0001062822-23-000058 | 10-Q | XBRL Viewer | Lexicon Pharmaceuticals INC

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

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, 2023 and December 31, 2022. There were no transfers between Level 1 and Level 2 during the periods presented.


	Fair Value as of September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)

Cash and cash equivalents	$	21,116	$	—	$	—	$	21,116
Short-term investments	191,439		5,872		—		197,311
Total cash and cash equivalents and investments	$	212,555	$	5,872	$	—	$	218,427


	Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)

Cash and cash equivalents	$	46,345	$	—	$	—	$	46,345
Short-term investments	73,680		18,332		—		92,012
Total cash and cash equivalents and investments	$	120,025	$	18,332	$	—	$	138,357

The fair value of the Oxford Term Loans (see Note 5) is determined under Level 2 in the fair value hierarchy and approximates carrying value as the loans bear interest at a rate that approximates prevailing market rates for instruments with similar characteristics.

Debt Obligations	9 Months Ended
Debt Obligations	Sep. 30, 2023
Debt Obligations [Abstract]
Debt Obligations	Debt Obligations Oxford Term Loans. In March 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”). The loan and security agreement was subsequently amended in August 2022, May 2023 and June 2023. The Oxford Term Loans are available in five tranches, each maturing in March 2027. The first $25 million tranche was funded in March 2022, the second $25 million tranche was funded in December 2022 and the third $50 million tranche was funded in June 2023. The fourth $25 million tranche is available for draw at Lexicon’s option between December 1 and December 31, 2023. The fifth $25 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 period as described below. An unused fee will be due in the event Lexicon does not draw the full amount available under the fourth tranche. 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 $6.0 million as of September 30, 2023, in the aggregate for the three borrowed tranches, is recorded as a debt discount on the condensed consolidated balance sheet. Concurrent with the funding of each of the first three tranches, Lexicon granted Oxford warrants to purchase 420,673 shares of Lexicon’s common stock at an exercise price of $2.08 per share, 224,128 shares of Lexicon’s common stock at an exercise price of $1.95 per share and 183,824 shares of Lexicon’s common stock at an exercise price of $2.38 per share, respectively. Subject to and upon funding of the fourth tranche, Lexicon will grant Oxford a warrant to purchase shares of its common stock having a value equal to 1.75% of such tranche, as determined by reference to a 10-day average closing price of the shares, and having an exercise price equal to such average closing price. All warrants are exercisable for five years from their respective grant dates and feature a net cashless exercise provision. The Company allocated the proceeds from each term loan tranche to the corresponding warrant using the relative fair value method and used the Black-Scholes model to calculate the fair value of the warrants. The warrants that have been issued in connection with the funding of each tranche reduced the carrying value of long-term debt and are separately classified as equity instruments on the condensed consolidated balance sheet. As of September 30, 2023, the carrying value of the Oxford Term Loans on the condensed consolidated balance sheet was $99.3 million, reflecting as a discount of $6.7 million to the face value of long-term debt for the final payment exit fee, the warrant fair value, and debt issuance costs, which are being amortized into interest expense throughout the life of the term loan using the effective interest rate method. Monthly interest-only payments are due during an initial 36-month period from the original March 2022 borrowing date, which may be extended at Lexicon’s option to 48 months if Lexicon maintains compliance with financial covenants relating to (i) net sales of INPEFA following regulatory approval and, (ii) minimum cash balance requirements if Lexicon draws the fourth tranche and following its funding. The interest-only period will be followed by an amortization period extending through the maturity date. Payments of $34.8 million, $52.2 million, and $19.0 million, including debt principal and final exit fee payments, will be due during the fiscal years ended December 31, 2025, December 31, 2026 and December 31, 2027, respectively, with respect to all borrowed loan tranches as of September 30, 2023. Prior to the June 2023 amendment to the loan and security agreement, the Oxford Term Loans bore 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. Following such amendment, the floating interest rate is based on the sum of (a) the 1-month CME Term Secured Overnight Financing Rate (SOFR), (b) 0.10%, and (c) 7.90% for the first and second tranches and 7.00% for the third and fourth tranches. As of September 30, 2023, the weighted average interest rate was 12.9%. During the nine months ended September 30, 2023, the Company recognized interest expense of $7.7 million, including $1.0 million in amortization of discount and related debt costs. 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. Additionally, 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. 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 covenants, 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, 2023.

