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Item 2. Management’s Discussion and Analysis

2025-05-14 compared with 2024-11-13 · 74 added, 80 removed, 74 unchanged (68% of the section changed)

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We are a biopharmaceutical company with a mission of pioneering medicines that transform patients’ lives.

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

• We are commercializing INPEFA ® (sotagliflozin), an orally-delivered small molecule drug, in the United States to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent heart failure visits in adults with heart failure or type 2 diabetes mellitus, chronic kidney disease, or CKD, and other cardiovascular risk factors.

We are devoting most of our resources to the research and development of our most advanced drug candidates and the commercialization of our approved drug, INPEFA ® (sotagliflozin):

• We are developing pilavapadin (LX 9211), an orally-delivered small molecule drug candidate, as a treatment for neuropathic pain.

We have completed three Phase 2 clinical trials ev aluating the safety and tolerability of pilavapadin and its effects on diabetic peripheral neuropathic pain, or DPNP, and neuropathic pain.

We have reported top-line results from our Phase 2b clinical trial of pilavapadin in DPNP, which demonstrated clear evidence of effect at the 10 mg dose, and have received Fast Track designation from the U.S.

Food and Drug Administration, or FDA, for development of pilavapadin in that indication.

We have also reported positive results from a Phase 2a clinical trial of pilavapadin in DPNP and results from a separate Phase 2a clinical trial of pilavapadin in post-herpetic neuralgia which also demonstrated evidence of effect.

• We are developing LX9851, an orally-delivered small molecule drug candidate, as a treatment for obesity and associated cardiometabolic disorders.

We have granted Novo Nordisk an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize LX9851 and are conducting preclinical development of LX9851 in preparation for the filing of an investigational new drug application, or IND, with the FDA and commencement of clinical development by Novo Nordisk.

• We continue to commercialize INPEFA (sotagliflozin), an orally-delivered small molecule drug, in the United States to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent heart failure visits in adults with heart failure or type 2 diabetes mellitus, chronic kidney disease, or CKD, and other cardiovascular risk factors.

We are also developing sotagliflozin as a treatment for hypertrophic cardiomyopathy, or HCM, and are conducting a Phase 3 clinical trial of sotagliflozin in that indication.

We are separately pursuing regulatory approval of ZYNQUISTA ® (sotagliflozin) as a treatment for type 1 diabetes.

We have a pending New Drug Application, or NDA, for ZYNQUISTA as an adjunct to insulin therapy for glycemic control in adults with type 1 diabetes and CKD.

The NDA is currently under review by the U.S.

Food and Drug Administration, or FDA, and has been assigned a Prescription Drug User Fee Act, or PDUFA, goal date of December 20, 2024.

We have reported positive results from three Phase 3 clinical trials of sotagliflozin in type 1 diabetes.

We are also developing sotagliflozin as a treatment for hypertrophic cardiomyopathy, or HCM, and have initiated a Phase 3 clinical trial of sotagliflozin in HCM.

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

We are conducting a Phase 2b clinical trial of LX9211 in diabetic peripheral neuropathic pain, or DPNP, and have received Fast Track designation from the FDA for development of LX9211 in that indication.

We have reported positive results from a Phase 2 clinical trial of LX9211 in DPNP and top-line results from a separate Phase 2 clinical trial of LX9211 in post-herpetic neuralgia which also demonstrated evidence of effect.

• We are conducting preclinical development of LX9851, an orally-delivered small molecule drug candidate, as a treatment for obesity and associated cardiometabolic disorders.

• 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.

Sotagliflozin, LX9851 and compounds from a number of additional drug programs originated from our own internal drug discovery efforts, and LX9211 originated from our collaborative neuroscience drug discovery efforts with Bristol-Myers Squibb.

The FDA issued a complete response letter regarding our New Drug Application, or NDA, for sotagliflozin in type 1 diabetes in March 2019 and an additional complete response letter in December 2024 regarding our NDA for sotagliflozin as an adjunct to insulin therapy for glycemic control in adults with type 1 diabetes and CKD.

At our request, the FDA has issued a public Notice of Opportunity for Hearing, or NOOH, on whether there are grounds for denying approval of our NDA and those proceedings are ongoing.

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

Pilavapadin originated from our collaborative neuroscience drug discovery efforts with Bristol-Myers Squibb and LX9851, sotagliflozin and compounds from a number of additional drug programs originated from our own internal drug discovery efforts.

Our 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.

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To date, we have generated a substantial portion of our revenues from a limited number of sources.

Our operating results and, in particular, our ability to generate additional revenues are dependent on many factors, including the success of our commercialization of INPEFA in the United States and the amount of revenues generated from sales of INPEFA;

the success of our ongoing research and development efforts and the ability to obtain necessary regulatory approvals of the drug candidates which are the subject of such efforts;

Our operating results and, in particular, our ability to generate additional revenues are dependent on many factors, including the success of our ongoing research and development efforts and the ability to obtain necessary regulatory approvals of the drug candidates which are the subject of such efforts;

our success in establishing new collaborations and licenses and our receipt of milestones, royalties and other payments under such arrangements;

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Our ability to secure future revenue-generating agreements will depend upon our ability to address the needs of our potential future collaborators and licensees, and to negotiate agreements that we believe are in our long-term best interests.

We may determine, as we have with INPEFA in the United States, that our interests are better served by retaining rights to our discoveries and advancing our therapeutic programs to a later stage, which could limit our near-term revenues and increase expenses.

We may determine, as we have with INPEFA in heart failure in the United States, that our interests are better served by retaining rights to our discoveries and advancing our therapeutic programs to a later stage, which could limit our near-term revenues and increase expenses.

Because of these and other factors, our operating results have fluctuated in the past and are likely to do so in the future, and we do not believe that period-to-period comparisons of our operating results are a good indication of our future performance.

Since our inception, we have incurred significant losses and, as of September 30, 2024, we had an accumulated deficit of $1.9 billion.

Since our inception, we have incurred significant losses and, as of March 31, 2025, we had an accumulated deficit of approximately $2.0 billion.

Our losses have resulted principally from costs incurred in research and development, selling, general and administrative costs associated with our operations, and non-cash stock-based compensation expenses associated with stock options and restricted stock units granted to employees and consultants.

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Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, sales and marketing, and administrative personnel, professional fees and other corporate expenses, including information technology, facilities costs and general legal activities.

We expect to continue to incur significant research and development costs in connection with the continuing research and development of our drug candidates and significant selling, general and administrative expenses in connection with our commercial launch of INPEFA.

We expect to continue to incur significant research and development costs in connection with the continuing research and development of our drug candidates.

As a result, we will need to generate significantly higher revenues to achieve profitability.

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Results of Operations

Revenues were approximately $1.8 million and $0.2 million, respectively, for the three months ended September 30, 2024 and 2023 and $4.5 million and $0.5 million, respectively, for the nine months ended September 30, 2024 and 2023 primarily from product revenues recognized from sales of INPEFA following its regulatory approval in May 2023.

Revenues for the three months ended March 31, 2025 and 2024 were approximately $1.3 million and $1.1 million, respectively, primarily from product revenues recognized from sales of INPEFA.

Cost of Sales

Cost of sales during the three and nine months ended September 30, 2024 consist of third-party manufacturing costs and freight associated with sales of INPEFA.

Prior to receiving regulatory approval on May 26, 2023, we had completed or begun the manufacturing of certain INPEFA raw materials.

Cost of sales during the three months ended March 31, 2025 and 2024 were less than $0.1 million and consist of third-party manufacturing costs and freight associated with sales of INPEFA.

Prior to receiving regulatory approval of INPEFA in May 2023, we had completed or begun the manufacturing of certain INPEFA raw materials.

