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Item 1. Business

2022-03-10 compared with 2021-03-12 · 146 added, 101 removed, 368 unchanged (40% 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 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 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 devoting most of our resources to the research, development and preparation for commercialization of our most advanced drug candidates:

• 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 are now preparing a resubmission of our application for regulatory approval to market sotagliflozin in the United States for heart failure after voluntarily withdrawing our initial application to correct a technical issue with the initial submission.

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.

Food and Drug Administration, or FDA, issued a complete response letter regarding our application for regulatory approval to market sotagliflozin for type 1 diabetes in the United States.

At our request, the FDA has issued a public Notice of Opportunity for Hearing on whether there are grounds for denying approval of our application and the hearing process is ongoing.

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

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

• 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.

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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.

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.

Our corporate headquarters are located at 2445 Technology Forest Blvd., 11th Floor, The Woodlands, Texas 77381, and our telephone number is (281) 863-3000.

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.

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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 are devoting most of our resources to the research, development and preparation for commercialization of our most advanced drug candidates:

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

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

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

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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;

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;

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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.

In December 2021, we submitted an application for regulatory approval to market sotagliflozin in the United States for heart failure.

In February 2022, we voluntarily withdrew the application to correct a technical issue we identified in the initial submission and are now preparing a resubmission of the application.

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 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 November 2020, we requested an opportunity for an administrative hearing on whether there are grounds for denying approval of our application.

In response to such request, the FDA issued a public Notice of Opportunity for Hearing in March 2021 and the hearing process is ongoing.

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.

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

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

Potential 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.

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The differences from placebo were clinically significant for both the 200mg and 400mg dose groups (p=0.026 and p<0.001, respectively).

The increase in time spent in range by both sotagliflozin dose groups was a result of significantly reduced time spent above 180 mg/dL, while the time spent below 70 mg/dL was not increased.

The increase in time spent in range by both sotagliflozin dose groups was a result of significantly reduced time

spent above 180 mg/dL, while the time spent below 70 mg/dL was not increased.

These results translate into an additional 1.41 hours and 3.02 hours that a patient would spend within the 70-180 mg/dL target range in a 24-hour period, for the 200mg and 400mg dose groups respectively.

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

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

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

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

Certain patient-reported outcome measures will also be assessed.

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.

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.

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We received $58 million in upfront payments, research funding and research milestone payments under the agreement during the research collaboration term, which expired in November 2008.

In addition, we are entitled to receive clinical and regulatory milestone payments ranging, depending on the extent of our efforts in the alliance, up to $25 million for each drug target for which Genentech develops a biotherapeutic drug under the alliance.

In addition, we are entitled to receive clinical and regulatory milestone payments ranging, depending on the extent of our efforts in the alliance, up to $25 million for each drug target for which

Genentech develops a biotherapeutic drug under the alliance.

We will also earn royalties on sales of biotherapeutic drugs commercialized by Genentech under the alliance.

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 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 do not own or operate manufacturing or distribution facilities or resources for production and distribution of sotagliflozin, LX9211 or our other drug candidates.

Instead, we have multiple contractual agreements in place with third-party contract manufacturing organizations, or CMOs, who, on our behalf, manufacture supplies of sotagliflozin, LX9211 and our other 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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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 clinical 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 our drug candidates.

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

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

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

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.

Such selective SGLT2 inhibitors include dapagliflozin, empagliflozin and canagliflozin, currently marketed for the treatment of type 2 diabetes by AstraZeneca, Boehringer Ingelheim and Eli Lilly, and Janssen (a subsidiary of Johnson & Johnson), respectively.

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 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.

We expect that our principal competition for sotagliflozin for the treatment of heart failure would include selective SGLT2 inhibitors which have gained or may gain regulatory approval for the treatment of heart failure.

Such selective SGLT2 inhibitors include dapagliflozin and empagliflozin, currently marketed for the treatment of heart failure by AstraZeneca and through an alliance between Boehringer Ingelheim and Eli Lilly, respectively.

We expect that such competition would also include, to some extent, other classes of drugs used in the treatment of heart failure, such as the combination drug sacubitril/valsartan, currently marketed for the treatment of heart failure by Novartis, and vericiguat, currently marketed for the treatment of heart failure by Merck, or which may gain regulatory approval for the treatment of heart failure, such as omecamtiv mecarbil, currently being developed for the treatment of heart failure by Cytokinetics.

