LEXICON PHARMACEUTICALS, INC. 10-Q

Item 1. Financial Statements Lexicon Pharmaceuticals, Inc. Condensed Consolidated Balance Sheets (In thousands, except par value) As of March 31, As of December 31, 2023 2022 Assets (unaudited) Current assets: Cash and cash equivalents $ 26,001 $ 46,345 Short-term investments 79,936 92,012 Accounts receivable 261 28 Prepaid expenses and other current assets 3,348 2,481 Total current assets 109,546 140,866 Property and equipment, net of accumulated depreciation and amortization of $ 4,096 and $ 3,984 , respectively 2,207 2,071 Goodwill 44,543 44,543 Operating lease right-of-use-assets 6,420 6,819 Total assets $ 162,716 $ 194,299 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 10,311 $ 10,395 Accrued liabilities 10,060 12,777 Total current liabilities 20,371 23,172 Long-term debt, net of issuance costs 48,845 48,579 Long-term operating lease liabilities 5,454 5,424 Total liabilities 74,670 77,175 Commitments and contingencies Stockholders’ Equity: Preferred stock, $ 0.01 par value; 5,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.001 par value; 300,000 shares authorized; 190,430 and 189,214 shares issued, respectively 190 189 Additional paid-in capital 1,712,558 1,709,144 Accumulated deficit ( 1,621,654 ) ( 1,589,720 ) Accumulated other comprehensive loss ( 163 ) ( 428 ) Treasury stock, at cost, 868 and 488 shares, respectively ( 2,885 ) ( 2,061 ) Total stockholders’ equity 88,046 117,124 Total liabilities and stockholders’ equity $ 162,716 $ 194,299 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Lexicon Pharmaceuticals, Inc. Condensed Consolidated Statements of Comprehensive Loss (In thousands, except per share amounts) (Unaudited) Three Months Ended March 31, 2023 2022 Revenues: Royalties and other revenue $ 24 $ 37 Operating expenses: Research and development, including stock-based compensation of $ 1,203 and $ 1,032 , respectively 12,026 14,926 Selling, general and administrative, including stock-based compensation of $ 2,212 and $ 1,740 , respectively 19,140 8,491 Total operating expenses 31,166 23,417 Loss from operations ( 31,142 ) ( 23,380 ) Interest expense ( 1,821 ) ( 110 ) Interest and other income, net 1,029 14 Net loss $ ( 31,934 ) $ ( 23,476 ) Net loss per common share, basic and diluted $ ( 0.17 ) $ ( 0.16 ) Shares used in computing net loss per common share, basic and diluted 189,014 149,150 Other comprehensive loss: Unrealized gain (loss) on investments 265 ( 27 ) Comprehensive loss $ ( 31,669 ) $ ( 23,503 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Lexicon Pharmaceuticals, Inc. Condensed Consolidated Statements of Stockholders’ Equity (In thousands) (Unaudited) Common Stock Additional Accumulated Other Shares Par Value Paid-In Capital Accumulated Deficit Comprehensive Gain (Loss) Treasury Stock Total Balance at December 31, 2021 150,082 $ 150 $ 1,608,749 $ ( 1,487,776 ) $ ( 10 ) $ ( 7,518 ) $ 113,595 Stock-based compensation — — 2,772 — — — 2,772 Issuance of equity classified warrants — — 698 — — — 698 Issuance of treasury stock — — ( 6,321 ) — — 6,321 — Repurchase of common stock — — — — — ( 864 ) ( 864 ) Net loss — — — ( 23,476 ) — — ( 23,476 ) Unrealized loss on investments — — — — ( 27 ) — ( 27 ) Balance at March 31, 2022 150,082 $ 150 $ 1,605,898 $ ( 1,511,252 ) $ ( 37 ) $ ( 2,061 ) $ 92,698 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 under Equity Incentive Plans 1,216 1 ( 1 ) — — — — Repurchase of common stock — — — — — ( 824 ) ( 824 ) Net loss — — — ( 31,934 ) — — ( 31,934 ) 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. 5 Lexicon Pharmaceuticals, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 31,934 ) $ ( 23,476 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 112 109 Stock-based compensation 3,415 2,772 Amortization of debt issuance costs 265 25 Changes in operating assets and liabilities: Increase in accounts receivable ( 234 ) ( 23 ) (Increase) decrease in prepaid expenses and other current assets ( 867 ) 273 Decrease in operating lease right-of-use-assets 400 207 Decrease in accounts payable and other liabilities ( 2,770 ) ( 3,308 ) Net cash used in operating activities ( 31,613 ) ( 23,421 ) Cash flows from investing activities: Purchases of property and equipment ( 248 ) ( 76 ) Purchases of investments ( 28,864 ) ( 17,816 ) Maturities of investments 41,205 13,484 Net cash provided by (used in) investing activities 12,093 ( 4,408 ) Cash flows from financing activities: Repurchase of common stock ( 824 ) ( 864 ) Proceeds from debt borrowings, net of fees — 24,148 Net cash (used in) provided by financing activities ( 824 ) 23,284 Net decrease in cash and cash equivalents ( 20,344 ) ( 4,545 ) Cash and cash equivalents at beginning of period 46,345 64,065 Cash and cash equivalents at end of period $ 26,001 $ 59,520 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,556 $ 85 Supplemental disclosure of non-cash investing and financing activities: Issuance of equity classified warrants $ — $ 698 Issuance of treasury stock $ — $ 6,321 Recognition of exit fee liability related to debt borrowings $ — $ 1,500 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Lexicon Pharmaceuticals, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited condensed consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. 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, 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. Intercompany transactions and balances are eliminated in consolidation. For further information, refer to the financial statements and footnotes thereto included in Lexicon’s annual report on Form 10-K for the year ended December 31, 2022, as filed with the SEC. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. 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 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. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method. Accrued liabilities: Accrued liabilities consisted of the following: As of March 31, As of December 31, 2023 2022 (in thousands) Accrued research and development services $ 3,937 $ 3,252 Accrued compensation and benefits 4,348 7,830 Short term lease liability 1,291 1,291 Other 484 404 Total accrued liabilities $ 10,060 $ 12,777 Leases: Lexicon determines if a contract is or contains a lease at inception or upon modification of the contract. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. Lexicon does not apply this accounting to those leases with terms of twelve (12) months or less. Operating lease right-of-use assets and associated lease liabilities are recorded in the balance sheet at the lease commencement date based on the present value of future lease payments to be made over the expected lease term. As the implicit rate is not determinable in its leases, Lexicon used a borrowing rate ranging between 9% and 9.7% at the commencement date in determining the present value of future payments. 