The Woodlands, Texas, March 2, 2006 – Lexicon Genetics Incorporated (Nasdaq: LEXG) announced today that Takeda Pharmaceutical Company Limited has selected LG474 for therapeutic development.  LG474 is a target that was discovered by Lexicon in its Genome5000TM program.  Under the terms of the companies’ alliance, the selection by Takeda of a target for therapeutic development entitles Lexicon to a $5 million research milestone payment.  

In July 2004, Lexicon and Takeda entered into an alliance to develop new drugs directed against promising hypertension targets discovered in Lexicon’s Genome5000 program.  In this program, Lexicon is using its proprietary gene knockout technology to rapidly discover the functions of 5,000 of the most pharmaceutically important genes in the human genome.  Takeda is responsible for the screening, medicinal chemistry, preclinical and clinical development and commercialization of drugs directed against Lexicon’s targets, and bears all related costs. 

The financial consideration to Lexicon under the alliance consisted of a $12 million upfront payment and includes research milestone payments for each target selected for therapeutic development and clinical development and product launch milestone payments related to the development and commercialization of drugs resulting from the alliance.  Lexicon is also entitled to receive royalties on worldwide sales of drugs commercialized by Takeda.

“We are pleased that, after extensive research, Takeda supports our positive assessment of the value of the LG474 target and is committed to advancing this drug discovery program into development,” said Arthur T. Sands, M.D., Ph.D., president and chief executive officer of Lexicon.  “Takeda’s selection of LG474 is an encouraging progression of our alliance toward therapeutic development and further validation of the importance of the targets we are discovering.”

“We are pleased to start research study of LG474 as the first target that we have selected under this collaboration with Lexicon Genetics,” said Shigenori Ohkawa, Ph.D., general manager of Takeda’s Pharmaceutical Research Division.  “We highly expect this research to lead to the discovery of new drugs for cardiovascular diseases.”

As a result of this research milestone payment, Lexicon announced that it expects its revenue for the three months ending March 31, 2006 to range from $18 million to $20 million, which is above Lexicon’s original revenue guidance of $13 million to $15 million for the quarter.  Lexicon also reiterated its full year 2006 revenue guidance of $78 million to $82 million.

 
About Lexicon Genetics

Lexicon Genetics is a biopharmaceutical company focused on the discovery and development of breakthrough treatments for human disease.  Lexicon is systematically discovering the physiological and behavioral functions of genes to identify potential points of therapeutic intervention, or drug targets.  Lexicon makes these discoveries using its proprietary gene knockout technology to model the physiological effects that could be expected from prospective drugs directed against novel targets.  The Company has advanced knockout-validated targets into drug discovery programs in six therapeutic areas:  diabetes and obesity, cardiovascular disease, psychiatric and neurological disorders, cancer, immune system disorders and ophthalmic disease.  Lexicon is working both independently and through strategic collaborations and alliances to accelerate the development and commercialization of its discoveries.  Additional information about Lexicon is available through its corporate website, www.lexicon-genetics.com. 

Safe Harbor Statement

This press release contains “forward-looking statements,” including statements about Lexicon’s growth and future operating results, discovery and development of products, strategic alliances and intellectual property, as well as other matters that are not historical facts or information.  These forward-looking statements are based on management’s current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Lexicon’s ability to successfully conduct preclinical development of its drug candidates and advance such candidates into clinical development, achieve its operational objectives, obtain patent protection for its discoveries and establish strategic alliances, as well as those relating to manufacturing, the regulatory process, intellectual property rights, and the therapeutic or commercial value of its drug candidates, that may cause Lexicon’s actual results to be materially different from any future results expressed or implied by such forward-looking statements. Information identifying such important factors is contained under “Factors Affecting Forward-Looking Statements” and “Business – Risk Factors” in Lexicon’s annual report on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission.  Lexicon undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.