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<SEC-DOCUMENT>0000950123-09-049362.txt : 20091009
<SEC-HEADER>0000950123-09-049362.hdr.sgml : 20091009
<ACCEPTANCE-DATETIME>20091009060132
ACCESSION NUMBER:		0000950123-09-049362
CONFORMED SUBMISSION TYPE:	424B2
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20091009
DATE AS OF CHANGE:		20091009

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LEXICON PHARMACEUTICALS, INC./DE
		CENTRAL INDEX KEY:			0001062822
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				760474169
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-161696
		FILM NUMBER:		091113002

	BUSINESS ADDRESS:	
		STREET 1:		8800 TECHNOLOGY FOREST PLACE
		CITY:			THE WOODLANDS
		STATE:			TX
		ZIP:			77381
		BUSINESS PHONE:		2818633000

	MAIL ADDRESS:	
		STREET 1:		8800 TECHNOLOGY FOREST PLACE
		CITY:			THE WOODLANDS
		STATE:			TX
		ZIP:			77381

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LEXICON GENETICS INC/TX
		DATE OF NAME CHANGE:	20000126
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B2
<SEQUENCE>1
<FILENAME>h68168b2e424b2.htm
<DESCRIPTION>424B2
<TEXT>
<HTML>
<HEAD>
<TITLE>e424b2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 11pt">PROSPECTUS SUPPLEMENT<BR>
    (To Prospectus dated September&#160;18, 2009)</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Filed Pursuant to Rule 424(b)(2)
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Registration No.&#160;333-161696
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 18pt">33,333,333&#160;Shares</FONT></I></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <IMG src="h68168b2h6816800.gif" alt="(LEXICON LOGO)"><FONT style="font-size: 18pt">
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 24pt">Lexicon Pharmaceuticals,
    Inc.</FONT></I></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 12pt">COMMON STOCK</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I>Lexicon is offering 33,333,333&#160;shares of its common
    stock. Of these shares, 19,894,076 are being offered through the
    underwriters named in this prospectus supplement and 13,439,257
    are being offered by Lexicon directly to Invus, L.P.,
    Lexicon&#146;s largest stockholder.</I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I>Our common stock is listed on The Nasdaq Global Market
    under the symbol &#147;LXRX.&#148; On October&#160;8, 2009, the
    reported last sale price of our common stock on The Nasdaq
    Global Market was $1.77&#160;per share.</I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I>Investing in our common stock involves
    risks.&#160;&#160;See &#147;Risk Factors&#148; beginning on
    <FONT style="white-space: nowrap">page&#160;S-6</FONT>
    of this prospectus supplement.</I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I>PRICE <FONT style="font-size: 12pt">$1.50</FONT> A
    SHARE</I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="21%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B><I><FONT style="color: #00337F">Underwriting<BR>
    </FONT></I></B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B><I><FONT style="color: #00337F">Price to<BR>
    </FONT></I></B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B><I><FONT style="color: #00337F">Discounts and<BR>
    </FONT></I></B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B><I><FONT style="color: #00337F">Proceeds to<BR>
    </FONT></I></B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><I><FONT style="color: #00337F">Public</FONT></I></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><I><FONT style="color: #00337F">Commissions</FONT></I></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><I><FONT style="color: #00337F">Lexicon
    Pharmaceuticals</FONT></I></B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Per Share through the Underwriters
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $1.50
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $0.0825
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $1.4175
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Per Share to Invus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $1.50
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $1.50
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $50,000,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $1,641,261
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $48,358,739
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>The underwriters will not receive any compensation with
    respect to the shares being offered by Lexicon to Invus.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>We have granted the underwriters the right to purchase up to
    an additional 2,984,111&#160;shares to cover over-allotments.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>The Securities and Exchange Commission and state securities
    regulators have not approved or disapproved these securities, or
    determined if this prospectus supplement or the accompanying
    prospectus is truthful or complete. Any representation to the
    contrary is a criminal offense.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>The underwriters expect to deliver the shares to purchasers
    on October&#160;14, 2009.</I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 18pt">MORGAN STANLEY</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><I><FONT style="font-size: 14pt">THOMAS WEISEL PARTNERS
    LLC</FONT></I></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>October&#160;8, 2009</I>
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>



<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="87%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Prospectus
    Supplement</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">Page</FONT></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#301'>Prospectus Supplement Summary</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#302'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-6
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#303'>Special Note Regarding Forward-Looking
    Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#304'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#305'>Price Range of Common Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#306'>Dividend Policy</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#307'>Capitalization</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-27
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#308'>Dilution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-28
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#309'>Underwriters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-29
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#310'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#311'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#312'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Prospectus</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">Page</FONT></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Lexicon Pharmaceuticals, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Risk Factors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Capital Stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Debt Securities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Warrants
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Rights
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Description of Units
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Legal Ownership of Securities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Special Note Regarding Forward-Looking
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Statements
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of Earnings to Fixed Charges
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Use of Proceeds
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Plan of Distribution
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Legal Matters
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Experts
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Where You Can Find More Information
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Documents Incorporated by Reference
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    You should rely only on the information contained or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus. Neither we nor the underwriters have
    authorized anyone to provide you with information different from
    that contained or incorporated by reference in this prospectus
    supplement and the accompanying prospectus. We are offering to
    sell the shares of common stock, and are seeking offers to buy
    the shares of common stock, only in jurisdictions where offers
    and sales are permitted. The information contained or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus is accurate only as of the date of this
    prospectus supplement, or the documents incorporated by
    reference, regardless of the time of delivery of this prospectus
    supplement and the accompanying prospectus or any sales of the
    shares of common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In this prospectus supplement and the accompanying prospectus,
    unless otherwise indicated, &#147;Lexicon,&#148; &#147;Lexicon
    Pharmaceuticals,&#148; &#147;we,&#148; &#147;us&#148; and
    &#147;our&#148; refer to Lexicon Pharmaceuticals, Inc. and its
    subsidiaries. We own or have rights to trademarks or trade names
    that we use in connection with the operation of our business.
    The Lexicon name and logo,
    LexVision<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and
    OmniBank<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    are registered trademarks and
    Genome5000<SUP style="font-size: 85%; vertical-align: top"><FONT style="font-variant: SMALL-CAPS">tm</FONT></SUP>

    is a trademark of Lexicon Pharmaceuticals, Inc. This prospectus
    supplement and the accompanying prospectus also include
    trademarks owned by other persons.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->
<A name='301'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS
    SUPPLEMENT SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>This summary does not contain all of the information that you
    should consider before investing in our common stock. You should
    read this entire prospectus supplement and the accompanying
    prospectus carefully, including the &#147;Risk Factors&#148;
    section of this prospectus supplement beginning on
    <FONT style="white-space: nowrap">page&#160;S-6</FONT>
    and the financial statements and other information incorporated
    by reference in this prospectus supplement and the accompanying
    prospectus, before making an investment decision.</I>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEXICON
    PHARMACEUTICALS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Lexicon Pharmaceuticals is a biopharmaceutical company focused
    on the discovery and development of breakthrough treatments for
    human disease. We have used our proprietary gene knockout
    technology and an integrated platform of advanced medical
    technologies to systematically study the physiological and
    behavioral functions of almost 5,000 genes in mice and assessed
    the utility of the proteins encoded by the corresponding human
    genes as potential drug targets. We have identified and
    validated in living animals, or <I>in vivo</I>, more than 100
    targets with promising profiles for drug discovery. For targets
    that we believe have high pharmaceutical value, we engage in
    programs for the discovery and development of potential new
    drugs, focusing in the core therapeutic areas of immunology,
    metabolism, cardiology and ophthalmology.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are presently conducting Phase 2 clinical trials of our four
    most advanced drug candidates: LX1031, LX4211, LX1032 and LX2931.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LX1031</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX1031 is an orally-delivered small molecule compound that we
    are developing for the potential treatment of irritable bowel
    syndrome and other gastrointestinal disorders. We initiated a
    Phase 2 clinical trial in December 2008 to evaluate the safety
    and tolerability of LX1031 and its effects on symptoms
    associated with irritable bowel syndrome. The Phase 2 clinical
    trial enrolled 155&#160;patients suffering from either
    diarrhea-predominant or mixed irritable bowel syndrome in a
    randomized, double-blind, placebo-controlled study of two dose
    levels of LX1031 against placebo over a four-week treatment
    period. The endpoints under evaluation in the study include a
    global assessment of adequate relief, number of bowel movements,
    symptom severity evaluation (bloating, urgency and pain), and
    stool form. Top-line data from this trial are expected to be
    available in November 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We previously completed a Phase 1a single ascending-dose study,
    an initial Phase 1b multiple ascending-dose study and an
    additional Phase 1b dose escalation study of LX1031. In Phase 1
    clinical trials, all dose levels were well tolerated, no
    dose-limiting toxicities were observed and LX1031 was shown to
    reduce levels of urinary
    <FONT style="white-space: nowrap">5-HIAA,</FONT> the
    primary metabolite of serotonin and a biomarker of serotonin
    production.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We designed LX1031 to reduce production of serotonin in the
    gastrointestinal tract and therefore reduce the sertonin
    available for receptor activation without affecting serotonin
    levels in the brain. LX1031 was internally generated by our
    medicinal chemists as an inhibitor of tryptophan hydroxylase, or
    TPH, the rate-limiting enzyme for serotonin production found
    primarily in enterochromaffin, or EC, cells of the
    gastrointestinal tract. Our scientists found that mice lacking
    the non-neuronal form of this enzyme, TPH1, have virtually no
    serotonin in the gastrointestinal tract, but maintain normal
    levels of serotonin in the brain. In preclinical studies, LX1031
    demonstrated a dose-dependent reduction of serotonin levels in
    the gastrointestinal tract of multiple species without affecting
    brain serotonin levels. Clinical development of LX1031 is being
    funded through our product development collaboration with
    Symphony Capital Partners, L.P.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LX4211</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX4211 is an orally-delivered small molecule compound that we
    are developing for the potential treatment of Type 2 diabetes.
    We initiated a Phase 2 clinical trial in September 2009 to
    evaluate the safety and tolerability of LX4211 and its effects
    on biomarkers associated with Type 2 diabetes. The Phase 2 trial
    is expected to enroll 36&#160;patients with non-insulin
    dependent Type 2 diabetes in a double-blind, randomized,
    placebo-controlled study of two dose levels of LX4211 against
    placebo over a four-week treatment period. The endpoints under
    evaluation in
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-1
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    the study include fasting blood glucose, urinary glucose
    excretion and response to oral glucose tolerance testing.
    Top-line data from this trial are expected to be available in
    the first quarter of 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We previously completed a combined Phase 1 single ascending-dose
    and multiple ascending-dose study of LX4211. In the Phase 1
    clinical trial, LX4211 was well tolerated at all dose levels and
    produced a dose-dependent increase in urinary glucose excretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX4211 was internally generated by our medicinal chemists to
    target sodium-glucose cotransporter type 2, or SGLT2, a
    transporter responsible for most of the glucose reabsorption
    performed by the kidney. Our scientists discovered that mice
    lacking SGLT2 have improved glucose tolerance and increased
    urinary glucose excretion. In preclinical studies, animals
    treated with LX4211 demonstrated increased urinary glucose
    excretion and decreased blood HbA1c levels, a marker of average
    blood sugar levels, with urinary glucose excretion returning to
    baseline after treatment was discontinued.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LX1032</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX1032 is an orally-delivered small molecule compound that we
    are developing for the potential treatment of symptoms
    associated with carcinoid syndrome. We initiated a Phase 2
    clinical trial in July 2009 to evaluate the safety and
    tolerability of LX1032 and its effects on symptoms associated
    with carcinoid syndrome. The Phase 2 trial is expected to enroll
    up to 28&#160;patients with symptomatic carcinoid syndrome
    refractory to octreotide therapy in a double-blind, randomized,
    placebo-controlled study assessing a series of escalating doses
    of LX1032 against placebo over a
    <FONT style="white-space: nowrap">28-day</FONT>
    treatment period, followed by cohort expansion at optimal dose.
    The primary endpoint under evaluation in the study is the number
    of daily bowel movements. Top-line data from this trial are
    expected to be available in the second or third quarter of 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We previously completed a Phase 1a single ascending-dose study
    and a Phase 1b multiple ascending-dose study of LX1032. In Phase
    1 clinical trials, LX1032 was well tolerated at all dose levels,
    and results demonstrated a potent dose-dependent reduction in
    both blood serotonin levels and urinary 5-HIAA which was
    consistent with the reductions observed in preclinical animal
    models.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX1032 was internally generated by our medicinal chemists as an
    inhibitor of TPH, the same target as LX1031, but LX1032 is
    chemically distinct and, unlike LX1031, was specifically
    designed to achieve enhanced systemic exposure to address
    disorders such as carcinoid syndrome that require regulation of
    serotonin levels beyond the enterochromaffin cells in the
    gastrointestinal tract without impacting brain serotonin
    production. In preclinical studies, LX1032 was able to reduce
    peripheral serotonin levels in several different species without
    affecting serotonin levels in the brain. LX1032 has received
    Fast Track status from the United States Food and Drug
    Administration, or FDA, which provides for an expedited review
    process that may shorten FDA approval times. Clinical
    development of LX1032 is being funded through our product
    development collaboration with Symphony Capital Partners, L.P.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LX2931</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX2931 is an orally-delivered small molecule compound that we
    are developing for the potential treatment of autoimmune
    diseases such as rheumatoid arthritis. We initiated a Phase 2
    clinical trial in August 2009 to evaluate the safety and
    tolerability of LX2931 and its effects on symptoms associated
    with rheumatoid arthritis. The Phase 2 trial is expected to
    enroll up to 120&#160;patients with rheumatoid arthritis who are
    also taking methotrexate, a standard therapy, in a double-blind,
    randomized, placebo-controlled study of three dose levels of
    LX2931 against placebo over a 12-week treatment period. The
    primary endpoint under evaluation in the study is ACR20 at
    12&#160;weeks, with secondary endpoints including
    <FONT style="white-space: nowrap">ACR20/50/70</FONT>
    and DAS28 at four, eight and 12&#160;weeks. Top-line data from
    this trial are expected to be available in the third quarter of
    2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We previously completed a drug-drug interaction study of LX2931
    in rheumatoid arthritis patients taking methotrexate. We also
    completed two Phase 1a single ascending-dose studies, a Phase 1b
    multiple ascending-dose study and a multiple dose study
    assessing the pharmacokinetics of a solid dose form of LX2931.
    In the Phase 1b clinical trial, LX2931 was well tolerated at all
    doses and results demonstrated a dose-dependent reduction in
    circulating lymphocytes similar to those associated with a
    beneficial response observed in animal arthritis models
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-2
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    after treatment with LX2931. In the Phase 1a clinical trials,
    LX2931 produced a dose-dependent decrease in absolute lymphocyte
    counts with systemic exposure plateauing at doses of 100 to
    125&#160;mg. An episode of acute abdominal pain resolving within
    24&#160;hours was observed in two out of 24 subjects in the
    single ascending-dose trials who received doses above
    175&#160;mg, potentially representing dose-limiting tolerability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    LX2931 was internally generated by our medicinal chemists to
    target sphingosine-1-phosphate lyase, or S1P lyase, an enzyme in
    the sphingosine-1 phosphate (S1P) pathway associated with the
    activity of lymphocytes. Lymphocytes are a cellular component
    and key driver of the immune system, and are involved in a
    number of autoimmune and inflammatory disorders. Our scientists
    discovered that mice lacking this enzyme have increased
    retention of immune cells in the thymus and spleen with a
    corresponding reduction in the deployment of T-cells and B-cells
    into the circulating blood. In preclinical studies, LX2931
    produced a consistent reduction in circulating lymphocyte counts
    in multiple species, and reduced joint inflammation and
    prevented arthritic destruction of joints in mouse and rat
    models of arthritis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have advanced one other drug candidate into preclinical
    development: LX7101, a topically-delivered small molecule
    compound that we are developing as a potential treatment for
    glaucoma. We have small molecule compounds from a number of
    additional drug discovery programs in various stages of
    preclinical research and believe that our systematic, target
    biology-driven approach to drug discovery will enable us to
    substantially expand our clinical pipeline.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are working both independently and through strategic
    collaborations and alliances to capitalize on our technology,
    drug target discoveries and drug discovery and development
    programs. Consistent with this approach, we seek to retain
    exclusive rights to the benefits of certain of our small
    molecule drug programs by developing drug candidates from such
    programs internally and to collaborate with third parties with
    respect to the discovery, development and commercialization of
    small molecule and biotherapeutics drug candidates for other
    targets, particularly when the collaboration provides us with
    access to expertise and resources that we do not possess
    internally or are complementary to our own. We have established
    drug discovery and development collaborations with a number of
    leading pharmaceutical and biotechnology companies which have
    enabled us to generate near-term cash while offering us the
    potential to retain economic participation in products our
    collaborators develop through the collaboration. In addition, we
    have established collaborations and license agreements with
    other leading pharmaceutical and biotechnology companies,
    research institutes and academic institutions under which we
    receive fees and, in some cases, are eligible to receive
    milestone and royalty payments, in return for granting access to
    some of our technologies and discoveries for use in the other
    organization&#146;s own drug discovery efforts.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Lexicon was incorporated in Delaware in July 1995, and commenced
    operations in September 1995. Our corporate headquarters are
    located at 8800 Technology Forest Place, The Woodlands, Texas
    77381, and our telephone number is
    <FONT style="white-space: nowrap">(281)&#160;863-3000.</FONT>
    Our common stock is listed on The Nasdaq Global Market under the
    symbol &#147;LXRX.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
    and amendments to those reports filed or furnished pursuant to
    Section&#160;13(a) or 15(d) of the Securities Exchange Act of
    1934, or Exchange Act, are made available free of charge on our
    corporate website located at www.lexpharma.com as soon as
    reasonably practicable after the filing of those reports with
    the Securities and Exchange Commission, or SEC. Information
    found on our website is not incorporated by reference into this
    prospectus supplement or the accompanying prospectus and should
    not be considered part of this document.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-3
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    OFFERING</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>The following summary contains basic information about this
    offering. The summary is not intended to be complete. You should
    read the full text and more specific details contained elsewhere
    in this document. For a more detailed description of our common
    stock, see the description of common stock contained in the
    accompanying prospectus.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Issuer</TD>
    <TD></TD>
    <TD valign="bottom">
    Lexicon Pharmaceuticals, Inc.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Common stock offered</TD>
    <TD></TD>
    <TD valign="bottom">
    33,333,333&#160;shares<SUP style="font-size: 85%; vertical-align: top">(1)</SUP></TD>

</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Common stock to be outstanding after this offering</TD>
    <TD></TD>
    <TD valign="bottom">
    170,704,881&#160;shares<SUP style="font-size: 85%; vertical-align: top">(2)</SUP></TD>

</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="bottom">
    The net proceeds of this offering are estimated to be
    approximately $48.0&#160;million after deduction of underwriting
    discounts and commissions and estimated offering expenses. We
    currently intend to use the net proceeds for research and
    development. We may also use a portion of the net proceeds to
    acquire or invest in complementary products and technologies or
    for general corporate purposes. See &#147;Use of Proceeds.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Nasdaq Global Market symbol</TD>
    <TD></TD>
    <TD valign="bottom">
    LXRX</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Risk Factors</TD>
    <TD></TD>
    <TD valign="bottom">
    See &#147;Risk Factors&#148; beginning on
    <FONT style="white-space: nowrap">page&#160;S-6</FONT>
    and the other information included in, or incorporated by
    reference into, this prospectus supplement and the accompanying
    prospectus for a discussion of certain factors you should
    carefully consider before deciding to invest in shares of our
    common stock.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Except as otherwise indicated, all information in this
    prospectus supplement assumes no exercise of the
    underwriters&#146; over-allotment option in this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    To the extent that the underwriters exercise their
    <FONT style="white-space: nowrap">over-allotment</FONT>
    option, we will offer Invus, L.P., or Invus, the right to
    purchase a number of additional shares of our common stock
    sufficient to permit Invus to maintain its percentage ownership
    of our outstanding common stock, which could be up to 2,015,888
    additional shares of our common stock if the underwriters
    exercise their over-allotment option in full.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #00337F"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 13,439,257&#160;shares
    offered directly by us to Invus at the price to the public set
    forth on the cover page of this prospectus supplement pursuant
    to Invus&#146; right to purchase up to the number of shares that
    is sufficient to maintain its pro rata ownership of our common
    stock. While Invus has indicated interest in purchasing such
    shares, an indication of interest is not a binding commitment or
    agreement to purchase shares and, as a result, Invus may
    purchase fewer or no shares in this offering.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Based on 137,371,548&#160;shares of
    our common stock outstanding as of September&#160;30, 2009 and
    excludes:
    </FONT></TD>
</TR>

</TABLE>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    18,527,651&#160;shares of common stock issuable upon the
    exercise of outstanding stock options at a weighted average
    exercise price per share of $4.20; and
</TD>
</TR>





