R | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
q | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0474169 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Yes | þ | No |
Yes | þ | No |
Yes | No | þ |
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Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
As of June 30, | As of December 31, | |||||||
2011 | 2010 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,328 | $ | 47,208 | ||||
Short-term investments, including restricted investments of $430 | 144,486 | 163,903 | ||||||
Accounts receivable, net of allowances of $35 | 505 | 744 | ||||||
Prepaid expenses and other current assets | 3,874 | 2,883 | ||||||
Total current assets | 169,193 | 214,738 | ||||||
Property and equipment, net of accumulated depreciation and amortization of $78,680 and $80,323, respectively | 48,370 | 53,427 | ||||||
Goodwill | 44,543 | 44,543 | ||||||
Other intangible assets | 53,557 | 53,557 | ||||||
Other assets | 253 | 619 | ||||||
Total assets | $ | 315,916 | $ | 366,884 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,671 | $ | 3,159 | ||||
Accrued liabilities | 8,037 | 6,264 | ||||||
Current portion of deferred revenue | 138 | 214 | ||||||
Current portion of long-term debt | 1,380 | 1,138 | ||||||
Total current liabilities | 13,226 | 10,775 | ||||||
Deferred revenue, net of current portion | 14,212 | 14,212 | ||||||
Long-term debt | 24,188 | 27,345 | ||||||
Deferred tax liabilities | 18,745 | 18,745 | ||||||
Other long-term liabilities | 51,357 | 48,783 | ||||||
Total liabilities | 121,728 | 119,860 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred stock, $.01 par value; 5,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $.001 par value; 900,000 shares authorized; 337,895 and 337,566 shares issued, respectively | 338 | 338 | ||||||
Additional paid-in capital | 923,797 | 920,324 | ||||||
Accumulated deficit | (729,673 | ) | (673,406 | ) | ||||
Accumulated other comprehensive gain | 71 | 5 | ||||||
Treasury stock, at cost, 218 and 158 shares, respectively | (345 | ) | (237 | ) | ||||
Total equity | 194,188 | 247,024 | ||||||
Total liabilities and equity | $ | 315,916 | $ | 366,884 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: | ||||||||||||||||
Collaborative research | $ | 461 | $ | 1,164 | $ | 977 | $ | 2,805 | ||||||||
Subscription and license fees | 94 | 69 | 174 | 69 | ||||||||||||
Total revenues | 555 | 1,233 | 1,151 | 2,874 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, including stock-based compensation of $818, $809, $1,657 and $1,615, respectively | 20,145 | 20,239 | 44,066 | 41,327 | ||||||||||||
Increase in fair value of Symphony Icon, Inc. purchase liability | 1,804 | — | 2,862 | — | ||||||||||||
General and administrative, including stock-based compensation of $632, $511, $1,265 and $1,010, respectively | 4,532 | 5,068 | 9,285 | 10,587 | ||||||||||||
Total operating expenses | 26,481 | 25,307 | 56,213 | 51,914 | ||||||||||||
Loss from operations | (25,926 | ) | (24,074 | ) | (55,062 | ) | (49,040 | ) | ||||||||
Gain on investments, net | — | 53 | — | 141 | ||||||||||||
Interest income | 68 | 200 | 155 | 417 | ||||||||||||
Interest expense | (810 | ) | (729 | ) | (1,417 | ) | (1,456 | ) | ||||||||
Other income (expense), net | 30 | (643 | ) | 57 | (1,325 | ) | ||||||||||
Consolidated net loss | $ | (26,638 | ) | $ | (25,193 | ) | $ | (56,267 | ) | $ | (51,263 | ) | ||||
Consolidated net loss per common share, basic and diluted | $ | (0.08 | ) | $ | (0.07 | ) | $ | (0.17 | ) | $ | (0.19 | ) | ||||
Shares used in computing consolidated net loss per common share, basic and diluted | 337,668 | 337,404 | 337,598 | 267,709 |
Lexicon Pharmaceuticals, Inc. Stockholders | |||||||||||||||||||||||||||||||||||
Common Stock | Additional | Accumulated Other | |||||||||||||||||||||||||||||||||
Shares | Par Value | Paid-In Capital | Accumulated Deficit | Comprehensive Gain | Treasury Stock | Total | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||
Balance at December 31, 2009 | 175,785 | $ | 176 | $ | 733,874 | $ | (570,175 | ) | $ | — | $ | (88 | ) | $ | 163,787 | $ | (290 | ) | $ | 163,497 | |||||||||||||||
Deconsolidation of Symphony Icon | — | — | — | — | — | — | — | 290 | 290 | ||||||||||||||||||||||||||
Cumulative-effect adjustment for adoption of new accounting principle | — | — | — | (1,456 | ) | — | — | (1,456 | ) | — | (1,456 | ) | |||||||||||||||||||||||
Stock-based compensation | — | — | 2,625 | — | — | — | 2,625 | — | 2,625 | ||||||||||||||||||||||||||
Issuance of common stock, net of fees | 161,770 | 162 | 181,312 | — | — | — | 181,474 | — | 181,474 | ||||||||||||||||||||||||||
Exercise of common stock options | 7 | — | 17 | — | — | — | 17 | — | 17 | ||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (149 | ) | (149 | ) | — | (149 | ) | |||||||||||||||||||||||
Net loss | — | — | — | (51,263 | ) | — | — | (51,263 | ) | — | (51,263 | ) | |||||||||||||||||||||||
Balance at June 30, 2010 | 337,562 | $ | 338 | $ | 917,828 | $ | (622,894 | ) | $ | — | $ | (237 | ) | $ | 295,035 | $ | — | $ | 295,035 | ||||||||||||||||
Balance at December 31, 2010 | 337,566 | $ | 338 | $ | 920,324 | $ | (673,406 | ) | $ | 5 | $ | (237 | ) | $ | 247,024 | $ | — | $ | 247,024 | ||||||||||||||||
Stock-based compensation | — | — | 2,922 | — | — | — | 2,922 | — | 2,922 | ||||||||||||||||||||||||||
Grant of stock in lieu of bonus | 201 | — | 363 | — | — | — | 363 | — | 363 | ||||||||||||||||||||||||||
Exercise of common stock options | 128 | — | 188 | — | — | — | 188 | — | 188 | ||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (108 | ) | (108 | ) | — | (108 | ) | |||||||||||||||||||||||
Net loss | — | — | — | (56,267 | ) | — | — | (56,267 | ) | — | (56,267 | ) | |||||||||||||||||||||||
Unrealized gain on investments | — | — | — | — | 66 | — | 66 | — | 66 | ||||||||||||||||||||||||||
