LEXICON PHARMACEUTICALS, INC.

Previous wording

•We continue to commercialize INPEFA (sotagliflozin), an orally-delivered small molecule drug, in the United States to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent heart failure visits in adults with heart failure or type 2 diabetes mellitus, chronic kidney disease, or CKD, and other cardiovascular risk factors.

Current wording

•We continue to make INPEFA (sotagliflozin) commercially available. INPEFA is our orally-delivered small molecule drug, in the United States to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent heart failure visits in adults with heart failure or type 2 diabetes mellitus, chronic kidney disease, or CKD, and other cardiovascular risk factors.

Previous wording

Since our inception, we have incurred significant losses and, as of March 31, 2025, we had an accumulated deficit of approximately $2.0 billion. Our losses have resulted principally from costs incurred in research and development, selling, general and administrative costs associated with our operations, and non-cash stock-based compensation expenses associated with stock options and restricted stock units granted to employees and consultants. Research and development expenses consist primarily of salaries and related personnel costs, external research costs related to our nonclinical and clinical efforts, material costs, facility costs, depreciation on property and equipment, 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, 2025, we had an accumulated deficit of approximately $2.0 billion. Our losses have resulted principally from costs incurred in research and development, selling, general and administrative costs associated with our operations, and non-cash stock-based compensation expenses associated with stock options and restricted stock units granted to employees and consultants. 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

Cost of sales during the three months ended March 31, 2025 and 2024 were less than $0.1 million and 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, 2025, substantially all of the “zero-cost” INPEFA raw materials remains available to us. However, the time period over which this inventory is consumed will depend on a number of factors, including the amount of future INPEFA sales, use of this inventory to satisfy manufacturing and supply agreements associated with strategic alliances (for further information, see our Annual Report on Form 10-K for the year ended December 31, 2024) or in clinical development or other research activities, production lead times, and/or the ability to utilize inventory prior to its expiration date. 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 and six months ended June 30, 2025 and 2024 were less than $0.2 million and primarily consist of third-party manufacturing costs and freight associated with sales of INPEFA. 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 June 30, 2025, substantially all of the “zero-cost” INPEFA raw materials remains available to us. However, the time period over which this inventory is consumed will depend on a number of factors, including the amount of future INPEFA sales, use of this inventory to satisfy manufacturing and supply agreements associated with strategic alliances (for further information, see our Annual Report on Form 10-K for the year ended December 31, 2024) or in clinical development or other research activities, production lead times, and/or the ability to utilize inventory prior to its expiration date. 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.

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, 2025 increased 12% to $8.0 million from $7.2 million as compared to the corresponding period in 2024 primarily driven by higher preclinical manufacturing expense.

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

Previous wording

•Personnel – Personnel costs for the three months ended March 31, 2025 increased 4% to $4.4 million from $4.2 million, as compared to the corresponding period in 2024. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

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

Previous wording

•Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2025 and 2024 were $1.6 million in each period.

Current wording

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

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, 2025 decreased 6% to $1.3 million from $1.4 million, as compared to the corresponding period in 2024.

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

Previous wording

•Personnel – Personnel costs for the three months ended March 31, 2025 decreased 69% to $5.0 million from $16.4 million, as compared to the corresponding period in 2024, primarily due to lower employee salaries and benefit costs as a result of decreased headcount from the Company restructuring in late 2024. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs.

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

Previous wording

•Professional and consulting fees – Professional and consulting fees for the three months ended March 31, 2025 decreased 59% to $3.9 million from $9.6 million, as compared to the corresponding period in 2024, primarily due to lower marketing costs in conjunction with the Company restructuring in late 2024.

Current wording

•Professional and consulting fees – Professional and consulting fees for the three months ended June 30, 2025 decreased 82% to $2.6 million from $14.6 million, and for the six months ended June 30, 2025 decreased 73% to $6.5 million from $24.2 million as compared to the corresponding periods in 2024, primarily due to lower marketing costs in conjunction with the Company restructuring in late 2024.

Previous wording

•Stock-based compensation – Stock-based compensation expenses for the three months ended March 31, 2025 decreased 46% to $1.5 million from $2.7 million, as compared to the corresponding period in 2024, due to decreased headcount from the reduction in the field force in late 2024.

Current wording

•Stock-based compensation – Stock-based compensation expenses for the three months ended June 30, 2025 decreased 50% to $1.6 million from $3.2 million, and for the six months ended June 30, 2025 decreased 48% to $3.0 million from $5.9 million as compared to the corresponding periods in 2024, due to decreased headcount from the reduction in the field force in late 2024.

Previous wording

•Facilities, equipment, and other – Facilities, equipment, and other costs for the three months ended March 31, 2025 decreased 65% to $1.2 million from $3.4 million, as compared to the corresponding period in 2024. The decrease was primarily due to lower travel as a result of the Company restructuring in late 2024.

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, 2025 decreased 62% to $1.6 million from $4.2 million, and for the six months ended June 30, 2025 decreased 62% to $2.9 million from $7.6 million as compared to the corresponding periods in 2024. The decrease was primarily due to lower travel as a result of the Company restructuring in late 2024.

Previous wording

Interest and Other Expense. Interest and other expense was $1.8 million and $4.9 million, respectively, during the three months ended March 31, 2025 and 2024. 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.

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

Previous wording

Interest Income and Other, Net. Interest income and other, net increased to $2.2 million from $1.9 million during the three months ended March 31, 2025 from the corresponding period in 2024. Interest earned on cash, cash equivalents and short-term investments is included in interest income and other, net.

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

Previous wording

Net Loss and Net Loss per Common Share

Current wording

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

Previous wording

Net loss and Net loss per Common Share. Net loss was $25.3 million, or $0.07 net loss per share, in the three months ended March 31, 2025 as compared to a net loss of $48.4 million, or $0.20 net loss per share, in the corresponding period in 2024.

Current wording

Net income (loss) and Net income (loss) per Common Share. Net income was $3.3 million, or $0.01 per diluted share, in the three months ended June 30, 2025 as compared to a net loss of $53.4 million, or $0.17 net loss per share, in the corresponding period in 2024. Net loss was $22.0 million, or $0.06 net loss per share in the six months ended June 30, 2025, as compared to a net loss of $101.8 million, or $0.37 net loss per share in the corresponding period in 2024.

Previous wording

As of March 31, 2025 and December 31, 2024, we had $194.8 million and $238.0 million in cash, cash equivalents and short-term investments, respectively. We used cash of $43.8 million from operations in the three months ended March 31, 2025, largely reflective of the net loss for the period of $25.3 million which included non-cash charges of $0.8 million primarily related to stock-based compensation expense. Investing activities provided cash of $40.6 million in the three months ended March 31, 2025, primarily due to net maturities of investments. Financing activities used cash of $0.6 million, primarily from payments for tax withholding on share-based compensation.

Current wording

As of June 30, 2025 and December 31, 2024, we had $168.0 million and $238.0 million in cash, cash equivalents, restricted cash and short-term investments, respectively. We used cash of $26.8 million from operations in the six months ended June 30, 2025, largely reflective of the net loss for the period of $22.0 million which included total non-cash charges of $3.3 million primarily related to stock-based compensation expense. Investing activities provided cash of $56.1 million in the six months ended June 30, 2025, primarily due to net maturities of investments. Financing activities used cash of $45.6 million, primarily from repayment of debt borrowings.

Previous wording

Among other items, the loan and security agreement includes a financial covenant which requires us to maintain a minimum balance of unrestricted cash, cash equivalents. short-term investments, and restricted cash, inclusive of a required minimum amount of $29 million to be maintained in a blocked account, in an amount equal to not less than the greater of (i) fifty percent (50%) of the outstanding principal amount of the Oxford Term Loans and (ii) the required minimum amount of $29 million. As of March 31, 2025, the Company was in compliance with its debt covenants.

Current wording

Among other items, the loan and security agreement includes a financial covenant which requires us to maintain a minimum balance of unrestricted cash, cash equivalents. short-term investments, and restricted cash, inclusive of a required minimum amount of $29 million to be maintained in a blocked account, in an amount equal to not less than the greater of (a) fifty percent (50%) of the outstanding principal amount of the Oxford Term Loans and (b) the required minimum amount of $29 million. As of June 30, 2025, the Company maintained $29 million in the blocked account.

Previous wording

In March 2025, we entered into an exclusive license agreement with Novo Nordisk A/S for the worldwide development, manufacture and commercialization of LX9851, our preclinical drug candidate for obesity and associated cardiometabolic disorders. Under the license agreement, we granted Novo Nordisk an exclusive, worldwide, royalty-bearing right and license under our patent rights and know-how to develop, manufacture and commercialize LX9851. We received an upfront payment of $45 million in April 2025 under this license agreement and are eligible to receive (a) up to an aggregate of $485 million upon the achievement of specified regulatory and commercial launch milestones and (b) up to an aggregate of $475 million upon the achievement of specified sales milestones. We are also entitled to tiered, escalating royalties ranging from single-digit to low-double-digit percentages of annual net sales of LX9851, subject to customary royalty reduction provisions.

Current wording

In March 2025, we entered into an exclusive license agreement with Novo Nordisk A/S for the worldwide development, manufacture and commercialization of LX9851, our preclinical drug candidate for obesity and associated cardiometabolic disorders, pursuant to which we received an upfront payment of $45 million. For additional information on the exclusive license agreement, refer to Note 5, Collaborations and Strategic Alliances.

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 $194.8 million in cash and cash equivalents and short-term investments as of March 31, 2025. 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 approximately $168.0 million in cash and cash equivalents, restricted cash and short-term investments as of June 30, 2025. 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.