Exhibit 10.2

July 7, 2014

Arthur T. Sands, M.D., Ph.D.
[Address]

Dear Arthur:

We are pleased to invite you to become a consultant to Lexicon Pharmaceuticals,
Inc. (which, together with its subsidiaries and affiliates, is referred to as
the “Company” or “Lexicon”). The purpose of this letter agreement (this
“Agreement”) is to set forth our mutual understanding of the terms and
conditions under which you will provide consulting services to the Company, as
set forth below.

1.Consulting Services. As a consultant to Lexicon, you will provide such
consulting and advisory services as may be requested by the Company’s chief
executive officer, or his or her designee (Lexicon’s “Designated
Representative”) relating to (i) matters previously within the scope of your
employment with the Company, including, without limitation, the Company’s
clinical development of LX4211 for type 1 and type 2 diabetes, and (ii) such
other consulting and advisory services as you and the Company may agree. You
will devote up to 24 days annually during the first two years of the term hereof
and up to 12 days annually during the following three years of the term hereof
to providing such services to the Company under this Agreement, on a schedule
and at times reasonably agreed upon by you and the Designated Representative.
You agree to provide the Company with written quarterly reports detailing the
number of days (reported in half-day increments) devoted to providing services
under this Agreement during the prior quarter.

2.Compensation. As full consideration for your services as a consultant to the
Company and your obligations under this Agreement, you will receive fees of
$100,000 per year for the first two years of the term hereof and fees of $50,000
per year for the following three years of the term hereof, in each case payable
in 12 monthly installments. In addition, you will be reimbursed for your
reasonable, ordinary and necessary out-of-pocket expenses for attendance at
in-person meetings or otherwise incurred at the Company’s request in connection
with your performance of consulting or advisory services under this Agreement.
To the extent applicable, each installment payment payable pursuant to this
Agreement shall be treated as a separate payment for purposes of section 409A of
the Internal Revenue Code of 1986, as amended.

3.Confidential Information.

(a)In the course of your service as a consultant to the Company, you may learn
or be exposed, orally, visually, electronically or in writing, to inventions,
discoveries, improvements, materials, data, technology, processes, formulas,
know-how, trade secrets, ideas and other information which we consider
proprietary or confidential (“Confidential Information”). You agree to hold any
Confidential Information disclosed to you by the Company or learned by you from
the Company in conjunction with your services under this Agreement in strict
confidence and to take all reasonable precautions to protect such Confidential
Information, not to disclose any such Confidential Information to any third
party, and to use such Confidential Information only in furtherance of your
services under this Agreement; provided that your nondisclosure obligation shall
not apply to the extent such Confidential Information (i) is already in the
public domain or hereafter enters the public domain other than through your acts
or omissions in violation of this Agreement; (ii) is already known to you, as
may be shown by competent written records; (iii) is hereafter received by you
without restriction as to confidentiality or use from a third party lawfully
entitled so to disclose same in such manner; or (iv) is hereafter generated by
you, other than in performance of your services under this Agreement, without
the use of any Confidential Information, facilities or personnel of the Company.
Information shall not be deemed to be within the foregoing exceptions merely
because such information is embraced by more

--------------------------------------------------------------------------------

general information in the public domain or in your possession. All Confidential
Information (and any copies and notes thereof) shall remain the sole property of
the Company.

(b)You agree not to disclose or otherwise make available to the Company any
information that you possess under an obligation of confidentiality to a third
party. You may disclose to the Company any information made available generally
to the scientific community at large through published reports or public
presentations prior to disclosure to the Company.

4.Inventions and Discoveries.

(a)You hereby assign and transfer to the Company all of your right, title and
interest throughout the world in all inventions, discoveries, improvements,
materials, data, works of authorship and other intellectual property, whether or
not patentable or subject to copyright, which may be made, written or conceived
by you in the course of, or arising as a result of, your performance of your
services as a consultant to the Company, in whole or in part and whether alone
or in conjunction with others (collectively, “Intellectual Property”). All such
Intellectual Property shall be the sole property of the Company or its nominee.

(b)You shall promptly disclose any Intellectual Property in writing to the
Company in order to permit the Company to claim rights to which it may be
entitled under this Agreement. The Company shall have full power and authority
to file and prosecute patent applications and copyright registrations throughout
the world with respect to all Intellectual Property, and to procure and maintain
patents and copyrights with respect thereto. You agree, at the Company’s
reasonable request and expense, to sign, execute and acknowledge, or cause to be
signed, executed and acknowledged, any applications, assignments, instruments
and other documents, and to perform such other acts, as the Company may deem
necessary, useful or convenient to confirm and vest in the Company or its
nominee all right, title and interest throughout the world in and to any
Intellectual Property and all patent, copyright and other intellectual property
rights and protections therein, and to assist the Company in procuring,
maintaining, enforcing and defending such patent, copyright and other
intellectual property rights and protections throughout the world. You agree to
treat all such Intellectual Property as Confidential Information under this
Agreement.

5.Conflicting Engagements.