Comprehensive loss | (56,201 | ) | (56,201 | ) | |||||||||||||||||||||||||||||||
Balance at June 30, 2011 | 337,895 | $ | 338 | $ | 923,797 | $ | (729,673 | ) | $ | 71 | $ | (345 | ) | $ | 194,188 | $ | — | $ | 194,188 |
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Consolidated net loss | $ | (56,267 | ) | $ | (51,263 | ) | ||
Adjustments to reconcile consolidated net loss to net cash used in operating activities: | ||||||||
Depreciation | 2,571 | 2,745 | ||||||
Impairment of fixed assets | 800 | — | ||||||
Amortization of Symphony Icon, Inc. purchase option | — | 1,357 | ||||||
Change in fair value of Symphony Icon, Inc. purchase liability | 2,862 | — | ||||||
Stock-based compensation | 2,922 | 2,625 | ||||||
Net gain on auction rate securities ("ARS") and ARS Rights | — | (141 | ) | |||||
Gain on disposal of property and equipment | (15 | ) | (10 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | 239 | (851 | ) | |||||
(Increase) decrease in prepaid expenses and other current assets | (991 | ) | 3,053 | |||||
Decrease in other assets | 366 | 49 | ||||||
Increase (decrease) in accounts payable and other liabilities | 2,360 | (1,459 | ) | |||||
Decrease in deferred revenue | (76 | ) | (428 | ) | ||||
Net cash used in operating activities | (45,229 | ) | (44,323 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (815 | ) | (562 | ) | ||||
Proceeds from disposal of property and equipment | 2,516 | 29 | ||||||
Purchases of investments | (64,126 | ) | — | |||||
Maturities of investments | 83,609 | 32,600 | ||||||
Net cash provided by investing activities | 21,184 | 32,067 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 188 | 181,491 | ||||||
Repurchase of common stock | (108 | ) | (149 | ) | ||||
Proceeds from debt borrowings | — | 11,377 | ||||||
Repayment of debt borrowings | (2,915 | ) | (33,319 | ) | ||||
Net cash provided by (used in) financing activities | (2,835 | ) | 159,400 | |||||
Net increase (decrease) in cash and cash equivalents | (26,880 | ) | 147,144 | |||||
Cash and cash equivalents at beginning of period | 47,208 | 100,554 | ||||||
Cash and cash equivalents at end of period | $ | 20,328 | $ | 247,698 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 1,385 | $ | 1,220 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Unrealized gain on investments | $ | 66 | $ | — |
Expected Volatility | Risk-free Interest Rate | Expected Term | Dividend Rate | ||||||||
June 30, 2011: | |||||||||||
Employees | 88 | % | 2.2 | % | 5 | 0% | |||||
Officers and non-employee directors | 78 | % | 3.2 | % | 8 | 0% | |||||
June 30, 2010: | |||||||||||
Employees | 86 | % | 2.4 | % | 5 | 0% | |||||
Officers and non-employee directors | 80 | % | 3.3 | % | 8 | 0% |
Options | Weighted Average Exercise Price | ||||||
(in thousands) | |||||||
Outstanding at December 31, 2010 | 19,598 | $ | 3.46 | ||||
Granted | 2,970 | 1.80 | |||||
Exercised | (129 | ) | 1.46 | ||||
Expired | (1,136 | ) | 8.35 | ||||
Forfeited | (189 | ) | 1.78 | ||||
Outstanding at June 30, 2011 | 21,114 | 2.99 | |||||
Exercisable at June 30, 2011 | 13,022 | $ | 3.74 |
Shares | Weighted Average Grant Date Fair Value | ||||||
(in thousands) | |||||||
Outstanding at December 31, 2010 | — | $ | — | ||||
Granted | 2,196 | 1.81 | |||||
Forfeited | (6 | ) | 1.81 | ||||
Nonvested at June 30, 2011 | 2,190 | $ | 1.81 |
Shares | Weighted Average Grant Date Fair Value | ||||||
(in thousands) | |||||||
Outstanding at December 31, 2010 | 361 | $ | 1.90 | ||||
Nonvested at June 30, 2011 | 361 | $ | 1.90 |
As of June 30, 2011 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 20,328 | $ | — | $ | — | $ | 20,328 | ||||||||
Securities maturing within one year: | ||||||||||||||||
Certificates of deposit | 545 | — | — | 545 | ||||||||||||
U.S. treasury securities | 143,870 | 72 | (1 | ) | 143,941 | |||||||||||
Total short-term investments | $ | 144,415 | $ | 72 | $ | (1 | ) | $ | 144,486 | |||||||
Total cash and cash equivalents and investments | $ | 164,743 | $ | 72 | $ | (1 | ) | $ | 164,814 | |||||||
As of December 31, 2010 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 47,207 | $ | 1 | $ | — | $ | 47,208 | ||||||||
Securities maturing within one year: | ||||||||||||||||
Certificates of deposit | 545 | — | — | 545 | ||||||||||||
U.S. treasury securities | 163,354 | 10 | (6 | ) | 163,358 | |||||||||||
Total short-term investments | $ | 163,899 | $ | 10 | $ | (6 | ) | $ | 163,903 | |||||||
Total cash and cash equivalents and investments | $ | 211,106 | $ | 11 | $ | (6 | ) | $ | 211,111 |
• | Level 1 - quoted prices in active markets for identical investments |
• | Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.) |
• | Level 3 - significant unobservable inputs (including the Company's own assumptions in determining the fair value of investments) |
Assets and Liabilities at Fair Value as of June 30, 2011 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 20,328 | $ | — | $ | — | $ | 20,328 | ||||||||
Short-term investments | 144,486 | — | — | 144,486 | ||||||||||||
Total cash and cash equivalents and investments | $ | 164,814 | $ | — | $ | — | $ | 164,814 | ||||||||
Liabilities | ||||||||||||||||
Other long-term liabilities | $ | — | $ | — | $ | 51,129 | $ | 51,129 | ||||||||
Total liabilities | $ | — | $ | — | $ | 51,129 | $ | 51,129 |
Assets and Liabilities at Fair Value as of December 31, 2010 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 47,208 | $ | — | $ | — | $ | 47,208 | ||||||||
Short-term investments | 163,903 | — | — | 163,903 | ||||||||||||
Total cash and cash equivalents and investments | $ | 211,111 | $ | — | $ | — | $ | 211,111 | ||||||||
Liabilities | ||||||||||||||||
Other long-term liabilities | $ | — | $ | — | $ | 48,267 | $ | 48,267 | ||||||||
Total liabilities | $ | — | $ | — | $ | 48,267 | $ | 48,267 |
