0001062822-22-000042 | 10-Q | XBRL Viewer | Lexicon Pharmaceuticals INC

Other Capital Agreements (Details) shares in Thousands	3 Months Ended
Other Capital Agreements (Details) shares in Thousands	Sep. 30, 2022 shares
Equity [Abstract]
Shares sold in July 2022 Offering	39,100

Consolidated Balance Sheets Parentheticals - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Consolidated Balance Sheets [Abstract]
Accumulated depreciation and amortization, property and equipment	$ 5,177	$ 4,853
Preferred stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	300,000	300,000
Common stock, shares issued	189,214	150,082
Treasury stock, shares	488	1,165

Summary of Significant Accounting Policies Stock-based Compensation Summary (Details 1) - $ / shares shares in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	12,182	8,367
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 5.28	$ 6.80
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	4,587
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 3.05
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	163
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price	$ 12.50
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	609
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 7.41
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	5,728
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 7.18
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	2,773	1,854
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 3.15	$ 5.16
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	2,185
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 2.25
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	1,012
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	$ 4.86
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	254
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value	$ 3.47

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2022
Summary of Significant Accounting Policies [Abstract]
Consolidation, Policy [Policy Text Block]	The accompanying condensed consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.
Use of Estimates, Policy [Policy Text Block]	Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Cash and Cash Equivalents, Policy [Policy Text Block]	Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2022 and December 31, 2021, short-term investments consisted of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations as they all contain maturities of less than one year. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method.
Revenue [Policy Text Block]	Revenue Recognition: The Company performs the following five steps in determining the amount of revenue to recognize as its performance obligations under each of its contracts with customers: (i) identify the contract(s) with a customer; (ii) identify the performance obligation in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. At contract inception, the Company evaluates whether development milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the associated development milestone value is included in the transaction price. Development milestones that are not within the control of the Company or the licensee, including those requiring regulatory approval, are not considered probable of being achieved until those milestones are achieved. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue when (or as) the performance obligation is satisfied. At the end of each reporting period, the Company re-evaluates the probability of achievement of the development milestones and any related constraint, and if necessary, adjusts its estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment. In agreements in which a license to the Company’s intellectual property is determined distinct from other performance obligations identified in the agreement, the Company recognizes revenue when the license is transferred to the licensee and the licensee is able to use and benefit from the license. The Company may receive payments from its licensees based on billing schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under the relevant agreement. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.
Research and Development Expense, Policy [Policy Text Block]	Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred. Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.
Share-based Payment Arrangement [Policy Text Block]	Stock-Based Compensation: The Company recognizes compensation expense in its condensed consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units granted to employees, based on their fair values on the date of the grant, with the compensation expense recognized over the period in which an employee is required to provide service in exchange for the stock award. Stock-based compensation expense for awards without performance conditions is recognized on a straight-line basis. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met. The fair value of stock options is estimated at the date of grant using the Black-Scholes method. The Black-Scholes option-pricing model requires the input of subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in a change in the assumptions used for expected option lives. Historical data is used to estimate the expected option life for each group. Expected volatility is based on the historical volatility in the Company’s stock price.
Earnings Per Share, Policy [Policy Text Block]	Net Loss per Common Share: Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive.

- Definition

Disclosure of accounting policy for award under share-based payment arrangement. Includes, but is not limited to, methodology and assumption used in measuring cost.

+ References + Details

Consolidated Statements of Stockholders' Equity/Deficit-Unaudited - USD ($) shares in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Gain (Loss)	Treasury Stock
Balance, shares at Dec. 31, 2020		142,289
Balance, value at Dec. 31, 2020	$ 156,371,000	$ 142,000	$ 1,561,096,000	$ (1,400,018,000)	$ (6,000)	$ (4,843,000)
Stock-based compensation	2,851,000	$ 0	2,851,000	0	0	0
Issuance of common stock under Equity Incentive Plans, shares		2,000
Issuance of common stock under Equity Incentive Plans, value	(16,399,000)	$ (2,000)	(16,397,000)	0	0	0
Repurchase of common stock	(2,675,000)	0	0	0	0	(2,675,000)
Net loss		0	0	(20,958,000)	0	0
Unrealized gain on investments	11,000	$ 0	0	0	11,000	0
Balance, shares at Mar. 31, 2021		145,552
Balance, value at Mar. 31, 2021	152,547,000	$ 145,000	1,580,891,000	(1,420,976,000)	5,000	(7,518,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		1,263
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	548,000	$ 1,000	547,000	0	0	0
Balance, shares at Dec. 31, 2020		142,289
Balance, value at Dec. 31, 2020	156,371,000	$ 142,000	1,561,096,000	(1,400,018,000)	(6,000)	(4,843,000)
Net loss	(62,147,000)
Unrealized gain on investments	1,000
Balance, shares at Sep. 30, 2021		149,987
Balance, value at Sep. 30, 2021	136,603,000	$ 150,000	1,606,142,000	(1,462,165,000)	(6,000)	(7,518,000)
Stock Issued During Period, Value, Treasury Stock Reissued	0
Balance, shares at Mar. 31, 2021		145,552
Balance, value at Mar. 31, 2021	152,547,000	$ 145,000	1,580,891,000	(1,420,976,000)	5,000	(7,518,000)
Stock-based compensation	2,786,000	0	2,786,000	0	0	0
Payments of Stock Issuance Costs	(31,000)	0	(31,000)	0	0	0
Net loss		0	0	(18,067,000)	0	0
Unrealized gain on investments	(10,000)	$ 0	0	0	(10,000)	0
Balance, shares at Jun. 30, 2021		145,640
Balance, value at Jun. 30, 2021	137,233,000	$ 146,000	1,583,653,000	(1,439,043,000)	(5,000)	(7,518,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		88
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	8,000	$ 1,000	7,000	0	0	0
Stock-based compensation	2,712,000	$ 0	2,712,000	0	0	0
Issuance of common stock under Equity Incentive Plans, shares		4,177
Issuance of common stock under Equity Incentive Plans, value	(19,123,000)	$ (4,000)	(19,119,000)	0	0	0
Net loss	(23,122,000)	0	0	(23,122,000)	0	0
Unrealized gain on investments	(1,000)	$ 0	0	0	(1,000)	0
Balance, shares at Sep. 30, 2021		149,987
Balance, value at Sep. 30, 2021	136,603,000	$ 150,000	1,606,142,000	(1,462,165,000)	(6,000)	(7,518,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		170
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	$ 658,000	$ 0	658,000	0	0	0
Balance, shares at Dec. 31, 2021	150,082	150,082
Balance, value at Dec. 31, 2021	$ 113,595,000	$ 150,000	1,608,749,000	(1,487,776,000)	(10,000)	(7,518,000)
Stock-based compensation	2,772,000	$ 0	2,772,000	0	0	0
Issuance of common stock under Equity Incentive Plans, shares		0
Issuance of common stock under Equity Incentive Plans, value	(864,000)	$ 0	0	0	0	864,000
Net loss	(23,476,000)	0	0	(23,476,000)	0	0
Unrealized gain on investments	(27,000)	$ 0	0	0	(27,000)	0
Balance, shares at Mar. 31, 2022		150,082
Balance, value at Mar. 31, 2022	92,698,000	$ 150,000	1,605,898,000	(1,511,252,000)	(37,000)	(2,061,000)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures		0
Shares Issued, Value, Share-based Payment Arrangement, after Forfeiture	698,000	$ 0	698,000	0	0	0
Stock Issued During Period, Value, Treasury Stock Reissued	$ 0	$ 0	(6,321,000)	0	0	(6,321,000)
Stock Issued During Period, Shares, Treasury Stock Reissued		0
Balance, shares at Dec. 31, 2021	150,082	150,082
Balance, value at Dec. 31, 2021	$ 113,595,000	$ 150,000	1,608,749,000	(1,487,776,000)	(10,000)	(7,518,000)
Net loss	(71,450,000)
Unrealized gain on investments	$ (481,000)
Balance, shares at Sep. 30, 2022	189,214	189,214
Balance, value at Sep. 30, 2022	$ 144,018,000	$ 189,000	1,705,607,000	(1,559,226,000)	(491,000)	(2,061,000)
Stock Issued During Period, Value, Treasury Stock Reissued	(6,321)
Balance, shares at Mar. 31, 2022		150,082
Balance, value at Mar. 31, 2022	92,698,000	$ 150,000	1,605,898,000	(1,511,252,000)	(37,000)	(2,061,000)
Stock-based compensation	2,832,000	$ 0	2,832,000	0	0	0
Issuance of common stock under Equity Incentive Plans, shares		32
Issuance of common stock under Equity Incentive Plans, value	0	$ 0	0	0	0	0
Net loss	(24,587,000)	0	0	(24,587,000)	0	0
Unrealized gain on investments	(113,000)	$ 0	0	0	(113,000)	0
Balance, shares at Jun. 30, 2022		150,114
Balance, value at Jun. 30, 2022	70,830,000	$ 150,000	1,608,730,000	(1,535,839,000)	(150,000)	(2,061,000)
Stock-based compensation	2,648,000	$ 0	2,648,000	0	0	0
Issuance of common stock under Equity Incentive Plans, shares		39,100
Issuance of common stock under Equity Incentive Plans, value	(94,268,000)	$ (39,000)	(94,229,000)	0	0	0
Net loss	(23,387,000)	0	0	(23,387,000)	0	0
Unrealized gain on investments	$ (341,000)	$ 0	0	0	(341,000)	0
Balance, shares at Sep. 30, 2022	189,214	189,214
Balance, value at Sep. 30, 2022	$ 144,018,000	$ 189,000	$ 1,705,607,000	$ (1,559,226,000)	$ (491,000)	$ (2,061,000)

Other Capital Agreements	9 Months Ended
Other Capital Agreements	Sep. 30, 2022
Equity [Abstract]
Other Capital Agreements	Other Capital Agreements Common Stock: In 2020, Lexicon entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) relating to the shares of its common stock. In January 2021, Lexicon sold 2,000,000 shares of its common stock at a price of $8.463 per share pursuant to the Sales Agreement, resulting in net proceeds of $16.4 million. In August and September 2021, Lexicon sold an aggregate of 4,176,953 shares of its common stock at a price of $4.732 per share pursuant to the Sales Agreement, resulting in net proceeds of $19.1 million. The net proceeds are reflected as issuances of common stock in the accompanying condensed consolidated financial statements. In August 2022, Lexicon sold an aggregate of 39,100,000 shares of its common stock at a price of $2.50 per share in a public offering and concurrent private placement to two affiliates of Invus, L.P., resulting in net proceeds of approximately $94.3 million, after deducting underwriting discounts and commissions and estimated offering expenses.

