[Factors Affecting Forward-Looking Statements](index=2&type=section&id=Factors%20Affecting%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements, associated risks, and the company's policy on updates - This report contains forward-looking statements identified by terms like "anticipate," "believe," "expect," etc., which are predictions involving known and unknown risks and uncertainties[11](index=11&type=chunk) - Actual results may vary materially from expectations due to risks outlined in "Part II, Item 1A. - Risk Factors" and the annual report on Form 10-K for the year ended December 31, 2024[11](index=11&type=chunk)[12](index=12&type=chunk) - The company does not undertake any duty to update forward-looking statements unless required by law[12](index=12&type=chunk) [Part I – Financial Information](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Lexicon Pharmaceuticals, Inc. presents its unaudited condensed consolidated financial statements and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents Lexicon Pharmaceuticals, Inc.'s condensed consolidated balance sheets, detailing assets, liabilities, and equity **Condensed Consolidated Balance Sheets (in thousands)** | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Total current assets | $145,084 | $246,193 | | Total assets | $225,583 | $298,420 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $34,836 | $45,248 | | Long-term debt, net | $56,107 | $100,298 | | Total liabilities | $96,143 | $152,470 | | Total stockholders' equity | $129,440 | $145,950 | | Total liabilities and stockholders' equity | $225,583 | $298,420 | - Total assets decreased by **$72.8 million** from December 31, 2024, to June 30, 2025, primarily due to a reduction in cash, cash equivalents, and short-term investments[15](index=15&type=chunk) - Total liabilities decreased by **$56.3 million**, largely driven by a **$44.2 million** reduction in long-term debt, net, and decreases in accounts payable and accrued liabilities[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents Lexicon Pharmaceuticals, Inc.'s condensed consolidated statements of comprehensive income (loss), detailing revenues, expenses, and net results **Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands, except per share amounts)** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $28,866 | $1,647 | $30,128 | $2,777 | | Total operating expenses | $25,130 | $57,001 | $52,071 | $103,464 | | Income (loss) from operations | $3,736 | $(55,354) | $(21,943) | $(100,687) | | 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) | | Comprehensive income (loss) | $3,213 | $(53,572) | $(22,176) | $(102,050) | - Total revenues significantly increased for both the three and six months ended June 30, 2025, primarily due to **$27.5 million** in licensing revenue from the Novo Nordisk agreement[18](index=18&type=chunk)[85](index=85&type=chunk) - The company reported a net income of **$3.3 million** (**$0.01 EPS**) for the three months ended June 30, 2025, a substantial improvement from a net loss of **$53.4 million** (**$0.17 loss per share**) in the prior year period[18](index=18&type=chunk)[91](index=91&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section presents Lexicon Pharmaceuticals, Inc.'s condensed consolidated statements of stockholders' equity, detailing changes in equity components **Condensed Consolidated Statements of Stockholders' Equity (in thousands)** | Metric | December 31, 2024 | June 30, 2025 | | :----------------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $145,950 | $129,440 | | Common Stock Shares Outstanding | 363,020 | 365,781 | | Additional Paid-In Capital | $2,117,325 | $2,123,560 | | Accumulated Deficit | $(1,967,242) | $(1,989,285) | - Total stockholders' equity decreased from **$145.95 million** at December 31, 2024, to **$129.44 million** at June 30, 2025, primarily due to a net loss of **$25.3 million** in Q1 2025, partially offset by stock-based compensation and net income in Q2 2025[24](index=24&type=chunk) - Stock-based compensation contributed **$3.04 million** and **$3.20 million** to additional paid-in capital for the periods ended March 31, 2025, and June 30, 2025, respectively[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Lexicon Pharmaceuticals, Inc.'s condensed consolidated statements of cash flows, detailing movements from operating, investing, and financing activities **Condensed Consolidated Statements of Cash Flows (in thousands) - Six Months Ended June 30,** | Cash Flow Activity | 2025 | 2024 | | :----------------------------------- | :--------- | :---------- | | Net cash used in operating activities | $(26,785) | $(103,670) | | Net cash provided by (used in) investing activities | $56,065 | $(122,547) | | Net cash (used in) provided by financing activities | $(45,572) | $239,369 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(16,292) | $13,152 | | Cash, cash equivalents, and restricted cash at end of period | $50,364 | $35,617 | - Net cash used in operating activities significantly decreased from **$(103.7) million** in 2024 to **$(26.8) million** in 2025, primarily due to a reduced net loss[26](index=26&type=chunk)[95](index=95&type=chunk) - Investing activities provided **$56.1 million** in cash in 2025, a reversal from using **$(122.5) million** in 2024, mainly driven by net maturities of investments[26](index=26&type=chunk)[95](index=95&type=chunk) - Financing activities used **$45.6 million** in 2025, compared to providing **$239.4 million** in 2024, primarily due to debt repayments in 2025 and preferred stock issuance in 2024[26](index=26&type=chunk)[95](index=95&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, explaining accounting policies, fair values, collaborations, debt, and equity [1. Summary of Significant Accounting Policies](index=8&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the significant accounting policies used in preparing the unaudited condensed consolidated financial statements, emphasizing GAAP compliance - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, with all necessary adjustments included[29](index=29&type=chunk) - Management makes estimates and assumptions that affect reported amounts, and actual results may differ[30](index=30&type=chunk) - There have been no significant changes to the company's accounting policies since the December 31, 2024, annual report on Form 10-K[31](index=31&type=chunk) [2. Cash and Cash Equivalents, Restricted Cash and Investments](index=9&type=section&id=2.%20Cash%20and%20Cash%20Equivalents,%20Restricted%20Cash%20and%20Investments) This section details the fair value of Lexicon Pharmaceuticals, Inc.'s cash, cash equivalents, restricted cash, and investments **Fair Value of Cash, Restricted Cash, and Investments (in thousands)** | Category | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :------------------------------------------------- | :------------------------- | :--------------------------- | | Cash and cash equivalents | $21,364 | $66,656 | | Restricted cash | $29,000 | — | | Short-term investments (U.S. treasury & corporate debt) | $117,643 | $171,301 | | Total cash, cash equivalents, restricted cash, and short-term investments | $168,007 | $237,957 | - As of June 30, 2025, investments in an unrealized loss position had an estimated fair value of **$76.4 million**, significantly higher than **$12.9 million** at December 31, 2024[33](index=33&type=chunk) [3. Fair Value Measurements](index=9&type=section&id=3.%20Fair%20Value%20Measurements) This section explains Lexicon Pharmaceuticals, Inc.'s categorization of fair value measurements into Level 1 and Level 2 - The company categorizes fair value measurements into Level 1 (quoted prices in active markets for identical assets, e.g., U.S. treasury securities) and Level 2 (other significant observable inputs, e.g., corporate debt securities)[36](index=36&type=chunk) **Assets at Fair Value by Level (in thousands)** | Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 1 (December 31, 2024) | Level 2 (December 31, 2024) | | :------------------------------------------------- | :---------------------- | :---------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $21,364 | — | $66,656 | — | | Short-term investments | $94,846 | $22,797 | $127,990 | $43,311 | | Restricted cash | $29,000 | — | — | — | | Total | $145,210 | $22,797 | $194,646 | $43,311 | [4. Supplemental Financial Information](index=10&type=section&id=4.%20Supplemental%20Financial%20Information) This section provides supplemental financial details, including net property and equipment, accrued liabilities, and share-based awards **Net Property and Equipment (in thousands)** | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total property and equipment | $4,570 | $4,570 | | Less: Accumulated depreciation and amortization | $(2,438) | $(2,086) | | Net property and equipment | $2,132 | $2,484 | **Accrued Liabilities (in thousands)** | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Accrued research and development services | $4,257 | $12,251 | | Accrued compensation and benefits | $4,292 | $14,712 | | Short-term lease liability | $909 | $1,175 | | Other | $2,023 | $2,309 | | Total accrued liabilities | $11,481 | $30,447 | - 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 due to net income[42](index=42&type=chunk) [5. Collaborations and Strategic Alliances](index=11&type=section&id=5.%20Collaborations%20and%20Strategic%20Alliances) This section details Lexicon Pharmaceuticals, Inc.'s collaborations, including the exclusive license agreement with Novo Nordisk for LX9851 and associated payments - In March 2025, Lexicon entered an exclusive license agreement with Novo Nordisk for LX9851 (obesity/cardiometabolic disorders), receiving an upfront payment of **$45 million** in April 2025[43](index=43&type=chunk) - Lexicon is eligible for up to **$485 million** in regulatory/commercial launch milestones and up to **$475 million** in sales milestones, plus tiered royalties on net sales of LX9851[43](index=43&type=chunk) - The company recognized **$27.5 million** as licensing revenue in Q2 2025 from the Novo Nordisk agreement, with the remaining **$17.5 million** recorded as deferred revenue[45](index=45&type=chunk) [6. Debt Obligations](index=12&type=section&id=6.%20Debt%20Obligations) This section details Lexicon Pharmaceuticals, Inc.'s debt obligations, including Oxford Term Loans, repayment activities, and financial covenant compliance - Lexicon has Oxford Term Loans totaling **$100 million** funded across three tranches, with a current weighted average interest rate of **11.9%** as of June 30, 2025[51](index=51&type=chunk)[52](index=52&type=chunk) - In April 2025, the company repaid **$45 million** (including final payment exit fees) to Oxford, reducing the carrying value of long-term debt to **$56.1 million** as of June 30, 2025[53](index=53&type=chunk)[54](index=54&type=chunk) - The loan agreement requires maintaining a minimum balance of unrestricted cash, cash equivalents, short-term investments, and restricted cash (including **$29 million** in a blocked account), and the company was in compliance as of June 30, 2025[56](index=56&type=chunk)[57](index=57&type=chunk)[60](index=60&type=chunk) [7. Commitments and Contingencies](index=13&type=section&id=7.%20Commitments%20and%20Contingencies) This section outlines Lexicon Pharmaceuticals, Inc.'s operating lease obligations and legal proceedings, assessing their potential financial impact - Operating lease obligations include office space in Texas and New Jersey, with a new lease for the Texas office starting September 2025 and extending through January 2031, totaling **$4.1 million** in undiscounted cash payments[61](index=61&type=chunk) **Undiscounted Operating Lease Liability Reconciliation (in thousands) as of June 30, 2025** | Year | Amount | | :--------- | :----- | | 2025 | $518 | | 2026 | $865 | | 2027 | $881 | | 2028 | $898 | | 2029 | $914 | | Thereafter | $3,832 | | **Total undiscounted operating lease liability** | **$7,908** | | Less: amount of lease payments representing interest | $(2,564) | | Present value of future lease payments | $5,344 | | Less: short-term operating lease liability | $(909) | | **Long-term operating lease liability** | **$4,435** | - The company is involved in routine legal proceedings, which are not expected to have a material adverse effect on its operations, financial condition, or liquidity[65](index=65&type=chunk) [8. Equity Incentive Awards](index=14&type=section&id=8.%20Equity%20Incentive%20Awards) This section details Lexicon Pharmaceuticals, Inc.'s stock-based compensation expense and activity for stock options and restricted stock units - Stock-based compensation expense was **$3.2 million** for the three months ended June 30, 2025 (down from **$4.9 million** in 2024) and **$6.2 million** for the six months ended June 30, 2025 (down from **$9.2 million** in 2024)[66](index=66&type=chunk) **Stock Option Activity (in thousands, except price)** | Metric | Stock Options | Weighted Average Exercise Price | | :----------------------------------- | :------------ | :------------------------------ | | Outstanding at December 31, 2024 | 15,389 | $3.20 | | Granted | 10,594 | $0.69 | | Expired | (310) | $6.41 | | Forfeited | (2,388) | $2.41 | | Outstanding at June 30, 2025 | 23,285 | $2.10 | | Exercisable at June 30, 2025 | 7,835 | $4.03 | **Restricted Stock Unit (RSU) Activity (in thousands, except fair value)** | Metric | RSUs | Weighted Average Grant Date Fair Value | | :----------------------------------- | :----- | :------------------------------------- | | Outstanding at December 31, 2024 | 6,300 | $2.27 | | Granted | 14,323 | $0.69 | | Vested | (2,761) | $2.35 | | Forfeited | (1,539) | $1.39 | | Outstanding at June 30, 2025 | 16,323 | $0.95 | [9. Other Capital Agreements](index=15&type=section&id=9.%20Other%20Capital%20Agreements) This section describes Lexicon Pharmaceuticals, Inc.'s other capital agreements, including the sale and conversion of Series A Convertible Preferred Stock - In March 2024, Lexicon sold **2,304,147 shares** of Series A Convertible Preferred Stock, generating net proceeds of **$241.3 million**[70](index=70&type=chunk) - In May 2024, each share of preferred stock was converted into **50 shares** of common stock, totaling **115,207,350 common shares**[70](index=70&type=chunk) [10. Segment Information](index=16&type=section&id=10.%20Segment%20Information) This section clarifies Lexicon Pharmaceuticals, Inc. operates as a single reportable segment, focused on pharmaceutical product discovery, development, and commercialization - Lexicon operates as a **single reportable segment**, focused on the discovery, development, and commercialization of pharmaceutical products[71](index=71&type=chunk) - The CEO, as the chief operating decision maker (CODM), manages and allocates resources on a total company basis, assessing financial performance based on consolidated net income (loss) and consolidated cash/investments[72](index=72&type=chunk)[73](index=73&type=chunk) **Summary of Segment Net Income (Loss) and Expenses (in thousands)** | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $28,866 | $1,647 | $30,128 | $2,777 | | Research and development | $14,127 | $15,964 | $27,736 | $28,742 | | Sales and marketing | $1,233 | $28,982 | $3,908 | $51,662 | | General and administrative | $6,466 | $6,839 | $14,292 | $13,474 | | Income (loss) from operations | $3,736 | $(55,354) | $(21,943) | $(100,687) | | Net income (loss) | $3,252 | $(53,429) | $(22,043) | $(101,826) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Lexicon's financial condition and results of operations, covering business developments, performance drivers, liquidity, and capital [Overview](index=17&type=section&id=Overview) This section provides an overview of Lexicon Pharmaceuticals, Inc.'s biopharmaceutical focus, key drug candidates, and accumulated financial losses - Lexicon is a biopharmaceutical company focused on pioneering medicines, with primary resources dedicated to the research, development, and commercialization of INPEFA (sotagliflozin) and other drug candidates[76](index=76&type=chunk) - Key drug candidates include INPEFA (for heart failure/type 2 diabetes), pilavapadin (for neuropathic pain, with Fast Track designation), LX9851 (for obesity, licensed to Novo Nordisk), and sotagliflozin (for hypertrophic cardiomyopathy and type 1 diabetes)[76](index=76&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - The company has incurred significant losses, with an accumulated deficit of approximately **$2.0 billion** as of June 30, 2025, primarily from R&D and SG&A costs[83](index=83&type=chunk) [Critical Accounting Policies](index=18&type=section&id=Critical%20Accounting%20Policies) This section states no significant changes occurred in Lexicon Pharmaceuticals, Inc.'s critical accounting policies since the December 31, 2024, Annual Report - There have been no significant changes in the company's critical accounting policies as discussed in its Annual Report on Form 10-K for the year ended December 31, 2024[84](index=84&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) This section analyzes Lexicon Pharmaceuticals, Inc.'s financial performance, detailing changes in revenues, cost of sales, R&D, SG&A, and interest expenses [Revenues](index=18&type=section&id=Revenues) This section details Lexicon Pharmaceuticals, Inc.'s total revenues, highlighting the significant increase from the Novo Nordisk licensing agreement **Total Revenues (in millions)** | Period | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Three Months Ended June 30, | $28.9 | $1.6 | +$27.3M | | Six Months Ended June 30, | $30.1 | $2.8 | +$27.3M | - Revenues for 2025 included **$27.5 million** in licensing revenue recognized from the Novo Nordisk licensing agreement[85](index=85&type=chunk) [Cost of Sales](index=19&type=section&id=Cost%20of%20Sales) This section details Lexicon Pharmaceuticals, Inc.'s cost of sales, primarily for INPEFA, noting the impact of 'zero-cost' raw materials - Cost of sales for the three and six months ended June 30, 2025 and 2024, were less than **$0.2 million**, primarily consisting of third-party manufacturing costs and freight for INPEFA sales[86](index=86&type=chunk) - The low cost of sales is due to the utilization of 'zero-cost' INPEFA raw materials, which were either received in conjunction with a terminated agreement or expensed as R&D prior to regulatory approval[86](index=86&type=chunk) - The company estimates its cost of goods sold as a percentage of net product revenue will be less than **10%** after the utilization of all remaining 'zero-cost' inventory[86](index=86&type=chunk) [Research and Development Expenses](index=19&type=section&id=Research%20and%20Development%20Expenses) This section analyzes Lexicon Pharmaceuticals, Inc.'s research and development expenses, highlighting decreases from lower third-party services and personnel costs **Research and Development Expenses (in millions)** | Period | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Three Months Ended June 30, | $15.7 | $17.6 | $(1.9) (-11%) | | Six Months Ended June 30, | $31.1 | $32.0 | $(0.9) (-3%) | - The decrease in R&D expenses was primarily driven by lower third-party services (down **14%** for Q2, **4%** for H1) due to reduced clinical external research for current drug candidates[87](index=87&type=chunk) - Personnel costs decreased by **12%** for Q2 and **4%** for H1, while stock-based compensation remained relatively stable[87](index=87&type=chunk) [Selling, General and Administrative Expenses](index=20&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section analyzes Lexicon Pharmaceuticals, Inc.'s selling, general and administrative expenses, noting significant decreases due to company restructuring and reduced headcount **Selling, General and Administrative Expenses (in millions)** | Period | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--- | :--- | :----------- | | Three Months Ended June 30, | $9.4 | $39.2 | $(29.8) (-76%) | | Six Months Ended June 30, | $21.0 | $71.3 | $(50.3) (-71%) | - The significant decrease in SG&A expenses was primarily due to lower personnel costs (down **79%** for Q2, **74%** for H1) and professional/consulting fees (down **82%** for Q2, **73%** for H1) resulting from the company restructuring in late 2024[92](index=92&type=chunk) - Stock-based compensation within SG&A decreased by **50%** for Q2 and **48%** for H1 due to reduced headcount from the field force reduction[92](index=92&type=chunk) [Interest and Other Expense](index=20&type=section&id=Interest%20and%20Other%20Expense) This section details Lexicon Pharmaceuticals, Inc.'s interest and other expense, noting a decrease reflecting changes in outstanding debt **Interest and Other Expense (in millions)** | Period | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Three Months Ended June 30, | $2.3 | $2.2 | | Six Months Ended June 30, | $4.2 | $7.2 | - Interest and other expense for the six months ended June 30, 2025, decreased to **$4.2 million** from **$7.2 million** in the prior year, reflecting changes in outstanding debt principal and related amortization[89](index=89&type=chunk) [Interest Income and Other](index=20&type=section&id=Interest%20Income%20and%20Other) This section details Lexicon Pharmaceuticals, Inc.'s interest income and other, noting a decrease reflecting lower cash and investment balances **Interest Income and Other (in millions)** | Period | 2025 | 2024 | | :----------------------------------- | :--- | :--- | | Three Months Ended June 30, | $1.8 | $4.1 | | Six Months Ended June 30, | $4.1 | $6.0 | - Interest income and other decreased for both the three and six months ended June 30, 2025, compared to 2024, reflecting lower cash, cash equivalents, and short-term investment balances[90](index=90&type=chunk) [Net Income (Loss) and Net Income (Loss) per Common Share](index=20&type=section&id=Net%20Income%20(Loss)%20and%20Net%20Income%20(Loss)%20per%20Common%20Share) This section analyzes Lexicon Pharmaceuticals, Inc.'s net income (loss) and earnings per common share, highlighting significant improvements **Net Income (Loss) and EPS** | Period | Net Income (Loss) (in millions) | EPS (Diluted) | | :----------------------------------- | :------------------------------ | :------------ | | Three Months Ended June 30, 2025 | $3.3 | $0.01 | | Three Months Ended June 30, 2024 | $(53.4) | $(0.17) | | Six Months Ended June 30, 2025 | $(22.0) | $(0.06) | | Six Months Ended June 30, 2024 | $(101.8) | $(0.37) | - The company achieved a net income of **$3.3 million** (**$0.01 per diluted share**) for the three months ended June 30, 2025, a significant improvement from a net loss of **$53.4 million** (**$0.17 per share**) in the prior year[91](index=91&type=chunk) - Net loss for the six months ended June 30, 2025, was **$22.0 million** (**$0.06 per share**), substantially lower than the **$101.8 million** net loss (**$0.37 per share**) in the corresponding period of 2024[91](index=91&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Lexicon Pharmaceuticals, Inc.'s liquidity and capital resources, including financing, collaborations, commitments, and future capital needs [Financing Obligations](index=21&type=section&id=Financing%20Obligations) This section details Lexicon Pharmaceuticals, Inc.'s financing obligations, including loan amendments, debt repayments, and cash balance covenants - In March 2025, Lexicon entered a seventh amendment to its loan agreement with Oxford, providing for a **$45 million** prepayment in April 2025 and modifying amortization and financial covenants[97](index=97&type=chunk) - Additional debt payments of **$20.2 million**, **$30.2 million**, and **$11.6 million** (including debt principal and final exit fees) are due in fiscal years 2027, 2028, and 2029, respectively[98](index=98&type=chunk) - The company must maintain a minimum balance of unrestricted cash, cash equivalents, short-term investments, and restricted cash, including **$29 million** in a blocked account, and was in compliance as of June 30, 2025[99](index=99&type=chunk)[100](index=100&type=chunk) [Collaborations and Strategic Alliances](index=21&type=section&id=Collaborations%20and%20Strategic%20Alliances) This section highlights key upfront payments received by Lexicon Pharmaceuticals, Inc. from collaborations with Novo Nordisk and Viatris - In March 2025, Lexicon received a **$45 million** upfront payment from Novo Nordisk for the exclusive license of LX9851[101](index=101&type=chunk) - In October 2024, the company received a **$25 million** upfront payment from Viatris for the exclusive license of sotagliflozin outside the U.S. and Europe[102](index=102&type=chunk) [Other commitments](index=22&type=section&id=Other%20commitments) This section outlines Lexicon Pharmaceuticals, Inc.'s other financial commitments, including royalty payments for sotagliflozin and a milestone for pilavapadin - Upon regulatory approval of sotagliflozin for type 1 diabetes in a major market, the company will owe **$4.5 million** in royalty payments, in three annual installments of **$1.5 million**[103](index=103&type=chunk) - A **$5 million** milestone payment is due to Bristol-Myers Squibb upon dosing of the first patient in a Phase 3 clinical trial of pilavapadin[103](index=103&type=chunk) [Outlook](index=22&type=section&id=Outlook) This section discusses Lexicon Pharmaceuticals, Inc.'s future capital requirements, funding sufficiency, and potential impacts of additional financing - Future capital requirements will be substantial and depend on R&D success, regulatory approvals, new collaborations, and commercialization expenditures[105](index=105&type=chunk) - Current unrestricted cash and investment balances, along with expected revenues from collaborations, are believed to be sufficient to fund planned operations for at least the next **12 months**[106](index=106&type=chunk) - If additional financing is needed and unavailable on acceptable terms, the company may have to delay or reduce commercialization efforts or R&D programs, and equity/debt sales could dilute stockholders[107](index=107&type=chunk) [Disclosure about Market Risk](index=22&type=section&id=Disclosure%20about%20Market%20Risk) This section discusses Lexicon Pharmaceuticals, Inc.'s market and credit risk on investments, interest rate sensitivity on debt, and limited foreign currency risk - The company has limited market and credit risk on its cash equivalents and short-term investment portfolio (U.S. Treasury bills and corporate debt securities maturing within **3-12 months**)[108](index=108&type=chunk) - Lexicon is subject to interest rate sensitivity on its Oxford Term Loans, which bear a floating interest rate based on the **1-month CME Term SOFR rate**[109](index=109&type=chunk) - The company has no material exposure to foreign currency rate fluctuations as substantially all sales have been in U.S. dollars[110](index=110&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to market risk disclosures provided in Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations' - Quantitative and qualitative disclosures about market risk are provided under 'Disclosure about Market Risk' in Item 2[111](index=111&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) The principal executive and financial officers concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[112](index=112&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[113](index=113&type=chunk) [Part II – Other Information](index=24&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) This part presents other information not included in the financial statements, such as legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) Lexicon Pharmaceuticals, Inc. is involved in routine legal proceedings not expected to materially affect its operations, financial condition, or liquidity - The company is party to claims and legal proceedings that arise in the normal course of business[114](index=114&type=chunk) - Management believes these proceedings will not have a material adverse effect on its results of operations, financial condition, or liquidity[114](index=114&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks impacting Lexicon's business, including R&D success, capital needs, third-party reliance, intellectual property, and stock price volatility - The company's success heavily depends on its ability to successfully complete research and development, gain positive clinical trial results, and obtain necessary regulatory approvals for its drug candidates[115](index=115&type=chunk) - Lexicon will need additional capital in the future, and its unavailability could force delays or elimination of R&D programs, or lead to financing on unattractive terms[117](index=117&type=chunk) - The company relies on collaborations with pharmaceutical and biotechnology companies for development and commercialization, and conflicts or failures in these arrangements could significantly reduce revenue opportunities[117](index=117&type=chunk) - Risks related to intellectual property include the inability to adequately protect it, potential patent litigation, and the need for third-party licenses[117](index=117&type=chunk) - The company's stock price may be extremely volatile, and future issuances or sales of common stock could depress its price[122](index=122&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This section reports no directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[123](index=123&type=chunk) - No directors or executive officers adopted or terminated a non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[123](index=123&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including equity incentive plans, officer certifications, and XBRL documents - Exhibits include the 2017 Equity Incentive Plan and the 2017 Non-Employee Directors' Equity Incentive Plan, both as amended[124](index=124&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed herewith[124](index=124&type=chunk) - XBRL Instance Document and Taxonomy Extension Documents (Schema, Calculation, Definition, Label, Presentation) are included[124](index=124&type=chunk) [Signatures](index=29&type=section&id=Signatures) This section contains the official signatures of the company's principal executive and financial officers, certifying the report - The report was signed on August 6, 2025, by Michael S. Exton, Ph.D., Chief Executive Officer, and Scott M. Coiante, Senior Vice President and Chief Financial Officer[128](index=128&type=chunk)

Core Viewpoint - Lexicon Pharmaceuticals reported quarterly earnings of $0.01 per share, exceeding the Zacks Consensus Estimate of a loss of $0.08 per share, marking a significant improvement from a loss of $0.17 per share a year ago [1] Financial Performance - The company achieved revenues of $28.87 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 344.78%, compared to revenues of $1.65 million in the same quarter last year [2] - Over the last four quarters, Lexicon has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Lexicon shares have increased approximately 42.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [3] Future Outlook - The company's earnings outlook will be crucial for determining the sustainability of its stock price movement, with current consensus EPS estimates for the upcoming quarter at -$0.08 on revenues of $6.56 million, and -$0.32 on revenues of $16.07 million for the current fiscal year [4][7] - The estimate revisions trend for Lexicon was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Lexicon belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting that the industry's outlook could materially impact stock performance [8]

Financial Data and Key Metrics Changes - For Q2 2025, Lexicon Pharmaceuticals reported revenues of $28.9 million, a significant increase from $1.6 million in Q2 2024, primarily driven by $27.5 million in licensing revenue from Novo Nordisk [24] - The net income for Q2 2025 was $3.3 million, or $0.01 per share, compared to a net loss of $53.4 million, or $0.17 per share, in the same period of 2024 [25] - Total operating expenses decreased by $31.9 million quarter over quarter, reflecting the company's strategic repositioning as an R&D-focused entity [27] Business Line Data and Key Metrics Changes - Research and development expenses for Q2 2025 decreased to $15.7 million from $17.6 million in Q2 2024, mainly due to lower external research expenses on the PROGRESS clinical trial [25] - Selling, general, and administrative expenses decreased to $9.4 million in Q2 2025 from $39.2 million in 2024, attributed to reduced marketing efforts for MPEFA [25] Market Data and Key Metrics Changes - The company is actively pursuing regulatory approvals for sotagliflozin in various international markets, including the UAE, Saudi Arabia, Canada, Australia, New Zealand, and several Southeast Asian countries [31] - The ongoing Phase III SONATA study for sotagliflozin is the only registrational trial currently evaluating treatment in both obstructive and non-obstructive hypertrophic cardiomyopathy (HCM) [20] Company Strategy and Development Direction - Lexicon is focused on advancing its innovative portfolio of potential medicines, with a strategic pivot towards R&D that has taken shape in 2025 [6] - The company aims to maximize the potential of its drug candidates through partnerships, particularly with Novo Nordisk for LX9851 and Viatris for sotagliflozin [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress of their R&D programs and the potential for pilavapitan to become a transformative therapy for patients with neuropathic pain [14] - The company anticipates presenting full progress data for pilavapitan in Q3 2025 and is preparing for an end-of-Phase II meeting [33] Other Important Information - The company ended Q2 2025 with $168 million in cash and short-term investments, down from $238 million at the end of 2024 [26] - Lexicon expects to recognize the remaining $17.5 million of licensing revenue from the Novo agreement in the second half of 2025 [26] Q&A Session Summary Question: Can you walk us through the SOTA CROSS trial and its design? - Management explained that the SOTA CROSS trial is designed to evaluate therapeutic options for non-obstructive HCM, with a crossover design allowing patients to serve as their own control [42] Question: How does the company plan to take advantage of the push for non-opioid pain medications? - Management highlighted their engagement with legislative efforts supporting non-opioid medications and expressed optimism about the potential for pilavapitan in this context [48] Question: What is Novo's plan for the Phase I study in obesity? - Management indicated that Novo is expected to vigorously pursue the Phase I program for LX9851, with a focus on oral and combination therapies [56] Question: How does the recent Vertex announcement impact confidence in the pain market? - Management expressed increased confidence in their own neuropathic pain program, citing successful Phase II results with pilavapitan [72] Question: Will an echo be required for patients if sotagliflozin is approved? - Management stated that while an echo will be part of the study protocol, it may not be a major impediment for patient suitability if approved [78]

Pipeline Progress - Pilavapadin 10 mg consistently delivered clinically meaningful pain reduction in Phase 2 trials[8] - Lexicon plans to present full Phase 2 results for Pilavapadin in September 2025 and partnership discussions are ongoing[5] - IND-enabling studies of LX9851 are on track to be completed in 2025[5] - Accelerated site initiations are underway for the Phase 3 SONATA-HCM study of sotagliflozin in HCM[5] Sotagliflozin in HCM - Approximately 1.1 million people in the U S have either obstructive or non-obstructive HCM[15] - 30% of HCM patients are diagnosed with oHCM and 70% are diagnosed with nHCM[16] - The SONATA-HCM Phase 3 study is evaluating sotagliflozin 400 mg versus placebo in 500 patients with oHCM and nHCM[22] - Enrollment in the SONATA-HCM Phase 3 study is accelerating, with all sites expected to be active by the end of Q3 2025[23] Financial Performance - Lexicon reported $28.9 million in total revenues for Q2 2025, including $1.3 million in net product revenues and $27.5 million in licensing revenue[30] - The $27.5 million in licensing revenue includes an upfront payment for the exclusive licensing agreement of LX9851 with Novo Nordisk[31] - Total operating expenses for 2025 are now expected to be between $105 million and $115 million[33]

[Business and Pipeline Highlights](index=1&type=section&id=Business%20and%20Pipeline%20Highlights) Lexicon Pharmaceuticals reported significant progress across its R&D pipeline in Q2 2025, advancing key programs like pilavapadin, LX9851, and sotagliflozin - The company is executing its strategy as an R&D-focused organization, with **strong progress across all key programs**[3](index=3&type=chunk) [Pilavapadin (LX9211) for Diabetic Peripheral Neuropathic Pain (DPNP)](index=1&type=section&id=Pilavapadin%20(LX9211)%20for%20Diabetic%20Peripheral%20Neuropathic%20Pain%20(DPNP)) Pilavapadin, a potential first-in-class oral, non-opioid drug for DPNP, is in partnership discussions, with additional Phase 2b data expected in September - Partnership discussions for pilavapadin are underway following the completion of the **Phase 2b PROGRESS study**[1](index=1&type=chunk)[5](index=5&type=chunk) - Pilavapadin has the potential to be the **first new oral, non-opioid drug approved for neuropathic pain in over two decades**[5](index=5&type=chunk) [LX9851 for Obesity](index=1&type=section&id=LX9851%20for%20Obesity) Preclinical development of LX9851 for obesity is on track for 2025 completion, with Novo Nordisk's IND submission potentially triggering up to $30 million in milestone payments - IND-enabling studies for LX9851 are on track for **completion in 2025**[1](index=1&type=chunk)[11](index=11&type=chunk) - The licensing agreement with Novo Nordisk includes an **upfront payment of $45 million** (received in April) and potential for up to **$1 billion in total milestones**, plus tiered royalties[11](index=11&type=chunk) - Lexicon is eligible for up to an additional **$30 million in near-term milestone payments** upon planned IND submission and initiation of clinical development by Novo Nordisk[11](index=11&type=chunk) [Sotagliflozin Program](index=2&type=section&id=Sotagliflozin%20Program) The sotagliflozin program is advancing with accelerated enrollment in the SONATA Phase 3 HCM study, Viatris preparing ex-U.S./EU filings, and FDA review for Zynquista® in Type 1 Diabetes - Enrollment in the SONATA Phase 3 study for both obstructive and non-obstructive HCM is accelerating, with **completion targeted for 2026**[1](index=1&type=chunk)[12](index=12&type=chunk) - Licensee Viatris is preparing regulatory filings for sotagliflozin outside the U.S. and EU, which could lead to **royalty payments to Lexicon starting next year**[3](index=3&type=chunk)[12](index=12&type=chunk) - Lexicon is in the end-of-review process with the FDA to evaluate bringing **Zynquista® (sotagliflozin) to market for people with Type 1 Diabetes**[8](index=8&type=chunk) - Sotagliflozin remains commercially available in the U.S. for heart failure under the brand name **INPEFA®**[7](index=7&type=chunk) [Second Quarter 2025 Financial Highlights](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Lexicon's Q2 2025 financial performance dramatically improved to a net income of $3.3 million, driven by licensing revenue and significantly reduced operating expenses [Key Financial Results (Q2 2025 vs Q2 2024)](index=2&type=section&id=Key%20Financial%20Results%20(Q2%202025%20vs%20Q2%202024)) Q2 2025 saw total revenues surge to $28.9 million and operating expenses significantly reduced, resulting in a net income of $3.3 million compared to a prior-year loss Key Financial Results Table | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $28.9M | $1.6M | +1655% | | R&D Expenses | $15.7M | $17.6M | -10.8% | | SG&A Expenses | $9.4M | $39.2M | -76.0% | | **Net Income (Loss)** | **$3.3M** | **($53.4M)** | **Turned to Profit** | | Net Income (Loss) per Share | $0.01 | ($0.17) | **Turned to Profit** | - The significant increase in revenue was primarily due to **$27.5 million in licensing revenue** from the agreement with Novo Nordisk[10](index=10&type=chunk) - The decrease in SG&A expenses reflects lower costs from the strategic repositioning in late 2024 and significantly reduced marketing for INPEFA in 2025[14](index=14&type=chunk) [Cash Position and Balance Sheet](index=3&type=section&id=Cash%20Position%20and%20Balance%20Sheet) As of June 30, 2025, Lexicon's total cash and investments stood at $168 million, a decrease from $238.0 million at year-end 2024, partly due to severance payments Cash Position and Investments | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and investments | $139.0M | $238.0M | | Restricted cash | $29.0M | $0 | | **Total Cash & Investments** | **$168.0M** | **$238.0M** | - The change in cash position includes **$7.5 million in severance payments** related to the strategic repositioning in late 2024[16](index=16&type=chunk) [Detailed Financial Statements](index=5&type=section&id=Detailed%20Financial%20Statements) This section provides a comprehensive breakdown of Lexicon's operating results for Q2 2025 and 2024, alongside consolidated balance sheet data for June 30, 2025, and December 31, 2024 Consolidated Statements of Operations (Three Months Ended) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $28,866 | $1,647 | | Total operating expenses | $25,130 | $57,001 | | Income (loss) from operations | $3,736 | ($55,354) | | **Net income (loss)** | **$3,252** | **($53,429)** | Consolidated Balance Sheet Data | (In thousands) | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Total assets | $225,583 | $298,420 | | Long-term debt, net | $56,107 | $100,298 | | Total stockholders' equity | $129,440 | $145,950 |

Core Insights - Lexicon Pharmaceuticals is making significant progress in its R&D strategy, with ongoing partnership discussions for pilavapadin and IND-enabling studies for LX9851 on track for completion in 2025 [3][4][8] - The company reported a substantial increase in total revenues for Q2 2025, reaching $28.9 million, compared to $1.6 million in Q2 2024, primarily driven by licensing revenue from Novo Nordisk [11][21] - Lexicon's net income for Q2 2025 was $3.3 million, a notable improvement from a net loss of $53.4 million in the same period last year [14][21] Partnership and Product Development - Partnership discussions for pilavapadin are ongoing, with full Phase 2 data expected to be presented at an upcoming medical meeting [3][8] - LX9851, a novel oral candidate for obesity, is in preclinical development, with an exclusive licensing agreement with Novo Nordisk that includes an upfront payment of $45 million and potential milestone payments up to $1 billion [8][11] - The SONATA Phase 3 study for sotagliflozin in hypertrophic cardiomyopathy (HCM) is progressing well, with over 100 sites initiated across 20 countries [3][16] Financial Performance - Total revenues for Q2 2025 were $28.9 million, consisting of $27.5 million in licensing revenue and $1.3 million from INPEFA® sales [11][21] - Research and development expenses decreased to $15.7 million in Q2 2025 from $17.6 million in Q2 2024, reflecting optimized resource allocation [12][21] - Selling, general, and administrative expenses significantly decreased to $9.4 million in Q2 2025 from $39.2 million in Q2 2024 due to strategic repositioning [13][21] Cash Position and Investments - As of June 30, 2025, Lexicon had $139 million in cash and investments, down from $238 million at the end of 2024, primarily due to severance payments related to strategic changes [15][21] - The company also reported $29 million in restricted cash as of the same date [15][21] Pipeline and Future Outlook - Lexicon is focused on advancing its pipeline, with sotagliflozin being commercially available in the U.S. for heart failure as INPEFA® [7][19] - The company is also preparing for regulatory filings for sotagliflozin in various international markets, with submissions already made in the UAE and Saudi Arabia [16][19]

THE WOODLANDS, Texas, July 31, 2025 (GLOBE NEWSWIRE) -- Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX) today announced that Nasdaq's listing qualifications staff has determined that the closing bid price of the Company's common stock has been at $1.00 per share or greater for ten consecutive business days and that, accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2). This update was previously disclosed in the Company's Current Report on Form 8-K filed on July 28, 2025. For In ...

THE WOODLANDS, Texas, July 23, 2025 (GLOBE NEWSWIRE) -- Lexicon Pharmaceuticals, Inc. (Nasdaq: LXRX) today announced the Company will release its second quarter 2025 financial results on Wednesday, August 6, 2025, prior to market open. Management will conduct a conference call and live webcast at 8:30 a.m. ET (7:30 a.m. CT) that day to discuss the financial results and to provide a business update. Participants can access the conference call live via webcast on the Events page of the Company's website at ht ...

Core Insights - Lexicon Pharmaceuticals is presenting data on diabetic peripheral neuropathic pain (DPNP) at the 7th Annual Meeting of the American Society of Pain and Neuroscience, highlighting the impact of DPNP on patients despite standard treatments [1][2] - Approximately 9 million patients in the U.S. suffer from DPNP, affecting 30% of type 1 diabetes patients and 50% of type 2 diabetes patients [2] - The study aims to raise awareness among healthcare professionals about the burden of DPNP on patients and encourage discussions about treatment options [3] Product Development - Pilavapadin (LX9211) is an investigational, non-opioid treatment for DPNP, discovered through Lexicon's gene science approach, targeting AAK1 to inhibit pain signaling without affecting opiate pathways [4] - The Phase 2a proof-of-concept RELIEF-DPN-1 study demonstrated that pilavapadin met its primary endpoint by reducing average daily pain scores (ADPS) at week 6 compared to placebo, showing significant benefits in alleviating DPNP symptoms [5] - Pilavapadin has received Fast Track designation from the U.S. FDA for its development in treating DPNP [5] Company Overview - Lexicon Pharmaceuticals focuses on pioneering medicines that transform patients' lives, utilizing its Genome5000™ program to identify therapeutic protein targets across various diseases [6] - The company has a pipeline of drug candidates in clinical and preclinical development for conditions including neuropathic pain, hypertrophic cardiomyopathy, and obesity [6]

Pilavapadin (LX9211) for DPNP - The PROGRESS Phase 2b study identified the 10 mg dose of pilavapadin as the most clinically meaningful for treating Diabetic Peripheral Neuropathic Pain (DPNP) [7] - Post-hoc analysis of the PROGRESS study reaffirmed the 10 mg dose, showing statistically significant results (p = 0.04) when combining the 10 mg and 20/10 mg arms [11] - The 10 mg dose of pilavapadin had a study completion rate of 87.8%, similar to the placebo group's 87.9% [13] - Approximately 60% of U S patients with DPNP have tried multiple treatments, indicating a high unmet need and sizable market opportunity [15] LX9851 for Obesity and Related Metabolic Disorders - LX9851 is a first-in-class, potent, and selective orally bioavailable ACSL5 inhibitor with the potential to address unmet needs in obesity and related cardiometabolic disorders [17] - IND filing for LX9851 is on track for 2025 [20] Sotagliflozin - A Lancet Diabetes & Endocrinology publication highlighted the unique efficacy benefits of sotagliflozin, showing a reduced risk of major adverse cardiovascular events (MACE) with a Hazard Ratio (HR) of 0.77 (95% CI 0 65-0 91), p=0 0020 [23] - The cumulative incidence of total MACE was 10.0 per 100 patients in the sotagliflozin group [23] - Viatris is undertaking ex-US, ex-EU registration and regional development of sotagliflozin [21] Financials - Total revenues for FY 2024 were $31.1 million, compared to $1.2 million in FY 2023 [26] - Lexicon anticipates total operating expenses between $135 million and $145 million for full year 2025 [29]