Short-term Investments | ||||
(in thousands) | ||||
Balance at December 31, 2009 | $ | 56,034 | ||
Unrealized gains included in earnings as gain on investments, net | 141 | |||
Net sales and settlements | (32,600 | ) | ||
Balance at June 30, 2010 | $ | 23,575 |
Other Long-term Liabilities | ||||
(in thousands) | ||||
Balance at December 31, 2010 | $ | 48,267 | ||
Change in valuation of purchase consideration payable to former Symphony Icon stockholders | 2,862 | |||
Balance at June 30, 2011 | $ | 51,129 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total revenues | $ | 0.6 | $ | 1.2 | $ | 1.2 | $ | 2.9 | ||||||||
Dollar decrease | $ | (0.7 | ) | $ | (1.7 | ) | ||||||||||
Percentage decrease | (55 | )% | (60 | )% |
• | Collaborative research – Revenue from collaborative research for the three months ended June 30, 2011 decreased 60% to $0.5 million, and for the six months ended June 30, 2011 decreased 65% to $1.0 million, as compared to the corresponding periods in 2010, primarily due to reduced revenues under our alliance with Taconic Farms. |
• | Subscription and license fees – Revenue from subscriptions and license fees for the three months ended June 30, 2011 increased 36% to $0.1 million, and for the six months ended June 30, 2011 increased 152% to $0.2 million, as compared to the corresponding periods in 2010, primarily due to an increase in technology license fees. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total research and development expense | $ | 20.1 | $ | 20.2 | $ | 44.1 | $ | 41.3 | ||||||||
Dollar increase (decrease) | $ | (0.1 | ) | $ | 2.7 | |||||||||||
Percentage increase (decrease) | 0 | % | 7 | % |
• | Personnel – Personnel costs for the three months ended June 30, 2011 decreased 5% to $7.6 million, and for the six months ended June 30, 2011 increased 3% to $16.6 million, as compared to the corresponding periods in 2010, primarily due to a reduction in our personnel in February 2011 and associated severance costs. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs. |
• | Third-party and other services – Third-party and other services for the three months ended June 30, 2011 increased 7% to $5.9 million, and for the six months ended June 30, 2011 increased 17% to $13.5 million, as compared to the corresponding periods in 2010, primarily due to an increase in external preclinical research and development costs. |
• | Facilities and equipment – Facilities and equipment costs for the three months ended June 30, 2011 were $3.4 million, consistent with the corresponding period in 2010. Facilities and equipment costs for the six months ended June 30, 2011 increased 7% to $7.5 million, as compared to the corresponding period in 2010, primarily due to an impairment of buildings due to excess capacity. |
• | Laboratory supplies – Laboratory supplies expense for the three months ended June 30, 2011 decreased 12% to $1.4 million, and for the six months ended June 30, 2011 decreased 14% to $2.6 million, as compared to the corresponding periods in 2010, primarily due to reductions in early-stage research activities. |
• | Stock-based compensation – Stock-based compensation expense for the three months ended June 30, 2011 was $0.8 million, consistent with the corresponding period in 2010. Stock-based compensation expense for the six months ended June 30, 2011 increased 3% to $1.7 million, as compared to the corresponding period in 2010. |
• | Other – Other costs for the three months ended June 30, 2011 increased 11% to $1.1 million, and for the six months ended June 30, 2011 increased 9% to $2.2 million, as compared to the corresponding periods in 2010. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total general and administrative expense | $ | 4.5 | $ | 5.1 | $ | 9.3 | $ | 10.6 | ||||||||
Dollar decrease | $ | (0.5 | ) | $ | (1.3 | ) | ||||||||||
Percentage decrease | (11 | )% | (12 | )% |
• | Personnel – Personnel costs for the three months ended June 30, 2011 decreased 7% to $2.1 million, and for the six months ended June 30, 2011 decreased 8% to $4.6 million, as compared to the corresponding periods in 2010, primarily due to a reduction in our personnel in February 2011. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs. |
• | Professional fees – Professional fees for the three months ended June 30, 2011 decreased 27% to $0.8 million, and for the six months ended June 30, 2011 decreased 37% to $1.5 million, as compared to the corresponding periods in 2010, primarily due to decreased patent-related, other legal and consulting costs. |
• | Facilities and equipment – Facilities and equipment costs for the three months ended June 30, 2011 were $0.6 million, and for the six months ended June 30, 2011 were $1.2 million, consistent with the corresponding periods in 2010. |
• | Stock-based compensation – Stock-based compensation expense for the three months ended June 30, 2011 increased 24% to $0.6 million, and for the six months ended June 30, 2011 increased 25% to $1.3 million as compared to the corresponding periods in 2010. |
• | Other – Other costs for the three months ended June 30, 2011 decreased 33% to $0.4 million, and for the six months ended June 30, 2011 decreased 24% to $0.8 million, as compared to the corresponding periods in 2010. |
• | We will need additional capital in the future and, if it is unavailable, we will be forced to significantly curtail or cease our operations. If it is not available on reasonable terms, we will be forced to obtain funds by entering into financing agreements on unattractive terms. |
• | Invus, L.P. and its affiliate Invus C.V., our largest stockholders, may decline to grant their consent which is required for us to conduct additional equity offerings at prices less than $4.50 per share. In addition, we can provide no assurance that Invus will exercise its rights to require us to initiate a pro rata rights offering in which it would be obligated to purchase its pro rata portion of the offering. |
