What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-06 · 64 added, 57 removed, 341 unchanged (26% of the section changed)

3 unchanged sentences

(In thousands, except par value and share amounts)

As of June 30, As of December 31,

As of September 30, As of December 31,

Assets (unaudited)

40 unchanged sentences

(In thousands, except per share amounts)

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

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

2025 2024 2025 2024

10 unchanged sentences

Total operating expenses 26,369 65,443 78,441 168,907

Income (loss) from operations 3,736 ( 55,354 ) ( 21,943 ) ( 100,687 )

Loss from operations

( 12,187 ) ( 63,693 ) ( 34,131 ) ( 164,380 )

Interest and other expense ( 2,155 ) ( 4,562 ) ( 6,308 ) ( 11,721 )

Interest income and other 1,573 3,444 5,628 9,464

Net income (loss) $ 3,252 $ ( 53,429 ) $ ( 22,043 ) $ ( 101,826 )

Net income (loss) per common share, basic $ 0.01 $ ( 0.17 ) $ ( 0.06 ) $ ( 0.37 )

Net income (loss) per common share, diluted $ 0.01 $ ( 0.17 ) $ ( 0.06 ) $ ( 0.37 )

Weighted average common shares outstanding, basic 363,294 310,836 362,687 278,113

Weighted average common shares outstanding, diluted 363,570 310,836 362,687 278,113

Net loss $ ( 12,769 ) $ ( 64,811 ) $ ( 34,811 ) $ ( 166,637 )

Net loss per common share, basic and diluted $ ( 0.04 ) $ ( 0.18 ) $ ( 0.10 ) $ ( 0.54 )

Weighted average common shares outstanding, basic and diluted 363,399 361,492 362,927 306,109

Other comprehensive income (loss):

Unrealized loss on investments ( 39 ) ( 143 ) ( 133 ) ( 224 )

Comprehensive income (loss) $ 3,213 $ ( 53,572 ) $ ( 22,176 ) $ ( 102,050 )

Unrealized gain (loss) on investments 43 542 ( 90 ) 318

Comprehensive loss $ ( 12,726 ) $ ( 64,269 ) $ ( 34,901 ) $ ( 166,319 )

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

19 unchanged sentences

Balance at June 30, 2024 363,020 $ 363 — $ — $ 2,113,090 $ ( 1,868,665 ) $ ( 193 ) $ ( 4,615 ) $ 239,980

Stock-based compensation — — — — 2,801 — — — 2,801

Net loss — — — — — ( 64,811 ) — — ( 64,811 )

Unrealized gain on investments — — — — — — 542 — 542

Balance at September 30, 2024 363,020 $ 363 — $ — $ 2,115,891 $ ( 1,933,476 ) $ 349 $ ( 4,615 ) $ 178,512

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

16 unchanged sentences

Balance at June 30, 2025 365,781 $ 366 — $ — $ 2,123,560 $ ( 1,989,285 ) $ ( 14 ) $ ( 5,187 ) $ 129,440

Stock-based compensation — — — — 3,445 — — — 3,445

Net loss — — — — — ( 12,769 ) — — ( 12,769 )

Unrealized gain on investments — — — — — — 43 — 43

Balance at September 30, 2025 365,781 $ 366 — $ — $ 2,127,005 $ ( 2,002,054 ) $ 29 $ ( 5,187 ) $ 120,159

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

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

11 unchanged sentences

Decrease in other long-term assets 567 513

Decrease in accounts payable and other liabilities ( 10,569 ) ( 3,198 )

Decrease (increase) in accounts payable and other liabilities ( 24,573 ) 5,673

Net cash used in operating activities ( 50,618 ) ( 157,289 )

17 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Accrued financing costs $ — $ 910

Conversion of preferred stock to common stock — 115

Right-of-use assets obtained in exchange for operating lease obligations $ 3,243 —

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

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 three and six month period ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ended December 31, 2025.

Operating results for the three and nine month periods ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ended December 31, 2025.

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, 2024, as filed with the SEC.

10 unchanged sentences

The fair value of cash and cash equivalents, restricted cash and investments held are as follows:

As of June 30, 2025

As of September 30, 2025

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

19 unchanged sentences

Total cash and cash equivalents, restricted cash and short-term investments $ 237,839 $ 136 $ ( 18 ) $ 237,957

As of June 30, 2025 and December 31, 2024, Lexicon’s investments in an unrealized loss position had an estimated fair value of $ 76.4 million and $ 12.9 million, respectively.

There were no realized gains or losses during either of the six month periods ended June 30, 2025 and 2024.

