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 March 31, 2025 and 2024 of $3.0 million and $4.3 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 three months ended March 31, 2025 and 2024:


	Expected Volatility		Risk-free Interest Rate		Expected Term	Dividend Rate
Three Months Ended March 31, 2025
Employees(1)	—	%	—	%	—	—	%
Officers and non-employee directors	115	%	4.3	%	6	—	%
Three Months Ended March 31, 2024
Employees	96	%	4.3	%	4	—	%
Officers and non-employee directors	104	%	4.2	%	6	—	%

The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans:


	RSU’s	Weighted Average Grant Date Fair Value
	(in thousands)
Outstanding at December 31, 2024	6,300	$	2.27
Granted	13,697	0.70
Vested	(2,540)	2.40
Forfeited	(932)	1.28
Outstanding at March 31, 2025	16,525	$	1.00