(a)During your service as a consultant to the Company, you agree that you will
not, without previously notifying the Company in writing, directly or
indirectly, become associated with, render advisory, consulting or other
services to, or become employed by any other person or entity engaging in the
clinical development of a drug (i) in direct conflict or competition with a
Phase 3 drug development program being conducted by the Company or (ii) which
inhibits or otherwise modulates a drug target that is the subject of any drug
development program which has been or is being conducted by the Company or any
drug discovery program to which the Company is devoting or has devoted material
resources (collectively referred to as “Third Party Competitors”). You agree to
disclose to the Company any proposed relationship with a Third Party Competitor
(a “Proposed Relationship”) at least 30 days prior to the establishment of a
confidential relationship between you and such Third Party Competitor. Upon such
disclosure, the Company may consent to the Proposed Relationship in writing, may
proffer written consent subject to condition precedent regarding certain
restrictions on the scope and/or field of the Proposed Relationship, or may
terminate this Agreement.

(b)Subject to your obligations with respect to Confidentiality and Intellectual
Property under Sections 3 and 4 of this Agreement, nothing in this Agreement
shall prohibit you from continuing your duties under any consulting or advisory
agreement that predates this Agreement, and which has been disclosed to the
Company in writing prior to the effective date of this Agreement.

6.Term and Termination. You will render your advisory and consulting services to
the Company for an initial period of five years commencing on July 7, 2014, at
which time this Agreement will terminate unless renewed by mutual written
consent. This Agreement may be terminated (i) at any time by you, with or
without cause, upon 30 days’ advance written notice to the Company and (ii) by
either party for breach of this Agreement by the other party

--------------------------------------------------------------------------------

that, where curable, is not cured within 10 business days after written notice
of such breach is delivered to the breaching party.

7.Independent Contractor. For purposes of this Agreement, you will be deemed an
independent contractor and not an employee or agent of Lexicon. In this
connection, you will not be eligible for, nor entitled to, any employee benefits
that we normally extend to our employees, and we will not withhold any taxes
from the compensation paid to you, all of which shall be your responsibility.
The manner in which you render your services under this Agreement will be within
your reasonable control and discretion. You have no express or implied authority
to incur any liability, or to make any decision or to create any binding
obligation, on our behalf.

8.Compliance with Laws and Procedures. To the extent you provide services under
this Agreement on our premises, you agree to observe our business hours, as well
as our rules, policies and security procedures concerning conduct and the
health, safety and protection of persons and property. You will comply with all
applicable governmental laws, ordinances, rules and regulations applicable to
the performance of your services under this Agreement.

9.Governing Law. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Texas as they apply to contracts
entered into and wholly to be performed in Texas.

10.Enforcement. You agree that a breach of any of the restrictions set forth in
the provisions of this Agreement would cause the Company irreparable injury and
damage, and that, in the event of any breach or threatened breach, the Company,
in addition to all other rights and remedies at law or in equity, shall have the
right to enforce the specific performance of such restrictions and to apply for
injunctive relief against their violation.

11.Survival of Terms. The provisions of Sections 3, 4 and 9 through 17 hereof
shall survive termination of this Agreement.

12.Successors and Assigns. You may not assign this Agreement without the written
consent of the Company. This Agreement shall be binding on your heirs,
executors, administrators and legal representatives and the Company’s successors
and assigns.

13.Severability. The invalidity or unenforceability of any provision of this
Agreement (or portion thereof) shall not affect the validity or enforceability
of any other provision of this Agreement, and if such provision (or portion
thereof) is so broad as to be unenforceable, it shall be interpreted to be only
as broad as is enforceable.

14.Entire Agreement. This Agreement (together with the Employment Agreement
between you and the Company, dated October 15, 1999, as amended) constitutes the
sole and complete agreement of the parties with respect to the matters included
herein, and supersedes any previous oral or written agreement, if any, relating
to the subject matters included herein.

15.Amendment and Waiver. This Agreement may not be amended or supplemented in
any way, nor may the benefit of any provision hereof be waived, except by a
written agreement duly executed by both you and the Company.

16.No Conflict. You represent that the performance of your obligations and
duties under this Agreement does not conflict with any obligations or duties,
express or implied, that you may have to third parties.

17.Construction. Each party to this Agreement has had the opportunity to review
this Agreement with legal counsel. This Agreement shall not be construed or
interpreted against any party on the basis that such party drafted or authored a
particular provision, parts of or the entirety of this Agreement.

--------------------------------------------------------------------------------

If the foregoing correctly sets forth our mutual understanding, please so
indicate by signing this letter in the space provided below and return it to the
Company at the above address, whereupon this Agreement shall constitute a
binding contract between us and our legal representatives, successors, and
assigns.

 
Very truly yours,
 
 
 
Lexicon Pharmaceuticals, Inc.
 
 
 
 
 
 
 
 
 
By:
/s/ Raymond Debbane
 
 
Raymond Debbane
 
 
Chairman of the Board of Directors
 
 
 

Accepted and agreed to on the date set forth below:

 
 
 
 
 
 
By:
/s/ Arthur T. Sands
 
 
Arthur T. Sands, M.D., Ph.D.
 
 
 
 
Date:
July 7, 2014