What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 59 added, 52 removed, 111 unchanged (50% of the section changed)

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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 sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for hypertrophic cardiomyopathy, or HCM, and are conducting the SONATA-HCM pivotal Phase 3 clinical trial of sotagliflozin in that indication.

• We are developing sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for hypertrophic cardiomyopathy, or HCM, and have completed patient enrollment in our SONATA-HCM pivotal 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.

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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 March 31, 2026, we had an accumulated deficit of approximately $2.0 billion.

Since our inception, we have incurred significant losses and, as of June 30, 2026, we had an accumulated deficit of approximately $2.1 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 $21.1 million and $1.3 million, respectively, for the three months ended March 31, 2026 and 2025.

Revenues for the three months ended March 31, 2026 included $20.0 million in development milestone revenue recognized from the Novo Nordisk licensing agreement.

Revenues were $0.7 million and $28.9 million, respectively, for the three months ended June 30, 2026 and 2025 and $21.8 million and $30.1 million, respectively, for the six months ended June 30, 2026 and 2025.

Revenues for the six months ended June 30, 2026 included $20.0 million in development milestone revenue recognized from the Novo Nordisk licensing agreement.

Revenues for the three and six months ended June 30, 2025 included $27.5 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 months ended March 31, 2026 and 2025 were $0.1 million and $0.03 million, respectively, 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.

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.

Based on our expectations for future manufacturing costs, we estimate these amounts totaled approximately $39.0 million.

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 March 31, 2026, 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, 2025) 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.

Cost of sales during the three months ended June 30, 2026 and 2025 were less than $0.1 million for each of the periods and during the six months ended June 30, 2026 and 2025 were $0.1 million and less than $0.1 million, respectively.

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

We began capitalizing inventory manufactured subsequent to regulatory approval of INPEFA to the extent the related costs were expected to be recoverable through commercial sales.

The time period over which the “zero-cost” materials is consumed will depend on a number of factors, including the amount utilized for future commercial production and sold to customers, the amount required 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, 2025) or amounts utilized in clinical development or other research and development activities, production lead times, and/or the ability to utilize inventory prior to its expiration date.

As of June 30, 2026, we estimate the remaining amount of the zero-cost materials total approximately $21 million based on future manufacturing costs.

A portion of this remaining “zero-cost” inventory will continue to support future sales of INPEFA which will result in a lower average per unit cost of materials until such inventory is depleted.

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

Research and Development Expenses

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

Three Months Ended March 31,

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,

2026 2025 2026 2025

Total research and development expense $ 17.4 $ 15.7 $ 30.2 $ 31.1

Dollar decrease $ (2.5)

Percentage decrease (16) %

Research and development expenses consist primarily of third-party services primarily including external research costs related to our nonclinical and clinical efforts and material costs, salaries and related personnel costs, stock-based compensation and facilities, equipment and other costs related to our drug discovery and development programs each of which are described below.

Dollar increase (decrease) $ 1.7 $ (0.9)

Percentage increase (decrease) 11 % (3) %

Research and development expenses consist primarily of third-party services including external research costs related to our nonclinical and clinical efforts and material costs, salaries and related personnel costs, stock-based compensation and facilities, equipment and other costs related to our drug discovery and development programs 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 March 31, 2026 decreased 29% to $5.7 million from $8.0 million as compared to the corresponding period in 2025 primarily driven by lower clinical and preclinical external research expense associated with our current drug candidates.

Overall, third-party services for the three months ended June 30, 2026 increased 20% to $10.6 million from $8.8 million, reflecting higher HCM study costs, and for the six months ended June 30, 2026 decreased 3% to $16.3 million from $16.8 million, reflecting lower LX9211 study costs upon completion of the Phase 2b activities in 2025, as compared to the corresponding periods in 2025.

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

Personnel costs for the three months ended March 31, 2026 decreased 2% to $4.3 million from $4.4 million as compared to the corresponding period in 2025.

• Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2026 decreased 13% to $1.4 million from $1.6 million as compared to the corresponding period in 2025.

Personnel costs were $3.8 million for each of the three months ended June 30, 2026 and 2025.

and decreased 1% to $8.2 million from $8.3 million for the six months ended June 30, 2026 as compared to the corresponding period in 2025.

• Stock-based compensation – Stock-based compensation expenses for the three months ended June 30, 2026 decreased 13% to $1.4 million from $1.6 million, and for the six months ended June 30, 2026 decreased 13% to $2.8 million from $3.2 million as compared to the corresponding periods in 2025.

• 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 March 31, 2026 increased 8% to $1.4 million from $1.3 million as compared to the corresponding period in 2025.

Facilities, equipment, and other costs for the three months ended June 30, 2026 increased 7% to $1.6 million from $1.5 million, and for the six months ended June 30, 2026 increased 4% to $2.9 million from $2.8 million as compared to the corresponding periods in 2025.

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 March 31,

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

2026 2025 2026 2025

Total selling, general and administrative expense $ 9.8 $ 9.4 $19.0 $21.0

Dollar decrease $ (2.4)

Percentage decrease (21) %

Dollar increase (decrease) $ 0.4 $(2.0)

Percentage increase (decrease) 4 % (10)%

Selling, general and administrative expenses consist primarily of personnel costs to support the continued 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 – Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

Personnel costs for the three months ended March 31, 2026 decreased 38% to $3.1 million from $5.0 million as compared to the corresponding period in 2025, primarily due to decreased headcount.

• Professional and consulting fees – Professional and consulting fees for the three months ended March 31, 2026 decreased 21% to $3.1 million from $3.9 million as compared to the corresponding period in 2025, primarily due to lower marketing costs.

• Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2026 increased 13% to $1.7 million from $1.5 million as compared to the corresponding period in 2025.

Personnel costs for the three months ended June 30, 2026 decreased 14% to $3.1 million from $3.6 million, and for the six months ended June 30, 2026 decreased 28% to $6.2 million from $8.6 million as compared to the corresponding periods in 2025, primarily due to decreased headcount.

• Professional and consulting fees – Professional and consulting fees for the three months ended June 30, 2026 increased 27% to $3.3 million from $2.6 million, primarily due to higher consulting fees, and for the six months ended June 30, 2026 decreased 3% to $6.3 million from $6.5 million, primarily due to lower marketing costs, as compared to the corresponding periods in 2025.

• Stock-based compensation – Stock-based compensation expenses for the three months ended June 30, 2026 increased 25% to $2.0 million from $1.6 million, and for the six months ended June 30, 2026 increased 23% to $3.7 million from $3.0 million as compared to the corresponding periods in 2025.

• 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 March 31, 2026 increased 8% to $1.3 million from $1.2 million as compared to the corresponding period in 2025.

Facilities, equipment, and other costs for the three months ended June 30, 2026 decreased 13% to $1.4 million from $1.6 million, and for the six months ended June 30, 2026 decreased 1% to $2.8 million from $2.9 million as compared to the corresponding periods in 2025.

Interest and Other Expense

Interest and Other Expense.

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 for the three months ended March 31, 2026 decreased to $1.6 million from $1.8 million as compared to the corresponding period in 2025 reflecting the repayment of $3 million and $5 million to Oxford, our lenders, in December 2025 and February 2026, respectively.

Interest Income and Other

Interest on the outstanding debt principal, amortization of debt issuance cost and discount, and changes in the fair value of warrants are included in interest and other expense.

Interest and other expense for the three months ended June 30, 2026 increased to $2.6 million from $2.3 million, as compared to the corresponding period in 2025, and was $4.2 million for each of the six months ended June 30, 2026 and 2025.

Interest and Other Income

Interest Income and Other.

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

Interest income and other for the three months ended March 31, 2026 decreased to $1.5 million from $2.2 million as compared to the corresponding period in 2025.

Net Loss and Net Loss per Common Share

Net loss was $1.0 million, or less than $0.01 per share, in the three months ended March 31, 2026 as compared to a net loss of $25.3 million, or $0.07 per share, in the corresponding period in 2025.

Interest income and other for the three months ended June 30, 2026 decreased to $1.7 million from $1.8 million, and for the six months ended June 30, 2026 decreased to $3.3 million from $4.1 million as compared to the corresponding periods in 2025.

Loss on early extinguishment of debt

In connection with the repayment of the Oxford term loans in May 2026, the company recorded a loss on early extinguishment of debt of $4.3 million for the three and six months ended June 30, 2026.

For further details, please see Note 6 of the Notes to Condensed Consolidated Financial Statements.

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

Net loss was $31.8 million, or $0.07 per share, in the three months ended June 30, 2026 as compared to a net income of $3.3 million, or $0.01 per diluted share, in the corresponding period in 2025.

Net loss was $32.8 million, or $0.08 per share,

in the six months ended June 30, 2026 as compared to a net loss of $22.0 million, or $0.06 per share, in the corresponding period in 2025.

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 March 31, 2026 and December 31, 2025, total cash, cash equivalents, short-term investments and restricted cash were $199.7 million and $125.2 million, respectively.

These balances include $29 million in restricted cash as further described

We used cash of $14.7 million from operations in the three months ended March 31, 2026, primarily reflective of the net loss for the period of $1.0 million (which included total non-cash stock-based compensation expense of $3.1 million) and working capital changes.

Investing activities used cash of $70.3 million in the three months ended March 31, 2026, primarily due to net purchases of investments.

As of June 30, 2026 and December 31, 2025, total cash, cash equivalents, short-term investments and restricted cash were $190.6 million and $125.2 million, respectively.

We used cash of $23.9 million from operations in the six months ended June 30, 2026, primarily reflective of the net loss for the period of $32.8 million (which included total non-cash stock-based compensation expense of $6.4 million) and working capital changes.

Investing activities used cash of $86.7 million in the six months ended June 30, 2026, primarily due to net purchases of investments.

Financing activities provided cash of $88.2 million, primarily due to the common and preferred stock issuance as further described below.

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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 March 31, 2026, the full amount is still available for issuance under the agreement.

As of June 30, 2026, the full amount is still available for issuance under the agreement.

Financing Obligations.

On May 4, 2026, we entered into a loan and security agreement with Hercules Capital, Inc.

In May 2026, we entered into a loan and security agreement with Hercules Capital, Inc.

and certain of its affiliates that provides up to $100 million in borrowing capacity available in three tranches, each maturing in May 2030.

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The third $25 million tranche is available for draw at our option, subject to Hercules’s consent, at any time prior to the expiration of the interest-only payment period.

The amounts funded under the Hercules term loans bear interest at a floating rate equal to the prime rate plus 3.10%, but not less than 9.85%.

We may prepay the Hercules term loans in whole or in part at our option at any time.

Any prepayment of the Hercules term loans is subject to prepayment fees equal to 3.0% of the outstanding principal being repaid, subject to a declining scale depending on when prepayment occurs relative to the applicable closing date.

A final payment equal to 6.25% of the amount funded under the Hercules term loans is due upon prepayment or maturity.

Our obligations under the Hercules term loans are secured by a first lien security interest in all of our assets.

The amounts funded under the Hercules term loan bear interest at a floating rate equal to the prime rate plus 3.10%, but not less than 9.85%.

We may prepay the Hercules term loan in whole or in part at our option at any time.

Any prepayment of the Hercules term loan is initially subject to prepayment fees equal to 3.0% of the outstanding principal being repaid, subject to a declining scale depending on when prepayment occurs relative to the applicable closing date.

A final payment equal to 6.25% of the amount funded under the Hercules term loan is due upon prepayment or maturity.

Our obligations under the Hercules term loan are secured by a first lien security interest in all of our assets.

Financial covenants include (a) a minimum cash covenant beginning on June 1, 2027, which will be extended to January 1, 2028 upon achievement of specified performance milestones and waived at any time we meet specified market capitalization requirements and (b) a minimum revenue covenant relating to net sales of our products beginning only at specified times after we draw the second or third tranche, which will be waived at any time we meet specified minimum cash and/or market capitalization requirements.

Concurrent with our execution of the loan and security agreement with Hercules, we repaid all amounts due under our previous loan and security agreement with Oxford Finance LLC, under which $100 million had been funded from inception through March 31, 2026.

We were in compliance with our debt covenants as of June 30, 2026.

Concurrent with our execution of the loan and security agreement with Hercules in May 2026, we repaid $54.3 million to Oxford, including pro-rata final payment exit fees equal to 7% of the amount funded under the Oxford Term Loans.

In April 2025, we repaid $45 million to Oxford, including pro-rata final payment exit fees equal to 7% of the amount funded under the Oxford term loans.

In December 2025 and February 2026, we repaid an additional $3 million and $5 million to Oxford, respectively, including a pro-rata portion of the final payment exit fees.

Under the Oxford loan and security agreement, we were subject to a financial covenant requiring us to maintain a minimum balance of unrestricted cash, cash equivalents, short-term investments, and restricted cash, including 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 March 31, 2026, we maintained $29 million in the blocked account and were in compliance with our debt covenants under the Oxford loan and security agreement.

In connection with the Oxford repayment we are no longer subject to the $29 million minimum restricted cash requirement.

Collaborations and Strategic Alliances.

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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 .

For a further discussion of other commitments and contingencies including our operating lease obligations and legal proceedings 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 ongoing research and development efforts and the ability to obtain necessary regulatory approvals of the drug candidates which are the subject of such efforts;

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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 $199.7 million in cash and cash equivalents, short-term investments and restricted cash as of March 31, 2026.

We had $190.6 million in cash and cash equivalents and short-term investments as of June 30, 2026.

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

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We currently do not hedge interest rate exposure or hold any derivative financial instruments in our investment portfolio.

As of March 31, 2026, we are subject to interest rate sensitivity on our outstanding Oxford Term Loans which bear interest at a floating rate equal to the 1-month CME Term SOFR rate.

As of June 30, 2026, we are subject to interest rate sensitivity on our outstanding Hercules Term Loan which bears interest at a floating rate equal to the prime rate plus 3.10%, but not less than 9.85%.

For further details see Note 6 of the Notes to Condensed Consolidated Financial Statements .

5 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