<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    12,873,824&#160;shares of common stock available for future
    grant or issuance under our stock incentive plans.
</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-4
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SUMMARY
    FINANCIAL DATA</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The statement of operations data for each of the three years in
    the period ended December&#160;31, 2008 has been derived from
    our financial statements that have been audited by
    Ernst&#160;&#038; Young LLP, independent auditors. The
    statements of operations data for the six months ended
    June&#160;30, 2009 and 2008, and the balance sheet data as of
    June&#160;30, 2009, are unaudited but include, in the opinion of
    management, all adjustments, consisting of only normal recurring
    adjustments, necessary for a fair presentation of such data. Our
    historical results for any prior or interim periods are not
    necessarily indicative of results to be expected for any future
    period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The data presented below has been prepared in accordance with
    accounting principles generally accepted in the United States
    and should be read in conjunction with our financial statements
    and related notes incorporated by reference in this prospectus
    supplement and the accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="52%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">Six Months Ended<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="color: #00337F">Year Ended
    December&#160;31,</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="color: #00337F">June&#160;30,</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">2006</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">2007</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">2008</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">2008</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">2009</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">(unaudited)</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">(in thousands, except per share
    data)</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    <B>Statements of Operations Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    72,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,118
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    32,321
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    18,459
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,157
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Operating expenses:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Research and development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    106,695
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    104,332
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    108,575
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,084
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    General and administrative
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,334
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,740
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,281
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,759
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,425
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 18pt">
    Total operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    128,029
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    125,072
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    128,856
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    69,283
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,509
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Loss from operations
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (55,231
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (74,954
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,535
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (50,824
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (46,352
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Interest and other income (expense), net
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    801
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,721
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (349
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,768
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,527
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Consolidated net loss before taxes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (54,430
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (71,233
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,884
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (49,056
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (47,879
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Income tax provision stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    119
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Consolidated net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (54,311
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (71,233
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,884
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (49,056
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (47,879
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Less: net loss attributable to noncontrolling interest in
    Symphony Icon, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,439
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,024
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,072
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,246
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Net loss attributable to Lexicon Pharmaceuticals, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (54,311
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (58,794
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (76,860
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (37,984
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (41,633
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Net loss attributable to Lexicon Pharmaceuticals, Inc. per
    common share, basic and diluted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.81
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.59
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.56
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.28
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.30
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Shares used in computing net loss attributable to Lexicon
    Pharmaceuticals, Inc. per common share, basic and diluted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,876
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    136,797
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    136,795
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    137,203
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="color: #00337F">As of June&#160;30,
    2009</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">Actual</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 9pt; color: #00337F">As
    Adjusted<SUP style="font-size: 85%; vertical-align: top">(2)</SUP></FONT></B>

</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">(unaudited)<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">(in thousands)</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    <B>Balance Sheet Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Cash, cash equivalents, restricted cash and short-term
    investments<SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    79,670
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    127,629
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Short-term investments held by Symphony Icon, Inc.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,735
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,735
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Long-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,409
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,409
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Working
    capital<SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83,601
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    131,560
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    244,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    292,292
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Long-term debt, net of current portion
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Accumulated deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (529,028
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (529,028
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Lexicon Pharmaceuticals, Inc. stockholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    147,109
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    195,068
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>



<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #00337F"></DIV><!-- callerid=999 iwidth=456 length=48 -->



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes restricted cash and
    investments of $430 as of June&#160;30, 2009.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Reflects the net proceeds from the
    sale of 33,333,333&#160;shares of common stock in this offering
    at the public offering price of $1.50&#160;per share, after
    deducting underwriting discounts and commissions and estimated
    offering expenses.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='302'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>An investment in our common stock involves
    risks.&#160;&#160;You should carefully consider the following
    risk factors, together with all of the other information
    included in, or incorporated by reference into, this prospectus
    supplement and the accompanying prospectus in evaluating an
    investment in our common stock. If any of the following risks
    were to occur, our business, financial condition or results of
    operations could be materially adversely affected. In that case,
    the trading price of our common stock could decline and you
    could lose all or part of your investment.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Need for Additional Financing and Our Financial
    Results</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    will need additional capital in the future and, if it is
    unavailable, we will be forced to significantly curtail or cease
    operations. If it is not available on reasonable terms, we will
    be forced to obtain funds by entering into financing agreements
    on unattractive terms.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As of June&#160;30, 2009, we had $136.1&#160;million in cash,
    cash equivalents and investments, including $56.4&#160;million
    of auction rate securities and related rights, and
    $7.7&#160;million in investments held by Symphony Icon, Inc. We
    anticipate that the net proceeds of this offering, our existing
    capital resources, and the cash and revenues we expect to derive
    from drug discovery and development collaborations and other
    collaborations and licenses will enable us to fund our currently
    planned operations for at least the next 12&#160;months. Our
    currently planned operations for that time period consist of the
    completion of our ongoing clinical trials, the initiation and
    conduct of additional clinical trials and the continuation of
    our small molecule drug discovery and preclinical research
    efforts. However, we caution you that we may generate less cash
    and revenues or incur expenses more rapidly than we currently
    anticipate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Although difficult to accurately predict, the amount of our
    future capital requirements will be substantial and will depend
    on many factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to obtain additional funds from collaborations and
    technology licenses;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the amount and timing of payments under such agreements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the level and timing of our research and development
    expenditures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing and progress of the clinical development of our drug
    candidates LX1031, LX4211, LX1032 and LX2931;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our election whether to exercise our exclusive option to acquire
    all of the equity of Symphony Icon, thereby allowing us to
    reacquire LX1031 and LX1032;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    future results from clinical trials of our drug candidates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost and timing of regulatory approvals of drug candidates
    that we successfully develop;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    market acceptance of products that we successfully develop and
    commercially launch;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the effect of competing programs and products, and of
    technological and market developments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the filing, maintenance, prosecution, defense and enforcement of
    patent claims and other intellectual property rights;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost and timing of establishing or contracting for sales,
    marketing and distribution capabilities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our capital requirements will increase substantially as we
    advance our drug candidates into and through clinical
    development. Our capital requirements will also be affected by
    any expenditures we make in connection with license agreements
    and acquisitions of and investments in complementary products
    and technologies. For all of these reasons, our future capital
    requirements cannot easily be quantified.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If our capital resources are insufficient to meet future capital
    requirements, we will have to raise additional funds to continue
    our currently planned operations. If we raise additional capital
    by issuing equity securities, our then-existing stockholders
    will experience dilution and the terms of any new equity
    securities may have preferences over our common stock. We cannot
    be certain that additional financing, whether debt or equity,
    will be available in
</DIV>

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    <BR>
    S-6
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    amounts or on terms acceptable to us, if at all. We may be
    unable to raise sufficient additional capital on reasonable
    terms; if so, we will be forced to significantly curtail or
    cease operations or obtain funds by entering into financing
    agreements on unattractive terms.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Invus,
    L.P., our largest stockholder, may decline to grant its consent
    which is required for us to conduct additional equity offerings
    at prices less than $4.50 per share. In addition, we can provide
    no assurance that Invus will exercise its rights to require us
    to initiate up to two pro rata rights offerings in which it
    would be obligated to purchase its pro rata portion of the
    offering.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In June 2007, we entered into a securities purchase agreement
    with Invus, L.P., under which Invus made an initial investment
    of $205.4&#160;million to purchase 50,824,986&#160;shares of our
    common stock in August 2007 and 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&#160;million, less the
    proceeds of any &#147;qualified offerings&#148; that we may
    complete in the interim involving the sale of our common stock
    at prices above $4.50 per share. Under the securities purchase
    agreement as in effect prior to this offering, Invus could
    exercise its right to require us to conduct the first rights
    offering by giving us notice within a period of 90&#160;days
    beginning on November&#160;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 with the
    approval of the members of our board of directors who are not
    affiliated with Invus. In connection with and subject to
    completion of this offering, we will agree to extend by nine
    months the period during which Invus may exercise its right to
    require us to conduct the first rights offering to a period of
    one year beginning on the first rights offering trigger date.
    Under the securities purchase agreement as in effect prior to
    this offering, Invus may exercise its right to require us to
    conduct a second rights offering by giving us notice within a
    period of 90&#160;days beginning on the date that is
    12&#160;months after Invus&#146; 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&#160;days beginning on
    the first anniversary of the first rights offering trigger date.
    In connection with and subject to this offering and Invus&#146;
    consent relating to this offering, we will agree to modify the
    timing of this right to permit Invus to exercise its right to
    require us to conduct the second rights offering by giving us
    notice within a period of one year beginning on the date that is
    90&#160;days after Invus&#146; 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 one year beginning on the first
    anniversary of the first rights offering trigger date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In addition, under the securities purchase agreement as in
    effect prior to this offering, if Invus elects to exercise its
    rights to require us to initiate a rights offering, Invus is
    required to purchase its pro rata portion of the offering, and
    must commit to purchase the entire portion of the offering not
    subscribed for by other stockholders. In connection with and
    subject to completion of this offering, we will agree to modify
    these obligations such that, if Invus elects to exercise its
    rights to require us to initiate a rights offering, Invus will
    be required to purchase only its pro rata portion of the rights
    offering, and will not be obligated to purchase the entire
    portion of the offering not subscribed for by other
    stockholders. Under the securities purchase agreement, until the
    later of the completion of the second rights offering or the
    expiration of the period following the second rights offering
    trigger date during which Invus may require us to initiate the
    second rights offering, we have agreed not to issue any of our
    common stock for a per share price of less than $4.50 without
    the prior written consent of Invus, except pursuant to an
    employee or director stock option, incentive compensation or
    similar plan or to persons involved in the pharmaceutical
    industry in connection with simultaneous strategic transactions
    involving such persons in the ordinary course. In addition, if
    we notify Invus of a proposed public offering for an offering
    above $4.50 per share during the period in which Invus may
    initiate a rights offering, Invus will have a period of 10
    business days in which to exercise its right to require us to
    conduct a rights offering, in which case we would be required to
    forego the proposed public offering and proceed with the rights
    offering. Although Invus has consented to this offering, if we
    are not able to issue common stock at prices equal to or greater
    than $4.50 per share in the future, due to market conditions or
    otherwise, this obligation will limit our ability to raise
    capital by issuing additional equity securities without the
    consent of Invus. In the event Invus declines to grant such
    consent with respect to future offerings and, in addition,
    elects not to exercise its right to require us to initiate the
    first rights offering, or elects to limit the size of the first
    rights offering, our ability during this period to satisfy our
    future capital requirements by issuing equity securities will be
    limited if we are unable to do so by issuing common stock at
    prices equal to or greater than $4.50&#160;per share.
</DIV>

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    <BR>
    S-7
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have a history of net losses, and net losses have been
    increasing in recent periods. We expect to continue to incur
    increasing net losses and may not achieve or maintain
    profitability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have incurred net losses since our inception, including net
    losses of $41.6&#160;million for the six months ended
    June&#160;30, 2009, $76.9&#160;million for the year ended
    December&#160;31, 2008, $58.8&#160;million for the year ended
    December&#160;31, 2007 and $54.3&#160;million for the year ended
    December&#160;31, 2006. As of June&#160;30, 2009, we had an
    accumulated deficit of $529.0&#160;million. We are unsure when
    we will become profitable, if ever. The size of our net losses
    will depend, in part, on the rate of decline or growth in our
    revenues and on the level of our expenses.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We derive substantially all of our revenues from drug discovery
    and development collaborations and other collaborations and
    technology licenses, and will continue to do so for the
    foreseeable future. Our future revenues from collaborations and
    technology licenses are uncertain because our existing
    agreements have fixed terms or relate to specific projects of
    limited duration and future revenues from such agreements, if
    any, depend on the achievement of milestones and payment of
    royalties we earn from any future products developed under the
    collaborations. As a result, we depend, in part, on securing new
    collaboration and license agreements. Our ability to secure
    future revenue-generating agreements will depend upon our
    ability to address the needs of our potential future
    collaborators, granting agencies and licensees, and to negotiate
    agreements that we believe are in our long-term best interests.
    We may determine, as we have to date with respect to our four
    clinical drug candidates, that our interests are better served
    by retaining rights to our discoveries and advancing our
    therapeutic programs to a later stage, which could limit our
    near-term revenues. Given the early-stage nature of our
    operations, we do not currently derive any revenues from sales
    of pharmaceutical products.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    A large portion of our expenses is fixed, including expenses
    related to facilities, equipment and personnel. In addition, we
    expect to spend significant amounts to fund our research and
    development activities, including the conduct of clinical trials
    and the advancement of additional potential therapeutics into
    clinical development. As a result, we expect that our operating
    expenses will continue to increase significantly as our drug
    programs progress into and through human clinical trials and,
    consequently, we will need to generate significant additional
    revenues to achieve profitability. Even if we do achieve
    profitability, we may not be able to sustain or increase
    profitability on a quarterly or annual basis.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have licensed the intellectual property, including
    commercialization rights, to our drug candidates LX1031 and
    LX1032 to Symphony Icon and will not receive any future
    royalties or revenues with respect to these drug candidates
    unless we exercise our option to purchase Symphony
    Icon.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our option to purchase all of the equity of Symphony Icon,
    thereby allowing us to reacquire these drug candidates, is
    exercisable by us at any time, in our sole discretion, until
    June&#160;15, 2011 at an exercise price of
    (a)&#160;$81&#160;million, if the purchase option is exercised
    before June&#160;15, 2010 and (b)&#160;$90&#160;million, if the
    purchase option is exercised on or after June&#160;15, 2010 and
    before June&#160;15, 2011. The purchase option exercise price
    may be paid in cash or a combination of cash and common stock,
    at our sole discretion, provided that the common stock portion
    may not exceed 40% of the purchase option exercise price. Any
    such issuance of common stock may also be subject to Invus
    providing its consent to such issuance as required by our
    securities purchase agreement with Invus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If we elect to exercise the purchase option, we will be required
    to make a substantial cash payment or to make a lesser but still
    substantial cash payment and issue a substantial number of
    shares of our common stock, which may in turn require us to
    enter into a financing arrangement or license arrangement with
    one or more third parties. The amount of any such cash payment
    would reduce our capital resources. Payment in shares of our
    common stock could result in dilution to our stockholders at
    that time. Other financing or licensing alternatives may be
    expensive or impossible to obtain. If we do not exercise the
    purchase option prior to its expiration, our rights to purchase
    all of the equity in Symphony Icon and to reacquire LX1031 and
    LX1032 will terminate. We may not have the financial resources
    to exercise the option, which may result in our loss of these
    rights. Additionally, the clinical data available to us may not
    be sufficient for us to make a determination of whether we
    should exercise the option prior to June&#160;15, 2010 or
    June&#160;15, 2011.
</DIV>

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    <BR>
    S-8
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">At
    June&#160;30, 2009, we held $56.9&#160;million (par value), with
    an estimated fair value of $44.3&#160;million, of auction rate
    securities for which auctions have failed and, as a result, we
    may not be able to access at least a portion of these funds
    without a loss of principal.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    At June&#160;30, 2009, we held $56.9&#160;million (par value),
    with an estimated fair value of $44.3&#160;million, of
    investments with an auction interest rate reset feature, known
    as auction rate securities. Until February 2008, the market for
    our auction rate securities was highly liquid. Starting in
    February 2008, a substantial number of auctions
    &#147;failed,&#148; meaning that there was not enough demand to
    sell all of the securities that holders desired to sell at
    auction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In November 2008, we accepted an offer from UBS AG, the
    investment bank that sold us our auction rate securities,
    providing us with certain rights related to our auction rate
    securities. The rights permit us to require UBS to purchase our
    auction rate securities from us at par value during the period
    from June&#160;30, 2010 through July&#160;2, 2012. Conversely,
    UBS has the right, in its discretion, to purchase or sell the
    securities at any time by paying us the par value of the
    securities. In connection with our acceptance of UBS&#146;s
    offer, in January 2009, we entered into a credit line agreement
    with UBS Bank USA that provides, as of June&#160;30, 2009, up to
    an aggregate amount of $37.0&#160;million in the form of an
    uncommitted, demand, revolving line of credit. The credit line
    is secured only by the auction rate securities and advances
    under the credit line will be made on a &#147;no net cost&#148;
    basis, meaning that the interest paid by us on advances will not
    exceed the interest or dividends paid to us by the issuer of the
    auction rate securities. We have drawn down the full
    $37.0&#160;million available to us under the credit line as of
    June&#160;30, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Although we have accessed the maximum amount permitted under the
    credit line and expect to exercise the rights and sell our
    auction rate securities to UBS on June&#160;30, 2010, the
    earliest date allowable under the rights, we will have no means
    to access $19.9&#160;million (par value), as of June&#160;30,
    2009, invested in auction rate securities before such date
    without a loss of principal. Further, UBS and its affiliates may
    not be able to maintain the financial resources necessary to
    perform its obligations under the rights or credit line. As a
    result, we cannot provide any assurance that we will be able to
    access the funds invested in auction rate securities without a
    loss of principal, unless a future auction on these investments
    is successful or the issuer redeems the securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    operating results have been and likely will continue to
    fluctuate, and we believe that period-to-period comparisons of
    our operating results are not a good indication of our future
    performance.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our operating results and, in particular, our ability to
    generate additional revenues are dependent on many factors,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to establish new collaborations and technology
    licenses, and the timing of such arrangements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the expiration or other termination of collaborations, which may
    not be renewed or replaced;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the success rate of our discovery and development efforts
    leading to opportunities for new collaborations and licenses, as
    well as milestone payments and royalties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing and willingness of our existing collaborators to
    commercialize pharmaceutical products that would result in
    milestone payments and royalties;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    general and industry-specific economic conditions, which may
    affect our and our collaborators&#146; research and development
    expenditures.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Because of these and other factors, including the risks and
    uncertainties described in this section, our operating results
    have fluctuated in the past and are likely to do so in the
    future. Due to the likelihood of fluctuations in our revenues
    and expenses, we believe that period-to-period comparisons of
    our operating results are not a good indication of our future
    performance.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Discovery and Development of Our Drug
    Candidates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    an early-stage company, and have not proven our ability to
    successfully develop and commercialize drug candidates based on
    our drug target discoveries.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our business strategy of using our technology platform and,
    specifically, the discovery of the functions of genes using
    knockout mice to select promising drug targets and developing
    and commercializing drug candidates
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-9
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    based on our target discoveries, in significant part through
    collaborations, is unproven. Our success will depend upon our
    ability to successfully generate, select and develop drug
    candidates for targets we consider to have pharmaceutical value,
    whether on our own or through collaborations, and to select an
    appropriate commercialization strategy for each potential
    therapeutic we choose to pursue.
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    We have not proven our ability to develop or commercialize drug
    candidates based on our drug target discoveries. The generation
    and selection of potential drug candidates for a target is a
    difficult, expensive and time-consuming process that is subject
    to substantial technical and scientific challenges and
    uncertainties, without any assurance of ever identifying a drug
    candidate warranting clinical testing. The process involves the
    optimization of a wide variety of variables, including among
    many other things potency against the target, selectivity for
    the intended target relative to other proteins, absorption,
    metabolism, distribution and excretion characteristics, activity
    in animal models of disease and the results of other preclinical
    research, and feasibility and cost of manufacture, each of which
    may affect one or more of the others in ways that conflict with
    the desired profile.
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    Furthermore, we do not know that any pharmaceutical products
    based on our drug target discoveries can be successfully
    developed or commercialized. Our strategy is focused principally
    on the discovery and development of drug candidates for targets
    that have not been clinically validated in humans by drugs or
    drug candidates generated by others. As a result, the drug
    candidates we develop are subject to uncertainties as to the
    effects of modulating the human drug target as well as to those
    relating to the characteristics and activity of the particular
    compound.
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    In addition, we may experience unforeseen technical
    complications in the processes we use to identify potential drug
    targets or discover and develop potential drug candidates. These
    complications could materially delay or limit the use of our
    resources, substantially increase the anticipated cost of
    conducting our drug target or drug candidate discovery efforts
    or prevent us from implementing our processes at appropriate
    quality and throughput levels.
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">Clinical
    testing of our drug candidates in humans is an inherently risky
    and time-consuming process that may fail to demonstrate safety
    and efficacy, which could result in the delay, limitation or
    prevention of regulatory approval.</FONT></I></B>
</DIV>

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    In order to obtain regulatory approvals for the commercial sale
    of any products that we may develop, we will be required to
    complete extensive clinical trials in humans to demonstrate the
    safety and efficacy of our drug candidates. We or our
    collaborators may not be able to obtain authority from the FDA,
    or other equivalent foreign regulatory agencies to initiate or
    complete any clinical trials. In addition, we have limited
    internal resources for making regulatory filings and dealing
    with regulatory authorities.
</DIV>

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    Clinical trials are inherently risky and the results from
    preclinical testing of a drug candidate that is under
    development may not be predictive of results that will be
    obtained in human clinical trials. In addition, the results of
    early human clinical trials may not be predictive of results
    that will be obtained in larger-scale, advanced stage clinical
    trials. A number of companies in the pharmaceutical industry
    have suffered significant setbacks in advanced clinical trials,
    even after achieving positive results in earlier trials.
    Although our four clinical drug candidates have been generally
    well-tolerated in Phase 1 clinical trials at the dose levels we
    expect to evaluate in Phase 2 clinical trials, we have not yet
    completed Phase 2 clinical trials of any of these drug
    candidates in patients suffering from the disease or condition
    that the drug candidates are designed to treat. Negative or
    inconclusive results from a preclinical study or a clinical
    trial could cause us, one of our collaborators or the FDA to
    terminate a preclinical study or clinical trial or require that
    we repeat it. Furthermore, we, one of our collaborators or a
    regulatory agency with jurisdiction over the trials may suspend
    clinical trials at any time if the subjects or patients
    participating in such trials are being exposed to unacceptable
    health risks or for other reasons.
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    Any preclinical or clinical test may fail to produce results
    satisfactory to the FDA or foreign regulatory authorities.
    Preclinical and clinical data can be interpreted in different
    ways, which could delay, limit or prevent regulatory approval.
    The FDA or institutional review boards at the medical
    institutions and healthcare facilities where we sponsor clinical
    trials may suspend any trial indefinitely if they find
    deficiencies in the conduct of these trials. Clinical trials
    must be conducted in accordance with the FDA&#146;s current Good
    Clinical Practices. The FDA and these institutional review
    boards have authority to oversee our clinical trials, and the
    FDA may require large
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    numbers of test subjects. In addition, we must manufacture, or
    contract for the manufacture of, the drug candidates that we use
    in our clinical trials under the FDA&#146;s current Good
    Manufacturing Practices.
</DIV>