- 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://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Cash and Cash Equivalents and Investments

9 Months Ended

Sep. 30, 2023

Cash and Cash Equivalents and Investments [Abstract]

Cash and Cash Equivalents and Investments

The fair value of cash and cash equivalents and investments held at September 30, 2023 and December 31, 2022 are as follows:


	As of September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Cash and cash equivalents	$	21,116	$	—	$	—	$	21,116
Securities maturing within one year:
U.S. treasury securities	191,551		2		(114)		191,439
Corporate debt securities	5,873		—		(1)		5,872
Total short-term investments	$	197,424	$	2	$	(115)	$	197,311
Total cash and cash equivalents and investments	$	218,540	$	2	$	(115)	$	218,427

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
			(in thousands)
Cash and cash equivalents	$	46,345	$	—	$	—	$	46,345
Securities maturing within one year:
U.S. treasury securities	74,022		—		(342)		73,680
Corporate debt securities	18,418		—		(86)		18,332
Total short-term investments	$	92,440	$	—	$	(428)	$	92,012
Total cash and cash equivalents and investments	$	138,785	$	—	$	(428)	$	138,357

There were no realized losses during either of the nine month periods ended September 30, 2023 and 2022, respectively.

Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Gain (Loss)	Treasury Stock
Balance, shares at Dec. 31, 2021		150,082,000
Balance, value at Dec. 31, 2021	$ 113,595	$ 150	$ 1,608,749	$ (1,487,776)	$ (10)	$ (7,518)
Stock-based compensation	2,772		2,772
Repurchase of common stock	(864)					(864)
Issuance of equity-classified warrants	698		698
Issuance of treasury stock	0		(6,321)			6,321
Net loss	(23,476)			(23,476)
Unrealized gain (loss) on investments	(27)				(27)
Balance, shares at Mar. 31, 2022		150,082,000
Balance, value at Mar. 31, 2022	92,698	$ 150	1,605,898	(1,511,252)	(37)	(2,061)
Balance, shares at Dec. 31, 2021		150,082,000
Balance, value at Dec. 31, 2021	113,595	$ 150	1,608,749	(1,487,776)	(10)	(7,518)
Issuance of equity-classified warrants	698
Issuance of treasury stock	6,321
Net loss	(71,450)
Unrealized gain (loss) on investments	(481)
Balance, shares at Sep. 30, 2022		189,214,000
Balance, value at Sep. 30, 2022	144,018	$ 189	1,705,607	(1,559,226)	(491)	(2,061)
Balance, shares at Mar. 31, 2022		150,082,000
Balance, value at Mar. 31, 2022	92,698	$ 150	1,605,898	(1,511,252)	(37)	(2,061)
Stock-based compensation	2,832		2,832
Issuance of common stock under Equity Incentive Plans (in shares)		32,000
Net loss	(24,587)			(24,587)
Unrealized gain (loss) on investments	(113)				(113)
Balance, shares at Jun. 30, 2022		150,114,000
Balance, value at Jun. 30, 2022	70,830	$ 150	1,608,730	(1,535,839)	(150)	(2,061)
Stock-based compensation	2,648		2,648
Issuance of common stock, net of issuance fees (in shares)		39,100,000
Issuance of common stock, net of issuance fees	94,268	$ 39	94,229
Net loss	(23,387)			(23,387)
Unrealized gain (loss) on investments	(341)				(341)
Balance, shares at Sep. 30, 2022		189,214,000
Balance, value at Sep. 30, 2022	$ 144,018	$ 189	1,705,607	(1,559,226)	(491)	(2,061)
Balance, shares at Dec. 31, 2022	189,213,948	189,214,000
Balance, value at Dec. 31, 2022	$ 117,124	$ 189	1,709,144	(1,589,720)	(428)	(2,061)
Stock-based compensation	3,415		3,415
Issuance of common stock under Equity Incentive Plans (in shares)		1,216,000
Issuance of common stock under Equity Incentive Plans	0	$ 1	(1)
Repurchase of common stock	(824)					(824)
Net loss	(31,934)			(31,934)
Unrealized gain (loss) on investments	265				265
Balance, shares at Mar. 31, 2023		190,430,000
Balance, value at Mar. 31, 2023	$ 88,046	$ 190	1,712,558	(1,621,654)	(163)	(2,885)
Balance, shares at Dec. 31, 2022	189,213,948	189,214,000
Balance, value at Dec. 31, 2022	$ 117,124	$ 189	1,709,144	(1,589,720)	(428)	(2,061)
Issuance of equity-classified warrants	307
Issuance of treasury stock	0
Net loss	(127,363)
Unrealized gain (loss) on investments	$ 315
Balance, shares at Sep. 30, 2023	245,792,668	245,793,000
Balance, value at Sep. 30, 2023	$ 139,510	$ 245	1,859,346	(1,717,083)	(113)	(2,885)
Balance, shares at Mar. 31, 2023		190,430,000
Balance, value at Mar. 31, 2023	88,046	$ 190	1,712,558	(1,621,654)	(163)	(2,885)
Stock-based compensation	3,815		3,815
Issuance of common stock under Equity Incentive Plans (in shares)		75,000
Issuance of equity-classified warrants	307		307
Issuance of common stock, net of issuance fees (in shares)		55,288,000
Issuance of common stock, net of issuance fees	139,034	$ 55	138,979
Net loss	(44,904)			(44,904)
Unrealized gain (loss) on investments	63				63
Balance, shares at Jun. 30, 2023		245,793,000
Balance, value at Jun. 30, 2023	186,361	$ 245	1,855,659	(1,666,558)	(100)	(2,885)
Stock-based compensation	3,898		3,898
Net loss	(50,525)			(50,525)
Unrealized gain (loss) on investments	(13)				(13)
Other	$ (211)		(211)
Balance, shares at Sep. 30, 2023	245,792,668	245,793,000
Balance, value at Sep. 30, 2023	$ 139,510	$ 245	$ 1,859,346	$ (1,717,083)	$ (113)	$ (2,885)