These raw materials were either received at “zero-cost” to us in conjunction with a terminated agreement in 2019 or recorded as research and development expense.

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We began capitalizing inventory manufactured subsequent to regulatory approval of INPEFA as the related costs were expected to be recoverable through the commercialization of the product.

At September 30, 2024, substantially all of the “zero-cost” INPEFA raw materials remains available to us.

The “zero-cost” inventory is expected to be consumed over approximately the next three years, which will result in a lower average per unit cost of materials during that period;

however, the time period over which this inventory is consumed will depend on a number of factors, including the amount of future INPEFA sales, use of this inventory in clinical development or other research activities, production lead times, collaboration agreements, and/or the ability to utilize inventory prior to its expiration date.

At March 31, 2025, substantially all of the “zero-cost” INPEFA raw materials remains available to us.

However, the time period over which this inventory is consumed will depend on a number of factors, including the amount of future INPEFA sales, use of this inventory to satisfy manufacturing and supply agreements associated with strategic alliances (for further information, see our Annual Report on Form 10-K for the year ended December 31, 2024) or in clinical development or other research activities, production lead times, and/or the ability to utilize inventory prior to its expiration date.

Any future sales of INPEFA will utilize this “zero-cost” inventory and will result in a lower average per unit cost of materials during that period.

We estimate our cost of goods sold as a percentage of net product revenue will be less than 10% subsequent to the utilization of all of the remaining “zero-cost” inventory.

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Research and development expenses and dollar and percentage changes as compared to the corresponding periods in the prior year are as follows (dollar amounts are presented in millions):

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

2024 2023 2024 2023

Three Months Ended March 31,

Total research and development expense $ 15.3 $ 14.4

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• Third-party services – Third-party services relate principally to our clinical trial and related development activities, such as preclinical and clinical studies and contract manufacturing.

Overall, third-party services for the three months ended September 30, 2024 increased 66% to $18.7 million and for the nine months ended September 30, 2024 increased 43% to $36.2 million, as compared to the corresponding periods in 2023 primarily driven by higher clinical external research expense associated with our current drug candidates.

• Personnel – Personnel costs for the three months ended September 30, 2024 increased to $4.2 million from $3.6 million, and for the nine months ended September 30, 2024 increased to $12.8 million from $11.1 million as compared to the corresponding periods in 2023.

Overall, third-party services for the three months ended March 31, 2025 increased 12% to $8.0 million from $7.2 million as compared to the corresponding period in 2024 primarily driven by higher preclinical manufacturing expense.

• Personnel – Personnel costs for the three months ended March 31, 2025 increased 4% to $4.4 million from $4.2 million, as compared to the corresponding period in 2024.

Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

• Stock-based compensation – Stock-based compensation expenses for the three months ended September 30, 2024 increased 9% to $1.5 million, and for the nine months ended September 30, 2024 increased 23% to $4.7 million, as compared to the corresponding periods in 2023, due to increased headcount.

• Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2025 and 2024 were $1.6 million in each period.

• Facilities, equipment, and other – Facilities, equipment, and other costs relate primarily to rent, insurance, travel and training, and software licensing costs.

Facilities, equipment, and other costs for the three months ended September 30, 2024 and 2023 were $1.4 million and $1.3 million, respectively.

For the nine months ended September 30, 2024 and 2023 these costs were $4.1 million and $3.8 million, respectively.

Facilities, equipment, and other costs for the three months ended March 31, 2025 decreased 6% to $1.3 million from $1.4 million, as compared to the corresponding period in 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses and dollar and percentage changes as compared to the corresponding periods in the prior year are as follows (dollar amounts are presented in millions):

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

2024 2023 2024 2023

Three Months Ended March 31,

Total selling, general and administrative expense $ 11.6 $ 32.1

Dollar increase $7.4 $29.4

Percentage increase 23% 36%

Dollar decrease $ (20.5)

Percentage decrease (64) %

Selling, general and administrative expenses consist primarily of personnel costs to support the commercialization of INPEFA and support of our research and development activities, professional and consulting fees, stock-based compensation expense, and facilities, equipment and other costs, each of which are described further below.

• Personnel – Personnel costs for the three months ended September 30, 2024 increased 18% to $19.0 million, and for the nine months ended September 30, 2024 increased 38% to $52.6 million, as compared to the corresponding periods in 2023.

• Personnel – Personnel costs for the three months ended March 31, 2025 decreased 69% to $5.0 million from $16.4 million, as compared to the corresponding period in 2024, primarily due to lower employee salaries and benefit costs as a result of decreased headcount from the Company restructuring in late 2024.

Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

The increase is driven by higher employee salaries and benefit costs, including $3.4 million in severance costs primarily reflecting the partial reduction in the field force in September 2024.

• Professional and consulting fees – Professional and consulting fees for the three months ended September 30, 2024 increased 57% to $15.9 million, and for the nine months ended September 30, 2024 increased 49% to $40.1 million, as compared to the corresponding periods in 2023, primarily due to higher marketing and professional fees in conjunction with the commercialization of INPEFA.

• Stock-based compensation – Stock-based compensation expenses for the three months ended September 30, 2024 decreased 48% to $1.3 million, and for the nine months ended September 30, 2024 decreased 1% to $7.2 million, as compared to the corresponding periods in 2023 reflecting forfeitures of unvested awards due to decreased headcount, including the partial reduction in the field force in September 2024.

• Facilities, equipment, and other – Facilities, equipment, and other costs for the three months ended September 30, 2024 and 2023 were $3.4 million and $3.5 million, and for the nine months ended September 30, 2024 and 2023 were $10.9 million and $8.9 million, respectively.

The increase was primarily due to travel in conjunction with the commercialization of INPEFA.

• Professional and consulting fees – Professional and consulting fees for the three months ended March 31, 2025 decreased 59% to $3.9 million from $9.6 million, as compared to the corresponding period in 2024, primarily due to lower marketing costs in conjunction with the Company restructuring in late 2024.

• Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2025 decreased 46% to $1.5 million from $2.7 million, as compared to the corresponding period in 2024, due to decreased headcount from the reduction in the field force in late 2024.

• Facilities, equipment, and other – Facilities, equipment, and other costs for the three months ended March 31, 2025 decreased 65% to $1.2 million from $3.4 million, as compared to the corresponding period in 2024.

The decrease was primarily due to lower travel as a result of the Company restructuring in late 2024.

Interest and Other Expense

Interest and Other Expense.

Interest and other expense was $4.6 million and $3.9 million, respectively, during the three months ended September 30, 2024 and 2023, and $11.7 million and $7.7 million, respectively, during the nine months ended September 30, 2024 and 2023, reflecting the additional $50 million borrowed under the Oxford Term Loans in June 2023.

Interest and other expense was $1.8 million and $4.9 million, respectively, during the three months ended March 31, 2025 and 2024.

Interest on the outstanding debt principal, amortization/accretion of debt issuance cost and discount and other related items are included in interest and other expense.

Interest Income and Other, Net

Interest Income and Other, Net.

Interest income and other, net increased to $3.4 million from $3.0 million during the three months ended September 30, 2024 and increased to $9.5 million from $5.3 million during the nine months ended September 30, 2024 from the corresponding periods in 2023, reflecting the increase in cash and investments due to net proceeds received from the March 2024 convertible preferred stock issuance.

Interest income and other, net increased to $2.2 million from $1.9 million during the three months ended March 31, 2025 from the corresponding period in 2024.

Interest earned on cash, cash equivalents and short-term investments is included in interest income and other, net.

Net Loss and Net Loss per Common Share

Net loss and Net loss per Common Share.

Net loss was $64.8 million, or $0.18 net loss per share, in the three months ended September 30, 2024 as compared to a net loss of $50.5 million, or $0.21 net loss per share, in the corresponding period in 2023.