7 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: (i) identify the contract(s) with a customer; (ii) identify the performance obligation in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. 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. Development milestones that are not within the control of the Company or the licensee, including those requiring regulatory approval, are not considered probable of being achieved until those milestones are achieved. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue when (or as) the performance obligation is satisfied. At the end of each reporting period, the Company re-evaluates the probability of achievement of the development milestones and any related constraint, and if necessary, adjusts its estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues in the period of adjustment. 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. Upfront payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under the relevant agreement. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred. Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Stock-Based Compensation: The Company recognizes compensation expense in its condensed consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units granted to employees, based on their fair values on the date of the grant, with the compensation expense recognized over the period in which an employee is required to provide service in exchange for the stock award. Stock-based compensation expense for awards without performance conditions is recognized on a straight-line basis. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met. 8 The fair value of stock options is estimated at the date of grant using the Black-Scholes method. The Black-Scholes option-pricing model requires the input of subjective assumptions. 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. 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 three months ended March 31, 2023 and 2022: Expected Volatility Risk-free Interest Rate Expected Term Dividend Rate March 31, 2023: Employees 112 % 4.1 % 4 — % Officers and non-employee directors 98 % 3.9 % 6 — % 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 three months ended March 31, 2023: Options Weighted Average Exercise Price (in thousands) Outstanding at December 31, 2022 12,349 $ 5.10 Granted 5,077 2.43 Expired ( 129 ) 14.83 Forfeited ( 170 ) 3.65 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. 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 Fair Value (in thousands) Outstanding at December 31, 2022 2,748 $ 3.78 Granted 4,070 2.43 Vested ( 1,216 ) 3.92 Forfeited ( 112 ) 2.94 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 stock warrants, stock options and restricted stock units are not included because they are antidilutive. 9 2. Recent Accounting Pronouncements We do not expect that any recently issued accounting pronouncements will have a material impact on our financial statements. 3. Cash and Cash Equivalents and Investments 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 (in thousands) Cash and cash equivalents $ 26,000 $ 1 $ — $ 26,001 Securities maturing within one year: U.S. treasury securities 70,894 9 ( 142 ) 70,761 Corporate debt securities 9,206 — ( 31 ) 9,175 Total short-term investments $ 80,100 $ 9 $ ( 173 ) $ 79,936 Total cash and cash equivalents and investments $ 106,100 $ 10 $ ( 173 ) $ 105,937 As of December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Cash and cash equivalents $ 46,345 $ — $ — $ 46,345 Securities maturing within one year: U.S. treasury securities 74,022 — ( 342 ) 73,680 Corporate debt securities 18,418 — ( 86 ) 18,332 Total short-term investments $ 92,440 $ — $ ( 428 ) $ 92,012 Total cash and cash equivalents and investments $ 138,785 $ — $ ( 428 ) $ 138,357 There were no realized losses during either of the three month periods ended March 31, 2023 and 2022, respectively. 4. Fair Value Measurements The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the condensed consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. The following levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities: • Level 1 - quoted prices in active markets for identical investments, which include U.S. treasury securities • Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which includes corporate debt securities • Level 3 - significant unobservable inputs 10 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, 2023 and December 31, 2022. Assets and Liabilities at Fair Value as of March 31, 2023 Level 1 Level 2 Level 3 Total (in thousands) Assets Cash and cash equivalents $ 26,001 $ — $ — $ 26,001 Short-term investments 70,761 9,175 — 79,936 Total cash and cash equivalents and investments $ 96,762 $ 9,175 $ — $ 105,937 Assets and Liabilities at Fair Value as of December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets Cash and cash equivalents $ 46,345 $ — $ — $ 46,345 Short-term investments 73,680 18,332 — 92,012 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 March 31, 2023 or December 31, 2022. Transfers between levels are recognized at the actual date of the circumstance that caused the transfer. There were no transfers between Level 1 and Level 2 during the periods presented. Refer to Note 5, Debt Obligations, for fair value measurements of debt obligations. 11 5. Debt Obligations 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. The first $ 25 million tranche was funded at closing. 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. 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. 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 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. Lexicon may prepay the Oxford Term Loans in whole at its option at any time. Any prepayment of the Oxford Term Loans is subject to prepayment fees for up to three years after the funding of each tranche of the loans. 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 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 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. 6. Commitments and Contingencies Operating Lease Obligations : 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 12 $ 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) 2023 $ 673 2024 1,378 2025 1,220 2026 865 2027 881 Thereafter 5,644 Total undiscounted operating lease liability 10,661 Less: amount of lease payments representing interest ( 3,916 ) Present value of future lease payments 6,745 Less: short-term operating lease liability ( 1,291 ) Long-term operating lease liability $ 5,454 Legal Proceedings. 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. 13