LEXICON PHARMACEUTICALS, INC.
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
(In thousands, except par value and share amounts)
| As of September 30, | As of December 31, | |
|---|---|---|
| 2026 | 2025 | |
| Assets · (unaudited) | ||
| Current assets: | ||
| Cash and cash equivalents | $44,081 | $34,326 |
| Short-term investments | 139,122 | 61,904 |
| Accounts receivable, net | 1,777 | 2,384 |
| Inventory | 1,206 | 281 |
| Prepaid expenses and other current assets | 2,653 | 3,000 |
| Total current assets | 188,839 | 101,895 |
| Property and equipment, net | 1,556 | 1,863 |
| Goodwill | 44,543 | 44,543 |
| Operating lease right-of-use assets | 6,714 | 7,318 |
| Restricted cash | — | 29,000 |
| Other assets | 369 | 368 |
| Total assets | $242,021 | $184,987 |
| Liabilities and Stockholders’ Equity | ||
| Current liabilities: | ||
| Accounts payable | $4,245 | $3,083 |
| Accrued liabilities | 13,528 | 13,189 |
| Current portion of long-term debt | — | 4,595 |
| Total current liabilities | 17,773 | 20,867 |
| Long-term debt, net | 51,894 | 49,408 |
| Other long-term liabilities | 8,509 | 7,174 |
| Total liabilities | 78,176 | 77,449 |
| Commitments and contingencies (Note 7) | ||
| Stockholders’ Equity: | ||
| Convertible preferred stock, $0.01 par value; 5,000,000 shares authorized2,712,582 and 2,304,147 shares issued at September 30, 2026 and December 31, 2025, respectively; none outstanding at September 30, 2026 and December 31, 2025 | — | — |
| Common stock, $0.001 par value; 900,000,000 shares authorized at September 30, 2026; 446,911,597 and 365,848,216 shares issued, respectively | 447 | 366 |
| Additional paid-in capital | 2,230,964 | 2,129,912 |
| Accumulated deficit | (2,064,406) | (2,017,583) |
| Accumulated other comprehensive (loss) income | (317) | 30 |
| Treasury stock, at cost, 1,933,747 and 2,381,939 shares, respectively | (2,843) | (5,187) |
| Total stockholders’ equity | 163,845 | 107,538 |
| Total liabilities and stockholders’ equity | $242,021 | $184,987 |
Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| Revenues: | ||||
| Net product revenue | $1,181 | $1,008 | $2,951 | $3,592 |
| Licensing and milestone revenue | 10,000 | 13,154 | 30,000 | 40,698 |
| Royalties and other revenue | 69 | 20 | 93 | 20 |
| Total revenues | 11,250 | 14,182 | 33,044 | 44,310 |
| Operating expenses: | ||||
| Cost of sales | 79 | 10 | 226 | 73 |
| Research and development, including stock-based compensation of $1,424, $1,832, $4,177, and $5,026 respectively | 16,204 | 18,757 | 46,403 | 49,806 |
| Selling, general and administrative, including stock-based compensation of $1,959, $1,612, $5,620, and $4,656 respectively | 9,462 | 7,602 | 28,446 | 28,562 |
| Total operating expenses | 25,745 | 26,369 | 75,075 | 78,441 |
| Loss from operations | (14,495) | (12,187) | (42,031) | (34,131) |
| Interest and other expense | (1,132) | (2,155) | (5,331) | (6,308) |
| Interest and other income | 1,622 | 1,573 | 4,888 | 5,628 |
| Loss on early extinguishment of debt | — | — | (4,349) | — |
| Net loss | $(14,005) | $(12,769) | $(46,823) | $(34,811) |
| Net loss per common share, basic and diluted | $(0.03) | $(0.04) | $(0.11) | $(0.10) |
| Weighted average common shares outstanding, basic and diluted | 444,956 | 363,399 | 427,780 | 362,927 |
| Other comprehensive loss: | ||||
| Unrealized (loss) gain on investments | (113) | 43 | (347) | (90) |
| Comprehensive loss | $(14,118) | $(12,726) | $(47,170) | $(34,901) |
Condensed Consolidated Statements of Stockholders’ Equity
| Common Stock · Preferred Stock · Additional · Accumulated Other | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Comprehensive Income (Loss) | Treasury Stock | Total | |
| Balance at December 31, 2024 | 363,020 | $363 | — | $— | $2,117,325 | $(1,967,242) | $119 | $(4,615) | $145,950 |
| Stock-based compensation expense | — | — | — | — | 3,043 | — | — | — | 3,043 |
| Issuance of common stock under Equity Incentive Plans | 2,540 | 3 | — | — | (3) | — | — | — | — |
| Payments for tax withholding on share-based compensation vesting | — | — | — | — | — | — | — | (572) | (572) |