Supplemental Financial Information

9 Months Ended

Sep. 30, 2023

Text Block [Abstract]

Supplemental Financial Information

The following tables show the Company’s additional balance sheet information as of September 30, 2023 and December 31, 2022:


	As of September 30,		As of December 31,
	2023		2022
	(in thousands)
Inventories:
Raw materials	$	—	$	—
Work-in-progress	167		—
Finished goods	169		—
Inventory	$	336	$	—


	As of September 30,		As of December 31,
	2023		2022
	(in thousands)
Accrued Liabilities:
Accrued research and development services	$	8,596	$	3,252
Accrued compensation and benefits	9,767		7,830
Short-term lease liability	1,291		1,291
Other	571		404
Total accrued liabilities	$	20,225	$	12,777

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Operating Lease Obligations: Lexicon’s operating leases include office space in The Woodlands, Texas and Bridgewater, New Jersey and will expire in August 2025 and January 2034, respectively. 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 uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. Lexicon does not record a right-of-use asset or associated liability for those leases with terms of twelve months or less.

As of September 30, 2023 and December 31, 2022, the right-of-use assets for the office space leases had a balance of $5.7 million and $6.4 million, respectively, which is included in operating lease right-of-use-assets in the condensed consolidated balance sheet. Current and long-term liabilities as of September 30, 2023, relating to the leases were $1.3 million and $5.4 million, respectively, which are included in accrued liabilities and long-term operating lease liabilities in the condensed consolidated balance sheet, respectively. Current and long-term liabilities as of December 31, 2022, relating to the leases were $1.3 million and $5.4 million, respectively, which are included in accrued liabilities and long-term operating lease liabilities in the condensed consolidated balance sheet, respectively. During the three and nine months ended September 30, 2023 and 2022, the Company incurred lease expense of $0.4 million and $1.2 million and $0.5 million and $1.2 million, respectively.

During the nine months ended September 30, 2023 and 2022, the Company made cash payments for lease liabilities of $0.5 million and $0.9 million, respectively. As of September 30, 2023 and December 31, 2022, the weighted-average remaining lease terms were 9.1 years and 9.5 years, respectively, with weighted-average discount rates of 9.6% and 9.6%, respectively.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at September 30, 2023:



	(in thousands)
2023	$	338
2024	1,378
2025	1,220
2026	865
2027	881
Thereafter	5,644
Total undiscounted operating lease liability	10,326
Less: amount of lease payments representing interest	(3,592)
Present value of future lease payments	6,734
Less: short-term operating lease liability	(1,291)
Long-term operating lease liability	$	5,443

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.

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Accumulated depreciation and amortization, property and equipment	$ 4,391	$ 3,984
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	5,000,000,000	5,000,000,000
Preferred stock, outstanding (in shares)	0	0
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	300,000,000,000	300,000,000,000
Common stock, issued (in shares)	245,792,668	189,213,948
Treasury stock (in shares)	867,973	488,205

Equity Incentive Awards (Details 2) - Stock Options shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period (in shares) \| shares	12,349
Granted (in shares) \| shares	7,216
Expired (in shares) \| shares	(152)
Forfeited (in shares) \| shares	(785)
Outstanding at end of period (in shares) \| shares	18,628
Exercisable (in shares) \| shares	7,700
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 5.10
Granted (in dollars per share) \| $ / shares	2.43
Expired (in dollars per share) \| $ / shares	14.68
Forfeited (in dollars per share) \| $ / shares	4.52
Outstanding at end of period (in dollars per share) \| $ / shares	4.01
Exercisable (in dollars per share) \| $ / shares	$ 5.75

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (127,363)	$ (71,450)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	407	324
Stock-based compensation	11,128	8,252
Amortization of debt-related costs	1,156	396
Other non-cash adjustments	(3,613)	0
Changes in operating assets and liabilities:
Increase in accounts receivable	(290)	(26)
Increase in inventories	(336)	0
Increase in prepaid expenses and other current assets	(1,935)	(470)
Decrease in other long-term assets	389	329
Increase (decrease) in accounts payable and other liabilities	9,108	(4,637)
Net cash used in operating activities	(111,349)	(67,282)
Cash flows from investing activities:
Purchases of property and equipment	(470)	(80)
Purchases of investments	(223,241)	(133,363)
Maturities of investments	121,870	38,191
Net cash used in investing activities	(101,841)	(95,252)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of fees	138,823	94,268
Repurchase of common stock	(824)	(864)
Proceeds from debt borrowings, net of fees	49,962	23,899
Net cash provided by financing activities	187,961	117,303
Net decrease in cash and cash equivalents	(25,229)	(45,231)
Cash and cash equivalents at beginning of period	46,345	64,065
Cash and cash equivalents at end of period	21,116	18,834
Supplemental disclosure of cash flow information:
Cash paid for interest	6,767	1,281
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use asset obtained in exchange for operating lease liability	0	5,206
Issuance of equity-classified warrants	307	698
Issuance of treasury stock	$ 0	$ (6,321)