Commitments and Contingencies (Details)	Sep. 30, 2022 USD ($)
Other Commitments [Line Items]
Long-term Debt and Lease Obligation	$ 5,438,000
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months	292,000
Lessee, Operating Lease, Liability, Payments, Due Year Two	805,000
Lessee, Operating Lease, Liability, Payments, Due Year Three	1,378,000
Lessee, Operating Lease, Liability, Payments, Due Year Four	1,219,000
Lessee, Operating Lease, Liability, to be Paid, Year Five	865,000
Lessee, Operating Lease, Liability, Payments, Due after Year Five	6,525,000
Lessee, Operating Lease, Liability, Payments, Due	11,084,000
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	4,240,000
Operating Lease, Liability	6,844,000
Short-term Lease Commitment, Amount	1,400,000
Operating Lease, Right-of-Use Asset	$ 7,100,000

Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value
Cash and Cash Equivalents	$ 18,834	$ 64,065
Debt Securities, Available-for-Sale, Current	117,369
Short-term Investments		22,678
Total Cash and Cash Equivalents and Investments	136,203	86,743
Fair Value, Level 1
Fair Value
Cash and Cash Equivalents	18,834	64,065
Debt Securities, Available-for-Sale, Current	97,599
Short-term Investments		7,561
Total Cash and Cash Equivalents and Investments	116,433	71,626
Fair Value, Level 2
Fair Value
Cash and Cash Equivalents	0	0
Debt Securities, Available-for-Sale, Current	19,770
Short-term Investments		15,117
Total Cash and Cash Equivalents and Investments	19,770	15,117
Fair Value, Level 3
Fair Value
Cash and Cash Equivalents	0	0
Debt Securities, Available-for-Sale, Current	0
Short-term Investments		0
Total Cash and Cash Equivalents and Investments	$ 0	$ 0

Summary of Significant Accounting Policies Stock-based Compensation Valuation (Details)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Lexicon incremental borrowing rate	970.00%		900.00%
Equity Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, ExpectedVolatilityRate, Employees	107.00%	102.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Employee	2.40%	0.60%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term, Employees	4 years	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate, Employees	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Officers and Non-employee Directors	91.00%	90.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Officers and Non-employee Directors	1.90%	1.10%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term, Officers and Non-employee Directors	7 years	7 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate, Officers and Non-employee Directors	0.00%	0.00%

