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Item 1. Business

2021-03-12 compared with 2020-03-12 · 170 added, 183 removed, 299 unchanged (54% of the section changed)

Lexicon Pharmaceuticals is a biopharmaceutical company with a mission of pioneering medicines that transform patients’ lives.

We are devoting most of our resources to the commercialization or development of our three most advanced drugs and drug candidates:

• We are commercializing XERMELO ® (telotristat ethyl), an orally-delivered small molecule drug, in the United States for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog, or SSA, therapy in adults inadequately controlled by SSA therapy.

We have granted Ipsen Pharma SAS, or Ipsen, an exclusive, royalty-bearing right to commercialize XERMELO outside of the United States and Japan.

Ipsen is commercializing XERMELO in the United Kingdom, Germany and multiple additional countries.

We are also developing telotristat ethyl as a treatment for biliary tract cancer and are conducting a Phase 2a clinical trial of telotristat ethyl in biliary tract cancer patients.

• We are developing Zynquista TM (sotagliflozin), an orally-delivered small molecule drug candidate, as a treatment for type 1 diabetes.

Food and Drug Administration, or FDA, has issued a complete response letter regarding our application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States and has confirmed that position in denying two appeals of the complete response letter.

Zynquista has been approved in the European Union for use as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and a body mass index > 27 kg/m 2 , who could not achieve adequate glycemic control despite optimal insulin therapy.

We are also developing sotagliflozin as a treatment for type 2 diabetes, heart failure and chronic kidney disease.

We are conducting a comprehensive Phase 3 development program, which includes one long-term outcomes study designed to demonstrate benefits in chronic heart failure and chronic kidney disease in type 2 diabetes patients and another long-term outcomes study designed to demonstrate benefits in acute decompensated heart failure in patients with and without type 2 diabetes.

We have reported preliminary top-line results from the first four Phase 3 clinical trials of sotagliflozin in adults living with type 2 diabetes.

We are devoting most of our resources to the research and development of our most advanced drug candidates:

• We are developing LX9211, an orally-delivered small molecule drug candidate, as a treatment for neuropathic pain.

We have reported top-line results from two Phase 1 clinical trials of LX9211 and are preparing to initiate a Phase 2 clinical trial of LX9211.

Compounds from our most advanced drug programs, as well as compounds from a number of additional drug discovery and development programs that we have advanced into various stages of clinical and preclinical development, originated from our own internal drug discovery efforts.

These efforts were driven by a systematic, target biology-driven approach in which we used gene knockout technologies and an integrated platform of advanced medical technologies to systematically study the physiological and behavioral functions of almost 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as potential drug targets.

We have reported results from two Phase 1 clinical trials of LX9211 and are now conducting a Phase 2 clinical trial of LX9211 in diabetic peripheral neuropathic pain and a second Phase 2 clinical trial of LX9211 in post-herpetic neuralgia.

LX9211 has received Fast Track designation from the U.S.

Food and Drug Administration, or FDA, for development in diabetic peripheral neuropathic pain.

• We are developing sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for heart failure and type 1 diabetes.

We have reported positive results from two Phase 3 clinical trials evaluating the effect of sotagliflozin on long-term outcomes related to cardiovascular death and heart failure in approximately 10,500 and 1,200 patients, respectively.

We are now working towards an application for regulatory approval to market sotagliflozin for heart failure and seeking a strategic collaboration for the commercialization of sotagliflozin, if approved.

We have reported positive results from three Phase 3 clinical trials evaluating the effect of sotagliflozin on type 1 diabetes in approximately 800, 800 and 1,400 patients, respectively.

The FDA issued a complete response letter regarding our application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States and, at our request, has issued a public Notice of Opportunity for Hearing on whether there are grounds for denying approval of our application.

Sotagliflozin has been approved in the European Union for use as an adjunct to insulin therapy in the treatment of type 1 diabetes, but has not yet been commercially launched.

• We are conducting preclinical research and development and preparing to conduct clinical development of compounds from a number of additional drug programs originating from our internal drug discovery efforts.

LX9211 originated from our collaborative neuroscience drug discovery efforts with Bristol-Myers Squibb, and sotagliflozin and compounds from a number of additional drug programs originated from our own internal drug discovery efforts.

Those efforts were driven by a systematic, target biology-driven approach in which we used gene knockout technologies and an integrated platform of advanced medical technologies to systematically study the physiological and behavioral functions of almost 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as potential drug targets.

We have identified and validated in living animals, or in vivo, more than 100 targets with promising profiles for drug discovery.

We are working both independently and through strategic collaborations and alliances with third parties to capitalize on our drug target discoveries and drug discovery and development programs.

We are working both independently and through collaborations and strategic alliances with third parties to capitalize on our drug target discoveries and drug discovery and development programs.

We seek to retain exclusive or co-exclusive rights to the benefits of certain drug discovery and development programs by developing and commercializing drug candidates from those programs internally, particularly in the United States for indications treated by specialist physicians.

We seek to collaborate with other pharmaceutical and biotechnology companies with respect to drug discovery or the development and commercialization of certain of our drug candidates, particularly with respect to commercialization in territories outside the United States or commercialization in the United States for indications treated by primary care physicians, or when the collaboration may otherwise provide us with access to expertise and resources that we do not possess internally or are complementary to our own.

Lexicon Pharmaceuticals was incorporated in Delaware in July 1995, and commenced operations in September 1995.

Lexicon Pharmaceuticals was incorporated in Delaware in July 1995, commenced operations in September 1995 and was listed on The Nasdaq Global Select Market in April 2000.

Our corporate headquarters are located at 8800 Technology Forest Place, The Woodlands, Texas 77381, and our telephone number is (281) 863-3000.

free of charge on our corporate website located at www.lexpharma.com as soon as reasonably practicable after the filing of those reports with the Securities and Exchange Commission.

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are made available free of charge on our corporate website located at www.lexpharma.com as soon as reasonably practicable after the filing of those reports with the Securities and Exchange Commission, or the SEC.

Information found on our website should not be considered part of this annual report on Form 10-K.

Drugs and Drug Candidates

We are devoting most of our resources to the commercialization or development of our three most advanced drugs and drug candidates:

XERMELO (telotristat ethyl), which we are commercializing for carcinoid syndrome diarrhea and developing for biliary tract cancer;

sotagliflozin, which we are developing for type 1 diabetes and type 2 diabetes, heart failure and chronic kidney disease;

and LX9211, which we are developing for neuropathic pain.

Alternatively, you may access these reports on the SEC’s website at www.sec.gov .

Drug Development Programs

We are devoting most of our resources to the research and development of our most advanced drug candidates:

LX9211, which we are developing as a treatment for neuropathic pain, and sotagliflozin, which we are developing as a treatment for heart failure and type 1 diabetes.

We have also advanced a number of additional compounds into various stages of clinical and preclinical development.

XERMELO (telotristat ethyl )

We commercially launched XERMELO, an orally-delivered small molecule compound, following regulatory approval in the United States in February 2017 for the treatment of carcinoid syndrome diarrhea in combination with SSA therapy in adults inadequately controlled by SSA therapy.

XERMELO was discovered by our scientists and inhibits tryptophan hydroxylase, or TPH, the rate-limiting enzyme for serotonin production which ordinarily is found primarily in enterochromaffin cells of the gastrointestinal tract.

Carcinoid syndrome is characterized by frequent and debilitating diarrhea and can result when these cells become cancerous and metastasize to the liver or other organs, where they overproduce serotonin.

The recommended dose of XERMELO is 250mg three times daily, and the full prescribing information for XERMELO includes certain warnings and precautions relating to constipation.

We have entered into a license and collaboration agreement under which we granted Ipsen an exclusive, royalty-bearing right and license to commercialize XERMELO outside of the United States and Japan.

Ipsen has received approval from the European Commission to market XERMELO for the treatment of carcinoid syndrome diarrhea in all member states of the European Union, Norway and Iceland and from certain other regulatory authorities to market XERMELO in additional countries.

Ipsen has commercially launched XERMELO in the United Kingdom, Germany and multiple additional countries.

As part of our life cycle management of the program, we are conducting our TELE-ABC Phase 2a clinical trial evaluating the safety and tolerability of telotristat ethyl and its effects on biliary tract cancer.

The trial is expected to enroll approximately 53 patients with unresectable, locally advanced, recurrent or metastatic biliary tract cancer in an open-label, two-stage study of a 250mg three times daily dose of telotristat ethyl over an initial 7-day treatment period, followed by a 500mg three times daily dose of telotristat ethyl over subsequent 21-day treatment cycles until cessation of treatment for disease progression, toxicity or patient withdrawal.

Standard of care, first-line chemotherapy doses of cisplatin and gemcitabine are administered on days one and eight of each 21-day treatment cycle.

The trial is designed to be conducted in two stages, of which the first stage is expected to enroll approximately 20 patients and the second stage is expected to enroll approximately 33 patients.

The primary efficacy endpoint under evaluation is the progression-free survival rate at six months, with secondary endpoints including progression-free survival at 12 months, overall survival rate, survival rates at six and twelve months, disease control rates and weight change.

A safety analysis of the first six patients who completed at least the first 21-day treatment cycle supported the continuation of enrollment with no adjustment in the dosing regimen.

LX9211 is an orally-delivered small molecule compound that we are developing as a treatment for neuropathic pain.

Our scientists identified the target of LX9211, adapter-associated kinase 1, or AAK1, in our target discovery efforts based on their discovery that mice lacking AAK1 exhibited increased resistance to induced neuropathic pain in preclinical models.

LX9211 and another development candidate were discovered by scientists working within our drug discovery alliance with Bristol-Myers Squibb from which we hold exclusive development and commercialization rights.

Preclinical studies of LX9211 demonstrated central nervous system penetration and reduction in pain behavior in models of neuropathic pain without affecting opiate pathways.

LX9211 has received Fast Track designation from the FDA for development in diabetic peripheral neuropathic pain.

We have completed two Phase 1 clinical trials evaluating the safety, tolerability and pharmacokinetics of LX9211.

The first trial enrolled ten cohorts of healthy volunteers in a randomized, double-blind, placebo-controlled, ascending single dose study of daily doses of LX9211.

The second trial enrolled five cohorts of healthy volunteers in a randomized, double-blind, placebo-controlled, ascending multiple dose study of daily doses of LX9211, followed by a maintenance dose for 14 days.

In both trials, LX9211 demonstrated a safety, tolerability and pharmacokinetics profile identifying the maximum tolerated dose and supportive of once-daily dosing, while exhibiting dose proportional pharmacokinetics.

The most common adverse events were headache and dizziness, and there were no drug-related serious adverse events.

We are conducting a Phase 2 clinical trial, RELIEF-DPN-1, evaluating the safety and tolerability of LX9211 and its effects on diabetic peripheral neuropathic pain, or DPN.

The trial is expected to enroll approximately 300 patients experiencing DPN in a randomized, double-blind, placebo-controlled study evaluating three treatment groups receiving an initial loading dose of 100mg or 200mg of LX9211 or placebo, followed by once daily doses of 10mg or 20mg of LX9211 or placebo, respectively.

The effects of LX9211 will be assessed over an 11-week evaluation period.

The primary efficacy endpoint under evaluation is the reduction in an average daily pain score at 6 weeks, with secondary endpoints including the proportion of patients with 30% or greater and 50% or greater reduction in pain intensity at 6 weeks and the proportion of patients discontinuing treatment due to lack of efficacy.

Certain patient-reported outcome measures will also be assessed.

We are conducting a second Phase 2 clinical trial, RELIEF-PHN-1, evaluating the safety and tolerability of LX9211 and its effects on post-herpetic neuralgia, or PHN.

The trial is expected to enroll approximately 74 patients experiencing PHN in a randomized, double-blind, placebo-controlled study evaluating two treatment groups receiving an initial loading dose of 200mg of LX9211 or placebo, followed by once daily doses of 20mg of LX9211 or placebo, respectively.

The effects of LX9211 will be assessed over an 11-week evaluation period.

Certain patient-reported outcome measures will also be assessed.

Sotagliflozin

Sotagliflozin is an orally-delivered small molecule compound that we are developing for the treatment of type 1 diabetes and type 2 diabetes, heart failure and chronic kidney disease.

Sotagliflozin was discovered by our scientists and inhibits both sodium-glucose cotransporter type 2, or SGLT2, a transporter responsible for most of the glucose reabsorption performed by the kidney, and sodium-glucose cotransporter type 1, or SGLT1, a transporter responsible for glucose and galactose absorption in the gastrointestinal tract.

Our scientists discovered that mice lacking SGLT1, SGLT2 or both exhibit potent anti-diabetic phenotypes across multiple measures of glucose control and metabolism, and found that compounds inhibiting both targets had a favorable preclinical profile relative to compounds selective for SGLT2.

We had previously granted Sanofi-Aventis Deutschland GmbH, or Sanofi, an exclusive, worldwide (excluding Japan), royalty-bearing right to develop, manufacture and commercialize sotagliflozin.

In September 2019, we and Sanofi agreed to terminate our collaboration, pursuant to which we have regained all rights to sotagliflozin and have assumed full responsibility for the worldwide development and commercialization of sotagliflozin in all indications.

Sotagliflozin is an orally-delivered small molecule compound that we are developing for the treatment of heart failure and type 1 diabetes.

Our scientists identified the targets of sotagliflozin, sodium-glucose cotransporter type 1, or SGLT1, and sodium-glucose cotransporter type 2, or SGLT2, in our target discovery efforts based on their discovery that mice lacking SGLT1, SGLT2 or both exhibited potent anti-diabetic phenotypes across multiple measures of glucose control and metabolism in preclinical models.

Preclinical studies of sotagliflozin demonstrated that compounds inhibiting both targets had a favorable preclinical profile relative to compounds selective for SGLT2.

In December 2015, we granted Sanofi-Aventis Deutschland GmbH an exclusive, worldwide (excluding Japan), royalty-bearing right to develop, manufacture and commercialize sotagliflozin.

In September 2019, we and Sanofi agreed to terminate our collaboration, pursuant to which we regained and hold exclusive development and commercialization rights to sotagliflozin.

Heart Failure.

We have completed two Phase 3 clinical trials evaluating the safety and tolerability of sotagliflozin and its effects on long-term outcomes related to composite primary endpoints of total cardiovascular death, hospitalizations for heart failure and urgent visits for heart failure.

Both clinical trials were initiated by Sanofi and transitioned to us in connection with the termination of our collaboration, following which both clinical trials were closed out early beginning in March 2020.

Our SCORED Phase 3 clinical trial enrolled 10,584 patients with type 2 diabetes, chronic kidney disease with an estimated glomerular filtration rate, or eGFR, of 25 to 60 ml per minute per 1.73 m 2 of body surface area and risks for cardiovascular disease in a randomized, double-blind, placebo-controlled study of sotagliflozin added to standard of care over a median treatment period of 16 months.

Patients were initiated on a 200mg once daily dose of sotagliflozin, which was increased at the discretion of the investigator to 400mg if unacceptable side effects did not occur.

The primary efficacy endpoint under evaluation in the study was the total number of events comprised of deaths from cardiovascular causes, hospitalizations for heart failure, and urgent visits for heart failure in patients treated with sotagliflozin compared with placebo.

Data from the study showed that treatment with sotagliflozin resulted in a significantly lower total number of cardiovascular deaths, heart failure hospitalizations and urgent visits as compared to placebo, meeting the study’s primary efficacy endpoint.

A total of 930 primary endpoint events occurred in the study, with 400 events in the sotagliflozin-treated group and 530 events in the placebo group.

There were 5.6 primary endpoint events per 100 patient-years in the sotagliflozin-treated group as compared to 7.5 events per 100 patient-years in the placebo group (HR=0.74;

95% CI=0.63 to 0.88;

There were 2.2 events of cardiovascular death per 100 patient-years in the sotagliflozin-treated group as compared to 2.4 events per 100 patient-years in the placebo group (HR=0.90;

95% CI=0.73 to 1.12;

The data showed an average reduction in hemoglobin A1c, or A1C, of 0.56% in the sotagliflozin-treated group as compared to a reduction of 0.25% in the placebo group in patients with severe chronic kidney disease, defined as having an eGFR of less than 30 ml per minute per 1.73 m 2 of body surface area (p<0.001).

In patients with moderate chronic kidney disease, defined as having an eGFR of greater than or equal to 30 ml per minute per 1.73 m 2 of body surface area, the data showed an average reduction in A1C of 0.60% in the sotagliflozin-treated group as compared to a reduction of 0.17% in the placebo group (p<0.001).

Serious adverse events that led to discontinuation of study drug, as determined by investigators, occurred in 2.1% (n=112) of the patients in the sotagliflozin-treated group and in 1.8% (n=94) of the patients in the placebo group.

Based on investigator reported events, the most common adverse events of special interest included urinary tract infections (11.5% on sotagliflozin versus 11.1% on placebo), diarrhea (8.5% on sotagliflozin versus 6.0% on placebo), volume depletion (5.3% on sotagliflozin versus 4.0% on placebo), bone fractures (2.1% on sotagliflozin versus 2.2% on placebo), and genital mycotic infections (2.4% on sotagliflozin versus 0.9% on placebo).

Among other adverse events of interest, diabetic ketoacidosis (0.6% on sotagliflozin vs.

0.3% on placebo) was more common in the sotagliflozin-treated group and severe hypoglycemia (1.0% on sotagliflozin vs.

1.0% on placebo) was similar between treatment groups.

The SCORED clinical trial was originally designed with co-primary endpoints, assessed in time-to-event analyses, of the first occurrence of a major adverse cardiovascular, or MACE, event, defined as death from cardiovascular causes, non-fatal myocardial infarction or non-fatal stroke, and the first occurrence of death from cardiovascular causes or hospitalization from heart failure, as determined by independent adjudication.

The co-primary endpoints were modified in connection with the early close out of the study to include urgent heart failure visits and reflect the total number of events, as determined by investigators, in order to enhance the statistical power of the comparison.

The specification of the primary endpoint based on total events was implemented without any awareness of the study outcomes or study group assignments and without information from an interim analysis.

In a time-to-event analysis, applying the original co-primary endpoints based on investigator reported events, the results for both the first occurrence of a MACE event (HR=0.84;

95% CI=0.72 to 0.99;

p=0.035) and the first occurrence of death from cardiovascular causes or hospitalization for heart failure (HR=0.78;

95% CI=0.66 to 0.91;

p=0.001) were consistent with those of the modified primary endpoint.

Our SOLOIST Phase 3 clinical trial enrolled 1,222 patients with type 2 diabetes who had recently been hospitalized with worsening heart failure in a randomized, double-blind, placebo-controlled study of sotagliflozin initiated either before or within three days of hospital discharge over a median treatment period of nine months.

Patients were initiated on a 200mg once daily dose of sotagliflozin, which was increased at the discretion of the investigator to 400mg if unacceptable side effects did not occur.

The first dose of sotagliflozin or placebo was administered prior to hospital discharge in 48.8% of patients and a median of two days following discharge in 51.2% of patients, with the benefits of sotagliflozin being consistent between those prespecified patient subgroups.

A total of 600 primary endpoint events occurred in the study, with 245 events in the sotagliflozin-treated group and 355 events in the placebo group.

There were 51.0 primary endpoint events per 100 patient-years in the sotagliflozin-treated group as compared to 76.3 events per 100 patient-years in the placebo group (HR=0.67;

95% CI=0.52 to 0.85;

There were 10.6 events of cardiovascular death per 100 patient-years in the sotagliflozin-treated group as compared to 12.5

events per 100 patient-years in the placebo group (HR=0.84;

95% CI=0.58 to 1.22;

Effects on the primary endpoint were consistent among patients suffering from heart failure with reduced ejection fraction, or HFrEF, and heart failure with preserved ejection fraction, or HFpEF.

Serious adverse events that led to discontinuation of study drug, as determined by investigators, occurred in 3.0% (n=18) of the patients in the sotagliflozin-treated group and in 2.8% (n=17) of the patients in the placebo group.

The most common adverse events of special interest included hypotension (6.0% on sotagliflozin versus 4.6% on placebo), urinary tract infections (4.8% on sotagliflozin versus 5.1% on placebo), acute kidney injury (4.1% on sotagliflozin versus 4.4% on placebo), and diarrhea (6.1% on sotagliflozin versus 3.4% on placebo).

Among other adverse events of interest, genital mycotic infections (0.8% on sotagliflozin vs.

0.2% on placebo) were infrequent, severe hypoglycemia (1.5% on sotagliflozin vs.

0.3% on placebo) was more common in the sotagliflozin-treated group and diabetic ketoacidosis (0.3% on sotagliflozin vs.

0.7% on placebo) was similar between treatment groups.

The SOLOIST clinical trial was originally designed with a primary endpoint of the first occurrence of death from cardiovascular causes or hospitalization from heart failure, as determined by independent adjudication.

The primary endpoint were modified in connection with the early close out of the study to include urgent heart failure visits and reflect the total number of events, as determined by investigators, in order to enhance the statistical power of the comparison.

Applying the original primary endpoint based on investigator reported events, the results for the first occurrence of death from cardiovascular causes or hospitalization for heart failure (HR=0.71;

95% CI=0.57 to 0.89;

p=0.003) were consistent with those of the modified primary endpoint.

Results from both the SCORED and SOLOIST clinical trials were published in the New England Journal of Medicine in November 2020.

In January 2021, we received feedback from the FDA that the results of the studies can support the submission of an application for regulatory approval for an indication to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent visits for heart failure in adult patients with type 2 diabetes with either worsening heart failure or additional risk factors for heart failure.

We are currently working towards an application for regulatory approval to market sotagliflozin for heart failure and seeking a strategic collaboration for the commercialization of sotagliflozin, if approved.

Type 1 Diabetes .

The FDA issued a complete response letter in March 2019 regarding our application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States and has confirmed that position in denying two appeals of the complete response letter in November 2019 and March 2020.

We are currently evaluating the feedback provided in the FDA’s most recent response.

In April 2019, Zynquista was approved in the European Union for use as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and a body mass index > 27 kg/m 2 , who could not achieve adequate glycemic control despite optimal insulin therapy.

We have not commercially launched Zynquista for the treatment of type 1 diabetes in the European Union or any other region.

We have requested an opportunity for an administrative hearing on whether there are grounds for denying approval of our application and, in response to such request, the FDA issued a public Notice of Opportunity for Hearing in March 2021.

In April 2019, sotagliflozin was approved in the European Union for use as an adjunct to insulin therapy to improve glycemic control in adults with type 1 diabetes and a body mass index > 27 kg/m 2 , who could not achieve adequate glycemic control despite optimal insulin therapy.

We have not commercially launched sotagliflozin for the treatment of type 1 diabetes in the European Union or any other region.

We have completed three Phase 3 clinical trials evaluating the safety and tolerability of sotagliflozin and its effects on glycemic parameters associated with type 1 diabetes.

1 unchanged sentence

Insulin therapy was optimized in patients over a 6-week period prior to dosing.

The primary efficacy endpoint under evaluation in the trial was the reduction of hemoglobin A1c, or A1C, versus placebo on optimized insulin treatment at 24 weeks, with secondary endpoints including percentage of patients achieving A1C levels of less than 7% without experiencing an event of severe hypoglycemia or diabetic ketoacidosis, or DKA, change in meal-time, or bolus, insulin use, body weight, fasting plasma glucose and patient-reported assessments.

The primary efficacy endpoint under evaluation in the trial was the reduction of A1C versus placebo on optimized insulin treatment at 24 weeks, with secondary endpoints including percentage of patients achieving A1C levels of less than 7% without experiencing an event of severe hypoglycemia or diabetic ketoacidosis, or DKA, change in meal-time, or bolus, insulin use, body weight, fasting plasma glucose and patient-reported assessments.

Data from the study showed that patients treated with sotagliflozin experienced statistically significant reductions in A1C from baseline of 0.43% for the 200mg dose (p<0.001) and 0.48% for the 400mg dose (p<0.001), as compared to a reduction of 0.07% on placebo after 24 weeks of treatment, meeting the study’s primary efficacy endpoint at both dose levels.

4 unchanged sentences

and the incidences of discontinuation due to adverse events were 4.1%, 4.9% and 6.5%, respectively.

Potential cases of severe hypoglycemia and DKA were reviewed by a blinded adjudication panel, which determined whether such cases met pre-established diagnostic criteria.

cases of severe hypoglycemia and DKA were reviewed by a blinded adjudication panel, which determined whether such cases met pre-established diagnostic criteria.

The number of patients with positively adjudicated severe hypoglycemic events during the full 52-week treatment period was 26 (9.7%), 17 (6.5%) and 17 (6.5%) in the placebo, 200mg and 400mg dose arms, respectively.

29 unchanged sentences

Results from the inTandem3 trial were published in the New England Journal of Medicine in September 2017.

Type 2 Diabetes, Heart Failure and Chronic Kidney Disease.

We are conducting a comprehensive Phase 3 development program for sotagliflozin in type 2 diabetes, heart failure and chronic kidney disease.

This Phase 3 program includes two long-term outcomes studies:

SCORED, which is designed to demonstrate benefits in chronic heart failure and chronic kidney disease in type 2 diabetes patients, and SOLOIST, which is designed to demonstrate benefits in acute decompensated heart failure in patients with and without type 2 diabetes.

We have cooperated with Sanofi in the transition of responsibility for such Phase 3 development program, which was previously conducted by Sanofi, and other activities relating to sotagliflozin.

We have reported preliminary top-line results from the first four Phase 3 clinical trials of sotagliflozin in adults living with type 2 diabetes.

We reported preliminary top-line results in July 2019 from our SOTA-MET Phase 3 clinical trial.

SOTA-MET enrolled 518 patients with type 2 diabetes and inadequate blood sugar control on background metformin therapy in a randomized, double-blind, placebo-controlled study of a 400mg once daily dose of sotagliflozin over a 26-week core treatment period, followed by a 53-week extension treatment period.

The primary efficacy endpoint under evaluation in the trial was the reduction of A1C versus placebo at 26 weeks.

Preliminary results from the study showed that patients treated with sotagliflozin experienced a statistically significant reduction in A1C at 26 weeks versus placebo, meeting the study's primary efficacy endpoint.

Sotagliflozin was generally well-tolerated in the trial, with similar overall incidences of serious adverse events in patients treated with sotagliflozin and placebo.

We reported preliminary top-line results in July 2019 from our SOTA-CKD3 Phase 3 clinical trial.

SOTA-CKD3 enrolled 787 patients with type 2 diabetes and moderate, or stage 3, chronic kidney disease in a randomized, double-blind, placebo-controlled study of 200mg and 400mg once daily doses of sotagliflozin over a 26-week core treatment period, followed by a 26-week extension period.

The primary efficacy endpoint under evaluation in the trial was the reduction of A1C versus placebo at 26 weeks in the overall population of patients with stage 3 chronic kidney disease and in each of the subpopulations of patients with stage 3a and 3b chronic kidney disease.

Preliminary results from the study showed that patients in the overall stage 3 population and patients with stage 3a chronic kidney disease who were treated with the 400mg dose of sotagliflozin experienced a statistically significant reduction in A1C at 26 weeks versus placebo.

Although sotagliflozin demonstrated numerical improvement on A1C at 26 weeks, a statistically significant reduction in A1C at 26 weeks versus placebo was not

achieved in patients with stage 3b chronic kidney disease.

Sotagliflozin was generally well-tolerated in the trial, with similar overall incidences of serious adverse events in patients treated with sotagliflozin and placebo.

We reported preliminary top-line results in July 2019 from our SOTA-CKD4 Phase 3 clinical trial.

SOTA-CKD4 enrolled 277 patients with type 2 diabetes and severe, or stage 4, chronic kidney disease in a randomized, double-blind, placebo-controlled study of 200mg and 400mg once daily doses of sotagliflozin over a 26-week core treatment period, followed by a 26-week extension period.

The primary efficacy endpoint under evaluation in the trial was the reduction of A1C versus placebo at 26 weeks.

Preliminary results from the study showed that patients treated with the 400mg dose of sotagliflozin experienced a clinically meaningful reduction in A1C at 26 weeks that narrowly missed statistical significance versus placebo and achievement of the primary efficacy endpoint.

Sotagliflozin was generally well-tolerated in the trial, with similar overall incidences of serious adverse events in patients treated with sotagliflozin and placebo.

We reported top-line results in December 2019 from our SOTA-EMPA Phase 3 clinical trial.

SOTA-EMPA enrolled 770 type 2 diabetes patients on dipeptidyl peptidase-4 inhibitors, with or without metformin therapy, in a randomized, double-blind, placebo-controlled study of a 400mg once daily dose of sotagliflozin and a 25mg once daily dose of empagliflozin over a 26-week treatment period.

The primary efficacy endpoint under evaluation in the trial was the reduction of A1C versus placebo at 26 weeks.

Data from the study showed that patients treated with sotagliflozin experienced a statistically significant reduction in A1C at 26 weeks versus placebo, meeting the study's primary efficacy endpoint.

The trial also achieved a key secondary endpoint of noninferiority of sotagliflozin versus empagliflozin on A1C reduction at 26 weeks.

Sotagliflozin was generally well-tolerated in the trial, with safety results comparable to previously reported safety results in type 2 diabetes.

In addition to such trials, the Phase 3 development program also includes the following randomized, double-blind, placebo-controlled studies:

• Our SOTA-MONO study of 200mg and 400mg once daily doses of sotagliflozin as monotherapy in approximately 400 patients over a 26-week treatment period;

• Our SOTA-SU study of a 400mg once daily dose of sotagliflozin in approximately 500 patients added to sulfonylurea alone or in combination with metformin therapy over a 26-week core treatment period, followed by a 53-week extension treatment period;

• Our SCORED long-term outcomes study of a 200mg once daily dose of sotagliflozin, titrated to 400mg if the 200mg dose is tolerated, in approximately 10,500 patients with cardiovascular risk factors and moderate or severe renal impairment over a study duration to be determined by cardiovascular outcome events;

• Our SOTA-INS study of 200mg and 400mg once daily doses of sotagliflozin in approximately 560 patients on background basal insulin alone or in addition to other oral antidiabetic drug therapies over a 52-week treatment period;

• Our SOTA-GLIM study of 200mg and 400mg once daily doses of sotagliflozin in approximately 930 patients on background metformin therapy compared to up to a maximum daily dose of 6mg of glimepiride over a 52-week treatment period;

• Our SOTA-BONE study of 200mg and 400mg once daily doses of sotagliflozin in approximately 360 patients aged 55 years or older, with or without any stable anti-diabetes therapy, evaluating efficacy and bone safety over a 26-week core treatment period, followed by a 78-week double-blind extension treatment period;

• Our SOLOIST long-term outcomes study of a 200mg once daily dose of sotagliflozin, titrated to 400mg if the 200mg is tolerated, in approximately 3,000 patients with acute decompensated heart failure and with or without type 2 diabetes over a study duration to be determined by cardiovascular outcome events.

LX9211 is an orally-delivered small molecule compound that we are developing for the treatment of neuropathic pain.

LX9211 was discovered by scientists working within our drug discovery alliance with Bristol-Myers Squibb and inhibits adaptor associated kinase 1, or AAK1.

Our scientists discovered that mice lacking AAK1 exhibit increased resistance to induced neuropathic pain in preclinical models.

We reported top-line data in December 2018 and December 2019 from two Phase 1 clinical trials evaluating the safety, tolerability and pharmacokinetics of LX9211.

The first trial enrolled ten cohorts of healthy volunteers in a randomized, double-blind, placebo-controlled, ascending single dose study of daily doses of LX9211.

The second trial enrolled five cohorts of healthy volunteers in a randomized, double-blind, placebo-controlled, ascending multiple dose study of daily doses of LX9211,

followed by a maintenance dose for 14 days.

The most common adverse events were headache and dizziness, and there were no drug-related serious adverse events.

We are preparing to initiate a Phase 2a clinical trial evaluating the safety and tolerability of LX9211 and its effects on diabetic peripheral neuropathic, or DPN, pain.

The trial is expected to enroll approximately 282 patients experiencing DPN pain in a randomized, double-blind, placebo-controlled study of initial 100mg or 200mg loading doses of LX9211, followed by 10mg or 20mg once daily doses of LX9211, respectively.

The effects of LX9211 will be assessed over an 11-week evaluation period.

Certain patient-reported outcome measures will also be assessed.

We have obtained exclusive research, development and commercialization rights to LX9211 and additional compounds acting through AAK1 from our alliance with Bristol-Myers Squibb.

Drug Target Discoveries

Our internal drug discovery efforts were driven by a systematic, target biology-driven approach in which we used gene knockout technologies and an integrated platform of advanced medical technologies to systematically study the physiological and behavioral functions of almost 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as potential drug targets.

Additional Drug Discovery and Development Programs

We are conducting preclinical research and development and preparing to conduct clinical development of compounds from a number of additional drug programs originating from our internal drug discovery efforts.

Those efforts were driven by a

systematic, target biology-driven approach in which we used gene knockout technologies and an integrated platform of advanced medical technologies to systematically study the physiological and behavioral functions of almost 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as potential drug targets.

We have identified and validated in living animals, or in vivo , more than 100 targets with promising profiles for drug discovery.

Collaborations

We are working both independently and through strategic collaborations and alliances with third parties to capitalize on our drug target discoveries and drug discovery and development programs.

Consistent with this approach, we seek to retain exclusive rights to the benefits of certain drug discovery and development programs by developing and commercializing drug candidates from those programs internally, particularly in the United States for indications treated by specialist physicians, as we have with XERMELO in the United States.

Collaborations and Strategic Alliances

We are working both independently and through collaborations and strategic alliances with third parties to capitalize on our drug target discoveries and drug discovery and development programs.

We seek to collaborate with other pharmaceutical and biotechnology companies with respect to drug discovery or the development and commercialization of certain of our drug candidates, particularly with respect to commercialization in territories outside the United States or commercialization in the United States for indications treated by primary care physicians, or when the collaboration may provide us with access to expertise and resources that we do not possess internally or are complementary to our own.

We also seek to collaborate with other pharmaceutical and biotechnology companies, research institutes and academic institutions to capitalize on our drug target discoveries.

Strategic Collaborations

We entered into a license and collaboration agreement with Ipsen in October 2014 under which we granted Ipsen an exclusive, royalty-bearing right and license to commercialize XERMELO outside of the United States, Canada and Japan.

The collaboration was expanded in March 2015 to include Canada.

We have received $24.5 million in upfront payments and $22.7 million in regulatory and commercial launch milestones under the agreement.

In addition, we are eligible to receive up to an additional $9.6 million upon the achievement of additional specified regulatory and commercial launch milestones and up to €72 million upon the achievement of specified sales milestones.

We are also entitled to tiered, escalating royalties ranging from low twenties to mid-thirties percentages of net sales of XERMELO in the licensed territory, subject to a credit for Ipsen’s payments to us for the manufacture and supply of such units of XERMELO and customary royalty reduction provisions.

Bristol-Myers Squibb

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For those targets that were selected for the alliance, we and Bristol-Myers Squibb worked together, on an exclusive basis, to identify, characterize and carry out the preclinical development of small molecule drugs.

Bristol-Myers Squibb has the first option to assume full responsibility for clinical development and commercialization of any drugs resulting from the alliance which enter clinical trials, other than LX9211 and additional compounds acting through AAK1.

We received $86 million in upfront payments and research funding under the agreement during the target discovery

portion of the alliance, which expired in October 2009.

We received $86 million in upfront payments and research funding under the agreement during the target discovery portion of the alliance, which expired in October 2009.

In addition, we are entitled to receive clinical and regulatory milestone payments ranging, depending on the timing and extent of our efforts in the alliance, up to $76 million for each drug developed by Bristol-Myers Squibb under the alliance.

We will also earn royalties on sales of drugs commercialized by Bristol-Myers Squibb under the alliance.

We jointly developed LX9211 with Bristol-Myers Squibb as part of the alliance, and obtained from the alliance exclusive research, development and commercialization rights to LX9211 and additional compounds acting through AAK1.

LX9211 and another development compound acting through AAK1 were discovered by scientists working within our alliance with Bristol-Myers Squibb.

We have agreed to pay Bristol-Myers Squibb up to $34.5 million in clinical and regulatory milestones for the first indication and up to $16 million in clinical and regulatory milestones for each of the second and third indications, if applicable.

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Genentech is entitled to receive milestone payments and royalties on sales of biotherapeutic drugs which we develop or commercialize under the alliance.

We completed the sale of our XERMELO (telotristat ethyl) product and related assets to TerSera Therapeutics LLC in September 2020.

XERMELO originated from our own internal drug discovery and development efforts and we commercially launched XERMELO following regulatory approval in the United States in February 2017 for the treatment of carcinoid syndrome diarrhea.

In connection with the sale, TerSera assumed responsibility for the continued development of XERMELO as a treatment for biliary tract cancer, currently in a Phase 2 clinical trial.

We are eligible to receive development, regulatory and sales milestone payments from TerSera of up to an aggregate of $65 million for the development and commercialization of XERMELO in patients with biliary tract cancer and mid-teens percentage royalty payments from TerSera on net sales of XERMELO in biliary tract cancer.

Other Collaborations

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Manufacturing and Product Supply

We do not own or operate manufacturing or distribution facilities or resources for clinical or commercial production and distribution of XERMELO or any of our drug candidates.

Instead, we have multiple contractual agreements in place with third-party contract manufacturing organizations, or CMOs, who, on our behalf, manufacture commercial supplies of XERMELO and clinical supplies of our drug candidates, and will continue to do so for the foreseeable future.

We do not own or operate manufacturing or distribution facilities or resources for clinical production and distribution of our drug candidates.

Instead, we have multiple contractual agreements in place with third-party contract manufacturing organizations, or CMOs, who, on our behalf, manufacture clinical supplies of our drug candidates, and will continue to do so for the foreseeable future.

We have selected well-established and reputable global CMOs for our active pharmaceutical ingredient, or API, and drug product manufacturing that have good regulatory standing, large manufacturing capacities, and multiple manufacturing sites within their business footprint.

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Our quality department audits these suppliers on a periodic basis.

Our commercial suppliers are subject to routine inspections by regulatory agencies.

We work closely with our third-party manufacturers to ensure compliance with current good manufacturing practices, or cGMP, and other stringent regulatory requirements enforced by the FDA and foreign regulatory agencies in other territories, as applicable.

Raw materials that are used to manufacture our API are sourced from multiple third-party suppliers in Asia and Europe.

Third-party API contract manufacturers in Asia and Europe stock sufficient quantities of these materials to ensure they can manufacture adequate API quantities per our requirements, for both clinical and commercial purposes.

We store API at third-party facilities, and provide appropriate amounts to third-party drug product contract manufacturers in Asia and North America who then manufacture, package and label our specified quantities of finished goods for XERMELO and our drug candidates.

We rely on sole source third-party drug product contract manufacturers in the United States to manufacture, package and label finished drug product for commercial distribution of XERMELO.

We also rely on a single third-party logistics provider, with two distribution locations, to provide shipping and warehousing services for our commercial supply of XERMELO in the United States.

Our third-party contract manufacturers also need to obtain materials such as excipients, components and reagents to manufacture our API and finished drug products.

Within our supply chain, we have established safety stock amounts for both our API and drug products, and store those quantities for XERMELO in multiple locations.

Within our supply chain, we have established safety stock amounts for both our API and drug products, and store those in multiple locations.

The quantities that we store are based on our business needs and take into account scenarios for demand, production lead times, potential supply interruptions and shelf life for our API and drug products.

In parallel, for business continuity reasons, we have established a backup supplier for our API and are in the process of evaluating and expect to establish an additional or backup supplier for our drug product in the near future.

We believe that our current manufacturing network has the appropriate capacity to produce sufficient commercial quantities of XERMELO for both our and Ipsen’s commercialization efforts in support of the current approved indication of carcinoid syndrome diarrhea, as well as the potential indication of biliary tract cancer, if clinical development in that indication proves to be successful and gains regulatory approval in the future.

Marketing, Sales and Distribution

We have a fully integrated commercial team consisting of sales, marketing, market access, and commercial operations functions.

Our specialized sales team promotes XERMELO in the United States, concentrating their efforts on oncologists, oncology nurses and pharmacists.

We have also built an internal medical affairs function with responsibility for responding to external inquiries regarding the appropriate use of XERMELO with regularly updated and well-substantiated scientific and medical information.

We have a limited distribution network consisting of specialty pharmacies and specialty distributors who distribute XERMELO in fulfillment of prescriptions in the United States.

We rely on Ipsen for the commercialization and distribution of XERMELO in territories outside of the United States.

To help ensure that all eligible patients in the United States have appropriate access to XERMELO, we have established a comprehensive reimbursement and support program called LexCares.

Through LexCares, we provide co-pay assistance to qualified, commercially insured patients to help minimize out-of-pocket costs and provide free drug to uninsured or under-insured patients who meet certain clinical and financial criteria.

In addition, LexCares is designed to provide comprehensive reimbursement support services, such as benefits investigation and, if needed, appeals support.

In parallel, for business continuity reasons, we will evaluate the need to establish an additional or backup supplier for our API and drug product, as necessary.

The biotechnology and pharmaceutical industries are highly competitive and characterized by rapid technological change.

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Similarly, our collaborators face similar competition from other competitors who may succeed in developing products more quickly, developing products that are more effective than those developed by our collaborators or commercialize products more effectively and profitably than our collaborators.

The competition for our products and drug candidates includes both marketed products and drug candidates that are being developed by others, including pharmaceutical products that are currently in a more advanced stage of clinical development or commercialization than are our own drug candidates.

The competition for our drug candidates includes both marketed products and drug candidates that are being developed by others, including pharmaceutical products that are currently in a more advanced stage of clinical development or commercialization than are our own drug candidates.

These competitive marketed products and drug candidates include compounds that employ different mechanisms of action in addressing diseases and conditions for which we are developing our own drug candidates and, in some cases such as sotagliflozin, that employ the same or similar mechanisms of action.

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• the availability of substantial capital resources to fund development and commercialization activities.

Our principal competition for XERMELO includes the use, above their maximum labeled dose, of the established SSA therapies octreotide and lanreotide, injectable products currently marketed by Novartis and Ipsen, respectively, as well as lutetium Lu 177 dotatate, a radiopharmaceutical product currently marketed for the treatment of gastroenteropancreatic neuroendocrine tumors by Advanced Accelerator Applications (a subsidiary of Novartis).

We expect that our principal competition for sotagliflozin in the treatment of type 1 diabetes would include established insulin therapies, as well as selective SGLT2 inhibitors currently being prescribed off-label, but which may gain regulatory approval, for the treatment of type 1 diabetes in the United States.

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In addition, AstraZeneca has received approval in the European Union for the use of dapagliflozin in type 1 diabetes as an adjunct to insulin in patients with a body mass index of 27 kg/m² or greater, when insulin alone does not provide adequate glycaemic control despite optimal insulin therapy.

We expect that our principal competition for sotagliflozin for the treatment of type 2 diabetes would include such selective SGLT2 inhibitors, as well as DPP-4 inhibitors such as sitagliptin, currently marketed for the treatment of type 2 diabetes by Merck.

We expect that our principal competition for sotagliflozin for the treatment of heart failure would include such selective SGLT2 inhibitors which may gain regulatory approval for the treatment of heart failure, as well as angiotensin-converting enzyme, or ACE, inhibitors and the combination drug sacubitril/valsartan, currently marketed for the treatment of heart failure by Novartis.

We expect that our principal competition for sotagliflozin for the treatment of chronic kidney disease would include canagliflozin and such other selective SGLT2 inhibitors which may gain regulatory approval for the treatment of chronic kidney disease.

We expect that our principal competition for sotagliflozin for the treatment of heart failure would include dapagliflozin and any other selective SGLT2 inhibitors which may gain regulatory approval for the treatment of heart failure, as well as angiotensin-converting enzyme, or ACE, inhibitors and the combination drug sacubitril/valsartan, currently marketed for the treatment of heart failure by Novartis.

We expect that our principal competition for LX9211 for the treatment of diabetic peripheral neuropathic pain, or DPN, would include duloxetine and pregabalin, which are currently marketed for the treatment of DPN by Eli Lilly and Pfizer, respectively.

We expect that our principal competition for LX9211 for the treatment of post-herpetic neuralgia, or PHN, would include gabapentin and pregabalin, both currently marketed for the treatment of PHN by Pfizer.

Government Regulation

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• pre-approval inspection of manufacturing facilities and selected clinical investigators for their compliance with cGMP and current good clinical practices, or cGCP;

• if FDA convenes an advisory committee, satisfactory completion of the advisory committee review;

• if the FDA convenes an advisory committee, satisfactory completion of the advisory committee review;

• FDA approval of the NDA or sNDA.

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Among other things, the FDA reviews an NDA to determine whether a product is safe and effective for its intended use and whether the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency.

The FDA may deny approval of an NDA by way of a Complete Response letter if the applicable regulatory criteria are not satisfied, or it may require additional clinical data or an additional pivotal Phase 3 clinical trial.

The FDA may deny approval of an NDA by way of a complete response letter if the applicable regulatory criteria are not satisfied, or it may require additional

clinical data or an additional pivotal Phase 3 clinical trial.

Even if such data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.

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All manufacturing establishments are subject to inspections by the FDA and by other federal, state and local agencies and must comply with current Good Manufacturing Practices requirements.

Non-compliance with these

requirements can result in, among other things, total or partial suspension of production, failure of the government to grant approval for marketing and withdrawal, suspension or revocation of marketing approvals.

Non-compliance with these requirements can result in, among other things, total or partial suspension of production, failure of the government to grant approval for marketing and withdrawal, suspension or revocation of marketing approvals.

Satisfaction of FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes many years, with the actual time required varying substantially based on, among other things, the nature, novelty and complexity of the drug candidate and of the disease or condition.

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The FDA closely regulates the marketing and promotion of drugs, including restricting the promotion of uses for which a drug is not approved by the agency.

Not only must a company have appropriate substantiation to support claims made about a drug, under the FDA’s current interpretation of relevant laws, a company can make only those claims relating to safety and efficacy that are for indications for which FDA has approved the drug and are otherwise consistent with the FDA-approved label for the drug.

Not only must a company have appropriate substantiation to support claims made about a drug, under the FDA’s current interpretation of relevant laws, a company can make only those claims relating to safety and efficacy that are for indications for which the FDA has approved the drug and are otherwise consistent with the FDA-approved label for the drug.

Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

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The United States Orphan Drug Act is intended to incentivize the development of products for rare diseases or conditions that affect fewer than 200,000 people in the United States.

If a drug is being developed for a rare disease or condition, to be eligible for designation as an orphan drug, the FDA must not have previously approved a drug considered the “same drug” for the same orphan indication.

If a drug is being developed for a rare disease or

condition, to be eligible for designation as an orphan drug, the FDA must not have previously approved a drug considered the “same drug” for the same orphan indication.

If the FDA has previously approved another same drug for the same indication, the sponsor of the subsequent drug would be required to provide a plausible hypotheses of clinical superiority over the previously approved drug to obtain an orphan designation.

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Moreover, a subsequent same drug could break a previously approved drug’s orphan exclusivity through a demonstration of clinical superiority over the previously approved drug.

The FDA has various programs, including Fast Track, priority review and accelerated approval, which are intended to expedite or simplify the process for developing and reviewing promising drugs, or to provide for the approval of a drug on the

basis of a surrogate endpoint.

Generally, drugs that are eligible for these programs are those for serious or life-threatening conditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existing treatments.

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Under European Union regulatory systems, a company may submit marketing authorization applications, or MAAs, either under a centralized or decentralized procedure.

Under the centralized procedure, MAAs are submitted to the European Medicines Agency, or EMA, whose Committee for Medicinal Products for Human Use reviews the application and issues an

opinion on it.

Under the centralized procedure, MAAs are submitted to the European Medicines Agency, or EMA, whose Committee for Medicinal Products for Human Use reviews the application and issues an opinion on it.

The opinion is considered by the European Commission which is responsible for deciding applications.

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the federal Anti-Kickback Statute, which prohibits.

among other things, soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

among other things, soliciting, receiving,

offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

and federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent.

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Other countries also have, or are developing, laws governing the collection, use and transmission of personal information.

In addition, most healthcare providers who are expected to prescribe our products and from whom we obtain patient health information, are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of

1996, as amended by the Health Information Technology and Clinical Health Act, or HIPAA.

Although we are not directly subject to HIPAA, we could be subject to criminal penalties if we knowingly obtain individually identifiable health information from a HIPAA-covered entity, including healthcare providers, in a manner that is not authorized or permitted by HIPAA.

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Compliance with such requirements can require significant investment in personnel, systems and resources, but failure to properly calculate our prices, or offer required discounts or rebates could subject us to substantial penalties.

Other Regulations

In addition to the foregoing, our business is subject to regulation under various state and federal environmental laws, including the Occupational Safety and Health Act, the Resource Conservation and Recovery Act and the Toxic Substances Control Act.

These and other laws govern our use, handling and disposal of various biological, chemical and radioactive substances used in and wastes generated by our operations.

We believe that we are in material compliance with applicable environmental laws and that our continued compliance with these laws will not have a material adverse effect on our business.

We cannot predict, however, whether new regulatory restrictions will be imposed by state or federal regulators and agencies or whether existing laws and regulations will adversely affect us in the future.

Environmental Matters

In addition to the foregoing, our business is subject to regulation under various state and federal environmental and worker safety laws, including the Occupational Safety and Health Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Toxic Substances Control Act, each as amended from time to time.