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2023
Summary of Significant Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. These unaudited condensed consolidated financial statements 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. We have made certain reclassification adjustments to conform prior-period amounts to the current presentation. 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, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023. 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, 2022, as filed with the SEC.
Use of Estimates	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	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, 2023 and December 31, 2022, short-term investments consisted of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are available for use in current operations regardless of the stated maturity date of the security and are classified as available-for-sale securities. The short-term investments are carried at fair value, based on quoted market prices of the securities. The Company does not intend to sell any of its available-for-sale securities prior to their maturity dates. 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.
Inventory	Inventory: Inventory is comprised of the Company’s approved product that it is commercializing in the United States, INPEFA® (sotagliflozin). Inventories are determined at the lower of cost or market value with cost determined under the specific identification method.
Revenue Recognition	Revenue Recognition: Product Revenues. Product revenues consist of U.S. sales of INPEFA. In June 2023, Lexicon began shipping INPEFA to its customers in the U.S. These customers primarily include wholesalers and limited retail pharmacies. The Company is in the process of contracting with certain managed care programs or pharmacy benefit managers (PBMs) and has legislatively mandated contracts with the federal and state governments under which rebates are provided based on product utilization. Product revenues are recognized when control is transferred to the customer upon delivery. Product shipping and handling costs are considered a fulfillment activity when control transfers to the Company’s customers and such costs are included in cost of sales. The Company recognizes product revenue net of applicable estimates of reserves for variable consideration using the expected value method. These estimates consider relevant factors such as current contractual and statutory requirements, industry data and forecasted customer buying and payment patterns. Net product revenue includes variable consideration only to the extent that it is probable that a significant reversal in revenue recognized will not occur in a future period. As necessary, these estimates will be adjusted in the period that such variances to actuals become known. Listed below is a further discussion of these reserves and sales return allowances: Customer Credits: The Company’s customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. The Company records allowances, deducts the full amount of prompt payment discounts, and deducts service fees from total product sales when revenues are earned and recognized. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program reflecting amounts owed after final dispensing of the product to participants. The Company’s estimates for rebates is based on statutory discount rates, third party market research data and data from sales to its customers. As rebates are generally invoiced and paid in arrears, the Company accrues an estimate of rebates based on the current quarter’s activity, plus any known unpaid prior quarter rebates. Chargebacks: Chargebacks are discounts that occur when healthcare providers purchase directly from a wholesaler. Generally, the healthcare providers purchase INPEFA at a discounted price. The wholesaler, in turn, charges back to Lexicon the difference between the price paid by the wholesaler and the discounted price that the wholesaler’s customer pays for that product. Medicare Part D Coverage Gap: The Medicare Part D prescription drug benefit mandates manufacturers to fund a portion of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company’s estimates for the expected Medicare Part D coverage gap are based on sales data received from a third party and projections based on historical data. As funding of the coverage gap is generally invoiced and paid in arrears, the Company accrues an estimate based on the current quarter’s activity, plus any known unpaid prior quarter estimates. Co-payment assistance: Patients with commercial insurance who meet certain eligibility requirements are eligible to receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. Sales returns: The Company records allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded based on an assessment of market exclusivity of the product, the patient population, the customers’ return rights and the Company’s historical experience with returns. Because approval is recent and there is a limited number of patients, most customers and retailers carry a limited inventory.
Cost of sales	Cost of Sales: Cost of sales consists of third-party manufacturing costs, freight and indirect overhead costs associated with sales of INPEFA. The Company began capitalizing inventory in June 2023 following regulatory approval of INPEFA, as the related costs were expected to be recovered through the commercialization of the product. Costs incurred prior to the approval of INPEFA have been recorded as research and development expense in the condensed consolidated statements of comprehensive loss.
Research and Development Expenses	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.
Net Loss per Common Share	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 stock warrants, stock options and restricted stock units are not included because they are antidilutive due to the Company’s net loss.
Recent Accounting Pronouncements	Recent Accounting Pronouncements. We do not expect that any recently issued accounting pronouncements will have a material impact on our financial statements.

Equity Incentive Awards (Details 3) - RSU’s shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares) \| shares	2,748
Granted (in shares) \| shares	4,199
Vested (in shares) \| shares	(1,290)
Forfeited (in shares) \| shares	(250)
Outstanding at end of period (in shares) \| shares	5,407
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 3.78
Outstanding at end of period (in dollars per share) \| $ / shares	2.76
Granted (in dollars per share) \| $ / shares	2.41
Vested (in dollars per share) \| $ / shares	3.80
Forfeited (in dollars per share) \| $ / shares	$ 2.73

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2023	Nov. 06, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-30111
Entity Registrant Name	Lexicon Pharmaceuticals, Inc.
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 Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		244,924,695
Document Fiscal Period Focus	Q3
Amendment Flag	false
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001062822

Cash and Cash Equivalents and Investments (Details 2) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash and Cash Equivalents and Investments [Abstract]
Realized Investment Gains (Losses)	$ 0	$ 0

Cash and Cash Equivalents and Investments (Tables)

9 Months Ended

Sep. 30, 2023

Cash and Cash Equivalents and Investments [Abstract]

Schedule of Cash, Cash Equivalents and Short-term Investments

The fair value of cash and cash equivalents and investments held at September 30, 2023 and December 31, 2022 are as follows:


	As of September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
Cash and cash equivalents	$	21,116	$	—	$	—	$	21,116
Securities maturing within one year:
U.S. treasury securities	191,551		2		(114)		191,439
Corporate debt securities	5,873		—		(1)		5,872
Total short-term investments	$	197,424	$	2	$	(115)	$	197,311
Total cash and cash equivalents and investments	$	218,540	$	2	$	(115)	$	218,427

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
			(in thousands)
Cash and cash equivalents	$	46,345	$	—	$	—	$	46,345
Securities maturing within one year:
U.S. treasury securities	74,022		—		(342)		73,680
Corporate debt securities	18,418		—		(86)		18,332
Total short-term investments	$	92,440	$	—	$	(428)	$	92,012
Total cash and cash equivalents and investments	$	138,785	$	—	$	(428)	$	138,357

Supplemental Financial Information (Tables)

9 Months Ended

Sep. 30, 2023

Text Block [Abstract]

Schedule of Inventory, Current

The following tables show the Company’s additional balance sheet information as of September 30, 2023 and December 31, 2022:


	As of September 30,		As of December 31,
	2023		2022
	(in thousands)
Inventories:
Raw materials	$	—	$	—
Work-in-progress	167		—
Finished goods	169		—
Inventory	$	336	$	—

Schedule of Accrued Liabilities


	As of September 30,		As of December 31,
	2023		2022
	(in thousands)
Accrued Liabilities:
Accrued research and development services	$	8,596	$	3,252
Accrued compensation and benefits	9,767		7,830
Short-term lease liability	1,291		1,291
Other	571		404
Total accrued liabilities	$	20,225	$	12,777

Other Capital Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	9 Months Ended
	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Equity [Abstract]
Sale of Stock, Number of Shares Issued in Transaction	55,288,460
Shares Issued, Price Per Share	$ 2.60
Proceeds from issuance of common stock, net of fees	$ 139,000	$ 138,823	$ 94,268

Supplemental Financial Information (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventories:
Raw materials	$ 0	$ 0
Work-in-progress	167	0
Finished goods	169	0
Inventory	336	0
Accrued Liabilities:
Accrued research and development services	8,596	3,252
Accrued compensation and benefits	9,767	7,830
Short-term lease liability	1,291	1,291
Other	571	404
Total accrued liabilities	$ 20,225	$ 12,777

Debt Obligations (Details) - USD ($)	3 Months Ended		9 Months Ended
Debt Obligations (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Dec. 31, 2022	Mar. 31, 2022
Debt Obligations [Abstract]
Oxford Loan Facility							$ 150,000,000
Term Loan A							$ 25,000,000
Term Loan B						$ 25,000,000
Term Loan C					$ 50,000,000
Term Loan D	$ 25,000,000		$ 25,000,000
Term Loan E	$ 25,000,000		$ 25,000,000
Final Payment % with no extention	6.00%		6.00%
Final Payment % with extention	7.00%		7.00%
Term Loan A Final Payment	$ 6,000,000		$ 6,000,000
Term Loan A Warrants Number							420,673
Term Loan A Warrant Exercise Price							$ 2.08
Term Loan B Warrants Number						224,128
Term Loan B Warrant Exercise Price						$ 1.95
Term Loan C Warrants Number					$ 183,824
Term Loan C Warrant Exercise Price					$ 2.38
Term Loan D Warrant %	1.75%		1.75%
Long-Term Debt	$ 99,300,000		$ 99,300,000
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net	6,700,000		6,700,000
2026 Oxford Principal Payments	34,800,000		34,800,000
2027 Oxford Principal Payments	52,200,000		52,200,000
2027 Oxford Principal Payments2	$ 19,000,000.0		$ 19,000,000.0
Debt Instrument, Interest Rate, Stated Percentage	7.90%		7.90%
Long-Term Debt, Percentage Bearing Fixed Interest, Percentage Rate	8.01%		8.01%
Term Loan Incremental Interest Component	0.10%		0.10%
Term Loan C & D, Interest Rate, Stated Percentage	7.00%		7.00%
Debt, Weighted Average Interest Rate	12.90%		12.90%
Interest Expense	$ (3,899,000)	$ (864,000)	$ (7,680,000)	$ (1,677,000)
Amortization of Debt Discount (Premium)			$ 1,000,000.0

Other Capital Agreements	9 Months Ended
Other Capital Agreements	Sep. 30, 2023
Equity [Abstract]
Other Capital Agreements	Other Capital Agreements Common Stock: In June 2023, Lexicon sold an aggregate of 55,288,460 shares of its common stock at a price of $2.60 per share in a public offering and concurrent private placement to an affiliate of Invus, L.P., resulting in net proceeds of approximately $139 million, after deducting underwriting discounts and commissions and offering expenses.

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2023
Summary of Significant Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. These unaudited condensed consolidated financial statements 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. We have made certain reclassification adjustments to conform prior-period amounts to the current presentation. 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, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023. 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, 2022, 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, 2023 and December 31, 2022, short-term investments consisted of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are available for use in current operations regardless of the stated maturity date of the security and are classified as available-for-sale securities. The short-term investments are carried at fair value, based on quoted market prices of the securities. The Company does not intend to sell any of its available-for-sale securities prior to their maturity dates. 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. Inventory: Inventory is comprised of the Company’s approved product that it is commercializing in the United States, INPEFA® (sotagliflozin). Inventories are determined at the lower of cost or market value with cost determined under the specific identification method. Revenue Recognition: Product Revenues. Product revenues consist of U.S. sales of INPEFA. In June 2023, Lexicon began shipping INPEFA to its customers in the U.S. These customers primarily include wholesalers and limited retail pharmacies. The Company is in the process of contracting with certain managed care programs or pharmacy benefit managers (PBMs) and has legislatively mandated contracts with the federal and state governments under which rebates are provided based on product utilization. Product revenues are recognized when control is transferred to the customer upon delivery. Product shipping and handling costs are considered a fulfillment activity when control transfers to the Company’s customers and such costs are included in cost of sales. The Company recognizes product revenue net of applicable estimates of reserves for variable consideration using the expected value method. These estimates consider relevant factors such as current contractual and statutory requirements, industry data and forecasted customer buying and payment patterns. Net product revenue includes variable consideration only to the extent that it is probable that a significant reversal in revenue recognized will not occur in a future period. As necessary, these estimates will be adjusted in the period that such variances to actuals become known. Listed below is a further discussion of these reserves and sales return allowances: Customer Credits: The Company’s customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. The Company records allowances, deducts the full amount of prompt payment discounts, and deducts service fees from total product sales when revenues are earned and recognized. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program reflecting amounts owed after final dispensing of the product to participants. The Company’s estimates for rebates is based on statutory discount rates, third party market research data and data from sales to its customers. As rebates are generally invoiced and paid in arrears, the Company accrues an estimate of rebates based on the current quarter’s activity, plus any known unpaid prior quarter rebates. Chargebacks: Chargebacks are discounts that occur when healthcare providers purchase directly from a wholesaler. Generally, the healthcare providers purchase INPEFA at a discounted price. The wholesaler, in turn, charges back to Lexicon the difference between the price paid by the wholesaler and the discounted price that the wholesaler’s customer pays for that product. Medicare Part D Coverage Gap: The Medicare Part D prescription drug benefit mandates manufacturers to fund a portion of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company’s estimates for the expected Medicare Part D coverage gap are based on sales data received from a third party and projections based on historical data. As funding of the coverage gap is generally invoiced and paid in arrears, the Company accrues an estimate based on the current quarter’s activity, plus any known unpaid prior quarter estimates. Co-payment assistance: Patients with commercial insurance who meet certain eligibility requirements are eligible to receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. Sales returns: The Company records allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded based on an assessment of market exclusivity of the product, the patient population, the customers’ return rights and the Company’s historical experience with returns. Because approval is recent and there is a limited number of patients, most customers and retailers carry a limited inventory. Cost of Sales: Cost of sales consists of third-party manufacturing costs, freight and indirect overhead costs associated with sales of INPEFA. The Company began capitalizing inventory in June 2023 following regulatory approval of INPEFA, as the related costs were expected to be recovered through the commercialization of the product. Costs incurred prior to the approval of INPEFA have been recorded as research and development expense in the condensed consolidated statements of comprehensive loss. 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. 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 stock warrants, stock options and restricted stock units are not included because they are antidilutive due to the Company’s net loss. Recent Accounting Pronouncements. We do not expect that any recently issued accounting pronouncements will have a material impact on our financial statements.

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 21,116	$ 46,345
Short-term investments	197,311	92,012
Accounts receivable, net	318	28
Inventory	336	0
Prepaid expenses and other current assets	4,291	2,481
Total current assets	223,372	140,866
Property and equipment, net of accumulated depreciation and amortization of $4,391 and $3,984, respectively	2,134	2,071
Goodwill	44,543	44,543
Operating lease right-of-use-assets	5,687	6,407
Other assets	743	412
Total assets	276,479	194,299
Current liabilities:
Accounts payable	12,036	10,395
Accrued liabilities	20,225	12,777
Total current liabilities	32,261	23,172
Long-term debt, net	99,265	48,579
Long-term operating lease liabilities	5,443	5,424
Total liabilities	136,969	77,175
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.001 par value; 300,000,000 shares authorized; 245,792,668 and 189,213,948 shares issued, respectively	245	189
Additional paid-in capital	1,859,346	1,709,144
Accumulated deficit	(1,717,083)	(1,589,720)
Accumulated other comprehensive loss	(113)	(428)
Treasury stock, at cost, 867,973 and 488,205 shares, respectively	(2,885)	(2,061)
Total stockholders’ equity	139,510	117,124
Total liabilities and stockholders’ equity	$ 276,479	$ 194,299

Equity Incentive Awards (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

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

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, 2023 and 2022:


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
September 30, 2023
Employees	93	%	3.9	%	4	—	%
Officers and non-employee directors	100	%	3.9	%	6	—	%
September 30, 2022
Employees	107	%	2.4	%	4	—	%
Officers and non-employee directors	91	%	1.9	%	7	—	%

Share-based Payment Arrangement, Option, Activity

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2023:


	Stock Options	Weighted Average Exercise Price
	(in thousands)
Outstanding at December 31, 2022	12,349	$	5.10
Granted	7,216	2.43

Expired	(152)	14.68
Forfeited	(785)	4.52
Outstanding at September 30, 2023	18,628	4.01
Exercisable at September 30, 2023	7,700	$	5.75

Schedule of Nonvested Restricted Stock Units Activity

The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2023:


	RSU’s	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2022	2,748	$	3.78
Granted	4,199	2.41
Vested	(1,290)	3.80
Forfeited	(250)	2.73
Outstanding at September 30, 2023	5,407	$	2.76

Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock-based compensation			$ 11,128	$ 8,252
Research and Development Expense
Stock-based compensation	$ 1,337	$ 939	3,842	3,069
Selling, General and Administrative Expenses
Stock-based compensation	$ 2,561	$ 1,709	$ 7,286	$ 5,183

Commitment and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Lessee, Operating Lease, Liability, to be Paid, Maturity

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at September 30, 2023:



	(in thousands)
2023	$	338
2024	1,378
2025	1,220
2026	865
2027	881
Thereafter	5,644
Total undiscounted operating lease liability	10,326
Less: amount of lease payments representing interest	(3,592)
Present value of future lease payments	6,734
Less: short-term operating lease liability	(1,291)
Long-term operating lease liability	$	5,443

Cash and Cash Equivalents and Investments (Details 1) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value
Estimated Fair Value	$ 197,311	$ 92,012
Cash and cash equivalents
Fair Value
Amortized Cost	21,116	46,345
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	21,116	46,345
U.S. treasury securities
Fair Value
Amortized Cost	191,551	74,022
Gross Unrealized Gains	2	0
Gross Unrealized Losses	(114)	(342)
Estimated Fair Value	191,439	73,680
Corporate debt securities
Fair Value
Amortized Cost	5,873	18,418
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(1)	(86)
Estimated Fair Value	5,872	18,332
Total short-term investments
Fair Value
Amortized Cost	197,424	92,440
Gross Unrealized Gains	2	0
Gross Unrealized Losses	(115)	(428)
Estimated Fair Value	197,311	92,012
Total cash and cash equivalents and investments
Fair Value
Amortized Cost	218,540	138,785
Gross Unrealized Gains	2	0
Gross Unrealized Losses	(115)	(428)
Estimated Fair Value	$ 218,427	$ 138,357

Equity Incentive Awards (Details 1) - Stock Options	9 Months Ended
Equity Incentive Awards (Details 1) - Stock Options	Sep. 30, 2023	Sep. 30, 2022
Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility	93.00%	107.00%
Risk-free Interest Rate	3.90%	2.40%
Expected Term	4 years	4 years
Dividend Rate	0.00%	0.00%
Officers and non-employee directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected Volatility	100.00%	91.00%
Risk-free Interest Rate	3.90%	1.90%
Expected Term	6 years	7 years
Dividend Rate	0.00%	0.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480483/718-10-35-1D

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480483/718-10-35-3

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)(1)
-Publisher FASB
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+ Details

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Measurements [Abstract]

Fair Value, by Balance Sheet Grouping

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, 2023 and December 31, 2022. There were no transfers between Level 1 and Level 2 during the periods presented.


	Fair Value as of September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)

Cash and cash equivalents	$	21,116	$	—	$	—	$	21,116
Short-term investments	191,439		5,872		—		197,311
Total cash and cash equivalents and investments	$	212,555	$	5,872	$	—	$	218,427


	Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)

Cash and cash equivalents	$	46,345	$	—	$	—	$	46,345
Short-term investments	73,680		18,332		—		92,012
Total cash and cash equivalents and investments	$	120,025	$	18,332	$	—	$	138,357

Commitments and Contingencies (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Operating lease right-of-use-assets	$ 5,687		$ 5,687		$ 6,407
Short-term lease liability	1,291		1,291		1,291
Long-term operating lease liabilities	5,443		5,443		$ 5,424
Operating Lease, Expense	$ 400	$ 500	1,200	$ 1,200
Payments for Rent			$ 500	$ 900
Operating Lease, Weighted Average Remaining Lease Term	9 years 1 month 6 days		9 years 1 month 6 days		9 years 6 months
Operating Lease, Weighted Average Discount Rate, Percent	9.60%		9.60%		9.60%

Commitments and Contingencies (Details 2) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
2023	$ 338
2024	1,378
2025	1,220
2026	865
2027	881
Thereafter	5,644
Total undiscounted operating lease liability	10,326
Less: amount of lease payments representing interest	(3,592)
Present value of future lease payments	6,734
Less: short-term operating lease liability	(1,291)	$ (1,291)
Long-term operating lease liabilities	$ 5,443	$ 5,424

Fair Value Measurements (Details 1) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value
Cash and cash equivalents	$ 21,116	$ 46,345
Short-term investments	197,311	92,012
Total cash and cash equivalents and investments	218,427	138,357
Level 1
Fair Value
Cash and cash equivalents	21,116	46,345
Short-term investments	191,439	73,680
Total cash and cash equivalents and investments	212,555	120,025
Level 2
Fair Value
Cash and cash equivalents	0	0
Short-term investments	5,872	18,332
Total cash and cash equivalents and investments	5,872	18,332
Level 3
Fair Value
Cash and cash equivalents	0	0
Short-term investments	0	0
Total cash and cash equivalents and investments	$ 0	$ 0

Condensed Consolidated Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Net product revenue	$ 148	$ 0	$ 438	$ 0
Royalties and other revenue	14	39	64	111
Total revenues	162	39	502	111
Operating expenses:
Cost of sales	7	0	15	0
Research and development, including stock-based compensation of $1,337, $939, $3,842 and $3,069, respectively	17,558	10,557	44,125	38,839
Selling, general and administrative, including stock-based compensation of $2,561, $1,709, $7,286, and $5,183, respectively	32,228	12,577	81,375	31,754
Total operating expenses	49,793	23,134	125,515	70,593
Loss from operations	(49,631)	(23,095)	(125,013)	(70,482)
Interest expense	(3,899)	(864)	(7,680)	(1,677)
Interest and other income, net	3,005	572	5,330	709
Net loss	$ (50,525)	$ (23,387)	$ (127,363)	$ (71,450)
Net loss per common share, basic	$ (0.21)	$ (0.13)	$ (0.60)	$ (0.45)
Net loss per common share, diluted	$ (0.21)	$ (0.13)	$ (0.60)	$ (0.45)
Shares used in computing net loss per common share, basic	244,925	174,904	213,112	157,984
Shares used in computing net loss per common share, diluted	244,925	174,904	213,112	157,984
Other comprehensive loss:
Unrealized (loss) gain on investments	$ (13)	$ (341)	$ 315	$ (481)
Comprehensive loss	$ (50,538)	$ (23,728)	$ (127,048)	$ (71,931)

Equity Incentive Awards

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Awards

Stock-Based Compensation: The Company has stockholder-approved equity incentive plans that permit the grant of stock options, restricted stock unit awards, and other stock-based awards to employees, directors, and consultants of the Company. Compensation expense related to stock options and restricted stock units (RSUs) is determined based on the fair value of the award on the date of the grant and is recognized on a straight-line basis over the vesting period in which an employee is required to provide service. Compensation expense is recorded in research and development expense and selling, general, and administrative expense as noted on the Company’s condensed consolidated statements of comprehensive loss.

The fair value of stock options is estimated at the date of grant using the Black-Scholes method requiring 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.


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
September 30, 2023
Employees	93	%	3.9	%	4	—	%
Officers and non-employee directors	100	%	3.9	%	6	—	%
September 30, 2022
Employees	107	%	2.4	%	4	—	%
Officers and non-employee directors	91	%	1.9	%	7	—	%

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2023:


	Stock Options	Weighted Average Exercise Price
	(in thousands)
Outstanding at December 31, 2022	12,349	$	5.10
Granted	7,216	2.43

Expired	(152)	14.68
Forfeited	(785)	4.52
Outstanding at September 30, 2023	18,628	4.01
Exercisable at September 30, 2023	7,700	$	5.75

The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2023:


	RSU’s	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2022	2,748	$	3.78
Granted	4,199	2.41
Vested	(1,290)	3.80
Forfeited	(250)	2.73
Outstanding at September 30, 2023	5,407	$	2.76