Net loss was $166.6 million, or $0.54 net loss per share, in the nine months ended September 30, 2024 as compared to a net loss of $127.4 million, or $0.60 net loss per share, in the corresponding period in 2023.

Net loss was $25.3 million, or $0.07 net loss per share, in the three months ended March 31, 2025 as compared to a net loss of $48.4 million, or $0.20 net loss per share, in the corresponding period in 2024.

Our quarterly operating results have fluctuated in the past and are likely to do so in the future, and we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance.

Liquidity and Capital Resources

We have financed our operations from inception primarily through sales of common and preferred stock, contract and milestone payments we received under our collaborations and strategic licenses, target validation, database subscription and technology license agreements, product sales, government grants and contracts, and financing under debt, lease and other project financing arrangements, as well as from commercial sales of our approved drug products.

In March 2022, we entered into a loan and security agreement with Oxford that provides up to $150 million in borrowing capacity, available in five tranches, under which $100 million has been funded under the first three tranches.

The fourth $25 million tranche is available for draw at our option upon the achievement of specified INPEFA net sales and until April 25, 2025.

The fifth $25 million tranche is available for draw at our option, subject to Oxford’s consent, at any time prior to the expiration of the 60-month interest-only payment period with an amortization date of May 1, 2027.

Payments of $34.8 million, $52.2 million, and $20.0 million, including debt principal and final exit fee payments, will be due during the fiscal years ended December 31, 2027, December 31, 2028 and December 31, 2029, respectively, with respect to all borrowed loan tranches as of September 30, 2024.

The loan and security agreement includes a financial covenant relating to net product revenue, which will be effective as of the quarter ending June 30, 2026, and a separate financial covenant which requires us to maintain a minimum unrestricted cash and investments balance of 50% of the outstanding principal amount through June 30, 2026, tested monthly as of the last day of each month.

In addition, we are separately required to maintain a quarterly minimum unrestricted cash and investments balance of $10 million until the achievement of specified INPEFA net sales (which will be satisfied by meeting the monthly minimum unrestricted cash and investments covenant noted above).

Upon funding of the fourth tranche, the quarterly minimum

unrestricted cash and investments balance requirement will increase to $25 million.

For additional information, please refer to Note 5 of the Notes to the Condensed Consolidated Financial Statements.

In December 2023, we entered into an Open Market Sale Agreement SM with Jefferies LLC pursuant to which we may offer and sell shares of our common stock having an aggregate sales price of up to $75 million from time to time through Jefferies as sales agent.

As of September 30, 2024, the full amount is still available for issuance under the agreement.

On March 11, 2024, we entered into an agreement with certain accredited investors pursuant to which we agreed to sell 2,304,147 shares of our Series A Convertible Preferred Stock, at a price of $108.50 per share.

We received net proceeds of $241.4 million, after deducting placement agent fees and offering expenses from the private placement offering.

On May 10, 2024, each share of preferred stock was converted into 50 shares of our common stock, or an aggregate of 115,207,350 shares.

For additional information on the private placement offering, please refer to Note 8 of the Notes to the Condensed Consolidated Financial Statements.

On October 16, 2024, we entered into an exclusive license agreement with Viatris for the development and commercialization of sotagliflozin in all markets outside of the United States and Europe pursuant to which we received an upfront payment of $25 million.

For additional information on the exclusive license agreement, please refer to Note 9 of the Notes to the Condensed Consolidated Financial Statements.

As of September 30, 2024 and December 31, 2023, we had $258.4 million and $170.0 million in cash, cash equivalents and short-term investments, respectively.

We used cash of $157.3 million from operations in the nine months ended September 30, 2024, largely reflective of the net loss for the period of $166.6 million which included non-cash charges of $6.9 million primarily related to stock-based compensation expense.

Investing activities used cash of $69.1 million in the nine months ended September 30, 2024, primarily due to net purchases of investments.