Debt Obligations	9 Months Ended
Debt Obligations	Sep. 30, 2022
Debt Obligations [Abstract]
Debt Disclosure	Debt Obligations On March 17, 2022, Lexicon and one of its subsidiaries entered into a loan and security agreement with Oxford Finance LLC (“Oxford”) that provides up to $150 million in borrowing capacity (the “Oxford Term Loans”) available in four tranches, each maturing in March 2027. Monthly interest-only payments are due during an initial 36-month period, which may be extended at Lexicon’s option to 48 months if Lexicon maintains compliance with a financial covenant relating to net sales of sotagliflozin following regulatory approval. The interest-only period will be followed by an amortization period extending through the maturity date. Principal payments of $8.7 million, $13.0 million, and $4.8 million will be due during the fiscal years ended December 31, 2025, December 31, 2026 and December 31, 2027, respectively, with respect to the first tranche. The first $25 million tranche was funded at closing. The second $25 million tranche is available for draw at Lexicon’s option from December 1 through December 31, 2022. The third $50 million tranche is available for draw at Lexicon’s option prior to June 30, 2023, but within 60 days of U.S. regulatory approval of sotagliflozin for heart failure. The fourth $50 million tranche is available for draw at Lexicon’s option, subject to Oxford’s consent, at any time prior to the expiration of the interest-only payment period. The loan and security agreement provides that, upon funding of the first three tranches, Lexicon will grant Oxford a warrant to purchase shares of its common stock having a value equal to 3.50%, 1.75% and 0.875%, respectively, of each such tranche, as determined by reference to a 10-day average closing price of the shares. Each warrant will have an exercise price equal to such average closing price, be exercisable for a five-year period from the date of issuance and feature a net cashless exercise provision. Concurrent with the funding of the first tranche, Lexicon granted Oxford a warrant to purchase 420,673 shares of Lexicon’s common stock at an exercise price of $2.08 per share. The warrant is exercisable through March 1, 2027 and is classified as an equity instrument. The Company allocated the proceeds from the first tranche to the warrant using the relative fair value method and used the Black-Scholes model to calculate the fair value of the warrants. The fair value of the warrant of $0.7 million was recognized as equity with a corresponding debt discount of $0.7 million. The Oxford Term Loans bear interest at a floating rate equal to the 30-day U.S. Dollar LIBOR plus 7.90%, but not less than 8.01%, subject to additional interest if an event of default occurs and is continuing. As of September 30, 2022, the interest rate was 10.45%. If an event of default occurs and is continuing, Oxford may declare all amounts outstanding under the loan and security agreement to be immediately due and payable. Lexicon may prepay the Oxford Term Loans in whole at its option at any time. Any prepayment of the Oxford Term Loans is subject to prepayment fees for up to three years after the funding of each tranche of the loans. A final payment exit fee equal to 6% of the amount funded under the Oxford Term Loans is due upon prepayment or maturity, which final payment will be adjusted to 7% of the amount funded upon extension of the interest-only payment period. The final payment exit fee of $1.5 million was recorded as a debt discount on the closing date of the first tranche. During March 2022, in connection with the first tranche of the loan and security agreement, the Company received cash proceeds of $24.2 million, net of debt issuance costs of $0.4 million and a facility fee of $0.5 million. The debt issuance costs and facility fee have been recorded as a debt discount on the condensed consolidated balance sheet, which together with the final payment exit fee of $1.5 million and warrant fair value of $0.7 million are being amortized to interest expense throughout the life of the term loan using the effective interest rate method. On August 29, 2022, the Company entered into a first amendment to its loan and security agreement with Oxford providing that the second $25 million tranche under the facility will be available for draw at Lexicon’s option from December 1 through December 31, 2022 in exchange for $0.3 million of cash consideration. As of September 30, 2022, the balance of the debt discount was $2.7 million. During the nine months ended September 30, 2022, the Company recognized interest expense of $1.6 million. As of September 30, 2022, the carrying value of the Oxford Term Loans was $23.8 million. The fair value of the Oxford Term Loans approximates its carrying value and was determined using Level 2 inputs using discounted cash flow analysis, based on the Company’s estimated current incremental borrowing rate. Lexicon’s obligations under the Oxford Term Loans are secured by a first lien security interest in all of the assets of the Company and its subsidiaries. The loan and security agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default applicable to Lexicon and its subsidiaries. In addition to the financial covenant, additional covenants include those restricting dispositions, fundamental changes to its business, mergers or acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and subordinated debt. The Company was in compliance with its debt covenants as of September 30, 2022. Convertible Debt. In November 2014, Lexicon completed an offering of $87.5 million in aggregate principal amount of its 5.25% Convertible Senior Notes due 2021 (the “Convertible Notes”). The conversion feature did not meet the criteria for bifurcation as required by generally accepted accounting principles and the entire principal amount was recorded as long-term debt on the Company’s condensed consolidated balance sheets. In 2020, the Company entered into separate, privately negotiated exchange agreements to exchange $75.8 million aggregate principal amount of the Convertible Notes for consideration valued at 85% of the principal amount of the Convertible Notes. In 2020, the Company issued 10,368,956 shares of the Company’s common stock and paid $50.0 million in cash, which included $1.3 million of accrued interest, to exchange such Convertible Notes. In December 2021, the remaining balance of $11.6 million was repaid in cash.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Cash and Cash Equivalents and Investments (Details 2) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Schedule of Investments [Line Items]
Realized Investment Gains (Losses)	$ 0	$ 0

Debt Obligations (Details) - USD ($)	1 Months Ended	9 Months Ended		12 Months Ended
Debt Obligations (Details) - USD ($)	Nov. 30, 2014	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2027	Dec. 31, 2026	Dec. 31, 2025	Dec. 31, 2024	Jun. 30, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021	Sep. 28, 2020	Nov. 20, 2014
Debt Instrument [Line Items]
Proceeds from Convertible Debt	$ 87,500,000
Conv Debt Instrument Interest Rate Stated Percentage													5.25%
Common stock, shares issued		189,214,000									150,082,000
Convertible debt exchange Remaining Notes											$ 11,600,000
Convertible debt exchange - Total Principal Amount												$ 75,800,000
Long-term debt, net of deferred issuance costs		$ (23,784,000)									$ 0
Long-Term Debt		23,800,000
Term Loan B									$ 25,000,000
Term Loan C								$ 50,000,000
Term Loan D							$ 50,000,000
Oxford Loan Facility		$ 150,000,000
Term Loan A										$ 25,000,000
Term Loan A&B Warrant %		3.50%
Term Loan C Warrant %		1.75%
Term Loan D Warrant %		0.875%
Term Loan A Warrants Number										420,673
Term Loan A Warrant Exercise Price										$ 2.08
Adjustments to Additional Paid in Capital, Warrant Issued		$ 700,000	$ 0
Debt Instrument, Interest Rate, Stated Percentage		7.90%
Long-Term Debt, Percentage Bearing Fixed Interest, Percentage Rate		8.01%
Subordinated Borrowing, Interest Rate		10.45%
Final Payment % with no extention		6.00%
Final Payment % with extention		7.00%
Term Loan A Final Payment		$ 1,500,000
Term Loan A Net Cash Receipt		24,200,000
Term Loan A Debt Issuance Costs		400,000
Oxford Facility Fee		500,000
Term Loan A Debt Discount		2,700,000
Term Loan A Interest Expense		1,600,000
2027 Oxford Principal Payments					$ 13,000,000
2027 Oxford Principal Payments2				$ 4,800,000		$ 8,700,000
Oxford Amendment Fee		$ 300,000

