Exhibit 10.3

First Amendment
to Collaboration and License Agreement

This First Amendment to Collaboration and License Agreement (the “Amendment”) is
entered into effective as of the last date set forth on the signature page
hereof (the “Effective Date”) by and between Lexicon Genetics Incorporated, a
Delaware corporation (“Lexicon”) and Bristol-Myers Squibb Company, a Delaware
corporation (“BMS”).

R E C I T A L S

WHEREAS, Lexicon and BMS are parties to that certain Collaboration and License
Agreement dated December 17, 2003 (the “Collaboration Agreement”);

WHEREAS, BMS desires to exercise its option to extend the Target Discovery
Program Term under Section 2.2.2(a) of the Collaboration Agreement; and

WHEREAS, Lexicon and BMS desire to amend the Collaboration Agreement as set
forth in this Amendment.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Lexicon and BMS hereby agree as follows:

1.    The terms in this Amendment with initial letters capitalized shall have
the meaning set forth in this Amendment and if not defined in this Amendment
shall have the meaning set forth in the Collaboration Agreement. Unless
otherwise expressly stated, the Sections referred to herein refer to the
Sections in the Collaboration Agreement.

2.    BMS hereby provides notice to Lexicon in accordance with Section 2.2.2
that BMS hereby exercises its option to extend the Target Discovery Program Term
under Section 2.2.2 subsection (a) of the Collaboration Agreement.

3.    Section 2.2 of the Collaboration Agreement is hereby amended such that the
decision to carry out Level 2 Phenotypic Analysis with respect to a Target may
be based on information, other than or in addition to Level 1 Phenotypic
Analysis, that is suggestive, as determined by the Joint Scientific Committee,
of the potential utility of the Target in the CNS Field. Any such determination
by the Joint Scientific Committee with respect to a given Target shall be
recorded in the meeting minutes of the Joint Scientific Committee. In accordance
with the foregoing, Sections 2.2.1 and 2.2.2 of the Collaboration Agreement are
deleted in their entirety and replaced with the following:

2.2.1    Generation and Analysis of Mutant Mice. In the Target Discovery
Program, Lexicon shall complete (a) the development and Level 1 Phenotypic
Analysis of Four Thousand (4,000) lines of Mutant Mice and (b) Level 2
Phenotypic Analysis of such lines of Mutant Mice, from the first Three Thousand
(3,000) lines of Mutant Mice for which Level 1 Phenotypic Analysis was
completed, (1) that displayed a phenotype suggestive, as determined by the Joint
Scientific Committee, of the potential utility of the corresponding Target in
the CNS Field or (2) with respect to which any other information is identified,
including but not limited to expression levels in brain tissues, that is
suggestive, as determined by the Joint Scientific Committee, of the potential
utility of the corresponding Target in the CNS Field. All lines of Mutant Mice
developed by Lexicon prior to the Effective Date (including but not limited to
those for which Level 1 Phenotypic Analysis and/or Level 2 Phenotypic Analysis
was completed prior to the Effective Date), with the exception of LG617, shall
be included in the Target Discovery Program. Lexicon shall use Diligent Efforts
to complete such work by the end of the third Contract Year of the Research Term
and, if necessary, shall continue to use Diligent Efforts thereafter until such
work is complete, without further annual research funding by BMS (subject to
Section 2.2.2). The Target Discovery Program Term shall continue until such work
is complete.

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2.2.2    Target Discovery Program Term. The Target Discovery Program shall
continue until the end of the third Contract Year of the Research Program Term
(and thereafter until the work set forth in Section 2.2.1 is completed) (the
“Target Discovery Program Term”); provided that BMS shall have the option to
extend the Target Discovery Program Term for an additional two Contract Years
(which two-year period may be further extended as set forth below) on the terms
set forth below:

(a)    BMS may extend the Target Discovery Program to include the completion by
Lexicon in the Target Discovery Program of (i) the development and Level 1
Phenotypic Analysis of Four Thousand (4,000) lines of Mutant Mice (to the extent
not already completed by the end of the third Contract Year of the Research
Program Term) and (ii) Level 2 Phenotypic Analysis of such lines of Mutant Mice,
from such Four Thousand (4,000) lines of Mutant Mice, (1) that displayed a
phenotype suggestive, as determined by the Joint Scientific Committee, of the
potential utility of the corresponding Target in the CNS Field or (2) with
respect to which any other information is identified, including but not limited
to expression levels in brain tissues, that is suggestive, as determined by the
Joint Scientific Committee, of the potential utility of the corresponding Target
in the CNS Field. Lexicon shall use Diligent Efforts to complete such work by
the end of the fifth Contract Year of the Research Term and, if necessary, shall
continue to use Diligent Efforts thereafter until such work is complete, without
further annual research funding by BMS. The Target Discovery Program Term shall
continue until such work is complete.

(b)    BMS may extend the Target Discovery Program to include the completion by
Lexicon in the Target Discovery Program of (i) the development and Level 1
Phenotypic Analysis of Five Thousand (5,000) lines of Mutant Mice and (ii) Level
2 Phenotypic Analysis of such lines of Mutant Mice, from such Five Thousand
(5,000) lines of Mutant Mice, (1) that displayed a phenotype suggestive, as
determined by the Joint Scientific Committee, of the potential utility of the
corresponding Target in the CNS Field or (2) with respect to which any other
information is identified, including but not limited to expression levels in
brain tissues, that is suggestive, as determined by the Joint Scientific
Committee, of the potential utility of the corresponding Target in the CNS
Field. Lexicon shall use Diligent Efforts to complete such work by the end of
the fifth Contract Year of the Research Term and, if necessary, shall continue
to use Diligent Efforts thereafter until such work is complete, without further
annual research funding by BMS. The Target Discovery Program Term shall continue
until such work is complete.