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    The rate of completion of clinical trials is dependent, in part,
    upon the rate of enrollment of patients. Patient accrual is a
    function of many factors, including the size of the patient
    population, the proximity of patients to clinical sites, the
    eligibility criteria for the study, the nature of the study, the
    existence of competitive clinical trials and the availability of
    alternative treatments. Delays in planned patient enrollment may
    result in increased costs and prolonged clinical development,
    which in turn could allow our competitors to bring products to
    market before we do and impair our ability to commercialize our
    products or potential products.
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    We or our collaborators may not be able to successfully complete
    any clinical trial of a potential product within any specified
    time period. In some cases, we or our collaborators may not be
    able to complete the trial at all. Moreover, clinical trials may
    not show our potential products to be both safe and effective.
    Thus, the FDA and other regulatory authorities may not approve
    any products that we develop for any indication or may limit the
    approved indications or impose other conditions.
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    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Relationships with Third Parties</FONT></B>
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">Disagreements
    with Symphony Icon regarding the development of our drug
    candidates LX1031 or LX1032 could negatively affect or delay
    their development.</FONT></I></B>
</DIV>

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    While we are the party primarily responsible for development of
    our drug candidates LX1031 and LX1032 in accordance with a
    specified development plan and related development budget, our
    development activities are supervised by Symphony Icon&#146;s
    development committee, which is comprised of an equal number of
    representatives from us and Symphony Icon. Any disagreements
    between us and Symphony Icon regarding a development decision
    may cause delays in the development and commercialization of
    those drug candidates or lead to development decisions that do
    not reflect our interests. Any such delays or development
    decisions not in our interest could negatively affect the value
    of LX1031 or LX1032.
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    dependent in many ways upon our collaborations with major
    pharmaceutical companies. The revenues we receive under these
    agreements have been decreasing in recent periods and are likely
    to continue to decrease in the future. If we are unable to
    achieve milestones under those collaborations or if our
    collaborators&#146; efforts fail to yield pharmaceutical
    products on a timely basis, our opportunities to generate
    revenues and earn royalties will be reduced.</FONT></I></B>
</DIV>

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    We have derived a substantial majority of our revenues to date
    from collaborative drug discovery and development alliances with
    a limited number of major pharmaceutical companies. Revenues
    from our drug discovery and development alliances depend upon
    continuation of the collaborations, the achievement of
    milestones and payment of royalties we earn from any future
    products developed under the collaborations. If our relationship
    terminates with any of our collaborators, our reputation in the
    business and scientific community may suffer and revenues will
    be negatively impacted to the extent such losses are not offset
    by additional collaboration agreements. If we are unable to
    achieve milestones or our collaborators are unable to
    successfully develop products from which royalties are payable,
    we will not earn the revenues contemplated by those drug
    discovery and development collaborations. In addition, some of
    our alliances are exclusive and preclude us from entering into
    additional collaborative arrangements with other parties in the
    field of exclusivity.
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    We have limited or no control over the resources that any
    collaborator may devote to the development and commercialization
    of products under our alliances. Any of our present or future
    collaborators may not perform their obligations as expected.
    These collaborators may breach or terminate their agreements
    with us or otherwise fail to conduct product discovery,
    development or commercialization activities successfully or in a
    timely manner. Further, our collaborators may elect not to
    develop pharmaceutical products arising out of our collaborative
    arrangements or may not devote sufficient resources to the
    development, approval, manufacture, marketing or sale of these
    products. If any of these events occurs, we may not be able to
    develop or commercialize potential pharmaceutical products,
    which would have a material adverse effect on our business.
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Conflicts
    with our collaborators could jeopardize the success of our
    collaborative agreements and harm our product development
    efforts.</FONT></I></B>
</DIV>

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    We may pursue opportunities in specific disease and therapeutic
    modality fields that could result in conflicts with our
    collaborators, if any of our collaborators takes the position
    that our internal activities overlap with those activities that
    are exclusive to our collaboration. Moreover, disagreements
    could arise with our collaborators over rights to our
    intellectual property or our rights to share in any of the
    future revenues of compounds or therapeutic approaches developed
    by our collaborators. Any conflict with or among our
    collaborators could result in the termination of our
    collaborative agreements, delay collaborative research or
    development activities, impair our ability to renew or obtain
    future collaborative agreements or lead to costly and time
    consuming litigation. Conflicts with our collaborators could
    also have a negative impact on our relationship with existing
    collaborators, materially impairing our business and revenues.
    Some of our collaborators are also potential competitors or may
    become competitors in the future. Our collaborators could
    develop competing products, preclude us from entering into
    collaborations with their competitors or terminate their
    agreements with us prematurely. Any of these events could harm
    our product development efforts.
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    lack the capability to manufacture materials for preclinical
    studies, clinical trials or commercial sales and rely on third
    parties to manufacture our drug candidates, which may harm or
    delay our product development and commercialization
    efforts.</FONT></I></B>
</DIV>

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    We currently do not have the manufacturing capabilities or
    experience necessary to produce materials for preclinical
    studies, clinical trials or commercial sales and intend in the
    future to continue to rely on collaborators and third-party
    contractors to produce such materials. We will rely on selected
    manufacturers to deliver materials on a timely basis and to
    comply with applicable regulatory requirements, including the
    current Good Manufacturing Practices of the FDA, which relate to
    manufacturing and quality control activities. These
    manufacturers may not be able to produce material on a timely
    basis or manufacture material at the quality level or in the
    quantity required to meet our development timelines and
    applicable regulatory requirements. In addition, there are a
    limited number of manufacturers that operate under the
    FDA&#146;s current Good Manufacturing Practices and that are
    capable of producing such materials, and we may experience
    difficulty finding manufacturers with adequate capacity for our
    needs. If we are unable to contract for the production of
    sufficient quantity and quality of materials on acceptable
    terms, our product development and commercialization efforts may
    be delayed. Moreover, noncompliance with the FDA&#146;s current
    Good Manufacturing Practices can result in, among other things,
    fines, injunctions, civil and criminal penalties, product
    recalls or seizures, suspension of production, failure to obtain
    marketing approval and withdrawal, suspension or revocation of
    marketing approvals.
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    rely on third parties to carry out drug development
    activities.</FONT></I></B>
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We rely on clinical research organizations and other third party
    contractors to carry out many of our drug development
    activities, including the performance of preclinical laboratory
    and animal tests under the FDA&#146;s current Good Laboratory
    Practices regulations and the conduct of clinical trials of our
    drug candidates in accordance with protocols we establish. If
    these third parties do not successfully carry out their
    contractual duties or regulatory obligations or meet expected
    deadlines, our drug development activities may be delayed,
    suspended or terminated. Such a failure by these third parties
    could significantly impair our ability to develop and
    commercialize the affected drug candidates.
</DIV>

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    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Regulatory Approval of Our Drug Candidates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    drug candidates are subject to a lengthy and uncertain
    regulatory process that may not result in the necessary
    regulatory approvals, which could adversely affect our ability
    to commercialize products.</FONT></I></B>
</DIV>

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    Our drug candidates, as well as the activities associated with
    their research, development and commercialization, are subject
    to extensive regulation by the FDA and other regulatory agencies
    in the United States and by comparable authorities in other
    countries. Failure to obtain regulatory approval for a drug
    candidate would prevent us from commercializing that drug
    candidate. We have not received regulatory approval to market
    any of our drug candidates in any jurisdiction and have only
    limited experience in preparing and filing the
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    applications necessary to gain regulatory approvals. The process
    of obtaining regulatory approvals is expensive, and often takes
    many years, if approval is obtained at all, and can vary
    substantially based upon the type, complexity and novelty of the
    drug candidates involved. Before a new drug application can be
    filed with the FDA, the drug candidate must undergo extensive
    clinical trials, which can take many years and may require
    substantial expenditures. Any clinical trial may fail to produce
    results satisfactory to the FDA. For example, the FDA could
    determine that the design of a clinical trial is inadequate to
    produce reliable results. The regulatory process also requires
    preclinical testing, and data obtained from preclinical and
    clinical activities are susceptible to varying interpretations,
    which could delay, limit or prevent regulatory approval. In
    addition, delays or rejections may be encountered based upon
    changes in regulatory policy for product approval during the
    period of product development and regulatory agency review.
    Changes in regulatory approval policy, regulations or statutes
    or the process for regulatory review during the development or
    approval periods of our drug candidates may cause delays in the
    approval or rejection of an application. Even if the FDA or a
    comparable authority in another country approves a drug
    candidate, the approval may impose significant restrictions on
    the indicated uses, conditions for use, labeling, advertising,
    promotion, marketing
    <FONT style="white-space: nowrap">and/or</FONT>
    production of such product and may impose ongoing requirements
    for post-approval studies, including additional research and
    development and clinical trials. These agencies also may impose
    various civil or criminal sanctions for failure to comply with
    regulatory requirements, including withdrawal of product
    approval.
</DIV>

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    <B><I><FONT style="font-family: 'Times New Roman', Times">If our
    potential products receive regulatory approval, we or our
    collaborators will remain subject to extensive and rigorous
    ongoing regulation.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If we or our collaborators obtain initial regulatory approvals
    from the FDA or foreign regulatory authorities for any products
    that we may develop, we or our collaborators will be subject to
    extensive and rigorous ongoing domestic and foreign government
    regulation of, among other things, the research, development,
    testing, manufacture, labeling, promotion, advertising,
    distribution and marketing of our products and drug candidates.
    The failure to comply with these requirements or the
    identification of safety problems during commercial marketing
    could lead to the need for product marketing restrictions,
    product withdrawal or recall or other voluntary or regulatory
    action, which could delay further marketing until the product is
    brought into compliance. The failure to comply with these
    requirements may also subject us or our collaborators to
    stringent penalties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Commercialization of Products</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    commercial success of any products that we may develop will
    depend upon the degree of market acceptance of our products
    among physicians, patients, health care payors, private health
    insurers and the medical community.</FONT></I></B>
</DIV>