Cash and Cash Equivalents and Investments (Details 1) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value
Debt Securities, Available-for-Sale, Current	$ 117,369
Cash and Cash Equivalents
Fair Value
Gross Unrealized Gains		$ 0
Gross Unrealized Losses		(1)
Estimated Fair Value		64,065
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax	0
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax	0
Debt Securities, Available-for-Sale, Amortized Cost, Current	18,834	64,066
Debt Securities, Available-for-Sale, Current	18,834
U.S. Treasury Securities
Fair Value
Estimated Fair Value		7,561
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax	385	1
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax	0	0
Debt Securities, Available-for-Sale, Amortized Cost, Current	97,984	7,562
Debt Securities, Available-for-Sale, Current	97,599
Total Short-term Investments
Fair Value
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax	492	9
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax	1	0
Debt Securities, Available-for-Sale, Amortized Cost, Current	117,860	22,687
Debt Securities, Available-for-Sale, Current	117,369	22,678
Total Cash and Cash Equivalents and Investments
Fair Value
Gross Unrealized Gains		0
Gross Unrealized Losses		(10)
Estimated Fair Value		86,743
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax	492
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax	1
Debt Securities, Available-for-Sale, Amortized Cost, Current	136,694	86,753
Debt Securities, Available-for-Sale, Current	136,203
Corporate Debt Securities
Fair Value
Estimated Fair Value		15,117
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Loss, before Tax	107	8
Debt Securities, Available-for-Sale, Accumulated Gross Unrealized Gain, before Tax	1	0
Debt Securities, Available-for-Sale, Amortized Cost, Current	19,876	$ 15,125
Debt Securities, Available-for-Sale, Current	$ 19,770

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Measurements [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]


	Assets and Liabilities at Fair Value as of September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	18,834	$	—	$	—	$	18,834
Short-term investments	97,599		19,770		—		117,369
Total cash and cash equivalents and investments	$	116,433	$	19,770	$	—	$	136,203


	Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	64,065	$	—	$	—	$	64,065
Short-term investments	7,561		15,117		—		22,678
Total cash and cash equivalents and investments	$	71,626	$	15,117	$	—	$	86,743

Consolidated Balance Sheets-Unaudited - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 18,834	$ 64,065
Short-term investments	117,369	22,678
Accounts receivable, net	39	14
Prepaid expenses and other current assets	2,821	2,164
Total current assets	139,063	88,921
Property and equipment, net of accumulated depreciation and amortization of $5,177 and $4,853, respectively	932	1,176
Goodwill	44,543	44,543
Other assets	7,147	2,269
Total assets	191,685	136,909
Current liabilities:
Accounts payable	9,427	9,152
Accrued liabilities	9,018	12,972
Total current liabilities	18,445	22,124
Other long-term liabilities	5,438	1,190
Total liabilities	47,667	23,314
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.001 par value; 300,000 shares authorized; 189,214 and 150,082 shares issued, respectively	189	150
Additional paid-in capital	1,705,607	1,608,749
Accumulated deficit	(1,559,226)	(1,487,776)
Accumulated other comprehensive loss	(491)	(10)
Treasury stock, at cost, 488 and 1,165 shares, respectively	(2,061)	(7,518)
Total stockholder's equity (deficit)	144,018	113,595
Total liabilities and equity	191,685	136,909
Long-term debt, net of deferred issuance costs	$ 23,784	$ 0

Collaboration and License Agreements	9 Months Ended
Collaboration and License Agreements	Sep. 30, 2022
Collaboration and License Agreements [Abstract]
Collaborative Arrangement Disclosure	Collaboration and License Agreements Lexicon has derived substantially all of its revenues from drug discovery and development alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, product sales, government grants and contracts, technology licenses, subscriptions to its databases and compound library sales, as well as from commercial sales of its XERMELO product following its commercial launch in February 2017 until its sale of XERMELO and related assets to TerSera Therapeutics, LLC in September 2020.

Summary of Significant Accounting Policies Accrued Liabilities (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021	Mar. 31, 2021
Accrued Liabilities [Line Items]
Accrued research and development services current	$ 1,184,000	$ 3,669,000
Accrued compensation and benefits current	5,709,000	5,711,000
Operating Lease, Liability, Current	(1,406,000)	(1,089,000)
Other Accrued Liabilities, Current	719,000	2,503,000
Accrued Liabilities	$ 9,018,000	$ 12,972,000
Lexicon incremental borrowing rate	970.00%		900.00%

Other Capital Agreements (Details) - USD ($)	3 Months Ended
Other Capital Agreements (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021	Mar. 31, 2021
Equity [Abstract]
Shares sold in January 2021 ATM offering			2,000,000
Share price in January 2021 ATM Offering			8.463
Proceeds from January 2021 ATM Offering			$ 16,400,000
Shares sold in September 2021 ATM Offerring		4,176,953
Share Price in September 2021 ATM Offerring		$ 4.732
Proceeds from September 2021 ATM Offering		$ 19.1
Share Price in July 2022 Offering	$ 2.50
Proceeds from July 2022 Offering	$ 94,300,000

