Hercules Capital has provided Lexicon Pharmaceuticals with a loan facility of up to $100 million. The first $55 million was funded at closing and will be used to repay Lexicon's existing loan facility with Oxford Finance. Lexicon announced the agreement on 4 May 2026.
Lexicon is a Nasdaq-listed biopharmaceutical company developing medicines for neuropathic pain, hypertrophic cardiomyopathy, obesity and other cardiometabolic indications.
The remaining capacity is available in two further tranches. A second tranche of $20 million may be drawn at Lexicon's option within 30 days of specified clinical, regulatory and financial milestones, and no later than 15 June 2028. Those tests include US Food and Drug Administration approval of sotagliflozin for both obstructive and non-obstructive hypertrophic cardiomyopathy in a manner that supports Lexicon's planned commercialisation strategy. A third tranche of $25 million may be drawn at Lexicon's option, subject to Hercules's consent, at any time before the interest-only period expires.
The loans bear a floating rate equal to the prime rate plus 3.10 per cent, subject to a floor of 9.85 per cent. Monthly interest-only payments run for an initial 18 months and may be extended to 24 months if specified performance milestones are met, including the SONATA-HCM Phase 3 trial of sotagliflozin meeting its primary endpoint with an acceptable safety profile. A further six-month extension to 30 months is available if the Tranche 2 milestones are achieved. Amortisation then runs through maturity.
Outstanding principal and accrued but unpaid interest are due on or before 4 May 2030. A final payment equal to 6.25 per cent of the amount funded is due on prepayment or maturity. Lexicon may prepay in whole or in part. Any prepayment is subject to a fee of 3.0 per cent of the principal repaid, on a declining scale depending on when the prepayment occurs.
The facility is secured by a first lien on the assets of Lexicon and its subsidiaries. A minimum cash covenant begins on 1 June 2027, extends to 1 January 2028 if the Tranche 2 milestones are met, and is waived if Lexicon meets specified market-capitalisation tests. A minimum revenue covenant on net product sales applies only after a draw of the second or third tranche, and is waived if Lexicon meets specified cash or market-capitalisation tests.
Lexicon granted Hercules warrants equal to 2 per cent of the aggregate principal funded, at an exercise price of $1.59 a share. Warrants over 691,823 shares of common stock were issued with the first tranche. Further warrants over 251,572 and 314,465 shares will be issued if the second and third tranches are funded. The warrants are exercisable for five years from issuance and include a net cashless exercise provision.
Scott Coiante, Chief Financial Officer of Lexicon, said: "By refinancing our existing loan facility with Hercules Capital, a strong partner with a history of supporting biotech innovation, we are expanding our access to non-dilutive capital and gaining additional flexibility to opportunistically deploy capital on value-creating initiatives, including the advancement of our pipeline of late-stage cardiometabolic programs."
Adam Soller, Managing Director at Hercules, said: "Hercules Capital is pleased to support Lexicon Pharmaceuticals with a flexible financing solution that will support it through upcoming clinical and regulatory milestones."