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    Even if approved by the relevant regulatory authority, our
    ability to commercialize any products that we may develop will
    be highly dependent upon the extent to which these products gain
    market acceptance among physicians, patients, health care
    payors, such as Medicare and Medicaid, private health insurers,
    including managed care organizations and group purchasing
    organizations, and the medical community. If these products do
    not achieve an adequate level of acceptance, we may not generate
    adequate product revenues, if at all, and we may not become
    profitable. The degree of market acceptance of our drug
    candidates, if approved for commercial sale, will depend upon a
    number of factors, including:
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    the effectiveness, or perceived effectiveness, of our products
    in comparison to competing products;
</TD>
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    the existence of any significant side effects, as well as their
    severity in comparison to any competing products;
</TD>
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    potential advantages over alternative treatments;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ability to offer our products for sale at competitive prices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    relative convenience and ease of administration;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the strength of marketing and distribution support;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sufficient third-party coverage or reimbursement.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-13
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to establish sales and marketing capabilities or
    enter into agreements with third parties to market and sell our
    drug candidates, we may be unable to generate product
    revenues.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have no experience as a company in the sales, marketing and
    distribution of pharmaceutical products and do not currently
    have a sales and marketing organization. Developing a sales and
    marketing force would be expensive and time-consuming, could
    delay any product launch, and we may never be able to develop
    this capacity. To the extent that we enter into arrangements
    with third parties to provide sales, marketing and distribution
    services, our product revenues are likely to be lower than if we
    market and sell any products that we develop ourselves. If we
    are unable to establish adequate sales, marketing and
    distribution capabilities, independently or with others, we may
    not be able to generate product revenues.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to obtain adequate coverage and reimbursement from
    third-party payors for any products that we may develop, our
    revenues and prospects for profitability will
    suffer.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our ability to commercialize any products that we may develop
    will be highly dependent on the extent to which coverage and
    reimbursement for our products will be available from
    third-party payors, including governmental payors, such as
    Medicare and Medicaid, and private health insurers, including
    managed care organizations and group purchasing organizations.
    Many patients will not be capable of paying themselves for some
    or all of the products that we may develop and will rely on
    third-party payors to pay for, or subsidize, their medical
    needs. If third-party payors do not provide coverage or
    reimbursement for any products that we may develop, our revenues
    and prospects for profitability will suffer. In addition, even
    if third-party payors provide some coverage or reimbursement for
    our products, the availability of such coverage or reimbursement
    for prescription drugs under private health insurance and
    managed care plans often varies based on the type of contract or
    plan purchased.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    A primary trend in the United States health care industry is
    toward cost containment. Current and future prescription drug
    benefit programs, including any programs that may be proposed as
    a result of the change in the presidential administration in
    January 2009, may have the effect of reducing the prices that we
    are able to charge for products we develop and sell through
    plans under the programs. These prescription drug programs may
    also cause third-party payors other than the federal government,
    including the states under the Medicaid program, to discontinue
    coverage for products we develop or to lower the price that they
    will pay.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Proponents of drug reimportation may attempt to pass
    legislation, which would allow direct reimportation under
    certain circumstances. If legislation or regulations were passed
    allowing the reimportation of drugs, it could decrease the price
    we receive for any products that we may develop, thereby
    negatively affecting our revenues and prospects for
    profitability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In addition, in some foreign countries, particularly the
    countries in the European Union, the pricing of prescription
    pharmaceuticals is subject to governmental control. In these
    countries, price negotiations with governmental authorities can
    take six to 12&#160;months or longer after the receipt of
    regulatory marketing approval for a product. To obtain
    reimbursement
    <FONT style="white-space: nowrap">and/or</FONT>
    pricing approval in some countries, we may be required to
    conduct a clinical trial that compares the cost effectiveness of
    our drug candidates or products to other available therapies.
    The conduct of such a clinical trial could be expensive and
    result in delays in the commercialization of our drug
    candidates. Third-party payors are challenging the prices
    charged for medical products and services, and many third-party
    payors limit reimbursement for newly approved health care
    products. In particular, third-party payors may limit the
    indications for which they will reimburse patients who use any
    products that we may develop. Cost-control initiatives could
    decrease the price we might establish for products that we may
    develop, which would result in lower product revenues to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    competitors may develop products and technologies that make our
    products and technologies obsolete.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The biotechnology industry is highly fragmented and is
    characterized by rapid technological change. We face, and will
    continue to face, intense competition from biotechnology and
    pharmaceutical companies, as well as academic research
    institutions, clinical reference laboratories and government
    agencies that are pursuing research activities similar to ours.
    In addition, significant delays in the development of our drug
    candidates could allow our competitors to bring products to
    market before us, which would impair our ability to
    commercialize our drug
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-14
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    candidates. Our future success will depend upon our ability to
    maintain a competitive position with respect to technological
    advances. Any products that are developed through our
    technologies will compete in highly competitive markets.
    Further, our competitors may be more effective at using their
    technologies to develop commercial products. Many of the
    organizations competing with us have greater capital resources,
    larger research and development staff and facilities, more
    experience in obtaining regulatory approvals and more extensive
    product manufacturing and marketing capabilities. As a result,
    our competitors may be able to more easily develop technologies
    and products that would render our technologies and products,
    and those of our collaborators, obsolete and noncompetitive. In
    addition, there may be drug candidates of which we are not aware
    at an earlier stage of development that may compete with our
    drug candidates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not be able to manufacture our drug candidates in commercial
    quantities, which would prevent us from commercializing our drug
    candidates.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    To date, our drug candidates have been manufactured in small
    quantities for preclinical and clinical trials. If any of these
    drug candidates are approved by the FDA or other regulatory
    agencies for commercial sale, we will need to manufacture them
    in larger quantities. We may not be able to successfully
    increase the manufacturing capacity, whether in collaboration
    with third-party manufacturers or on our own, for any of our
    drug candidates in a timely or economic manner, or at all.
    Significant
    <FONT style="white-space: nowrap">scale-up</FONT> of
    manufacturing may require additional validation studies, which
    the FDA must review and approve. If we are unable to
    successfully increase the manufacturing capacity for a drug
    candidate, the regulatory approval or commercial launch of that
    drug candidate may be delayed or there may be a shortage in
    supply. Our drug candidates require precise, high-quality
    manufacturing. The failure to achieve and maintain these high
    manufacturing standards, including the incidence of
    manufacturing errors, could result in patient injury or death,
    product recalls or withdrawals, delays or failures in product
    testing or delivery, cost overruns or other problems that could
    seriously hurt our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Intellectual Property</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to adequately protect our intellectual property,
    third parties may be able to use our technology, which could
    adversely affect our ability to compete in the
    market.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our success will depend in part upon our ability to obtain
    patents and maintain adequate protection of the intellectual
    property related to our technologies and products. The patent
    positions of biotechnology companies, including our patent
    position, are generally uncertain and involve complex legal and
    factual questions. We will be able to protect our intellectual
    property rights from unauthorized use by third parties only to
    the extent that our technologies are covered by valid and
    enforceable patents or are effectively maintained as trade
    secrets. We will continue to apply for patents covering our
    technologies and products as and when we deem appropriate.
    Pending patent applications do not provide protection against
    competitors because they are not enforceable until they issue as
    patents. Further, the disclosures contained in our current and
    future patent applications may not be sufficient to meet
    statutory requirements for patentability. Once issued, patents
    still may not provide commercially meaningful protection. Our
    existing patents and any future patents we obtain may not be
    sufficiently broad to prevent others from practicing our
    technologies or from developing competing products. Furthermore,
    others may independently develop similar or alternative
    technologies or design around our patents. If anyone infringes
    upon our or our collaborators&#146; patent rights, enforcing
    these rights may be difficult, costly and time-consuming and, as
    a result, it may not be cost-effective or otherwise expedient to
    pursue litigation to enforce those patent rights. In addition,
    our patents may be challenged or invalidated or may fail to
    provide us with any competitive advantages, if, for example,
    others were the first to invent or to file patent applications
    for these inventions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Because patent applications can take many years to issue, there
    may be currently pending applications, unknown to us, which may
    later result in issued patents that cover the production,
    manufacture, commercialization or use of our technologies, drug
    targets or drug candidates. If any such patents are issued to
    other entities, we will be unable to obtain patent protection
    for the same or similar discoveries that we make. Moreover, we
    may be blocked from using or developing some of our existing or
    proposed technologies and products, or may be required to obtain
    a license that may not be available on reasonable terms, if at
    all. Further, others may discover uses for our technologies or
    products other than those covered in our issued or pending
    patents, and these other uses may be separately patentable. Even
    if we have a patent claim on a particular technology or product,
    the holder of a patent
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-15
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    covering the use of that technology or product could exclude us
    from selling a product that is based on the same use of that
    product.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The laws of some foreign countries do not protect intellectual
    property rights to the same extent as the laws of the United
    States, and many companies have encountered significant problems
    in protecting and defending such rights in foreign
    jurisdictions. Many countries, including certain countries in
    Europe, have compulsory licensing laws under which a patent
    owner may be compelled to grant licenses to third parties (for
    example, the patent owner has failed to &#147;work&#148; the
    invention in that country or the third party has patented
    improvements). In addition, many countries limit the
    enforceability of patents against government agencies or
    government contractors. In these countries, the patent owner may
    have limited remedies, which could materially diminish the value
    of the patent. Compulsory licensing of life-saving drugs is also
    becoming increasingly popular in developing countries either
    through direct legislation or international initiatives. Such
    compulsory licenses could be extended to include some of our
    drug candidates, which could limit our potential revenue
    opportunities. Moreover, the legal systems of certain countries,
    particularly certain developing countries, do not favor the
    aggressive enforcement of patent and other intellectual property
    protection, which makes it difficult to stop infringement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We rely on trade secret protection for our confidential and
    proprietary information. We have taken security measures to
    protect our proprietary information and trade secrets, but these
    measures may not provide adequate protection. While we seek to
    protect our proprietary information by entering into
    confidentiality agreements with employees, collaborators and
    consultants, we cannot assure you that our proprietary
    information will not be disclosed, or that we can meaningfully
    protect our trade secrets. In addition, our competitors may
    independently develop substantially equivalent proprietary
    information or may otherwise gain access to our trade secrets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be involved in patent litigation and other disputes regarding
    intellectual property rights and may require licenses from third
    parties for our discovery and development and planned
    commercialization activities. We may not prevail in any such
    litigation or other dispute or be able to obtain required
    licenses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our discovery and development efforts as well as our potential
    products and those of our collaborators may give rise to claims
    that they infringe the patents of others. We are aware that
    other companies and institutions have conducted research on many
    of the same targets that we have identified and have filed
    patent applications potentially covering many of the genes and
    encoded drug targets that are the focus of our drug discovery
    programs. In some cases, patents have issued from these
    applications. In addition, many companies and institutions have
    well-established patent portfolios directed to common
    techniques, methods and means of developing, producing and
    manufacturing pharmaceutical products. Other companies or
    institutions could bring legal actions against us or our
    collaborators for damages or to stop us or our collaborators
    from engaging in certain discovery or development activities or
    from manufacturing and marketing any resulting therapeutic
    products. If any of these actions are successful, in addition to
    our potential liability for damages, these entities would likely
    require us or our collaborators to obtain a license in order to
    continue engaging in the infringing activities or to manufacture
    or market the resulting therapeutic products or may force us to
    terminate such activities or manufacturing and marketing efforts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may need to pursue litigation against others to enforce our
    patents and intellectual property rights and may be the subject
    of litigation brought by third parties to enforce their patent
    and intellectual property rights. In addition, we may become
    involved in litigation based on intellectual property
    indemnification undertakings that we have given to certain of
    our collaborators. Patent litigation is expensive and requires
    substantial amounts of management attention. The eventual
    outcome of any such litigation is uncertain and involves
    substantial risks.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We believe that there will continue to be significant litigation
    in our industry regarding patent and other intellectual property
    rights. We have expended and many of our competitors have
    expended and are continuing to expend significant amounts of
    time, money and management resources on intellectual property
    litigation. If we become involved in future intellectual
    property litigation, it could consume a substantial portion of
    our resources and could negatively affect our results of
    operations.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We use
    intellectual property that we license from third parties. If we
    do not comply with these licenses, we could lose our rights
    under them.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We rely, in part, on licenses to use certain technologies that
    are important to our business, and we do not own the patents
    that underlie these licenses. Most of these licenses, however,
    have terms that extend for the life of the licensed patents. Our
    rights to use these technologies and practice the inventions
    claimed in the licensed patents are subject to our abiding by
    the terms of those licenses and the licensors not terminating
    them. We believe we are currently in material compliance with
    all requirements of these licenses. In many cases, we do not
    control the filing, prosecution or maintenance of the patent
    rights to which we hold licenses and rely upon our licensors to
    prosecute infringement of those rights. The scope of our rights
    under our licenses may be subject to dispute by our licensors or
    third parties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have not sought patent protection outside of the United States
    for some of our inventions, and some of our licensed patents
    only provide coverage in the United States. As a result, our
    international competitors could be granted foreign patent
    protection with respect to our discoveries.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have decided not to pursue patent protection with respect to
    some of our inventions outside the United States, both because
    we do not believe it is cost-effective and because of
    confidentiality concerns. Accordingly, our international
    competitors could develop, and receive foreign patent protection
    for, genes or gene sequences, uses of those genes or gene
    sequences, gene products and drug targets, assays for
    identifying potential therapeutic products, potential
    therapeutic products and methods of treatment for which we are
    seeking United States patent protection. In addition, most of
    our gene trapping patents and our licensed gene targeting
    patents cover only the United States and do not apply to
    discovery activities conducted outside of the United States or,
    in some circumstances, to importing into the United States
    products developed using this technology.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be subject to damages resulting from claims that we, our
    employees or independent contractors have wrongfully used or
    disclosed alleged trade secrets of their former
    employers.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Many of our employees and independent contractors were
    previously employed at universities, other biotechnology or
    pharmaceutical companies, including our competitors or potential
    competitors. We may be subject to claims that these employees,
    independent contractors or we have inadvertently or otherwise
    used or disclosed trade secrets or other proprietary information
    of their former employers. Litigation may be necessary to defend
    against these claims. Even if we are successful in defending
    against these claims, litigation could result in substantial
    costs and divert management&#146;s attention. If we fail in
    defending such claims, in addition to paying money claims, we
    may lose valuable intellectual property rights or personnel. A
    loss of key research personnel
    <FONT style="white-space: nowrap">and/or</FONT> their
    work product could hamper or prevent our ability to
    commercialize certain drug candidates, which could severely harm
    our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Employees, Growth and Facilities Operations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    loss of key personnel or the inability to attract and retain
    additional personnel could impair our ability to expand our
    operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are highly dependent upon the principal members of our
    management and scientific staff, the loss of whose services
    might adversely impact the achievement of our objectives and the
    continuation of existing collaborations. Recruiting and
    retaining qualified clinical and scientific personnel will be
    critical to support activities related to advancing our clinical
    and preclinical development programs, and supporting our
    collaborative arrangements and our internal proprietary research
    and development efforts. Competition is intense for experienced
    clinical personnel, in particular, and we may be unable to
    retain or recruit clinical personnel with the expertise or
    experience necessary to allow us to pursue collaborations,
    develop our products and core technologies or expand our
    operations to the extent otherwise possible. Further, all of our
    employees are employed &#147;at will&#148; and, therefore, may
    leave our employment at any time.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-17
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    collaborations with outside scientists may be subject to
    restriction and change.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We work with scientific and clinical advisors and collaborators
    at academic and other institutions that assist us in our
    research and development efforts. These advisors and
    collaborators are not our employees and may have other
    commitments that limit their availability to us. Although these
    advisors and collaborators generally agree not to do competing
    work, if a conflict of interest between their work for us and
    their work for another entity arises, we may lose their
    services. In such a circumstance, we may lose work performed by
    them, and our development efforts with respect to the matters on
    which they were working maybe significantly delayed or otherwise
    adversely affected. In addition, although our advisors and
    collaborators sign agreements not to disclose our confidential
    information, it is possible that valuable proprietary knowledge
    may become publicly known through them.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Security
    breaches may disrupt our operations and harm our operating
    results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our network security and data recovery measures may not be
    adequate to protect against computer viruses, break-ins, and
    similar disruptions from unauthorized tampering with our
    computer systems. The misappropriation, theft, sabotage or any
    other type of security breach with respect to any of our
    proprietary and confidential information that is electronically
    stored, including research or clinical data, could have a
    material adverse impact on our business, operating results and
    financial condition. Additionally, any break-in or trespass of
    our facilities that results in the misappropriation, theft,
    sabotage or any other type of security breach with respect to
    our proprietary and confidential information, including research
    or clinical data, or that results in damage to our research and
    development equipment and assets could have a material adverse
    impact on our business, operating results and financial
    condition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Because
    most of our operations are located at a single facility, the
    occurrence of a disaster could significantly disrupt our
    business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Most of our operations are conducted at our facility in The
    Woodlands, Texas. While we have developed redundant and
    emergency backup systems to protect our resources and the
    facilities in which they are stored, they may be insufficient in
    the event of a severe fire, flood, hurricane, tornado,
    mechanical failure or similar disaster. If such a disaster
    significantly damages or destroys the facility in which our
    resources are maintained, our business could be disrupted until
    we could regenerate the affected resources. Our business
    interruption insurance may not be sufficient to compensate us in
    the event of a major interruption due to such a disaster.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Environmental and Product Liability</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We use
    hazardous chemicals and radioactive and biological materials in
    our business. Any claims relating to improper handling, storage
    or disposal of these materials could be time consuming and
    costly.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our research and development processes involve the controlled
    use of hazardous materials, including chemicals and radioactive
    and biological materials. Our operations produce hazardous waste
    products. We cannot eliminate the risk of accidental
    contamination or discharge and any resultant injury from these
    materials. Federal, state and local laws and regulations govern
    the use, manufacture, storage, handling and disposal of
    hazardous materials. We may face liability for any injury or
    contamination that results from our use or the use by third
    parties of these materials, and such liability may exceed our
    insurance coverage and our total assets. Compliance with
    environmental laws and regulations may be expensive, and current
    or future environmental regulations may impair our research,
    development and production efforts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In addition, our collaborators may use hazardous materials in
    connection with our collaborative efforts. In the event of a
    lawsuit or investigation, we could be held responsible for any
    injury caused to persons or property by exposure to, or release
    of, these hazardous materials used by these parties. Further, we
    may be required to indemnify our collaborators against all
    damages and other liabilities arising out of our development
    activities or products produced in connection with these
    collaborations.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-18
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    be sued for product liability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We or our collaborators may be held liable if any product that
    we or our collaborators develop, or any product that is made
    with the use or incorporation of any of our technologies, causes
    injury or is found otherwise unsuitable during product testing,
    manufacturing, marketing or sale. Although we currently have and
    intend to maintain product liability insurance, this insurance
    may become prohibitively expensive or may not fully cover our
    potential liabilities. Our inability to obtain sufficient
    insurance coverage at an acceptable cost or otherwise to protect
    against potential product liability claims could prevent or
    inhibit the commercialization of products developed by us or our
    collaborators. If we are sued for any injury caused by our or
    our collaborators&#146; products, our liability could exceed our
    total assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    stock price may be extremely volatile.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The trading price of our common stock has been highly volatile,
    and we believe the trading price of our common stock will remain
    highly volatile and may fluctuate substantially due to factors
    such as the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    adverse results or delays in clinical trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    announcement of FDA approval or non-approval, or delays in the
    FDA review process, of our or our collaborators&#146; product
    candidates or those of our competitors or actions taken by
    regulatory agencies with respect to our, our collaborators&#146;
    or our competitors&#146; clinical trials;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the announcement of new products by us or our competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    quarterly variations in our or our competitors&#146; results of
    operations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    conflicts or litigation with our collaborators;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    litigation, including intellectual property infringement and
    product liability lawsuits, involving us;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    failure to achieve operating results projected by securities
    analysts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in earnings estimates or recommendations by securities
    analysts;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    financing transactions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developments in the biotechnology or pharmaceutical industry;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sales of large blocks of our common stock or sales of our common
    stock by our executive officers, directors and significant
    stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    departures of key personnel or board members;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developments concerning current or future collaborations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    FDA or international regulatory actions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    third-party reimbursement policies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    acquisitions of other companies or technologies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    disposition of any of our subsidiaries, technologies or
    compounds;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other factors, including factors unrelated to our operating
    performance or the operatin<I>g </I>performance of our
    competitors.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    These factors, as well as general economic, political and market
    conditions, may materially adversely affect the market price of
    our common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In the past, following periods of volatility in the market price
    of a company&#146;s securities, securities class action
    litigation has often been instituted. A securities class action
    suit against us could result in substantial costs and divert
    management&#146;s attention and resources, which could have a
    material and adverse effect on our business.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-19
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    engage in future acquisitions, which may be expensive and time
    consuming and from which we may not realize anticipated
    benefits.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may acquire additional businesses, technologies and products
    if we determine that these businesses, technologies and products
    complement our existing technology or otherwise serve our
    strategic goals. If we do undertake any transactions of this
    sort, the process of integrating an acquired business,
    technology or product may result in operating difficulties and
    expenditures and may not be achieved in a timely and
    non-disruptive manner, if at all, and may absorb significant
    management attention that would otherwise be available for
    ongoing development of our business. If we fail to integrate
    acquired businesses, technologies or products effectively or if
    key employees of an acquired business leave, the anticipated
    benefits of the acquisition would be jeopardized. Moreover, we
    may never realize the anticipated benefits of any acquisition,
    such as increased revenues and earnings or enhanced business
    synergies. Future acquisitions could result in potentially
    dilutive issuances of our equity securities, the incurrence of
    debt and contingent liabilities and amortization expenses
    related to intangible assets, which could materially impair our
    results of operations and financial condition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Future
    sales of our common stock may depress our stock
    price.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If our stockholders sell substantial amounts of our common stock
    (including shares issued upon the exercise of options and
    warrants) in the public market, the market price of our common
    stock could fall. These sales also might make it more difficult
    for us to sell equity or equity-related securities in the future
    at a time and price that we deem appropriate. For example,
    following an acquisition, a significant number of shares of our
    common stock held by new stockholders may become freely tradable
    or holders of registration rights could cause us to register
    their shares for resale. Sales of these shares of common stock
    held by existing stockholders could cause the market price of
    our common stock to decline.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Invus&#146;
    ownership of our common stock and its other rights under the
    stockholders&#146; agreement we entered into in connection with
    Invus&#146; $205.4 million initial investment in our common
    stock provide Invus with substantial influence over matters
    requiring stockholder approval, including the election of
    directors and approval of significant corporate transactions, as
    well as other corporate matters.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Under the stockholders&#146; agreement we entered into in
    connection with Invus&#146; $205.4&#160;million initial
    investment in our common stock, Invus currently 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, pursuant to which Invus has designated Raymond
    Debbane, president and chief executive officer of The Invus
    Group, LLC, an affiliate of Invus, and Philippe J. Amouyal and
    Christopher J. Sobecki, each of whom are 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&#146; 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&#146;
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Invus&#146; 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&#146; agreement).
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-20
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Invus has preemptive rights under the stockholders&#146;
    agreement to participate in future equity issuances by us
    (including this offering and 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    preemptive rights will terminate on the earlier to occur of
    August&#160;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%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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&#146;
    agreement, including in the rights offerings and upon
    Invus&#146; exercise of preemptive rights under the
    stockholders&#146; agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    solicit proxies to vote any of our voting securities or any
    voting securities of our subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    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&#146; securities or assets by Invus and its
    affiliates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    enter into discussions, negotiations, arrangements or
    understandings with any third party with respect to any of the
    foregoing;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    request us or any of our representatives, directly or
    indirectly, to amend or waive any of these standstill provisions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The standstill provisions of the stockholders&#146; agreement
    will terminate on the earliest to occur of
    (a)&#160;August&#160;28, 2017, (b)&#160;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)&#160;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&#146; agreement), (d)&#160;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 our board of directors recommends
    or approves, or proposes to recommend or approve, any such
    transaction or (e)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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&#146;
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    sales to third parties will terminate on the earliest to occur
    of (a)&#160;August&#160;28, 2017, (b)&#160;the date on which the
    percentage of all the outstanding shares of our common stock
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-21
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    owned by Invus and its affiliates falls below 10%, and
    (c)&#160;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&#146; agreement).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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&#146; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    voting will terminate on the earliest to occur of
    (a)&#160;August&#160;28, 2017, (b)&#160;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)&#160;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&#146;
    agreement), and (d)&#160;the termination of the standstill
    provisions in accordance with the stockholders&#146; agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Invus is entitled to certain minority protections, including
    consent rights over (a)&#160;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)&#160;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&#146; rights under the securities
    purchase agreement and the related agreements, (c)&#160;the
    repurchase, retirement, redemption or other acquisition of our
    or our subsidiaries&#146; capital stock (or securities
    convertible into or exercisable for shares of our or our
    subsidiaries&#146; capital stock), (d)&#160;any increase in the
    size of our board of directors to more than 12 members and
    (e)&#160;the adoption or proposed adoption of any
    stockholders&#146; rights plan, &#147;poison pill&#148; or other
    similar plan or agreement, unless Invus is exempt from the
    provisions of such plan or agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    minority protections will terminate on the earlier to occur of
    August&#160;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.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    are unable to meet Nasdaq continued listing requirements, Nasdaq
    may take action to delist our common stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our common stock trades on The Nasdaq Global Market, which has
    qualitative and quantitative listing criteria, including
    operating results, net assets, corporate governance, minimum
    trading price and minimums for public float, which is the amount
    of stock not held by affiliates of the issuer. If we are unable
    to meet Nasdaq continued listing requirements, Nasdaq may take
    action to delist our common stock. A delisting of our common
    stock could negatively impact us and our shareholders by
    reducing the liquidity and market price of our common stock and
    potentially reducing the number of investors willing to hold or
    acquire our common stock.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-22
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to this Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have broad discretion in the use of the net proceeds from this
    offering and may not use them effectively.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As of the date of this prospectus supplement, we cannot specify
    with certainty the particular uses for the net proceeds we will
    receive from this offering. Management will have broad
    discretion in the application of the net proceeds, including any
    of the purposes described in &#147;Use of Proceeds.&#148; The
    failure by our management to apply these funds effectively could
    have a material adverse effect on our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Provisions
    contained in our charter documents and Delaware law may inhibit
    a takeover attempt, which could reduce or eliminate the
    likelihood of a change of control transaction and, therefore,
    the ability of our stockholders to sell their shares for a
    premium.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Provisions in our corporate charter and bylaws and applicable
    provisions of the Delaware General Corporation Law may make it
    more difficult for a third party to acquire control of us
    without the approval of our board of directors. These provisions
    include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a classified board of directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limitations on the removal of directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limitations on stockholder proposals at meetings of stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the inability of stockholders to act by written consent or to
    call special meetings;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ability of our board of directors to designate the terms of
    and issue new series of preferred stock without stockholder
    approval.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    These provisions may discourage transactions that otherwise
    could involve the payment of a premium over prevailing market
    prices of our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    availability of shares of our common stock for future sale could
    depress our stock price.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Upon completion of this offering, we will have outstanding an
    aggregate of 170,704,881&#160;shares of common stock, assuming
    no exercise of outstanding options. Sales of a substantial
    number of shares of our common stock in the public markets
    following this offering, or the perception that such sales might
    occur, could have a material adverse effect on the price of our
    common stock or could impair our future ability to obtain
    capital through offerings of our equity securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our executive officers, directors and Invus have agreed pursuant
    to
    <FONT style="white-space: nowrap">&#147;lock-up&#148;</FONT>
    agreements that, subject to certain exceptions, for a period of
    90&#160;days from the date of this prospectus supplement, they
    will not sell any shares of common stock without the prior
    written consent of Morgan Stanley&#160;&#038; Co. Incorporated.
    See &#147;Underwriters.&#148;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-23
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='303'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SPECIAL
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    This prospectus supplement, the accompanying prospectus and the
    documents incorporated by reference into this prospectus
    supplement and the accompanying prospectus contain certain
    information regarding our financial projections, plans and
    strategies that are forward-looking statements within the
    meaning of Section&#160;27A of the Securities Act and 21E of the
    Exchange Act. We have attempted to identify forward-looking
    statements by terminology including &#147;anticipate,&#148;
    &#147;believe,&#148; &#147;can,&#148; &#147;continue,&#148;
    &#147;could,&#148; &#147;estimate,&#148; &#147;expect,&#148;
    &#147;intend,&#148; &#147;may,&#148; &#147;plan,&#148;
    &#147;potential,&#148; &#147;predict,&#148; &#147;should&#148;
    or &#147;will&#148; or the negative of these terms or other
    comparable terminology. These statements, which are only
    predictions and involve known and unknown risks, uncertainties
    and other important factors may include, among other things,
    statements which address our strategy and operating performance,
    events or developments that we expect or anticipate will occur
    in the future, such as projections of our future results of
    operations or of our financial condition, the status of any
    collaborative agreements or clinical trials, the expected timing
    of the completion of our ongoing clinical trials and the results
    of such trials, including top-line data, expected enrollment in
    our clinical trials, and our research and development efforts
    and anticipated trends in our business. Discussions containing
    forward-looking statements may be found, among other places, in
    the &#147;Prospectus Supplement Summary&#148; section of this
    prospectus supplement, as well as in the &#147;Business&#148;
    and &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; sections of documents
    incorporated by reference herein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have based these forward-looking statements on our current
    expectations and projections about future events. However, there
    may be events in the future that we are not able to predict
    accurately or which we do not fully control that could cause
    actual results to differ materially from those expressed or
    implied in our forward-looking statements. Many important
    factors that could cause actual results to differ materially
    from those expressed or implied by these forward-looking
    statements, including those discussed under &#147;Risk
    Factors&#148; in this prospectus supplement and other sections
    of the documents incorporated by reference into this prospectus
    supplement and the accompanying prospectus. We undertake no
    obligation to publicly release any revisions to the
    forward-looking statements or reflect events or circumstances
    after the date of this prospectus supplement.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-24
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='304'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We estimate that the net proceeds from the sale of the
    33,333,333&#160;shares of common stock that we are offering will
    be approximately $48.0&#160;million, based on the public
    offering price of $1.50 per share, and after deducting
    underwriting discounts and commissions and estimated offering
    expenses. If the underwriters exercise their option to purchase
    2,984,111 additional shares in this offering and Invus does not
    exercise its right to purchase additional shares from us
    sufficient to maintain its pro rata ownership of our common
    stock, we estimate the aggregate net proceeds to us will be
    approximately $52.2&#160;million. If the underwriters exercise
    their option and Invus exercises its right to purchase an
    additional 2,015,888 shares from us sufficient to maintain its
    pro rata ownership of our common stock, we estimate the
    aggregate net proceeds to us will be approximately
    $55.2&#160;million. We currently intend to use the net proceeds
    from this offering for research and development, including the
    Phase 2 clinical trials of our four most advanced drug
    candidates and our other preclinical research and development
    efforts. We may also use a portion of the net proceeds to
    acquire or invest in complementary products and technologies or
    for general corporate purposes. We have no current plans or
    commitments as to any such acquisition or investment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The amounts that we actually expend for research and
    development, acquisitions, investments or general corporate
    purposes will vary significantly depending on a number of
    factors, including our future revenues, the amount of cash we
    generate from operations and the progress of our product
    development efforts. Accordingly, our management will retain
    broad discretion in the allocation of the net proceeds from this
    offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Pending such uses, we intend to invest the net proceeds from
    this offering in interest-bearing, investment-grade securities.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-25
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='305'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PRICE
    RANGE OF COMMON STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our common stock is quoted on The Nasdaq Global Market under the
    symbol &#147;LXRX.&#148; The following table sets forth, for the
    periods indicated, the range of the high and low sales prices
    per share for our common stock as reported on The Nasdaq Global
    Market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">High</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">Low</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Year ended December&#160;31, 2007</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    First Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Second Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.87
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.91
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Third Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.69
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.04
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Fourth Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.03
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.80
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Year ended December&#160;31, 2008</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    First Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.27
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Second Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.57
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Third Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.51
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Fourth Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.90
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.74
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Year ended December&#160;31, 2009</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    First Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.81
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Second Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.63
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.94
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Third Quarter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.11
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Fourth Quarter (through October&#160;8, 2009)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.13
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As of September&#160;30, 2009, there were approximately 243
    holders of record of our common stock. On October&#160;8, 2009,
    the reported last sale price of our common stock on The Nasdaq
    Global Market was $1.77&#160;per share.
</DIV>
<A name='306'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DIVIDEND
    POLICY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have never paid cash dividends on our common stock. We
    anticipate that we will retain all of our future earnings, if
    any, for use in the expansion and operation of our business and
    do not anticipate paying cash dividends in the foreseeable
    future.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-26
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='307'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following table presents our unaudited capitalization and
    other data as of June&#160;30, 2009 on an actual basis and as
    adjusted to give effect to (i)&#160;the sale by us of
    33,333,333&#160;shares of common stock in this offering at the
    public offering price of $1.50 per share, after deducting
    underwriting discounts and commissions and estimated offering
    expenses and (ii)&#160;the amendment to Article&#160;IV of our
    certificate of incorporation increasing the number of authorized
    shares of our common stock from 300,000,000&#160;shares to
    900,000,000&#160;shares, which was approved by our stockholders
    on July&#160;15, 2009. You should read the following table in
    conjunction with the consolidated financial statements and the
    related notes incorporated by reference into this prospectus
    supplement and the accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="76%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="color: #00337F">As of June&#160;30,
    2009</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">Actual</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">As
    Adjusted</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">(in thousands,<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">except share data)</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Cash, cash equivalents, restricted cash and investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    143,814
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    191,773
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Long-term debt, net of current portion
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    65,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    65,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Stockholders&#146; equity:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Preferred stock, $0.01&#160;par value; 5,000,000&#160;shares
    authorized, no shares issued and outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Common stock, $0.001&#160;par value; 300,000,000&#160;shares
    authorized, 137,330,254&#160;shares issued and outstanding,
    actual; 900,000,000&#160;shares authorized,
    170,663,587&#160;shares issued and outstanding, as adjusted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    137
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    171
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Additional paid-in capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    676,001
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    723,926
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accumulated deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (529,028
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (529,028
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Accumulated other comprehensive loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 30pt">
    Total Lexicon Pharmaceuticals, Inc. stockholders&#146; equity
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    147,109
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    195,068
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 40pt">
    Total capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    213,079
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    261,038
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #00337F"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The table above excludes 19,648,719&#160;shares of common stock
    issuable upon the exercise of stock options outstanding as of
    June&#160;30, 2009 at a weighted average exercise price of $4.18
    per share and 11,862,063&#160;shares of common stock available
    for future grant or issuance under our stock incentive plans.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='308'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DILUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As of June&#160;30, 2009, our net tangible book value was
    approximately $125.3&#160;million, or approximately $0.91 per
    share. Net tangible book value per share represents the amount
    of our total tangible assets, excluding goodwill and other
    intangible assets, less total liabilities divided by the
    137,330,254&#160;shares of our common stock outstanding as of
    June&#160;30, 2009. After giving effect to our sale of
    33,333,333&#160;shares of common stock in this offering at the
    public offering price of $1.50 per share, after deducting
    underwriting discounts and commissions and estimated offering
    expenses, the net tangible book value as of June&#160;30, 2009
    would have been approximately $173.3&#160;million, or
    approximately $1.02 per share. This represents an immediate
    increase in net tangible book value of $0.11 per share to
    existing stockholders and an immediate dilution in net tangible
    book value of $0.48 per share to new investors purchasing shares
    of common stock at the public offering price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following table illustrates this dilution on a per share
    basis:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="87%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Net tangible book value per share as of June&#160;30, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.91
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Increase in net tangible book value per share attributable to
    new investors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.11
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net tangible book value per share as of June&#160;30, 2009 after
    giving effect to this offering
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.02
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Dilution in net tangible book value per share to new investors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #00337F"></DIV><!-- callerid=999 iwidth=456 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As of June&#160;30, 2009, there were outstanding options to
    purchase a total of 19,648,719&#160;shares of common stock at a
    weighted average exercise price of $4.18 per share. To the
    extent that any of these stock options are exercised, there may
    be further dilution to new public investors.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='309'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">UNDERWRITERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Under the terms and subject to the conditions contained in an
    underwriting agreement dated the date of this prospectus
    supplement, the underwriters named below for whom Morgan
    Stanley&#160;&#038; Co. Incorporated is acting as
    representative, have severally agreed to purchase, and we have
    agreed to sell to them, severally, the number of shares of
    common stock indicated below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="88%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">Number of<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Name</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Shares</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Morgan Stanley&#160;&#038; Co. Incorporated
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,108,905
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Thomas Weisel Partners LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,785,171
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD style="border-top: 1px solid #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,894,076
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD style="border-top: 3px double #00337F">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The underwriters are offering the shares of common stock subject
    to their acceptance of the shares from us and subject to prior
    sale. The underwriting agreement provides that the obligations
    of the several underwriters to pay for and accept delivery of
    the shares of common stock offered by this prospectus supplement
    and the accompanying prospectus are subject to the approval of
    various legal matters by their counsel and to other conditions.
    The underwriters are obligated to take and pay for all of the
    shares of common stock offered by this prospectus supplement and
    the accompanying prospectus if any such shares are taken.
    However, the underwriters are not required to take or pay for
    the shares covered by the underwriters&#146; over-allotment
    option described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The underwriters initially propose to offer part of the shares
    of common stock directly to the public at the public offering
    price listed on the cover page of this prospectus supplement,
    less underwriting discounts and commissions, and part to certain
    dealers at a price that represents a concession not in excess of
    $0.045 a share under the public offering price. No underwriter
    may allow and no dealer may re-allow, any concessions to other
    underwriters or to certain dealers. After the initial offering
    of the shares of common stock, the offering price and other
    selling terms may from time to time be varied by the
    representatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have granted to the underwriters an option, exercisable for
    30&#160;days from the date of this prospectus supplement, to
    purchase up to an aggregate of 2,984,111 additional shares of
    common stock at the public offering price set forth on the cover
    page of this prospectus supplement, less underwriting discounts
    and commissions. The underwriters may exercise this option
    solely for the purpose of covering over-allotments, if any, made
    in connection with the offering of the shares of common stock
    offered by this prospectus supplement and the accompanying
    prospectus. To the extent the option is exercised, each
    underwriter will become obligated, subject to certain
    conditions, to purchase about the same percentage of the
    additional shares of common stock as the number listed next to
    the underwriter&#146;s name in the preceding table bears to the
    total number of shares of common stock listed next to the names
    of all underwriters in the preceding table.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following table shows the per share and total underwriting
    discounts and commissions that we are to pay to the underwriters
    in connection with this offering. These amounts are shown
    assuming both no exercise and full exercise of the
    underwriters&#146; option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">No<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">Full<BR>
    </FONT></B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Exercise</FONT></B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #00337F; width: 1%; padding-bottom: 1px">
    <B><FONT style="font-size: 10pt; color: #00337F">Exercise</FONT></B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.0825
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.0825
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,641,261
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,887,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The underwriters have informed us that they do not intend sales
    to discretionary accounts to exceed five percent of the total
    number of shares of common stock offered by them.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We, our directors and executive officers and Invus have agreed,
    without the prior written consent of Morgan Stanley&#160;&#038;
    Co. Incorporated on behalf of the underwriters, during the
    period ending 90&#160;days after the date of this prospectus
    supplement, not to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    offer, pledge, sell, contract to sell, sell any option or
    contract to purchase, purchase any option or contract to sell,
    grant any option, right or warrant to purchase, lend, or
    otherwise transfer or dispose of directly or
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    indirectly, any shares of common stock or any securities
    convertible into or exercisable or exchangeable for common
    stock;&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    enter into any swap or other arrangement that transfers to
    another, in whole or in part, any of the economic consequences
    of ownership of the common stock;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    whether any such transaction described above is to be settled by
    delivery of common stock or such other securities, in cash or
    otherwise. The restrictions described in this paragraph do not
    apply:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in our case, to (1)&#160;the sale of the common stock offered
    hereby, including any sale of shares to Invus; (2)&#160;the
    issuance by us of any shares of common stock upon the exercise
    of an option or warrant or the conversion of a security
    outstanding on the date of this prospectus supplement;
    (3)&#160;the grant of options to purchase our common stock under
    our stock option plans and (4) the establishment of a trading
    plan pursuant to Rule&#160;10b5-1 under the Exchange Act for the
    transfer of shares of common stock, provided that the plan does
    not provide for the transfer of common stock during the
    restricted period except as otherwise permitted;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of our directors, executive officers and Invus, to
    (1)&#160;transactions relating to shares of common stock or
    other securities acquired in open market transactions after the
    completion of this offering, provided that no filing under
    Section&#160;16(a) of the Exchange Act is required or
    voluntarily made in connection with subsequent sales of such
    shares of common stock or other securities; (2)&#160;any
    surrender of shares of common stock (or options to purchase
    shares of common stock) to us in satisfaction of (i)&#160;any
    federal, state or local taxes required by law to be withheld
    with respect to the vesting of shares of common stock or the
    exercise of stock options to purchase common stock
    <FONT style="white-space: nowrap">and/or</FONT>
    (ii)&#160;the exercise price payable to us with respect to the
    exercise of stock options to purchase common stock;
    (3)&#160;transfers of shares of common stock or any security
    convertible into common stock as a bona fide gift;
    (4)&#160;distributions of shares of common stock or any security
    convertible into common stock to limited partners or
    stockholders of the transferor; (5)&#160;transfers to immediate
    family members of the transferor, to a trust established for the
    benefit of the transferor or an immediate family member, or to a
    corporation, partnership, limited partnership or limited
    liability company wholly owned by the transferor and members of
    his or her immediate family, in each case for estate planning
    purposes, provided that in the case of any transfer or
    distribution pursuant to clause (3)&#160;- (5), (i)&#160;each
    transferee agrees in writing to be bound by the restrictions set
    forth above and pursuant to clause (2)&#160;- (5), (ii)&#160;no
    filing under Section 16(a) of the Exchange Act, reporting a
    reduction in beneficial ownership of shares of common stock, is
    required or voluntarily made during the restricted period;
    (6)&#160;the establishment of a trading plan pursuant to
    <FONT style="white-space: nowrap">Rule&#160;10b5-1</FONT>
    under the Exchange Act for the transfer of shares of common
    stock, provided that the plan does not provide for the transfer
    of common stock during the restricted period except as otherwise
    permitted; or in the case of Invus and our directors who are
    designees of Invus, (7) the sale of securities in a registered
    public offering pursuant to Invus&#146; incidental, or
    &#147;piggy-back,&#148; registration rights in connection with
    registration statements proposed to be filed by us for any
    public offering of our securities after this offering.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In order to facilitate the offering of the common stock, the
    underwriters may engage in transactions that stabilize, maintain
    or otherwise affect the price of the common stock. Specifically,
    the underwriters may sell more shares than they are obligated to
    purchase under the underwriting agreement, creating a short
    position. A short sale is covered if the short position is no
    greater than the number of shares available for purchase by the
    underwriters under the over-allotment option. The underwriters
    can close out a covered short sale by exercising the
    over-allotment option or purchasing shares in the open market.
    In determining the source of shares to close out a covered short
    sale, the underwriters will consider, among other things, the
    open market price of shares compared to the price available
    under the over-allotment option. The underwriters may also sell
    shares in excess of the over-allotment option, creating a naked
    short position. The underwriters must close out any naked short
    position by purchasing shares in the open market. A naked short
    position is more likely to be created if the underwriters are
    concerned that there may be downward pressure on the price of
    the common stock in the open market after pricing that could
    adversely affect investors who purchase in the offering. As an
    additional means of facilitating the offering, the underwriters
    may bid for, and purchase, shares of common stock in the open
    market to stabilize the price of the common stock. The
    underwriting syndicate may also reclaim selling concessions
    allowed to an underwriter or a dealer for distributing the
    common stock in the offering, if the syndicate repurchases
    previously distributed
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-30
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    common stock to cover syndicate short positions or to stabilize
    the price of the common stock. These activities may raise or
    maintain the market price of the common stock above independent
    market levels or prevent or retard a decline in the market price
    of the common stock. These transactions may be effected on The
    Nasdaq Global Market, in the over-the-counter market or
    otherwise. The underwriters are not required to engage in these
    activities, and may end any of these activities at any time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We and the underwriters have agreed to indemnify each other
    against certain liabilities, including liabilities under the
    Securities Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    A prospectus supplement or accompanying prospectus in electronic
    format may be made available on the web sites maintained by one
    or more of the underwriters, and one or more of the underwriters
    may distribute prospectuses electronically. Other than the
    prospectus supplement or accompanying prospectus in electronic
    format, the information on any of these websites and any other
    information contained on a website maintained by an underwriter
    or syndicate member is not part of this prospectus supplement or
    accompanying prospectus. The underwriters may agree to allocate
    a number of shares to underwriters for sale to their online
    brokerage account holders. Internet distributions will be
    allocated by the underwriters that make Internet distributions
    on the same basis as other allocations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">European
    Economic Area</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In relation to each Member State of the European Economic Area
    which has implemented the Prospectus Directive, each Manager has
    represented and agreed that with effect from and including the
    date on which the Prospectus Directive is implemented in that
    Member State it has not made and will not make an offer of our
    shares of common stock to the public in that Member State,
    except that it may, with effect from and including such date,
    make an offer of our shares of common stock to the public in
    that Member State:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    (a)&#160;at any time to legal entities which are authorised or
    regulated to operate in the financial markets or, if not so
    authorised or regulated, whose corporate purpose is solely to
    invest in securities;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    (b)&#160;at any time to any legal entity which has two or more
    of (1)&#160;an average of at least 250&#160;employees during the
    last financial year; (2)&#160;a total balance sheet of more than
    &#128;43,000,000 and (3)&#160;an annual net turnover of more
    than &#128;50,000,000, as shown in its last annual or
    consolidated accounts;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    (c)&#160;at any time in any other circumstances which do not
    require the publication by us of a prospectus pursuant to
    Article&#160;3 of the Prospectus Directive.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For the purposes of the above, the expression an &#147;offer of
    shares to the public&#148; in relation to any our shares of
    common stock in any Member State means the communication in any
    form and by any means of sufficient information on the terms of
    the offer and the our shares of common stock to be offered so as
    to enable an investor to decide to purchase or subscribe the our
    shares of common stock, as the same may be varied in that Member
    State by any measure implementing the Prospectus Directive in
    that Member State and the expression Prospectus Directive means
    Directive 2003/71/EC and includes any relevant implementing
    measure in that Member State.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">United
    Kingdom</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each underwriter has represented and agreed that it has only
    communicated or caused to be communicated and will only
    communicate or cause to be communicated an invitation or
    inducement to engage in investment activity (within the meaning
    of Section&#160;21 of the Financial Services and Markets Act
    2000)&#160;in connection with the issue or sale of the our
    shares of common stock in circumstances in which
    Section&#160;21(1) of such Act does not apply to us and it has
    complied and will comply with all applicable provisions of such
    Act with respect to anything done by it in relation to any our
    shares of common stock in, from or otherwise involving the
    United Kingdom.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-31
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='310'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Vinson&#160;&#038; Elkins L.L.P., Houston, Texas, will pass upon
    the validity of the shares of common stock offered by this
    prospectus supplement and the accompanying prospectus for us.
    Certain legal matters in connection with this offering will be
    passed upon for the underwriters by Ropes&#160;&#038; Gray LLP,
    Boston, Massachusetts.
</DIV>
<A name='311'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Ernst&#160;&#038; Young LLP, independent registered public
    accounting firm, has audited our consolidated financial
    statements for the year ended December&#160;31, 2008 included in
    our Current Report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on September&#160;2, 2009, as set forth in their report,
    which is incorporated by reference in this prospectus
    supplement. Our financial statements are incorporated by
    reference in reliance on Ernst&#160;&#038; Young LLP&#146;s
    report, given on their authority as experts in accounting and
    auditing.
</DIV>
<A name='312'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We file reports, proxy statements and other information with the
    SEC. You may read and copy the reports, proxy statements and
    other information that we file with the SEC at the SEC&#146;s
    Public Reference Room at 100&#160;F&#160;Street, NE,
    Washington,&#160;D.C. 20549. Please call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    for information about the operation of its Public Reference Room
    and for its prescribed rates to obtain copies of such material.
    The SEC also maintains a website that contains reports, proxy
    and information statements and other information regarding
    registrants, like us, that file electronically with the SEC. The
    address of the SEC&#146;s Internet site is
    <U><FONT style="white-space: nowrap">http://www.sec.gov</FONT></U>.
    Our website is
    <U><FONT style="white-space: nowrap">http://www.lexpharma.com</FONT></U>.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our annual reports on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    and other filings with the SEC are available, free of charge,
    through our website, as soon as reasonably practicable after
    those reports or filings are electronically filed with or
    furnished to the SEC. Information on our website or any other
    website is not incorporated by reference into this prospectus
    supplement or the accompanying prospectus and does not
    constitute a part of this prospectus supplement or the
    accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    This prospectus supplement is part of a registration statement
    we filed with the SEC relating to the securities we may offer.
    As permitted by SEC rules, this prospectus supplement does not
    contain all of the information we have included in the
    registration statement and the accompanying exhibits and
    schedules we filed with the SEC. You may refer to the
    registration statement, exhibits and schedules for more
    information about us and the securities. The registration
    statements, exhibits and schedules are available at the
    SEC&#146;s public reference room or through its website.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; the
    information we have filed with it, which means that we can
    disclose important information by referring you to those
    documents. The information we incorporate by reference is an
    important part of this prospectus supplement and the
    accompanying prospectus, and later information that we file with
    the SEC will automatically update and supersede this
    information. We incorporate by reference into this prospectus
    supplement and the accompanying prospectus any future documents
    filed with the SEC under Sections&#160;13(a), 13(c), 14 or 15(d)
    of the Exchange Act subsequent to the date of this prospectus
    supplement and prior to the termination of the offering.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    S-32
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 18pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">$150,000,000</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <IMG src="h68168b2x6816800.gif" alt="(LEXICON LOGO)"><B><FONT style="font-size: 18pt">
    </FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 24pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Lexicon
    Pharmaceuticals, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 14pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Stock<BR>
    Preferred Stock<BR>
    Debt Securities<BR>
    Warrants<BR>
    Rights<BR>
    Units</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may offer common stock, preferred stock, debt securities,
    warrants
    <FONT style="white-space: nowrap">and/or</FONT>
    rights, either individually or in units, from time to time in
    one or more offerings in amounts, at prices and on terms to be
    determined in light of market conditions at the time of sale. We
    may also offer common stock or preferred stock upon conversion
    of debt securities, common stock upon conversion of preferred
    stock or common stock, preferred stock or debt securities upon
    the exercise of warrants or rights.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each time we sell these securities, we will provide a supplement
    to this prospectus that contains specific information about the
    offering. The supplement may also add, update or change
    information contained in this prospectus. You should carefully
    read this prospectus and any supplement before you invest.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our common stock is listed on The Nasdaq Global Market under the
    symbol &#147;LXRX&#148;. The prospectus supplement will contain
    information, where applicable, regarding any other listing on
    The Nasdaq Global Market or any securities exchange of the
    securities covered by the prospectus supplement. The reported
    last sale price of our common stock on September&#160;1, 2009
    was $1.35 per share.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">Investing in our securities
    involves risks. See &#147;Risk Factors&#148; on
    page&#160;2.</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.</I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>The date of this prospectus is September&#160;18, 2009.</I>
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>