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2022	Nov. 07, 2022
Cover [Abstract]
Document Type	10-Q
Document Fiscal Period Focus	Q3
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Amendment Flag	false
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	000-30111
Entity Registrant Name	Lexicon Pharmaceuticals, Inc.
Entity Central Index Key	0001062822
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	76-0474169
Entity Address, Address Line One	2445 Technology Forest Blvd.
Entity Address, Address Line Two	11th Floor
Entity Address, City or Town	The Woodlands
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77381
City Area Code	281
Local Phone Number	863-3000
Title of 12(b) Security	Common Stock, par value $0.001
Trading Symbol	LXRX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		188,725,743

Consolidated Statements of Comprehensive Loss-Unaudited - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Royalties and other revenue	$ 39	$ 23	$ 111	$ 284
Stock-based compensation expense associated with research and development expense	939	1,138	3,069	3,608
Operating expenses:
Research and development, including stock-based compensation of $939, $1,138, $3,069 and $3,608 respectively	10,557	15,682	38,839	38,548
Selling, general and administrative, including stock-based compensation of $1,709, $1,574, $5,183 and $4,741 respectively	12,577	7,303	31,754	23,496
Total operating expenses	(23,134)	22,985	70,593	62,044
Loss from operations	(23,095)	(22,962)	(70,482)	(61,760)
Interest expense	(864)	(171)	(1,677)	(507)
Interest and other income, net	572	11	709	120
Net loss	$ (23,387)	$ (23,122)	$ (71,450)	$ (62,147)
Net income (loss) per common share, Basic	$ (0.13)	$ (0.16)	$ (0.45)	$ (0.43)
Shares used in computing net loss per common share, Basic	174,904	145,820	157,984	144,558
Unrealized gain on investments		$ 0
Unrealized gain on investments	$ (341)	(1)	$ (481)	$ 1
Comprehensive loss	$ (23,728)	$ (23,122)	$ (71,931)	$ (62,146)

Cash and Cash Equivalents and Investments

9 Months Ended

Sep. 30, 2022

Cash and Cash Equivalents and Investments [Abstract]

Cash and Cash Equivalents Disclosure

Cash and Cash Equivalents and Investments

The fair value of cash and cash equivalents and investments held at September 30, 2022 and December 31, 2021 are as follows:


	As of September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Cash and cash equivalents	$	18,834	$	—	$	—	$	18,834
Securities maturing within one year:
U.S. treasury securities	97,984		—		(385)		97,599
Corporate debt securities	19,876		1		(107)		19,770
Total short-term investments	$	117,860	$	1	$	(492)	$	117,369
Total cash and cash equivalents and investments	$	136,694	$	1	$	(492)	$	136,203

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
			(in thousands)
Cash and cash equivalents	$	64,066	$	—	$	(1)	$	64,065
Securities maturing within one year:
U.S. treasury securities	7,562		—		(1)		7,561
Corporate debt securities	15,125		—		(8)		15,117
Total short-term investments	$	22,687	$	—	$	(9)	$	22,678
Total cash and cash equivalents and investments	$	86,753	$	—	$	(10)	$	86,743

There were no realized losses during either of the nine months ended September 30, 2022 and 2021, respectively. The cost of securities sold is based on the specific identification method.

Recent Accounting Pronouncements Level 1 (Notes)	9 Months Ended
Recent Accounting Pronouncements Level 1 (Notes)	Sep. 30, 2022
Recent Accounting Pronouncements [Abstract]
New Accounting Pronouncements, Policy	Recent Accounting PronouncementsIn August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which removes the separation models for convertible debt with cash conversion or beneficial conversion features. ASU 2020-06 also requires the application of the if-converted method for calculating earnings per diluted share, as the treasury stock method will no longer be permitted for convertible instruments. The adoption of ASU 2020-06 during the first quarter of 2022 did not have a material impact on the condensed consolidated financial statements.

Cash and Cash Equivalents and Investments (Tables)

9 Months Ended

Sep. 30, 2022

Cash and Cash Equivalents and Investments [Abstract]

Schedule of Cash, Cash Equivalents and Short-term Investments [Table Text Block]


	As of September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Cash and cash equivalents	$	18,834	$	—	$	—	$	18,834
Securities maturing within one year:
U.S. treasury securities	97,984		—		(385)		97,599
Corporate debt securities	19,876		1		(107)		19,770
Total short-term investments	$	117,860	$	1	$	(492)	$	117,369
Total cash and cash equivalents and investments	$	136,694	$	1	$	(492)	$	136,203

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
			(in thousands)
Cash and cash equivalents	$	64,066	$	—	$	(1)	$	64,065
Securities maturing within one year:
U.S. treasury securities	7,562		—		(1)		7,561
Corporate debt securities	15,125		—		(8)		15,117
Total short-term investments	$	22,687	$	—	$	(9)	$	22,678
Total cash and cash equivalents and investments	$	86,753	$	—	$	(10)	$	86,743

Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure

Commitments and Contingencies

Operating Lease Obligations: Lexicon’s operating leases include office space in The Woodlands, Texas and Basking Ridge, New Jersey and will expire in August 2025 and December 2022, respectively. Under its lease agreements, Lexicon is obligated to pay property taxes, insurance, and maintenance costs. In July 2022, the Company entered into a lease agreement for a 22,000 square-foot office space in Bridgewater, New Jersey to which it plans to relocate the New Jersey offices. The lease agreement will extend for ten years and 11 months from the date Lexicon occupies the building and provides for escalating yearly base rent payments starting at $820,000 and increasing to $986,000 in the final year of the lease.