These and other laws and their implementing regulations govern our manufacture, use, storage, handling, transport and disposal of various biological, chemical, radioactive and other hazardous substances used in our operations and the wastes generated by those activities.

We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these substances.

We may face liability for any injury or contamination that results from our use or the use by third parties of those substances, and such liability may exceed our insurance coverage and our total assets.

Historically, our environmental and worker safety compliance costs have not had a material adverse effect on our results of operations, but there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material adverse effect on our business and operational results.

The trend in environmental and occupational health and safety laws and regulations is to typically place more restrictions and limitations on activities that may adversely affect the environment or expose workers to injury.

If existing regulatory requirements or enforcement policies change or new regulatory

or enforcement initiatives are developed and implemented in the future, we may be required to make significant, unanticipated capital and operating expenditures.

Patents and Proprietary Rights

We are able to protect our proprietary rights from unauthorized use by third parties only to the extent that those rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We can protect our proprietary rights from unauthorized use by third parties only to the extent that those rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

Accordingly, patents and other proprietary rights are an essential element of our business.

We own or exclusively license patents and/or patent applications throughout the world that claim our products and drug candidates, including:

• issued patents and pending patent applications in Europe, the United States, and other countries throughout the world, including Australia, Argentina, Brazil, Canada, China, Europe, India, Israel, Japan, Mexico, New Zealand, South Africa, and South Korea, that claim telotristat ethyl and associated crystalline forms, pharmaceutical compositions comprising telotristat ethyl, and methods of its manufacture and use;

• issued patents and pending patent applications in Europe, the United States, and other countries throughout the world, including Australia, Argentina, Brazil, Canada, China, Europe, India, Israel, Japan, Mexico, New Zealand, South Africa, and South Korea, that claim sotagliflozin and associated crystalline forms, pharmaceutical compositions comprising sotagliflozin, and methods of its manufacture and use;

South Korea, that disclose and/or claim LX9211, pharmaceutical compositions comprising LX9211, and methods of its use.

Additionally, we hold rights to a number of patents and patent applications under license agreements with third parties.

Many of these licenses are nonexclusive, although some are exclusive in specified fields.

Most of the licenses have terms that extend for the life of the licensed patents.

We own or exclusively license patents and patent applications throughout the world that claim our products and drug candidates, including:

• issued patents and pending patent applications in Europe, the United States, and other countries throughout the world, including Australia, Brazil, Canada, China, Europe, India, Israel, Japan, Mexico, New Zealand, South Africa, and South Korea, that claim LX9211, pharmaceutical compositions comprising LX9211, and methods of its use;

• issued patents and pending patent applications in Europe, the United States, and other countries throughout the world, including Australia, Argentina, Brazil, Canada, China, Europe, India, Israel, Japan, Mexico, New Zealand, South Africa, and South Korea, that claim sotagliflozin, crystalline forms of sotagliflozin, pharmaceutical compositions comprising sotagliflozin, and methods of its manufacture and use.

Patents extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained.

The actual protection afforded by a patent, which can vary from country to country, depends on the type of patent, the scope of its coverage and the availability of legal remedies in the country.

We have filed patent applications and hold issued patents covering our approved drug, XERMELO, and each of our drug candidates.

None of our United States patents that claim XERMELO or one of our drug candidates has a normal expiration date earlier than 2026.

We have filed patent applications and hold issued patents covering each of our drug candidates.

None of our United States patents that claim one of our drug candidates has a normal expiration date earlier than 2028.

All of our employees, consultants and advisors are required to execute a proprietary information agreement upon the commencement of employment or consultation.

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Lonnel Coats 56 President and Chief Executive Officer and Director

Pablo Lapuerta, M.D.

56 Executive Vice President and Chief Medical Officer

66 Executive Vice President, Commercial Supply Operations

Santini 61 Executive Vice President and Chief Commercial Officer

67 Executive Vice President, Innovation & Chemical Sciences

Praveen Tyle, Ph.D.

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from Oakland University.

Pablo Lapuerta, M.D.

has been our executive vice president and chief medical officer since February 2015 and previously served in a series of medical and clinical leadership positions since joining our company in 2011.

Lapuerta was formerly vice president at Bristol-Myers Squibb Company with responsibility for global development of an Alzheimer’s disease drug candidate, and prior to that served as senior vice president, clinical strategy and chief medical officer of Cogentus Pharmaceuticals, Inc.

and in a variety of clinical development leadership roles at Bristol-Myers Squibb, where he worked for 11 years before joining Cogentus.

He holds a B.A.

in biology from Harvard College and an M.D.

from Harvard Medical School.

has been our executive vice president, commercial supply operations since May 2017 and previously served in a series of manufacturing and scientific leadership positions since joining our company in 2001.

has been our executive vice president of innovation and chemical sciences since September 2020 and previously served in a series of manufacturing and scientific leadership positions since joining our company in 2001.

Main was president and chief executive officer of Coelacanth Corporation, a leader in using proprietary chemistry technologies to rapidly discover new chemical entities for drug development, until our acquisition of Coelacanth in

formerly senior vice president, U.S.

Main was formerly senior vice president, U.S.

Research at Novartis Pharmaceuticals Corporation, where he worked for 20 years before joining Coelacanth.

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in organic chemistry from the University of Liverpool, England and completed postdoctoral studies at the Woodward Research Institute.

Santini has been our executive vice president and chief commercial officer since November 2016 and previously served in a series of commercial leadership positions since joining our company in April 2015.

Santini was formerly vice president of market access and an executive member at Bayer Healthcare Pharmaceuticals, where he had executive responsibility for market access, pricing, trade and channel management and payer account management, and prior to that served in a variety of commercial leadership roles of increasing responsibility during eight years of service at Bayer and 22 years of service at Berlex Laboratories.

Santini served as a non-commissioned officer in the United States Air Force, where he completed the Radiologic Technology Program at the United States Air Force School of Health Care Science and an AAS in business marketing from Westchester Community College.

Praveen Tyle, Ph.D.

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from the University of Houston.

Significant Shareholders

We have valuable relationships with Invus, L.P.

and its affiliates, which we collectively refer to as Invus.

Invus currently owns approximately 52.3% of the outstanding shares of our common stock.

Human Capital Resources

As of February 28, 2021, we employed 78 persons, of whom 14 hold M.D.

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None of our employees are represented by a labor union and we believe that our relationship with our employees is good.

Our company culture is supported by our five core values:

innovation, transparency, ownership, respect and integrity.

We value a diverse workforce and proudly reflect a company culture developed with a variety of ethnic backgrounds, nationalities, races, religions, military service, sexual preferences and abilities.

We are committed to promoting and maintaining an inclusive, high-performing environment where all team members embrace and leverage each other’s talents and backgrounds and nourish innovative thinking in order to achieve their full potential and contribute to our success.

Our most valued resource is the collective talent and time that our employees dedicate to support and advance our mission.

Accordingly, we offer our employees a comprehensive compensation and benefits package that is competitive within the industry and make investing in the growth and development of our employees an important priority.

Employee development is advanced through talent management, promotions, mentoring, stretch assignments, internships, formal training, speaker series, conferences, continuing education and educational reimbursement.

Research and Development Expenses

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business