• | We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability. |
• | Our operating results have been and likely will continue to fluctuate, and we believe that period-to-period comparisons of our operating results are not a good indication of our future performance. |
• | We are an early-stage company, and have not proven our ability to successfully develop and commercialize drug candidates based on our drug target discoveries. |
• | Clinical testing of our drug candidates in humans is an inherently risky and time-consuming process that may fail to demonstrate safety and efficacy, which could result in the delay, limitation or prevention of regulatory approval. |
• | Our drug candidates are subject to a lengthy and uncertain regulatory process that may not result in the necessary regulatory approvals, which could adversely affect our ability to commercialize products. |
• | If our potential products receive regulatory approval, we or our collaborators will remain subject to extensive and rigorous ongoing regulation. |
• | The commercial success of any products that we may develop will depend upon the degree of market acceptance of our products among physicians, patients, health care payors, private health insurers and the medical community. |
• | If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our drug candidates, we may be unable to generate product revenues. |
• | If we are unable to obtain adequate coverage and reimbursement from third-party payors for any products that we may develop, our revenues and prospects for profitability will suffer. |
• | Our competitors may develop products that make our products obsolete. |
• | We may not be able to manufacture our drug candidates in commercial quantities, which would prevent us from commercializing our drug candidates. |
• | We are dependent in many ways upon our collaborations with major pharmaceutical companies. If milestone are not achieved under our collaborations or if our collaborators' efforts fail to yield pharmaceutical products on a timely basis, our opportunities to generate revenues and earn royalties will be reduced. |
• | Conflicts with our collaborators could jeopardize the success of our collaborative agreements and harm our product development efforts. |
• | We rely on third parties to carry out drug development activities. |
• | We lack the capability to manufacture materials for preclinical studies, clinical trials or commercial sales and rely on third parties to manufacture our drug candidates, which may harm or delay our product development and commercialization efforts. |
• | If we are unable to adequately protect our intellectual property, third parties may be able to use our technology, which could adversely affect our ability to compete in the market. |
• | We may be involved in patent litigation and other disputes regarding intellectual property rights and may require licenses from third parties for our discovery and development and planned commercialization activities. We may not prevail in any such litigation or other dispute or be able to obtain required licenses. |
• | We use intellectual property that we license from third parties. If we do not comply with these licenses, we could lose our rights under them. |
• | We have not sought patent protection outside of the United States for some of our inventions, and some of our licensed patents only provide coverage in the United States. As a result, our international competitors could be granted foreign patent protection with respect to our discoveries. |
• | We may be subject to damages resulting from claims that we, our employees or independent contractors have wrongfully used or disclosed alleged trade secrets of their former employers. |
• | The loss of key personnel or the inability to attract and retain additional personnel could impair our ability to expand our operations. |
• | Our collaborations with outside scientists may be subject to restriction and change. |
• | Because most of our operations are located at a single facility, the occurrence of a disaster could significantly disrupt our business. |
• | We use hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly. |
• | We may be sued for product liability. |
• | Our stock price may be extremely volatile. |
• | Invus' ownership of our common stock and its other rights under our stockholders' agreement we entered into in connection with Invus, L.P.'s $205.5 million initial investment in our common stock provide Invus with substantial influence over |
• | We may engage in future acquisitions, which may be expensive and time consuming and from which we may not realize anticipated benefits. |
• | Future sales of our common stock may depress our stock price. |
• | If we are unable to meet Nasdaq continued listing requirements, Nasdaq may take action to delist our common stock. |
Exhibit No. | Description | |
31.1 | — | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | — | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | — | Certification of Principal Executive and Principal Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | — | XBRL Instance Document |
101.SCH | — | XBRL Taxonomy Extension Schema Document |
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document |
Lexicon Pharmaceuticals, Inc. | |||
Date: | August 8, 2011 | By: | /s/ Arthur T. Sands |
Arthur T. Sands, M.D., Ph.D. | |||
President and Chief Executive Officer |
Date: | August 8, 2011 | By: | /s/ Jeffrey L. Wade |
Jeffrey L. Wade | |||
Executive Vice President, Corporate Development and Chief Financial Officer |
Exhibit No. | Description | |
