What happened Lexicon Pharmaceuticals (NASDAQ: LXRX) ended Friday 6% lower than the previous close. A fall seemed inevitable, as the company announced a rather dilutive new secondary common stock issue at a level below the shares' Thursday closing price. So what Lexicon, a biotech focused on developing drugs underpinned by extensive gene research, said it will float just over 20.3 million new shares in a registered direct offering to three privately held entities. The price is $3.20 apiece. All told, if successful the gross proceeds of the issue will be $65 million. Image source: Getty Images. The placement agent is Citigroup Global Markets, and the issue is expected to close on or about next Wednesday, Dec. 16. In its announcement, Lexicon did not specify how it would utilize its share of the proceeds -- perhaps one reason why investors sold off the stock. Another more obvious inducement to sell is the high level of shareholder dilution that will occur with this new issue. At the moment, the company's market capitalization is a shade above $373 million, so swelling that by $65 million is going to have an impact. Now what As Lexicon is a biotech with a small clutch of pipeline drugs aimed at treating ailments such as diabetes and heart afflictions, it will surely use the funds to maintain or expand those programs in some way. The company has provided little detail, however, and that uncertainty seems to be adding to negative sentiment on the stock. 10 stocks we like better than Lexicon PharmaceuticalsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Lexicon Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of November 20, 2020 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source