LEXICON PHARMACEUTICALS, INC.

Previous wording

•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.

Current wording

•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.

Previous wording

Since our inception, we have incurred significant losses and, as of March 31, 2026, 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. Research and development expenses consist primarily of salaries and related personnel costs, external research and material costs related to our nonclinical efforts and clinical trials, and other expenses related to our drug discovery and development programs. Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, sales and marketing, and administrative personnel, professional fees and other corporate expenses, including information technology, facilities costs and general legal activities. We expect to continue to incur significant research and development costs in connection with the continuing research and development of our drug candidates. As a result, we will need to generate significantly higher revenues to achieve profitability.

Current wording

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. Research and development expenses consist primarily of salaries and related personnel costs, external research and material costs related to our nonclinical efforts and clinical trials, and other expenses related to our drug discovery and development programs. Selling, general and administrative expenses consist primarily of salaries and related expenses for executive, sales and marketing, and administrative personnel, professional fees and other corporate expenses, including information technology, facilities costs and general legal activities. We expect to continue to incur significant research and development costs in connection with the continuing research and development of our drug candidates. As a result, we will need to generate significantly higher revenues to achieve profitability.

Previous wording

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. See Note 5, Collaborations and Strategic Alliances, for further information. Total revenues for each of the periods presented also include product revenues from sales of INPEFA.

Current wording

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. Total revenues for each of the periods presented also include product revenues from sales of INPEFA.

Previous wording

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.

Current wording

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.

Previous wording

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):

Current wording

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):

Previous wording

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.

Current wording

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.

Previous wording

•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.

Current wording

•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, 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.

Previous wording

•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.

Current wording

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

Previous wording

•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.

Current wording

•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.

Previous wording

•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.

Current wording

•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, 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.

Previous wording

•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.

Current wording

•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, 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.

Previous wording

•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.

Current wording

•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.

Previous wording

•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.

Current wording

•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.

Previous wording

•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.

Current wording

•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, 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.

Previous wording

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.

Current wording

Interest and Other Expense. 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.

Previous wording

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.

Current wording

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 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.

Previous wording

Net Loss and Net Loss per Common Share

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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 below. 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. Financing activities provided cash of $88.8 million, primarily due to the common and preferred stock issuance as further described below.

Current wording

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.

Previous wording

Common and Preferred Stock Issuance. In February 2026, we received approximately $96.5 million in net cash proceeds from the issuance of our common and preferred stock as follows:

Current wording

Common and Preferred Stock Issuance. In February 2026, we received approximately $96.2 million in net cash proceeds from the issuance of our common and preferred stock as follows:

Previous wording

•34,089,403 shares of our common stock sold in an underwritten public offering for $1.30 per share, resulting in net cash proceeds of approximately $40.9 million (after deducting underwriting discounts and commissions and other offering expenses); and

Current wording

•34,089,403 shares of our common stock sold in an underwritten public offering for $1.30 per share, resulting in net cash proceeds of approximately $40.6 million (after deducting underwriting discounts and commissions and other offering expenses); and

Previous wording

Financing Obligations. On May 4, 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. Monthly interest-only payments are due during an initial 18-month period, which may be extended to 24 or 30 months if specified performance milestones are achieved. The interest-only period will be followed by an amortization period extending through the maturity date.

Current wording

Financing Obligations. 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. Monthly interest-only payments are due during an initial 18-month period, which may be extended to 24 or 30 months if specified performance milestones are achieved. The interest-only period will be followed by an amortization period extending through the maturity date.

Previous wording

The first $55 million tranche was funded at closing. The second $20 million tranche is available for draw at our option by no later than June 15, 2028, subject to the achievement of specified performance milestones and certain additional timing restrictions. 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%.

Current wording

The first $55 million tranche was funded at closing. The second $20 million tranche is available for draw at our option by no later than June 15, 2028, subject to the achievement of specified performance milestones and certain additional timing restrictions. 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 loan bear interest at a floating rate equal to the prime rate plus 3.10%, but not less than 9.85%.

Previous wording

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.

Current wording

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.

Previous wording

Our obligations under the Hercules term loans 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.

Current wording

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

Previous wording

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. 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.

Current wording

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

Previous wording

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

Current wording

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.

Previous wording

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 maintain a short-term investment portfolio which consists of U.S. Treasury bills and corporate debt securities that mature three to 12 months from the time of purchase, which we believe are subject to limited market and credit risk. We currently do not hedge interest rate exposure or hold any derivative financial instruments in our investment portfolio.

Current wording

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 $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. Treasury bills and corporate debt securities that mature three to 12 months from the time of purchase, which we believe are subject to limited market and credit risk. We currently do not hedge interest rate exposure or hold any derivative financial instruments in our investment portfolio.

Previous wording

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

Current wording

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.