Financing activities provided cash of $238.5 million, primarily from the issuance of sale of 2,304,147 shares of our Series A Convertible Preferred Stock in a private placement in March 2024 at a price of $108.50 per share.

The preferred shares were converted into an aggregate of 115,207,350 common shares in May 2024.

We have financed our operations from inception primarily through sales of common and preferred stock, contract and milestone payments we received under our collaborations and strategic licenses, target validation, database subscription and technology license agreements, government grants and contracts, and financing under debt, lease and other project financing arrangements, as well as from commercial sales of our approved drug products.

As of March 31, 2025 and December 31, 2024, we had $194.8 million and $238.0 million in cash, cash equivalents and short-term investments, respectively.

We used cash of $43.8 million from operations in the three months ended March 31, 2025, largely reflective of the net loss for the period of $25.3 million which included non-cash charges of $0.8 million primarily related to stock-based compensation expense.

Investing activities provided cash of $40.6 million in the three months ended March 31, 2025, primarily due to net maturities of investments.

Financing activities used cash of $0.6 million, primarily from payments for tax withholding on share-based compensation.

We have entered into an Open Market Sale Agreement SM with Jefferies LLC pursuant to which we may offer and sell shares of our common stock having an aggregate sales price of up to $75 million from time to time through Jefferies as sales agent.

As of March 31, 2025, the full amount is still available for issuance under the agreement.

Financing Obligations.

In March 2022, we entered into a loan and security agreement with Oxford that originally provided up to $150 million in borrowing capacity, available in five tranches, under which $100 million has been funded under the first three tranches.

Availability of the fourth $25 million tranche expired on April 15, 2025.

In March 2025, we entered into a seventh amendment to our loan and security agreement (the “Seventh Amendment”) with Oxford (a) providing for a prepayment to the lenders of $45 million, which occurred in April 2025, and certain additional contingent future prepayments totaling $8 million, (b) modifying the amortization date and repayment amortization schedule under the loans under certain circumstances, (c) modifying the financial covenant relating to minimum cash and (d) eliminating the previous financial covenant relating to net sales of INPEFA® (sotagliflozin), as well as certain other terms.

In April 2025, we repaid $45 million (including final payment exit fees) to Oxford on a pro-rata basis across each loan tranche pursuant to the terms of the Seventh Amendment.

Additional payments of $20.2 million, $30.2 million, and $11.6 million, including debt principal and final exit fee payments (equal to 7% of the remaining amount funded under the Oxford Term Loans), will be due during the fiscal years ended December 31, 2027, December 31, 2028 and December 31, 2029, respectively, with respect to all borrowed loan tranches as of March 31, 2025.

As a result of the Seventh Amendment, the current amortization date of May 1, 2027 and the final maturity date of March 1, 2029 are subject to potential acceleration to December 1, 2026 and November 1, 2027, respectively, dependent upon the occurrence of certain future events.

Additionally, Lexicon may prepay the Oxford Term Loans in whole at its option at any time subject to prepayment fees of up to 3% which decline over the three years following the funding date of each loan tranche.

Among other items, the loan and security agreement includes a financial covenant which requires us to maintain a minimum balance of unrestricted cash, cash equivalents.

short-term investments, and restricted cash, inclusive of a required minimum amount of $29 million to be maintained in a blocked account, in an amount equal to not less than the greater of (i) fifty percent (50%) of the outstanding principal amount of the Oxford Term Loans and (ii) the required minimum amount of $29 million.

As of March 31, 2025, the Company was in compliance with its debt covenants.

Collaborations and Strategic Alliances.

In March 2025, we entered into an exclusive license agreement with Novo Nordisk A/S for the worldwide development, manufacture and commercialization of LX9851, our preclinical drug candidate for obesity and associated cardiometabolic disorders.

Under the license agreement, we granted Novo Nordisk an exclusive, worldwide, royalty-bearing right and license under our patent rights and know-how to develop, manufacture and commercialize LX9851.