31.1 | — | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | — | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | — | Certification of Principal Executive and Principal Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | — | XBRL Instance Document |
101.SCH | — | XBRL Taxonomy Extension Schema Document |
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this Quarterly Report on Form 10-Q of Lexicon Pharmaceuticals, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Arthur T. Sands | |
Arthur T. Sands, M.D., Ph.D. | |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Lexicon Pharmaceuticals, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Jeffrey L. Wade |
Jeffrey L. Wade |
Executive Vice President, Corporate Development and Chief Financial Officer |
1. | Lexicon's Quarterly Report on Form 10-Q for the period ended June 30, 2011, and to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Lexicon. |
By: | /s/ Arthur T. Sands |
Arthur T. Sands, M.D., Ph.D. | |
President and Chief Executive Officer |
By: | /s/ Jeffrey L. Wade |
Jeffrey L. Wade | |
Executive Vice President, Corporate Development and Chief Financial Officer |
Consolidated Balance Sheets Parentheticals (Unaudited) (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Restricted investments | $ 430 | $ 430 |
Allowance for doubtful accounts receivable | 35 | 35 |
Accumulated depreciation and amortization, property and equipment | $ 78,680 | $ 80,323 |
Preferred stock, par value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 900,000 | 900,000 |
Treasury stock, shares | 218 | 158 |
Common Stock [Member]
|
||
Common stock, shares, issued | 337,895 | 337,566 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 04, 2011
|
|
Entity Information | ||
Entity Registrant Name | LEXICON PHARMACEUTICALS, INC./DE | |
Entity Central Index Key | 0001062822 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 337,677,864 |
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Cash and Cash Equivalents and Investments
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Jun. 30, 2011
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Cash and Cash Equivalents and Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents Disclosure | Cash and Cash Equivalents and Investments The fair value of cash and cash equivalents and investments held at June 30, 2011 and December 31, 2010 are as follows:
There were no realized gains or losses for the three and six months ended June 30, 2011 and 2010. The cost of securities sold is based on the specific identification method. |
Other Capital Stock Agreements
|
6 Months Ended |
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Jun. 30, 2011
|
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Other Capital Stock Agreements [Abstract] | |
Stockholders' Equity Note Disclosure | Other Capital Stock Agreements Common Stock: In March 2010, Lexicon completed the public offering and sale and concurrent private placement of an aggregate of 161,770,206 shares of its common stock at a price of $1.15 per share, resulting in net proceeds of $181.5 million, after deducting underwriting discounts and commissions of $4.3 million and offering expenses of $0.3 million. Invus, L.P. and its affiliate Invus C.V., Lexicon's largest stockholders, purchased 94,270,206 of these shares. All of the net proceeds of this offering are reflected as issuance of common stock in the accompanying financial statements. |
Basis of Presentation
|
6 Months Ended |
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Jun. 30, 2011
|
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Basis of Presentation [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure | Basis of Presentation The accompanying unaudited consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. The accompanying consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. For further information, refer to the financial statements and footnotes thereto included in Lexicon’s annual report on Form 10-K for the year ended December 31, 2010, as filed with the SEC. |
Debt Obligations
|
6 Months Ended |
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Jun. 30, 2011
|
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Debt Obligations [Abstract] | |
Debt Disclosure | Debt Obligations Mortgage Loan. In April 2004, Lexicon obtained a $34.0 million mortgage on its facilities in The Woodlands, Texas. The mortgage loan has a ten-year term with a 20-year amortization and bears interest at a fixed rate of 8.23%. The mortgage had a principal balance outstanding of $25.6 million as of June 30, 2011. Net proceeds from the sale of the building as discussed in Note 6, "Fair Value Measurements," were used to pay down the mortgage principal in June 2011 in the amount of $2.4 million. The fair value of Lexicon’s mortgage loan approximates its carrying value. The fair value of Lexicon’s mortgage loan is estimated using discounted cash flow analysis, based on the Company’s current incremental borrowing rate. |
Arrangements with Symphony Icon Inc
|
6 Months Ended |
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Jun. 30, 2011
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Arrangements with Symphony Icon Inc [Abstract] | |