| Net loss | — | — | — | — | — | (25,295) | — | — | (25,295) |
| Unrealized loss on investments | — | — | — | — | — | — | (94) | — | (94) |
| Balance at March 31, 2025 | 365,560 | $366 | — | $— | $2,120,365 | $(1,992,537) | $25 | $(5,187) | $123,032 |
| Stock-based compensation expense | — | — | — | — | 3,195 | — | — | — | 3,195 |
| Issuance of common stock under Equity Incentive Plans | 221 | — | — | — | — | — | — | — | — |
| Net income | — | — | — | — | — | 3,252 | — | — | 3,252 |
| Unrealized loss on investments | — | — | — | — | — | — | (39) | — | (39) |
| Balance at June 30, 2025 | 365,781 | $366 | — | $— | $2,123,560 | $(1,989,285) | $(14) | $(5,187) | $129,440 |
| Stock-based compensation | — | — | — | — | 3,445 | — | — | — | 3,445 |
| Net loss | — | — | — | — | — | (12,769) | — | — | (12,769) |
| Unrealized gain on investments | — | — | — | — | — | — | 43 | — | 43 |
| Balance at September 30, 2025 | 365,781 | $366 | — | $— | $2,127,005 | $(2,002,054) | $29 | $(5,187) | $120,159 |
Condensed Consolidated Statements of Stockholders’ Equity
| Common Stock · Preferred Stock · Additional · Accumulated Other | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Shares | Par Value | Shares | Par Value | Paid-In Capital | Accumulated Deficit | Comprehensive Income (Loss) | Treasury Stock | Total | |
| Balance at December 31, 2025 | 365,848 | $366 | — | $— | $2,129,912 | $(2,017,583) | $30 | $(5,187) | $107,538 |
| Stock-based compensation expense | — | — | — | — | 3,078 | — | — | — | 3,078 |
| Issuance of preferred stock, net of fees | — | — | 408 | 4 | 26,544 | — | — | — | 26,548 |
| Issuance of common stock, net of fees | 56,489 | 57 | — | — | 69,616 | — | — | — | 69,673 |
| Issuance of common stock under Equity Incentive Plans | 3,371 | 3 | — | — | 62 | — | — | — | 65 |
| Issuance of treasury stock under Equity Incentive Plans | — | — | — | — | (5,187) | — | — | 5,187 | — |
| Payments for tax withholding on share-based compensation vesting | — | — | — | — | — | — | — | (2,843) | (2,843) |
| Net loss | — | — | — | — | — | (1,043) | — | — | (1,043) |
| Unrealized loss on investments | — | — | — | — | — | — | (160) | — | (160) |
| Balance at March 31, 2026 | 425,708 | $426 | 408 | $4 | $2,224,025 | $(2,018,626) | $(130) | $(2,843) | $202,856 |
| Stock-based compensation expense | — | — | — | — | 3,336 | — | — | — | 3,336 |
| Fees related to issuance of common stock | — | — | — | — | (50) | — | — | — | (50) |
| Issuance of common stock under Equity Incentive Plans | 741 | 1 | — | — | 231 | — | — | — | 232 |
| Conversion of preferred stock to common stock | 20,422 | 20 | (408) | (4) | (16) | — | — | — | — |
| Net loss | — | — | — | — | — | (31,775) | — | — | (31,775) |
| Unrealized loss on investments | — | — | — | — | — | — | (74) | — | (74) |
| Balance at June 30, 2026 | 446,871 | $447 | — | $— | $2,227,526 | $(2,050,401) | $(204) | $(2,843) | $174,525 |
| Stock-based compensation expense | — | — | — | — | 3,383 | — | — | — | 3,383 |
| Issuance of common stock under Equity Incentive Plans | 41 | — | — | — | 55 | — | — | — | 55 |
| Net loss | — | — | — | — | — | (14,005) | — | — | (14,005) |
| Unrealized loss on investments | — | — | — | — | — | — | (113) | — | (113) |
| Balance at September 30, 2026 | 446,912 | $447 | — | $— | $2,230,964 | $(2,064,406) | $(317) | $(2,843) | $163,845 |
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended September 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Cash flows from operating activities: | ||
| Net loss | $(46,823) | $(34,811) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 307 | 503 |
| Stock-based compensation | 9,797 | 9,682 |
| Amortization of debt-related costs | 1,669 | 1,205 |
| Loss on early extinguishment of debt | 4,349 | — |
| Accretion of marketable securities purchased at a discount | (2,022) | (3,272) |
| Other non-cash adjustments | (823) | (1,579) |
| Changes in operating assets and liabilities: | ||
| Decrease in accounts receivable, net | 607 | 1,139 |
| (Increase) decrease in inventories | (925) | 73 |
