View:
[Lexicon Pharmaceuticals, Inc. Letterhead]
February
21, 2008
Securities
and Exchange Commission
Division
of Corporate Finance
100 F
Street, N.E.
Washington,
D.C. 20549
Attention: Mr.
Mark Brunhofer
Division
of Corporate Finance
Re: Lexicon
Pharmaceuticals, Inc.
Form 10-K
for the fiscal year ended December 31, 2006
Form 10-Q
for the quarterly period ended September 30, 2007
File No.
000-30111
Dear Mr.
Brunhofer:
On behalf
of Lexicon Pharmaceuticals, Inc., we have set forth our responses to the oral
comments received from the Securities and Exchange Commission’s staff on
February 13, 2008 regarding our annual report on Form 10-K for the fiscal year
ended December 31, 2006 and our quarterly report on Form 10-Q for the quarterly
period ended September 30, 2007. For your convenience, we have
summarized each comment prior to the response.
Form 10-Q for the Quarterly
Period Ended September 30, 2007
Notes to Consolidated
Financial Statements
Note
7: Arrangements with Symphony Icon, Inc., page 9
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1.
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Please
provide us the disclosure you intend to include in your future filings
with respect to the recording of the value of the purchase option as an
asset rather than a charge to minority
interests.
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Response:
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In
future filings beginning in the Form 10-K for the year ended
December 31, 2007, we propose to disclose in a footnote to our
financial statements the following
statement:
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Lexicon
has calculated the value of the Purchase Option as the difference between the
fair value of the common stock issued to Holdings of $23.6 million and the $15.0
million in cash received from Holdings for the issuance of the common
stock. Lexicon has recorded the value of the Purchase Option as an
asset, and is amortizing this asset over the four-year option
period. The unamortized balance of $7.4 million is recorded in other
assets in the accompanying consolidated balance sheet as of December 31,
2007, and the amortization expense of $1.2 million is recorded in other
expense, net in the accompanying consolidated statement of operations for the
year ended December 31, 2007.
Note
8: Agreements with Invus, L.P., page 10
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2.
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Please
provide us the disclosure you intend to include in your future filings
indicating that you assessed whether the rights offerings should be
treated as liabilities or equity instruments under
EITF 00-19.
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Response:
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In
future filings beginning in the Form 10-K for the year ended
December 31, 2007, we propose to disclose in a footnote to our
financial statements the following
statement:
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Lexicon
has determined that the First Rights Offering and the Second Rights Offering
should be treated as equity instruments in accordance with EITF 00-19,
“Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock,” and accordingly has not recorded a liability
for the future settlement of any rights offerings.
If you
have any further questions or require additional information, please do not
hesitate to contact me at (281) 863-3321.
Very
truly yours,
/s/ Jeffrey L. Wade
Jeffrey
L. Wade
Executive
Vice President and
General
Counsel