Arrangements with Symphony Icon Inc | Arrangements with Symphony Icon, Inc. On June 15, 2007, Lexicon entered into a series of related agreements providing for the financing of the clinical development of certain of its drug candidates, including LX1031, LX1032 and LX1033, along with any other pharmaceutical compositions modulating the same targets as those drug candidates (the “Programs”). The agreements included a Novated and Restated Technology License Agreement pursuant to which the Company licensed to Symphony Icon, a then wholly-owned subsidiary of Symphony Icon Holdings LLC (“Holdings”), the Company's intellectual property rights related to the Programs. Holdings contributed $45 million to Symphony Icon in order to fund the clinical development of the Programs. Under a Share Purchase Agreement, dated June 15, 2007, between the Company and Holdings, the Company issued and sold to Holdings 7,650,622 shares of its common stock on June 15, 2007 in exchange for $15 million and the Purchase Option (as defined below). Under a Purchase Option Agreement, dated June 15, 2007, among the Company, Symphony Icon and Holdings, the Company received from Holdings an exclusive purchase option (the “Purchase Option”) that gave the Company the right to acquire all of the equity of Symphony Icon, thereby allowing the Company to reacquire all of the Programs. Lexicon originally calculated the value of the Purchase Option as the difference between the fair value of the common stock issued to Holdings of $23.6 million (calculated at the time of issuance) and the $15.0 million in cash received from Holdings for the issuance of the common stock. Lexicon recorded the value of the Purchase Option as an asset, and was amortizing this asset over the four-year option period. Upon the adoption of a new accounting pronouncement regarding variable interest entities (formerly SFAS No. 167) on January 1, 2010, $2.3 million of structuring and legal fees originally allocated to noncontrolling interest was allocated to the value of the Purchase Option. This resulted in a cumulative-effect adjustment to retained earnings of $1.5 million, representing the additional amortization expense that would have been recorded through December 31, 2009. Upon the exercise of the Purchase Option on July 30, 2010 as discussed below, the remaining balance was amortized immediately. The amortization expense of $1,357,000 is recorded in other expense, net in the accompanying consolidated statement of operations for the six months ended June 30, 2010. On July 30, 2010, Lexicon entered into an Amended and Restated Purchase Option Agreement with Symphony Icon and Holdings and simultaneously exercised the Purchase Option, thereby reacquiring the Programs. Pursuant to the amended terms of the Purchase Option, Lexicon paid Holdings $10 million and agreed to make up to $80 million in additional base and contingent payments. The base payments will be in an amount equal to $50 million less 50% of the expenses Lexicon incurs after its exercise of the Purchase Option for the development of LX1031, LX1032, LX1033 and other pharmaceutical compositions modulating the same target as those drug candidates (the “LG103 Programs”), subject to certain exceptions and up to an aggregate reduction of $15 million. The base payments are payable in Lexicon's discretion at any time before July 30, 2013. The contingent payments will consist of 50% of any consideration Lexicon receives pursuant to any licensing transaction under which Lexicon grants a third party rights to commercialize a drug candidate from the LG103 Programs (a “Licensing Transaction”), subject to certain exceptions and up to a maximum of $30 million plus the amount of any reduction in the base payments for Lexicon's development expenses for the LG103 Programs (the “Recapture Eligible Amount”). The contingent payments will be due if and when Lexicon receives such consideration from a Licensing Transaction. In the event Lexicon receives regulatory approval in the United States for the marketing and sale of any product resulting from the LG103 Programs prior to entering into a Licensing Transaction for the commercialization of such product in the United States, in lieu of any contingent payment from such a Licensing Transaction, Lexicon will pay Holdings the sum of $15 million and any Recapture Eligible Amount attributable to the development of such product, reduced by up to 50% of such sum for the amount of any contingent payments paid prior to such United States regulatory approval attributable to any such Licensing Transaction outside of the United States with respect to such product. In the event Lexicon makes any such payment upon United States regulatory approval, Lexicon will have no obligation to make subsequent contingent payments attributable to any such Licensing Transactions for the commercialization of such product outside the United States until the proceeds of such Licensing Transactions exceed 50% of the payment made as a result of such United States regulatory approval. The base payments and the contingent payments may be paid in cash, common stock, or a combination of cash and common stock, in Lexicon's discretion, provided that at least 50% of any payment made on or prior to July 30, 2012 will be paid in common stock and no more than 50% of any payment made after such date will be paid in common stock. Lexicon accounted for the exercise of the Purchase Option and acquisition of Symphony Icon as a business combination. In connection with its acquisition of Symphony Icon, Lexicon paid $10.0 million in cash, and has also agreed to pay Holdings additional base and contingent payments as discussed above. The fair value of the base and contingent consideration payments was $45.6 million at the date of acquisition and was estimated by applying a probability-based income approach utilizing an appropriate discount rate. This estimation was based on significant inputs that are not observable in the market, referred to as Level 3 inputs. Key assumptions include: (1) a discount rate of 14% for the base payments; (2) a discount rate of 18% for the contingent payments; and (3) a probability adjusted contingency. Subsequent changes in the fair value of the Symphony Icon purchase consideration liability are recorded as an increase or decrease in fair value of Symphony Icon purchase liability expense in the accompanying consolidated statements of operations. During the six months ended June 30, 2011, the fair value of the Symphony Icon purchase consideration liability increased by $2.9 million. |
Fair Value Measurements
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Jun. 30, 2011
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Measurement Inputs, Disclosure | Fair Value Measurements The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the 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:
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 and liabilities that are measured at fair value on a recurring basis according to the fair value levels described above as of June 30, 2011 and December 31, 2010.
The Company did not have any Level 3 financial assets during the six months ended June 30, 2011. In 2010, Lexicon held auction rate securities and related rights that permitted Lexicon to require the investment bank that sold Lexicon the auction rate securities to purchase its auction rate securities at par value. On June 30, 2010, Lexicon exercised the rights and the investment bank purchased Lexicon's remaining auction rate securities at par value on July 1, 2010. The table presented below summarizes the change in consolidated balance sheet carrying value associated with these Level 3 financial assets for the six months ended June 30, 2010.
The Company's Level 3 liabilities are estimated using a probability-based income approach utilizing an appropriate discount rate. Subsequent changes in the fair value of the Symphony Icon purchase consideration liability are recorded as an increase or decrease in Symphony Icon purchase liability expense in the accompanying consolidated statements of operations. The following table summarizes the change in consolidated balance sheet carrying value associated with Level 3 liabilities for the six months ended June 30, 2011.
The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include goodwill associated with the acquisitions of Coelacanth Corporation in 2001 and Symphony Icon on July 30, 2010 and intangible assets associated with the acquisition of Symphony Icon on July 30, 2010. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. During the six months ended June 30, 2011, the Company determined that one of its buildings was impaired and therefore recorded an impairment loss of $800,000 in addition to an impairment loss of $900,000 recorded in the year ended December 31, 2010, which was recorded as research and development expense in the accompanying consolidated statement of operations. The fair value of the impaired building was estimated using offers received from potential purchasers of the building. In June 2011, the Company sold this building with an immaterial additional loss on the sale. |
Net Loss Per Share
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6 Months Ended |
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Jun. 30, 2011
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Net Loss Per Share [Abstract] | |
Earnings Per Share, Policy | Net Loss Per Share Net loss per share is computed using the weighted average number of shares of common stock outstanding during the applicable period and excludes outstanding unvested restricted shares or units. Shares associated with stock options, restricted stock units and warrants are not included because they are antidilutive. There are no differences between basic and diluted net loss per share for all periods presented. |
Stock-Based Compensation
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Jun. 30, 2011
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | Stock-Based Compensation The Company recorded $1.5 million and $1.3 million of stock-based compensation expense for the three months ended June 30, 2011 and 2010, respectively, and $2.9 million and $2.6 million of stock-based compensation expense for the six months ended June 30, 2011 and 2010, respectively. The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions for options granted in the six months ended June 30, 2011 and 2010:
The following is a summary of option activity under Lexicon’s stock-based compensation for the six months ended June 30, 2011:
During the six months ended June 30, 2011, Lexicon granted its officers 200,277 shares of stock bonus awards in lieu of cash bonus awards. The stock bonus awards had a weighted average grant date fair value of $1.81 per share and vested immediately. During the six months ended June 30, 2011, Lexicon granted its employees restricted stock units in lieu of or in addition to annual stock option awards. These restricted stock units vest in four annual installments. The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the six months ended June 30, 2011:
During 2010, Lexicon granted certain employees restricted stock units with a performance condition. The shares subject to the restricted stock units granted in 2010 vest upon the dosing of the first patient in a pivotal human clinical trial in any country, the results of which could be used to establish safety and efficacy of a pharmaceutical product discovered or developed by Lexicon as a basis for a New Drug Application. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met. The following is a summary of performance-based restricted stock units activity under Lexicon's stock-based compensation plans for the six months ended June 30, 2011:
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Collaboration and License Agreements
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6 Months Ended |
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Jun. 30, 2011
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Collaboration and License Agreements [Abstract] | |
