Collaboration and License Agreements

6 Months Ended

Jun. 30, 2011

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.