What happened

Shares of Lexicon Pharmaceuticals (NASDAQ:LXRX) fell nearly 14% today after the company was downgraded by analysts at JP Morgan from neutral to underweight. The new price target is $10 per share, which is a 7% premium to yesterday's closing price. While this isn't ideal for shareholders, it's an unfortunate reality of owning shares in publicly traded companies.

As of 1:54 p.m. EST, the stock had settled to an 11.7% loss.

So what

Lexicon Pharmaceuticals has had a rough life on the stock market in the last five years. A healthy run-up that began in early 2015 has been almost entirely erased by a precipitous fall since mid-2017. Disappointing news from late-stage drug assets didn't help late last year. Meanwhile, the balance of the company's cash and cash equivalents changed by $150 million from the end of 2016 through the end of September 2017.

A man in a business suit holding his hand out while a stock chart showing losses hovers over it.

Image source: Getty Images.

While Lexicon Pharmaceuticals now has its first drug on the market, which generated $10 million in revenue in the first nine months of 2017, it also saw a roughly equivalent fall in collaboration revenue. The result? Sales were flat (slightly lower, actually) and operating losses hardly budged.

Now what

There's still high hope for the continued ramp up of sales of the first marketed drug, but there's also growing concern that another debt or share offering is on tap for 2018. Therefore, it's not entirely surprisingly that Wall Street is recalculating the value of Lexicon Pharmaceuticals stock.

Investors should wait for the next update from management in the coming weeks when it discusses full-year 2017 results and plans for the year ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.