What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-09 · 76 added, 122 removed, 257 unchanged (44% of the section changed)

3 unchanged sentences

(In thousands, except par value)

As of September 30, As of December 31,

As of March 31, As of December 31,

Assets (unaudited)

7 unchanged sentences

Goodwill 44,543 44,543

Other assets 7,147 2,269

Operating lease right-of-use-assets 6,420 6,819

Total assets $ 162,716 $ 194,299

5 unchanged sentences

Long-term debt, net of issuance costs 48,845 48,579

Other long-term liabilities 5,438 1,190

Long-term operating lease liabilities 5,454 5,424

Total liabilities 74,670 77,175

18 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Royalties and other revenue $ 24 $ 37

3 unchanged sentences

Selling, general and administrative, including stock-based compensation of $ 2,212 and $ 1,740 , respectively

12,577 7,303 31,754 23,496

Total operating expenses 31,166 23,417

6 unchanged sentences

Other comprehensive loss:

Unrealized (loss) gain on investments ( 341 ) — ( 481 ) 1

Unrealized gain (loss) on investments 265 ( 27 )

Comprehensive loss $ ( 31,669 ) $ ( 23,503 )

3 unchanged sentences

(In thousands)

Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Gain (Loss) Treasury Stock

Shares Par Value Total

Balance at December 31, 2020 142,289 $ 142 $ 1,561,096 $ ( 1,400,018 ) $ ( 6 ) $ ( 4,843 ) $ 156,371

Stock-based compensation — — 2,851 — — — 2,851

Issuance of common stock under Equity Incentive Plans 1,263 1 547 — — — 548

Issuance of common stock under an Open Market Sale Agreement, net of issuance fees 2,000 2 16,397 — — — 16,399

Repurchase of common stock — — — — — ( 2,675 ) ( 2,675 )

Net loss — — — ( 20,958 ) — — ( 20,958 )

Unrealized gain on investments — — — — 11 — 11

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

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

Stock-based compensation — — 2,712 — — — 2,712

Issuance of common stock under Equity Incentive Plans 170 — 658 — — — 658

Issuance of common stock under an Open Market Sale Agreement, net of issuance fees 4,177 4 19,119 — — — 19,123

Net loss — — — ( 23,122 ) — — ( 23,122 )

Unrealized loss on investments — — — — ( 1 ) — ( 1 )

Balance at September 30, 2021 149,987 $ 150 $ 1,606,142 $ ( 1,462,165 ) $ ( 6 ) $ ( 7,518 ) $ 136,603

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

Lexicon Pharmaceuticals, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

Common Stock Additional Accumulated Other

8 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

Balance at December 31, 2022 189,214 $ 189 $ 1,709,144 $ ( 1,589,720 ) $ ( 428 ) $ ( 2,061 ) $ 117,124

Stock-based compensation — — 3,415 — — — 3,415

Issuance of common stock, net of issuance fees 39,100 39 94,229 — — — 94,268

Issuance of common stock under Equity Incentive Plans 1,216 1 ( 1 ) — — — —

Repurchase of common stock — — — — — ( 824 ) ( 824 )

Net loss — — — ( 31,934 ) — — ( 31,934 )

Unrealized loss on investments — — — — ( 341 ) — ( 341 )

Balance at September 30, 2022 189,214 $ 189 $ 1,705,607 $ ( 1,559,226 ) $ ( 491 ) $ ( 2,061 ) $ 144,018

Unrealized gain on investments — — — — 265 — 265

Balance at March 31, 2023 190,430 $ 190 $ 1,712,558 $ ( 1,621,654 ) $ ( 163 ) $ ( 2,885 ) $ 88,046

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

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

5 unchanged sentences

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable ( 26 ) 372

Increase in accounts receivable ( 234 ) ( 23 )

(Increase) decrease in prepaid expenses and other current assets ( 867 ) 273

Decrease in other assets 329 459

Decrease in operating lease right-of-use-assets 400 207

Decrease in accounts payable and other liabilities ( 2,770 ) ( 3,308 )

4 unchanged sentences

Maturities of investments 41,205 13,484

Net cash used in investing activities ( 95,252 ) ( 3,986 )

Net cash provided by (used in) investing activities 12,093 ( 4,408 )

Cash flows from financing activities:

Proceeds from issuance of common stock, net of fees 94,268 36,705

Repurchase of common stock ( 824 ) ( 864 )

Proceeds from debt borrowings, net of fees — 24,148

Net cash provided by financing activities 117,303 34,030

Net cash (used in) provided by financing activities ( 824 ) 23,284

Net decrease in cash and cash equivalents ( 20,344 ) ( 4,545 )

3 unchanged sentences

Cash paid for interest $ 1,556 $ 85

Supplemental disclosure of non-cash activities:

Right-of-use asset $ 5,206 $ 1,704

Supplemental disclosure of non-cash investing and financing activities:

Issuance of equity classified warrants $ — $ 698

10 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 nine-month period ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ended December 31, 2022.

Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023.

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

As of March 31, 2023 and December 31, 2022, short-term investments consisted of U.S.

treasury bills and corporate debt securities.

The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities.

The Company views its available-for-sale securities as available for use in current operations as they all contain maturities of less than one year.

The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security.

The Company does not intend to sell any of its available-for-sale securities prior to their maturity dates.

Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity.

3 unchanged sentences

Accrued liabilities consisted of the following:

As of September 30, As of December 31,

As of March 31, As of December 31,

(in thousands)

11 unchanged sentences

Revenue Recognition:

Revenues under collaborative agreements include both license revenue and contract research revenue.

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:

3 unchanged sentences

(iv) allocate the transaction price to the performance obligation in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.

At contract inception, the Company evaluates whether development milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

The Company applies this five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company develops assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.

In agreements that include development milestones, the Company evaluates at contract inception whether development milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal will not occur, the associated development milestone value is included in the transaction price.

4 unchanged sentences

In agreements in which a license to the Company’s intellectual property is determined distinct from other performance obligations identified in the agreement, the Company recognizes revenue when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

For agreements that include sales-based royalties, including milestones based on a level of sales, the license is deemed to be the predominant item to which the royalties relate and the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The Company may receive payments from its licensees based on billing schedules established in each contract.

18 unchanged sentences

Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination

behaviors, resulting in a change in the assumptions used for expected option lives.

For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in a change in the assumptions used for expected option lives.

Historical data is used to estimate the expected option life for each group.

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

The 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 nine months ended September 30, 2022 and 2021:

Expected Volatility Risk-free Interest Rate Expected Term Dividend

September 30, 2022:

March 31, 2023:

Employees 112 % 4.1 % 4 — %

Officers and non-employee directors 98 % 3.9 % 6 — %

September 30, 2021:

March 31, 2022:

Employees 104 % 1.8 % 4 — %

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

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

The following is a summary of stock option activity under Lexicon’s stock-based compensation plans for the three months ended March 31, 2023:

Options Weighted Average Exercise Price

4 unchanged sentences

Forfeited ( 170 ) 3.65

Outstanding at September 30, 2022 12,182 5.28

Exercisable at September 30, 2022 5,728 $ 7.18

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

Outstanding at March 31, 2023 17,127 4.25

Exercisable at March 31, 2023 6,877 $ 6.20

During the three months ended March 31, 2023, Lexicon granted its employees annual restricted stock units.

Outstanding employee restricted stock units vest in three annual installments.

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 nine months ended September 30, 2022:

The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the three months ended March 31, 2023:

Shares Weighted Average Grant Date

4 unchanged sentences

Forfeited ( 112 ) 2.94

Outstanding at September 30, 2022 2,773 $ 3.15

Outstanding at March 31, 2023 5,490 $ 2.77

Net Loss per Common Share:

Net loss per common share is computed using the weighted average number of shares of common stock outstanding.

Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive.

Shares associated with stock warrants, stock options and restricted stock units are not included because they are antidilutive.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which removes the separation models for convertible debt with cash conversion or beneficial conversion features.

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 the condensed consolidated financial statements.

We do not expect that any recently issued accounting pronouncements will have a material impact on our financial statements.

Cash and Cash Equivalents and Investments

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

As of September 30, 2022

The fair value of cash and cash equivalents and investments held at March 31, 2023 and December 31, 2022 are as follows:

As of March 31, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

16 unchanged sentences

$ 138,785 $ — $ ( 428 ) $ 138,357

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

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

There were no realized losses during either of the three month periods ended March 31, 2023 and 2022, respectively.

Fair Value Measurements

7 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 September 30, 2022 and December 31, 2021.

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

Assets and Liabilities at Fair Value as of March 31, 2023

Level 1 Level 2 Level 3 Total

9 unchanged sentences

Total cash and cash equivalents and investments $ 120,025 $ 18,332 $ — $ 138,357

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

The Company did not have any Level 3 assets or liabilities as of March 31, 2023 or December 31, 2022.

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

2 unchanged sentences

Debt Obligations

On March 17, 2022, Lexicon and one of its subsidiaries entered into a loan and security agreement with Oxford Finance LLC (“Oxford”) that provides up to $ 150 million in borrowing capacity (the “Oxford Term Loans”) available in four tranches, each maturing in March 2027.

Monthly interest-only payments are due during an initial 36-month period, which may be extended at Lexicon’s option to 48 months if Lexicon maintains compliance with a financial covenant relating to net sales of sotagliflozin following regulatory approval.

Oxford Term Loans.

In March 2022, Lexicon and one of its subsidiaries entered into a loan and security agreement with Oxford Finance LLC (“Oxford”) that provides up to $ 150 million in borrowing capacity (the “Oxford Term Loans”) available in four tranches, each maturing in March 2027.

Monthly interest-only payments are due during an initial 36-month period, which may be extended at Lexicon’s option to 48 months if Lexicon maintains compliance with financial covenants relating to net sales of sotagliflozin following regulatory approval and minimum cash balance requirements following funding of the third tranche.

The interest-only period will be followed by an amortization period extending through the maturity date.

Principal payments of $ 8.7 million, $ 13.0 million, and $ 4.8 million will be due during the fiscal years ended December 31, 2025, December 31, 2026 and December 31, 2027, respectively, with respect to the first tranche.

The first $ 25 million tranche was funded at closing.

The second $ 25 million tranche is available for draw at Lexicon’s option from December 1 through December 31, 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.

The second $ 25 million tranche was funded on December 30, 2022.

The loan and security agreement was amended on May 1, 2023, to increase the amount available for draw under the third tranche from $50 million to $75 million and decrease the amount available for draw under the fourth tranche from $50 million to $25 million.

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

regulatory approval of sotagliflozin for heart failure.

The fourth $ 50 million tranche is available for draw at Lexicon’s option, subject to Oxford’s consent, at any time prior to the expiration of the interest-only payment period.

The loan and security agreement provides that, upon funding of the first three tranches, Lexicon will grant Oxford a warrant to purchase shares of its common stock having a value equal to 3.50 %, 1.75 % and 0.875 %, respectively, of each such tranche, as determined by reference to a 10-day average closing price of the shares.

Each warrant will have an exercise price equal to such average closing price, be exercisable for a five-year period from the date of issuance and feature a net cashless exercise provision.

An unused fee will be due in the event Lexicon does not draw the full amount available under the third tranche.

The fourth tranche is available for draw at Lexicon’s option, subject to Oxford’s consent, at any time prior to the expiration of the interest-only period.

Concurrent with the funding of the first tranche, Lexicon granted Oxford a warrant to purchase 420,673 shares of Lexicon’s common stock at an exercise price of $ 2.08 per share.

The warrant is exercisable through March 1, 2027 and is classified as an equity instrument.

The Company allocated the proceeds from the first tranche to the warrant using the relative fair value method and used the Black-Scholes model to calculate the fair value of the warrants.

The fair value of the warrant of $ 0.7 million was recognized as equity with a corresponding debt discount of $ 0.7 million.

Concurrent with the funding of the second tranche, Lexicon granted Oxford a warrant to purchase 224,128 shares of Lexicon’s common stock at an exercise price of $ 1.95 per share.

The loan and security agreement provides that, upon funding of the third tranche, Lexicon will grant Oxford a warrant to purchase shares of its common stock having a value equal to 0.875% of such tranche, as determined by reference to a 10-day average closing price of the shares, and having an exercise price equal to such average closing price.

All warrants are exercisable for five years from their respective grant dates and feature a net cashless exercise provision.

The warrants that have been issued in connection with the funding of the first and second tranches are classified as equity instruments.

The Oxford Term Loans bear interest at a floating rate equal to the 30-day U.S.

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 September 30, 2022, the interest rate was 10.45 %.

As of March 31, 2023, the interest rate was 12.57 %.

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.

2 unchanged sentences

A final payment exit fee equal to 6 % of the amount funded under the Oxford Term Loans is due upon prepayment or maturity, which final payment will be adjusted to 7 % of the amount funded upon extension of the interest-only payment period.

The final payment exit fee of $ 1.5 million was recorded as a debt discount on the closing date of the first tranche.

During March 2022, in connection with the first tranche of the loan and security agreement, the Company received cash proceeds of $ 24.2 million, net of debt issuance costs of $ 0.4 million and a facility fee of $ 0.5 million.

The debt issuance costs and facility fee have been recorded as a debt discount on the 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.

On August 29, 2022, the Company entered into a first amendment to its loan and security agreement with Oxford providing that the second $25 million tranche under the facility will be available for draw at Lexicon’s option from December 1 through December 31, 2022 in exchange for $ 0.3 million of cash consideration.

As of September 30, 2022, the balance of the debt discount was $ 2.7 million.

During the nine months ended September 30, 2022, the Company recognized interest expense of $ 1.6 million.

As of September 30, 2022, the carrying value of the Oxford Term Loans was $ 23.8 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.

The final payment exit fee of $ 1.5 million was recorded once for each tranche as a debt discount on the funding date.

As of March 31, 2023, the balance of the debt discount was $ 4.2 million which offsets long-term debt on the condensed consolidated balance sheet.

During the three months ended March 31, 2023, the Company recognized interest expense of $ 1.8 million.

As of March 31, 2023, the carrying value of the Oxford Term Loans was $ 48.8 million.

The carrying value of the Oxford Term Loans approximates its fair value, as the loans bear interest at a rate that approximates prevailing market rates for instruments with similar characteristics.

The fair value of the Oxford Term Loans is determined under Level 2 in the fair value hierarchy.

Lexicon’s obligations under the Oxford Term Loans are secured by a first lien security interest in all of the assets of the Company and its subsidiaries.

The loan and security agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default applicable to Lexicon and its subsidiaries.

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 September 30, 2022.

Convertible Debt.

In November 2014, Lexicon completed an offering of $ 87.5 million in aggregate principal amount of its 5.25 % Convertible Senior Notes due 2021 (the “Convertible Notes”).

The conversion feature did not meet the criteria for bifurcation as required by generally accepted accounting principles and the entire principal amount was recorded as long-term debt on the Company’s condensed consolidated balance sheets.

In 2020, the Company entered into separate, privately negotiated exchange agreements to exchange $ 75.8 million aggregate principal amount of the Convertible Notes for consideration valued at 85% of the principal amount of the Convertible Notes.

In 2020, the Company issued 10,368,956 shares of the Company’s common stock and paid $50.0 million in cash, which included $1.3 million of accrued interest, to exchange such Convertible Notes.

In December 2021, the remaining balance of $ 11.6 million was repaid in cash.

In addition to the financial covenants, 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, 2023.

Commitments and Contingencies

Operating Lease Obligations :

Lexicon’s operating leases include office space in The Woodlands, Texas and Basking Ridge, New Jersey and will expire in August 2025 and December 2022, respectively.

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

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 lease agreement will extend for ten years and 11 months from the date Lexicon occupies the building 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 September 30, 2022, the right-of-use assets for the office space leases had a balance of $ 7.1 million, which is included in other assets in the condensed consolidated balance sheet.

Current and non-current liabilities relating to the leases were $ 1.4 million and $ 5.4 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 September 30, 2022:

Lexicon’s operating leases include office space in The Woodlands, Texas and Bridgewater, New Jersey and will expire in August 2025 and January 2034, respectively.

As of March 31, 2023 and December 31, 2022, the right-of-use assets for the office space leases had a balance of $ 6.4 million and $ 6.8 million, respectively, which is included in operating lease right-of-use-assets in the condensed consolidated balance sheet.

Current and long-term liabilities as of March 31, 2023, relating to the leases were $ 1.3 million and

$ 5.5 million, respectively, which are included in accrued liabilities and long-term operating lease liabilities in the condensed consolidated balance sheet, respectively.

Current and long-term liabilities as of December 31, 2022, relating to the leases were $ 1.3 million and $ 5.4 million, respectively, which are included in accrued liabilities and long-term operating lease liabilities in the condensed consolidated balance sheet, respectively.

During each of the three months ended March 31, 2023 and 2022, the Company incurred lease expense of $ 0.4 million.

During the three months ended March 31, 2023 and 2022, the Company made cash payments for lease liabilities of $ 0.1 million and $ 0.3 million, respectively.

As of March 31, 2023 and December 31, 2022, the weighted-average remaining lease terms were 9.4 years and 9.5 years, respectively, with weighted-average discount rates of 9.6 % and 9.6 %, respectively.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at March 31, 2023:

(in thousands)

7 unchanged sentences

Lexicon is from time to time party to claims and legal proceedings that arise in the normal course of its business and that it believes will not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity.

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 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

Common Stock :

In 2020, Lexicon entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) relating to the shares of its common stock.

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.

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.

In August 2022, Lexicon sold an aggregate of 39,100,000 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 $ 94.3 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