As of September 30, 2022, the right-of-use assets for the office space leases had a balance of $7.1 million, which is included in other assets in the condensed consolidated balance sheet. Current and non-current liabilities relating to the leases were $1.4 million and $5.4 million, respectively, which are included in accrued liabilities and other long-term liabilities in the condensed consolidated balance sheet, respectively.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at September 30, 2022:



	(in thousands)
2022	$	292
2023	805
2024	1,378
2025	1,219
2026	865
Thereafter	6,525
Total undiscounted operating lease liability	11,084
Less: amount of lease payments representing interest	(4,240)
Present value of future lease payments	6,844
Less: short-term operating lease liability	(1,406)
Long-term operating lease liability	$	5,438

Legal Proceedings.

Lexicon is from time to time party to claims and legal proceedings that arise in the normal course of its business and that it believes will not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity.

Summary of Significant Accounting Policies (Notes)

9 Months Ended

Sep. 30, 2022

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022.

The accompanying condensed consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.

For further information, refer to the financial statements and footnotes thereto included in Lexicon’s annual report on Form 10-K for the year ended December 31, 2021, as filed with the SEC.

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2022 and December 31, 2021, short-term investments consisted of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations as they all contain maturities of less than one year. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method.

Accrued liabilities: Accrued liabilities consisted of the following:


	As of September 30,		As of December 31,
	2022		2021
	(in thousands)
Accrued research and development services	$	1,184	$	3,669
Accrued compensation and benefits	5,709		5,711
Short term lease liability	1,406		1,089
Other	719		2,503
Total accrued liabilities	$	9,018	$	12,972

Leases: Lexicon determines if a contract is or contains a lease at inception or upon modification of the contract. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Lexicon does not apply this accounting to those leases with terms of twelve (12) months or less.

Operating lease right-of-use assets and associated lease liabilities are recorded in the balance sheet at the lease commencement date based on the present value of future lease payments to be made over the expected lease term. As the implicit rate is not determinable in its leases, Lexicon used a borrowing rate ranging between 9% and 9.7% at the commencement date in determining the present value of future payments.

Revenue Recognition:

The Company performs the following five steps in determining the amount of revenue to recognize as its performance obligations under each of its contracts with customers: (i) identify the contract(s) with a customer; (ii) identify the performance obligation in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. At contract inception, the Company evaluates whether development milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur, the associated development milestone value is included in the transaction price. Development milestones that are not within the control of the Company or the licensee, including those requiring regulatory approval, are not considered probable of being achieved until those milestones are achieved. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue when (or as) the performance obligation is satisfied. At the end of each reporting period, the Company re-evaluates the probability of achievement of the development milestones and any related constraint, and if necessary, adjusts its estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment.

In agreements in which a license to the Company’s intellectual property is determined distinct from other performance obligations identified in the agreement, the Company recognizes revenue when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

The Company may receive payments from its licensees based on billing schedules established in each contract. Upfront payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under the relevant agreement. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred. Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation: The Company recognizes compensation expense in its condensed consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units granted to employees, based on their fair values on the date of the grant, with the compensation expense recognized over the period in which an employee is required to provide service in exchange for the stock award. Stock-based compensation expense for awards without performance conditions is recognized on a straight-line basis. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met.

The fair value of stock options is estimated at the date of grant using the Black-Scholes method. The Black-Scholes option-pricing model requires the input of subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination

behaviors, resulting in a change in the assumptions used for expected option lives. Historical data is used to estimate the expected option life for each group. Expected volatility is based on the historical volatility in the Company’s stock price.

The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock option compensation granted, with the following weighted-average assumptions for stock options granted in the nine months ended September 30, 2022 and 2021:


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
September 30, 2022:
Employees	107	%	2.4	%	4	—	%
Officers and non-employee directors	91	%	1.9	%	7	—	%
September 30, 2021:
Employees	102	%	0.6	%	4	—	%
Officers and non-employee directors	90	%	1.1	%	7	—	%

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2022:


	Options	Weighted Average Exercise Price
	(in thousands)
Outstanding at December 31, 2021	8,367	$	6.80
Granted	4,587	3.05

Expired	(163)	12.50
Forfeited	(609)	7.41
Outstanding at September 30, 2022	12,182	5.28
Exercisable at September 30, 2022	5,728	$	7.18

During the nine months ended September 30, 2022, Lexicon granted its employees and non-employee directors annual restricted stock units. Outstanding employee restricted stock units vest in three annual installments. Outstanding non-employee director restricted stock units vest fully on the first anniversary of the grant. The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2022:


	Shares	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2021	1,854	$	5.16
Granted	2,185	2.25
Vested	(1,012)	4.86
Forfeited	(254)	3.47
Outstanding at September 30, 2022	2,773	$	3.15

Net Loss per Common Share: Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive.

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (71,450,000)	$ (62,147,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	324,000	180,000
Stock-based compensation	8,252,000	8,349,000
Amortization of debt issuance costs	396,000	46,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(26,000)	372,000
(Increase) decrease in prepaid expenses and other current assets	(470,000)	1,985,000
Decrease in other assets	329,000	459,000
Decrease in accounts payable and other liabilities	(4,637,000)	(13,433,000)
Net cash provided by (used in) operating activities	(67,282,000)	(64,189,000)
Cash and cash equivalents	18,834,000	92,118,000
Cash paid for interest	1,281,000	307,000
Initial recognition of right of use asset	5,206,000	1,704,000
Issuance of Stock and Warrants for Services or Claims	698
Adjustments to Additional Paid in Capital, Warrant Issued	700,000	0
Stock Issued During Period, Value, Treasury Stock Reissued	6,321	0
Business Exit Costs	1,500	0
Cash flows from investing activities:
Purchases of property and equipment	(80,000)	(1,198,000)
Purchases of investments	(133,363,000)	(28,880,000)
Maturities of investments	38,191,000	26,092,000
Net cash (used in) provided by investing activities	(95,252,000)	(3,986,000)
Cash flows from financing activities:
Proceeds from issuance of common stock	94,268,000	36,705,000
Repurchase of common stock	(864,000)	(2,675,000)
Proceeds from debt borrowings, net of fees	23,899,000	0
Net cash used in financing activities	117,303,000	34,030,000
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect	(45,231,000)	(34,145,000)
Cash and cash equivalents at beginning of period	64,065,000	126,263,000
Cash and cash equivalents at end of period	18,834,000	92,118,000
Supplemental disclosure of cash flow information:
Cash paid for interest	1,281,000	307,000
Initial recognition of right of use asset	$ 5,206,000	$ 1,704,000

Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Measurements [Abstract]

Fair Value, Measurement Inputs, Disclosure

Fair Value Measurements

The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. The following levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities:

•Level 1 - quoted prices in active markets for identical investments, which include U.S. treasury securities

•Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which includes corporate debt securities

•Level 3 - significant unobservable inputs

The inputs or methodology used for valuing securities are not necessarily an indication of the credit risk associated with investing in those securities. The following table provides the fair value measurements of applicable Company assets that are measured at fair value on a recurring basis according to the fair value levels defined above as of September 30, 2022 and December 31, 2021.


	Assets and Liabilities at Fair Value as of September 30, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	18,834	$	—	$	—	$	18,834
Short-term investments	97,599		19,770		—		117,369
Total cash and cash equivalents and investments	$	116,433	$	19,770	$	—	$	136,203


	Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Cash and cash equivalents	$	64,065	$	—	$	—	$	64,065
Short-term investments	7,561		15,117		—		22,678
Total cash and cash equivalents and investments	$	71,626	$	15,117	$	—	$	86,743

The Company did not have any Level 3 assets or liabilities as of September 30, 2022 or December 31, 2021. Transfers between levels are recognized at the actual date of the circumstance that caused the transfer. There were no transfers between Level 1 and Level 2 during the periods presented.

Refer to Note 5, Debt Obligations, for fair value measurements of debt obligations.

Summary of Significant Accounting Policies Equity Incentive Awards (Tables)

9 Months Ended

Sep. 30, 2022

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities: Accrued liabilities consisted of the following:


	As of September 30,		As of December 31,
	2022		2021
	(in thousands)
Accrued research and development services	$	1,184	$	3,669
Accrued compensation and benefits	5,709		5,711
Short term lease liability	1,406		1,089
Other	719		2,503
Total accrued liabilities	$	9,018	$	12,972

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
September 30, 2022:
Employees	107	%	2.4	%	4	—	%
Officers and non-employee directors	91	%	1.9	%	7	—	%
September 30, 2021:
Employees	102	%	0.6	%	4	—	%
Officers and non-employee directors	90	%	1.1	%	7	—	%

Share-based Payment Arrangement, Option, Activity [Table Text Block]


	Options	Weighted Average Exercise Price
	(in thousands)
Outstanding at December 31, 2021	8,367	$	6.80
Granted	4,587	3.05

Expired	(163)	12.50
Forfeited	(609)	7.41
Outstanding at September 30, 2022	12,182	5.28
Exercisable at September 30, 2022	5,728	$	7.18

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]


	Shares	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2021	1,854	$	5.16
Granted	2,185	2.25
Vested	(1,012)	4.86
Forfeited	(254)	3.47
Outstanding at September 30, 2022	2,773	$	3.15

Consolidated Statements of Comprehensive Loss Parentheticals - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Consolidated Statements of Operations [Abstract]
Stock-based compensation expense associated with research and development expense	$ 939	$ 1,138	$ 3,069	$ 3,608
Stock-based compensation expense associated with selling, general and administrative expense	$ 1,709	$ 1,574	$ 5,183	$ 4,741