We received an upfront payment of $45 million in April 2025 under this license agreement and are eligible to receive (a) up to an aggregate of $485 million upon the achievement of specified regulatory and commercial launch milestones and (b) up to an aggregate of $475 million upon the achievement of specified sales milestones.

We are also entitled to tiered, escalating royalties ranging from single-digit to low-double-digit percentages of annual net sales of LX9851, subject to customary royalty reduction provisions.

In October 2024, we entered into an exclusive license agreement with Viatris for the development and commercialization of sotagliflozin in all markets outside of the United States and Europe pursuant to which we received an upfront payment of $25 million.

For additional information on the exclusive license agreement, please refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

Other commitments.

Upon the regulatory approval of sotagliflozin for the treatment of type 1 diabetes in a major market, we will be required to make certain royalty payments, totaling $4.5 million, in three equal annual installments of $1.5 million.

Under our drug discovery alliance with Bristol-Myers Squibb, we will be required to make a milestone payment of $5 million upon dosing of the first patient in a Phase 3 clinical trial of LX9211.

Under our drug discovery alliance with Bristol-Myers Squibb, we will be required to make a milestone payment of $5 million upon dosing of the first patient in a Phase 3 clinical trial of pilavapadin.

For a further discussion of our commitments and contingencies see Note 7 of the Notes to Condensed Consolidated Financial Statements .

Our future capital requirements will be substantial and will depend on many factors, including the success of our commercialization of INPEFA in the United States;

the success of our commercial launch of ZYNQUISTA for patients with type 1 diabetes and CKD, if approved;

the success of our ongoing research and development efforts and the ability to obtain necessary regulatory approvals of the drug candidates which are the subject of such efforts;

Our future capital requirements will be substantial and will depend on many factors, including the success of our ongoing research and development efforts and the ability to obtain necessary regulatory approvals of the drug candidates which are the subject of such efforts;

our success in establishing new collaborations and licenses and our receipt of milestones, royalties and other payments under such arrangements;

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Our capital requirements will also be affected by any expenditures we make in connection with license agreements and acquisitions of and investments in complementary technologies and businesses.

We expect to continue to devote substantial capital resources to the commercialization of INPEFA for heart failure;

the commercial launch of ZYNQUISTA for patients with type 1 diabetes and CKD, if approved;

the research and development of our drug candidates;

and for other general corporate activities.

We believe that our current unrestricted cash and investment balances as well as future revenues will be sufficient to fund our currently planned operations for at least the next 12 months from the date of this report.

We expect to continue to devote substantial capital resources to the research and development of our drug candidates and for other general corporate activities.

We believe that our current unrestricted cash and investment balances and revenues we expect to derive from strategic and other collaborations and other sources will be sufficient to fund our currently planned operations for at least the next 12 months from the date of this report.

In future periods, if cash on hand or generated by operations is insufficient to satisfy our liquidity requirements, we will need to obtain additional liquidity through future strategic and other collaborations or sell additional equity or debt securities or obtain additional credit arrangements.

Additional financing may not be available on terms acceptable to us or at all, and the sale of additional equity or convertible debt securities may result in additional dilution to our stockholders.

If we are unable to obtain adequate financing when needed, we may have to delay or reduce the scope of our commercialization efforts or one or more of our clinical trials and other research and development programs.

Additional financing may not be available on terms acceptable to us or at all.

The sale of additional equity or convertible debt securities may result in additional dilution to our stockholders.

From time to time, our board of directors may authorize us to repurchase shares of our common stock.

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We are exposed to limited market and credit risk on our cash equivalents which have maturities of three months or less at the time of purchase.

We had approximately $258.4 million in cash and cash equivalents and short-term investments as of September 30, 2024.

We had approximately $194.8 million in cash and cash equivalents and short-term investments as of March 31, 2025.

We maintain a short-term investment portfolio which consists of U.S.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis