New OmniBank Library will Form the Core of the Texas Institute for Genomic Medicine

The Woodlands, Texas, July 16, 2005 – Lexicon Genetics Incorporated (Nasdaq: LEXG) announced today that it has been awarded $35 million from the Texas Enterprise Fund for the creation of a comprehensive knockout mouse embryonic stem cell library containing 350,000 cell lines.  Lexicon will create the library using its proprietary gene trapping technology for the Texas Institute for Genomic Medicine, a newly formed non-profit institute whose founding members are Texas A&M University, the Texas A&M University System Health Science Center and Lexicon Genetics.  The Texas Enterprise Fund has also awarded $15 million to The Texas A&M University System for the creation of facilities and infrastructure to house the library. 

When complete, the new library is expected to be the world’s largest collection of mouse embryonic stem cells that have been engineered for the study of gene function, allowing researchers to identify which genes offer the most promise for future drug development.  Institute researchers may also access specific cells from Lexicon’s current gene trap library of 270,000 mouse embryonic stem cell lines and will have certain rights to utilize Lexicon’s patented gene targeting technologies.  In addition, Lexicon will equip the Institute with the bioinformatics software required for the management and analysis of data relating to the library. 

The Texas Institute for Genomic Medicine is designed to pioneer the development of life-changing medical breakthroughs, accelerate the pace of medical discoveries and foster the development of the biotechnology industry in Texas.  The Institute will prioritize diabetes and obesity research and other areas of significant medical need such as infectious disease and cancer.  It is structured to encourage participation and membership by all Texas academic, medical and commercial entities.  Entities outside of Texas will also be invited to participate in the Institute to further their scientific research efforts.  The Institute will make cells from its library available to researchers worldwide.  Its facilities will be located in Houston at the Texas A&M System Health Science Center’s Institute of Biosciences and Technology and in College Station at Texas A&M University.

With the support of the Texas Enterprise Fund, the Texas Institute for Genomic Medicine is envisioned to positively impact the growth and development of Texas as a center of biotechnology innovation.  It will offer the opportunity for job creation and the incubation of new biotechnology companies throughout the State and is designed to attract well-known researchers, venture capital and grant funding to Texas. 

“I am proud to announce that the state of Texas is committing $50 million from the Enterprise Fund to help Lexicon Genetics and The Texas A&M University System establish the Texas Institute for Genomic Medicine, a groundbreaking genetics research center that will bring 5,000 new jobs to Texas, attract millions of new dollars for medical research and lead to the development of life-saving medical treatments and therapies,” Gov. Rick Perry said.

“The Texas Institute for Genomic Medicine is the only non-profit entity fully equipped to knockout and study all genes.  We believe researchers affiliated with the Institute can utilize this robust capability to make major scientific findings that will positively impact human and veterinary health,” said Arthur T. Sands, M.D., Ph.D., president and chief executive officer of Lexicon.  “As a founding member of the Institute, Lexicon is pleased to be contributing to the development of the biotechnology research and commercial community in Texas.” 

The Texas A&M University System is one of the largest and most complex systems of higher education in the nation, conducting more than $500 million in research annually, much of which deals with the life sciences and biotechnology.  The A&M System has strong expertise in research on both human and animal health through Texas A&M and the A&M System Health Science Center.

About Lexicon Genetics

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

Safe Harbor Statement

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