As of September 30, 2025 and December 31, 2024, Lexicon’s investments in an unrealized loss position had an estimated fair value of $ 16.3 million and $ 12.9 million, respectively.

There were no realized gains or losses during either of the nine month periods ended September 30, 2025 and 2024.

Fair Value Measurements

9 unchanged sentences

There were no transfers between Level 1 and Level 2 during the periods presented.

Assets at Fair Value as of June 30, 2025

Assets at Fair Value as of September 30, 2025

Level 1 Level 2 Level 3 Total

12 unchanged sentences

The carrying amount of prepaid expenses and other assets, accounts payable and accrued expenses are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.

The fair value of the Oxford Term Loans (see Note 6) is determined under Level 2 in the fair value hierarchy and approximates carrying 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 (see Note 6, Debt Obligations ) is determined under Level 2 in the fair value hierarchy and approximates carrying value as the loans bear interest at a rate that approximates prevailing market rates for instruments with similar characteristics.

Supplemental Financial Information

Property and Equipment.

Estimated Useful Lives As of June 30, As of December 31,

Estimated Useful Lives As of September 30, As of December 31,

In Years 2025 2024

8 unchanged sentences

Accrued Liabilities.

As of June 30, As of December 31,

As of September 30, As of December 31,

(in thousands)

4 unchanged sentences

Total accrued liabilities $ 13,620 $ 30,447

As of June 30, 2025 and December 31, 2024, $ 0.6 million and $ 8.8 million of accrued severance is included in accrued compensation and benefits within accrued liabilities on the condensed consolidated balance sheet as noted in the table above.

As of December 31, 2024, $ 8.5 million of accrued severance is included in accrued compensation and benefits within accrued liabilities on the condensed consolidated balance sheet, all of which was paid prior to September 30, 2025.

Net Income (Loss) Per Share.

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

Shares associated with warrants, stock options and restricted stock units that could potentially dilute earnings per share in the future are not included in the computation of diluted earnings per share when the company has a net loss because they are antidilutive.

For the three months ended June 30, 2025, approximately 0.3 million share-based awards were included in the calculation of diluted earnings per share.

For the three month period ended June 30, 2024 and six month periods ended June 30, 2025 and June 30, 2024, no share-based awards were included in the computation of diluted earnings per share of common stock because the effect would have been anti-dilutive due to the net loss in these periods.

Potentially dilutive shares associated with warrants, stock options and restricted stock units totaling 5.5 million and 2.4 million for the three and nine months ended September 30, 2025, and totaling 0.3 million and 0.5 million for the three and nine months ended September 30, 2024, were not included in the computation of diluted earnings per share because they are antidilutive due to the Company’s net loss in all periods presented.

Collaborations and Strategic Alliances

8 unchanged sentences

The Company provided the licensed technology under its patent rights and know-how to develop, manufacture and commercialize LX9851 in March 2025.

During the quarter ended June 30, 2025, the Company recognized $ 27.5 million as licensing revenue on the condensed consolidated statements of comprehensive income (loss) based on partial completion of the IND-enabling activities.

During the three months and nine months ended September 30, 2025, the Company recognized $ 13.2 million and $ 40.7 million as licensing revenue on the condensed consolidated statements of comprehensive income (loss) based on partial completion of the IND-enabling activities.

The remaining $ 4.3 million of the $ 45 million upfront payment is recorded as deferred revenue on the condensed consolidated balance sheet.

10 unchanged sentences

The Oxford Term Loans are available in five tranches, each maturing in March 2029.

The first two $ 25 million tranches totaling $ 50 million were funded in 2022 and the third $ 50 million tranche was funded in June 2023.

The first two $ 25 million tranches totaling $ 50 million were funded in 2022 and the third $ 50 million tranche was funded in 2023.

Availability of the fourth $ 25 million tranche expired in April 2025.

5 unchanged sentences

The floating interest rate is currently based on the sum of (a) the 1-month CME Term Secured Overnight Financing Rate (SOFR), (b) 0.10 %, and (c) 7.90 % for the first and second tranches and 7.00 % for the third tranche.

As of June 30, 2025, the weighted average interest rate of the Oxford Term Loans was 11.9 %.

In April 2025 the Company 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.

As of September 30, 2025, the weighted average interest rate of the Oxford Term Loans was 11.8 %.

In April 2025, the Company repaid $ 45 million (including pro-rata 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 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.

As of June 30, 2025, the Company reflected the carrying value of the Oxford Term Loans of $ 56.1 million in long-term debt on the condensed consolidated balance sheet.

Additionally, Lexicon may prepay the Oxford Term Loans in whole at its option at any time subject to prepayment fees which have declined to 1 percent on a portion of the outstanding amounts of each loan tranche.

As of September 30, 2025, the Company reflected the carrying value of the Oxford Term Loans of $ 56.5 million in long-term debt on the condensed consolidated balance sheet.

The carrying value above reflects an unamortized discount of $ 5.5 million to the face value of long-term debt related to debt issuance costs, the final payment exit fee, and the warrant fair value described below, which are being amortized into interest and other expense.

5 unchanged sentences

Among other restrictive provisions and covenants, 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 (a) fifty percent ( 50 %) of the outstanding principal amount of the Oxford Term Loans and (b) the required minimum amount of $ 29 million.

As of June 30, 2025, the Company reflected the $ 29 million minimum cash in the blocked account as restricted cash on the condensed consolidated balance sheet.

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 (a) fifty percent ( 50 %) of the outstanding principal amount of the

Oxford Term Loans and (b) the required minimum amount of $ 29 million.

As of September 30, 2025, the Company reflected the $ 29 million minimum cash in the blocked account as restricted cash on the condensed consolidated balance sheet.

The Loan Agreement also contains certain customary representations and warranties, affirmative and negative covenants and events of default applicable to Lexicon and its subsidiaries.

2 unchanged sentences

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 Company was in compliance with its debt covenants as of June 30, 2025.

The Company was in compliance with its debt covenants as of September 30, 2025.

Commitments and Contingencies

Operating Lease Obligations.

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

In July 2024, Lexicon entered into a new lease agreement for its existing office space in The Woodlands, Texas.

The term of the lease begins September 2025, extends through January 2031 and provides for total undiscounted cash payments of $ 4.1 million.

Operating lease right-of-use assets and associated lease liabilities are recorded in the condensed consolidated balance sheet at the lease commencement date based on the present value of future lease payments to be made over the expected lease term.

1 unchanged sentence

Lexicon does not apply this accounting to those leases with terms of twelve months or less.

As of June 30, 2025 and December 31, 2024, the right-of-use assets for the office space leases of $ 4.5 million and $ 4.8 million, respectively, are separately included in operating lease right-of-use-assets in the condensed consolidated balance sheet.

Current liabilities relating to the leases are included in accrued liabilities in the condensed consolidated balance sheet (as further described in Note 4) and long-term operating lease liabilities of approximately $ 4.4 million and $ 4.6 million, respectively, as of June 30, 2025 and December 31, 2024 are included in other long-term liabilities in the condensed consolidated balance sheet.

During each of the three and six months ended June 30, 2025 and 2024, the Company incurred lease expense of $ 0.4 million and $ 0.8 million, respectively.

During each of the six months ended June 30, 2025 and 2024, the Company made cash payments for lease liabilities of $ 0.7 million.

As of June 30, 2025 and December 31, 2024, the weighted-average remaining lease terms were 8.4 years and 8.6 years, respectively, with weighted-average discount rates of 9.7 % for each year.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at June 30, 2025:

Lexicon’s operating leases include leases of office space in The Woodlands, Texas and Bridgewater, New Jersey that will expire in January 2031 and January 2034, respectively.

In September 2025, we entered into a new lease for 25,000 square feet of office space in The Woodlands, Texas.

The term of this office lease extends through January 2031 and provides for escalating annual office rent and other fixed payments starting at approximately $ 0.8 million and increasing to approximately $ 0.9 million in the final year of the lease for total undiscounted cash payments of $ 4.5 million.

In September 2025, the Company recorded a right-of use asset and right-of-use liability of approximately $ 3.2 million related to this new office lease based on the present value of future lease payments to be made over the expected lease term using a discount rate of approximately 11.9 %.

As of September 30, 2025 and December 31, 2024, total right-of-use assets for the office space leases of $ 7.5 million and $ 4.8 million, respectively, are separately included in operating lease right-of-use-assets in the condensed consolidated balance sheet.

Current liabilities relating to the leases are included in accrued liabilities in the condensed consolidated balance sheet (as further described in Note 4, Supplemental Financial Information ) and long-term operating lease liabilities of approximately $ 6.8 million and $ 4.6 million, respectively, as of September 30, 2025 and December 31, 2024 are included in other long-term liabilities in the condensed consolidated balance sheet.

During each of the three and nine months ended September 30, 2025 and 2024, the Company incurred lease expense of $ 0.4 million and $ 1.3 million, respectively.

During each of the nine months ended September 30, 2025 and 2024, the Company made cash payments for lease liabilities of $ 1.0 million.

As of September 30, 2025 and December 31, 2024, the weighted-average remaining lease terms were 7.2 and 8.6 years, respectively, with weighted-average discount rates of 10.6 % for each year.