<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="87%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">Page</FONT></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>Lexicon Pharmaceuticals, Inc.&#160;</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'>Description of Capital Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'>Description of Debt Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'>Description of Warrants</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'>Description of Rights</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'>Description of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'>Legal Ownership of Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'>Special Note Regarding Forward-Looking
    Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'>Ratio of Earnings to Fixed Charges</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#112'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#113'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#114'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#115'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#116'>Documents Incorporated by Reference</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <B>You should rely only on the information contained in this
    prospectus and documents incorporated into this prospectus by
    reference. We have not authorized anyone to provide you with
    information different from that contained in this prospectus or
    the documents incorporated by reference herein. This prospectus
    may only be used where it is legal to sell these securities. The
    information contained in this prospectus, the documents
    incorporated by reference herein and any supplements to this
    prospectus is accurate only as of the dates of their respective
    covers or earlier dates as specified therein, regardless of the
    time of delivery of this prospectus or any supplement to this
    prospectus or of any sale of our common stock.</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In this prospectus, &#147;Lexicon,&#148; &#147;Lexicon
    Pharmaceuticals,&#148; &#147;we,&#148; &#147;us&#148; and
    &#147;our&#148; refer to Lexicon Pharmaceuticals, Inc. and its
    subsidiaries.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 21%; border-bottom: 1pt solid #00337F"></CENTER><!-- callerid=999 iwidth=456 length=96 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The Lexicon name and logo,
    LexVision<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and
    OmniBank<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    are registered trademarks and
    Genome5000<SUP style="font-size: 85%; vertical-align: top"><FONT style="font-variant: SMALL-CAPS">tm</FONT></SUP>