Such selective SGLT2 inhibitors include dapagliflozin, empagliflozin and canagliflozin, currently marketed for the treatment of type 2 diabetes by AstraZeneca, through an alliance between Boehringer Ingelheim and Eli Lilly, and by Janssen (a subsidiary of Johnson & Johnson), respectively.

We expect that our principal competition for LX9211 for the treatment of DPN would include duloxetine and pregabalin, which are currently marketed for the treatment of DPN by Eli Lilly and Pfizer, respectively, and are also available as generics.

We expect that our principal competition for LX9211 for the treatment of PHN would include gabapentin and pregabalin, both of which are currently marketed for the treatment of PHN by Pfizer and also available as generics.

Government Regulation

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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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Once issued, the FDA may withdraw product approval if ongoing regulatory standards are not met or if safety problems occur after the product reaches the market.

In addition, the FDA may require testing and surveillance programs to monitor the effect of approved products which have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.

In addition, the FDA may require testing and surveillance programs to monitor the effect of

approved products which have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.

In addition to obtaining FDA approval for each product, each drug manufacturing establishment must be inspected and approved by the FDA.

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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.

Upon FDA receipt of orphan drug designation, the sponsor is eligible for tax credits of up to 25% for qualified clinical trial expenses, the ability to apply for annual grant funding and waiver of PDUFA application fee.

In addition, upon marketing approval, an orphan-designated drug could be eligible for seven years of market exclusivity for the approved orphan-designated indication.

In addition, upon marketing approval, an orphan-designated drug could be eligible for seven years

of market exclusivity for the approved orphan-designated indication.

Such orphan drug exclusivity, if awarded, would only block the approval of any drug considered the same drug for the same orphan indication.

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In addition to regulations in the United States, we are subject to the regulations of other countries governing clinical trials and the manufacturing, commercial sales and distribution of our products outside of the United States.

Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of countries outside of the United States before we can commence clinical trials in such countries and approval of the regulators of such countries or economic areas, such as the European Union, before we may market products in those countries or areas.

economic areas, such as the European Union, before we may market products in those countries or areas.

The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.

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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.

Additionally, we are subject to state law equivalents of each of the above federal laws, which may be broader in scope and apply regardless of whether the payer is a federal healthcare program, and many of which differ from each other in significant ways and may not have the same effect, further complicate compliance efforts.

Additionally, we are subject to state law equivalents of each of the above federal laws, which may be

broader in scope and apply regardless of whether the payer is a federal healthcare program, and many of which differ from each other in significant ways and may not have the same effect, further complicate compliance efforts.

Numerous federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use and disclosure of personal information.

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Failure to provide adequate privacy protections and maintain compliance with safe harbor mechanisms could jeopardize business transactions across borders and result in significant penalties.

In addition, the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the PPACA, created a federal requirement under the federal Open Payments program, that requires certain manufacturers to track and report to the Centers for Medicare and Medicaid Services, or CMS, annually certain payments and other transfers of value provided to physicians and teaching hospitals made in the previous calendar year.

In addition, the Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010, or the ACA, created a federal requirement under the federal Open Payments program, that requires certain manufacturers to track and report to the Centers for Medicare and Medicaid Services, or CMS, annually certain payments and other transfers of value provided to physicians and certain advanced non-physician health care practitioners and teaching hospitals made in the previous calendar year, as well as ownership and investment interests held by physicians and their immediate family members.

In addition, there are also an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information.

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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.

Environmental Matters

Healthcare Reform

In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of pharmaceutical products, restrict or regulate post-approval activities, and affect the ability to profitably sell pharmaceutical products that obtain marketing approval.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of drug candidates.

Moreover, among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access.

For example, the ACA has had a significant impact on the health care industry in the United States.

The ACA was designed to expand coverage for the uninsured while at the same time contain overall healthcare costs.

With regard to biopharmaceutical products, the ACA, among other things, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program.

Additionally, the Creating and Restoring Equal Access to Equivalent Samples Act of 2019, or the CREATES Act, aims to address the concern articulated by both the FDA and others in the industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a risk evaluation and mitigation strategies, or

REMS, program for certain products, to deny generic product developers access to samples of brand products.

Because generic product developers need samples to conduct certain comparative testing required by the FDA, some have attributed the inability to timely obtain samples as a cause of delay in the entry of generic products.

To remedy this concern, the CREATES Act established a private cause of action that permits a generic product developer to sue the brand manufacturer to compel it to furnish the necessary samples on “commercially reasonable, market-based terms.” Whether and how generic product developments will use this new pathway, as well as the likely outcome of any legal challenges to provisions of the CREATES Act, remain highly uncertain and its potential effects on future competition are unknown.

As another example, the 2021 Consolidated Appropriations Act incorporated extensive healthcare provisions and amendments to existing laws, including a requirement that all manufacturers of drugs and biological products covered under Medicare Part B report the product’s average sales price to the Department of Health and Human Services, or DHHS, beginning on January 1, 2022, subject to enforcement via civil money penalties.

Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA and we expect there will be additional challenges and amendments to the ACA in the future.

Members of the United States Congress have indicated that they may continue to seek to modify, repeal or otherwise invalidate all, or certain provisions of, the ACA.

For example, the Tax Cuts and Jobs Act, among other things, removed penalties, starting January 1, 2019, for not complying with the ACA’s individual mandate to carry health insurance, commonly referred to as the “individual mandate.” It is unclear how this and other efforts to repeal and replace the ACA will impact the implementation of the ACA, the pharmaceutical industry more generally, and our business.

Moreover, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

DHHS has solicited feedback on some of various measures intended to lower drug prices and reduce the out of pocket costs of drugs and implemented others under its existing authority.

Congress and the executive branch have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs, making this area subject to ongoing uncertainty.

Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In December 2020, the United States Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers and other members of the health care and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services.

Environmental and Worker Safety 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.

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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.

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Name Age Position with the Company

Lonnel Coats 56 President and Chief Executive Officer and Director

67 Executive Vice President, Innovation & Chemical Sciences

Praveen Tyle, Ph.D.

60 Executive Vice President, Research and Development

Wade 56 Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer

Crum 48 Vice President and General Counsel

Tessmer 61 Vice President, Finance and Accounting

Lonnel Coats has been our president and chief executive officer and a director since July 2014.

Lonnel Coats 57 Chief Executive Officer and Director

Wade 57 President and Chief Financial Officer

Crum 49 Senior Vice President and General Counsel

Granowitz, M.D., Ph.D.

57 Senior Vice President and Chief Medical Officer

Kassler-Taub, M.D.

66 Senior Vice President, Regulatory and Quality Assurance

68 Executive Vice President, Innovation and Chemical Sciences

McDermott 51 Vice President, Human Resources

56 Vice President and Chief Commercial Officer

Alexander 54 Vice President, Finance and Accounting

Lonnel Coats has been our chief executive officer and a director since July 2014.

Coats previously served in a series of executive leadership positions at Eisai Inc.

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from Oakland University.

Wade has been our president and chief financial officer since October 2021, having previously served in a series of finance, corporate development, administrative and legal leadership positions since joining our company in

Before joining Lexicon, Mr.

Wade was a partner with the law firm of Andrews & Kurth L.L.P., where he represented companies in the biotechnology, information technology and energy industries in venture capital financings, public offerings and private placements, mergers and acquisitions, collaborations and licensing, and other corporate matters.

Wade is a member of the boards of directors of the Texas Healthcare and Bioscience Institute and BioHouston.

He received his B.A.

from the University of Texas.

Crum has been our senior vice president and general counsel since October 2021 and previously served in a series of legal leadership positions since joining our company in 2001.

Crum was previously a corporate securities attorney with the law firms of Brobeck, Phleger & Harrison LLP and Andrews & Kurth L.L.P., where he represented companies in the energy and information technology industries.

Crum received his B.B.A.

from the University of Texas.

Granowitz, M.D., Ph.D.

has been our senior vice president and chief medical officer since August 2021.

Granowitz previously served as chief medical officer of Amarin Corporation plc since 2016.

Prior to joining Amarin, Dr.

Granowitz served as senior vice president and head of global medical affairs, global human health of Merck & Co., Inc.

and in a variety of medical and commercial management positions for Schering-Plough Corporation.

Granowitz received his B.A.

from Dartmouth College and his M.D.

from Columbia University.

Kassler-Taub, M.D.

has been our senior vice president, regulatory affairs and quality assurance since October 2021 and previously served as vice president, clinical operations and in other senior capacities since joining our company in 2014.

Kassler-Taub previously served in various senior clinical and medical leadership positions at Becton Dickinson and Company, where he worked for 12 years, most recently as vice president, corporate clinical development.

Prior to joining Becton Dickinson, Dr.

Kassler-Taub spent 14 years with Bristol-Myers Squibb Company Pharmaceutical Research Institute, where he held a variety of clinical and drug safety positions.

Kassler-Taub received his B.A.

from Amherst College and M.D.

from the Boston University School of Medicine.

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.

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

Praveen Tyle, Ph.D.

has been our executive vice president of research and development since May 2016.

Tyle was previously a member of the executive management team at Osmotica Pharmaceutical Corp., serving as president and chief executive officer from January 2013 through April 2016 and prior to that as executive vice president and chief scientific officer.

Prior to his service at Osmotica, Dr.

Tyle held a series of scientific leadership positions within the pharmaceutical industry, including executive vice president and chief science officer for the United States Pharmacopeia, senior vice president and global head of research and development and business development and licensing at Novartis OTC, corporate senior vice president of global research and development and chief scientific officer at Bausch & Lomb Incorporated and vice president and global head of pharmaceutical sciences at Pharmacia Corporation.

Tyle serves as director of Eyegate Pharmaceuticals, Inc.

and Orient Europharma Ltd.

Tyle received his B.Pharm.

from the Indian Institute of Technology, Banaras Hindu University and his Ph.D.

in pharmaceutics and pharmaceutical chemistry from the Ohio State University.

Wade has been our executive vice president, corporate and administrative affairs and chief financial officer since February 2015 and previously served in a series of finance and legal leadership positions since joining our company in 1999.

Wade was previously a corporate securities and finance attorney for ten years with the law firm of Andrews & Kurth L.L.P., where he represented companies in the biotechnology, information technology and energy industries.

Wade is a member of the board of directors of the Texas Healthcare and Bioscience Institute.

He received his B.A.

from the University of Texas.

Crum has been our vice president and general counsel since May 2010 and previously served in a series of legal leadership positions since joining our company in 2001.

Crum received his B.B.A.

from the University of Texas.

Tessmer has been our vice president, finance and accounting since November 2007 and previously served in a series of finance and accounting leadership positions since joining our company in 2001.

Tessmer was previously assistant controller for Mariner Health Network, Inc.

and prior to that served in a variety of financial and accounting management positions for HWC Distribution Corp.

and American General Corporation.

Tessmer is a certified public accountant and received his B.B.A.

from the University of Wisconsin – Milwaukee and his M.B.A.

from the University of Houston.

McDermott has been our vice president, human resources since January 2022.

McDermott previously served as chief people officer of Rafael Pharmaceuticals, Inc.

since 2019, vice president, human resources of Sanofi from 2017 to 2019 and in a variety of human resources positions with Sanofi, Schering-Plough Corporation and other companies in the tobacco, media and talent and event management industries.

McDermott received her B.A.

from State University of New York at Plattsburgh.

has been our vice president and chief commercial officer since October 2021 and previously served in a series of commercial and medical leadership positions since joining our company in 2014.

Seth previously served as executive director and head of the oncology business unit with Eisai, Inc.

and in a series of marketing roles with Bristol-Myers Squibb Company, Pfizer Inc.

and Schering Plough Corporation.

Seth received his B.S.

from Norfolk State University, his M.B.A.

Joseph’s University and his Ph.D.

from Meharry Medical College.

Alexander has been our vice president of finance and accounting and principal accounting officer since September 2021 and previously served as controller since joining our company in 2017.

Alexander previously served as controller of Johnson Specialty Tools, LLC and in a variety of finance and accounting management positions for Trican Well Services, L.P., Nabors Industries Ltd.

and Ernst & Young, LLP.

Alexander is a certified public accountant and received her B.B.A.

from the University of Oklahoma.

Significant Shareholders

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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