| Decrease in prepaid expenses and other current assets | 347 | 448 |
| Decrease in other long-term assets | 604 | 567 |
| Increase (decrease) in accounts payable and other liabilities | 912 | (24,573) |
| Net cash used in operating activities | (32,001) | (50,618) |
| Cash flows from investing activities: | ||
| Purchases of investments | (186,235) | (117,668) |
| Maturities of investments | 110,692 | 225,858 |
| Net cash (used in) provided by investing activities | (75,543) | 108,190 |
| Cash flows from financing activities: | ||
| Proceeds from issuance of common stock, net of fees | 70,777 | — |
| Proceeds from issuance of preferred stock, net of fees | 26,548 | — |
| Proceeds from issuance of common stock for equity incentive plans | 352 | — |
| Payments for tax withholding on share-based compensation vesting | (2,843) | (572) |
| Proceeds from debt borrowings | 55,000 | — |
| Repayment of debt borrowings | (59,261) | (45,000) |
| Payment of financing fees | (2,274) | — |
| Net cash provided by (used in) financing activities | 88,299 | (45,572) |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (19,245) | 12,000 |
| Cash, cash equivalents, and restricted cash at beginning of period | 63,326 | 66,656 |
| Cash, cash equivalents, and restricted cash at end of period | $44,081 | $78,656 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid for interest | $3,990 | $6,645 |
| Supplemental disclosure of non-cash investing and financing activities: | ||
| Right-of-use assets obtained in exchange for operating lease obligations | $— | $3,243 |
Notes to Condensed Consolidated Financial Statements
- 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. 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 three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other period. 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, 2025, as filed with the SEC.
Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) 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.
Significant Accounting Policies. There have been no significant changes to our summary of significant policies discussed in our annual report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements Issued But Not Yet Adopted. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses, which is effective prospectively for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The Company is evaluating the impact of adopting ASU 2024-03.
- Cash and Cash Equivalents, Restricted Cash and Investments
The fair value of cash and cash equivalents, restricted cash and investments held are as follows:
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |
|---|---|---|---|---|
| (in thousands) | ||||
| Cash and cash equivalents | $44,083 | $— | $(2) | $44,081 |
| Securities maturing within one year: | ||||
| U.S. treasury securities | 94,307 | — | (166) | 94,141 |
| Corporate debt securities | 45,131 | — | (150) | 44,981 |
| Total short-term investments | $139,438 | $— | $(316) | $139,122 |
| Total cash and cash equivalents and short-term investments | $183,521 | $— | $(318) | $183,203 |
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |
| (in thousands) | ||||
| Cash and cash equivalents | $34,326 | $— | $— | $34,326 |
| Restricted cash | 29,000 | — | — | 29,000 |
| Total cash and cash equivalents and restricted cash | $63,326 | $— | $— | $63,326 |
| Securities maturing within one year: | ||||
| U.S. treasury securities | 39,004 | 22 | — | 39,026 |
| Corporate debt securities | 22,871 | 8 | (1) | 22,878 |
| Total short-term investments | $61,875 | $30 | $(1) | $61,904 |
| Total cash and cash equivalents, restricted cash and short-term investments | $125,201 | $30 | $(1) | $125,230 |
As of September 30, 2026 and December 31, 2025, Lexicon’s investments in an unrealized loss position had an estimated fair value of $142.0 million and $2.5 million, respectively. During the nine months ended September 30, 2026, there were less than $0.1 million in realized gains and no realized losses. There wereno realized gains or losses during the nine months ended September 30, 2025.