BMS may exercise the foregoing option by delivery to Lexicon of written notice
of such exercise (specifying the subsection above under which such option is
being exercised) no fewer than one hundred twenty (120) days before the end of
the third Contract Year of the Research Program Term.

4.    Section 2.6.2 of the Collaboration Agreement is hereby amended and
restated in its entirety as follows:

2.6.2    During the Target Discovery Program Term, Lexicon shall work
exclusively with BMS and shall not enter into any discussions or agreements with
any Third Party with respect to activities directed to the identification of
novel Targets for the identification and development of Small Molecule Compounds
for use in the CNS Field, provided that Lexicon may pursue discussions and enter
agreements with Third Parties with respect to Released Targets and Inactive
Selected Targets that the parties have agreed to out-license. Notwithstanding
the foregoing, in the event BMS exercises its option to extend the Target
Discovery Program Term under Section 2.2.2(a), at any time following the end of
the fourth Contract Year, Lexicon may enter into discussions with Third Parties
with respect to Targets other than those corresponding to the lines of Mutant
Mice for which Level 1 Phenotypic Analysis and, as applicable, Level 2
Phenotypic Analysis is to be completed in accordance with such extension. During
the Target Discovery Program Term, Lexicon shall work exclusively with BMS under
the terms of the Agreement with respect to all Targets identified as of the
Effective Date by Lexicon or thereafter by Lexicon or by the Joint Scientific
Committee under Section 2.2.1 as having potential utility in the CNS Field, with
the exception of Lexicon’s LG617 Target (which is subject to Section 4.4) and
Released Targets. Notwithstanding the foregoing, in the event BMS exercises its
option to extend the Target Discovery Program Term under Section 2.2.2(a), the
foregoing obligation shall not be deemed to restrict Lexicon from working
internally with respect to Targets other than those corresponding to the lines
of Mutant

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Mice for which Level 1 Phenotypic Analysis and, as applicable, Level 2
Phenotypic Analysis is to be completed in accordance with such extension;
provided that (i) during the initial Target Discovery Program Term (i.e., prior
to giving effect to any such extension) and continuing until the Joint
Scientific Committee determines that Lexicon has completed such Level 1
Phenotypic Analysis for 4,000 lines of Mutant Mice corresponding to 4,000
Targets in accordance with Section 2.2, Lexicon shall not knowingly exclude any
Targets from being included in such group of 4,000 Targets in a manner that
conflicts with the objectives of the Target Discovery Program to identify
Targets having potential utility in the CNS Field and (ii) Lexicon shall not
work internally to perform any Level 2 Phenotypic Analysis to identify Targets
having potential utility in the CNS Field (other than in support of the Target
Discovery Program) to the extent that such activity would limit or otherwise
compromise the efforts and resources that Lexicon devotes to performing and
completing the Level 2 Phenotypic Analysis in support of the Target Discovery
Program.

5.    This Amendment shall not amend or modify the covenants, terms, conditions,
rights and obligations of the parties under the Collaboration Agreement, except
as specifically set forth herein. The Collaboration Agreement shall continue in
full force and effect in accordance with its terms as amended by this Amendment.
This Amendment shall not amend or modify the covenants, terms, conditions,
rights and obligations of the parties under any other agreement between the
parties, including, without limitation, the following agreements relating to the
Collaboration Agreement, which shall continue in full force and effect in
accordance with their terms: (a) that certain letter agreement dated January 20,
2006 under which Lexicon provided BMS with a list of certain Targets to be
evaluated as potential Selected Targets under the Collaboration Agreement; (b)
that certain Compound Transfer and License Agreement effective August 1, 2005
governing the transfer of certain compounds between the parties for use in
screening against Selected Targets and/or for use in support of follow up
medicinal chemistry efforts by the recipient party in the performance of the
Research Program pursuant to the Collaboration Agreement; (c) that certain
Material Transfer Agreement effective May 17, 2005 for the transfer to BMS by
Lexicon of materials for testing to determine A-beta levels in support of the
Target Discovery Program, in connection with the Collaboration Agreement; (d)
that certain License Agreement dated as of March 15, 2005 relating to the use of
certain BMS intellectual property in support of research and development
activities under the Collaboration Agreement; and (e) that certain letter
agreement dated February 24, 2005 concerning the Target identified by Lexicon as
LG324, in connection with the Collaboration Agreement.
6.    This Agreement may be executed in counterparts, each of which shall be
deemed an original, but both of which together shall constitute one and the same
instrument.

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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute and deliver this Agreement as of the Effective Date.

Bristol-Myers Squibb Company
 
 
 
By:
 
 
 
(Signature of Authorized Representative)
 
 
 
Printed Name:
 
 
 
 
Title:
 
 
 
 
 
Date:
 
 
 
 
 

Lexicon Genetics Incorporated
 
 
 
By:
 
 
 
(Signature of Authorized Representative)
 
 
 
Printed Name:
 
 
 
 
Title:
 
 
 
 
 
Date: