What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-06 · 43 added, 41 removed, 111 unchanged (43% of the section changed)

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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.

We have reported 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.

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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 make INPEFA (sotagliflozin) commercially available.

INPEFA is our 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 continue to make INPEFA (sotagliflozin) commercially available in the United States.

INPEFA is our orally-delivered small molecule drug approved 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.

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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 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.

We may determine, as we have with sotagliflozin in the United States and Europe, 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 June 30, 2025, we had an accumulated deficit of approximately $2.0 billion.

Since our inception, we have incurred significant losses and, as of September 30, 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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Results of Operations

Revenues were approximately $28.9 million and $1.6 million, respectively, for the three months ended June 30, 2025 and 2024 and $30.1 million and $2.8 million, respectively, for the six months ended June 30, 2025 and 2024.

Revenues for 2025 included $27.5 million in licensing revenue recognized from the Novo Nordisk licensing agreement.

Revenues were approximately $14.2 million and $1.8 million, respectively, for the three months ended September 30, 2025 and 2024 and $44.3 million and $4.5 million, respectively, for the nine months ended September 30, 2025 and 2024.

Revenues for the three months and nine months ended September 30, 2025 included $13.2 million and $40.7 million in licensing revenue recognized from the Novo Nordisk licensing agreement.

See Note 5, Collaborations and Strategic Alliances , for further information.

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Cost of Sales

Cost of sales during the three and six months ended June 30, 2025 and 2024 were less than $0.2 million and primarily consist of third-party manufacturing costs and freight associated with sales of INPEFA.

Cost of sales during the three and nine months ended September 30, 2025 and 2024 were less than $0.3 million in each period and primarily 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.

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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 June 30, 2025, substantially all of the “zero-cost” INPEFA raw materials remains available to us.

At September 30, 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.

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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 June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

Total research and development expense $ 18.8 $ 25.8 $ 49.8 $ 57.8

Dollar increase $ (1.9) $ (0.9)

Percentage increase (11) % (3) %

Dollar decrease

$ (7.0) $ (8.0)

Percentage decrease

(27) % (14) %

Research and development expenses consist primarily of third-party services principally related to preclinical and clinical development activities, salaries and other personnel-related expenses, facility and equipment costs, stock-based compensation expense and other costs, each of which are described below.

• 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 June 30, 2025 decreased 14% to $8.8 million from $10.2 million, and for the six months ended June 30, 2025 decreased 4% to $16.8 million from $17.4 million as compared to the corresponding periods in 2024 primarily driven by lower clinical external research expense associated with our current drug candidates.

Overall, third-party services for the three months ended September 30, 2025 decreased 39% to $11.5 million from $18.7 million, and for the nine months ended September 30, 2025 decreased 22% to $28.3 million from $36.2 million as compared to the corresponding periods in 2024 primarily driven by lower clinical external research expense associated with our current drug candidates.

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

Personnel costs for the three months ended June 30, 2025 decreased 12% to $3.8 million from $4.3 million, and for the six months ended June 30, 2025 decreased 4% to $8.3 million from $8.6 million as compared to the corresponding periods in 2024.

• Stock-based compensation – Stock-based compensation expenses for the three months ended June 30, 2025 and 2024 were $1.6 million and $1.7 million and for the six months ended June 30, 2025 and 2024 were $3.2 million and $3.3 million.

Personnel costs for the three months ended September 30, 2025 increased to $4.3 million from $4.2 million, and for the nine months ended September 30, 2025 decreased to $12.5 million from $12.8 million as compared to the corresponding periods in 2024.

• Stock-based compensation – Stock-based compensation expenses for the three months ended September 30, 2025 and 2024 were $1.8 million and $1.5 million and for the nine months ended September 30, 2025 and 2024 were $5.0 million and $4.7 million.

• 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 June 30, 2025 increased 7% to $1.5 million from $1.4 million, and for the six months ended June 30, 2025 increased 3% to $2.8 million from $2.7 million as compared to the corresponding periods in 2024.

Facilities, equipment, and other costs for the three months ended September 30, 2025 decreased 16% to $1.2 million from $1.4 million, and for the nine months ended September 30, 2025 decreased 3% to $4.0 million from $4.1 million as compared to the corresponding periods 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 June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

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Percentage decrease (81) % (74)%

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.

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

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

Personnel costs for the three months ended June 30, 2025 decreased 79% to $3.6 million from $17.2 million, and for the six months ended June 30, 2025 decreased 74% to $8.6 million from $33.6 million as compared to the corresponding periods in 2024, primarily due to lower employee salaries and benefit costs as a result of decreased headcount from the Company restructuring in late 2024.

• Professional and consulting fees – Professional and consulting fees for the three months ended June 30, 2025 decreased 82% to $2.6 million from $14.6 million, and for the six months ended June 30, 2025 decreased 73% to $6.5 million from $24.2 million as compared to the corresponding periods 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 June 30, 2025 decreased 50% to $1.6 million from $3.2 million, and for the six months ended June 30, 2025 decreased 48% to $3.0 million from $5.9 million as compared to the corresponding periods in 2024, due to decreased headcount from the reduction in the field force in late 2024.

Personnel costs for the three months ended September 30, 2025 decreased 88% to $2.2 million from $19.0 million, and for the nine months ended September 30, 2025 decreased 79% to $10.9 million from $52.6 million as compared to the corresponding periods in 2024, primarily due to lower employee salaries and benefit costs as a result of decreased headcount from our restructuring in late 2024.

• Professional and consulting fees – Professional and consulting fees for the three months ended September 30, 2025 decreased 85% to $2.5 million from $15.9 million, and for the nine months ended September 30, 2025 decreased 78% to $9.0 million from $40.1 million as compared to the corresponding periods in 2024, primarily due to lower marketing costs in conjunction with our restructuring in late 2024.

• Stock-based compensation – Stock-based compensation expenses for the three months ended September 30, 2025 increased 20% to $1.6 million from $1.3 million, and for the nine months ended September 30, 2025 decreased 35% to $4.7 million from $7.2 million as compared to the corresponding periods in 2024, due to decreased headcount from our reduction in the field force in late 2024.

• 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 June 30, 2025 decreased 62% to $1.6 million from $4.2 million, and for the six months ended June 30, 2025 decreased 62% to $2.9 million from $7.6 million as compared to the corresponding periods in 2024.

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

Facilities, equipment, and other costs for the three months ended September 30, 2025 decreased 62% to $1.3 million from $3.4 million, and for the nine months ended September 30, 2025 decreased 62% to $4.0 million from $10.9 million as compared to the corresponding periods in 2024.

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

Interest and Other Expense

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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 and other expense was $2.3 million and $2.2 million, respectively, during the three months ended June 30, 2025 and 2024, and $4.2 million and $7.2 million during the six months ended June 30, 2025 and 2024.

Interest and other expense was $2.2 million and $4.6 million, respectively, during the three months ended September 30, 2025 and 2024, and $6.3 million and $11.7 million during the nine months ended September 30, 2025 and 2024 reflecting the repayment of $45 million to Oxford, our lenders, in April 2025.

Interest Income and Other

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

Interest income and other decreased to $1.8 million from $4.1 million during the three months ended June 30, 2025 and decreased to $4.1 from $6.0 million during the six months ended June 30, 2025 from the corresponding period in 2024.

Net Income (Loss) and Net Income (Loss) per Common Share

Net income (loss) and Net income (loss) per Common Share.

Net income was $3.3 million, or $0.01 per diluted share, in the three months ended June 30, 2025 as compared to a net loss of $53.4 million, or $0.17 net loss per share, in the corresponding period in 2024.

Net loss was $22.0 million, or $0.06 net loss per share in the six months ended June 30, 2025, as compared to a net loss of $101.8 million, or $0.37 net loss per share in the corresponding period in 2024.

Interest income and other decreased to $1.6 million from $3.4 million during the three months ended September 30, 2025 and decreased to $5.6 million from $9.5 million during the nine months ended September 30, 2025 from the corresponding period in 2024.

Net Loss and Net Loss per Common Share

Net loss and Net loss per Common Share.

Net loss was $12.8 million, or $0.04 per diluted share, in the three months ended September 30, 2025 as compared to a net loss of $64.8 million, or $0.18 net loss per share, in the corresponding period in 2024.

Net loss was $34.8 million, or $0.10 net loss per share in the nine months ended September 30, 2025, as compared to a net loss of $166.6 million, or $0.54 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.

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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 June 30, 2025 and December 31, 2024, we had $168.0 million and $238.0 million in cash, cash equivalents, restricted cash and short-term investments, respectively.

We used cash of $26.8 million from operations in the six months ended June 30, 2025, largely reflective of the net loss for the period of $22.0 million which included total non-cash charges of $3.3 million primarily related to stock-based compensation expense.

Investing activities provided cash of $56.1 million in the six months ended June 30, 2025, primarily due to net maturities of investments.

As of September 30, 2025 and December 31, 2024, we had $145.0 million and $238.0 million in cash, cash equivalents, restricted cash and short-term investments, respectively.

We used cash of $50.6 million from operations in the nine months ended September 30, 2025, primarily reflective of the net loss for the period of $34.8 million (which included total non-cash stock-based compensation expense of $9.7 million) and working capital changes.

Investing activities provided cash of $108.2 million in the nine months ended September 30, 2025, primarily due to net maturities of investments.

Financing activities used cash of $45.6 million, primarily from repayment of debt borrowings.

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 June 30, 2025, the full amount is still available for issuance under the agreement.

As of September 30, 2025, the full amount is still available for issuance under the agreement.

Financing Obligations.

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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 June 30, 2025.

In April 2025, we 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.

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.

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.

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 (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 maintained $29 million in the blocked account.

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

As of September 30, 2025, the Company maintained $29 million in the blocked account.

As of September 30, 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, pursuant to which we received an upfront payment of $45 million.

For additional information on the exclusive license agreement, refer to Note 5, Collaborations and Strategic Alliances.

For additional information on our exclusive license agreement with Novo Nordisk, refer to Note 5, Collaborations and Strategic Alliances.

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.

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

Other commitments.

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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 $168.0 million in cash and cash equivalents, restricted cash and short-term investments as of June 30, 2025.

We had approximately $145.0 million in cash and cash equivalents, restricted cash and short-term investments as of September 30, 2025.

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

9 unchanged sentences

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 2. Management’s Discussion and Analysis