What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-05 · 55 added, 40 removed, 312 unchanged (23% of the section changed)

3 unchanged sentences

(In thousands, except par value)

As of March 31, As of December 31,

As of June 30, As of December 31,

Assets (unaudited)

36 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Royalties and other revenue 35 234 72 261

3 unchanged sentences

Selling, general and administrative, including stock-based compensation of $ 1,734 , $ 1,602 , $ 3,474 and $ 3,167 respectively

10,686 7,936 19,177 16,193

Total operating expenses 24,042 18,193 47,459 39,059

22 unchanged sentences

Balance at March 31, 2021 145,552 145 1,580,891 ( 1,420,976 ) 5 ( 7,518 ) 152,547

Common Stock Additional Accumulated Other

Shares Par Value Paid-In Capital Accumulated Deficit Comprehensive Gain (Loss) Treasury Stock Total

Stock-based compensation — — 2,786 — — — 2,786

Issuance of common stock under Equity Incentive Plans 88 1 7 — — — 8

Issuance fees related to Open Market Sale Agreement — — ( 31 ) — — — ( 31 )

Net loss — — — ( 18,067 ) — — ( 18,067 )

Unrealized loss on investments — — — — ( 10 ) — ( 10 )

Balance at June 30, 2021 145,640 146 1,583,653 ( 1,439,043 ) ( 5 ) ( 7,518 ) 137,233

Balance at December 31, 2021 150,082 150 1,608,749 ( 1,487,776 ) ( 10 ) ( 7,518 ) 113,595

6 unchanged sentences

Balance at March 31, 2022 150,082 150 1,605,898 ( 1,511,252 ) ( 37 ) ( 2,061 ) 92,698

Issuance of common stock under Equity Incentive Plans 32 — — — — — —

Stock-based compensation — — 2,832 — — — 2,832

Net loss — — — ( 24,587 ) — — ( 24,587 )

Unrealized loss on investments — — — — ( 113 ) — ( 113 )

Balance at June 30, 2022 150,114 $ 150 $ 1,608,730 $ ( 1,535,839 ) $ ( 150 ) $ ( 2,061 ) $ 70,830

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

6 unchanged sentences

(Increase) decrease in accounts receivable ( 20 ) 236

Decrease in prepaid expenses and other current assets 273 1,095

Decrease (increase) in other assets 207 ( 74 )

(Increase) decrease in prepaid expenses and other current assets ( 732 ) 451

Decrease in other assets 420 261

Decrease in accounts payable and other liabilities ( 5,447 ) ( 14,707 )

29 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the three-month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022.

Operating results for the six-month period ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022.

The accompanying condensed consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries.

7 unchanged sentences

Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents.

As of March 31, 2022 and December 31, 2021, short-term investments consisted of U.S.

As of June 30, 2022 and December 31, 2021, short-term investments consisted of U.S.

treasury bills and corporate debt securities.

6 unchanged sentences

Accrued liabilities consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(in thousands)

11 unchanged sentences

Revenue Recognition:

We perform the following five steps in determining the amount of revenue to recognize as we fulfill our performance obligations under each of our contracts with customers:

The Company performs the following five steps in determining the amount of revenue to recognize as its performance obligations under each of its contracts with customers:

(i) identify the contract(s) with a customer;

33 unchanged sentences

Expected volatility is based on the historical volatility in the Company’s stock price.

The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock option compensation granted, with the following weighted-average assumptions for stock options granted in the three months ended March 31, 2022 and 2021:

Expected Volatility Risk-free Interest Rate Expected Term Dividend

March 31, 2022:

June 30, 2022:

Employees 106 % 2.1 % 4 — %

Officers and non-employee directors 91 % 1.9 % 7 — %

March 31, 2021:

June 30, 2021:

Employees 101 % 0.6 % 4 — %

Officers and non-employee directors 90 % 1.1 % 7 — %

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the three months ended March 31, 2022:

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the six months ended June 30, 2022:

Options Weighted Average Exercise Price

4 unchanged sentences

Forfeited ( 353 ) 9.20

Outstanding at March 31, 2022 11,784 5.46

Exercisable at March 31, 2022 5,093 $ 7.57

During the three months ended March 31, 2022, Lexicon granted its employees annual restricted stock units.

Outstanding at June 30, 2022 12,108 5.34

Exercisable at June 30, 2022 5,423 $ 7.35

During the six months ended June 30, 2022, Lexicon granted its employees and non-employee directors annual restricted stock units.

Outstanding employee restricted stock units vest in three annual installments.

The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the three months ended March 31, 2022:

Outstanding non-employee director restricted stock units vest fully on the first anniversary of the grant.

The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the six months ended June 30, 2022:

Shares Weighted Average Grant Date

4 unchanged sentences

Forfeited ( 108 ) 3.40

Outstanding at March 31, 2022 2,949 $ 3.20

Outstanding at June 30, 2022 2,919 $ 3.17

Net Loss per Common Share:

7 unchanged sentences

The guidance is effective for annual periods beginning after December 15, 2020, including interim periods therein.

The adoption of ASU 2019-12 in the first quarter of 2021 did not have a material impact on our condensed consolidated financial statements.

The adoption of ASU 2019-12 in the first quarter of 2021 did not have a material impact on the condensed consolidated financial statements.

In August 2020, the FASB issued ASU No.

1 unchanged sentence

ASU 2020-06 also requires the application of the if-converted method for calculating earnings per diluted share, as the treasury stock method will no longer be permitted for convertible instruments.

The adoption of ASU 2020-06 during the first quarter of 2022 did not have a material impact on our condensed consolidated financial statements.

The adoption of ASU 2020-06 during the first quarter of 2022 did not have a material impact on the condensed consolidated financial statements.

Cash and Cash Equivalents and Investments

The fair value of cash and cash equivalents and investments held at March 31, 2022 and December 31, 2021 are as follows:

As of March 31, 2022

The fair value of cash and cash equivalents and investments held at June 30, 2022 and December 31, 2021 are as follows:

As of June 30, 2022

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

16 unchanged sentences

$ 86,753 $ — $ ( 10 ) $ 86,743

There were no realized losses during either of the three months ended March 31, 2022 and 2021, respectively.

There were no realized losses during either of the six months ended June 30, 2022 and 2021, respectively.

The cost of securities sold is based on the specific identification method.

8 unchanged sentences

The inputs or methodology used for valuing securities are not necessarily an indication of the credit risk associated with investing in those securities.

The following table provides the fair value measurements of applicable Company assets that are measured at fair value on a recurring basis according to the fair value levels defined above as of March 31, 2022 and December 31, 2021.

Assets and Liabilities at Fair Value as of March 31, 2022

Assets and Liabilities at Fair Value as of June 30, 2022

Level 1 Level 2 Level 3 Total

9 unchanged sentences

Total cash and cash equivalents and investments $ 71,626 $ 15,117 $ — $ 86,743

The Company did not have any Level 3 assets or liabilities as of March 31, 2022 or December 31, 2021.

The Company did not have any Level 3 assets or liabilities as of June 30, 2022 or December 31, 2021.

Transfers between levels are recognized at the actual date of the circumstance that caused the transfer.

6 unchanged sentences

The first $ 25 million tranche was funded at closing.

The second $ 25 million tranche is available for draw at Lexicon’s option prior to August 31, 2022, but within 30 days of acceptance of filing by the U.S.

Food and Drug Administration of Lexicon’s resubmission of its application for U.S.

regulatory approval of sotagliflozin for heart failure.

The second $ 25 million tranche is available for draw at Lexicon’s option prior to August 25, 2022.

The third $ 50 million tranche is available for draw at Lexicon’s option prior to June 30, 2023, but within 60 days of U.S.

9 unchanged sentences

Dollar LIBOR plus 7.90 %, but not less than 8.01 %, subject to additional interest if an event of default occurs and is continuing.

As of March 31, 2022, the interest rate was 8.14 %.

As of June 30, 2022, the interest rate was 9.02 %.

If an event of default occurs and is continuing, Oxford may declare all amounts outstanding under the loan and security agreement to be immediately due and payable.

5 unchanged sentences

The debt issuance costs and facility fee have been recorded as a debt discount on the Company’s condensed consolidated balance sheet, which together with the final payment exit fee of $ 1.5 million and warrant fair value of $ 0.7 million are being amortized to interest expense throughout the life of the term loan using the effective interest rate method.

As of March 31, 2022, the balance of the debt discount was $ 3.0 million.

During the three months ended March 31, 2022, the Company recognized interest expense of $ 0.1 million.

As of March 31, 2022, the carrying value of the Oxford Term Loans was $ 23.5 million.

As of June 30, 2022, the balance of the debt discount was $ 2.9 million.

During the six months ended June 30, 2022, the Company recognized interest expense of $ 0.8 million.

As of June 30, 2022, the carrying value of the Oxford Term Loans was $ 23.6 million.

The fair value of the Oxford Term Loans approximates its carrying value and was determined using Level 2 inputs using discounted cash flow analysis, based on the Company’s estimated current incremental borrowing rate.

2 unchanged sentences

In addition to the financial covenant, additional covenants include those restricting dispositions, fundamental changes to its business, mergers or acquisitions, indebtedness, encumbrances, distributions, investments, transactions with affiliates and subordinated debt.

The Company was in compliance with its debt covenants as of March 31, 2022.

The Company was in compliance with its debt covenants as of June 30, 2022.

Convertible Debt.

8 unchanged sentences

Under its lease agreements, Lexicon is obligated to pay property taxes, insurance, and maintenance costs.

As of March 31, 2022, the right-of-use assets for the office space leases had a balance of $ 2.1 million, which is included in other assets in the condensed consolidated balance sheet.

In July 2022, the Company entered into a lease agreement for a 22,000 square-foot office space in Bridgewater, New Jersey to which it plans to relocate the New Jersey offices.

The term of the lease is expected to commence in December 2022, will extend for ten years and 11 months from such commencement date and provides for escalating yearly base rent payments starting at $820,000 and increasing to $986,000 in the final year of the lease.

As of June 30, 2022, the right-of-use assets for the office space leases had a balance of $ 1.8 million, which is included in other assets in the condensed consolidated balance sheet.

Current and non-current liabilities relating to the leases were $ 0.8 million and $ 1.0 million, respectively, which are included in accrued liabilities and other long-term liabilities in the condensed consolidated balance sheet, respectively.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at March 31, 2022:

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at June 30, 2022:

(in thousands)

7 unchanged sentences

Collaboration and License Agreements

Lexicon has derived substantially all of its revenues from drug discovery and development alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, product sales, government grants and contracts, technology licenses, subscriptions to its databases and compound library sales, as well as from commercial sales of our XERMELO product following its commercial launch in February 2017 until our sale of XERMELO and related assets to TerSera Therapeutics, LLC in September 2020.

Lexicon has derived substantially all of its revenues from drug discovery and development alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, product sales, government grants and contracts, technology licenses, subscriptions to its databases and compound library sales, as well as from commercial sales of its XERMELO product following its commercial launch in February 2017 until its sale of XERMELO and related assets to TerSera Therapeutics, LLC in September 2020.

Other Capital Agreements

2 unchanged sentences

In January 2021, Lexicon sold 2,000,000 shares of its common stock at a price of $ 8.463 per share pursuant to the Sales Agreement, resulting in net proceeds of $ 16.4 million.

The net proceeds are reflected as issuances of common stock in the accompanying condensed consolidated financial statements.

In August and September 2021, Lexicon sold an aggregate of 4,176,953 shares of its common stock at a price of $ 4.732 per share pursuant to the Sales Agreement, resulting in net proceeds of $ 19.1 million.

The net proceeds are reflected as issuances of common stock in the accompanying condensed consolidated financial statements.

Subsequent Events

Common Stock :

In August 2022, Lexicon sold an aggregate of 34,000,000 shares of its common stock at a price of $ 2.50 per share in a public offering and concurrent private placement to two affiliates of Invus, L.P., resulting in net proceeds of approximately $ 82.2 million, after deducting underwriting discounts and commissions and estimated offering expenses.

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-Q

Item 1. Financial Statements