The following table reconciles the undiscounted cash flows of the operating lease liability to the recorded lease liability at September 30, 2025:

(in thousands)

11 unchanged sentences

Compensation expense related to stock options and restricted stock units (“RSUs”) is determined based on the fair value of the award on the date of the grant and is recognized on a straight-line basis over the vesting period in which an employee is required to provide service.

Compensation expense for the three months ended June 30, 2025 and 2024 of $ 3.2 million and $ 4.9 million, respectively, and for the six months ended June 30, 2025 and 2024 of $ 6.2 million and $ 9.2 million, respectively, is recorded separately in research and development expense and selling, general, and administrative expense as noted on the Company’s condensed consolidated statements of comprehensive income (loss).

Compensation expense for the three months ended September 30, 2025 and 2024 of $ 3.4 million and $ 2.8 million, respectively, and for the nine months ended September 30, 2025 and 2024 of $ 9.7 million and $ 12.0 million, respectively, is recorded separately in research and development expense and selling, general, and administrative expense as noted on the Company’s condensed consolidated statements of comprehensive income (loss).

The fair value of stock options is estimated at the date of grant using the Black-Scholes method requiring the input of subjective assumptions.

3 unchanged sentences

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

The following weighted-average assumptions were used for stock options granted in the six months ended June 30, 2025 and 2024:

The following weighted-average assumptions were used for stock options granted in the nine months ended September 30, 2025 and 2024:

Expected Volatility Risk-free Interest Rate Expected Term Dividend

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Employees 105 % 3.9 % 4 — %

Officers and non-employee directors 115 % 4.3 % 6 — %

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Employees 96 % 4.4 % 4 — %

8 unchanged sentences

Forfeited ( 4,723 ) 2.86

Outstanding at June 30, 2025 23,285 2.10

Exercisable at June 30, 2025 7,835 $ 4.03

Outstanding at September 30, 2025 20,950 1.96

Exercisable at September 30, 2025 7,331 $ 3.63

The following is a summary of restricted stock unit activity under Lexicon’s stock-based compensation plans:

5 unchanged sentences

Forfeited ( 2,393 ) 1.18

Outstanding at June 30, 2025 16,323 $ 0.95

Outstanding at September 30, 2025 15,469 $ 0.96

Other Capital Agreements

11 unchanged sentences

Summary of segment net income (loss), including segment expenses were as follows:

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

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

2025 2024 2025 2024

12 unchanged sentences

Total operating expenses 26,369 65,443 78,441 168,907

Income (loss) from operations 3,736 ( 55,354 ) ( 21,943 ) ( 100,687 )

Loss from operations ( 12,187 ) ( 63,693 ) ( 34,131 ) ( 164,380 )

Interest and other expense ( 2,155 ) ( 4,562 ) ( 6,308 ) ( 11,721 )

Interest income and other 1,573 3,444 5,628 9,464

Net income (loss) $ 3,252 $ ( 53,429 ) $ ( 22,043 ) $ ( 101,826 )

(1) For the three and six months ended June 30, 2025 and 2024, other segment expense primarily includes, among other items, stock compensation of $ 1.6 million, $ 1.7 million, $ 3.2 million, and $ 3.3 million, respectively, related to research and development personnel;

$ 0.01 million, $ 1.2 million, $ 0.05 million , and $ 2.0 million, respectively, related to sales and marketing personnel;

and $ 1.6 million, $ 2.0 million, $ 3.0 million, and $ 3.9 million, respectively, related to general and administrative personnel.

Net loss $ ( 12,769 ) $ ( 64,811 ) $ ( 34,811 ) $ ( 166,637 )

(1) For the three and nine months ended September 30, 2025 and 2024, other segment expense includes stock compensation of (i) $ 1.8 million, $ 1.5 million, $ 5.0 million, and $ 4.7 million, respectively, related to research and development personnel and (ii) $ 1.6 million, $ 0.8 million, $ 4.6 million, and $ 4.7 million, respectively, related to general and administrative personnel.

For the three and nine months ended September 30, 2024, other segment expense primarily includes, among other items, stock compensation of $ 0.6 million and $ 2.6 million, respectively, related to sales and marketing personnel.

(2) For the three and nine months ended September 30, 2025, other segment expense includes, among other items, severance costs of $ 0.1 million and $ 0.2 million, respectively, related to research and development personnel.

For the three and nine months ended September 30, 2024, other segment expense includes, among other items, severance costs of (i) $ 2.5 million and $ 2.7 million, respectively, related to sales and marketing personnel and (ii) $ 0.9 million and $ 0.9 million, respectively, related to general and administrative personnel.

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