Collaborative Arrangement Disclosure | Collaboration and License Agreements Lexicon has derived substantially all of its revenues from drug discovery and development collaborations, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, government grants and contracts, technology licenses, subscriptions to its databases and compound library sales. Revenues generated from third parties under collaborative arrangements are recorded on a gross basis on the consolidated statements of operations as Lexicon is the principal participant for these transactions for the purpose of accounting for these arrangements. Lexicon established an alliance with Organon in May 2005 to jointly discover, develop and commercialize novel biotherapeutic drugs. There was no revenue recognized under this agreement for the three months ended June 30, 2011 and 2010, respectively. Revenue recognized under this agreement was none and $0.2 million for the six months ended June 30, 2011 and 2010, respectively. Lexicon established an alliance with Taconic Farms in November 2005 for the marketing, distribution and licensing of certain lines of knockout mice and entered into extended collaborations with Taconic in July 2009 and May 2011. Revenue recognized under these agreements was $0.2 million and $0.8 million for the three months ended June 30, 2011 and 2010, respectively, and $0.4 million and $1.5 million for the six months ended June 30, 2011 and 2010, respectively. |
Recent Accounting Pronouncements
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6 Months Ended |
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Jun. 30, 2011
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Recent Accounting Pronouncements [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Recent Accounting Pronouncements In October 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2009-13, “Multiple-Deliverable Revenue Arrangements”, which amends FASB ASC Topic 605. ASU No. 2009-13 addresses how to determine whether an arrangement involving multiple deliverables contain more than one unit of accounting and how to allocate consideration to each unit of accounting in the arrangement. This pronouncement replaces all references to fair value as the measurement criteria with the term selling price and establishes a hierarchy for determining the selling price of a deliverable. The pronouncement also eliminates the use of the residual value method for determining the allocation of arrangement consideration, and requires additional disclosures. This pronouncement should be applied prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. Lexicon adopted this pronouncement in 2011 and there was no material impact to its consolidated results of operations and financial condition. In April 2010, the FASB issued ASU No. 2010-17, “Milestone Method of Revenue Recognition”, which amends FASB ASC Topic 605. ASU No. 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Research or development arrangements frequently include payment provisions whereby a portion or all of the consideration is contingent upon milestone events such as successful completion of phases in a study or achieving a specific result from the research or development efforts. The amendments in this ASU provide guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. ASU 2010-17 is effective for fiscal years and interim periods within those years beginning on or after June 15, 2010, with early adoption permitted. Lexicon adopted this pronouncement in 2011 and there was no material impact to its consolidated results of operations and financial condition. In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income”, which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this standard require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either method, adjustments must be displayed for items that are reclassified from other comprehensive income (“OCI”) to net income, in both net income and OCI. The standard does not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. This pronouncement should be applied retrospectively for fiscal years beginning after December 15, 2011, with early adoption permitted. Management does not expect the adoption of this standard to have a material impact on Lexicon's consolidated financial statements. |
Consolidated Statements of Operations Parentheticals (Unaudited) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Stock-based compensation expense associated with research and development expense | $ 818 | $ 809 | $ 1,657 | $ 1,615 |
Stock-based compensation expense associated with general and administrative expense | $ 632 | $ 511 | $ 1,265 | $ 1,010 |
Commitments and Contingencies
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6 Months Ended |
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Jun. 30, 2011
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Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingencies Operating Lease Obligations: A Lexicon subsidiary leases laboratory and office space in Hopewell, New Jersey under an agreement which expires in June 2013. The lease provides for two five-year renewal options at 95% of the fair market rent and includes escalating lease payments. Rent expense is recognized on a straight-line basis over the original lease term. Lexicon is the guarantor of the obligations of its subsidiary under this lease. The maximum potential amount of future payments the Company could be required to make under this agreement is $5.2 million without taking into account the exercise of the renewal options. The Company is required to maintain restricted investments to collateralize a standby letter of credit for this lease. The Company had $0.4 million in restricted investments as collateral as of June 30, 2011 and December 31, 2010. Additionally, Lexicon leases certain equipment under operating leases. 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. |