- 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 assets, 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 tables provide 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. There were no transfers between Level 1 and Level 2 during the periods presented.
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| (in thousands) | ||||
| Cash and cash equivalents | $44,081 | $— | $— | $44,081 |
| Short-term investments | 94,141 | 44,981 | — | 139,122 |
| Total cash and cash equivalents and short-term investments | $138,222 | $44,981 | $— | $183,203 |
| Level 1 | Level 2 | Level 3 | Total | |
|---|---|---|---|---|
| (in thousands) | ||||
| Cash and cash equivalents | $34,326 | $— | $— | $34,326 |
| Short-term investments | 39,026 | 22,878 | — | 61,904 |
| Restricted cash | 29,000 | — | — | 29,000 |
| Total cash and cash equivalents, short-term investments and restricted cash | $102,352 | $22,878 | $— | $125,230 |
The carrying amount of prepaid expenses and other assets, accounts payable, and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The fair value of the Hercules Term Loan is determined under Level 2 in the fair value hierarchy and approximates carrying value as the loan bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics. See Note 6, Debt Obligationsfor a further discussion of our debt and related instruments.
- Supplemental Financial Information
Property and Equipment.
| Estimated Useful Lives · As of September 30, · As of December 31, | |||||
|---|---|---|---|---|---|
| In Years · 2026 · 2025 | |||||
| (in thousands) | |||||
| Computers and software | 3-5 | $2,003 | $2,003 | ||
| Furniture and fixtures | 5-7 | 389 | 389 | ||
| Leasehold improvements | 3-7 | 2,178 | 2,178 | ||
| Total property and equipment | 4,570 | 4,570 | |||
| Less: Accumulated depreciation and amortization | (3,014) | (2,707) | |||
| Net property and equipment | $1,556 | $1,863 | |||
Accrued Liabilities.
| As of September 30, | As of December 31, | |
|---|---|---|
| 2026 | 2025 | |
| (in thousands) | ||
| Accrued research and development services | $5,247 | $2,932 |
| Accrued compensation and benefits | 4,470 | 6,415 |
| Short-term lease liability | 1,642 | 1,642 |
| Other | 2,169 | 2,200 |
| Total accrued liabilities | $13,528 | $13,189 |
Net Loss Per Share. Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Potentially dilutive shares associated with warrants, stock options and restricted stock units totaling 12.3 million and 10.9 million for the three and nine months ended September 30, 2026, and totaling 5.5 million and 2.4 million for the three and nine months ended September 30, 2025, were not included in the computation of diluted earnings per share because they are antidilutive due to the Company’s net loss in all periods presented.
- Collaborations and Strategic Alliances
Novo Nordisk. In March 2025, the Company entered into an exclusive license agreement with Novo Nordisk A/S (“Novo Nordisk”) for the worldwide development, manufacturing and commercialization of LX9851, the Company’s preclinical drug candidate for obesity and associated cardiometabolic disorders. Under the agreement, the Company received an upfront payment of $45 million in April 2025, received the first two development milestones totaling $20 million in the first half of 2026, received the third development milestone of $10 million in the third quarter of 2026, and is eligible to receive (a) up to an aggregate of $455 million upon the achievement of additional specified regulatory and commercial launch milestones and (b) up to an aggregate of $475 million upon the achievement of specified sales milestones. The Company is also entitled to tiered, escalating royalties ranging from single-digit to low-double-digit percentages of annual net sales of LX9851, subject to customary royalty reduction provisions.
Viatris. In October 2024, the Company entered into an exclusive license agreement with Viatris Inc. (“Viatris”) for the development and commercialization of sotagliflozin in all markets outside of the United States and Europe (the “Licensed Territory”) pursuant to which the Company received an upfront payment of $25 million. Lexicon also entered into a manufacturing and supply agreement with Viatris pursuant to which Lexicon supplies the development and commercial requirements of sotagliflozin of Viatris, and Viatris pays an agreed upon transfer price for such supply. Lexicon is also eligible to receive (a) up to an aggregate of $12 million upon the achievement of specified regulatory milestones, (b) up to an aggregate of $185 million upon the achievement of specified sales milestones and (c) tiered royalties ranging from low double-digit to upper-teens percentages of annual net sales of sotagliflozin in the Licensed Territory.