    is a trademark of Lexicon Pharmaceuticals, Inc.
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #00337F; padding-top: 12pt; border-right: 1px solid #00337F; padding-right: 12pt; border-bottom: 1px solid #00337F; padding-bottom: 12pt; border-left: 1px solid #00337F; padding-left: 12pt"><!-- Begin box 1 -->
<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEXICON
    PHARMACEUTICALS, INC.</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Lexicon Pharmaceuticals, Inc. is a biopharmaceutical company
    focused on the discovery and development of breakthrough
    treatments for human disease. We have used our proprietary gene
    knockout technology and an integrated platform of advanced
    medical technologies to systematically study the physiological
    and behavioral functions of almost 5,000 genes in mice and
    assessed the utility of the proteins encoded by the
    corresponding human genes as potential drug targets. We have
    identified and validated in living animals, or
    <I>in&#160;vivo</I>, more than 100&#160;targets with promising
    profiles for drug discovery. For targets that we believe have
    high pharmaceutical value, we engage in programs for the
    discovery and development of potential new drugs, focusing in
    the core therapeutic areas of immunology, metabolism, cardiology
    and ophthalmology.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are presently conducting Phase 2 clinical trials of our four
    most advanced drug candidates: LX1031, an orally-delivered small
    molecule compound that we are developing as a potential
    treatment for irritable bowel syndrome and other
    gastrointestinal disorders; LX1032, an orally-delivered small
    molecule compound that we are developing as a potential
    treatment for the symptoms associated with carcinoid syndrome;
    LX2931, an orally-delivered small molecule compound that we are
    developing as a potential treatment for rheumatoid arthritis and
    other autoimmune diseases; and LX4211, an orally-delivered small
    molecule compound that we are developing as a potential
    treatment for Type&#160;2 diabetes. We have advanced one other
    drug candidate into preclinical development: LX7101, a
    topically-delivered small molecule compound that we are
    developing as a potential treatment for glaucoma. We have small
    molecule compounds from a number of additional drug discovery
    programs in various stages of preclinical research and believe
    that our systematic, target biology-driven approach to drug
    discovery will enable us to substantially expand our clinical
    pipeline.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are working both independently and through strategic
    collaborations and alliances to capitalize on our technology,
    drug target discoveries and drug discovery and development
    programs. Consistent with this approach, we seek to retain
    exclusive rights to the benefits of certain of our small
    molecule drug programs by developing and commercializing drug
    candidates from such programs internally and to collaborate with
    third parties with respect to the discovery, development and
    commercialization of small molecule and biotherapeutics drug
    candidates for other targets, particularly when the
    collaboration provides us with access to expertise and resources
    that we do not possess internally or are complementary to our
    own. We have established drug discovery and development
    collaborations with a number of leading pharmaceutical and
    biotechnology companies which have enabled us to generate
    near-term cash while offering us the potential to retain
    economic participation in products our collaborators develop
    through the collaboration. In addition, we have established
    collaborations and license agreements with other leading
    pharmaceutical and biotechnology companies, research institutes
    and academic institutions under which we receive fees and, in
    some cases, are eligible to receive milestone and royalty
    payments, in return for granting access to some of our
    technologies and discoveries for use in the other
    organization&#146;s own drug discovery efforts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Lexicon Pharmaceuticals, Inc. was incorporated in Delaware in
    July 1995, and commenced operations in September 1995. Our
    corporate headquarters are located at 8800&#160;Technology
    Forest Place, The Woodlands, Texas 77381, and our telephone
    number is
    <FONT style="white-space: nowrap">(281)&#160;863-3000.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
    and amendments to those reports filed or furnished pursuant to
    Section&#160;13(a) or 15(d) of the Securities Exchange Act of
    1934, or Exchange Act, are made available free of charge on our
    corporate website located at www.lexpharma.com as soon as
    reasonably practicable after the filing of those reports with
    the Securities and Exchange Commission, or SEC. Information
    found on our website should not be considered part of this
    prospectus.
</DIV>
</DIV><!-- End box 1 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>You should carefully consider the risk factors and all other
    information contained in this prospectus and any prospectus
    supplement and incorporated herein by reference before
    purchasing our securities. Investing in our securities involves
    a high degree of risk.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For a discussion of these risks, please see:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our most recent annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our other filings with the SEC that are incorporated by
    reference into this prospectus.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For more information about our SEC filings, please see
    &#147;Where You Can Find More Information&#148; and
    &#147;Documents Incorporated By Reference&#148; on page&#160;24
    of this prospectus. See also &#147;Special Note Regarding
    Forward-Looking Statements&#148; on page&#160;20 of this
    prospectus.
</DIV>
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF CAPITAL STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our authorized capital stock consists of 900&#160;million shares
    of common stock, $0.001&#160;par value, and five million shares
    of preferred stock, $0.01&#160;par value. As of
    September&#160;1, 2009, there were 137,262,363&#160;shares of
    our common stock issued and outstanding, 67,891&#160;shares of
    our common stock issued and held in treasury and no shares of
    preferred stock outstanding.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following summary description of our capital stock is based
    on the provisions of our restated certificate of incorporation,
    as amended, restated bylaws and the applicable provisions of the
    Delaware General Corporation Law. This information may not be
    complete in all respects and is qualified entirely by reference
    to the provisions of our restated certificate of incorporation,
    as amended, restated bylaws and the Delaware General Corporation
    Law. For information on how to obtain copies of our restated
    certificate of incorporation, as amended, and restated bylaws,
    see &#147;Where You Can Find More Information&#148; on
    page&#160;23 of this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The holders of common stock are entitled to one vote for each
    share held of record on all matters submitted to a vote of the
    stockholders and do not have cumulative voting rights.
    Accordingly, holders of a majority of the shares of common stock
    entitled to vote in any election of directors may elect all of
    the directors standing for election. Subject to preferences that
    may be applicable to any outstanding shares of preferred stock,
    the holders of common stock are entitled to receive ratably such
    dividends as may be declared by the board of directors out of
    funds legally available therefor. Upon the liquidation,
    dissolution or winding up of Lexicon, holders of our common
    stock are entitled to share ratably in all assets remaining
    after payment of liabilities and the liquidation preferences of
    any outstanding shares of preferred stock. Holders of common
    stock have no preemptive rights and no right to convert their
    common stock into any other securities. There are no redemption
    or sinking fund provisions applicable to our common stock. All
    outstanding shares of our common stock are, and all shares of
    common stock that may be issued under this prospectus will be,
    fully paid and non-assessable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Preferred
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Pursuant to our restated certificate of incorporation, our board
    of directors has the authority, without further action by the
    stockholders, to issue up to five million shares of preferred
    stock, in one or more series. Our board of directors is
    authorized to fix or alter from time to time the designation,
    powers, preferences and rights of the shares of each series of
    preferred stock, including dividend rights, conversion rights,
    voting rights, terms of redemption, liquidation preferences and
    sinking fund terms. Our board of directors may also establish
    from time to time the number of shares constituting any series
    of preferred stock, and to increase or decrease the number of
    shares of any series subsequent to the issuance of shares of
    that series, but not below the number of shares of any series
    then outstanding.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We will fix the rights, preferences, privileges and restrictions
    of the preferred stock of each series in the certificate of
    designation relating to that series. We will incorporate by
    reference as an exhibit to the registration
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    statement that includes this prospectus or as an exhibit to a
    report filed under the Exchange Act, the form of any certificate
    of designation that describes the terms of the series of
    preferred stock we are offering before the issuance of the
    related series of preferred stock. This description will include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title and stated value;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of shares we are offering;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the liquidation preference per share;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the purchase price;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the dividend rate, period and payment date and method of
    calculation for dividends;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether dividends will be cumulative or non-cumulative and, if
    cumulative, the date from which dividends will accumulate;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the provisions for a sinking fund, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the provisions for redemption or repurchase, if applicable, and
    any restrictions on our ability to exercise those redemption and
    repurchase rights;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the preferred stock will be convertible into our common
    stock, and, if applicable, the conversion price, or how it will
    be calculated, and the conversion period;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the preferred stock will be exchangeable into debt
    securities, and, if applicable, the exchange price, or how it
    will be calculated, and the exchange period;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    voting rights, if any, of the preferred stock;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    preemption rights, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    restrictions on transfer, sale or other assignment, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the relative ranking and preferences of the preferred stock as
    to dividend rights and rights if we liquidate, dissolve or wind
    up our affairs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any limitations on issuance of any class or series of preferred
    stock ranking senior to or on a parity with the series of
    preferred stock as to dividend rights and rights if we
    liquidate, dissolve or wind up our affairs; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other specific terms, preferences, rights or limitations of,
    or restrictions on, the preferred stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If we issue shares of preferred stock under this prospectus, the
    shares will be fully paid and non-assessable and will not have,
    or be subject to, any preemptive or similar rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The Delaware General Corporation Law provides that the holders
    of preferred stock will have the right to vote separately as a
    class on any proposal involving fundamental changes in the
    rights of holders of that preferred stock. This right is in
    addition to any voting rights that may be provided for in the
    applicable certificate of designation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The issuance of preferred stock could adversely affect the
    voting power, conversion or other rights of holders of common
    stock. Preferred stock could be issued quickly with terms
    designed to delay or prevent a change in control of our company
    or make removal of management more difficult. Additionally, the
    issuance of preferred stock may have the effect of decreasing
    the market price of our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Arrangements
    with Invus, L.P.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In June 2007, we entered into a securities purchase agreement
    with Invus, L.P., pursuant to which Invus purchased
    50,824,986&#160;shares of our common stock for approximately
    $205.4&#160;million in August 2007. This purchase resulted in
    Invus&#146; ownership of 40% of the post-transaction outstanding
    shares of our common stock. Pursuant to the securities purchase
    agreement, Invus, at its option, 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&#160;million, less the
    proceeds of any &#147;qualified offerings&#148; that we may
    complete in the interim involving the sale of our common stock
    at prices above $4.50 per share. Invus
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    3
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    may exercise its right to require us to conduct the first rights
    offering by giving us notice within a period of 90&#160;days
    beginning on November&#160;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 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&#160;days beginning on the date that is
    12&#160;months after Invus&#146; 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&#160;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&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Board of Directors.</I>&#160;&#160;Concurrently with the
    execution of the securities purchase agreement, we entered into
    a stockholders&#146; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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&#146;
    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&#146; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Invus&#146; 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&#146; agreement).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Preemptive Rights.</I>&#160;&#160;Invus has preemptive rights
    under the stockholders&#146; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    preemptive rights will terminate on the earlier to occur of
    August&#160;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%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Standstill Provisions.</I>&#160;&#160;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&#146;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    4
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    agreement, including in the rights offerings and upon
    Invus&#146; exercise of preemptive rights under the
    stockholders&#146; agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    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:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    solicit proxies to vote any of our voting securities or any
    voting securities of our subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    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&#146; securities or assets by Invus and its
    affiliates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    enter into discussions, negotiations, arrangements or
    understandings with any third party with respect to any of the
    foregoing;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    request us or any of our representatives, directly or
    indirectly, to amend or waive any of these standstill provisions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The standstill provisions of the stockholders&#146; agreement
    will terminate on the earliest to occur of
    (a)&#160;August&#160;28, 2017, (b)&#160;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)&#160;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&#146; agreement), (d)&#160;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)&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Sales to Third Parties.</I>&#160;&#160;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&#146; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    sales to third parties will terminate on the earliest to occur
    of (a)&#160;August&#160;28, 2017, (b)&#160;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)&#160;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&#146; agreement).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Voting of Shares.</I>&#160;&#160;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&#146; 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.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    5
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    voting will terminate on the earliest to occur of
    (a)&#160;August&#160;28, 2017, (b)&#160;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)&#160;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&#146;
    agreement), and (d)&#160;the termination of the standstill
    provisions in accordance with the stockholders&#146; agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Minority Protections.</I>&#160;&#160;Invus is entitled to
    certain minority protections, including consent rights over
    (a)&#160;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)&#160;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&#146; rights under the securities
    purchase agreement and the related agreements, (c)&#160;the
    repurchase, retirement, redemption or other acquisition of our
    or our subsidiaries&#146; capital stock (or securities
    convertible into or exercisable for shares of our or our
    subsidiaries&#146; capital stock), (d)&#160;any increase in the
    size of our board of directors to more than 12 members and
    (e)&#160;the adoption or proposed adoption of any
    stockholders&#146; rights plan, &#147;poison pill&#148; or other
    similar plan or agreement, unless Invus is exempt from the
    provisions of such plan or agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions of the stockholders&#146; agreement relating to
    minority protections will terminate on the earlier to occur of
    August&#160;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Registration Rights.</I>&#160;&#160;Concurrently with the
    execution of the securities purchase agreement, we entered into
    a registration rights agreement with Invus, pursuant to which
    Invus has certain registration rights with respect to shares of
    our common stock acquired by Invus under the securities purchase
    agreement. These registration rights require, among other
    things, that if we propose to register any of our securities
    under the Securities Act of 1933, or Securities Act, either for
    our own account or for the account of others, Invus is entitled
    to notice of the registration and is entitled to include, at our
    expense, its shares of common stock in the registration and any
    related underwriting, provided, among other conditions, that the
    underwriters may limit the number of shares to be included in
    the registration and in some cases exclude these shares
    entirely. Invus has waived these registration rights with
    respect to any offerings of our securities pursuant to this
    prospectus. In addition, Invus may require us, at our expense
    and subject to certain limitations, to file a registration
    statement under the Securities Act with respect to its shares of
    our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Anti-Takeover
    Effects of Provisions of Delaware Law and Our Charter
    Documents</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Delaware Takeover Statute.</I>&#160;&#160;We are subject to
    the provisions of Section&#160;203 of the Delaware General
    Corporation Law. In general, the statute prohibits a
    publicly-held Delaware corporation such as Lexicon from engaging
    in a business combination with an interested stockholder for a
    period of three years after the date of the transaction in which
    the person became an interested stockholder, unless the business
    combination is approved in a prescribed manner. For purposes of
    Section&#160;203, a business combination includes a merger,
    asset sale or other transaction resulting in a financial benefit
    to the interested stockholder. An interested stockholder is a
    person who, together with affiliates and associates, owns (or
    within three years prior, did own) 15% or more of our voting
    stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Charter Documents.</I>&#160;&#160;Our restated certificate of
    incorporation, as amended, requires that any action required or
    permitted to be taken by our stockholders must be effected at a
    duly called annual or special meeting of stockholders and may
    not be effected by a consent in writing. Additionally, our
    restated certificate of incorporation, as amended:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    does not provide for the use of cumulative voting in the
    election of directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provides for a board of directors, classified into three classes
    of directors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provides that the authorized number of directors may be changed
    only by resolution of our board of directors;&#160;and
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provides for the authority of our board of directors to issue up
    to five million shares of &#147;blank check&#148; preferred
    stock and to determine the price, powers, preferences and rights
    of these shares, without stockholder approval.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our restated bylaws provide that candidates for director may be
    nominated only by our board of directors or by a stockholder who
    gives written notice to us not less than 120&#160;days nor more
    than 150&#160;days in advance of the first anniversary of the
    date of our proxy statement relating to the previous year&#146;s
    annual meeting of stockholders. The authorized number of
    directors is fixed in accordance with our restated certificate
    of incorporation, as amended. Our board of directors currently
    consists of ten members, divided into three classes. As a
    result, a portion of the board of directors will be elected each
    year. The board of directors may appoint new directors to fill
    vacancies or newly created directorships. Our restated bylaws
    also limit who may call a special meeting of stockholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Delaware law and these charter provisions may have the effect of
    deterring hostile takeovers or delaying changes in control of
    our management, which could depress the market price of our
    common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    Agent and Registrar</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The transfer agent and registrar for our common stock is BNY
    Mellon Shareowner Services. The transfer agent for any series of
    preferred stock will be named and described in the prospectus
    supplement for that series.
</DIV>
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEBT SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following description, together with the additional
    information we may include in any applicable prospectus
    supplements, summarizes the material terms and provisions of the
    debt securities that we may offer under this prospectus and the
    related indenture. While the terms summarized below will apply
    generally to any debt securities we may offer under this
    prospectus, we will describe the particular terms of any debt
    securities that we may offer in more detail in the applicable
    prospectus supplement. If we indicate in the prospectus
    supplement, the terms of any debt securities offered under that
    prospectus supplement may differ from the terms described below.
    However, no prospectus supplement shall fundamentally change the
    terms that are set forth in this prospectus or offer a security
    that is not registered and described in this prospectus at the
    time of its effectiveness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may offer debt securities in the form of either senior debt
    securities or subordinated debt securities. Unless otherwise
    specified in a supplement to this prospectus, the debt
    securities will be our direct, unsecured obligations and will
    rank equally with all of our other unsecured and unsubordinated
    indebtedness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The debt securities will be issued under an indenture between us
    and a trustee. The following summary of the general features of
    the debt securities to be governed by the indenture is subject
    to, and qualified in its entirety by reference to, the
    provisions of the indenture applicable to a particular series of
    debt securities. We have filed a form of indenture as an exhibit
    to the registration statement which includes this prospectus.
    Capitalized terms used in the summary have the meanings
    specified in the indenture.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The terms of each series of debt securities will be established
    by or pursuant to a resolution of our board of directors, or a
    committee thereof, and set forth or determined in the manner
    provided in an officer&#146;s certificate or by a supplemental
    indenture. The particular terms of each series of debt
    securities will be described in a prospectus supplement relating
    to such series, including any pricing supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We can issue an unlimited amount of debt securities under the
    indenture that may be in one or more series with the same or
    various maturities, at par, at a premium or at a discount. We
    will set forth in a prospectus supplement, including any pricing
    supplement, relating to any series of debt securities being
    offered, the aggregate principal amount and the following terms
    of the debt securities:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title of the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price or prices (expressed as a percentage of the principal
    amount) at which we will sell the debt securities;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any limit on the aggregate principal amount of the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which we will pay the principal on the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the rate or rates (which may be fixed or variable) per annum or
    the method used to determine the rate or rates (including any
    commodity, commodity index, stock exchange index or financial
    index) at which the debt securities will bear interest, the date
    or dates from which interest will accrue, the date or dates on
    which interest will commence and be payable and any regular
    record date for the interest payable on any interest payment
    date;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the place or places where principal of, and premium and interest
    on, the debt securities will be payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms and conditions upon which we may redeem the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any obligation we have to redeem or purchase the debt securities
    pursuant to any sinking fund or analogous provisions or at the
    option of a holder of debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the dates on which and the price or prices at which we will
    repurchase debt securities at the option of the holders of debt
    securities and other detailed terms and provisions of these
    repurchase obligations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominations in which the debt securities will be issued,
    if other than denominations of $1,000 and any integral multiple
    thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the debt securities will be issued in the form of
    certificated debt securities or global debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the portion of principal amount of the debt securities payable
    upon declaration of acceleration of the maturity date, if other
    than the principal amount;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the currency of denomination of the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation of the currency, currencies or currency units in
    which payment of principal of, and premium and interest on, the
    debt securities will be made;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if payments of principal of, or premium or interest on, the debt
    securities will be made in one or more currencies or currency
    units other than that or those in which the debt securities are
    denominated, the manner in which the exchange rate with respect
    to these payments will be determined;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the manner in which the amounts of payment of principal of, or
    premium or interest on, the debt securities will be determined,
    if these amounts may be determined by reference to an index
    based on a currency or currencies other than that in which the
    debt securities are denominated or designated to be payable or
    by reference to a commodity, commodity index, stock exchange
    index or financial index;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provisions relating to any security provided for the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any addition to or change in the events of default described in
    this prospectus or in the indenture with respect to the debt
    securities and any change in the acceleration provisions
    described in this prospectus or in the indenture with respect to
    the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any addition to or change in the covenants described in this
    prospectus or in the indenture with respect to the debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any conversion provisions, including the conversion price, the
    conversion period, provisions as to whether conversion will be
    mandatory, at the option of the holder or at our option, the
    events requiring an adjustment of the conversion price and
    provisions affecting conversion if such series of debt
    securities are redeemed;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether the debt securities will be senior debt securities or
    subordinated debt securities and, if applicable, a description
    of the subordination terms thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any depositaries, interest rate calculation agents, exchange
    rate calculation agents or other agents with respect to the debt
    securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other terms of the debt securities, which may modify,
    delete, supplement or add to any provision of the indenture as
    it applies to that series.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may issue debt securities that provide for an amount less
    than their stated principal amount to be due and payable upon
    declaration of acceleration of their maturity pursuant to the
    terms of the indenture. We will provide you with information on
    the federal income tax considerations and other special
    considerations applicable to any of these debt securities in the
    applicable prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If we denominate the purchase price of any of the debt
    securities in a foreign currency or currencies or a foreign
    currency unit or units, or if the principal of, and premium and
    interest on, any series of debt securities is payable in a
    foreign currency or currencies or a foreign currency unit or
    units, we will provide you with information on the restrictions,
    elections, general tax considerations, specific terms and other
    information with respect to that issue of debt securities and
    such foreign currency or currencies or foreign currency unit or
    units in the applicable prospectus supplement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    and Exchange</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each debt security will be represented by either one or more
    global securities registered in the name of The Depository
    Trust&#160;Company, as Depositary, or a nominee (we will refer
    to any debt security represented by a global debt security as a
    &#147;book-entry debt security&#148;), or a certificate issued
    in definitive registered form (we will refer to any debt
    security represented by a certificated security as a
    &#147;certificated debt security&#148;) as set forth in the
    applicable prospectus supplement. Except as set forth under the
    heading &#147;Legal Ownership of Securities&#148; below,
    book-entry securities will not be issuable in certificated form.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    You may transfer or exchange certificated debt securities at any
    office we maintain for this purpose in accordance with the terms
    of the indenture. No service charge will be made for any
    transfer or exchange of certificated debt securities, but we may
    require payment of a sum sufficient to cover any tax or other
    governmental charge payable in connection with a transfer or
    exchange.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    You may effect the transfer of certificated debt securities and
    the right to receive the principal of, and any premium and
    interest on, certificated debt securities only by surrendering
    the certificate representing those certificated debt securities
    and either reissuance by us or the trustee of the certificate to
    the new holder or the issuance by us or the trustee of a new
    certificate to the new holder.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">No
    Protection in the Event of a Change of Control</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Unless we state otherwise in the applicable prospectus
    supplement, the debt securities will not contain any provisions
    which may afford holders of the debt securities protection in
    the event we have a change in control or in the event of a
    highly leveraged transaction (whether or not such transaction
    results in a change in control) which could adversely affect
    holders of debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Covenants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We will set forth in the applicable prospectus supplement any
    restrictive covenants applicable to any issue of debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Consolidation,
    Merger and Sale of Assets</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may not consolidate with or merge with or into, or convey,
    transfer or lease all or substantially all of our properties and
    assets to, any person, which we refer to as a successor person,
    unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we are the surviving corporation or the successor person (if
    other than Lexicon) is organized and validly existing under the
    laws of any U.S.&#160;domestic jurisdiction and expressly
    assumes our obligations on the debt securities and under the
    indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    immediately after giving effect to the transaction, no event of
    default, and no event which, after notice or lapse of time, or
    both, would become an event of default, shall have occurred and
    be continuing under the indenture; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    certain other conditions are met.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Events of
    Default</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Event of default means, with respect to any series of debt
    securities, any of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the payment of any interest upon any debt security of
    that series when it becomes due and payable, and continuance of
    that default for a period of 30&#160;days (unless the entire
    amount of the payment is deposited by us with the trustee or
    with a paying agent prior to the expiration of the
    <FONT style="white-space: nowrap">30-day</FONT>
    period);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the payment of principal of or premium on any debt
    security of that series when due and payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the deposit of any sinking fund payment, when and as
    due in respect of any debt security of that series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the performance or breach of any other covenant or
    warranty by us in the indenture (other than a covenant or
    warranty that has been included in the indenture solely for the
    benefit of a series of debt securities other than that series),
    which default continues uncured for a period of 90&#160;days
    after we receive written notice from the trustee or we and the
    trustee receive written notice from the holders of not less than
    a majority in principal amount of the outstanding debt
    securities of that series as provided in the indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    certain events of bankruptcy, insolvency or reorganization of
    our company;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other event of default provided with respect to debt
    securities of that series that is described in the applicable
    prospectus supplement accompanying this prospectus.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    No event of default with respect to a particular series of debt
    securities (except as to certain events of bankruptcy,
    insolvency or reorganization) necessarily constitutes an event
    of default with respect to any other series of debt securities.
    The occurrence of an event of default may constitute an event of
    default under our bank credit agreements in existence from time
    to time. In addition, the occurrence of certain events of
    default or an acceleration under the indenture may constitute an
    event of default under certain of our other indebtedness
    outstanding from time to time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If an event of default with respect to debt securities of any
    series at the time outstanding occurs and is continuing, then
    the trustee or the holders of not less than a majority in
    principal amount of the outstanding debt securities of that
    series may, by a notice in writing to us (and to the trustee if
    given by the holders), declare to be due and payable immediately
    the principal (or, if the debt securities of that series are
    discount securities, that portion of the principal amount as may
    be specified in the terms of that series) of, and accrued and
    unpaid interest, if any, on all debt securities of that series.
    In the case of an event of default resulting from certain events
    of bankruptcy, insolvency or reorganization, the principal (or
    such specified amount) of and accrued and unpaid interest, if
    any, on all outstanding debt securities will become and be
    immediately due and payable without any declaration or other act
    on the part of the trustee or any holder of outstanding debt
    securities. At any time after a declaration of acceleration with
    respect to debt securities of any series has been made, but
    before a judgment or decree for payment of the money due has
    been obtained by the trustee, the holders of a majority in
    principal amount of the outstanding debt securities of that
    series may rescind and annul the acceleration if all events of
    default, other than the non-payment of accelerated principal and
    interest, if any, with respect to debt securities of that
    series, have been cured or waived as provided in the indenture.
    We refer you to the prospectus supplement relating to any series
    of debt securities that are discount securities for the
    particular provisions relating to acceleration of a portion of
    the principal amount of such discount securities upon the
    occurrence of an event of default.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The indenture provides that the trustee will be under no
    obligation to exercise any of its rights or powers under the
    indenture at the request of any holder of outstanding debt
    securities, unless the trustee receives indemnity satisfactory
    to it against any loss, liability or expense. Subject to certain
    rights of the trustee, the holders of a majority in principal
    amount of the outstanding debt securities of any series will
    have the right to direct the time, method and place of
    conducting any proceeding for any remedy available to the
    trustee or exercising any trust or power conferred on the
    trustee with respect to the debt securities of that series.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    No holder of any debt security of any series will have any right
    to institute any proceeding, judicial or otherwise, with respect
    to the indenture or for the appointment of a receiver or
    trustee, or for any remedy under the indenture, unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that holder has previously given to the trustee written notice
    of a continuing event of default with respect to debt securities
    of that series;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the holders of at least a majority in principal amount of the
    outstanding debt securities of that series have made written
    request, and offered reasonable indemnity, to the trustee to
    institute the proceeding as trustee, and the trustee has not
    received from the holders of a majority in principal amount of
    the outstanding debt securities of that series a direction
    inconsistent with that request and has failed to institute the
    proceeding within 60&#160;days.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Notwithstanding the foregoing, the holder of any debt security
    will have an absolute and unconditional right to receive payment
    of the principal of, and any premium and interest on, that debt
    security on or after the due dates expressed in that debt
    security and to institute suit for the enforcement of payment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If any securities are outstanding under the indenture, the
    indenture requires us, within 120&#160;days after the end of our
    fiscal year, to furnish to the trustee a statement as to
    compliance with the indenture. The indenture provides that the
    trustee may withhold notice to the holders of debt securities of
    any series of any default or event of default (except in payment
    on any debt securities of that series) with respect to debt
    securities of that series if it in good faith determines that
    withholding notice is in the interest of the holders of those
    debt securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Modification
    and Waiver</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may modify and amend the indenture with the consent of the
    holders of at least a majority in principal amount of the
    outstanding debt securities of each series affected by the
    modifications or amendments. We may not make any modification or
    amendment without the consent of the holders of each affected
    debt security then outstanding if that amendment will:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the amount of debt securities whose holders must consent
    to an amendment or waiver;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the rate of or extend the time for payment of interest
    (including default interest) on any debt security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the principal of or premium on or change the fixed
    maturity of any debt security or reduce the amount of, or
    postpone the date fixed for, the payment of any sinking fund or
    analogous obligation with respect to any series of debt
    securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the principal amount of discount securities payable upon
    acceleration of maturity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    waive a default in the payment of the principal of, or premium
    or interest on, any debt security (except a rescission of
    acceleration of the debt securities of any series by the holders
