, be further
amended by changing Section 4.01(a) of Article IV thereof so that, as
amended, such Section shall be and read as follows:
“(a) The
total number of shares of stock that the Corporation shall have the authority to
issue is 905,000,000 shares of capital stock, consisting of (i) 5,000,000 shares
of preferred stock, par value $0.01 per share (the “Preferred Stock”), and (ii)
900,000,000 shares of common stock, par value $0.001 per share (the “Common
Stock”).”
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SECOND:
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That
thereafter, pursuant to a resolution of its Board of Directors, a special
meeting of the Corporation’s stockholders was duly called and held upon
notice in accordance with the provisions of Section 222 of the DGCL, at
which meeting the necessary number of shares as required by applicable law
were voted in favor of such
amendment.
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THIRD:
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That
such amendment was duly adopted in accordance with the provisions of
Section 242 of the DGCL.
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IN
WITNESS WHEREOF, the Corporation has caused this Third Certificate of Amendment
to be signed by Jeffrey L. Wade, its Executive Vice President and General
Counsel, this ____ day of July, 2009.
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LEXICON
PHARMACEUTICALS, INC.
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By:
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Jeffrey
L. Wade
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Secretary
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VOTE BY INTERNET - www.proxyvote.com
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LEXICON PHARMACEUTICALS, INC.
8800 TECHNOLOGY FOREST PLACE
THE WOODLANDS, TX 77381-4287
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Use the
Internet to transmit your voting instructions and for electronic delivery
of information up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you access
the web site and follow the instructions to obtain your records and to
create an electronic voting instruction form.
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ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
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If you would
like to reduce the costs incurred by Lexicon Pharmaceuticals, Inc. in
mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow
the instructions above to vote using the Internet and, when prompted,
indicate that you agree to receive or access stockholder communications
electronically in future years.
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VOTE
BY PHONE – 1-800-690-6903
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Use any
touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you call and then
follow the instructions.
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VOTE
BY MAIL
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Mark, sign and
date your proxy card and return it in the postage-paid envelope we have
provided or return it to Vote Processing c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS |
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KEEP THIS
PORTION FOR YOUR RECORDS
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| DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED
| LEXICON PHARMACEUTICALS, INC. |
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| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL(S) |
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For
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Against
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Abstain
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| 1. | Approval of an amendment to the Company's certificate of incorporation increasing the number of authorized shares of the Company's common stock from 300,000,000 to 900,000,000 |
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| NOTE: | In their discretion, upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof. | |||||||||||||||||
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The shares
represented by this proxy, when properly executed, will be voted in the
matter directed herein by the undersigned Stockholder(s). If no
direction is made, this proxy will be voted FOR item 1.
If any other matters properly come before the meeting, or if cumulative
voting is required, the person named in this proxy will vote in their
discretion.
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| Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer. | ||||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Special
Meeting:
The
Notice and Proxy Statement is/are available at www.proxyvote.com.
| LEXPH2 | |||
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LEXICON
PHARMACEUTICALS, INC.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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SPECIAL
MEETING OF STOCKHOLDERS
July
15, 2009
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The
stockholder(s) hereby appoint(s) Arthur T. Sands, M.D., Ph.D. and Jeffrey
L. Wade, or either of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of Common
Stock of Lexicon Pharmaceuticals, Inc. that the stockholder(s) is/are
entitled to vote at the Special Meeting of Stockholders to be held at 1:30
p.m., local time, on July 15, 2009 at the offices of the company, 8800
Technology Forest Place, The Woodlands, Texas, and any adjournment or
postponement thereof.
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THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S).
IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY
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CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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