For additional information, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
- Debt Obligations
Hercules Term Loan. In May 2026, the Company and its subsidiaries entered into a loan and security agreement with Hercules Capital, Inc. and certain of its affiliates (“Hercules”) that provides up to $100 million in borrowing capacity (the “Hercules Term Loan”) available in three tranches, each maturing in May 2030. The first $55 million tranche was funded at closing. The second $20 million tranche is available for draw at the Company’s option by no later than June 15, 2028, subject to the achievement of specified performance milestones and certain additional timing restrictions. The third $25 million tranche is available for draw at the Company’s option, subject to Hercules’s consent, at any time prior to the expiration of the interest-only payment period.
A final payment (equal to 6.25% of the amount funded under the Hercules Term Loan), is due upon prepayment or maturity of the loan. Additionally, the Company may prepay the Hercules Term Loan in whole or in part at its option at any time. Any prepayment of the Hercules Term Loan is subject to prepayment fees initially equal to 3.0% of the outstanding principal being repaid, subject to a declining scale depending on when prepayment occurs relative to the applicable closing date.
Warrants. In connection with the loan and security agreement, the Company agreed to grant Hercules warrants to purchase a number of shares of its common stock equal to 2% of the aggregate principal amount of the Hercules Term Loan made and funded under the loan and security agreement at an exercise price of $1.59 per share. Concurrent with the funding of the first tranche, the Company granted Hercules warrants to purchase 691,823 shares of its common stock. Upon funding of the second and third tranches, the Company will grant Hercules warrants to purchase an additional 251,572 and 314,465 shares of its common stock, respectively. The warrants are exercisable for afive-year period from the date of issuance.
The Company used the Black-Scholes model to calculate the fair value of the warrants which are reflected in other long-term liabilities on the consolidated balance sheet and reduced the initial carrying value of long-term debt. The fair value was recorded using assumptions of stock price volatility, the expected life of the warrants and the fair value of the common stock underlying the warrants, among other assumptions and will be remeasured each reporting period with changes in fair value recorded in the condensed consolidated statement of comprehensive loss within interest and other expense.
Interest, Principal Payments, and Carrying Value of Debt. Monthly interest-only payments are due during an initial 18-month period, which may be extended to 24 months or 30 months if specified performance milestones are achieved. The interest-only period will be followed by an amortization period extending through the maturity date. The Hercules Term Loan bears interest at a floating rate equal to the prime rate plus 3.10%, but not less than 9.85%. As of September 30, 2026, the interest rate of the Hercules Term Loan was 10.10%.
Payments of $3.5 million, $21.3 million, $21.3 million and $12.3 million, including debt principal and the final payment noted above, will be during the fiscal years ended December 31, 2027, December 31, 2028, December 31, 2029 and December 31, 2030, respectively.
As of September 30, 2026, the carrying value of the Hercules Term Loan in long-term debt on the condensed consolidated balance sheet was $51.9 million primarily reflecting the unamortized balance of debt issuance costs and discounts totaling $3.5 million, which are being amortized into interest and other expense over the life of the loan.
Restrictive Provisions/Covenants. The Company’s obligations under the Hercules Term Loan are secured by a first lien security interest in all of the assets of the Company and its subsidiaries. Financial covenants include (a) a minimum cash covenant beginning on June 1, 2027, which will be extended to January 1, 2028 upon achievement of specified performance milestones and waived at any time the Company meets specified market capitalization requirements and (b) a minimum revenue covenant relating to net sales of its products beginning only at specified times after the Company draws the second or third tranche, which will be waived at any time the Company meets specified minimum cash and/or market capitalization requirements. The Company was in compliance with its debt covenants as of September 30, 2026.
Oxford Term Loans. Concurrent with its execution of the loan and security agreement with Hercules in May 2026, the Company repaid the remaining $54.3 million (including pro-rata final payment exit fees equal to 7% of the amount funded) under the Oxford Term Loans. In April 2025, December 2025 and February 2026, the Company repaid $45 million, $3 million, and $5 million to Oxford, respectively, including pro-rata final payment exit fees equal to 7% of the amount funded under the Oxford Term Loans. In connection with the repayment of the Oxford term loans in May 2026, the Company recorded a loss on early extinguishment of debt of $4.3 million and is no longer subject to the $29 million minimum restricted cash requirement.
For additional information on the Company’s long-term debt obligations, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
- Commitments and Contingencies
Operating Lease Obligations. Operating lease right-of-use assets and associated lease liabilities are recorded in the condensed consolidated 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 apply this accounting to those leases with terms of twelve months or less.
Lexicon’s operating leases include leases of office space in The Woodlands, Texas and Bridgewater, New Jersey that will expire in January 2031 and January 2034, respectively. As of September 30, 2026 and December 31, 2025, the right-of-use assets for the office space leases of $6.7 million and $7.3 million, respectively, are separately included in operating lease right- of-use assets in the condensed consolidated balance sheet. Current liabilities relating to the leases are included in accrued liabilities in the condensed consolidated balance sheet (as further described in Note 4) and long-term operating lease liabilities of $6.0 million and $6.6 million, respectively, as of September 30, 2026 and December 31, 2025 are included in other long-term liabilities in the condensed consolidated balance sheet.
During the three months ended September 30, 2026 and 2025, the Company incurred lease expense of $0.6 million and $0.4 million, respectively. During the nine months ended September 30, 2026 and 2025, the Company incurred lease expense of $1.6 million and $1.3 million, respectively. During the nine months ended September 30, 2026 and 2025, the Company made cash payments for lease liabilities of $1.2 million and $1.0 million, respectively. As of September 30, 2026 and December 31, 2025, the weighted-average remaining lease terms were 6.3 years and 7.0 years, respectively, with weighted-average discount rates of 10.5% for each year.
The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at September 30, 2026:
| (in thousands) | |
|---|---|
| 2026 | $432 |
| 2027 | 1,683 |
| 2028 | 1,718 |
| 2029 | 1,753 |
| 2030 | 1,863 |
| Thereafter | 2,979 |
| Total undiscounted operating lease liability | 10,428 |
| Less: amount of lease payments representing interest | (2,784) |
| Present value of future lease payments | 7,644 |
| Less: short-term operating lease liability | (1,642) |
| Long-term operating lease liability | $6,002 |
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.
- Equity Incentive Awards
Stock-Based Compensation. The Company has stockholder-approved equity incentive plans that permit the grant of stock options, restricted stock units, 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 for the three months ended September 30, 2026 and 2025 of $3.4 million each, and for the nine months ended September 30, 2026 and 2025 of $9.8 million and $9.7 million, respectively, is recorded separately 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 different 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 following weighted-average assumptions were used for stock options granted in the nine months ended September 30, 2026 and 2025:
| Expected Volatility | Risk-free Interest Rate | Expected Term | DividendRate | |
|---|---|---|---|---|
| Employees | 104% | 4.2% | 4 | —% |
| Officers and non-employee directors | 104% | 3.8% | 6 | —% |
| Employees | 105% | 3.9% | 4 | —% |
| Officers and non-employee directors | 115% | 4.3% | 6 | —% |
The following is a summary of stock option activity under Lexicon’s stock-based compensation plans:
| Stock Options | Weighted Average Exercise Price | |
|---|---|---|
| (in thousands) | ||
| Outstanding at December 31, 2025 | 20,738 | $1.96 |
| Granted | 5,654 | 1.44 |
| Exercised | (250) | 1.38 |
| Expired | (207) | 8.91 |
| Forfeited | (991) | 1.55 |
| Outstanding at September 30, 2026 | 24,944 | 1.81 |
| Exercisable at September 30, 2026 | 12,150 | $2.47 |
The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans:
| RSUs | Weighted Average Grant DateFair Value | |
|---|---|---|
| (in thousands) | ||
| Outstanding at December 31, 2025 | 15,469 | $0.96 |
| Granted | 6,738 | 1.38 |
| Vested | (6,284) | 1.10 |
| Forfeited | (822) | 0.92 |
| Outstanding at September 30, 2026 | 15,101 | $1.09 |
During the nine months ended September 30, 2026, the Company issued treasury shares totaling $5.2 million in lieu of issuing additional authorized common shares in order to satisfy the annual vesting of restricted stock units for its employees and officers.
- Other Capital Agreements
2026 Common and Series B Preferred Stock Issuance. In February 2026, Lexicon sold 34,089,403 shares of its common stock in an underwritten public offering for $1.30 per share resulting in net proceeds of approximately $40.6 million (after deducting underwriting discounts and commissions and other offering expenses).
Concurrent with the underwritten public offering, Lexicon sold to certain affiliates of Invus, L.P. in a concurrent private placement (a)22,400,000 shares of its common stock for $1.30 per share and (b)408,434.70 shares of its Series B Convertible Preferred Stock for $65.00 per share, which were convertible into 20,421,735 shares of common stock, resulting in aggregate gross proceeds of approximately $55.6 million.
In April 2026, following the approval by the Company’s stockholders of the Seventh Amended and Restated Certificate of Incorporation which increased the total authorized shares of common stock from 450,000,000 to 900,000,000 and the filing and acceptance of the Seventh Amended and Restated Certificate of Incorporation by the Secretary of State of Delaware, each share of preferred stock was converted into 50 shares of common stock at par value, or 20,421,735 shares in the aggregate.
- Segment Information
Lexicon operates as a single reportable segment, primarily focusing on the discovery, development and commercialization of pharmaceutical products for the treatment of human disease. Substantially all of the Company’s revenues have been derived from drug discovery alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, technology licenses, subscriptions to its databases, product sales, government grants and contracts and compound library sales, as well as from commercial sales of its approved drug product.
The chief operating decision maker (“CODM”) is the Company’s chief executive officer (“CEO”). The CEO manages and allocates resources on a total company basis by assessing the overall level of resources available and how to best deploy these resources across research and development projects in line with the Company’s long-term company-wide strategic goals.
The CEO evaluates single-segment consolidated financial information against budget for purposes of making operating decisions, planning and forecasting for future periods, and deciding the level of investment in the Company’s various operating activities and other capital allocation activities. The CODM assesses financial performance based on consolidated net loss (as reported on the consolidated statement of comprehensive loss). The CEO also uses consolidated cash and cash equivalents and short-term investments (which can be found on our Consolidated Balance Sheets) as a measure of segment assets for allocating resources.
Summary of segment net loss, including segment expenses were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |
| (in thousands) · (in thousands) | ||||
| Revenues: | ||||
| Net product revenue | $1,181 | $1,008 | $2,951 | $3,592 |
| Licensing and milestone revenue | 10,000 | 13,154 | 30,000 | 40,698 |
| Royalties and other revenue | 69 | 20 | 93 | 20 |
| Total revenues | 11,250 | 14,182 | 33,044 | 44,310 |
| Operating expenses: | ||||
| Cost of sales | 79 | 10 | 226 | 73 |
| Research and development | 14,780 | 16,799 | 42,226 | 44,535 |
| Sales and marketing | 1,182 | 1,149 | 3,097 | 5,057 |
| General and administrative | 6,321 | 4,841 | 19,729 | 19,133 |
| Other segment expense (1)(2) | 3,383 | 3,570 | 9,797 | 9,643 |
| Total operating expenses | 25,745 | 26,369 | 75,075 | 78,441 |
| Loss from operations | (14,495) | (12,187) | (42,031) | (34,131) |
| Interest and other expense | (1,132) | (2,155) | (5,331) | (6,308) |
| Interest and other income | 1,622 | 1,573 | 4,888 | 5,628 |
| Loss on early extinguishment of debt | — | — | (4,349) | — |
| Net loss | $(14,005) | $(12,769) | $(46,823) | $(34,811) |
(1) For the three and nine months ended September 30, 2026, other segment expense includes, among other items, stock compensation of (i) $1.4 million and $4.2 million, respectively, related to research and development personnel and (ii) $2.0 million and $5.6 million, respectively, related to general and administrative personnel. For the three and nine months ended September 30, 2025, other segment expense primarily includes, among other items, stock compensation of (i) $1.8 million and $5.0 million, respectively, related to research and development personnel and (ii) $1.6 million and $4.6 million, respectively, related to general and administrative personnel.
(2) For the three and nine months ended September 30, 2025, other segment expense includes, among other items, severance costs of $0.1 million and $0.2 million, respectively, related to research and development personnel.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.