    of at least a majority in aggregate principal amount of the then
    outstanding debt securities of that series and a waiver of the
    payment default that resulted from such acceleration);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    make the principal of, or premium or interest on, any debt
    security payable in currency other than that stated in the debt
    security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    make any change to certain provisions of the indenture relating
    to, among other things, the right of holders of debt securities
    to receive payment of the principal of, and premium and interest
    on, those debt securities and to institute suit for the
    enforcement of any such payment and to waivers or amendments; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    waive a redemption payment with respect to any debt security.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Except for certain specified provisions, the holders of at least
    a majority in principal amount of the outstanding debt
    securities of any series may on behalf of the holders of all
    debt securities of that series waive our compliance with
    provisions of the indenture. The holders of a majority in
    principal amount of the outstanding debt securities of any
    series may on behalf of the holders of all the debt securities
    of such series waive any past default under the indenture with
    respect to that series and its consequences, except a default in
    the payment of the principal of, or any premium or interest on,
    any debt security of that series or in respect of a covenant or
    provision, which cannot be
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    11
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    modified or amended without the consent of the holder of each
    outstanding debt security of the series affected; <I>provided,
    however</I>, that the holders of a majority in principal amount
    of the outstanding debt securities of any series may rescind an
    acceleration and its consequences, including any related payment
    default that resulted from the acceleration.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Defeasance
    of Debt Securities and Certain Covenants in Certain
    Circumstances</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Legal Defeasance.</I>&#160;&#160;The indenture provides that,
    unless otherwise provided by the terms of the applicable series
    of debt securities, we may be discharged from any and all
    obligations in respect of the debt securities of any series
    (except for certain obligations to register the transfer or
    exchange of debt securities of such series, to replace stolen,
    lost or mutilated debt securities of such series, and to
    maintain paying agencies and certain provisions relating to the
    treatment of funds held by paying agents). We will be so
    discharged upon the deposit with the trustee, in trust, of money
    <FONT style="white-space: nowrap">and/or</FONT>
    U.S.&#160;government obligations or, in the case of debt
    securities denominated in a single currency other than
    U.S.&#160;dollars, foreign government obligations, that, through
    the payment of interest and principal in accordance with their
    terms, will provide money in an amount sufficient in the opinion
    of a nationally recognized firm of independent public
    accountants to pay and discharge each installment of principal
    of, premium and interest on and any mandatory sinking fund
    payments in respect of the debt securities of that series on the
    stated maturity of those payments in accordance with the terms
    of the indenture and those debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    This discharge may occur only if, among other things, we have
    delivered to the trustee an opinion of counsel stating that we
    have received from, or there has been published by, the United
    States Internal Revenue Service a ruling or, since the date of
    execution of the indenture, there has been a change in the
    applicable United States federal income tax law, in either case
    to the effect that, and based thereon such opinion shall confirm
    that, the holders of the debt securities of that series will not
    recognize income, gain or loss for United States federal income
    tax purposes as a result of the deposit, defeasance and
    discharge and will be subject to United States federal income
    tax on the same amounts and in the same manner and at the same
    times as would have been the case if the deposit, defeasance and
    discharge had not occurred.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Defeasance of Certain Covenants.</I>&#160;&#160;The indenture
    provides that, unless otherwise provided by the terms of the
    applicable series of debt securities, upon compliance with
    certain conditions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may omit to comply with the covenant described under the
    heading &#147;Consolidation, Merger and Sale of Assets&#148; and
    certain other covenants set forth in the indenture, as well as
    any additional covenants which may be set forth in the
    applicable prospectus supplement;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any omission to comply with those covenants will not constitute
    a default or an event of default with respect to the debt
    securities of that series, or covenant defeasance.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The conditions include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    depositing with the trustee money
    <FONT style="white-space: nowrap">and/or</FONT>
    U.S.&#160;government obligations or, in the case of debt
    securities denominated in a single currency other than
    U.S.&#160;dollars, foreign government obligations, that, through
    the payment of interest and principal in accordance with their
    terms, will provide money in an amount sufficient in the opinion
    of a nationally recognized firm of independent public
    accountants to pay and discharge each installment of principal
    of, premium and interest on and any mandatory sinking fund
    payments in respect of the debt securities of that series on the
    stated maturity of those payments in accordance with the terms
    of the indenture and those debt securities;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    delivering to the trustee an opinion of counsel to the effect
    that the holders of the debt securities of that series will not
    recognize income, gain or loss for United States federal income
    tax purposes as a result of the deposit and related covenant
    defeasance and will be subject to United States federal income
    tax on the same amounts and in the same manner and at the same
    times as would have been the case if the deposit and related
    covenant defeasance had not occurred.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>Covenant Defeasance and Events of Default.</I>&#160;&#160;In
    the event we exercise our option to effect covenant defeasance
    with respect to any series of debt securities and the debt
    securities of that series are declared due and payable because
    of the occurrence of any event of default, the amount of money
    <FONT style="white-space: nowrap">and/or</FONT>
    U.S.&#160;government
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    12
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    obligations or foreign government obligations on deposit with
    the trustee will be sufficient to pay amounts due on the debt
    securities of that series at the time of their stated maturity
    but may not be sufficient to pay amounts due on the debt
    securities of that series at the time of the acceleration
    resulting from the event of default. In such a case, we would
    remain liable for those payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <I>&#147;Foreign Government Obligations&#148; </I>means, with
    respect to debt securities of any series that are denominated in
    a currency other than U.S.&#160;dollars:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    direct obligations of the government that issued or caused to be
    issued such currency for the payment of which obligations its
    full faith and credit is pledged which are not callable or
    redeemable at the option of the issuer thereof;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obligations of a person controlled or supervised by or acting as
    an agency or instrumentality of that government the timely
    payment of which is unconditionally guaranteed as a full faith
    and credit obligation by that government which are not callable
    or redeemable at the option of the issuer thereof.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Governing
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The indenture and the debt securities will be governed by and
    construed in accordance with the laws of the State of New York.
</DIV>
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF WARRANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following description, together with the additional
    information we may include in any applicable prospectus
    supplements, summarizes the material terms and provisions of the
    warrants that we may offer under this prospectus and the related
    warrant agreements and warrant certificates. While the terms
    summarized below will apply generally to any warrants that we
    may offer under this prospectus, we will describe the particular
    terms of any series of warrants that we may offer in more detail
    in the applicable prospectus supplement. If we indicate in the
    prospectus supplement, the terms of any warrants offered under
    that prospectus supplement may differ from the terms described
    below. However, no prospectus supplement shall fundamentally
    change the terms that are set forth in this prospectus or offer
    a security that is not registered and described in this
    prospectus at the time of its effectiveness. Specific warrant
    agreements will contain additional important terms and
    provisions and will be incorporated by reference as an exhibit
    to the registration statement that includes this prospectus or
    as an exhibit to a report filed under the Exchange Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We will describe in the applicable prospectus supplement the
    terms of the series of warrants, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the offering price and aggregate number of warrants offered;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the currency for which the warrants may be purchased;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the designation and terms of the securities with
    which the warrants are issued and the number of warrants issued
    with each such security or each principal amount of such
    security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the date on and after which the warrants and the
    related securities will be separately transferable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of warrants to purchase common stock or preferred
    stock, the number of shares of common stock or preferred stock,
    as the case may be, purchasable upon the exercise of one warrant
    and the price at which these shares may be purchased upon such
    exercise;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of warrants to purchase debt securities, the
    principal amount of debt securities purchasable upon exercise of
    one warrant and the price at, and currency in which, this
    principal amount of debt securities may be purchased upon such
    exercise;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the effect of any merger, consolidation, sale or other
    disposition of our business on the warrant agreements and the
    warrants;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms of any rights to redeem or call the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provisions for changes to or adjustments in the exercise
    price or number of securities issuable upon exercise of the
    warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the dates on which the right to exercise the warrants will
    commence and expire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the manner in which the warrant agreements and warrants may be
    modified;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    federal income tax consequences of holding or exercising the
    warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms of the securities issuable upon exercise of the
    warrants; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other specific terms, preferences, rights or limitations of
    or restrictions on the warrants.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Before exercising their warrants, holders of warrants will not
    have any of the rights of holders of the securities purchasable
    upon such exercise, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of warrants to purchase common stock or preferred
    stock, the right to receive dividends, if any, or, payments upon
    our liquidation, dissolution or winding up or to exercise voting
    rights, if any;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of warrants to purchase debt securities, the right
    to receive payments of principal of, or premium, if any, or
    interest on, the debt securities purchasable upon exercise or to
    enforce covenants in the applicable indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exercise
    of Warrants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each warrant will entitle the holder to purchase the securities
    that we specify in the applicable prospectus supplement at the
    exercise price that we describe in the applicable prospectus
    supplement. Unless we otherwise specify in the applicable
    prospectus supplement, holders of the warrants may exercise the
    warrants at any time up to the specified time on the expiration
    date that we set forth in the applicable prospectus supplement.
    After the close of business on the expiration date, unexercised
    warrants will become void.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Holders of the warrants may exercise the warrants by delivering
    the warrant certificate representing the warrants to be
    exercised together with specified information, and paying the
    required amount to the warrant agent in immediately available
    funds, as provided in the applicable prospectus supplement. We
    will set forth on the reverse side of the warrant certificate
    and in the applicable prospectus supplement the information that
    the holder of the warrant will be required to deliver to the
    warrant agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Upon receipt of the required payment and the warrant certificate
    properly completed and duly executed at the corporate trust
    office of the warrant agent or any other office indicated in the
    applicable prospectus supplement, we will issue and deliver the
    securities purchasable upon such exercise. If fewer than all of
    the warrants represented by the warrant certificate are
    exercised, then we will issue a new warrant certificate for the
    remaining amount of warrants. If we so indicate in the
    applicable prospectus supplement, holders of the warrants may
    surrender securities as all or part of the exercise price for
    warrants.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Governing
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The warrants and warrant agreements will be governed by and
    construed in accordance with the laws of the State of New York.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Enforceability
    of Rights by Holders of Warrants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each warrant agent will act solely as our agent under the
    applicable warrant agreement and will not assume any obligation
    or relationship of agency or trust with any holder of any
    warrant. A single bank or trust company may act as warrant agent
    for more than one issue of warrants. A warrant agent will have
    no duty or responsibility in case of any default by us under the
    applicable warrant agreement or warrant, including any duty or
    responsibility to initiate any proceedings at law or otherwise,
    or to make any demand upon us. Any holder of a warrant may,
    without the consent of the related warrant agent or the holder
    of any other warrant, enforce by appropriate legal action its
    right to exercise, and receive the securities purchasable upon
    exercise of, its warrants.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF RIGHTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following description, together with the additional
    information we may include in any applicable prospectus
    supplements, summarizes the material terms and provisions of the
    rights that we may offer under this prospectus and the related
    rights agreements. While the terms summarized below will apply
    generally to any rights that we may offer under this prospectus,
    we will describe the particular terms of any series of rights
    that we may offer in more detail in the applicable prospectus
    supplement. If we indicate in the prospectus supplement, the
    terms of any rights offered under that prospectus supplement may
    differ from the terms described below. However, no prospectus
    supplement shall fundamentally change the terms that are set
    forth in this prospectus or offer a security that is not
    registered and described in this prospectus at the time of its
    effectiveness. Specific rights agreements will contain
    additional important terms and provisions and will be
    incorporated by reference as an exhibit to the registration
    statement that includes this prospectus or as an exhibit to a
    report filed under the Exchange Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may issue rights to purchase common stock, preferred stock,
    debt securities or other securities. These rights may be issued
    independently or together with any other security offered hereby
    and may or may not be transferable by the stockholder receiving
    the rights in such offering. In connection with any offering of
    such rights, we may enter into a standby arrangement with one or
    more underwriters or other purchasers pursuant to which the
    underwriters or other purchasers may be required to purchase any
    securities remaining unsubscribed for after such offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each series of rights will be issued under a separate rights
    agreement which we will enter into with a bank or trust company,
    as rights agent, all as set forth in the applicable prospectus
    supplement. The rights agent will act solely as our agent in
    connection with the certificates relating to the rights and will
    not assume any obligation or relationship of agency or trust
    with any holders of rights certificates or beneficial owners of
    rights. We will file the rights agreement and the rights
    certificates relating to each series of rights with the SEC, and
    incorporate them by reference as an exhibit to the registration
    statement of which this prospectus is a part on or before the
    time we issue a series of rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We will describe in the applicable prospectus supplement the
    terms of the series of rights, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date of determining the stockholders entitled to the rights
    distribution;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of rights issued or to be issued to each stockholder;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the exercise price payable for each share of common stock,
    preferred stock, debt securities or other securities upon the
    exercise of the rights;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number and terms of the shares of common stock, preferred
    stock, debt securities or other securities which may be
    purchased per each right;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the extent to which the rights are transferable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date on which the holder&#146;s ability to exercise the
    rights shall commence, and the date on which the rights shall
    expire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the extent to which the rights may include an over-subscription
    privilege with respect to unsubscribed securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the material terms of any standby underwriting or
    purchase arrangement entered into by us in connection with the
    offering of such rights;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other terms of the rights, including the terms, procedures,
    conditions and limitations relating to the exchange and exercise
    of the rights.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The description in the applicable prospectus supplement of any
    rights that we may offer will not necessarily be complete and
    will be qualified in its entirety by reference to the applicable
    rights certificate, which will be filed with the&#160;SEC.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exercise
    of Rights</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each right will entitle the holder of the right to purchase for
    cash such amount of shares of common stock, preferred stock,
    debt securities or other securities at such exercise price as
    shall in each case be set forth in, or be determinable as set
    forth in, the prospectus supplement relating to the rights
    offered thereby. Rights may be exercised at any time up to the
    close of business on the expiration date for such rights set
    forth in the prospectus supplement. After the close of business
    on the expiration date, all unexercised rights will become void.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Rights may be exercised as set forth in the prospectus
    supplement relating to the rights offered thereby. Upon receipt
    of payment and the rights certificate properly completed and
    duly executed at the corporate trust office of the rights agent
    or any other office indicated in the prospectus supplement, we
    will forward, as soon as practicable, the shares of common
    stock, preferred stock, debt securities or other securities
    purchasable upon such exercise. We may determine to offer any
    unsubscribed offered securities directly to persons other than
    stockholders, to or through agents, underwriters or dealers or
    through a combination of such methods, including pursuant to
    standby underwriting arrangements, as set forth in the
    applicable prospectus supplement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Governing
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The rights and rights agreements will be governed by and
    construed in accordance with the laws of the State of New York.
</DIV>
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The following description, together with the additional
    information we may include in any applicable prospectus
    supplements, summarizes the material terms and provisions of the
    units that we may offer under this prospectus and the related
    unit agreements. While the terms summarized below will apply
    generally to any units that we may offer under this prospectus,
    we will describe the particular terms of any series of units
    that we may offer in more detail in the applicable prospectus
    supplement. If we indicate in the prospectus supplement, the
    terms of any units offered under that prospectus supplement may
    differ from the terms described below. However, no prospectus
    supplement shall fundamentally change the terms that are set
    forth in this prospectus or offer a security that is not
    registered and described in this prospectus at the time of its
    effectiveness. Specific unit agreements will contain additional
    important terms and provisions and will be incorporated by
    reference as an exhibit to the registration statement that
    includes this prospectus or as an exhibit to a report filed
    under the Exchange Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may issue units comprised of one or more shares of common
    stock, shares of preferred stock, debt securities and warrants
    in any combination. Each unit will be issued so that the holder
    of the unit is also the holder of each security included in the
    unit. Thus, the holder of a unit will have the rights and
    obligations of a holder of each included security. The unit
    agreement under which a unit is issued may provide that the
    securities included in the unit may not be held or transferred
    separately, at any time or at any time before a specified date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We will describe in the applicable prospectus supplement the
    terms of the series of units, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of the units and of the securities
    comprising the units, including whether and under what
    circumstances those securities may be held or transferred
    separately;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provisions of the governing unit agreement that differ from
    those described below;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provisions for the issuance, payment, settlement, transfer
    or exchange of the units or of the securities comprising the
    units.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The provisions described in this section, as well as those
    described under &#147;Description of Capital Stock,&#148;
    &#147;Description of Debt Securities&#148; and &#147;Description
    of Warrants&#148; will apply to each unit and to any common
    stock, preferred stock, debt security or warrant included in
    each unit, respectively.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Issuance
    in Series</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may issue units in such amounts and in numerous distinct
    series as we determine.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Enforceability
    of Rights by Holders of Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each unit agent will act solely as our agent under the
    applicable unit agreement and will not assume any obligation or
    relationship of agency or trust with any holder of any unit. A
    single bank or trust company may act as unit agent for more than
    one series of units. A unit agent will have no duty or
    responsibility in case of any default by us under the applicable
    unit agreement or unit, including any duty or responsibility to
    initiate any proceedings at law or otherwise, or to make any
    demand upon us. Any holder of a unit may, without the consent of
    the related unit agent or the holder of any other unit, enforce
    by appropriate legal action its rights as holder under any
    security included in the unit.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Title</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Lexicon, the unit agents and any of their agents may treat the
    registered holder of any unit certificate as an absolute owner
    of the units evidenced by that certificate for any purpose and
    as the person entitled to exercise the rights attaching to the
    units so requested, despite any notice to the contrary. See
    &#147;Legal Ownership of Securities.&#148;
</DIV>
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    OWNERSHIP OF SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We can issue securities in registered form or in the form of one
    or more global securities. We describe global securities in
    greater detail below. We refer to those persons who have
    securities registered in their own names on the books that we or
    any applicable trustee maintain for this purpose as the
    &#147;holders&#148; of those securities. These persons are the
    legal holders of the securities. We refer to those persons who,
    indirectly through others, own beneficial interests in
    securities that are not registered in their own names, as
    &#147;indirect holders&#148; of those securities. As we discuss
    below, indirect holders are not legal holders, and investors in
    securities issued in book-entry form or in street name will be
    indirect holders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Book-Entry
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may issue securities in book-entry form only, as we will
    specify in the applicable prospectus supplement. This means
    securities may be represented by one or more global securities
    registered in the name of a financial institution that holds
    them as depositary on behalf of other financial institutions
    that participate in the depositary&#146;s book-entry system.
    These participating institutions, which are referred to as
    participants, in turn, hold beneficial interests in the
    securities on behalf of themselves or their customers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Only the person in whose name a security is registered is
    recognized as the holder of that security. Securities issued in
    global form will be registered in the name of the depositary or
    its nominee. Consequently, for securities issued in global form,
    we will recognize only the depositary as the holder of the
    securities, and we will make all payments on the securities to
    the depositary. The depositary passes along the payments it
    receives to its participants, which in turn pass the payments
    along to their customers who are the beneficial owners. The
    depositary and its participants do so under agreements they have
    made with one another or with their customers; they are not
    obligated to do so under the terms of the securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As a result, investors in a book-entry security will not own
    securities directly. Instead, they will own beneficial interests
    in a global security, through a bank, broker or other financial
    institution that participates in the depositary&#146;s
    book-entry system or holds an interest through a participant. As
    long as the securities are issued in global form, investors will
    be indirect holders, and not holders, of the securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Street
    Name Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may terminate a global security or issue securities in
    non-global form. In these cases, investors may choose to hold
    their securities in their own names or in &#147;street
    name.&#148; Securities held by an investor in street name would
    be
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    17
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    registered in the name of a bank, broker or other financial
    institution that the investor chooses, and the investor would
    hold only a beneficial interest in those securities through an
    account he or she maintains at that institution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For securities held in street name, we will recognize only the
    intermediary banks, brokers and other financial institutions in
    whose names the securities are registered as the holders of
    those securities, and we will make all payments on those
    securities to them. These institutions pass along the payments
    they receive to their customers who are the beneficial owners,
    but only because they agree to do so in their customer
    agreements or because they are legally required to do so.
    Investors who hold securities in street name will be indirect
    holders, not holders, of those securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Legal
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our obligations, as well as the obligations of any applicable
    trustee and of any third parties employed by us or a trustee,
    run only to the legal holders of the securities. We do not have
    obligations to investors who hold beneficial interests in global
    securities, in street name or by any other indirect means. This
    will be the case whether an investor chooses to be an indirect
    holder of a security or has no choice because we are issuing the
    securities only in global form.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For example, once we make a payment or give a notice to the
    holder, we have no further responsibility for the payment or
    notice even if that holder is required, under agreements with
    depositary participants or customers or by law, to pass it along
    to the indirect holders but does not do so. Similarly, we may
    want to obtain the approval of the holders to amend an
    indenture, to relieve us of the consequences of a default or of
    our obligation to comply with a particular provision of the
    indenture or for other purposes. In such an event, we would seek
    approval only from the holders, and not the indirect holders, of
    the securities. Whether and how the holders contact the indirect
    holders is up to the holders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Special
    Considerations for Indirect Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If you hold securities through a bank, broker or other financial
    institution, either in book-entry form or in street name, you
    should check with your own institution to find out:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how it handles securities payments and notices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether it imposes fees or charges;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how it would handle a request for the holders&#146; consent, if
    ever required;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    whether and how you can instruct it to send you securities
    registered in your own name so you can be a holder, if that is
    permitted in the future;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    how it would exercise rights under the securities if there were
    a default or other event triggering the need for holders to act
    to protect their interests;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the securities are in book-entry form, how the
    depositary&#146;s rules and procedures will affect these matters.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Global
    Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    A global security is a security that represents one or any other
    number of individual securities held by a depositary. Generally,
    all securities represented by the same global securities will
    have the same terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Each security issued in book-entry form will be represented by a
    global security that we deposit with and register in the name of
    a financial institution or its nominee that we select. The
    financial institution that we select for this purpose is called
    the depositary. Unless we specify otherwise in the applicable
    prospectus supplement, The Depository Trust&#160;Company, New
    York, New York, known as DTC, will be the depositary for all
    securities issued in book-entry form.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    A global security may not be transferred to or registered in the
    name of anyone other than the depositary, its nominee or a
    successor depositary, unless special termination situations
    arise. We describe those situations below under &#147;Special
    Situations When a Global Security Will Be Terminated.&#148; As a
    result of these arrangements, the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    18
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    depositary, or its nominee, will be the sole registered owner
    and holder of all securities represented by a global security,
    and investors will be permitted to own only beneficial interests
    in a global security. Beneficial interests must be held by means
    of an account with a broker, bank or other financial institution
    that in turn has an account with the depositary or with another
    institution that does. Thus, an investor whose security is
    represented by a global security will not be a holder of the
    security, but only an indirect holder of a beneficial interest
    in the global security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If the prospectus supplement for a particular security indicates
    that the security will be issued in global form only, then the
    security will be represented by a global security at all times
    unless and until the global security is terminated. If
    termination occurs, we may issue the securities through another
    book-entry clearing system or decide that the securities may no
    longer be held through any book-entry clearing system.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Special
    Considerations for Global Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    As an indirect holder, an investor&#146;s rights relating to a
    global security will be governed by the account rules of the
    investor&#146;s financial institution and of the depositary, as
    well as general laws relating to securities transfers. We do not
    recognize an indirect holder as a holder of securities and
    instead deal only with the depositary that holds the global
    security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If securities are issued only in the form of a global security,
    an investor should be aware of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An investor cannot cause the securities to be registered in his
    or her name, and cannot obtain non-global certificates for his
    or her interest in the securities, except in the special
    situations we describe below;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An investor will be an indirect holder and must look to his or
    her own bank or broker for payments on the securities and
    protection of his or her legal rights relating to the
    securities, as we describe above;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An investor may not be able to sell interests in the securities
    to some insurance companies and to other institutions that are
    required by law to own their securities in non-book-entry form;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    An investor may not be able to pledge his or her interest in a
    global security in circumstances where certificates representing
    the securities must be delivered to the lender or other
    beneficiary of the pledge in order for the pledge to be
    effective;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The depositary&#146;s policies, which may change from time to
    time, will govern payments, transfers, exchanges and other
    matters relating to an investor&#146;s interest in a global
    security. We and any applicable trustee have no responsibility
    for any aspect of the depositary&#146;s actions or for its
    records of ownership interests in a global security. We and the
    trustee also do not supervise the depositary in any way;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The depositary may, and we understand that DTC will, require
    that those who purchase and sell interests in a global security
    within its book-entry system use immediately available funds,
    and your broker or bank may require you to do so as
    well;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Financial institutions that participate in the depositary&#146;s
    book-entry system, and through which an investor holds its
    interest in a global security, may also have their own policies
    affecting payments, notices and other matters relating to the
    securities. There may be more than one financial intermediary in
    the chain of ownership for an investor. We do not monitor and
    are not responsible for the actions of any of those
    intermediaries.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Special
    Situations When a Global Security Will Be Terminated</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In a few special situations described below, the global security
    will terminate and interests in it will be exchanged for
    physical certificates representing those interests. After that
    exchange, the choice of whether to hold securities directly or
    in street name will be up to the investor. Investors must
    consult their own banks or brokers to find out how to have their
    interests in securities transferred to their own name, so that
    they will be direct holders. We have described the rights of
    holders and street name investors above.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The global security will terminate when the following special
    situations occur:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the depositary notifies us that it is unwilling, unable or no
    longer qualified to continue as depositary for that global
    security and we do not appoint another institution to act as
    depositary within 90&#160;days;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if we notify any applicable trustee that we wish to terminate
    that global security;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if an event of default has occurred with regard to securities
    represented by that global security and has not been cured or
    waived.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The prospectus supplement may also list additional situations
    for terminating a global security that would apply only to the
    particular series of securities covered by the prospectus
    supplement. When a global security terminates, the depositary,
    and not we or any applicable trustee, is responsible for
    deciding the names of the institutions that will be the initial
    direct holders.
</DIV>
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SPECIAL
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    This prospectus and the documents incorporated by reference into
    this prospectus contain certain information regarding our
    financial projections, plans and strategies that are
    forward-looking statements within the meaning of
    Section&#160;27A of the Securities Act and 21E of the Exchange
    Act. We have attempted to identify forward-looking statements by
    terminology including &#147;anticipate,&#148;
    &#147;believe,&#148; &#147;can,&#148; &#147;continue,&#148;
    &#147;could,&#148; &#147;estimate,&#148; &#147;expect,&#148;
    &#147;intend,&#148; &#147;may,&#148; &#147;plan,&#148;
    &#147;potential,&#148; &#147;predict,&#148; &#147;should&#148;
    or &#147;will&#148; or the negative of these terms or other
    comparable terminology. These statements, which are only
    predictions and involve known and unknown risks, uncertainties
    and other important factors may include, among other things,
    statements which address our strategy and operating performance,
    events or developments that we expect or anticipate will occur
    in the future, such as projections of our future results of
    operations or of our financial condition, the status of any
    collaborative agreements, our research and development efforts
    and anticipated trends in our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have based these forward-looking statements on our current
    expectations and projections about future events. However, there
    may be events in the future that we are not able to predict
    accurately or which we do not fully control that could cause
    actual results to differ materially from those expressed or
    implied in our forward-looking statements. Many important
    factors could cause actual results to differ materially from
    those expressed or implied by these forward-looking statements,
    including those discussed under &#147;Risk Factors&#148; in this
    prospectus and any prospectus supplement and other sections of
    the documents incorporated by reference into this prospectus. We
    undertake no obligation to publicly release any revisions to the
    forward-looking statements or reflect events or circumstances
    after the date of this prospectus.
</DIV>
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RATIO OF
    EARNINGS TO FIXED CHARGES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Our earnings were insufficient to cover fixed charges in each of
    the years in the five-year period ended December&#160;31, 2008
    and in the six-month period ended June&#160;30, 2009.
    &#147;Fixed charges&#148; consist of interest expense, the
    estimated interest included in rental expense and accretion on
    redeemable convertible preferred stock. The following table sets
    forth the computation of our ratio of earnings to fixed charges
    for the periods indicated:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="49%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">Six Months<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="color: #00337F">Ended June&#160;30,<BR>
    </FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="color: #00337F">Fiscal Years Ended
    December&#160;31,</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2009</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2008</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2007</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2006</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2005</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #00337F">
    <B><FONT style="font-size: 10pt; color: #00337F">2004</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of earnings to fixed
    charges<SUP style="font-size: 85%; vertical-align: top">(1)</SUP>

</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV>

<DIV style="font-size: 12pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #00337F"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">For the six months ended
    June&#160;30, 2009, and the fiscal years ended December&#160;31,
    2008, 2007, 2006, 2005 and 2004, our earnings were insufficient
    to cover fixed charges by $41.6&#160;million,
    $76.9&#160;million, $58.8&#160;million, $54.4&#160;million,
    $36.2&#160;million, and $47.2&#160;million, respectively.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    For the periods indicated above, we had no outstanding shares of
    preferred stock with required dividend payments. Therefore, our
    ratios of earnings to combined fixed charges and preferred stock
    dividends for the periods indicated are identical to the ratios
    presented in the table above.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Except as otherwise described in the prospectus supplement
    relating to an offering, we intend to use the net proceeds from
    the sale(s) of securities offered pursuant to this prospectus
    and any prospectus supplement for research and development and
    general corporate purposes, including capital expenditures and
    working capital needs. We may also use some or all of the net
    proceeds to acquire or invest in businesses, products and
    technologies that are complementary to our own.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The amounts that we actually expend for working capital
    purposes, investments or acquisitions will vary significantly
    depending on a number of factors, including future revenue
    growth, if any, the amount of cash we generate from operations
    and the progress of our product development efforts.
    Accordingly, our management will retain broad discretion in the
    allocation of the net proceeds from the sale(s) of the offered
    securities. If we elect at the time of the issuance of the
    securities to make different or more specific use of proceeds
    other than as described in this prospectus, the change in use of
    proceeds will be described in the applicable prospectus
    supplement.
</DIV>
<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may sell securities under this prospectus from time to time
    in any one or more of the following ways:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to or through underwriters;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through brokers or dealers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    directly to other purchasers; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through agents.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may sell securities under this prospectus from time to time
    in one or more transactions:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at a fixed price or prices, which may be changed;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at market prices prevailing at the time of sale;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at prices related to such prevailing market prices; or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at negotiated prices.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The prospectus supplement relating to the securities will set
    forth the terms of the offering of such securities, including
    the name or names of any underwriters, brokers, dealers or
    agents, the name or names of any managing underwriter or
    underwriters, the purchase price of the securities and the net
    proceeds to us from such sale, any delayed delivery
    arrangements, any underwriting discounts and commissions and
    other items constituting underwriters&#146; compensation, any
    public offering price, any discounts or concessions allowed or
    reallowed or paid to dealers, any commissions paid to agents and
    any securities exchange or market on which the securities may be
    listed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If we use underwriters in the sale of securities, the
    underwriters will acquire the securities for their own account.
    The underwriters may resell the securities from time to time in
    one or more transactions, including negotiated transactions, at
    a fixed public offering price or at varying prices determined at
    the time of sale. Underwriters may offer securities to the
    public either through underwriting syndicates represented by one
    or more managing underwriters or directly by one or more firms
    acting as underwriters. Unless we inform you otherwise in the
    prospectus supplement, the obligations of the underwriters to
    purchase the securities will be subject to certain conditions,
    and the underwriters will be obligated to purchase all of the
    offered securities if they purchase any of them. The
    underwriters may change from time to time any public offering
    price and any discounts or concessions allowed or reallowed or
    paid to dealers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    In connection with the sale of our securities, underwriters,
    brokers, dealers or agents may receive compensation from us or
    purchasers of securities for whom they may act as agents, in the
    form of discounts, concessions or commissions. Underwriters,
    dealers and agents that participate in the distribution of our
    securities may be deemed to be underwriters, and any discounts
    or commissions received by them from us and any profit on the
    resale of securities by them may be deemed to be underwriting
    discounts and commissions under the Securities
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    21
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Act. Any person who may be deemed to be an underwriter will be
    identified, and the compensation received from us will be
    described, in the prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    During and after an offering through underwriters, the
    underwriters may purchase and sell the securities in the open
    market. These transactions may include over-allotment and
    stabilizing transactions and purchases to cover syndicate short
    positions created in connection with the offering. The
    underwriters may also impose a penalty bid, whereby selling
    concessions allowed to syndicate members or other broker-dealers
    for the securities sold for their account may be reclaimed by
    the syndicate if those securities are repurchased by the
    syndicate in stabilizing or covering transactions. These
    activities may stabilize, maintain or otherwise affect the
    market price of the securities, which may be higher than the
    price that might otherwise prevail in the open market, and, if
    commenced, may be discontinued at any time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If dealers or brokers acting as dealers are used in the sale of
    the securities, we will sell the securities to such dealers or
    brokers as principals. The dealers or brokers acting as dealers
    may then resell such securities to the public at varying prices
    to be determined by such dealers or brokers at the time of
    resale. The names of dealers or brokers acting as dealers and
    the terms of the transaction will be set forth in the prospectus
    supplement relating to such securities. We may sell the
    securities directly or through agents designated by us from time
    to time. Any agent involved in the offer or sale of the
    securities will be named, and any commissions that we pay to
    such agent will be set forth, in the prospectus supplement
    relating to such securities. Unless otherwise indicated in the
    prospectus supplement, any such agent will be acting on a best
    efforts basis for the period of its appointment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may sell securities directly, in which case no underwriters
    or agents would be involved. We may sell securities directly to
    institutional investors or others who may be deemed to be
    underwriters within the meaning of the Securities Act with
    respect to any sale of those securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may offer securities through agents in connection with a
    distribution to our stockholders of rights to purchase such
    securities. The terms of any such sales will be described in the
    prospectus supplement relating thereto. Pursuant to any standby
    underwriting agreement entered into in connection with a rights
    offering to our stockholders, persons acting as standby
    underwriters may receive a commitment fee for all securities
    underlying the rights that the underwriter commits to purchase
    on a standby basis. Additionally, prior to the expiration date
    with respect to any rights, any standby underwriters in a rights
    offering to our stockholders may offer such securities on a
    when-issued basis, including securities to be acquired through
    the purchase and exercise of rights, at prices set from time to
    time by the standby underwriters. After the expiration date with
    respect to such rights, the underwriters may offer securities of
    the type underlying the rights, whether acquired pursuant to a
    standby underwriting agreement, the exercise of the rights or
    the purchase of such securities in the market, to the public at
    a price or prices to be determined by the underwriters. The
    standby underwriters may thus realize profits or losses
    independent of the underwriting discounts or commissions paid by
    us. If we do not enter into a standby underwriting agreement in
    connection with a rights offering to our stockholders, we may
    elect to retain a dealer-manager to manage such a rights
    offering for us. Any such dealer-manager may offer securities of
    the type underlying the rights acquired or to be acquired
    pursuant to the purchase and exercise of rights and may thus
    realize profits or losses independent of any dealer-manager fee
    paid by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    All securities we offer, other than common stock and other
    securities issued upon a reopening of a previous series, will be
    new issues of securities with no established trading market. Any
    underwriters may make a market in these securities, but will not
    be obligated to do so and may discontinue any market making at
    any time without notice. We cannot guarantee the liquidity of
    the trading markets for any securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    If so indicated in the prospectus supplement, we will authorize
    agents, underwriters, brokers or dealers to solicit offers from
    certain types of institutions to purchase securities at the
    public offering price set forth in the prospectus supplement
    pursuant to delayed delivery contracts providing for payment and
    delivery on a specified date in the future. Such contracts will
    be subject only to those conditions set forth in the prospectus
    supplement, and the prospectus supplement will set forth also
    the commission payable for solicitation of such contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We may have agreements with the underwriters, dealers and agents
    to indemnify them against specific civil liabilities, including
    liabilities under the Securities Act, or to contribute with
    respect to payments which the underwriters, dealers or agents
    may be required to make as a result of those specific civil
    liabilities.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    22
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Underwriters and agents and their affiliates may be customers
    of, engage in transactions with, or perform services for us or
    our subsidiaries in the ordinary course of their businesses.
</DIV>
<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The validity of the issuance of the securities offered by this
    prospectus has been passed upon for us by Vinson&#160;&#038;
    Elkins L.L.P., Houston, Texas.
</DIV>
<A name='114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Ernst&#160;&#038; Young LLP, independent registered public
    accounting firm, has audited our consolidated financial
    statements for the year ended December&#160;31, 2008 included in
    our Current Report on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on September&#160;2, 2009, as set forth in their report,
    which is incorporated by reference in this prospectus and
    elsewhere in the registration statement. Our financial
    statements are incorporated by reference in reliance on
    Ernst&#160;&#038; Young LLP&#146;s report, given on their
    authority as experts in accounting and auditing.
</DIV>
<A name='115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    under the Securities Act regarding the offer and sale of
    securities under this prospectus. This prospectus, which
    constitutes a part of the registration statement, does not
    contain all of the information contained in the registration
    statement or the exhibits to the registration statement, as
    permitted by the rules and regulations of the SEC. For further
    information about us and our common stock, please review the
    registration statement and the exhibits filed as a part of it.
    Statements made in this prospectus that describe documents may
    not necessarily be complete. We recommend that you review the
    documents that we have filed with the registration statement to
    obtain a more complete understanding of these documents. A copy
    of the registration statement, including the exhibits filed as a
    part of it, may be inspected without charge at the SEC&#146;s
    Public Reference Room, 100&#160;F&#160;Street, N.E.,
    Washington,&#160;D.C. 20549, and copies of all or any part of
    the registration statement may be obtained from the SEC upon the
    payment of fees prescribed by it. You may obtain information on
    the Public Reference Room by calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    The SEC maintains a website at www.sec.gov that contains
    reports, proxy and information statements and other information
    regarding companies that file electronically with&#160;it.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    We are subject to the information and reporting requirements of
    the Exchange Act and will file periodic reports, proxy
    statements and other information with the SEC. You may inspect
    any of these documents as described in the preceding paragraph.
</DIV>
<A name='116'>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #00337F; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DOCUMENTS
    INCORPORATED BY REFERENCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    The SEC allows us to &#147;incorporate by reference&#148; into
    this prospectus information that we file with the SEC in other
    documents. This means that we can disclose important information
    to you by referring to other documents that contain that
    information. The information incorporated by reference is
    considered to be part of this prospectus, except for information
    superseded by information in this prospectus. We incorporate by
    reference the documents listed below that we have previously
    filed with the SEC and any future filings we make with the SEC
    under Sections&#160;13(a), 13(c), 14 or 15(d) (other than
    information furnished to the SEC under Item&#160;2.02 and 9.01
    of
    <FONT style="white-space: nowrap">Form&#160;8-K)</FONT>
    of the Securities Exchange Act of 1934, prior to the termination
    of the offering of the securities covered by this prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended December&#160;31, 2008;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly periods ended March&#160;31 and June&#160;30,
    2009;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    dated January&#160;27, February&#160;12, April&#160;23,
    May&#160;4, June&#160;8 (as amended on September&#160;2) and
    September&#160;2, 2009;&#160;and
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    23
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the description of our common stock contained in our
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;8-A</FONT>
    filed with the SEC on March&#160;27, 2000 pursuant to
    Section&#160;12 of the Securities Exchange Act of 1934,
    including any amendments and reports filed for the purpose of
    updating such description.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Any statement contained in a document incorporated or deemed to
    be incorporated by reference in this prospectus will be deemed
    to be modified or superseded for purposes of this prospectus to
    the extent that a statement contained in this prospectus or in
    any other subsequently filed document which also is or is deemed
    to be incorporated by reference in this prospectus modifies or
    supersedes that statement. Any statement that is modified or
    superseded will not constitute a part of this prospectus, except
    as so modified or superseded. You may rely on any statement
    contained in this prospectus or in documents incorporated or
    deemed to be incorporated in this prospectus, unless that
    statement has been subsequently modified or superseded as
    described above prior to the time you make your investment
    decision.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Upon your written or oral request, we will provide you at no
    cost a copy of any or all of the documents incorporated by
    reference in this prospectus, other than the exhibits to those
    documents, unless the exhibits are specifically incorporated by
    reference into this prospectus. You may request a copy of these
    documents by contacting:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    Investor Relations<BR>
    Lexicon Pharmaceuticals, Inc.<BR>
    8800 Technology Forest Place<BR>
    The Woodlands, Texas
    <FONT style="white-space: nowrap">77381-1160</FONT><BR>
    Telephone:
    <FONT style="white-space: nowrap">(281)&#160;863-3000</FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <BR>
    24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">
    <IMG src="h68168b2h6816800.gif" alt="(LEXICON LOGO)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #00337F; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
